DATE: 4 April, 1984

Equivalent citations: (1984) 2 GLR 1058

Author: V Bedarkar

Bench: V Bedarkar

JUDGMENT

V.V. Bedarkar, J.

(1) This is a revision application under sec. 29(2) of the Bombay Rent Act against the concurrent decree of both the courts below directing the petitioner to vacate the premises on the ground of sec. 13(1) (k) of the Act. This dispute pertains to a suit house at Baroda on Kothi Road belonging to the respondent and given on rent in the name of the petitioner ever since the time when she was a minor. It is the case that her father was serving at Broach and there-fire she was initially studying in Gujarati. But because she wanted to study Sindhi at Baroda, she came to her maternal relative and there-after this house was taken on rent in her name so that she can study there. It is the case that since 1968, the petitioner has gone over to Bombay. She is serving there as a Lecturer in College of Pharmacy and therefore this house is not used. Initially, it was the case that because she has got an alternative accommodation at Bombay, the possession of this premises should be handed over to the respondent under the provisions of sec. 13(1)(1) of the Act. And then the another contention, in the a terminative which was urged was under sec. 13(1)(k) of the Act was believed by the trial court and decree was passed on both counts. But the appellate court considered that two houses at Bombay were not in the name of the petitioner, but they were in the names of her father and mother or brother and therefore decree on that count was set aside. But the learned appellate judge in appeal, confirmed the decree on the count of sec. 13(1)(k) of the Act,. The landlord did not proceed father against his being non-suited under sec. 13(1)(1) and hence that finding has been found.

(2) . The case of the petitioner was that she had temporarily gone to Bombay for studies and has taken a casual appointment as Lecturer. But she had all desire to come back to Baroda and stay in the suit house and that in her absence, her parents were staying in the suit house at Baroda and therefore the decree should not be passed. Both the courts below did not believe the case of the petitioner that her parents were staying in the house and maintaining it which is for the benefit of the petitioner so that after coming back to Baroda, she could stay there. The courts below did not believe that she was to return and stay at Baroda. It should be noted that the house is on the main road of city of Baroda on Kothi Road on a rent of only Rs.16-60 p.s.

(3) 3. So far as the facts are concerned, it is not in dispute now that right from 1968, the petitioner’s ordinary residence is at Bombay. It is also not now in dispute that at Bombay, one flat No.A29 of Triloknagar Co-operative Housing Society, Bandra, was standing in the name of her mother Sitaben Trikamdas. It is also an admitted position that at Bandra, the petitioner was staying in the very flat with her brother Lakshman till 1973. It should be noted that the suit is filed on 21-6-1971 and the suit notice is dated 7-1-1977. So the position that was prevalent at that time has to be considered. Of course, by Exh. 71, dated 10-10-1974, the said flat of Triloknagar was transferred to the name of Mr.Ronnie Almeda on 14-12-1974. In that flat of Triloknagar, there are five rooms on the second floor. It is also in evidence that the defendant-petitioner has been residing in block no-13 of Cainor Co-operative Housing Society, Bandra and this flat belongs to the father of the petitioner. The brother of the petitioner lakshman has got a flat in that society. This is addition to the flat belonging to the father and the petitioner stays with her brother Lakshman as a family member. Therefore, the position stands that at the relevant time, there was a flat in the name of mother Sitaben in Triloknagar society and a flat in the name of the father in Cainor Co-operative Housing Society. The petitioner claims that the suit house was used for the residence of these two persons, who were also having their flats in Bombay. Of course, evidence is also there that after 1974, one bungalow in Navjivan society is purchased in the name of the father. But it is the case that, that was purchased for the engineering Firm which was run by the petitioner’s brother Lakshman. As that transaction is after the relevant period, I do not propose to go into it. But a contention is raised before me that here is a man having bungalow at Baroda and a flat in his wife’s name at Bombay and a flat in his own name at Bombay, and still wants to retain this premises in the name of his daughter just in order not to lose the possession of a very precious house in Baroda at the rent of Rs.16-50 ps. P.m. whatever may be the position, if the petitioner is entitled to retain the house in her own rights, merely because the house is in a very important locality and important city like Baroda on a very nominal rent, should not weigh. Now it is found in evidence that it was only in 1971 that the names of the petitioner, her father, her mother and her brother are entered as voters in the municipal corporation elector roll for ward No.7 in the suit premises. It has not come on record that at any time during the whole trial, Lakshman was staying at Baroda. But at any rate, it may be stated that in 1971 this position is there. But it is held that prior to that period, the name of the petitioner was in the elector roll at Bombay. In view of these facts, the only point which is required to be considered is whether the petitioner has proved her animus revertendi that she has desire to come back and stay permanently at Baroda and secondly whether during the statutory period, the house was in use or it had offended the provisions of sec. 13(1)(k) of the Act.

(4) 4. Now I shall refer to the provisions of sec. 13(1) (k) of the Act:

” sec. 13(1) : Notwithstanding anything contained in this Act (but subject to the provisions of sec.15), a landlord shall be entitled to recover possession of any premises if the court is satisfied- (k) that the premises have not been used without reasonable cause for the purpose for which they were let for a continuous period of six months immediately preceding the date of the suit”.

(5) It should be noted that earlier, unfortunately, an issue was raised- “Whether the plaintiff proves that the defendant is not using the suit premises continuously for a period of six months and more at the date of the suit notice?” Therefore as the contention was raised earlier before the learned appellate judge, the matter was sent back to the trial court by amending the issue to the following effect:

” Whether the plaintiff proves that the premises have not been used without reasonable cause for the purpose for which they were let for a continuous period of six months immediately preceding the date of the suit.”

(6) In the earlier issue, there were two defects. The first was, the words ” without reasonable cause” were not mentioned, and second was that instead of ‘the date of the suit’ the words used were ‘date of the suit notice’. After the remand, the finding was given b the learned trial judge in favour of the landlord again. I have referred to this section (k) of the Act because I was considering the relevant statutory period during which the petitioner tries to prove that the house was used for the purpose for which it was let, and if it was not so used, then whether there is reasonable cause for it or not. It is the contention by Mr. Vakil that both the courts below have committed material irregularity which ultimately resulted in substantial injustice to the petitioner in not construing the evidence and the position of law properly. It is the contention that though on the record, there were written documents to show the use of this particular house by the parents, especially by the mother of the petitioner, during the statutory period, that aspect is misconstrued by putting perverse appreciation of documentary evidence. The second ground is that from the evidence on record, it can be shown that the petitioner has desire to come back and stay in Baroda in the suit house and the provisions of law, clearly permit such a possession taking out the rigours of sec. 13(1)(k) of the Act. Still however, both the courts have passed the decree and therefore, this court, in revision, should be in a position to set aside that decree.

(7) This argument is advanced because here before me, Mr.Shelat, the learned advocate appearing on behalf of the respondent has drawn my attention to the limited scope of this court in revision under sec.29(2) of the Act. Sec.29(2) of the act is to the following effect:

“No further appeal shall lie against any decision in appeal under sub-sec. (I) but the High Court may, for the purpose of satisfying itself that nay such decision in appeal was according to law, call for the case in which such decision was taken and pass such order with respect thereto as it thinks fit.”

(8) It should be noted that an appeal was filed before the district court under sub-sec. (1) of sec.29 of the Act and therefore, decision in appeal of a district judge, can be revised by this court under sec. 29(2) of the Act, provided the court is satisfied that such decision in appeal was not according to law. In support of this contention, reliance is placed by Mr.Shelat on the decision of the Supreme Court in the case of Hari Shankar and Others v. Rao Girdhari lal Chowdhury, reported A.I.R. 1963, S.C.698. Therein the Supreme court has considered that even though under the Rent Act, the power is not so limited as under sec.115 of the Civil Procedure Code, the High Court is enabled to call for the record of a case to satisfy itself that the decision therein is according to law. The Supreme Court considered that the phrase ‘according to law’ (this was considered so far as sec.35 of the Delhi and Ajmer Rent Control Act, but that consideration also is applicable to Bombay Rent Act) refers to the decision as a whole, and is not to be equated to errors of law or of fact simpliciter. It refers to the overall decision which must be according to law which it would not be, if there is a miscarriage of justice due to a mistake of law. It was also considered by the Supreme Court that “section in spite of its apparent width of language where it confers a power on the High Court to pass such order as the High Court might think fit, is controlled by the opening words, where it says that the High Court may send for the record of the case to satisfy itself that the decision is according to law”.

(9) Then thereafter it has been observed by the Supreme Court that under sec.366, High court cannot interfere with a plain finding of fact arrived at by the court below. It cannot reassess the value of evidence and substitute its own conclusions of fact in place of those reached by the court below. In the instant case, it is the grievance of Mr. Vakil that in order to show the residence of the petitioner and also her mother in the suit premises during the statutory period, some letters were produced by the father during his deposition. Those letters referred to the petitioner’s coming to Baroda in January 1971. They are Exhs. 135, 146 and 140 dated 6-1-1971, 14-1-1971, and 15-1-1971, and the Exh. 141 is dated 5-12-1970. So that is prior to the statutory period. When these letters were produced by the father of the petitioner, no question is put to him that these were the letters fabricated or got written later on, on a wrong stamp from the postal authorities as would be available was obtained. In fact these letters are not challenged when they were produced. But the grievance of Mr.Vakill is that the learned appellate judge in paragraph 18 of his judgment approved the finding of the trial court that the said post-cards were subsequently got up and the postal seals were fabricated. In fact, it is not permissible for a court of facts to jump to a conclusion unless any suggestion is coming from the parties to the effect that the letters were so fabricated. I can understand that if a question is put to a party that the letters were so fabricated and even if the other party says no, it would be open for the court to consider the overall effect. But when there is no suggestion or any doubt created by the party during the examination of a witness when the letters are produced, it is too much for a court to jump to a conclusion about fabrication. It is also contended that the courts below did not accept these letters because they were produced after the remand. A very attractive argument is advanced by Mr.Vakill that earlier there was no occasion to consider the stay in the suit premises during the relevant period because the issue was framed “prior to the suit notice” when the issue was recast and the question of period of six months “prior to the date of suit” arose, probably search was made and letters were found and therefore they were produced in order to meet with the requirement of the issue and therefore merely because those letters were produced at a subsequent stage, they cannot be doubted. This argument is quite justified. The letters did show that for that particular relevant period the mother of the petitioner was in the suit house. The question to be considered is whether that was a residence as required under sec.13(1)(k) of the Act to consider the using of the premises or it was a casual visit, and whether it showed the intention of using the premises as required in that section.

(10) In order to support the sending of letters, the writer of letters Kishor examined. The learned judge did not believe his version that the petitioner had gone to Baroda and from Baroda she had gone to Broach for getting the number of her eye from one Dr. Kama Kaka and she forgot that number card and therefore the letters were written. This was observed mainly because Kishor came out with a story that the defendants mother was in need of money and that he was helping Mohini i.e. the petitioner and her mother Sitaben. The version of Kishor and such statement in the letters xhs. 135 and 136 were not considered by the learned judge to be believable because the defendants father (petitioners father) is admittedly financially sound who owns a flat of five rooms at Bandra. He has a spacious bungalow in Navjivan society Pani-gate Baroda. He has an ambassador car in which he moves. But in my view the grievance of Mr. Vakil is justified that merely because this aspect is not believed it cannot be said that the letters written by Kishor are also false. One thing can be said that so far as the finding of fact is concerned the fact that Kishor was helping the petitioner and her mother is rightly disbelieved by the learned appellate judge and this court will not interfere into it. But that would not affect the fact of the case that letters-have been written. Would the effect of such letters which are written only for a period of 11 days between 6-1-1971 to 15-1-1971 be so as to give a reasonable ground to consider that the premises are used for the purpose for which they are let ? The learned appellate judge in paragraph-19 has considered while discussing the evidence on contention that the parents of the petitioner were residing in the house; held as a matter of fact that in the present case it is not established that the father and mother of the defendant resided in the suit premises because the defendant (petitioner) has not produced any reliable evidence to show that the parents resided in the suit premises at Baroda while she was residing at Bombay. The learned appellate judge considered what could have been the evidence in order to show that the parents were residing and has considered that no ration-card is produced no bills are produced no neighbours are examined and this is certainly a finding of fact. The letters referred to above are written in the name of the mother and surprisingly the petitioners mother is not examined to show for how long period and for what period she was residing in the suit premises. Therefore that evidence is completely absent. While though it is the case of the petitioner that her parents were residing in the suit premises and as we are concerned with the statutory period the learned appellate judge categorically referred to the deposition of the father wherein he admitted that he has not received any letter in the suit premises in 1971. Therefore except the bare testimony of the petitioner there is nothing to show that the parents actually resided in the suit premises to show the use as required by law which I will later on discuss from the rulings cited before me. In paragraph 24 of the judgment the learned appellate judge has also given a finding of fact that the defendant admitted that she has been residing in Bombay from 1968 to 1975. Her ration-card is at Bombay. Her ration is purchased from Bombay and her version that she visited the suit premises in January 197 1/06/1971 is not established. It was in her deposition that she stated that she used to visit the suit premises casually on holidays. It was not stated in her written statement or reply of the suit notice. So this fact has not been believed by the learned appellate judge as well as the trial court and therefore it has been attempted to show that now this court should not interfere in that finding of fact. It should be noted that the learned appellate judge in paragraph 25 of his judgment has considered the meaning of residence observing that-In the case of residence the purpose of letting is permanent residence not a mere casual occupation not a mere spasmodic stay in the premises. Either the tenant or a member of his family or his guest or his licencee must for the relevant period permanently reside in the premises which are let. This observation has been taken by the learned appellate judge from the rulings which a re cited before me also and therefore it shall have to be considered whether the use of the word residence can be imported into consideration of sec. 13 (1) (k) of the Act which does not contain the word residence but contains the word use sec. 13 (1) (k) requires that decree for eviction could be passed if the premises have not been used without reasonable cause for the purpose for which they were let for the statutory period. But from the aforesaid discussion it could well be said that the petitioner has gone over to Bombay permanently. In her deposition she stated that she has gone over to Bombay only for the purpose of studies. But it is also proved that she has got a job there. It is not brought on record whether that job was temporary or permanent. But in order to show that she has intention to return and stay in Baroda house it was necessary for her to show the nature of her job as to whether it is temporary for a temporary period. It may be that she has brought in evidence to show that she had gone to Bombay for the purpose of studies. But it is not uncommon in a place like Bombay that along with studies one can also carry on the job. It is not her case that she is required to come back to Baroda for a particular purpose. It was argued by Mr. Vakil that by now the petitioner is over 35 years of age and she has remained unmarried and therefore she is practically a spinster. Therefore when there is no house in her name in Bombay and if she cannot pull on with her brother or his wife later on it may be necessary for her to go back to Baroda to stay in that house. The learned appellate judge went on surmises without any suggestion or anything on record to disbelieve the letters. I cannot go on surmises to find out a fact in favour of the petitioner if she does not come out with the case specifically i.e. with the case that she is spinster and that because she may not pull on properly with her sister-in-law and that she has a desire to come back to Baroda and stay there permanently. It is nowhere her case that she wants to stay alone at Baroda. On the contrary at Bombay also she stays with her parents or brother. At Baroda also whenever she goes casually either her mother or father is present. Therefore it is not a case to stay single and individual or alone and therefore she wants an independent house.

(11) Now I shall examine the position from the rullings cited before me whether the decree passed by both the courts deserved to be set aside on proper appreciation of the provisions of this section or requires to be confirmed.

(12) One argument which is very relevant in such cases was advanced on behalf of the respondent. As considered earlier the parents of the petitioner have blocks at Bombay. The house at Baroda was taken on rent in the name of the petitioner when she was minor. She also does not stay permanently at Baroda and as the evidence accepted by both the courts of facts she permanently resides at Bombay for the purpose either of study or service. Even by putting somebody under. the guise of a caretaker unconnected with the family though in this case if it could be believed that the parents were staying and they are connected with the family still however they have in their own possession flats at Bombay and also have no reasonable cause to stay at Baroda; would it be permissible for a tenant to go away keeping the premises locked or hand it over to somebody under the guise that he wants to return after number of years and occupy the premises ? As would be seen from the rullings the main purpose of the Rent Control Legislation is to keep the houses available to the tenants who either cannot build their own houses or have no house to stay except in rented houses. If the attitude of the persons who are transferred or who leave big cities to continue in the house in a big city even though they serve elsewhere is accepted then the persons who come from the outside in the city and require a house on rent would not get the house. This defeats the very purpose of the Rent Control Legislation. When the persons serving at a particular place are transferred at a distant place with no possibility to come immediately in a near future but still continue the house for the members of the family for the purpose of education of the children or for the purpose of some adult member of the family who is serving in that place and the house is continued probably the benefit may be available. But if the house is not at all used for the family and it is either kept locked or given to some person not referable to the family can it be said that because a person after many years has intention to come back and stay permanently in the house the tenancy should continue ? That would be frustrating the purpose of the Legislation. This consideration is necessary in the persent case.

(13) On behalf of the petitioner reliance is placed in the case of Nathani Shivankumar Ghanshyamdas v. Shah Dhanalal Maneklal reported in XVI G.L.R. 779. This judgment of course refers to the provisions of sec. 13(1)(1) of the Act which provides for eviction of a tenant if after coming into operation of this Act has acquired vacant possession and that he has been allotted a suitable residence. In this Nathani case this court observed that the possession of a residence must be a suitable…and possession means legal possession. Any occupation by any person of any premises does not amount to possession. Possession connotes transfer of interest in the premises. The words Suitable residences are interpreted in this decision. The expression residence used in sec13(1)(1) of the Act means residence with the object of settling down. Unless there is evidence to show that the tenant has shifted to a new premises in order to settle down there it is extremely difficult for the court to hold that he has shifted for residence and obtained it for that purpose. Mr. Vakil then submitted that even though it can be said that the petitioner has gone to Bombay it cannot be said that she has gone to Bombay for residing because she does not reside in Bombay with the object of settling down. Now reliance on this judgment would not help because the sec. 13(1)(1) of the Act-has a different consideration as compared to sub-sec. (k). The relevant sub-section so far as this case is concerned merely requires the proof that the house has not been used without reasonable cause for the purpose for which it was let for a continuous period of six months immediately preceding the date of the suit. Therefore here the question of six months statutory period is material and the word residence can be imported and has been imported in the rulling cited before me to mean that even for the statutory period the house must be a suitable residence. If the expression residence interpreted by S H. Sheth J. in the case of Nathani Shivankumar (supra) is considered even in sub-section (k) that will have to be proved so as to bring out the reasonable cause. Mr. Vakil also referred to the case of Achut Pandurang Kulkarni v. Sadashiv Ganesh Phulambrikar reported in 75 Bombay Law Reporter Page-21. This is a case under sec. 13(1)(k) of the Act. In this decision expression reasonable cause is considered and it is observed that If there is evidence on record to show that the tenant had something more than a vague wish to return and that he had a real hope coupled with the practicable possibility of the fulfilment within a reasonable time it cannot be said that he had no reasonable cause for not using the premises. It is also observed that AbSence may be sufficiently prolonged or unintermittent to compel the inference prima facie of a ceaser of occupation. The onus is on the tenant in such a case to repeal the presumption and to establish that his poSsession had not ceased or that he had ceased to occupy on account of reasonable cause. It is also observed that – In the case of a tenant who is a Government servant the court cannot ignore the nature of his services and his liability to be transferred when deciding the question under sec 13(1) (k) of the Act. The tenant must couple and clothe his inward intention to return with some formal outward and visible sign of it. In this case reference was made to the decision of Chagla C. J. in the case of Dattatray Balaji Mahajan v. Narayan Vinayak Bhonde which has been referred to in other cases cited before me. In that case. The petitioner before the court in that case was a tenant and the opponent was landlord. The premises were situated in Poona and were occupied in May 1940. But from June 1950 the tenant had ceased to occupy the premises. He stayed with his son at Jalgoan The landlord therefore contended that the premises were not in use for the purpose for which they were let for a continuous period of six months immediately preceding the date of the suit. The trial judge held against the landlord and the District Judge had recorded finding against the tenant. Chagla C.J. refused to interfere in revision with the said findings of the District Judge but observed that-It is not necessary that the tenant himself should reside in the premises. But it is sufficient that the premises have been used for the purpose for which they were let. It was the fact in that case that the evidence in that case show that the son of the petitioner stayed in the premises from June 9 to June 14 and November 7 to November 14 1950 Chagla C J observed that …As a matter of fact the learned District Judge finds and I am bound by that finding-that there was merely a casual occupation by the petitioners son for a spasmodic period of a week each. This is the same finding so far as the instant case is concerned by both the courts below and therefore in revision I am bound by the finding because I do not find it to be in any way perverse inspite of the letters Exhs. 135 136 and 140 because they merely show a casual visit by Sitaben who is not examined or even the casual visit of the petitioner during the relevant period after the notice. Chagla C.J. has further observed that-Now a mere casual occupation of premises does not constitute residence in those promises. In construing sub-clause (k) one must also bear in mind the object of the Legislature in passing this legislation. The Rent Restriction Act is passed because there was a scarcity of premises and therefore it was necessary to protect bona fide tenants and also to see that premises were not left unoccupied so that people in need of premises should not be deprived of them and also a tenant should not have one set of premises of one place and go about residing in some other premises. Therefore the purpose within the meaning of sub-clause (k) for which premises are let is the purpose of permanent residence: not a mere casual occupation not a mere spasmodic stay in the premises. So this decision of Chagla C.J. interprets the word use in a way connecting it with residence importing that word in sub-clause (k) also and quite justifiably. As considered by me earlier the purpose of the Rent Control Act is that the people in need of premises should not be deprived of them and also a tenant should not have one set of premises at one place and go about residing in some other premises. This is what exactly done in the instant case. The petitioner wants to continue her premises in Baroda and she states that her parents stay in the said premises. Her very parents have their own premises in Bombay where the petitioner herself stays. So it is not a case where person is without a shelter. But or the contrary the person is trying to have shelter at both the places depriving some needy tenant of shelter in Baroda. Mr. Vakil also relied on a decision of this court rendered by D.A. Desai J. in the case of Darbar Ravichandra v. Lalitkumar Amratlal and Others in Civil Revision Application No. 710 of 1965 decided by D.A. Desai J. (as he then was) on 20/06/1968 notes of which are reproduced in Vol. 5 (1967-68) of Gujarat Law Times page No. 447 case No-168. In that case it is observed that even if the rented premises are not used by the tenant for a statutory period this court held that the landlord is not automatically entitled to a decree for eviction. In order to get a decree for eviction under sec. 13(1)(k) of the Act the landlord has to establish that the premises have not been used for the purpose for which they were let for a continuous period of six months immediately preceding the date of the suit. Even if it is eStablished that the premises are kept closed and are not being used for the purpose for which they were let for a period of 2 to 22 years that by itself would not enable the landlord to obtain a decree for possession If these tacts are established it would be open to the tenant to show that the premises were being kept closed for a reasonable cause. It is the absence of reasonable cause which would enable the landlord to obtain possession. The burden to establish that the premises are not being used for a reasonable cause would be on the tenant. Mr. Vakil therefore insisted on the words reasonable cause and submitted that the petitioner has proved that the petitioner had gone to Bombay and kept The house unoccupied for a reasonable cause. The cause was that she had gone to Bombay for study. Both the courts have believed that she has gone for service and she is residing at Bombay permanently. Reliance was placed also on the decision of this court in an unreported decision by J.M. Sheth J. in Civil Revision Application No. 254 of 1971 decided on 19-2-1974. Therein the point of animus revertendi was considered. It is a very lengthy judgment. But the ratio of the decision is that even if the premises are kept closed for a number of years if the tenant could prove animus revertendi then it would be a reasonable cause. In this decision Justice. J.M. Sheth (as he then was) has considered various rullings of Indian courts as well as English courts. The suit in that case referred to a building situated in Surendranagar and was taken on lease by the father of the petitioner. The father died about 10 years prior to the date of the notice in that case and after his death the mother of the petitioner who stayed alone in the suit house also died three years back. Thereafter the premises were kept closed. Therefore it was the case that the premises were not used at all for the purpose for which they were let i.e. for the purpose of residence. It was also the case that for the last 15 years or so the petitioner was staying; in Bombay with his family and was serving there and his sons were also studying at Borivali and the suit premises were being kept mostly closed. But it was the case of the petitioner-tenant that he was staying there in the house and his wife has been coming and going according to their convenience and therefore the contention that the premises have not been kept closed for three years was disputed. On these facts after appreciating the evidence and decision of both the courts below J.M. Sheth J. referred to the decision of Skinner v. Geary 1931 Volume 2 Kings Bench Division p. 546 rendered by Talbot J. and observed at page 550 as follows:

It is obvious that it would be impossible to say that because a man goes away for reasons of either business or pleasure. for a day or a week or even a few months intending to come back he ceases to reside at the premises. But this is a case of a man who does not reside at the premises who has not resided there for a considerable time and on whose absence from the premises there is not limit in point of time either express or to be collected from the circumstances.

(14) In appeal against that judgment observations are made by Slesser Lord Juctice at page 569 and page 570 which are re-produced in judgment by J. M. Sheth J. wherein Slesser Lord Justice agreed with Scrutton Lord Justice – That although a person may be absent from-the premises for a time yet if he has an intention to return to them it may fairly be said that he is still in actual possession and therefore entitled to be protected. In this case the country court judge has found as a fact that the appellant Geary is not in actual occupation that those who were in actual occupation were not there to preserve the house as a residence for him and that he did not intend to return to the house in order to occupy it. Then the questions of two-home men was considered. Lord Justice Asquith had used the formula – animus possidendi and corpus possessionis. In other words the tenant though physically absent must still in the eye of the law retain his possession of the first house. If he gives it up an intention however truthfully and sincerely entertained to return there at some future date will not as I understand the Law suffice. This reference to two-home men would certainly attract the provisions of sec. 13(1) (1) of the Act. But in clause (k) it is only a question of user of residence or non-user. The normal consideration of the English court was that notwithstanding and to suppose that one can absent for 5 or 10 years or more and retain possession and his protected status simply by proving an inward intention to return after so protracted an absence would be to frustrate the spirit and policy of the Acts. But it is also considered that – Notwithstanding an absence so protracted the authorities suggest that its effect may be averted if the couples and clothes his inward intention with some formal outward and visible sign of it i.e. instals in the premises some caretaker or representative he it a relative or not with the status of a licensee and with the function of preserving the premises for his own ultimate homecoming. This has been also considered by the Bombay High Court in Vol. 75 Bombay Law Reporter referred to above. But in our law even keeping a licensee is not permissible. But in fact as will be seen the main intention would be that the house must be available to the tenant and must be kept by persons referable to the tenant and not outsiders. Therefore now I am inclined to observe that the possession by a licensee or caretaker would not be available in order to continue the possession of the premises even though the tenant is absent. There should be some person referable to the tenant. In the decision of the England Court in the case of Beck v. Scholz 1953(1) All England Law Reports 814 the landlord claimed possession of a flat in London which was within the ambit of the Rent Restrictions Acts on the ground that the tenant was not in personal occupation of the premises. The tenant and her husband had a home in Luton where the husband carried on his business. The tenant kept her furniture in the fiat and her licensees lived there as caretakers. The tenant and her husband slept occasionally in the flat the tenant on four or five occasions during the year preceding the summons and her husband some six times in that period. It was held that the question posed and to be answered by ordinary commonsense standards was whether the premises were in the personal occupation of the tenant as her home or if the tenant had more than one home as one of her homes; occupation merely as a convenience for occasional visits would not be occupation as a home so as to entitle the tenant to the protection of the Rent Acts. Thus it can be seen from the above referred decision that even though there was a caretaker licensee protection was not given because there was no occupation as a residence by the tenant. J. M. Sheth J. in his judgment also observed that it cannot be gainsaid that mere casual stay or spasmodic visit for a day or two during the relevant period by itself will not be sufficient for reaching the conclusion that the premises were used for the purpose for which they were let. But then it was also observed by J. M. Sheth J. that – One will have also to take into consideration the factor of animus revertendi the factor whether house was kept fit for occupation whether the house was from time to time no doubt intermittently used as a house for the purpose of residence of the tenant. Ultimately as observed by J. M. Sheth J. this will depend upon the facts and because the facts were not properly considered the matter was remanded for further consideration.

(15) In the instant case all the facts are properly considered and on finding of fact both the courts have come to the conclusion that the house was not used during the particular period even though there were letters showing casual spasmodic visits. These findings are in para 28 of the appellate judgment which are binding and against the petitioner. This court (M. U. Shah J. as he then was) in the case of Dalichand Virchand Shroff v. Babulal Rajmal and Ors. reported in XI G. L. R. page 377 had an occasion to consider this clause. Therein it was observed that – In order that clause (k) of sub-sec. (1) of sec. 13 of the Bombay Rents Control Act be attracted three conditions must be satisfied: (1) that the premises have not been used for the purpose for which they were let; (2) that such non-user was for a continuous period of six months immediately preceding the date of the suit; and (3) such non-user was without reasonable cause. In this judgment it was considered that the purpose for which the suit premises were let out to the original tenant was residence. It was also further observed that- But it has to be remembered that the residence intended was of the tenant himself which may in a given case include the residence of his heirs and of some others. But when a tenant abandons the premises and has no control left over the premises and no interest left in the premises and has left the premises in the occupation of some other persons who are not referable to him (emphasis supplied) he cannot be said to be using the premises for the purpose for which it was let. I have referred to this portion and supplied emphasis just in order to show that how the notion about caretaker or licensee would not be available to the tenant under the provisions of the Act. But the person who stays should be referable to the tenant. In the instant case if the mother is proved to have stayed there for a particular period and not spasmodic stay then she could be said to he a person referable to the petitioner. But the courts believed that it is not proved that the mother actually resided in the house nor it is proved that the petitioner also resided in the house and therefore this finding of fact is binding to this court. Of course before M. U. Shah J. it was a case when a tenant abandons the suit premises and goes back to reside in his home town in another State. But the question in this matter is whether the tenant had intention to keep this house for herself or it was an intention merely to utilise the right as a tenant in a city like Baroda at a very normal rent. In this judgment also M. U. Shah J. considered the decision of Chagla C. J. in the case of Dattatray Balaji Mahajan (supra) wherein it was observed by the learned Chief Justice that Residence involves a more or less permanent or continuous stay at a place and that residence is not the same as mere stay. It was also observed by Chagla C. J. that – There is no obligation upon the tenant himself permanently to reside at the premises. But somebody either a member of his family or his guest or his licensee must for the relevant period permanently reside in the premises which are let to him. In the present case there is no evidence before me that the father permanently resided or the mother permanently resided in the house. The three letters which show only casual visit. In the case before the learned Chief Justice Chagla the son of the tenant stayed in the house for two weeks during the relevant period but it was not considered sufficient period to take out the case from the operation of sec. 13(1) (k) of the Act. Likewise in the instant case also the casual stay by the mother would not take out the case from the operation of sec. 13 (1) (k) of the Act.

(16) In view of the discussion made above L am of the opinion that the decision of both the courts below is quite justified and no case is made out to interfere with the said decision and therefore the Revision Application is dismissed with costs. Rule discharged.

(17) Time for eight weeks from the date of receipt of certified copy of the judgment of this order is granted to the petitioner to vacate the suit premises. The petitioners advocate undertaken to file application for certified copy of the judgment today. Revision application dismissed.

The post Mohini Bhiryomal Hingorani Vs. Bhanubhai Manilal Patel appeared first on B&B Associates LLP.

LAKSHMI KANT PANDEY …PETITIONER
Vs.
UNION OF INDIA …RESPONDENT

DATE OF JUDGMENT: 06/02/1984

BENCH:BHAGWATI, P.N.
BENCH:BHAGWATI, P.N. PATHAK, R.S.SEN, AMARENDRA NATH (J)

CITATION:
1984 AIR 469 1984 SCR (2) 795
1984 SCC (2) 244 1984 SCALE (1)159

CITATOR INFO :
E 1987 SC 232 (4,5,8)
RF 1990 SC1413 (14)
RF 1990 SC1480 (52)

ACT:
Adoption of Children by foreigner-International adoptions-Normative and Procedural safeguards to be insisted upon so far as a foreigner wishing to take a child in adoption, outlined-Constitution of India, 1950 Articles 15,24 and 39 and Guardian and Wards Act (Act VIII of 1890), Sections 7 to 9 and 11.

HEADNOTE:

The petitioner, an advocate of the Supreme Court addressed a letter in public interest to the Court, complaining of malpractices indulged in by social organisation and voluntary agencies engaged in the work of offering Indian Children in adoption to foreign parents, the petitioner alleged that not only Indian Children of tender age are under the guise of adoption “exposed to the long horrendous journey to distant foreign countries at great risk to their lives but in cases where they survive and where these children are not placed in the shelter and Relief Houses, they in course of time become beggars or prostitutes for want of proper care from their alleged foster parents.” The petitioner, accordingly, sought relief restraining Indian based private agencies “from carrying out further activity of routing children for adoption abroad” and directing the Government of India, the Indian Council of Child Welfare and the Indian Council of Social Welfare to carry out their obligations in the matter of adoption of Indian Children by Foreign parents. Being a public interest litigation, the letter was treated as a writ petition.

Disposing of the Writ Petition, after indicating the principles and norms to be observed in giving a Child in adoption to foreign parents, the Court
^
HELD: 1: 1. Every child has a right to love and be loved and to grow up in an atmosphere of love and affection and of moral and material security and this is possible only if the child is brought up in a family. The most congenial environment would, of course, be that of the family of his biological parents. But if for any reason it is not possible for the biological parents or other near relative to look after the child or the child is abandoned and it is either not possible to trace the parents or the parents are not willing to take care of the child, the next best alternative would be to find adoptive parents for the child so that the child can grow up under the loving care and attention of the adoptive parents. The adoptive parents would be the next best substitute for the biological parents. [813E-F]

1: 2. When the parents of a child want to give it away in adoption or the child is abandoned and it is considered necessary in the interest of the child to give it in adoption, every effort must be made first to find adoptive parents for it within the country, because such adoption would steer clear of any problems of assimilation of the child in the family of the adoptive parents which might arise on account of cultural, racial or linguistic differences in case of adoption of the child by foreign parents. If it is not possible to find suitable adoptive parents for the child within the country, it may become necessary to give the child in adoption to foreign parents rather than allow the child to grow up in an orphanage or an institution where it will have no family life and no love and affection of parents and quite often, in the socioeconomic conditions prevailing in the country, it might have to lead the life of a destitute, half clad, half-hungry and suffering from malnutrition and illness. [8 4B-D]

2: 1. The primary object of giving the child in adoption should be the welfare of the child. Great care has to be exercised in permitting the child to be given in adoption to foreign parents, lest the child may be neglected or abandoned by the adoptive parents in the foreign country or the adoptive parents may not be able to provide to the child a life or moral or material security or the child may be subjected to moral or sexual abuse or forced labour or experimentation for medial or other research and may be placed in a worse situation than that in his own country. [815G-H; 816A]

2: 2. Since there is no statutory enactment in our country providing for adoption of a child by foreign parents or laying down the procedure which must be followed in such a case, resort is had to the provisions of the Guardians and Wards Act 1890 for the purpose of facilitating such adoption. [ 824G]

2: 3. The High Courts of Bombay, Delhi and Gujarat have laid down by Rules and Instructions certain procedure when a foreigner makes an application for adoption under the Guardian and Wards Act including issuing of a notice to the Indian Council of Social Welfare and other officially recognised social welfare agencies with a view to assist the court in properly and carefully scrutinising the applications of the foreign parents for determining whether it will be in the interest of the child and promotive of its welfare, to be adopted by the foreign parents making the application or in other words, whether such adoption will provide moral and material security to the child with an opportunity to grow into the full stature of its personality in an atmosphere of love and affection and warmth of a family health and home. This Procedure is eminently desirable and it can help considerably to reduce, if notice imitate, the possibility of the child being adopted by unsuitable or undesirable parents or being placed in a family where it may be neglected, maltreated or exploited by the adoptive parents. [828B-E]

Rasiklal Chaganlal Mehta’s case A.I.R. 1982 Gujarat 193, approved.

3: 1. The requirements which should be insisted upon so far as a foreigner wishing to take a child in adoption and the procedure that should be followed for the purpose of ensuring that such inter-country adoptions do not lead to abuse maltreatment or exploitation of children and secure to them a healthy, decent family life are as under:

(1) Every application from a foreigner desiring to adopt a child must be sponsored by a social or child welfare agency recognised or licensed by the government of the country in which the foreigner is resident. No application by a foreigner for taking a child in adoption should be entertained directly by any social or welfare agency of India working in the area of inter-country adoption or by any institution or centre or home to which children are committed by the juvenile court. This is essential primarily for three reasons. [831G-H]

Firstly, it will help to reduce, if not eliminate altogether, the possibility of profiteering and trafficking in children, because if a foreigner were allowed to contact directly agencies or individuals in India for the purpose of obtaining a child in adoption, he might, in his anxiety to secure a child for adoption, be induced or persuaded to pay any unconscionable or unreasonable amount which might be demanded by the agency to individual procuring the child. Secondly it would be almost impossible for the court to satisfy itself that the foreigner who wishes to take the child in adoption would be suitable as a parent for the child and whether he would be able to provide a stable and secure family life to the child and would be able to handler trans-racial, trans-cultural and trans-national problems likely to arise from such adoption, because where the application for adopting a child has not been sponsored by a social or child welfare agency in the country of the foreigner, there would be no proper and satisfactory home study report on which the court can rely. Thirdly, in such a case, where the application of a foreigner for taking a child in adoption is made directly without the intervention of a social or child welfare agency, there would be no authority or agency in the country of the foreigner who could be made responsible for supervising the progress of the child and ensuring that the child is adopted at the earliest in accordance with law and grows up in an atmosphere of warmth and affection with moral and material security assured to it. [832A-E]

Every application of a foreigner for taking a child in adoption must be accompanied by a home study report and the social or child welfare agency sponsor in such application should also send along with it a recent photograph of the family, a marriage certificate of the foreigner and his or her spouse as also a declaration concerning their health together with a certificate regarding their medical fitness duly certified by a medical doctor, a declaration regarding their financial status alongwith supporting documents including employer’s certificate where applicable, income- tax assessment orders, bank references and particulars concerning the properties owned by them, and also a declaration stating that they are willing to be appointed guardian of the child and an undertaking that they would adopt the child according to the law of their country within a period of not more than two years from time of arrival of the child in their country and give intimation of such adoption to the court appointing them as guardian as also to the social or child welfare agency in India process. sing their case, and that they would maintain the child and provide it necessary education and up-bringing according to their status and they would also send to the court as also to the social or child welfare agency in India reports relating to the progress of the child alongwith its recent photograph, the frequency of such progress reports being quarterly during the first two years and half yearly for the next three years. The application of the foreigner must also be accompanied by a Power of Attorney in favour of an officer of the social or child welfare agency in India which is requested to process the case and such Power of Attorney should authorize the Attorney to handle the case on behalf of the foreigner in case the foreigner is not in a position to come to India. The social or child welfare agency sponsoring the application of the foreigner must also certify that the foreigner seeking to adopt a child is permitted to do so according to the law of his country. These certificates, declarations and documents must accompany the application of the foreigner for taking child in adoption, should be duly notarised by a Notary Public whose signature should be duly attested either by an officer of the Ministry of External Affairs or Justice or Social Welfare of the country of the foreigner or by an officer of the Indian Embassy or High Commission or Consulate in that country. The social or child welfare agency sponsoring the application of the forefingers must also undertake while forwarding the application to the social or child welfare agency in India, that it will ensure adoption of the child by the foreigner according to the law of his country within a period not exceeding two years and as soon as the adoption is affected, it will send two certified copies of the adoption order to the social or child welfare agency in India through which the application for guardianship is processed, so that one copy can be filed in court and the other can remain with the social or child welfare agency in India. The social or child welfare agency sponsoring the application must also agree to send to the concerned social or child welfare agency in India progress reports in regard to the child, quarterly during the first year and half yearly for the subsequent year or years until the adoption is effected, and it must also undertake that in case of disruption of the family of the foreigner before adoption can be effected, it will take care of the child and find a suitable alternative placement for it with the approval of the concerned social or child welfare agency in India and report such alternative placement to the court handling the guardianship proceedings and such information shall be passed on both by the court as also by the concerned social or child welfare agency in India to the Secretary, Ministry of Social Welfare, Government of India. [833C-H; 834A-E]

3: 2. The Government of India shall prepare a list of social or child welfare agencies licensed or recognised for inter-country adoption by the Government of each foreign country where children from India are taken in adoption and this list shall be prepared after getting the necessary information from the government of each such foreign country and the Indian Diplomatic Mission in that foreign country. Such lists shall be supplied by the Government of India to the various High Courts in India as also to the social or child welfare agencies operation in India in the area of inter-country adoption under licence or recognition from the Government of India. [834E F; [835 B]

3: 3. If the biological parents are known, they should be helped to understand all the implications of adoption including the possibility of adoption by a foreigner and they should be told specifically that in case the child is adopted, it would not be possible for them to have any further contact with the child The biological parents should not be subjected to any duress in making a decision about relinquishment and even after they have taken a decision to relinquish the child for giving in adoption, a further period of about three months should be allowed to them to reconsider their decision. But once the decision is taken and not reconsidered within such further time as may be allowed to them, it must be regarded as irrevocable and the procedure for giving the child in adoption to a foreigner can then be initiated without any further reference to the biological parents by filling an application for appointment of the foreigner as guardian of the child. Thereafter there can be no question of once again consulting the biological parents whether they wish to give the child in adoption or they want to take it back. But in order to eliminate any possibility of mischief and to make sure that the child has in fact surrendered by its biological parents, it is necessary that the Institution or Centre or home for Child Care or social or Child Welfare Agency to which the child is surrendered by the biological parents, should take from the biological parents a document of surrender duly signed by the biological parents and attested by at least two responsible persons and such document of surrender should not only contain the names of the biological parents and their address but also information in regard to the birth of the child and its background, health and development. If the biological parents state a preference for the religious upbringing of the child, their wish should as far as possible be respected, but ultimately the interest of the child alone should be the sole guiding factor and the biological parents should be informed that the child may be given in adoption even to a foreigner who professes a religion different from that of the biological parents. The biological parents should not be induced or encouraged or even be permitted to take a decision in regard to giving of a child in adoption before the birth of a child or within a period of three months from the date of birth. This precaution is necessary because the biological parents must have reasonable time after the birth of the child to take a decision whether to rear up the child themselves or to relinquish it for adoption and moreover it may be necessary to allow some time to the child to overcome any health problems experienced after birth.
[835-H; 836A-D; 836G-H]

3: 4. It should not be open to any and every agency or individual to process an application from a foreigner for taking a child in adoption and such application should be processed only through a social or child welfare agency licensed or recognised by the Government of India or the Government of the State in which it is operating. Since an application for appointment as guardian can be processed only by a recognised social or child welfare agency and none else, any unrecognised institution, centre or agency which has a child under its care would have to approach a recognised social or child welfare agency if it desires such child to be given in inter country adoption, and in that event it must send without any undue delay the name and must send without any undue delay the name and particulars of such child to the recognised social or child welfare agency through which such child is proposed to be given in inter- country adoption. The Indian Council of Social Welfare and the Indian Council for Child Welfare are clearly two social or child welfare agencies operating at the national level and recognised by the Government of India. But apart from these two recognised social or child welfare agencies functioning at the national level, there are other social or child welfare agencies engaged in child care and welfare and if they have good standing and reputation and are doing commendable work in the are of child care and welfare they should also be recognised by the Government of India or the Government of the State for the purpose of inter-country adoptions. But before taking a decision to recognise any particular social or child welfare agency for the purpose of inter country adoptions the Government of India or the Government of a State would do well to examine whether the social or child welfare agency has proper staff with professional social work experience, because otherwise it may not be possible for the social or child welfare agency to carry out satisfactorily the highly responsible task of ensuring proper placement of a child with a foreign adoptive family. The Government of India or the Government of a State recognising any social or child welfare agency for inter-country adoptions must insist as a condition of recognition that the social or child welfare agency shall maintain proper accounts which shall be audited by a chartered accountant at the end of every year and it shall not charge to the foreigner wishing to adopt a child any amount in excess of that actually in cured by way of legal or other expenses in connection with the application for appointment of guardian including such reasonable remuneration or honorarium for the work done and trouble taken in processing, filing and pursuing the application as may be fixed by the Court. [837B-H; 838A-D]

3:5. Every recognised social or child welfare agency must maintain a register in which the names and particulars of all children proposed to be given in inter-country adoption through it must be entered and in regard to each such child, the recognised social or child welfare agency must prepare a child study report through a professional social worker giving all relevant information in regard to the child so as to help the foreigner to come to a decision whether or not to adopt the child and to understand the child, if he decides to adopt it as also to assist the court in coming to a decision whether it will be for the welfare of the child to be given in adoption to the foreigner wishing to adopt it. The child study report should contain as far as possible information in regard to the following matters:-

(1) Identifying information, supported where possible by documents.

(2) Information about original parents, including their health and details of the mother’s pregnancy and birth.

(3) Physical, intellectual and emotional development.

(4) Health report prepared by a registered medical practitioner preferably by a paediatrician.

(5) Recent photograph.

(6) Present environment-category of care (Own home, foster home, institution etc.) relationships routines and habits.

(7) Social worker’s assessment and reasons for suggesting inter-country adoption. [838G-H; 839A- E]

3:6. The recognised social or child welfare agency must insist upon approval of a specific known child and once that approval is obtained the recognised social or child welfare agency should immediately without any undue delay proceed to make an application for appointment of the foreigner as guardian of the child. Such application would have to be made in the court within whose jurisdiction the child ordinarily resides and it must be accompanied by copies of the home study report, the child study report and other certificates and documents forwarded by the social or child welfare agency sponsoring the application of the foreigner for taking the child in adoption. It is also necessary that the recognised social or child welfare agency through which an application of a foreigner for taking a child in adoption is routed must before offering a child in adoption, make sure that the child is free to be adopted. The recognised social or child welfare agency must place sufficient material before the court to satisfy it that the child is legally available for adoption. It is also necessary that the recognised social or child welfare agency must satisfy itself, firstly, that there is no impediment in the way of the child entering the country of the prospective adoptive parent; secondly, that the travel documents for the child can be obtained at the appropriate time and lastly, that the law of the country of the prospective adoptive parent permits legal adoption of the child and that on such legal adoption being concluded, the child would acquire the same legal status and rights of inheritance as a natural born child and would be granted citizenship in the country of adoption and it should file alongwith the application for guardianship, a certificate reciting such satisfaction. [841C-D; 842H; 843A-D]

3: 7. In cases where a child relinquished by its biological parents or an orphan or destitute or abandoned child is brought by an agency or individual from one State to another, there should be no objection to a social or child welfare agency taking the child to another State, even if the object be to give it in adoption, provided there are sufficient safeguards to ensure that such social or child welfare agency does not indulge in any malpractice. There should also be no difficulty to apply for guardianship of the child in the court of the latter State. because the child not having any permanent place of residence would then be ordinarily resident in the place where it is in the care and custody of such agency or individual. [843H; 844A-F]

Section 11 of the Guardians and Wards Act, 1890 provides for notice of the application to be issued to various persons including the parents of the child if they are residing in any State to which the Act extends. But, no notice under this section should be issued to the biological parents of the child, since it would create considerable amount of embarrassment and hardship if the biological parents were then to come forward and oppose the application of the prospective adoptive parent for guardianship of the child. Moreover, the biological parents would then come to know who is the person taking the child in adoption and with this knowledge they would at any time be able to trace the whereabouts of the child and they may try to contact the child resulting in emotional and psychological disturbance for the child which might affect his future happiness. For the same reasons, notice of the application for guardianship should also not be published in any newspaper. If the court is satisfied, after giving notice of the application to the Indian Council of Child Welfare or the Indian Council for Social Welfare or any of its branches for scrutiny of the application, that it will be for the welfare of the child to be give in adoption to the foreigner making the application for guardianship, it will only then make an order appointing the foreigner as guardian of the child and permitting him to remove the child to his own country with a view to eventual adoption. The Court will introduce the following conditions in the order, namely: [846A-H; 848A-B]

(i) That the foreigner who is appointed guardian shall make proper provision by way of deposit or bond or otherwise to enable the child to be repatriated to India should it become necessary for any reason. [847C]

(ii) That the foreigner who is appointed guardian shall submit to the court as also to the Social or Child Welfare Agency processing the application for guardianship, progress reports of the child alone with a recent photograph quarterly during the first two years and half yearly for the next three years. [847D]

(iii) The order appointing guardian shall carry, attached to it, a photograph of the child duly counter-signed by an officer of the court. [817F]

Where an order appointing guardian of a child is made by the court, immediate intimation of the same shall be given to the Ministry of Social Welfare, Government of India as also to the Ministry of Social Welfare of the Government of the State in which the court is situate and copies of such order shall also be forwarded to the two respective Ministries of Social Welfare. The Ministry of Social Welfare, Government of India shall maintain a register containing names and other particulars of the children in respect of whom orders for appointment of guardian have been made as also names, addresses and other particulars of the prospective adoptive parents who have been appointed such guardians and who have been permitted to take away the children for the purpose of adoption. The Govt. of India will also sent to the Indian Embassy or High Commission in the country of the prospective adoptive parents from time to time the names, addresses and other particulars of such prospective adoptive parents together with particulars of the children taken by them and requesting the Embassy or High Commission to maintain and unobtrusive watch over the welfare and progress of such children in order to safeguard against any possible maltreatment exploitation or use for ulterior purposes and to immediately report and instance of maltreatment, negligence or exploitation to the Government of India for suitable action. [847G-H; 848A-C]

3:8. The social or child welfare agency which is looking after the child selected by a prospective adoptive parent, may legitimately receive from such prospective adoptive parent maintenance expenses at a rate of not exceeding Rs. 60 per day (this outer limit being subjective to revision by the Ministry of Social Welfare, Government of India from time to time) from the date of selection of the child by him until the date the child leaves for going to is new home as also medical expenses including hospitalization charges, any, actually incurred by such social or child welfare agency for the child. But the claim for payment of such maintenance charges and medical expenses shall be submitted to the prospective adoptive parent. [842C-D]

3:9. If a child is to be given in inter-country adoption, it would be desirable that it is given in such adoption as far as possible before it completes the age of 3 years. The reason is that if a child is adopted before it attains the age of understanding, it is always easier for it to get assimilated and integrated in the new environment in which it may find itself on being adopted by a foreign parent. Children above the age of 3 years may also be given in inter-country adoption. There can be no hard and fast rule in this connection. Even children between the ages of 3 to 7 years may be able to assimilate themselves in the new surroundings without any difficulty. Even children above the age of seven years may be given in inter-country adoption but their wishes may be ascertained if they are in a position to indicate any preference. [845D-G]

3:10. The proceedings on the Application for guardianship should be held by the Court in camera and they should be regarded as confidential and as soon as an order is made on the application for guardianship the entire proceedings including the papers and documents should be sealed. [841C-D]

3:11. The social or child welfare agency which is looking after the child selected by a prospective adoptive parent, may legitimately receive from such prospective adoptive parent maintenance expenses at a rate of not exceeding Rs. 60 per day (this outer limit being subject to revision by the Ministry of Social Welfare, Government of India from time to time) from the date of selection of the child by him until the date the child leaves for going to its new home as also medical expenses including hospitalisation charges, if any, actually incurred by such social or child welfare agency for the child. But the claim for payment of such maintenance charges and medical expenses shall be submitted to the prospective adoptive parent through the recognised social or child welfare agency which has processed the application for guardianship and payment in respect of such claim shall not be received directly by the social or child welfare agency making the claim but shall be paid only through the recognised social or child welfare agency. However, a foreigner may make voluntary donation to any social or child welfare agency but no such donation from a prospective adoptive parents shall be received until after the child has reached the country of its prospective adoptive parent. [842C-G]

JUDGMENT:

ORIGINAL JURISDICTION: Writ Petition (CRL) No. 1171 of 1982.

Under article 32 of the Constitution of India. Petitioner in person.

FOR THE RESPONDENTS:

Miss A. Subhashini for Union of India and Ministry of Social Welfare.

Miss Kamini Jaiswal for Indian Council of Social Welfare.

J.B. Dadachanji & Co. for Indian Council of Child Welfare and Swedish Embassy.

Dr. N.M. Ghatate for all God’s Children Inc. Arizone, U.S.A.

P.H. Parekh for Maharashtra State Women’s Council of Child Welfare, Bombay and for Enfants de-L’espoir.

P.K. Chakeravorty for Legal Aid Service, West Bengal.

Mrs. Manik Karanjawala for Indian Associations for Promotion of Adoption.

Mrs Urmila Kapur for SOS Children’s Village of India. Kailash Vasdev for Missionary of Charity, Calcutta.

Baldev Raj Respondent in person.

G.M. Coelho Bar at Law for Enfant’s du Mande (France) Miss Rani Jethamalani for Kuanyin Charitable Trust.

B.M. Bageria for Terre Des Hommes (India) Society. Sukumar Ghose for Mission of Hope (India) Society, Calcutta.

S.K. Mehta for Netherlands Inter Country Child Welfare Oraganisation.

Parijot Sinha for society for International Child Welfare.

Kailash Vasdev for Bhavishys.

The Judgment of the Court was delivered by

BHAGWATI, J. This writ petition has been initiated on the basis of a letter addressed by one Laxmi Kant Pandey, an advocate practising in this Court, complaining of malpractices indulged in by social organisations and voluntary agencies engaged in the work of offering Indian children in adoption to foreign parents. The letter referred to a press report based on “empirical investigation carried out by the staff of a reputed foreign magazine” called “The Mail” and alleged that not only Indian children of tender age are under the guise of adoption “exposed to the long horrendous journey to distant foreign countries at great risk to their lives but in cases where they survive and where these children are not placed in the Shelter and Relief Homes, they in course of time become beggars or prostitutes for want of proper care from their alleged foreign foster parents.” The petitioner accordingly sought relief restraining Indian based private agencies “from carrying out further activity of routing children for adoption abroad” and directing the Government of India, the Indian Council of Child Welfare and the Indian Council of Social Welfare to carry out their obligations in the matter of adoption of Indian children by foreign parents. This letter was treated as a writ petition and by an Order dated 1st September, 1982 the Court issued notice to the Union of India the Indian Council of Child Welfare and the Indian Council of Social Welfare to appear in answer to the writ petition and assist the Court in laying down principles and norms which should be followed in determining whether a child should be allowed to be adopted by foreign parents and if so, the procedure to be followed for that purpose, with the object of ensuring the welfare of the child.

The Indian Council of Social Welfare was the first to file its written submissions in response to the notice issued by the Court and its written submission filed on 30th September, 1982 not only carried considerable useful material bearing on the question of adoption of Indian children by foreign parents but also contained various suggestions and recommendations for consideration by the Court in formulating principles and norms for permitting such adoptions and laying down the procedure for that purpose. We shall have occasion to refer to this large material placed before us as also to discuss the various suggestions and recommendations made in the written submission by the Indian Council of Social Welfare when we take up for consideration the various issues arising in the writ petition. Suffice it to state for the present that the written submission of the Indian Council of Social Welfare is a well thought out document dealing comprehensively with various aspects of the problem in its manifold dimensions. When the writ petition reached hearing before the Court on 12th October, 1982 the only written submission filed was that the Indian Council of Social Welfare and neither the Union of India nor the Indian Council of Child Welfare had made any response to the notice issued by the Court. But there was a telegram received from a Swedish Organisation called ‘Barnen Framfoer Allt Adoptioner” intimating to the Court that this Organisation desired to participate in the hearing of the writ petition and to present proper material before the Court. S.O.S, Children’s Villages of India also appeared through their counsel Mrs. Urmila Kapoor and applied for being allowed to intervene at the hearing of the writ petition so that they could made their submissions on the question of adoption of Indian Children by foreign parents. Since S.O.S, Children’s Villages of India is admittedly an organisation concerned with welfare of children, the Court, by an Order dated 12th October, 1982, allowed them to intervene and to make their submissions before the Court. The Court also by the same Order directed that the Registry may address a communication to Barnen Framfoer Allt Adoptioner informing them about the adjourned date of hearing of the writ petition and stating that if they wished to present any material and make their submissions, they could do so by filing an affidavit before the adjourned date of hearing. The Court also directed the Union of India to furnish before the next hearing of the writ petition the names of “any Indian Institutions or Organisations other than the Indian Council of Social Welfare and the Indian Council of Child Welfare, which are engaged or involved in offering Indian children for adoption by foreign parents” and observed that if the Union of India does not have this information, they should gather the requisite information so far as it is possible for them to do so and to make it available to the Court. The Court also issued a similar direction to the Indian Council of Child Welfare, Indian Council of Social Welfare and S.O.S. Children’s Villages of India. There was also a further direction given in the same Order to the Union of India, the Indian Council of Child Welfare, the Indian Council of Social Welfare and the S.O.S. Children’s Villages of India “to supply to the Court information in regard to the names and particulars of any foreign agencies which are engaged in the work of finding Indian children for adoption for foreign parents”. The writ petition was adjourned to 9th November, 1982 for enabling the parties to carry out these directions.

It appears that the Indian Council of Social Welfare thereafter in compliance with the directions given by the Court, filed copies of the Adoption of Children Bill, 1972 and the adoption of Children Bill, 1980. The adoption of Children Bill, 1972 was introduced in the Rajya Sabha sometime in 1972 but it was subsequently dropped, presumably because of the opposition of the Muslims stemming from the fact that it was intended to provide for a uniform law of adoption applicable to all communities including the Muslims. It is a little difficult to appreciate why the Muslims should have opposed this Bill which merely empowered a Muslim to adopt if he so wished; it had no compulsive force requiring a Muslim to act contrary to his religious tenets: it was merely an enabling legislation and if a Muslim felt that it was contrary to his religion to adopt, he was free not to adopt. But in view of the rather strong sentiments expressed by the members of the Muslim Community and with a view not to offend their religious susceptibilities, the Adoption of Children Bill, 1980 which was introduced in the Lok Sabha eight years later on 16th December, 1980, contained an express provision that it shall not be applicable to Muslims. Apart from this change in its coverage the Adoption of Children Bill, 1980 was substantially in the same terms as the Adoption of Children Bill, 1972. The Adoption of Children Bill 1980 has unfortunately not yet been enacted into law but it would be useful to notice some of the relevant provisions of this Bill in so far as they indicate what principles and norms the Central Government regarded as necessary to be observed for securing the welfare of children sought to be given in adoption to foreign parents and what procedural safeguards the Central Government thought, were essential for securing this end. Clauses 23 and 24 of the Adoption of Children Bill, 1980 dealt with the problem of adoption of Indian children by parents domiciled abroad and, in so far as material, they provided as follows: “23 (1) Except under the authority of an order under section 24, it shall not be lawful for any person to take or send out of India a child who is a citizen of India to any place outside India with a view to the adoption of the child by any person.

(2) Any person who takes or sends a child out of India to any place outside India in contravention of sub-section (1) or makes or takes part in any arrangements for transferring the care and custody of a child to any person for that purpose shall be punishable with imprisonment for a term which may extend to six months or with fine, or with both.

(24) (1) If upon an application made by a person who is not domiciled in India, the district court is satisfied that the applicant intends to adopt a child under the law of or within the country in which he is domiciled, and for that purpose desires to remove the child from India either immediately or after an interval, the court may make an order (in this section referred to as a provisional adoption order) authorising the applicant to remove the child for the purpose aforesaid and giving to the applicant the care and custody of the child pending his adoption as aforesaid:

Provided that no application shall be entertained unless it is accompanied by a certificate by the Central Government to the effect that-
(i) the applicant is in its opinion a fit person to adopt the child;
(ii) the welfare and interests of the child shall be safeguarded under the law of the country of domicile of the applicant;
(iii) the applicant has made proper provision by way of deposit or bond or otherwise in accordance with the rules made under this Act to enable the child to be repatriated to India, should it become necessary for any reason.
(2) The provisions of this Act relating to an adoption order shall, as far as may be apply in relation to a provisional adoption order made under this section.
The other clauses of the Adoption of Children Bill, 1980 were sought to be made applicable in relation to a provisional adoption order by reason of sub-clause (3) of clause 24. The net effect of this provision, if the Bill were enacted into law, would be that in view of clause 17 no institution or organisation can make any arrangement for the adoption of an Indian child by foreign parents unless such institution or organisation is licensed as a social welfare institution and under Clause 21, it would be unlawful to make or to give to any person any payment or reward for or in consideration of the grant by that person of any consent required in connection with the adoption of a child or the transfer by that person of the care and custody of such child with a view to its adoption or the making by that person of any arrangements for such adoption. Moreover, in view of Clause 8, no provisional adoption order can be made in respect of an Indian child except with the consent of the parent or guardian of such child and if such child is in the care of an institution, except with the consent of the institution given on its behalf by all the persons entrusted with or in charge of its management, but the District Court can dispense with such consent if it is satisfied that the person whose consent is to be dispensed with has abandoned, neglected or persistently ill-treated the child or has persistently failed without reasonable cause to discharge his obligation as parent or guardian or can not be found or is incapable of giving consent or is withholding consent unreasonably. When a provisional adoption order is made by the District Court on the application of a person domiciled abroad, such person would be entitled to obtain the care and custody of the child in respect of which the order is made and to remove such child for the purpose of adopting it under the law or within the country in which he is domiciled. These provisions in the Adoption of Children Bill, 1980 will have to be borne in mind when we formulate the guidelines which must be observed in permitting an Indian child to be given in adoption to foreign parents. Besides filing copies of the Adoption of Children Bill, 1972 and the Adoption of Children Bill, 1980 the Indian Council of Social Welfare also filed two lists, one list giving names and particulars of recognised agencies in foreign countries engaged in facilitating procurement of children from other countries for adoption in their own respective countries and the other list containing names and particulars of institutions and organisations in India engaged in the work of offering and placing Indian children for adoption by foreign parents.

The Writ Petition thereafter came up for hearing on 9th November, 1982 when several applications were made by various institutions and organisations for intervention at the hearing of the writ petition. Since the questions arising in the writ petition were of national importance, the Court thought that it would be desirable to have assistance from whatever legitimate source it might come and accordingly, by an order dated 9th November, 1982, the Court granted permission to eight specified institutions or organisations to file affidavits or statements placing relevant material before the Court in regard to the question of adoption of Indian children by foreign parents and directed that such affidavits or statements should be filed on or before 27th November, 1982.

The Court also issued notice of the writ petition to the State of West Bengal directing it to file its affidavit or statement on or before the same date. The Court also directed the Superintendent of Tees Hazari courts to produce at the next hearing of the writ petition quarterly reports in regard to the orders made under the Guardian and Wards Act, 1890 entrusting care and custody of Indian children to foreign parents during the period of five years immediately prior to 1st October, 1982. Since the Union of India had not yet filed its affidavit or statement setting out what was the attitude adopted by it in regard to this question, the Court directed the Union of India to file its affidavit or statement within the same time as the others. The Court then adjourned the hearing of the writ petition to 1st December 1982 in order that the record may be completed by that time.

Pursuant to these directions given by the Court, various affidavits and statements were filed on behalf of the Indian Council of Social Welfare, Enfants Du Monde, Missionaries of Charity, Enfants De L’s Espoir, Indian Association for promotion of Adoption Kuan-yin Charitable Trust, Terre Des Homes (India) Society, Maharashtra State Women’s Council, Legal Aid Services West Bengal, SOS Children’s Villages of India, Bhavishya International Union for Child Welfare and the Union of India. These affidavits and statements placed before the Court a wealth of material bearing upon the question of adoption of Indian children by foreign parents and made valuable suggestions and recommendations for the consideration of the Court. These affidavits and statements were supplemented by elaborate oral arguments which explored every facet of the question, involving not only legal but also sociological considerations. We are indeed grateful to the various participants in this inquiry and to their counsel for the very able assistance rendered by them in helping us to formulate principles and norms which should be observed in giving Indian children in adoption to foreign parents and the procedure that should be followed for the purpose of ensuring that such inter-country adoptions do not lead to abuse maltreatment or exploitation of children and secure to them a healthy, decent family life.

It is obvious that in a civilized society the importance of child welfare cannot be over-emphasized, because the welfare of the entire community, its growth and development, depend on the health and well-being of its children. Children are a “supremely important national asset” and the future well being of the nation depends on how its children grow and develop. The great poet Milton put it admirably when he said: “Child shows the man as morning shows the day” and the Study Team on Social Welfare said much to the same effect when it observed that “the physical and mental health of the nation is determined largely by the manner in which it is shaped in the early stages”. The child is a soul with a being, a nature and capacities of its own, who must be helped to find them, to grow into their maturity, into fulness of physical and vital energy and the utmost breadth, depth and height of its emotional, intellectual and spiritual being; otherwise there cannot be a healthy growth of the nation. Now obviously children need special protection because of their tender age and physique mental immaturity and incapacity to look-after themselves. That is why there is a growing realisation in every part of the globe that children must be brought up in an atmosphere of love and affection and under the tender care and attention of parents so that they may be able to attain full emotional, intellectual and spiritual stability and maturity and acquire self-confidence and self-respect and a balanced view of life with full appreciation and realisation of the role which they have to play in the nation building process without which the nation cannot develop and attain real prosperity because a large segment of the society would then be left out of the developmental process. In India this consciousness is reflected in the provisions enacted in the Constitution. Clause (3) of Article 15 enables the State to make special provisions inter alia for children and Article 24 provides that no child below the age of fourteen years shall be employed to work in any factory or mine or engaged in any other hazardous employment. Clauses (e) and (f) of Article 39 provide that the State shall direct its policy towards securing inter alia that the tender age of children is not abused, that citizens are not forced by economic necessity to enter avocations unsuited to their age and strength and that children are given facility to develop in a healthy manner and in conditions of freedom and dignity and that childhood and youth are protected against exploitation and against moral and material abandonment. These constitutional provisions reflect the great anxiety of the constitution makers to protect and safeguard the interest and welfare of children in the country. The Government of India has also in pursuance of these constitutional provisions evolved a National Policy for the Welfare of Children. This Policy starts with a goal-oriented perambulatory introduction:

“The nation’s children are a supremely important asset. Their nurture and solicitude are our responsibility. Children’s programme should find a prominent part in our national plans for the development of human resources, so that our children grow up to become robust citizens, physically fit, mentally alert and morally healthy, endowed with the skills and motivations needed by society. Equal opportunities for development to all children during the period of growth should be our aim, for this would serve our larger purpose of reducing inequality and ensuring social justice.”

The National Policy sets out the measures which the Government of India proposes to adopt towards attainment of the objectives set out in the perambulatory introduction and they include measures designed to protect children against neglect, cruelty and exploitation and to strengthen family ties “so that full potentialities of growth of children are realised within the normal family neighbourhood and community environment.” The National Policy also lays down priority in programme formation and it gives fairly high priority to maintenance, education and training of orphan and destitute children. There is also provision made in the National Policy for constitution of a National Children’s Board and pursuant to this provision, the Government of India has Constituted the National Children’s Board with the Prime Minister as the chair person. It is the function of the National Children’s Board to provide a focus for planning and review and proper coordination of the multiplicity of services striving to meet the needs of children and to ensure at different levels continuous planning, review and coordination of all the essential services. The National Policy also stresses the vital role which the voluntary organisations have to play in the field of education, health recreation and social welfare services for children and declares that it shall be the endeavour of State to encourage and strengthen such voluntary organisations.

There has been equally great concern for the welfare of children at the international level culminating in the Declaration of the Rights of the Child adopted by the General Assembly of the United Nations on 20th November, 1959. The Declaration in its Preamble points out that “the child, by reason of his physical and mental immaturity, needs special safeguards and care, including appropriate legal protection, before as well as after birth”, and that “mankind owes to the child the best it has to give” and proceeds to formulate several Principles of which the following are material for our present purpose:

“PRINCIPLE 2: The child shall enjoy special protection and shall be given opportunities and facilities by law and by other means, to enable him to develop physically mentally morally, spiritually and socially in a healthy and normal manner and in conditions of freedom and dignity. In the enactment of laws for this purpose the best interests of the child shall be the paramount consideration.”

PRINCIPLE 3: The child shall be entitled from his birth to a name and a nationality.

PRINCIPLE 6: The Child, for the full and harmonious development of his personality, needs love and under-standing. He shall, wherever possible, grow up in the care and under the responsibility of his parents, and in any case in an atmosphere of affection and of moral and material security; a child of tender years shall not, save in exceptional circumstances, be separated from his mother. Society and the public authorities shall have the duty to extend particular care to children without a family and to those without adequate means of support. Payment of State and other assistance towards the maintenance of children of large families is desirable.

PRINCIPLE 9: The child shall be protected against all forms of neglect, cruelty and exploitation. He shall not be the subject of traffic, in any form.

PRINCIPLE 10: The child shall be protected from practices which may foster racial, religious and any other form of discrimination. He shall be brought up in a spirit of understanding, tolerance friendship among peoples, peace and universal brotherhood and in full consciousness that his energy and talents should be devoted to the service of his fellow men.”

Every child has a right to love and be loved and to grow up in an atmosphere of love and affection and of moral and material security and this is possible only if the child is brought up in a family. The most congenial environment would, of course, be that of the family of his biological parents. But if for any reason it is not possible for the biological parents or other near relative to look after the child or the child is abandoned and it is either not possible to trace the parents or the parents are not willing to take care of the child, the next best alternative would be to find adoptive parents for the child so that the child can grow up under the loving care and attention of the adoptive parents. The adoptive parents would be the next best substitute for the biological parents. The practice of adoption has been prevalent in Hindu Society for centuries and it is recognised by Hindu Law, but in a large number of other countries it is of comparatively recent origin while in the muslim countries it is totally unknown. Amongst Hindus, it is not merely ancient Hindu Law which recognises the practice of adoption but it has also been legislatively recognised in the Hindu Adoption and Maintenance Act, 1956.

The Adoption of Children Bill 1972 sought to provide for a uniform law of adoption applicable to all communities including the muslims but, as pointed out above, it was dropped owing to the strong opposition of the muslim community. The Adoption of Children Bill, 1980 is now pending in Parliament and if enacted, it will provide a uniform law of adoption applicable to all communities in India excluding the muslim community. Now when the parents of a child want to give it away in adoption or the child is abandoned and it is considered necessary in the interest of the child to give it in adoption, every effort must be made first to find adoptive parents for it within the country, because such adoption would steer clear of any problems of assimilation of the child in the family of the adoptive parents which might arise on account of cultural, racial or linguistic differences in case of adoption of the child by foreign parents. If it is not possible to find suitable adoptive parents for the child within the country, it may become necessary to give the child in adoption to foreign parents rather than allow the child to grow up in an orphanage or an institution where it will have no family life and no love and affection of parents and quite often, in the socioeconomic conditions prevailing in the country, it might have to lead the life of a destitute, half clad, half-hungry and suffering from malnutrition and illness. Paul Harrison a free-lance journalist working for several U.N. Agencies including the International Year of the Child Secretariat points out that most third world children suffer “because of their country’s lack of resources for development as well as pronounced inequalities in the way available resources are distributed” and they face a situation of absolute material deprivation. He proceeds to say that for quite a large number of children in the rural areas, “poverty and lack of education of their parents, combined with little or no access to essential services of health, sanitation and education, prevent the realisation of their full human potential making them more likely to grow up uneducated, unskilled and unproductive” and their life is blighted by malnutrition, lack of health care and disease and illness caused by starvation, impure water and poor sanitation. What Paul Harrison has said about children of the third world applies to children in India and if it is not possible to provide to them in India decent family life where they can grow up under the loving care and attention of parents and enjoy the basic necessities of life such as nutritive food, health care and education and lead a life of basic human dignity with stability and security, moral as well as material, there is no reason why such children should not be allowed to be given in adoption to foreign parents. Such adoption would be quite consistent with our National Policy on Children because it would provide an opportunity to children, otherwise destitute, neglected or abandoned, to lead a healthy decent life, without privation and suffering arising from poverty, ignorance, malnutrition and lack of sanitation and free from neglect and exploitation, where they would be able to realise “full potential of growth”. But of course as we said above, every effort must be made first to see if the child can be rehabilitated by adoption within the country and if that is not possible, then only adoption by foreign parents, or as it is some time called ’inter country adoption’ should be acceptable. This principle stems from the fact that inter country adoption may involve trans-racial, trans-cultural and trans-national aspects which would not arise in case of adoption’ within the country and the first alternative should therefore always be to find adoptive parents for the child within the country. In fact, the Draft Guidelines of Procedures Concerning Inter-Country Adoption formulated at the International Council of Social Welfare Regional Conference of Asia and Western Pacific held in Bombay in 1981 and approved at the Workshop on Inter Country Adoption held in Brighten, U.K. on 4th September, 1982, recognise the validity of this principle in clause 3.1 which provides:

“Before any plans are considered for a child to be adopted by a foreigner, the appropriate authority or agency shall consider all alternatives for permanent family care within the child’s own country”. Where, however, it is not possible to find placement for the child in an adoptive family within the country, we do not see anything wrong if: a home is provided to the child with an adoptive family in a foreign country. The Government of India also in the affidavit filed on its behalf by Miss B. Sennapati Programme Officer in the Ministry of Social Welfare seems to approve of inter-country adoption for Indian children and the proceedings of the Workshop on Inter Country Adoption held in Brighten, U.K. on 4th September, 1982 clearly show that the Joint Secretary, Ministry of Social Welfare who represented the Government of India at the Workshop “affirmed support of the Indian Government to the efforts of the international organisations in promoting measures to protect welfare and interests of children who are adopted aboard.”

But while supporting inter-country adoption, it is necessary to bear in mind that the primary object of giving the child in adoption being the welfare of the child, great care has to be exercised in permitting the child to be given in adoption to foreign parents, lest the child may be neglected or abandoned by the adoptive parents in the foreign country or the adoptive parents may not be able to provide to the child a life of moral or material security or the child may be subjected to moral or sexual abuse or forced labour or experimentation for medical or other research and may be placed in a worse situation than that in his own country. The Economic and Social Council as also the Commission for Social Development have therefore tried to evolve social and legal principles for the protection and welfare of children given in inter-country adoption. The Economic and Social Council by its Resolution 1925 LVIII requested the Secretary General of the United Nations to convene a group of Experts with relevant experts with relevant experience of family and child welfare with the following mandate:

“(a) To prepare a draft declaration of social and legal principles relating to adoption and foster placement of children nationally and internationally, and to review and appraise the recommendations and guidelines incorporated in the report of the Secretary General and the relevant material submitted by Governments already available to the Secretary General and the regional commissions.

(b) To draft guidelines for the use of Governments in the implementation of the above principles, as well as suggestions for improving procedures within the context of their social development-including family and child welfare-programmes.”

Pursuant to this mandate an expert Group meeting was convened in Geneva in December, 1978 and this Expert Group adopted a “Draft declaration on social and legal principles relating to the protection and welfare of children with special reference of foster placement and adoption, nationally and internationally”. The Commission for Social Development considered the draft Declaration at its 26th Session and expressed agreement with its contents and the Economic and Social Council approved the draft Declaration and requested the General Assembly to consider it in a suitable manner. None of the parties appearing could give us information whether any action has been taken by the General Assembly. But the draft Declaration is a very important document in as much it lays down certain social and legal principles which must be observed in case of inter-country adoption. Some of the relevant principles set out in the draft Declaration may be referred to with advantage: “Art. 2. It is recognised that the best child welfare is good family welfare.

4. When biological family care is unavailable or in appropriate, substitute family care should be considered.
7. Every child has a right to a family. Children who cannot remain in their biological family should be placed in foster family or adoption in preference to institutions, unless the child’s particular needs can best be met in a specialized facility.
8. Children for whom institutional care was formerly regarded as the only option should be placed with families, both foster and adoptive.
12. The primary purpose of adoption is to provide a permanent family for a child who cannot be cared for by his/her biological family.
14. In considering possible adoption placements, those responsible for the child should select the most appropriate environment for the particular child concerned.
15. Sufficient time and adequate counselling should be given to the biological parents to enable them to reach a decision on their child’s future, recognizing that it is in the child’s best interest to reach this decision as early as possible.
16. Legislation and services should ensure that the child becomes an integral part of the adoptive family.
17. The need of adult adoptees to know about their background should be recognized.
19. Governments should determine the adequacy of their national services for children, and recognize those children whose needs are not being met by existing services. For some of these children, inter- country adoption may be considered as a suitable means of providing them with a oily.
21. In each country, placements should be made through authorized agencies competent to deal with inter country adoption services and providing the same safeguards and standards as are applied in national adoptions.
22. Proxy adoptions are not acceptable, in consideration of the child’s legal and social safety.
23. No adoption plan should be considered before it has been established that the child is legally free for adoption and the pertinent documents necessary to complete the adoption are available. All necessary consents must be in a form which is legally valid in both countries. It must be definitely established that the child will be able to immigrate into the country of the prospective adopters and can subsequently obtain their nationality.
24. In inter-country adoptions, legal validation of the adoption should be assured in the countries involved.
25. The child should at all times have a name, nationality and legal guardian.”
Thereafter at the Regional Conference of Asia and Western Pacific held by the International Council on Social Welfare in Bombay in 1981, draft guidelines of procedure concerning inter-country adoption were formulated and, as pointed out above, they were approved at the Workshop held in Brighton,
U.K. on 4th September, 1982. These guidelines were based on the Draft Declaration and they are extremely relevant as they reflect the almost unanimous thinking of participants from various countries who took part in the Regional Conference in Bombay and in the Workshop in Brighton, U.K. There are quite a few of these guidelines which are important and which deserve serious consideration by us:
“1.4. In all inter-country adoption arrangements, the welfare of the child shall be prime consideration.
Biological Parents:
2.2. When the biological parents are known they shall be offered social work services by professionally qualified workers (or experienced personnel who are supervised by such qualified workers) before and after the birth of the child.
2.3. These services shall assist the parents to consider all the alternatives for the child’s future. Parents shall not be subject to any duress in making a decision about adoption. No commitment to an adoption plan shall be permitted before the birth of the child. After allowing parents a reasonable time to reconsider any decision to relinquish a child for adoption, the decision should become irrevocable.
2.5. If the parents decide to relinquish the child for adoption, they shall be helped to understand all the implications, including the possibility of adoption by foreigners and of no further contact with the child.
2.6. Parents should be encouraged, where possible, to provide information about the child’s background and development, and their own health.
2.8. It is the responsibility of the appropriate authority or agency to ensure that when the parents relinquish a child for adoption all of the legal requirements are met.
2.9. If the parents state a preference for the religious up-bringing of the child, these wishes shall be respected as far as possible, but the best interest of the child will be the paramount consideration.
2.10. If the parents are not known, the appropriate authority or agency, in whose care the child has been placed, shall endeavour to trace the parents and ensure that the above services are provided, before taking any action in relation to adoption of the child.
The Child:
3.1. Before any plans are considered for a child to be adopted by foreigners, the appropriate authority or agency shall consider all alternatives for permanent family care within the child’s own country.
3.2. A child-study report shall be prepared by professional workers (or experienced personnel who are supervised by such qualified workers) of an appropriate authority or agency, to provide information which will form a basis for the selection of prospective adopters for the child, assist with the child’s need to know about his original family at the appropriate time, and help the adoptive parents understand the child and have relevant information about him/her.
3.3 As far as possible, the child-study report shall include the following:
3.3.1. Identifying information, supported where possible by documents.
3.3.2. Information about original parents, including their health and details of the mother’s pregnancy and the birth.
3.3.3. Physical, intellectual and emotional development.
3.3.4. Health report.
3.3.5. Recent photograph.
3.3.6. Present environment-category of care (Own home, foster home, institution, etc.) relationships, routines and habits.
3.3.7. Social Worker’s assessment and reasons for suggesting inter-country adoption.
3.4. Brothers and sisters and other children who have been cared for as siblings should not be separated by adoption placement except for special reasons.
3.5. When a decision about an adoption placement is finalised, adequate time and effort shall be given to preparation of the child in a manner appropriate to his/her age and level of development. Information about the child’s new country and new home, and counselling shall be provided by a skilled worker.
3.5. (a) Before any adoption placement is finalized the child concerned shall be consulted in a manner appropriate to his/her age and level of development.
3.6. When older children are placed for adoption, the adoptive parents should be encouraged to come to the child’s country of origin, to meet him/her there, learn personally about his/her first environment and escort the child to its new home.
Adoptive Parents:
4.3. In addition to the usual capacity for adoptive, parenthood applicants need to have the capacity to handle the trans-racial, trans-cultural and trans-national aspects of inter-country adoptions.
4.4. A family study report shall be prepared by professional worker (or experienced personnel who are supervised by such qualified workers) to indicate the basis on which the applicants were accepted as prospective adopters. It should include an assessment of the parents’ capacity to parent a particular type of child and provide relevant in formation for other authorities such as Courts.
4.5. The report on the family study which must be made in the community where the applicants are residing, shall include details of the following:
4.5.1. Identifying information about parents and other members of the family, including any necessary documentation.
4.5.2. Emotional and intellectual capacities of prospective adopters, and their motivation to adoption.
4.5.3. Relationship (material, family, relatives, friends, community)
4.5.4. Health.
4.5.5. Accommodation and financial position.
4.5.6. Employment and other interests.
4.5.7. Religious affiliations and/or attitude.
4.5.8. Capacity for adoptive parenthood, and details of child preferred (age, sex, degree of disability).
4.5.9. Support available from relatives, friends, community.
4.5.10. Social worker’s assessment and details of adoption authority’s approval.
4,5.11. Recent photograph of family.
Adoption Authorities and Agencies:
5.1. Inter-country adoption arrangements should be made only through Government adoption authorities (or agencies recognised by them) in both sending and receiving countries. They shall use experienced staff with professional social work education or experienced personnel supervised by such qualified workers.
5.2. The appropriate authority or agency in the child’s country should be informed of all proposed inter-country adoptions and have the opportunity to satisfy itself that all alternatives in the country have been considered, and that inter-country adoption is the optimal choice of care for the child.
5.3. Before any inter-country adoption plan is considered, the appropriate authority or agency in the child’s country should be responsible for establishing that the child is legally free for adoption, and that the necessary documentation is legally valid in both countries.
5.4. Approval of inter-country adoption applicants is a responsibility of the appropriate authorities or agencies in both sending and receiving countries. An application to adopt a child shall not be considered by a sending country unless it is forwarded through the appropriate authority or agency in the receiving country.
5.5. The appropriate authority or agency in both countries shall monitor the reimbursement of costs involved in inter-country adoption to prevent profiteering and traffic king in children.
5.6. XX XX XX XX
5.7. When a child goes to another country to be adopted, the appropriate authority or agency of the receiving country shall accept responsibility for supervision of the placement, and for the provision of progress reports for the adoption authority or agency in the sending country for the period agreed upon.
5.8. In cases where the adoption is not to be finalised in the sending country, the adoption authority in the receiving country shall ensure that an adoption order is sought as soon as possible but not later than 2 years after placement. It is the responsibility of the appropriate authority or agency in the receiving country to inform the appropriate authority or agency in the sending country of the details of the adoption order when it is granted.
5.8.1. In cases where the adoption is to be finalised in the sending country after placement, it is the responsibility of the appropriate authority or agency in both the sending and receiving country to ensure that the adoption is finalised as soon as possible.
5.9. If the placement is disrupted before the adoption is finalised, the adoption authority in the receiving country shall be responsible for ensuring, with the agreement of the adoption authority in the sending country that a satisfactory alternative placement is made with prospective adoptive parents who are approved by the adoption authorities of both countries.
Adoption Services and Communities:
6.1. Appropriate authorities or agencies in receiving countries shall ensure that there is adequate feedback to the appropriate authorities or agencies in sending countries, both in relation to inter-country adoption generally and to individual children where required.
6.2. XX XX XX XX
6.3. The appropriate authorities and agencies in both sending and receiving countries have a responsibility for public education in relation to inter-country adoption, to ensure that when such adoption is appropriate for children, public attitudes support this. Where public attitude is known to be discriminatory or likely to be hostile on grounds of race or colour, the appropriate authority or agency in the sending country should not consider placement of the child.
Status of the Child:
7.1. Family:
It is essential that in inter-country adoption child is given the same legal status and rights of inheritance, as if she/he had been born to the adoptive parents in marriage.
7.2. Name:
When the legal adoption process is concluded the child shall have the equivalent of a birth registration certificate.
7.3. Nationality:
When the legal adoption is concluded, the child shall be granted appropriate citizenship.
7.4. XX XX XX XX
7.5. Immigration:
Before an inter-country adoption placement with particular prospective adopters is proposed, the appropriate authority or agency in the child’s country shall ensure that there is no hindrance, to the child entering the prospective adopters’ country, and that travel documents can be obtained at the appropriate time.
We shall examine these provisions of the Draft Declaration and the draft guidelines of procedure when we proceed to consider and lay down the principles and norms which should be followed in intercountry adoption.

Now it would be convenient at this stage to set out the procedure which is at present being followed for giving a child in adoption to foreign parents. Since there is no statutory enactment in our country providing for adoption of a child by foreign parents or laying down the procedure which must be followed in such a case, resort is had to the provisions of the Guardians & Wards Act 1890 for the purpose of facilitating such adoption. This Act is an old statute enacted for the purpose of providing for appointment of guardian of the person or property of a minor. Section 4 sub-section (5) clause (a) defines the “court” to mean the district court having jurisdiction to entertain an application under the Act for an order appointing or declaring a person to be a guardian and the expression “district court” is defined in sub-section (4) of section 4 to have the same meaning as assigned to it in the Code of Civil Procedure and includes a High Court in the exercise of its ordinary original civil jurisdiction. Section 7 sub-section (1) provides that where the court is satisfied that it is for the welfare of a minor that an order should be made appointing a guardian of his person or property or both or declaring a person to be such a guardian, the court may make an order accordingly and, according to section 8, such an order shall not be made except on the application of one of four categories of persons specified in clauses (a) to (d), one of them being “the person desirous of being the guardian of the minor” and the other being “any relative or friend of the minor”. Sub section (1) of section 9 declares that if the ’application’ is with respect to the guardianship of the person of the minor-and that is the kind of application which is availed of for the purpose of intercountry adoption-it shall be made to the district court having jurisdiction in the place where the minor ordinarily resides. Then follows section 11, sub- section (1) which prescribes that if the court is satisfied that there is ground for proceeding on the application, it shall fix a date for the hearing thereof and cause notice of the application and of the date fixed for the hearing to be served on the parents of the minor if they are residing in any State to which the Act extends, the person if any named in the petition as having the custody or possession of the person of the minor, the person proposed in the application to be appointed guardian and any other person to whom, in the opinion of the court, special notice of the application should be given. Section 17 provides that in appointing guardian of a minor, the court shall be guided by what, consistently with the law to which the minor is subject, appears in the circumstances to be for the welfare of the minor and in considering what will be for the welfare of the minor, the court shall have regard to the age sex, and religion of the minor, the character and capacity of the proposed guardian and his nearness of kin to the minor, the wishes, if any, of a deceased parent and any existing or previous relations of the proposed guardian with the minor or his property. The last material section is section 26 which provides that a guardian of the person of a minor appointed by the court shall not, without the leave of the court by which he was appointed, remove the ward from the limits of its jurisdiction, except for such purposes as may be prescribed and the leave to be granted by the court may be special or general. These are the relevant provisions of the Guardians and Wards Act 1890 which have a bearing on the procedure which is at present being followed for the purpose of carrying through inter-country adoption. The foreign parent makes an application to the court for being appointed guardian of the person of the child whom he wishes to take in adoption and for leave of the court to take the child with him to his country on being appointed such guardian. The procedure to be followed by the court in disposing of such application is laid down by three High Courts in the country with a view to protecting the interest and safeguarding the welfare of the child, but so far as the rest of the High Courts are concerned, they do not seem to have taken any steps so far in that direction. Since most of the applications by foreign parents wishing to take a child in adoption in the State of Maharashtra are made on the original side of the High Court of Bombay that High Court has issued a notification dated 10th May 1972 incorporating Rule 361-B in Chapter XX of the Rules of the High Court of Bombay (Original Side) 1957 an this newly added Rule provides inter alia as follows:

When a foreigner makes an application for being appointed as the guardian of the person or property of a minor, the Prothonotary and Senior Master shall address a letter to the Secretary of the Indian Council of Social Welfare, informing him of the presentation of the application and the date fixed for the hearing thereof-he shall also inform him that any representation which the Indian Council of Social Welfare may make in the matter would be considered by the Court before passing the order on the application. A copy of the application shall be forwarded to the Secretary of the Indian Council of Social Welfare along with the letter of Prothonotary and Senior Master.”

The High Court of Delhi has also issued instructions on the same lines to the Courts subordinate to it and these instructions read as follows:

(i) A foreigner desirous of being appointed guardian or the person of a minor and praying for leave to remove the minor to a foreign country, shall make an application for the purpose in the prescribed form under the Guardians and Wards Act, attaching with it three copies of passport size photographs of the minor, duly attested by the person having custody of the minor at the time;

(ii) If the court is satisfied that there is no ground for proceedings on the application, it shall fix a day for the hearing there of and cause notice of the application and of the date fixed for the hearing on the person and in the manner mentioned in Section 11, Guardians and Wards Act, 1890 as also to the general public and the Secretary of the Indian Council of child Welfare and consider their representation;

(iii) Every person appointed guardian of the person of a minor shall execute a bond with or without a surety or sureties as the court may think fit to direct and in such sum as the court may fix, having regard to the welfare of the minor and to ensure his production in the court if and when so required by the court;

(iv) On the court making an order for the appointment of a foreigner guardian of the person of an Indian minor, a copy of the minor’s photograph shall be counter-signed by the Court and issued to the guardian or joint guardian, as the case may be, appointed by the court alongwith the certificate or guardianship.”

The High Court of Gujarat has not framed any specific rule for this purpose like the High Courts of Bombay and Delhi but in a judgment delivered in 1982 in the case of Rasiklal Chaganlal Mehta,(1) the High Court of Gujarat has made the following observations:
“In order that the Courts can satisfactorily decide an intercountry adoption case against the aforesaid background and in the light of the above referred guidelines, we consider it necessary to give certain directions. In all such cases, the Court should issue notice to the Indian Council of Social Welfare (175, Dadabhai Naroji Road, Bombay- 400001) and seek its assistance. If the Indian Council of Social Welfare so desires it should be made a party to the proceedings. If the Indian Council of Social Welfare does not appear, or if it is unable, for some reason, to render assistance, the Court should issue notice to an independent, reputed and publicly/officially recognised social welfare agency working in the field and in that area and request it to render assistance in the matter.”

The object of giving notice to the Indian Council of Social Welfare or the Indian Council for Child Welfare or any other independent, reputed and publicly or officially recognised social welfare agency is obviously to ensure that the application of foreign parents for guardianship of the child with a view to its eventual adoption is properly and carefully scrutinised and evaluated by an expert body having experience in the area of child welfare with a view to assisting the Court in coming to the conclusion whether it will be in the interest of the child, promotive of its welfare, to be adopted by the foreign parents making the application or in other words, whether such adoption will provide moral and material security to the child with an opportunity to grow into the full stature of its personality in an atmosphere of love and affection and warmth of a family hearth and home. This procedure which has been evolved by the High Courts of Bombay, Delhi and Gujarat is, in our opinion, eminently desirable and it can help considerably to reduce, if not eliminate, the possibility of the child being adopted by unsuitable or undesirable parents or being placed in a family where it may be neglected, maltreated or exploited by the adoptive parents. We would strongly commend this procedure for acceptance by every court in the country which has to deal with an application by a foreign parent for appointment of himself as guardian of a child with a view to its eventual adoption We shall discuss this matter a little more in detail when we proceed to consider what principles and norms should be laid down for inter-country adoption, but, in the meanwhile, proceeding further with the narration of the procedure followed by the courts in Bombay, Delhi and Gujarat, we may point out that when notice is issued by the court, the Indian Council of Social Welfare or the Indian Council for Child Welfare or any other recognised social welfare agency to which notice is issued, prepares what may conveniently be described as a child study report and submits it to the Court for its consideration. What are the different aspects relating to the child in respect of which the child study report should give information is a matter which we shall presently discuss, but suffice it to state for the time being that the child study report should contain legal and social data in regard to the child as also an assessment of its behavioural pattern and its intellectual, emotional and physical development. The Indian Council of Social Welfare has evolved a standardised form of the child study report and it has been annexed as Ex. ’C’ to the reply filed in answer to the notice issued by the Court. Ordinarily an adoption proposal from a foreign parent is sponsored by a social or child welfare agency recognised or licensed by the Government of the country in which the foreign parents resides and the application of the foreign parent for appointment as guardian of the child is accompanied by a home study report prepared by such social or child welfare agency. The home study report contains an assessment of the fitness and suitability of the foreign parent for taking the child in adoption based on his antecedents, family background, financial condition, psychological and emotional adaptability and the capacity to look after the child after adoption despite racial, national and cultural differences. The Indian Council of Social Welfare has set out in annexure ’B’ to the reply filed by it, guidelines for the preparation of the home study report in regard to the foreign parent wishing to take a child in adoption, and it is obvious from these guidlines which we shall discuss a little later, that the home study report is intended to provide social and legal facts in regard to the foreign parent with a view to assisting the court in arriving at a proper determination of the question whether it will be in the interest of the child to be given in adoption to such foreign parent. The court thus has in most cases where an application is made by a foreign parent for being appointed guardian of a child in the courts in Bombay, Delhi and Gujarat, the child study report as well as the home study report together with other relevant material in order to enable it to decide whether it will be for the welfare of the child to be allowed to be adopted by the foreign parents and if on a consideration of these reports and material, the court comes to the conclusion that it will be for the welfare of the child, the court makes an order appointing the foreign parent as guardian of the child with liberty to him to take the child to his own country with a view to its eventual adoption. Since adoption in a foreign country is bound to take some time and till then the child would continue to be under the guardianship of the foreign parent by virtue of the order made by the court, the foreign parent as guardian would continue to be accountable to the court for the welfare of the child and the court therefore takes a bond from him with or without surety or sureties in such sum as may be thought for ensuring its production if and when required by the court.

The foreign parent then takes the child to his own country either personally or through an escort and the child is then adopted by the foreign parent according to the law of his country and on such adoption, the child acquires the same status as a natural born child with the same rights of inheritance and succession as also the same nationality as the foreign parent adopting it. This is broadly the procedure which is followed in the courts in Bombay, Delhi and Gujarat and there can be no doubt that, by and large, this procedure tends to ensure the welfare of the child, but even so, there are several aspects of procedure and detail which need to be considered in order to make sure that the child is placed in the right family where it will be able to grow into full maturity of its personality with moral and material security and in an atmosphere of love and warmth and it would not be subjected to neglect, maltreatment or exploitation.

Now one thing is certain that in the absence of a law providing for adoption of an Indian child by a foreign parent, the only way in which such adoption can be effectuated is by making it in accordance with the law of the country in which the foreign parent resides. But in order to enable such adoption to be made in the country of the foreign parent, it would be necessary for the foreign parent to take the child to his own country where the procedure for making the adoption in accordance with the law of that country can be followed. However, the child which is an Indian national cannot be allowed to be removed out of India by the foreign parent unless the foreign parent is appointed guardian of the person of the child by the Court and is permitted by the Court to take the child to his own country under the provisions of the Guardians and Wards Act 1890. Today, therefore, as the law stands, the only way in which a foreign parents can take an Indian child in adoption is by making an application to the Court in which the child ordinarily resides for being appointed guardian of the person of the child with leave to remove the child out of India and take it to his own country for the purpose of adopting it in accordance with the law of his country. We are definitely of the view that such inter-country adoption should be permitted after exhausting the possibility of adoption within the country by Indian parents. It has been the experience of a large number of social welfare agencies working in the area of adoption that, by and large, Indian parents are not enthusiastic about taking a stranger child in adoption and even if they decide to take such child in adoption, they prefer to adopt a boy rather than a girl and they are wholly averse to adopting a handicapped child, with the result that the majority of abandoned, destitute or orphan girls and handicapped children have very little possibility of finding adoptive parents within the country and their future lies only in adoption by foreign parents. But at the same time it is necessary to bear in mind that by reason of the unavailability of children in the developed countries for adoption, there is a great demand for adoption of children from India and consequently there is increasing danger of ill-equipped and sometimes even undesirable organisations or individuals activising themselves in the field of inter- country adoption with a view to trafficking in children and sometimes it may also happen that the immediate prospect of transporting the child from neglect and abandonment to material comfort and security by placing it with a foreigner may lead to other relevant factors such as the intangible needs of the child, its emotional and psychological requirements and possible difficulty of its assimilation and integration in a foreign family with a different racial and cultural background, being under-emphasized, if not ignored. It is therefore necessary to evolve normative and procedural safeguards for ensuring that the child goes into the right family which would provide it warmth and affection of family life and help it to grow and develop physically, emotionally, intellectually and spiritually. These safeguards we now proceed to examine.

We may make it clear at the outset that we are not concerned here with cases of adoption of children living with their biological parents, for in such class of cases, the biological parents would be the best persons to decide whether to give their child in adoption to foreign parents. It is only in those cases where the children sought to be taken in adoption are destitute or abandoned and are living in social or child welfare centres that it is necessary to consider what normative and procedural safeguards should be forged for protecting their interest and promoting their welfare.

Let us first consider what are the requirements which should be insisted upon so far ar a foreigner whishing to take a child in adoption is concerned In the first place, every application from a foreigner desiring to adopt a child must be sponsored by a social or child welfare agency recognised or licensed by the government of the country in which the foreigner is resident. No application by a foreigner for taking a child in adoption should be entertained directly by any social or welfare agency in India working in the area of inter-country adoption or by any institution or centre or home to which children are committed by the juvenile court. This is essential primarily for three reasons.

Firstly, it will help to reduce, if not eliminate altogether the possibility of profiteering and trafficking in children, because if a foreigner were allowed to contact directly agencies or individuals in India for the purpose of obtaining a child in adoption, he might in his anxiety to secure a child for adoption, be induced or persuaded to pay any unconscionable or unreasonable amount which might be demanded by the agency or individual procuring the child. Secondly it would be almost impossible for the court to satisfy itself that the foreigner who wishes to take the child in adoption would be suitable as a parent for the child and whether he would be able to provide a stable and secure family life to the child and would be able to handle trans-racial, trans-cultural and trans-national problems likely to arise from such adoption, because, where the application for adopting a child has not been sponsored by a social or child welfare agency in the country of the foreigner, there would be no proper and satisfactory home study report on which the court can rely. Thirdly, in such a case, where the application of a foreigner for taking a child in adoption is made directly without the intervention of a social or child welfare agency, there would be no authority or agency in the country of the foreigner who could be made responsible for supervising the progress of the child and ensuring that the child is adopted at the earliest in accordance with law and grows up in an atmosphere of warmth and affection with moral and material security assured to it. The record shows that in every foreign country where children from India are taken in adoption, there are social and child welfare agencies licensed or recognised by the government and it would not therefore cause any difficulty hardship or inconvenience if it is insisted that every application from a foreigner for taking a child in adoption must be sponsored by a social or child welfare agency licensed or recognised or recognised by the government of the country in which the foreigner resides. It is not necessary that there should be only one social or child welfare agency in the foreign country through which an application for adoption of a child may be routed; there may be more than one such social or child welfare agencies, but every such social or child welfare agency must be licensed or recognised by the government of the foreign country and the court should not make an order for appointment of a foreigner as guardian unless it is satisfied that the application of the foreigner for adopting a child has been sponsored by such social or child welfare agency. The social or child welfare agency which sponsors the application for taking a child in adoption must get a home study report prepared by a professional worker indicating the basis on which the application of the foreigner for adopting a child has been sponsored by it. The home study report should broadly include information in regard to the various matters set out in Annexure ’A’ to this judgment though it need not strictly adhere to the requirements of that Annexure and it should also contain an assessment by the social or child welfare agency as to whether the foreigner wishing to take a child in adoption is fit and suitable and has the capacity to parent a child coming from a different racial and cultural milieu and whether the child will be able to fit into the environment of the adoptive family and the community in which it lives. Every application of a foreigner for taking a child in adoption must be accompanied by a home study report and the social or child welfare agency sponsoring such application should also send along with it a recent photograph of the family, a marriage certificate of the foreigner and his or her spouse as also a declaration concerning their health together with a certificate regarding their medical fitness duly certificate by a medical doctor, a declaration regarding their financial status alongwith supporting documents including employer’s certificate where applicable, income tax assessment orders, bank references and particulars concerning the properties owned by them, and also a declaration stating that they are willing to be appointed guardian of the child and undertaking that they would adopt the child according to the law of their country within a period of not more than two years from the time of arrival of the child in their country and give intimation of such adoption to the court appointing them as guardian as also to the social or child welfare agency in India processing their case, they would maintain the child and provide it necessary education and up-bringing according to their status and they would also send to the court as also to the social or child welfare agency in India reports relating to the progress of the child alongwith its recent photograph, the frequency of such progress reports being quarterly during the first two years and half yearly for the next three years. The application of the foreigner must also be accompanied by a Power of Attorney in favour of an Officer of the social or child welfare agency in India which is requested to process the case and such Power of Attorney should authorise the Attorney to handle the case on behalf of the foreigner in case the foreigner is not in a position to come to India. The social or child welfare agency sponsoring the application of the foreigner must also certify that the foreigner seeking to adopt a child is permitted to do so according to the law of his country. These certificates, declarations and documents which must accompany the application of the foreigner for taking a child in adoption, should be duly notarised by a Notary Public whose signature should be duly attested either by an Officer of the Ministry of External Affairs or Justice or Social Welfare of the country of the foreigner or by an Officer of the Indian Embassy or High Commission or Consulate in that country. The social or child welfare agency sponsoring the application of the foreigner must also undertake while forwarding the application to the social or child welfare agency in India, that it will ensure adoption of the child by the foreigner according to the law of his country within a period not exceeding two years and as soon as the adoption is effected, it will send two certified copies of the adoption order to the social or child welfare agency in India through which the application for guardianship is processed, so that one copy can be filed in court and the other can remain with the social or child welfare agency in India. The social or child welfare agency sponsoring the application must also agree to send to the concerned social or child welfare agency in India progress reports in regard to the child, quarterly during the first year and half yearly for the subsequent year or years until the adoption is effected, and it must also undertake that in case of disruption of the family of the foreigner before adoption can be effected, it will take care of the child and find a suitable alternative placement for it with the approval of the concerned social or child welfare agency in India and report such alternative placement to the court handling the guardianship proceedings and such information shall be passed on both by the court as also by the concerned social or child welfare agency in India to the Secretary, Ministry of Social Welfare, Government of India. The Government of India shall prepare a list of social or child welfare agencies licensed or recognised for inter- country adoption by the government of each foreign country where children from India are taken in adoption and this list shall be prepared after getting the necessary information from the government of each such foreign country and the Indian Diplomatic Mission in that foreign country. We may point out that the Swedish Embassy has in Annexure II to the affidavit filed on its behalf by Ulf Waltre, given names of seven Swedish organisations or agencies which are authorised by the National Board for Inter-Country Adoption functioning under the Swedish Ministry of Social Affairs to “mediate” applications for adoption by Swedish nationals and the Indian Council of Social Welfare has also in the reply filed by it in answer to the writ petition given a list of government recognised organisations or agencies dealing in inter-country adoption in foreign countries. It should not therefore be difficult for the Government of India to prepare a list of social or child welfare agencies licensed or recognised for intercountry adoption by the Government in various foreign countries. We direct the Government of India to prepare such list within six months from today and copies of such list shall be supplied by the Government of India to the various High Courts in India as also to the social or child welfare agencies operating in India in the area of inter-country adoption under licence or recognition from the Government of India. We may of course make it clear that application of foreigners for appointment of themselves as guardians of children in India with a view to their eventual adoption shall not be held up until such list is prepared by the Government of India but they shall be processed and disposed of in the light of the principles and norms laid down in this judgment.

We then proceed to consider the position in regard to biological parents of the child proposed to be taken in adoption. What are the safeguards which are required to be provided in so far as biological parents are concerned ? We may make it clear at the outset that when we talk about biological parents, we mean both parents if they are together of the mother or the father if either is alone. Now it should be regarded as an elementary requirement that if the biological parents are known, they should be properly assisted in making a decision about relinquishing the child for adoption, by the Institution or centre or Home for Child Care or social or child welfare agency to which the child is being surrendered. Before a decision is taken by the biological parents to surrender the child for adoption, they should be helped to understand all the implications of adoptions including the possibility of adoption by a foreigner and they should be told specifically that in case the child is adopted, it would not be possible for them to have any further contact with the child. The biological parents should not be subjected to any duress in making a decision about relinquishment and even after they have taken a decision to relinquish the child for giving in adoption, a further period of about three months should be allowed to them to reconsider their decision. But once the decision is taken and not reconsidered within such further time as may be allowed to them, it must be regarded as irrevocable and the procedure for giving the child in adoption to a foreigner can then be initiated without any further reference to the biological parents by filing an application for appointment of the foreigner as guardian of the child. Thereafter there can be no question of once again consulting the biological parents whether they wish to give the child in adoption or they want to take it back. It would be most unfair if after a child is approved by a foreigner and expenses are incurred by him for the purpose of maintenance of the child and some times on medical assistance and even hospitalisation for the child, the biological parents were once again to be consulted for giving them a locus penitential to reconsider their decision. But in order to eliminate any possibility of mischief and to make sure that the child has in fact been surrendered by its biological parents, it is necessary that the Institution or Centre or Home for Child Care or social or child welfare agency to which the child is surrendered by the biological parents, should take from the biological parents a document of surrender duly signed by the biological parents and attested by at least two responsible persons and such document of surrender should not only contain the names of the biological parents and their address but also information in regard to the birth of the child and its background, health and development. If the biological parents state a preference for the religious upbringing of the child, their wish should as far as possible be respected, but ultimately the interest of the child alone should be the sole guiding factor and the biological parents should be informed that the child may be given in adoption even to a foreigner who professes a religion different from that of the biological parents. This procedure can and must be followed where the biological parents are known and they relinquish the child for adoption to an Institution or Centre or Home for Child Care or hospital or social or child welfare agency. But where the child is an orphan, destitute or abandoned child and its parents are not known, the Institution or Centre or Home for Child Care or hospital or social or child welfare agency in whose care the child has come, must try to trace the biological parents of the child and if the biological parents can be traced and it is found that they do not want to take back the child, then the same procedure as outlined above should as far as possible be followed. But if for any reason the biological parents cannot be traced, then there can be no question of taking their consent or consulting them. It may also be pointed out that the biological parents should not be induced or encouraged or even be permitted to take a decision in regard to giving of a child in adoption before the birth of the child of within a period of three months from the date of birth. This precaution is necessary because the biological parents must have reasonable time after the birth of the child to take a decision whether to rear up the child themselves or to relinquish it for adoption and moreover it may be necessary to allow some time to the child to overcome any health problems experienced after birth.

We may now turn to consider the safeguards which should be observed in so far as the child proposed to be taken in adoption is concerned. It was generally agreed by all parties appearing before the Court, whether as interveners or otherwise, that it should not be open to any and every agency or individual to process an application from a foreigner for taking a child in adoption and such application should be processed only through a social or child welfare agency licensed or recognised by the Government of India or the Government of the State in which it is operating, or to put it differently in the language used by the Indian Council of Social Welfare in the reply filed by it in answer to the writ petition, “all private adoptions conducted by unauthorised individuals or agencies should be stopped”. The Indian Council of Social Welfare and the Indian Council for Child Welfare are clearly two social or child welfare agencies operating at the national level and recognised by the Government of India, as appears clearly from the letter dated 23rd August, 1980 addressed by the Deputy Secretary to the Government of India to the Secretary, Government of Kerela, Law Department, Annexure ’F’ to the submissions filed by the Indian Council for Child Welfare in response to the writ petition. But apart from these two recognised social or child welfare agencies functioning at the national level, there are other social or child welfare agencies engaged in child care and welfare and if they have good standing and reputation and are doing commendable work in the area of child care and welfare, there is no reason why they should not be recognised by the Government of India or the Government of a State for the purpose of inter-country adoptions. We would direct the Government of India to consider and decide within a period of three months from today whether any of the institutions or agencies which have appeared as interveners in the present writ petition are engaged in child care and welfare and if so, whether they deserve to be recognised for inter- country adoptions. Of course it would be open to the Government of India or the Government of a State suo motu or on an application made to it to recognise any other social or child welfare agency for the purpose of inter-country adoptions, provided such social or child welfare agency enjoys good reputation and is known for its work in the field of child care and welfare. We would suggest that before taking a decision to recognise any particular social or child welfare agency for the purpose of intercountry adoptions, the Government of India or the Government of a State would do well to examine whether the social or child welfare agency has proper staff with professional social work experience, because otherwise it may not be possible for the social or child wel- fare agency to carry out satisfactorily the highly responsible task of ensuring proper placement of a child with a foreign adoptive family. It would also be desirable not to recognise an organisation or agency which has been set up only for the purpose of placing children in adoption: it is only an organisation or agency which is engaged in the work of child care and welfare which should be regarded as eligible for recognition, since inter-country adoption must be looked upon not as an independent activity by itself, but as part of child welfare programme so that it may not tend to degenerate into trading. The Government of India or the Government of a State recognising any social or child welfare agency for inter-country adoptions must insist as a condition of recognition that the social or child welfare agency shall maintain proper accounts which shall be audited by a chartered accountant at the end of every year and it shall not charge to the foreigner wishing to adopt a child any amount in excess of that actually incurred by way of legal or other expenses in connection with the application for appointment of guardian including such reasonable remuneration or honorarium for the work done and trouble taken in processing, filing and pursuing the application as may be fixed by the Court.

Situations may frequently arise where a child may be in the care of a child welfare institution or centre or social or child welfare agency which has not been recognised by the Government. Since an application for appointment as guardian can, according to the principles and norms laid down by us, be processed only by a recognised social or child welfare agency and none else, any unrecognised institution, centre or agency which has a child under its care would have to approach a recognised social or child welfare agency if it desires such child to be given in inter-country adoption, and in that event it must send without any undue delay the name and particulars of such child to the recognised social or child welfare agency through which such child is proposed to be given in inter-country adoption. Every recognised social or child welfare agency must maintain a register in which the names and particulars of all children proposed to be given in inter-country adoption through it must be entered and in regard to each such child, the recognised social or child welfare agency must prepare a child study report through a professional social worker giving all relevant information in regard to the child so as to help the foreigner to come to a decision whether or not to adopt the child and to understand the child, if he decides to adopt it as also to assist the court in coming to a decision whether it will be for the welfare of the child to be given in adoption to the foreigner wishing to adopt it. The child study report should contain as far as possible information in regard to the following matters:

“(1) Identifying information, supported where possible by documents.
(2) Information about original parents, including their health and details of the mother’s pregnancy and birth.
(3) Physical, intellectual and emotional development.
(4) Health report prepared by a registered medical practitioner preferably by a paediatrician.
(5) Recent photograph.
(6) Present environment-category of care (Own home, foster home, institution etc.) relationships, routines and habits.
(7) Social worker’s assessment and reasons for suggesting inter-country adoption.”

The government of India should, with the assistance of the Government of the States, prepare a list of recognised social or child welfare agencies with their names, addresses and other particulars and send such list to the appropriate department of the Government of each foreign country where Indian children are ordinarily taken in adoption so that the social or child welfare agencies licensed or recognised by the Government of such foreign country for intercountry adoptions, would know which social or child welfare agency in India they should approach for processing an application of its national for taking an Indian child in adoption. Such list shall also be sent by the Government of India to each High Court with a request to forward it to the district courts within its jurisdiction so that the High Courts and the district courts in the country would know which are the recognised social or child welfare agencies entitled to process an application for appointment of a foreigner as guardian. Of course, it would be desirable if a Central Adoption Resource Agency is set up by the Government of India with regional branches at a few centres which are active in inter-country adoptions. Such Central Adoption Resource Agency can act as a clearing house of information in regard to children available for inter-country adoption and all applications by foreigners for taking Indian children in adoption can then be forwarded by the social or child welfare agency in the foreign country to such Central Adoption Resource Agency and the latter can in its turn forward them to one or the other of the recognised social or child welfare agencies in the country. Every social or child welfare agency taking children under its care can then be required to send to such Central Adoption Resource Agency the names and particulars of children under its care who are available for adoption and the names and particulars of such children can be entered in a register to be maintained by such Central Adoption Resource Agency. But until such Central Adoption Resource Agency is set up, an application of a foreigner for taking an Indian child in adoption must be routed through a recognised social or child welfare agency. Now before any such application from a foreigner is considered, every effort must be made by the recognised social or child welfare agency to find placement for the child by adoption in an Indian family. Whenever any Indian family approaches a recognised social or child welfare agency for taking a child in adoption, all facilities must be provided by such social or child welfare agency to the Indian family to have a look at the children available with it for adopt on and if the Indian family wants to see the child study report in respect of any particular child, child study report must also be made available to the Indian family in order to enable the Indian family to decide whether they would take the child in adoption. It is only if no Indian family comes forward to take a child in adoption within a maximum period of two months that the child may be regarded as available for inter-country adoption, subject only to one exception, namely, that if the child is handicapped or is in bad state of health needing urgent medical attention, which is not possible for the social or child welfare agency looking after the child to provide, the recognised social or child welfare agency need not wait for a period of two months and it can and must take immediate steps for the purpose of giving such child in inter-country adoption. The recognised social or child welfare agency should, on receiving an application of a foreigner for adoption through a licensed or recognised social or child welfare agency in a foreign country, consider which child would be suitable for being given in adoption to the foreigner and would fit into the environment of his family and community and send the photograph and child study report of such child to the foreigner for the purpose of obtaining his approval to the adoption of such child. The practice of accepting a general approval of the foreigner to adopt any child should not be allowed, because it is possible that if the foreigner has not seen the photograph of the child and has not studied the child study report and a child is selected for him by the recognised social or child welfare agency in India on the basis of his general approval, he may on the arrival of the child in his country find that he does not like the child or that the child is not suitable in which event the interest of the child would be seriously prejudiced. The recognised social or child welfare agency must therefore insist upon approval of a specific known child and once that approval is obtained, the recognised social or child welfare agency should immediately without any undue delay proceed to make an application for appointment of the foreigner as guardian of the child. Such application would have to be made in the court within whose jurisdiction the child ordinarily resides and it must be accompanied by copies of the home study report, the child study report and other certificates and documents forwarded by the social or child welfare agency sponsoring the application of the foreigner for taking the child in adoption.

Before we proceed to consider what procedure should be followed by the court in dealing with an application for appointment of a foreigner as guardian of a child, we may deal with a point of doubt which was raised before us, namely, whether the social or child welfare agency which is looking after the child should be entitled to receive from the foreigner wishing to take the child in adoption any amount in respect of maintenance of the child or its medical expenses. We were told that there are instances where large amounts are demanded by so called social or child welfare agencies or individuals in consideration of giving a child in adoption and often this is done under the label of maintenance charges and medical expenses supposed to have been incurred for the child. This is a pernicious practice which is really nothing short of trafficking in children and it is absolutely necessary to put an end to it by introducing adequate safeguards. There can be no doubt that if an application of a foreigner for taking a child in adoption is required to be routed through a recognised social or child welfare agency and the necessary steps for the purpose of securing appointment of the foreigner as guardian of the child have also to be taken only through a recognised social or child welfare agency, the possibility of any so called social or child welfare agency or individual trafficking in children by demanding exorbitant amounts from prospective adoptive parents under the guise of maintenance charges and medical expenses or otherwise, would be almost eliminated. But, at the same time, it would not be fair to suggest that the social or child welfare agency which is looking after the child should not be entitled to receive any amount from the prospective adoptive parent, when maintenance and medical expenses in connection with the child are actually incurred by such social or child welfare agency. Many of the social or child welfare agencies running homes for children have little financial resources of their own and have to depend largely on voluntary donations and therefore if any maintenance or medical expenses are incurred by them on a child, there is no reason why they should not be entitled to receive reimbursement of such maintenance and medical expenses from the foreigner taking the child in adoption. We would therefore direct that the social or child welfare agency which is looking after the child selected by a prospective adoptive parent, may legitimately receive from such prospective adoptive parent maintenance expenses at a rate not exceeding Rs. 60 per day (this outer limit being subject to revision by the Ministry of Social Welfare, Government of India from time to time) from the date of selection of the child by him until the date the child leaves for going to its new home as also medical expenses including hospitalisation charges, if any, actually incurred by such social or child welfare agency for the child. But the claim for payment of such maintenance charges and medical expenses shall be submitted to the prospective adoptive parent through the recognised social or child welfare agency which has processed the application for guardianship and payment in respect of such claim shall not be received directly by the social or child welfare agency making the claim but shall be paid only through the recognised social or child welfare agency. This procedure will to a large extent eliminate trafficking in children for money or benefits in kind and we would therefore direct that this procedure shall be followed in the future. But while giving this direction, we may make it clear that what we have said should not be interpreted as in any way preventing a foreigner from making voluntary donation to any social or child welfare agency but no such donation from a prospective adoptive parent shall be received until after the child has reached the country of its prospective adoptive parent.

It is also necessary to point out that the recognised social or child welfare agency through which an application of a foreigner for taking a child in adoption is routed must, before offering a child in adoption, make sure that the child is free to be adopted. Where the parents have relinquished the child for adoption and there is a docu- ment of surrender, the child must obviously be taken to be free for adoption. So also where a child is an orphan or destitute or abandoned child and it has not been possible by the concerned social or child welfare agency to trace its parents or where the child is committed by a juvenile court to an institution, centre or home for committed children and is declared to be a destitute by the juvenile court, it must be regarded as free for adoption. The recognised social or child welfare agency must place sufficient material before the court to satisfy it that the child is legally available for the adoption. It is also necessary that the recognised welfare agency must satisfy itself, firstly, that there is no impediment in the way of the child entering the country of the prospective adoptive parent; secondly, that the travel documents for the child can be obtained at the appropriate time and lastly, that the law of the country of the prospective adoptive parent permits legal adoption of the child and that no such legal adoption being concluded, the child would acquire the same legal status and rights of inheritance as a natural born child and would be granted citizenship in the country of adoption and it should file along with the application for guardianship, a certificate reciting such satisfaction.

We may also at this stage refer to one other question that was raised before us, namely, whether a child under the care of a social or child welfare agency or hospital or orphanage in one State can be brought to another State by a social or child welfare agency for the purpose of being given in adoption and an application for appointment of a guardian of such child can be made in the court of the latter State. This question was debated before us in view of the judgment given by Justice Lentin of the Bombay High Court of 22nd July, 1982 in Miscellaneous Petition No. 178 of 1982 and other allied petitions. We agree with Justice Lentin that the practice of social or child welfare agencies or individuals going to different States for the purpose of collecting children for being given in inter-country adoption is likely to lead to considerable abuse, because it is possible that such social or child welfare agencies or individuals may, by offering monetary inducement, persuade indigent parents to part with their children and then give the children to foreigners in adoption by demanding a higher price, which the foreigners in their anxiety to secure a child for adoption may be willing to pay. But we do not think that if a child is relinquished by its biological parents or is an orphan or destitute or abandoned child in its parent State, there should be any objection to a social or child welfare agency taking the child to another State, even if the object be to give it in adoption, provided there are sufficient safeguards to ensure that such social or child welfare agency does not indulge in any malpractice. Since we are directing that every application of a foreigner for taking a child in adoption shall be routed only through a recognised social or child welfare agency and an application for appointment of the foreigner as guardian of the child shall be made to the court only through such recognised social or child welfare agency, there would hardly be any scope for a social or child welfare agency or individual who brings a child from another State for the purpose of being given in adoption to indulge in trafficking and such a possibility would be reduced to almost nil. Moreover before proposing a child for adoption, the recognised social or child welfare agency must satisfy itself that the child has either been voluntarily relinquished by its biological parents without monetary inducement or is an orphan or destitute or abandoned child and for this purpose, the recognised social or child welfare agency may require the agency or individual who has the care and custody of the child to state on oath as to how he came by the child and may also, if it thinks fit, verify such statement, by directly enquiring from the biological parents or from the child care centre or hospital or orphanage from which the child is taken. This will considerably reduce the possibility of abuse while at the same time facilitating placement of children deprived of family love and care in smaller towns and rural areas. We do not see any reason why in cases of this kind where a child relinquished by its biological parents or an orphan or destitute or abandoned child is brought by an agency or individual from one State to another, it should not be possible to apply for guardianship of the child in the court of the latter State, because the child not having any permanent place of residence, would then be ordinarily resident in the place where it is in the care and custody of such agency or individual. But quite apart from such cases, we are of the view that in all cases where a child is proposed to be given in adoption, enquiries regarding biological parents, whether they are traceable or not and if traceable, whether they have voluntarily relinquished the child and if not, whether they wish to take the child back, should be completed before the child is offered for adoption and thereafter no attempt should be made to trace or contact the biological parents. This would obviate the possibility of an ugly and unpleasant situation of biological parents coming forward to claim the child after it has been given to a foreigner in adoption. It is also necessary while considering placement of a child in adoption to bear in mind that brothers and sisters or children who have been brought up as siblings should not be separated except for special reasons and as soon as a decision to give a child in adoption to a foreigner is finalised, the recognised social or child welfare agency must if the child has reached the age of understanding, take steps to ensure that the child is given proper orientation and is prepared for going to its new home in a new country so that the assimilation of the child to the new environment is facilitated. We must emphasize strongly that the entire procedure which we have indicated above including preparation of child study report, making of necessary enquiries and taking of requisite steps leading upto the filing of an application for guardianship of the child proposed to be given in adoption, must be completed expeditiously so that the child does not have to remain in the care and custody of a social or child welfare agency without the warmth and affection of family life, longer than is absolutely necessary.

We may also point out that if a child is to be given in intercountry adoption, it would be desirable that it is given in such adoption as far as possible before it completes the age of 3 years. The reason is that if a child is adopted before it attains the age of understanding, it is always easier for it to get assimilated and integrated in the new environment in which it may find itself on being adopted by a foreign parent. Comparatively it may be some what difficult for a grown up child to get acclimatized to new surroundings in a different land and some times a problem may also arise whether foreign adoptive parents would be able to win the love and affection of such grown up child. But we make it clear that we say this, we do not wish to suggest for a moment that children above the age of three years should not be given in inter-country adoption. There can be no hard and fast rule in this connection. Even children between the ages of 3 and 7 years may be able to assimilate themselves in the new surroundings without any difficulty and there is no reason why they should be denied the benefit of family warmth and affection in the home of foreign parents, merely because they are past the age of 3 years. We would suggest that even children above the age of 7 years may be given in inter-country adoption but we would recommend that in such cases, their wishes may be ascertained if they are in a position to indicate any preference. The statistics placed before us show that even children past the age of 7 years have been happily integrated in the family of their foreign adoptive parents.

Lastly, we come to the procedure to be followed by the court when an application for guardianship of a child is made to it. Section 11 of the Guardians and Wards Act, 1890 provides for notice of the application to be issued to various persons including the parents of the child if they are residing in any State to which the Act extends. But, we are definitely of the view that no notice under this section should be issued to the biological parents of the child, since it would create considerable amount of embarrassment and hard ship if the biological parents were then to come forward and oppose the application of the prospective adoptive parent for guardianship of the child. Moreover, the biological parents would then come to know who is the person taking the child in adoption and with this knowledge they would at any time be able to trace the whereabouts of the child and they may try to contact the child resulting in emotional and psychological disturbance for the child which might affect his future happiness. The possibility also cannot be ruled out that if the biological parents know who are the adoptive parents they may try to extort money from the adoptive parents. It is therefore absolutely essential that the biological parents should not have any opportunity of knowing who are the adoptive parents taking the child in adoption and therefore notice of the application for guardianship should not be given to the biological parents. We would direct that for the same reasons notice of the application for guardianship should also not be published in any newspaper. Section 11 of the Act empowers the court to serve notice of the application for guardianship on any other person to whom, in the opinion of the court, special notice of the application should be given and in exercise of this power the court should, before entertaining an application for guardianship, give notice to the Indian Council of Child Welfare or the Indian Council for Social Welfare or any of its branches for scrutiny of the application with a view to ensuring that it will be for the welfare of the child to be given in adoption to the foreigner making the application for guardianship. The Indian Council of Social Welfare of the Indian Council of Child Welfare to which notice is issued by the court would have to scrutinise the application for guardianship made on behalf of the foreigner wishing to take the child in adoption and after examining the home study report, the child study report as also documents and certificates forwarded by the sponsoring social or child welfare agency and making necessary enquiries, it must make its representation to the court so that the court may be able to satisfy itself whether the principles and norms as also the procedure laid down by us in this judgment have been observed and followed, whether the foreigner will be a suitable adoptive parent for the child and the child will be able to integrate and assimilate itself in the family and community of the foreigner and will be able to get warmth and affection of family life as also moral and material stability and security and whether it will be in the interest of the child to be taken in adoption by the foreigner. If the court is satisfied, then and then only it will make an order appointing the foreigner as guardian of the child and permitting him to remove the child to his own country with a view to eventual adoption. The court will also introduce a condition in the order that the foreigner who is appointed guardian shall make proper provision by way of deposit or bond or otherwise to enable the child to be repatriated to India should it become necessary for and reason. We may point out that such a provision is to be found in clause 24 of the Adoption of Children Bill No. 208 of 1980 and in fact the practice of taking a bond from the foreigner who is appointed guardian of the child is being followed by the courts in Delhi as a result of practice instructions issued by the High Court of Delhi. The order will also include a condition that the foreigner who is appointed guardian shall submit to the Court as also to the Social or Child Welfare Agency processing the application for guardianship, progress reports of the child along with a recent photograph quarterly during the first two years and half yearly for the next three years. The court may also while making the order permit the social or child welfare agency which has taken care of the child pending its selection for adoption to receive such amount as the Court thinks fit from the foreigner who is appointed guardian of such child. The order appointing guardian shall carry, attached to it, a photograph of the child duly counter- signed by an officer of the court. This entire procedure shall be completed by the court expediticusly and as far as possible within a period of two months from the date of filing of the application for guardianship of the child. The proceedings on the application for guardianship should be held by the Court in camera and they should be regarded as confidential and as soon as an order is made on the application for guardianship the entire proceedings including the papers and documents should be sealed. When an order appointing guardian of a child is made by the court, immediate intimation of the same shall be given to the Ministry of Social Welfare, Government of India as also to the Ministry of Social Welfare of the Government of the State in which the court is situate and copies of such order shall also be forwarded to the two respective ministries of Social Welfare. The Ministry of Social Welfare, Government of India shall maintain a register containing names and other particulars of the children in respect of whom orders for appointment of guardian have been made as also names, addresses and other particulars of the prospective adoptive parents who have been appointed such guardians and who have been permitted to take away the children for the purpose of adoption. The Government of India will also send to the Indian Embassy or High Commission in the country of the prospective adoptive parents from time to time the names, addresses and other particulars of such prospective adoptive parents together with particulars of the children taken by them and requesting the Embassy or High Commission to maintain an unobtrusive watch over the welfare and progress of such children in order to safeguard against any possible maltreatment, exploitation or use for ulterior purposes and to immediately report any instance of maltreatment, negligence or exploitation to the Government of India for suitable action.

We may add even at the cost of repetition that the biological parents of a child taken in adoption should not under any circumstances be able to know who are the adoptive parents of the child nor should they have any access to the home study report or the child study report or the other papers and proceedings in the application for guardianship of the child. The foreign parents who have taken a child in adoption would normally have the child study report with them before they select the child for adoption and in case they do not have the child study report, the same should be supplied to them by the recognised social or child welfare agency processing the application for guardianship and from the child study report, they would be able to gather information as to who are the biological parents of the child, if the biological parents are known. There can be no objection in furnishing to the foreign adoptive parents particulars in regard to the biological parents of the child taken in adoption, but it should be made clear that it would be entirely at the discretion of the foreign adoptive parents whether and if so when, to inform the child about its biological parents.

Once a child is taken in adoption by a foreigner and the child grows up in the surroundings of the country of adoption and becomes a part of the society of that country, it may not be desirable to give information to the child about its biological parents whilst it is young, as that might have the effect of exciting his curiosity to meet its biological parents resulting in unsettling effect on its mind. But if after attaining the age of maturity, the child wants to know about its biological parents, there may not be any serious objection to the giving of such information to the child because after the child attains maturity, it is not likely to be easily affected by such information and in such a case, the foreign adoptive parents may, in exercise of their discretion, furnish such information to the child if they so think fit.

These are the principles and norms which must be observed and the procedure which must be followed in giving a child in adoption to foreign parents. If these principles and norms are observed and this procedure is followed, we have no doubt that the abuses to which inter-country adoptions, if allowed without any safeguards, may lend themselves would be considerably reduced, if not eliminated and the welfare of the child would be protected and it would be able to find a new home where it can grow in an atmosphere of warmth and affection of family life with full opportunities for physical intellectual and spiritual development. We may point out that the adoption of children by foreign parents need not wait until social or child welfare agencies are recognised by the Government as directed in this order, but pending recognition of social or child welfare agencies for the purpose of inter-country adoptions, which interregnum, we hope, will not last for a period of more than two months, any social or child welfare agency having the care and custody of a child may be permitted to process an application of a foreigner, but barring this departure the rest of the procedure laid down by us shall be followed wholly and the principles and norms enunciated by us in this Judgment shall be observed in giving a child in inter-country adoption.

The writ petition shall stand disposed of in these terms. Copies of this order shall be sent immediately to the Ministry of Social Welfare of the Government of India and the Ministry of Social Welfare of each of the State Governments as also to all the High Courts in the country and to the Indian Council of Social Welfare and the Indian Council of Child Welfare. We would direct that copies of this Order shall also be supplied to the Embassies and Diplomatic Missions of Norway, Sweden, France, Federal Republic of Germany and the United States of America and the High Commissions of Canada and Australia for their informations since the statistics show that these are the countries where Indian children are taken in adoption.

ANNEXURE-’A’

1. Source of Referral.
2. Number of single and joint interviews.
3. Personality of husband and wife.
4. Health details such as clinical tests, heart condition, past illnesses etc. (medical certificates required, sterility certificate required, if applicable),
5. Social status and family background.
6. Nature and Adjustment with occupation.
7. Relationship with community.
8. Description of home.
9. Accommodation for the child.
10. Schooling facilities.
11. Amenities in the home.
12. Standard of living as it appears in the home.
13. Type of neighbourhood.
14. Current relationship between husband and wife.
15. (a) Current relationship between parents and children (if any children).
(b) Development of already adopted children (if any) and their acceptance of the child to be adopted.
16. Current relationship between the couple and the members of each other’s families.
17. If the wife is working, will she be able to give up the job ?
18. If she cannot leave the job, what arrangements will she make to look after the child ?
19. Is adoption considered because of sterility of one of the maritial partners ?
20. If not, can they eventually have children of their own ?
21. If a child is born to them, how will they treat the adopted child ?
22. If the couple already has children how will these children react to an adopted child ?
23. Important social and psychological experiences which have had a bearing on their desire to adopt a child.
24. Reasons for wanting to adopt an Indian child.
25. Attitude of grand-parents and relatives towards the adoption.
26. Attitude of relatives, friends, community and neighbourhood towards adoption of an Indian child.
27. Anticipated plans for the adopted child.
28. Can the child be adopted according to the adoption law in the adoptive parents country ? Have they obtained the necessary permission to adopt ? (Statement of permission required.)
29. Do the adoptive parents know any one who adopted a child from their own country or another country ? Who are they ? From where did they fail to get a child from that source ?
30. Did the couple apply for a child from any other source ? If yes, which source ?
31. What type of child is the couple interested in ? (sex, age, and for what reasons.)
32. Worker’s recommendation concerning the family and the type of child which would best fit into this home.
33. Name and address of the agency conducting the home study. Name of social worker, qualification of social worker.
34. Name of agency responsible for post placement, supervision and follow up.

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ACT:
Writ of Habeas Corpus served on Respondents directing them to produce the two named persons-Respondents fail to file a return but explain the reasons for not producing them-Appropriate mode of enforcing obedience to a Writ of Habeas Corpus, explained-Contempt of Court Act, 1971 Sections 2 (a) and 2 (b) “civil contempt” and willful di obedience”, explained Exemplary Cost by way of Compensation ordered under Rule 6 of order XLVII of Supreme Court Rules, 1966.

HEADNOTE:
On November 24, 1983, the Court by its judgment and order directed that a writ of Habeas Corpus be issued-Though the 1st, 2nd and 4th respondents were served, they failed to file a return to the Writ. However a return on affidavit by one Ajai Vikram Singh Director, Ministry of Defence was filed on 12.12.1983 expressing their inability to produce the two named officers due to circumstances beyond their control and their failure to trace them even with the assistance of Central Bureau of Investigation. This was supported by a copy of the report by the Dy. Inspector General of Police (s). Making the Rule absolute the Court,

^
HELD 1. In compliance with the mandatory direction contained in the Writ of Habeas Corpus, the person to whom it is directed is under a legal obligation to produce the body of the person alleged to be unlawfully detained before the Court on the day specified and to make a formal return to the writ. Here, such a writ has been issued and there has been failure to produce the missing persons in respect of whom writ is issued and to file the return as mandated by law.

2:1 The Contempt of Courts Act, 1971 defines ’contempt of court’ in Sec. 2(a) to mean ’civil contempt or criminal contempt’. ’Civil contempt’ is defined in Sec. 2(b) to mean willful disobedience to any judgment decree, direction, order, writ or other process of a Court or willful breach of an undertaking given to a Court’. Willful disobedience to a writ issued by the Court constitutes civil contempt.

2:2 Mere failure to obey the writ may not constitute civil contempt depending upon the facts and circumstances of the case. But willful disobedience to a writ issued by a Court constitutes civil contempt. Again it is well settled that the appropriate mode of enforcing obedience to a writ of habeas corpus is by committal for contempt. A committal order may be made against a person who intentionally makes a false return to a writ of habeas corpus, but an unintentional misrepresentation on a return is not a ground for committal.

2:3 The view of this Court as expressed in the main judgment clearly indicates that the assertion of respondents 1, 2 and 4 that C. Daniel and C. Paul left Phungrei Camp where 21st Sikh Regiment were stationed is not correct and that to avoid responsibility flowing from the mysterious disappearance of C. Daniel and C. Paul an attempt was made to suggest that they had left alive in the company of their compatriots. On that conclusion one can say that there is a willful disobedience to the writ of habeas corpus by misleading the court by presenting a distorted version of facts not borne out by the record. It is thus established that the respondents 1, 2 and 4 have committed civil contempt by their willful disobedience to the writ.

3:1 Civil contempt is punishable with imprisonment as well as fine. In a given case, the court may also penalise the party in contempt by ordering him to pay the costs of the application. A fine can also be imposed upon the contemnor.

3:2 In the facts and circumstances of the case, keeping in view the torture, the agony and the mental oppression through which Mrs. C. Thingkhuila, wife of Shri C. Daniel and Mrs. C. Vangamla, wife of Shri C. Paul had to pass and they being the proper applicants, the formal application being by. Sebastion M. Hongray, the court considered it proper and directed that as a measure of exemplary costs as is permissible in such cases, respondents Nos. 1 and 2 shall pay Rs. 1 lac to each of the aforementioned two women within a period of four weeks from April 23, 1984.

4. Further adjourning the matter to enable the respondents to trace or locate the two missing persons is to shut the eyes to the reality and to peruse a mirage. The two officers have not met their tragic end in an encounter as is usually claimed and the only possible inference that can be drawn from circumstance of the case is that both of them must have met an unnatural death. Prima facie, it would be an offence of murder. Who is individually or collectively the perpetrator of the crime or is responsible for their disappearance will have to be determined by a proper, thorough and responsible police investigation. It is not necessary to start casting a doubt on anyone or any particular person. But prima facie there is material on record to reach an affirmative conclusion that both Shri C. Daniel and Shri C. Paul are not alive and have met an unnatural death. And the Union of India cannot disown the responsibility in this behalf.

(The Court issued a writ of mandamus to the Superintendent of Police, Ukhrul, Manipur State to treat all the papers in the Writ of Habeas Corpus as “information of a cognizable offence and to commence investigation as”prescribed by the relevant provisions of the Code of Criminal Procedure.)

JUDGMENT: ORIGINAL JURISDICTION : Writ Petition (Criminal) No. 148 of 1983. (Under article 32 of the Constitution of India) Ms. Nandita Haksar and C.S. Vaidyanathan for the Petitioner. Ms. A. Subhashini for Respondent. Mrs. Urmila Kapoor for Respondent. V.C. Mahajan, P.N. Puri S.K. Mehta and Balbir Singh Shant for Respondent.

The Judgment of the Court was delivered by DESAI, J. On Nov. 24, 1983, the Court by its Judgment and order directed that a writ of habeas corpus be issued.

The operative portion of the order reads as under:
“Accordingly, this petition is allowed and we direct that a writ of habeas corpus be issued to the respondents 1, 2 and 4 commanding them to produce C. Daniel, retired Naik Subedar of Manipur Rifles and Headmaster of the Junior High School of Huining Village and C. Paul, Assistant Pastor of Huining Baptist Church, who were taken to Phungrei Camp by the jawans of 21st Sikh Regiment on March 10, 1982 before this Court on Dec. 12, 1983 and file the return.”

The Registry issued the writ and served the same upon first respondent-Union of India, second respondentSecretary, Ministry of Home Affairs and 4th respondentCommandant, 21st Sikh Regiment, Phungrei Camp. Pursuant to the writ, it was obligatory upon respondents 1, 2 and 4 to file the return and to produce C. Daniel and C. Paul. A return on affidavit by one Ajai Vikram Singh, Director, Ministry of Defence dated December 9, 1983 was produced in the Court on December 12, 1983 stating therein “that with all the will and the best efforts, the respondents are unable to produce S/Shri C. Daniel and C. Paul for the reasons set out in the affidavit and crave for indulgence of the Hon’ble Court for their inability to produce the abovenamed individuals due to circumstances beyond their control.” It was reiterated that C. Daniel and C. Paul were not in the custody or control of respondents 1, 2, and 4. To this return several affidavits and messages were annexed saying that the Army authorities conducted an extensive search for tracing C. Daniel and C. Paul but nothing fruitful has been achieved. One Surendra Kumar, Deputy Secretary, Ministry of Home Affairs had also filed the return stating that C. Daniel and C. Paul are neither in the custody or control of respondent No. 2. It was stated that Central Bureau of Investigation (CBI for short) have been directed to conduct enquiries to locate the aforementioned two persons and to intimate the result thereof. The matter was adjourned to enable the respondents to pursue their efforts. Nothing fruitful came up even though the matter was twice adjourned at the request of learned Attorney General who entered appearance on behalf of respondents Nos. 1, 2 and 4. The writ petition was posted for further hearing and orders on April 19, 1984. On that day, a summary of enquiry made by CBI was submitted to the Court in which it was stated that ’the field enquiries made by the CBI and the efforts made to locate the two persons have yielded no results and it has not been possible to locate Sri Daniel and Sri Paul’, The report was submitted by the Dy. Inspector General of Police (S).

It is now necessary to deal with the failure of respondents 1, 2 and 4 to file the return to the writ of habeas corpus. After a preliminary enquiry and after hearing the respondents and after negativing their contentions that Shri C. Daniel and Shri C. Paul were not seen last alive in the custody of the 4th respondent, the Court directed to issue a writ of habeas corpus. The writ of habeas corpus was issued and was served on respondents 1, 2 and 4. In compliance with the mandatory direction contained in the writ of habeas corpus, the person to whom it is directed is under a legal obligation to produce the body of person alleged to be unlawfully detained before the Court on the day specified and to make a formal return to the writ. (1) Such a writ has been issued and there has been failure to produce the missing persons in respect of whom writ is issued and to file the return as mandated by law.

The next question therefore, is : what is the appropriate mode of enforcing obedience to a writ of habeas corpus ?

The Contempt of Courts Act, 1971 defines ’contempt of court’ in Sec. 2(a) to mean ’civil contempt or criminal contempt’. ’Civil con tempt’ is defined in Sec. 2(b) to mean wilful disobedience to any judgment decree, direction, order, writ or other process of a Court or wilful breach of an undertaking given to a Court.’ Wilful disobedience to a writ issued by the Court constitutes civil contempt. The question is : whether this disobedience is wilful ? Mere failure to obey the writ may not constitute civil contempt depending upon the facts and circumstances of the case. But wilful disobedience to a writ issued by a Court constitutes civil contempt. Again it is well-settled that ’the appropriate mode of enforcing obedience to a writ of habeas corpus is by committal for contempt. A committal order may be made against a person who intentionally makes a false return to a writ of habeas corpus, but an unintentional misrepresentation on a return is not a ground for committal.’(1)

The view of this Court as expressed in the main judgment clearly indicates that the assertion of respondents 1, 2 and 4 that C. Daniel and C. Paul left Phungrei Camp where 21st Sikh Regiment were stationed is not correct and that to avoid responsibility flowing from the mysterious disappearance of C. Daniel and C. Paul an attempt was made to suggest that they had left alive in the company of their compatriots. The Court has rejected this submission as untenable and uncorrect. On that conclusion one can say that there is a wilful disobedience to the writ of habeas corpus by misleading the court by presenting a distorted version of facts not borne out by the record. It is thus established that the respondents 1, 2 and 4 have committed civil contempt by their wilful disobedience to the writ.

Civil contempt is punishable with imprisonment as well as fine. In a given case, the court may also penalise the party in contempt by ordering him to pay the costs of the application. (2) A fine can also be imposed upon the contemnor.

Now in the facts and circumstances of the case, we do not propose to impose imprisonment nor any amount as and by way of fine but keeping in view the torture, the agony and the mental oppression through which Mrs. C. Thingkhuila, wife of Shri C. Daniel and Mrs. C. Vangamla, wife of Shri C. Paul had to pass and they being the proper applicants, the formal application being by Sebastian M. Hongray, we direct that as a measure of exem plary costs as is permissible in such cases, respondents Nos. 1 and 2 shall pay Rs 1 lac to each of the aforementioned two women within a period of four weeks from today.

A query was posed to the learned Attorney General about the further step to be taken. It was made clear that further adjourning the matter to enable the respondents to trace or locate the two missing persons is to shut the eyes to the reality and to pursue a mirage. As we are inclined to direct registration of an offence and an investigation, we express no opinion as to what fate has befallen to Shri C. Daniel and Shri C. Paul, the missing two persons in respect of whom the writ of habeas corpus was issued save and except saying that they have not met their tragic end in an encounter as is usually claimed and the only possible inference that can be drawn from circumstance already discussed is that both of them must have met an unnatural death. Prima facie, it would be an offence of murder. Who is individually or collectively the perpetrator of the crime or is responsible for their disappearance will have to be determined by a proper, thorough and responsible police investigation. It is not necessary to start casting a doubt on anyone or any particular person. But prima facie there is material on record to reach an affirmative conclusion that both Shri C. Daniel and Shri C. Paul are not alive and have met an unnatural death. And the Union of India cannot disown the responsibility in this behalf. If this inference is permissible which we consider reasonable in the facts and circumstances of the case, we direct that the Registrar (Judicial) shall forward all the papers of the case accompanied by a writ of mandamus to the Superintendent of Police, Ukhrul, Manipur State to be treated as information of a cognizable offence and to commence investigation as prescribed by the relevant provisions of the Code of Criminal Procedure.

S.R. Rule made absolute.

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Syllabus

Petitioner Sony Corp. manufactures home videotape recorders (VTR’s), and markets them through retail establishments, some of which are also petitioners. Respondents own the copyrights on some of the television programs that are broadcast on the public airwaves. Respondents brought an action against petitioners in Federal District Court, alleging that VTR consumers had been recording some of respondents’ copyrighted works that had been exhibited on commercially sponsored television, and thereby infringed respondents’ copyrights, and further that petitioners were liable for such copyright infringement because of their marketing of the VTR’s. Respondents sought money damages, an equitable accounting of profits, and an injunction against the manufacture and marketing of the VTR’s. The District Court denied respondents all relief, holding that noncommercial home use recording of material broadcast over the public airwaves was a fair use of copyrighted works, and did not constitute copyright infringement, and that petitioners could not be held liable as contributory infringers even if the home use of a VTR was considered an infringing use. The Court of Appeals reversed, holding petitioners liable for contributory infringement and ordering the District Court to fashion appropriate relief

Held: The sale of the VTR’s to the general public does not constitute contributory infringement of respondents’ copyrights. Pp. 464 U. S. 428-456.

(a) The protection given to copyrights is wholly statutory, and, in a case like this, in which Congress has not plainly marked the course to be followed by the judiciary, this Court must be circumspect in construing the scope of rights created by a statute that never contemplated such a calculus of interests. Any individual may reproduce a copyrighted work for a “fair use”; the copyright owner does not possess the exclusive right to such a use. Pp. 464 U. S. 428-434.

(b) Kalem Co. v. Harper Brothers, 222 U. S. 55, does not support respondents’ novel theory that supplying the “means” to accomplish an infringing activity and encouraging that activity through advertisement are sufficient to establish liability for copyright infringement. This case does not fall in the category of those in which it is manifestly just to

Page 464 U. S. 418

impose vicarious liability because the “contributory” infringer was in a position to control the use of copyrighted works by others and had authorized the use without permission from the copyright owner. Here, the only contact between petitioners and the users of the VTR’s occurred at the moment of sale. And there is no precedent for imposing vicarious liability on the theory that petitioners sold the VTR’s with constructive knowledge that their customers might use the equipment to make unauthorized copies of copyrighted material. The sale of copying equipment, like the sale of other articles of commerce, does not constitute contributory infringement if the product is widely used for legitimate, unobjectionable purposes, or, indeed, is merely capable of substantial noninfringing uses. Pp. 464 U. S. 434-442.

(c) The record and the District Court’s findings show (1) that there is a significant likelihood that substantial numbers of copyright holders who license their works for broadcast on free television would not object to having their broadcast time-shifted by private viewers (i.e., recorded at a time when the VTR owner cannot view the broadcast so that it can be watched at a later time); and (2) that there is no likelihood that time-shifting would cause nonminimal harm to the potential market for, or the value of, respondents’ copyrighted works. The VTR’s are therefore capable of substantial noninfringing uses. Private, noncommercial time-shifting in the home satisfies this standard of noninfringing uses both because respondents have no right to prevent other copyright holders from authorizing such time-shifting for their programs and because the District Court’s findings reveal that even the unauthorized home time-shifting of respondents’ programs is legitimate fair use. Pp. 442-456.

659 F.2d 963, reversed.

STEVENS, J., delivered the opinion of the Court in which BURGER, C.J., and BRENNAN, WHITE, and O’CONNOR, JJ., joined. BLACKMUN, J., filed a dissenting opinion in which MARSHALL, POWELL, and REHNQUIST, JJ., joined, post, p. 464 U. S. 457.

Page 464 U. S. 419

JUSTICE STEVENS delivered the opinion of the Court.

Petitioners manufacture and sell home videotape recorders. Respondents own the copyrights on some of the television

Page 464 U. S. 420

programs that are broadcast on the public airwaves. Some members of the general public use videotape recorders sold by petitioners to record some of these broadcasts, as well as a large number of other broadcasts. The question presented is whether the sale of petitioners’ copying equipment to the general public violates any of the rights conferred upon respondents by the Copyright Act.

Respondents commenced this copyright infringement action against petitioners in the United States District Court for the Central District of California in 1976. Respondents alleged that some individuals had used Betamax videotape recorders (VTR’s) to record some of respondents’ copyrighted works which had been exhibited on commercially sponsored television, and contended that these individuals had thereby infringed respondents’ copyrights. Respondents further maintained that petitioners were liable for the copyright infringement allegedly committed by Betamax consumers because of petitioners’ marketing of the Betamax VTR’s. [Footnote 1] Respondents sought no relief against any Betamax consumer. Instead, they sought money damages and an equitable accounting of profits from petitioners, as well as an injunction against the manufacture and marketing of Betamax VTR’s.

After a lengthy trial, the District Court denied respondents all the relief they sought and entered judgment for petitioners. 480 F.Supp. 429 (1979). The United States Court of Appeals for the Ninth Circuit reversed the District Court’s judgment on respondents’ copyright claim, holding petitioners liable for contributory infringement and ordering the District Court to fashion appropriate relief. 659 F.2d 963

Page 464 U. S. 421

(1981). We granted certiorari, 457 U.S. 1116 (1982); since we had not completed our study of the case last Term, we ordered reargument, 463 U. S. 1226 (1983). We now reverse.

An explanation of our rejection of respondents’ unprecedented attempt to impose copyright liability upon the distributors of copying equipment requires a quite detailed recitation of the findings of the District Court. In summary, those findings reveal that the average member of the public uses a VTR principally to record a program he cannot view as it is being televised, and then to watch it once at a later time. This practice, known as “time-shifting,” enlarges the television viewing audience. For that reason, a significant amount of television programming may be used in this manner without objection from the owners of the copyrights on the programs. For the same reason, even the two respondents in this case, who do assert objections to time-shifting in this litigation, were unable to prove that the practice has impaired the commercial value of their copyrights or has created any likelihood of future harm. Given these findings, there is no basis in the Copyright Act upon which respondents can hold petitioners liable for distributing VTR’s to the general public. The Court of Appeals’ holding that respondents are entitled to enjoin the distribution of VTR’s, to collect royalties on the sale of such equipment, or to obtain other relief, if affirmed, would enlarge the scope of respondents’ statutory monopolies to encompass control over an article of commerce that is not the subject of copyright protection. Such an expansion of the copyright privilege is beyond the limits of the grants authorized by Congress.

I
The two respondents in this action, Universal City Studios, Inc., and Walt Disney Productions, produce and hold the copyrights on a substantial number of motion pictures and other audiovisual works. In the current marketplace, they can exploit their rights in these works in a number of ways:

Page 464 U. S. 422

by authorizing theatrical exhibitions, by licensing limited showings on cable and network television, by selling syndication rights for repeated airings on local television stations, and by marketing programs on prerecorded videotapes or videodiscs. Some works are suitable for exploitation through all of these avenues, while the market for other works is more limited.

Petitioner Sony manufactures millions of Betamax videotape recorders and markets these devices through numerous retail establishments, some of which are also petitioners in this action. [Footnote 2] Sony’s Betamax VTR is a mechanism consisting of three basic components: (1) a tuner, which receives electromagnetic signals transmitted over the television band of the public airwaves and separates them into audio and visual signals; (2) a recorder, which records such signals on a magnetic tape; and (3) an adapter, which converts the audio and visual signals on the tape into a composite signal that can be received by a television set.

Several capabilities of the machine are noteworthy. The separate tuner in the Betamax enables it to record a broadcast off one station while the television set is tuned to another channel, permitting the viewer, for example, to watch two simultaneous news broadcasts by watching one “live” and recording the other for later viewing. Tapes may be reused, and programs that have been recorded may be erased either before or after viewing. A timer in the Betamax can be used to activate and deactivate the equipment at predetermined

Page 464 U. S. 423

times, enabling an intended viewer to record programs that are transmitted when he or she is not at home. Thus a person may watch a program at home in the evening even though it was broadcast while the viewer was at work during the afternoon. The Betamax is also equipped with a pause button and a fast-forward control. The pause button, when depressed, deactivates the recorder until it is released, thus enabling a viewer to omit a commercial advertisement from the recording, provided, of course, that the viewer is present when the program is recorded. The fast-forward control enables the viewer of a previously recorded program to run the tape rapidly when a segment he or she does not desire to see is being played back on the television screen.

The respondents and Sony both conducted surveys of the way the Betamax machine was used by several hundred owners during a sample period in 1978. Although there were some differences in the surveys, they both showed that the primary use of the machine for most owners was “time-shifting” — the practice of recording a program to view it once at a later time, and thereafter erasing it. Time-shifting enables viewers to see programs they otherwise would miss because they are not at home, are occupied with other tasks, or are viewing a program on another station at the time of a broadcast that they desire to watch. Both surveys also showed, however, that a substantial number of interviewees had accumulated libraries of tapes. [Footnote 3] Sony’s survey indicated

Page 464 U. S. 424

that over 80% of the interviewees watched at least as much regular television as they had before owning a Betamax. [Footnote 4] Respondents offered no evidence of decreased television viewing by Betamax owners. [Footnote 5]

Sony introduced considerable evidence describing television programs that could be copied without objection from any copyright holder, with special emphasis on sports, religious, and educational programming. For example, their survey indicated that 7.3% of all Betamax use is to record sports events, and representatives of professional baseball, football, basketball, and hockey testified that they had no objection to the recording of their televised events for home use. [Footnote 6]

Page 464 U. S. 425

Respondents offered opinion evidence concerning the future impact of the unrestricted sale of VTR’s on the commercial value of their copyrights. The District Court found, however, that they had failed to prove any likelihood of future harm from the use of VTR’s for time-shifting. 480 F.Supp. at 469.

The District Court’s Decision

The lengthy trial of the case in the District Court concerned the private, home use of VTR’s for recording programs broadcast on the public airwaves without charge to the viewer. [Footnote 7] No issue concerning the transfer of tapes to other persons, the use of home-recorded tapes for public performances, or the copying of programs transmitted on pay or cable television systems was raised. See id. at 432-433, 442.

The District Court concluded that noncommercial home use recording of material broadcast over the public airwaves was a fair use of copyrighted works, and did not constitute copyright infringement. It emphasized the fact that the material was broadcast free to the public at large, the noncommercial character of the use, and the private character of the activity conducted entirely within the home. Moreover, the court found that the purpose of this use served the public interest in increasing access to television programming, an interest that

“is consistent with the First Amendment policy of providing the fullest possible access to information through the public airwaves. Columbia Broadcasting System, Inc. v. Democratic National Committee, 412 U. S. 94, 412 U. S. 102.”

Id. at 454. [Footnote 8] Even when an entire copyrighted work was recorded,

Page 464 U. S. 426

the District Court regarded the copying as fair use “because there is no accompanying reduction in the market for plaintiff’s original work.'” Ibid. .

As an independent ground of decision, the District Court also concluded that Sony could not be held liable as a contributory infringer even if the home use of a VTR was considered an infringing use. The District Court noted that Sony had no direct involvement with any Betamax purchasers who recorded copyrighted works off the air. Sony’s advertising was silent on the subject of possible copyright infringement, but its instruction booklet contained the following statement:

“Television programs, films, videotapes and other materials may be copyrighted. Unauthorized recording of such material may be contrary to the provisions of the United States copyright laws.”

Id. at 436.

The District Court assumed that Sony had constructive knowledge of the probability that the Betamax machine would be used to record copyrighted programs, but found that Sony merely sold a “product capable of a variety of uses, some of them allegedly infringing.” Id. at 461. It reasoned:

“Selling a staple article of commerce — e.g., a typewriter, a recorder, a camera, a photocopying machine — technically contributes to any infringing use subsequently made thereof, but this kind of ‘contribution,’ if deemed sufficient as a basis for liability, would expand the theory beyond precedent, and arguably beyond judicial management.”

“. . . Commerce would indeed be hampered if manufacturers of staple items were held liable as contributory infringers whenever they ‘constructively’ knew that some purchasers on some occasions would use their product

Page 464 U. S. 427

for a purpose which a court later deemed, as a matter of first impression, to be an infringement.”

Ibid.

Finally, the District Court discussed the respondents’ prayer for injunctive relief, noting that they had asked for an injunction either preventing the future sale of Betamax machines or requiring that the machines be rendered incapable of recording copyrighted works off the air. The court stated that it had

“found no case in which the manufacturers, distributors, retailers and advertisers of the instrument enabling the infringement were sued by the copyright holders,”

and that the request for relief in this case “is unique.” Id. at 465.

It concluded that an injunction was wholly inappropriate because any possible harm to respondents was outweighed by the fact that

“the Betamax could still legally be used to record noncopyrighted material or material whose owners consented to the copying. An injunction would deprive the public of the ability to use the Betamax for this noninfringing off-the-air recording.”

Id. at 468.

The Court of Appeals’ Decision

The Court of Appeals reversed the District Court’s judgment on respondents’ copyright claim. It did not set aside any of the District Court’s findings of fact. Rather, it concluded as a matter of law that the home use of a VTR was not a fair use, because it was not a “productive use.” [Footnote 9] It therefore held that it was unnecessary for plaintiffs to prove any harm to the potential market for the copyrighted works, but then observed that it seemed clear that the cumulative effect of mass reproduction made possible by VTR’s would tend to diminish the potential market for respondents’ works. 659 F.2d at 974.

Page 464 U. S. 428

On the issue of contributory infringement, the Court of Appeals first rejected the analogy to staple articles of commerce such as tape recorders or photocopying machines. It noted that such machines “may have substantial benefit for some purposes” and do not “even remotely raise copyright problems.” Id. at 975. VTR’s, however, are sold “for the primary purpose of reproducing television programming,” and “[v]irtually all” such programming is copyrighted material. Ibid. The Court of Appeals concluded, therefore, that VTR’s were not suitable for any substantial noninfringing use even if some copyright owners elect not to enforce their rights.

The Court of Appeals also rejected the District Court’s reliance on Sony’s lack of knowledge that home use constituted infringement. Assuming that the statutory provisions defining the remedies for infringement applied also to the nonstatutory tort of contributory infringement, the court stated that a defendant’s good faith would merely reduce his damages liability, but would not excuse the infringing conduct. It held that Sony was chargeable with knowledge of the homeowner’s infringing activity because the reproduction of copyrighted materials was either “the most conspicuous use” or “the major use” of the Betamax product. Ibid.

On the matter of relief, the Court of Appeals concluded that “statutory damages may be appropriate” and that the District Court should reconsider its determination that an injunction would not be an appropriate remedy; and, referring to “the analogous photocopying area,” suggested that a continuing royalty pursuant to a judicially created compulsory license may very well be an acceptable resolution of the relief issue. Id. at 976.

II
Article I, § 8, of the Constitution provides:

“The Congress shall have Power . . . To Promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries. ”

Page 464 U. S. 429

The monopoly privileges that Congress may authorize are neither unlimited nor primarily designed to provide a special private benefit. Rather, the limited grant is a means by which an important public purpose may be achieved. It is intended to motivate the creative activity of authors and inventors by the provision of a special reward, and to allow the public access to the products of their genius after the limited period of exclusive control has expired.

“The copyright law, like the patent statutes, makes reward to the owner a secondary consideration. In Fox Film Corp. v. Doyal, 286 U. S. 123, 286 U. S. 127, Chief Justice Hughes spoke as follows respecting the copyright monopoly granted by Congress,”

“The sole interest of the United States and the primary object in conferring the monopoly lie in the general benefits derived by the public from the labors of authors.”

“It is said that reward to the author or artist serves to induce release to the public of the products of his creative genius.”

United States v. Paramount Pictures, Inc., 334 U. S. 131, 334 U. S. 158 (1948).

As the text of the Constitution makes plain, it is Congress that has been assigned the task of defining the scope of the limited monopoly that should be granted to authors or to inventors in order to give the public appropriate access to their work product. Because this task involves a difficult balance between the interests of authors and inventors in the control and exploitation of their writings and discoveries on the one hand, and society’s competing interest in the free flow of ideas, information, and commerce on the other hand, our patent and copyright statutes have been amended repeatedly. [Footnote 10]

Page 464 U. S. 430

From its beginning, the law of copyright has developed in response to significant changes in technology. [Footnote 11] Indeed, it was the invention of a new form of copying equipment — the printing press — that gave rise to the original need for copyright protection. [Footnote 12] Repeatedly, as new developments have

Page 464 U. S. 431

occurred in this country, it has been the Congress that has fashioned the new rules that new technology made necessary. Thus, long before the enactment of the Copyright Act of 1909, 35 Stat. 1075, it was settled that the protection given to copyrights is wholly statutory. Wheaton v. Peters, 8 Pet. 591, 33 U. S. 661-662 (1834). The remedies for infringement “are only those prescribed by Congress.” Thompson v. Hubbard, 131 U. S. 123, 131 U. S. 151 (1889).

The judiciary’s reluctance to expand the protections afforded by the copyright without explicit legislative guidance is a recurring theme. See, e.g., Teleprompter Corp. v. Columbia Broadcasting System, Inc., 415 U. S. 394 (1974); Fortnightly Corp. v. United Artists Television, Inc., 392 U. S. 390 (1968); White-Smith Music Publishing Co. v. Apollo Co., 209 U. S. 1 (1908); Williams & Wilkins Co. v. United States, 203 Ct.Cl. 74, 487 F.2d 1345 (1973), aff’d by an equally divided Court, 420 U. S. 376 (1975). Sound policy, as well as history, supports our consistent deference to Congress when major technological innovations alter the market for copyrighted materials. Congress has the constitutional authority and the institutional ability to accommodate fully the varied permutations of competing interests that are inevitably implicated by such new technology.

In a case like this, in which Congress has not plainly marked our course, we must be circumspect in construing the scope of rights created by a legislative enactment which never contemplated such a calculus of interests. In doing so, we are guided by Justice Stewart’s exposition of the correct approach to ambiguities in the law of copyright:

“The limited scope of the copyright holder’s statutory monopoly, like the limited copyright duration required by the Constitution, reflects a balance of competing claims upon the public interest: creative work is to be

Page 464 U. S. 432

encouraged and rewarded, but private motivation must ultimately serve the cause of promoting broad public availability of literature, music, and the other arts. The immediate effect of our copyright law is to secure a fair return for an ‘author’s’ creative labor. But the ultimate aim is, by this incentive, to stimulate artistic creativity for the general public good. ‘The sole interest of the United States and the primary object in conferring the monopoly,’ this Court has said, ‘lie in the general benefits derived by the public from the labors of authors.’ Fox Film Corp. v. Doyal, 286 U. S. 123, 286 U. S. 127. See Kendall v. Winsor, 21 How. 322, 62 U. S. 327-328; Grant v. Raymond, 6 Pet. 218, 31 U. S. 241-242. When technological change has rendered its literal terms ambiguous, the Copyright Act must be construed in light of this basic purpose.”

Twentieth Century Music Corp. v. Aiken, 422 U. S. 151, 422 U. S. 156 (1975) (footnotes omitted).

Copyright protection “subsists . . . in original works of authorship fixed in any tangible medium of expression.” 17 U.S.C. § 102(a) (1982 ed.). This protection has never accorded the copyright owner complete control over all possible uses of his work. [Footnote 13] Rather, the Copyright Act grants the

Page 464 U. S. 433

copyright holder “exclusive” rights to use and to authorize the use of his work in five qualified ways, including reproduction of the copyrighted work in copies. § 106. [Footnote 14] All reproductions of the work, however, are not within the exclusive domain of the copyright owner; some are in the public domain. Any individual may reproduce a copyrighted work for a “fair use”; the copyright owner does not possess the exclusive right to such a use. Compare § 106 with § 107.

“Anyone who violates any of the exclusive rights of the copyright owner,” that is, anyone who trespasses into his exclusive domain by using or authorizing the use of the copyrighted work in one of the five ways set forth in the statute, “is an infringer of the copyright.” § 501(a). Conversely, anyone who is authorized by the copyright owner to use the copyrighted work in a way specified in the statute or who makes a fair use of the work is not an infringer of the copyright with respect to such use.

The Copyright Act provides the owner of a copyright with a potent arsenal of remedies against an infringer of his work, including an injunction to restrain the infringer from violating

Page 464 U. S. 434

his rights, the impoundment and destruction of all reproductions of his work made in violation of his rights, a recovery of his actual damages and any additional profits realized by the infringer or a recovery of statutory damages, and attorney’s fees. §§ 502-505. [Footnote 15]

The two respondents in this case do not seek relief against the Betamax users who have allegedly infringed their copyrights. Moreover, this is not a class action on behalf of all copyright owners who license their works for television broadcast, and respondents have no right to invoke whatever rights other copyright holders may have to bring infringement actions based on Betamax copying of their works. [Footnote 16] As was made clear by their own evidence, the copying of the respondents’ programs represents a small portion of the total use of VTR’s. It is, however, the taping of respondents’ own copyrighted programs that provides them with standing to charge Sony with contributory infringement. To prevail, they have the burden of proving that users of the Betamax have infringed their copyrights, and that Sony should be held responsible for that infringement.

III
The Copyright Act does not expressly render anyone liable for infringement committed by another. In contrast, the

Page 464 U. S. 435

Patent Act expressly brands anyone who “actively induces infringement of a patent” as an infringer, 35 U.S.C. § 271(b), and further imposes liability on certain individuals labeled “contributory” infringers, § 271(c). The absence of such express language in the copyright statute does not preclude the imposition of liability for copyright infringements on certain parties who have not themselves engaged in the infringing activity. [Footnote 17] For vicarious liability is imposed in virtually all areas of the law, and the concept of contributory infringement is merely a species of the broader problem of identifying the circumstances in which it is just to hold one individual accountable for the actions of another.

Such circumstances were plainly present in Kalem Co. v. Harper Brothers, 222 U. S. 55 (1911), the copyright decision of this Court on which respondents place their principal reliance. In Kalem, the Court held that the producer of an unauthorized film dramatization of the copyrighted book Ben Hur was liable for his sale of the motion picture to jobbers, who in turn arranged for the commercial exhibition of the film. Justice Holmes, writing for the Court, explained:

“The defendant not only expected but invoked by advertisement the use of its films for dramatic reproduction

Page 464 U. S. 436

of the story. That was the most conspicuous purpose for which they could be used, and the one for which especially they were made. If the defendant did not contribute to the infringement it is impossible to do so except by taking part in the final act. It is liable on principles recognized in every part of the law.”

Id. at 222 U. S. 62-63.

The use for which the item sold in Kalem had been “especially” made was, of course, to display the performance that had already been recorded upon it. The producer had personally appropriated the copyright owner’s protected work and, as the owner of the tangible medium of expression upon which the protected work was recorded, authorized that use by his sale of the film to jobbers. But that use of the film was not his to authorize: the copyright owner possessed the exclusive right to authorize public performances of his work. Further, the producer personally advertised the unauthorized public performances, dispelling any possible doubt as to the use of the film which he had authorized.

Respondents argue that Kalem stands for the proposition that supplying the “means” to accomplish an infringing activity and encouraging that activity through advertisement are sufficient to establish liability for copyright infringement. This argument rests on a gross generalization that cannot withstand scrutiny. The producer in Kalem did not merely provide the “means” to accomplish an infringing activity; the producer supplied the work itself, albeit in a new medium of expression. Sony in the instant case does not supply Betamax consumers with respondents’ works; respondents do. Sony supplies a piece of equipment that is generally capable of copying the entire range of programs that may be televised: those that are uncopyrighted, those that are copyrighted but may be copied without objection from the copyright holder, and those that the copyright holder would prefer not to have copied. The Betamax can be used to

Page 464 U. S. 437

make authorized or unauthorized uses of copyrighted works, but the range of its potential use is much broader than the particular infringing use of the film Ben Hur involved in Kalem. Kalem does not support respondents’ novel theory of liability.

Justice Holmes stated that the producer had “contributed” to the infringement of the copyright, and the label “contributory infringement” has been applied in a number of lower court copyright cases involving an ongoing relationship between the direct infringer and the contributory infringer at the time the infringing conduct occurred. In such cases, as in other situations in which the imposition of vicarious liability is manifestly just, the “contributory” infringer was in a position to control the use of copyrighted works by others, and had authorized the use without permission from the copyright owner. [Footnote 18] This case, however, plainly does not fall

Page 464 U. S. 438

in that category. The only contact between Sony and the users of the Betamax that is disclosed by this record occurred at the moment of sale. The District Court expressly found that

“no employee of Sony, Sonam or DDBI had either direct involvement with the allegedly infringing activity or direct contact with purchasers of Betamax who recorded copyrighted works off the air.”

480 F.Supp. at 460. And it further found that

“there was no evidence that any of the copies made by Griffiths or the other individual witnesses in this suit were influenced or encouraged by [Sony’s] advertisements.”

Ibid.

Page 464 U. S. 439

If vicarious liability is to be imposed on Sony in this case, it must rest on the fact that it has sold equipment with constructive knowledge of the fact that its customers may use that equipment to make unauthorized copies of copyrighted material. There is no precedent in the law of copyright for the imposition of vicarious liability on such a theory. The closest analogy is provided by the patent law cases to which it is appropriate to refer because of the historic kinship between patent law and copyright law. [Footnote 19]

Page 464 U. S. 440

In the Patent Act, both the concept of infringement and the concept of contributory infringement are expressly defined by statute. [Footnote 20] The prohibition against contributory infringement is confined to the knowing sale of a component especially made for use in connection with a particular patent. There is no suggestion in the statute that one patentee may object to the sale of a product that might be used in connection with other patents. Moreover, the Act expressly provides that the sale of a “staple article or commodity of commerce suitable for substantial noninfringing use” is not contributory infringement. 35 U.S.C. § 271(c).

When a charge of contributory infringement is predicated entirely on the sale of an article of commerce that is used by the purchaser to infringe a patent, the public interest in access to that article of commerce is necessarily implicated. A

Page 464 U. S. 441

finding of contributory infringement does not, of course, remove the article from the market altogether; it does, however, give the patentee effective control over the sale of that item. Indeed, a finding of contributory infringement is normally the functional equivalent of holding that the disputed article is within the monopoly granted to the patentee. [Footnote 21]

For that reason, in contributory infringement cases arising under the patent laws, the Court has always recognized the critical importance of not allowing the patentee to extend his monopoly beyond the limits of his specific grant. These cases deny the patentee any right to control the distribution of unpatented articles unless they are “unsuited for any commercial noninfringing use.” Dawson Chemical Co. v. Rohm & Hass Co., 448 U. S. 176, 448 U. S. 198 (1980). Unless a commodity “has no use except through practice of the patented method,” id. at 448 U. S. 199, the patentee has no right to claim that its distribution constitutes contributory infringement. “To form the basis for contributory infringement, the item must almost be uniquely suited as a component of the patented invention.” P. Rosenberg, Patent Law Fundamentals § 17.02[2] (2d ed.1982).

“[A] sale of an article which though adapted to an infringing use is also adapted to other and lawful uses, is not enough to make the seller a contributory infringer. Such a rule would block the wheels of commerce.”

Henry v. A. B. Dick Co., 224 U. S. 1, 224 U. S. 48 (1912), overruled on other grounds,

Page 464 U. S. 442

Motion Picture Patents Co. v. Universal Film Mfg. Co., 243 U. S. 502, 243 U. S. 517 (1917).

We recognize there are substantial differences between the patent and copyright laws. But in both areas, the contributory infringement doctrine is grounded on the recognition that adequate protection of a monopoly may require the courts to look beyond actual duplication of a device or publication to the products or activities that make such duplication possible. The staple article of commerce doctrine must strike a balance between a copyright holder’s legitimate demand for effective — not merely symbolic — protection of the statutory monopoly, and the rights of others freely to engage in substantially unrelated areas of commerce. Accordingly, the sale of copying equipment, like the sale of other articles of commerce, does not constitute contributory infringement if the product is widely used for legitimate, unobjectionable purposes. Indeed, it need merely be capable of substantial noninfringing uses.

IV
The question is thus whether the Betamax is capable of commercially significant noninfringing uses. In order to resolve that question, we need not explore all the different potential uses of the machine and determine whether or not they would constitute infringement. Rather, we need only consider whether, on the basis of the facts as found by the District Court, a significant number of them would be noninfringing. Moreover, in order to resolve this case, we need not give precise content to the question of how much use is commercially significant. For one potential use of the Betamax plainly satisfies this standard, however it is understood: private, noncommercial time-shifting in the home. It does so both (A) because respondents have no right to prevent other copyright holders from authorizing it for their programs, and (B) because the District Court’s factual findings reveal that even the unauthorized home time-shifting of respondents’ programs is legitimate fair use.

Page 464 U. S. 443

A. Authorized Time-Shifting

Each of the respondents owns a large inventory of valuable copyrights, but, in the total spectrum of television programming, their combined market share is small. The exact percentage is not specified, but it is well below 10%. [Footnote 22] If they were to prevail, the outcome of this litigation would have a significant impact on both the producers and the viewers of the remaining 90% of the programming in the Nation. No doubt, many other producers share respondents’ concern about the possible consequences of unrestricted copying. Nevertheless the findings of the District Court make it clear that time-shifting may enlarge the total viewing audience, and that many producers are willing to allow private time-shifting to continue, at least for an experimental time period. [Footnote 23]

The District Court found:

“Even if it were deemed that home-use recording of copyrighted material constituted infringement, the Betamax could still legally be used to record noncopyrighted material or material whose owners consented to the copying. An injunction would deprive the public of the ability to use the Betamax for this noninfringing off-the-air recording. ”

Page 464 U. S. 444

“Defendants introduced considerable testimony at trial about the potential for such copying of sports, religious, educational and other programming. This included testimony from representatives of the Offices of the Commissioners of the National Football, Basketball, Baseball and Hockey Leagues and Associations, the Executive Director of National Religious Broadcasters, and various educational communications agencies. Plaintiffs attack the weight of the testimony offered, and also contend that an injunction is warranted because infringing uses outweigh noninfringing uses.”

“Whatever the future percentage of legal versus illegal home-use recording might be, an injunction which seeks to deprive the public of the very tool or article of commerce capable of some noninfringing use would be an extremely harsh remedy, as well as one unprecedented in copyright law.”

480 F.Supp. at 468.

Although the District Court made these statements in the context of considering the propriety of injunctive relief, the statements constitute a finding that the evidence concerning “sports, religious, educational and other programming” was sufficient to establish a significant quantity of broadcasting whose copying is now authorized, and a significant potential for future authorized copying. That finding is amply supported by the record. In addition to the religious and sports officials identified explicitly by the District Court, [Footnote 24] two items in the record deserve specific mention.

Page 464 U. S. 445

First is the testimony of John Kenaston, the station manager of Channel 58, an educational station in Los Angeles affiliated with the Public Broadcasting Service. He explained and authenticated the station’s published guide to its programs. [Footnote 25] For each program, the guide tells whether unlimited home taping is authorized, home taping is authorized subject to certain restrictions (such as erasure within seven days), or home taping is not authorized at all. The Spring, 1978, edition of the guide described 107 programs. Sixty-two of those programs or 58% authorize some home taping. Twenty-one of them, or almost 20%, authorize unrestricted home taping. [Footnote 26]

Second is the testimony of Fred Rogers, president of the corporation that produces and owns the copyright on Mister Rogers’ Neighborhood. The program is carried by more public television stations than any other program. Its audience numbers over 3,000,000 families a day. He testified that he had absolutely no objection to home taping for noncommercial use, and expressed the opinion that it is a real service to families to be able to record children’s programs and to show them at appropriate times. [Footnote 27]

Page 464 U. S. 446

If there are millions of owners of VTR’s who make copies of televised sports events, religious broadcasts, and educational programs such as Mister Rogers’ Neighborhood, and if the proprietors of those programs welcome the practice, the business of supplying the equipment that makes such copying feasible should not be stifled simply because the equipment is used by some individuals to make unauthorized reproductions of respondents’ works. The respondents do not represent a class composed of all copyright holders. Yet a finding of contributory infringement would inevitably frustrate the interests of broadcasters in reaching the portion of their audience that is available only through time-shifting.

Of course, the fact that other copyright holders may welcome the practice of time-shifting does not mean that respondents should be deemed to have granted a license to copy their programs. Third-party conduct would be wholly irrelevant in an action for direct infringement of respondents’ copyrights. But in an action for contributory infringement against the seller of copying equipment, the copyright holder may not prevail unless the relief that he seeks affects only his programs, or unless he speaks for virtually all copyright holders with an interest in the outcome. In this case, the record makes it perfectly clear that there are many important producers of national and local television programs who find nothing objectionable about the enlargement in the size of the television audience that results from the practice of time-shifting for private home use. [Footnote 28] The seller of the equipment that expands those producers’ audiences cannot be a contributory

Page 464 U. S. 447

infringer if, as is true in this case, it has had no direct involvement with any infringing activity.

B. Unauthorized Time-Shifting

Even unauthorized uses of a copyrighted work are not necessarily infringing. An unlicensed use of the copyright is not an infringement unless it conflicts with one of the specific exclusive rights conferred by the copyright statute. Twentieth Century Music Corp. v. Aiken, 422 U.S. at 422 U. S. 154-155. Moreover, the definition of exclusive rights in § 106 of the present Act is prefaced by the words “subject to sections 107 through 118.” Those sections describe a variety of uses of copyrighted material that “are not infringements of copyright” “notwithstanding the provisions of section 106.” The most pertinent in this case is § 107, the legislative endorsement of the doctrine of “fair use.” [Footnote 29]

Page 464 U. S. 448

That section identifies various factors [Footnote 30] that enable a court to apply an “equitable rule of reason” analysis to particular claims of infringement. [Footnote 31] Although not conclusive, the first

Page 464 U. S. 449

factor requires that “the commercial or nonprofit character of an activity” be weighed in any fair use decision. [Footnote 32] If the Betamax were used to make copies for a commercial or profitmaking purpose, such use would presumptively be unfair. The contrary presumption is appropriate here, however, because the District Court’s findings plainly establish that time-shifting for private home use must be characterized as a noncommercial, nonprofit activity. Moreover, when one considers the nature of a televised copyrighted audiovisual work, see 17 U.S.C. § 107(2) (1982 ed.), and that time-shifting merely enables a viewer to see such a work which he had been invited to witness in its entirety free of charge, the fact that

Page 464 U. S. 450

the entire work is reproduced, see § 107(3), does not have its ordinary effect of militating against a finding of fair use. [Footnote 33]

This is not, however, the end of the inquiry, because Congress has also directed us to consider “the effect of the use upon the potential market for or value of the copyrighted work.” § 107(4). The purpose of copyright is to create incentives for creative effort. Even copying for noncommercial purposes may impair the copyright holder’s ability to obtain the rewards that Congress intended him to have. But a use that has no demonstrable effect upon the potential market for, or the value of, the copyrighted work need not be prohibited in order to protect the author’s incentive to create. The prohibition of such noncommercial uses would

Page 464 U. S. 451

merely inhibit access to ideas without any countervailing benefit. [Footnote 34]

Thus, although every commercial use of copyrighted material is presumptively an unfair exploitation of the monopoly privilege that belongs to the owner of the copyright, noncommercial uses are a different matter. A challenge to a noncommercial use of a copyrighted work requires proof either that the particular use is harmful or that, if it should become widespread, it would adversely affect the potential market for the copyrighted work. Actual present harm need not be shown; such a requirement would leave the copyright holder with no defense against predictable damage. Nor is it necessary to show with certainty that future harm will result. What is necessary is a showing by a preponderance of the evidence that some meaningful likelihood of future harm exists. If the intended use is for commercial gain, that likelihood may be presumed. But if it is for a noncommercial purpose, the likelihood must be demonstrated.

In this case, respondents failed to carry their burden with regard to home time-shifting. The District Court described respondents’ evidence as follows:

“Plaintiffs’ experts admitted at several points in the trial that the time-shifting without librarying would result in ‘not a great deal of harm.’ Plaintiffs’ greatest concern about time-shifting is with ‘a point of important philosophy that transcends even commercial judgment.’ They fear that, with any Betamax usage, ‘invisible boundaries’ are passed: ‘the copyright owner has lost control over his program.'”

480 F.Supp. at 467.

Page 464 U. S. 452

Later in its opinion, the District Court observed:

“Most of plaintiffs’ predictions of harm hinge on speculation about audience viewing patterns and ratings, a measurement system which Sidney Sheinberg, MCA’s president, calls a ‘black art’ because of the significant level of imprecision involved in the calculations.”

Id. at 469. [Footnote 35]

There was no need for the District Court to say much about past harm. “Plaintiffs have admitted that no actual harm to their copyrights has occurred to date.” Id. at 451.

On the question of potential future harm from time-shifting, the District Court offered a more detailed analysis of the evidence. It rejected respondents’

“fear that persons ‘watching’ the original telecast of a program will not be measured in the live audience, and the ratings and revenues will decrease”

by observing that current measurement technology allows the Betamax audience to be reflected. Id. at 466. [Footnote 36] It rejected respondents’ prediction “that live television

Page 464 U. S. 453

or movie audiences will decrease as more people watch Betamax tapes as an alternative,” with the observation that “[t]here is no factual basis for [the underlying] assumption.” Ibid. [Footnote 37] It rejected respondents’ “fear that time-shifting will reduce audiences for telecast reruns,” and concluded instead that “given current market practices, this should aid plaintiffs, rather than harm them.” Ibid. [Footnote 38] And it declared that respondents’ suggestion that “theater or film rental exhibition of a program will suffer because of time-shift recording of that program” “lacks merit.” Id. at 467. [Footnote 39]

Page 464 U. S. 454

After completing that review, the District Court restated its overall conclusion several times, in several different ways. “Harm from time-shifting is speculative and, at best, minimal.” Ibid.

“The audience benefits from the time-shifting capability have already been discussed. It is not implausible that benefits could also accrue to plaintiffs, broadcasters, and advertisers, as the Betamax makes it possible for more persons to view their broadcasts.”

Ibid. “No likelihood of harm was shown at trial, and plaintiffs admitted that there had been no actual harm to date.” Id. at 468-469.

“Testimony at trial suggested that Betamax may require adjustments in marketing strategy, but it did not establish even a likelihood of harm.”

Id. at 469.

“Television production by plaintiffs today is more profitable than it has ever been, and, in five weeks of trial, there was no concrete evidence to suggest that the Betamax will change the studios’ financial picture.”

Ibid.

The District Court’s conclusions are buttressed by the fact that to the extent time-shifting expands public access to freely broadcast television programs, it yields societal benefits. In Community Television of Southern California v. Gottfried, 459 U. S. 498, 459 U. S. 508, n. 12 (1983), we acknowledged the public interest in making television broadcasting more available. Concededly, that interest is not unlimited. But it supports an interpretation of the concept of “fair use” that requires the copyright holder to demonstrate some likelihood of harm before he may condemn a private act of time-shifting as a violation of federal law.

When these factors are all weighed in the “equitable rule of reason” balance, we must conclude that this record amply

Page 464 U. S. 455

supports the District Court’s conclusion that home time-shifting is fair use. In light of the findings of the District Court regarding the state of the empirical data, it is clear that the Court of Appeals erred in holding that the statute as presently written bars such conduct. [Footnote 40]

Page 464 U. S. 456

In summary, the record and findings of the District Court lead us to two conclusions. First, Sony demonstrated a significant likelihood that substantial numbers of copyright holders who license their works for broadcast on free television would not object to having their broadcasts time-shifted by private viewers. And second, respondents failed to demonstrate that time-shifting would cause any likelihood of nonminimal harm to the potential market for, or the value of, their copyrighted works. The Betamax is, therefore, capable of substantial noninfringing uses. Sony’s sale of such equipment to the general public does not constitute contributory infringement of respondents’ copyrights.

V
“The direction of Art. I is that Congress shall have the power to promote the progress of science and the useful arts. When, as here, the Constitution is permissive, the sign of how far Congress has chosen to go can come only from Congress.”

Deepsouth Packing Co. v. Laitram Corp., 406 U. S. 518, 406 U. S. 530 (1972).

One may search the Copyright Act in vain for any sign that the elected representatives of the millions of people who watch television every day have made it unlawful to copy a program for later viewing at home, or have enacted a flat prohibition against the sale of machines that make such copying possible.

It may well be that Congress will take a fresh look at this new technology, just as it so often has examined other innovations in the past. But it is not our job to apply laws that have not yet been written. Applying the copyright statute, as it now reads, to the facts as they have been developed in this case, the judgment of the Court of Appeals must be reversed.

It is so ordered.

Page 464 U. S. 457

[Footnote 1]

The respondents also asserted causes of action under state law and § 43(a) of the Trademark Act of 1946, 60 Stat. 441, 15 U.S.C. § 1125(a). These claims are not before this Court.

[Footnote 2]

The four retailers are Carter Hawley Hales Stores, Inc., Associated Dry Goods Corp., Federated Department Stores, Inc., and Henry’s Camera Corp. The principal defendants are Sony Corporation, the manufacturer of the equipment, and its wholly owned subsidiary, Sony Corporation of America. The advertising agency of Doyle Dane Bernback, Inc., also involved in marketing the Betamax, is also a petitioner. An individual VTR user, William Griffiths, was named as a defendant in the District Court, but respondents sought no relief against him. Griffiths is not a petitioner. For convenience, we shall refer to petitioners collectively as Sony.

[Footnote 3]

As evidence of how a VTR may be used, respondents offered the testimony of William Griffiths. Griffiths, although named as an individual defendant, was a client of plaintiffs’ law firm. The District Court summarized his testimony as follows:

“He owns approximately 100 tapes. When Griffiths bought his Betamax, he intended not only to time-shift (record, play-back and then erase) but also to build a library of cassettes. Maintaining a library, however, proved too expensive, and he is now erasing some earlier tapes and reusing them.”

“Griffiths copied about 20 minutes of a Universal motion picture called ‘Never Give An Inch,’ and two episodes from Universal television series entitled ‘Baa Baa Black Sheep’ and ‘Holmes and Yo Yo.’ He would have erased each of these but for the request of plaintiffs’ counsel that it be kept. Griffiths also testified that he had copied, but already erased, Universal films called ‘Alpha Caper’ (erased before anyone saw it) and ‘Amelia Earhart.’ At the time of his deposition, Griffiths did not intend to keep any Universal film in his library.”

“Grifflths has also recorded documentaries, news broadcasts, sporting events and political programs such as a rerun of the Nixon/Kennedy debate.”

480 F.Supp. 429, 436-437 (1979). Four other witnesses testified to having engaged in similar activity.

[Footnote 4]

The District Court summarized some of the findings in these surveys as follows:

“According to plaintiffs’ survey, 75.4% of the VTR owners use their machines to record for time-shifting purposes half or most of the time. Defendants’ survey showed that 96% of the Betamax owners had used the machine to record programs they otherwise would have missed.”

“When plaintiffs asked interviewees how many cassettes were in their library, 55.8% said there were 10 or fewer. In defendants’ survey, of the total programs viewed by interviewees in the past month, 70.4% had been viewed only that one time, and for 57.9%, there were no plans for further viewing.”

Id. at 438.

[Footnote 5]

“81.9% of the defendants’ interviewees watched the same amount or more of regular television as they did before owning a Betamax. 83.2% reported their frequency of movie going was unaffected by Betamax.”

Id. at 439.

[Footnote 6]

See Defendants’ Exh. OT, Table 20; Tr. 2447-2450, 2480, 2486-2487, 2515-2516, 2530-2534.

[Footnote 7]

The trial also briefly touched upon demonstrations of the Betamax by the retailer petitioners which were alleged to be infringements by respondents. The District Court held against respondents on this claim, 480 F.Supp. at 456-457, the Court of Appeals affirmed this holding, 659 F.2d 963, 976 (1981), and respondents did not cross-petition on this issue.

[Footnote 8]

The court also found that this

“access is not just a matter of convenience, as plaintiffs have suggested. Access has been limited not simply by inconvenience, but by the basic need to work. Access to the better program has also been limited by the competitive practice of counterprogramming.”

480 F.Supp. at 454.

[Footnote 9]

“Without a ‘productive use,’ e.g., when copyrighted material is reproduced for its intrinsic use, the mass copying of the sort involved in this case precludes an application of fair use.”

659 F.2d at 971-972.

[Footnote 10]

In its Report accompanying the comprehensive revision of the Copyright Act in 1909, the Judiciary Committee of the House of Representatives explained this balance:

“The enactment of copyright legislation by Congress under the terms of the Constitution is not based upon any natural right that the author has in his writings, . . . but upon the ground that the welfare of the public will be served and progress of science and useful arts will be promoted by securing to authors for limited periods the exclusive rights to their writings. . . .”

“In enacting a copyright law, Congress must consider . . . two questions: first, how much will the legislation stimulate the producer and so benefit the public; and, second, how much will the monopoly granted be detrimental to the public? The granting of such exclusive rights, under the proper terms and conditions, confers a benefit upon the public that outweighs the evils of the temporary monopoly.”

H.R.Rep. No. 2222, 60th Cong., 2d Sess., 7 (1909).

[Footnote 11]

Thus, for example, the development and marketing of player pianos and perforated rolls of music, see White-Smith Music Publishing Co. v. Apollo Co., 209 U. S. 1 (1908), preceded the enactment of the Copyright Act of 1909; innovations in copying techniques gave rise to the statutory exemption for library copying embodied in § 108 of the 1976 revision of the copyright law; the development of the technology that made it possible to retransmit television programs by cable or by microwave systems, see Fortnightly Corp. v. United Artists Television, Inc., 392 U. S. 390 (1968), and Teleprompter Corp. v. Columbia Broadcasting System, Inc., 415 U. S. 394 (1974), prompted the enactment of the complex provisions set forth in 17 U.S.C. § 111(d)(2)(B) and § 111(d)(5) (1982 ed.) after years of detailed congressional study, see Eastern Microwave, Inc. v. Doubleday Sports, Inc., 691 F.2d 125, 129 (CA2 1982).

By enacting the Sound Recording Amendment of 1971, 85 Stat. 391, Congress also provided the solution to the “record piracy” problems that had been created by the development of the audio tape recorder. Sony argues that the legislative history of that Act, see especially H.R.Rep. No. 92-487, p. 7 (1971), indicates that Congress did not intend to prohibit the private home use of either audio or videotape recording equipment. In view of our disposition of the contributory infringement issue, we express no opinion on that question.

[Footnote 12]

“Copyright protection became necessary with the invention of the printing press, and had its early beginnings in the British censorship laws. The fortunes of the law of copyright have always been closely connected with freedom of expression, on the one hand, and with technological improvements in means of dissemination, on the other. Successive ages have drawn different balances among the interest of the writer in the control and exploitation of his intellectual property, the related interest of the publisher, and the competing interest of society in the untrammeled dissemination of ideas.”

Foreword to B. Kaplan, An Unhurried View of Copyright vii-viii (1967).

[Footnote 13]

See, e.g., White-Smith Music Publishing Co. v. Apollo Co., 209 U.S. at 209 U. S. 19; cf. Deep South Packing Co. v. Laitram Corp., 406 U. S. 518, 406 U. S. 530-531 (1972). While the law has never recognized an author’s right to absolute control of his work, the natural tendency of legal rights to express themselves in absolute terms to the exclusion of all else is particularly pronounced in the history of the constitutionally sanctioned monopolies of the copyright and the patent. See, e.g., United States v. Paramount Pictures, Inc., 334 U. S. 131, 334 U. S. 156-158 (1948) (copyright owners claiming right to tie license of one film to license of another under copyright law); Fox Film Corp. v. Doyal, 286 U. S. 123 (1932) (copyright owner claiming copyright renders it immune from state taxation of copyright royalties); Bobbs-Merrill Co. v. Straus, 210 U. S. 339, 210 U. S. 349-351 (1908) (copyright owner claiming that a right to fix resale price of his works within the scope of his copyright); International Business Machines Corp. v. United States, 298 U. S. 131 (1936) (patentees claiming right to tie sale of unpatented article to lease of patented device).

[Footnote 14]

Section 106 of the Act provides:

“Subject to sections 107 through 118, the owner of copyright under this title has the exclusive rights to do and to authorize any of the following:”

“(1) to reproduce the copyrighted work in copies or phonorecords;”

“(2) to prepare derivative works based upon the copyrighted work;”

“(3) to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending;”

“(4) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly; and”

“(5) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly.”

[Footnote 15]

Moreover, anyone who willfully infringes the copyright to reproduce a motion picture for purposes of commercial advantage or private financial gain is subject to substantial criminal penalties, 17 U.S.C. § 506(a) (1982 ed.), and the fruits and instrumentalities of the crime are forfeited upon conviction, § 506(b).

[Footnote 16]

In this regard, we reject respondents’ attempt to cast this action as comparable to a class action because of the positions taken by amici with copyright interests and their attempt to treat the statements made by amici as evidence in this case. See Brief for Respondents 1, and n. 1, 6, 52, 53, and n. 116. The stated desires of amici concerning the outcome of this or any litigation are no substitute for a class action, are not evidence in the case, and do not influence our decision; we examine an amicus curiae brief solely for whatever aid it provides in analyzing the legal questions before us.

[Footnote 17]

As the District Court correctly observed, however, “the lines between direct infringement, contributory infringement and vicarious liability are not clearly drawn. . . .” 480 F.Supp. at 457-458. The lack of clarity in this area may, in part, be attributable to the fact that an infringer is not merely one who uses a work without authorization by the copyright owner, but also one who authorizes the use of a copyrighted work without actual authority from the copyright owner.

We note the parties’ statements that the questions of Sony’s liability under the “doctrines” of “direct infringement” and “vicarious liability” are not nominally before this Court. Compare Brief for Respondents 9, n. 22, 41, n. 90, with Reply Brief for Petitioners 1, n. 2. We also observe, however, that reasoned analysis of respondents’ unprecedented contributory infringement claim necessarily entails consideration of arguments and case law which may also be forwarded under the other labels, and indeed the parties to a large extent rely upon such arguments and authority in support of their respective positions on the issue of contributory infringement.

[Footnote 18]

The so-called “dance hall cases,” Famous Music Corp. v. Bay State Harness Horse Racing & Breeding Assn., Inc., 554 F.2d 1213 (CA1 1977) (racetrack retained infringer to supply music to paying customers); KECA Music, Inc. v. Dingus McGee’s Co., 432 F.Supp. 72 (WD Mo.1977) (cocktail lounge hired musicians to supply music to paying customers); Dreamland Ball Room, Inc. v. Shapiro, Bernstein & Co., 36 F.2d 354 (CA7 1929) (dance hall hired orchestra to supply music to paying customers), are often contrasted with the so-called landlord-tenant cases, in which landlords who leased premises to a direct infringer for a fixed rental and did not participate directly in any infringing activity were found not to be liable for contributory infringement. E.g., Deutsch v. Arnold, 98 F.2d 686 (CA2 1938).

In Shapiro, Bernstein & Co. v. H. L. Green Co., 316 F.2d 304 (CA2 1963), the owner of 23 chainstores retained the direct infringer to run its record departments. The relationship was structured as a licensing arrangement, so that the defendant bore none of the business risk of running the department. Instead, it received 10% or 12% of the direct infringer’s gross receipts. The Court of Appeals concluded:

“[The dance-hall cases] and this one lie closer on the spectrum to the employer-employee model, than to the landlord-tenant model. . . . [O]n the particular facts before us, . . . Green’s relationship to its infringing licensee, as well as its strong concern for the financial success of the phonograph record concession, renders it liable for the unauthorized sales of the ‘bootleg’ records.”

“* * * *”

“. . . [T]he imposition of vicarious liability in the case before us cannot be deemed unduly harsh or unfair. Green has the power to police carefully the conduct of its concessionaire . . . ; our judgment will simply encourage it to do so, thus placing responsibility where it can and should be effectively exercised.”

Id. at 308 (emphasis in original).

In Gershwin Publishing Corp. v. Columbia Artists Management, Inc., 443 F.2d 1159 (CA2 1971), the direct infringers retained the contributory infringer to manage their performances. The contributory infringer would contact each direct infringer, obtain the titles of the musical compositions to be performed, print the programs, and then sell the programs to its own local organizations for distribution at the time of the direct infringement. Id. at 1161. The Court of Appeals emphasized that the contributory infringer had actual knowledge that the artists it was managing were performing copyrighted works, was in a position to police the infringing conduct of the artists, and derived substantial benefit from the actions of the primary infringers. Id. at 1163.

In Screen Gems-Columbia Music, Inc. v. Mark-Fi Records, Inc., 256 F.Supp. 399 (SDNY 1966), the direct infringer manufactured and sold bootleg records. In denying a motion for summary judgment, the District Court held that the infringer’s advertising agency, the radio stations that advertised the infringer’s works, and the service agency that boxed and mailed the infringing goods could all be held liable if at trial it could be demonstrated that they knew or should have known that they were dealing in illegal goods.

[Footnote 19]

E.g., United States v. Paramount Pictures, Inc., 334 U.S. at 334 U. S. 158; Fox Film Corp. v. Doyal, 286 U.S. at 286 U. S. 131; Wheaton v. Peters, 8 Pet. 591, 33 U. S. 657-658 (1834). The two areas of the law, naturally, are not identical twins, and we exercise the caution which we have expressed in the past in applying doctrine formulated in one area to the other. See generally Mazer v. Stein, 347 U. S. 201, 347 U. S. 217-218 (1954); Bobbs-Merrill Co. v. Straus, 210 U.S. at 210 U. S. 345.

We have consistently rejected the proposition that a similar kinship exists between copyright law and trademark law, and in the process of doing so have recognized the basic similarities between copyrights and patents. The Trade-Mark Cases, 100 U. S. 82, 100 U. S. 91-92 (1879); see also United Drug Co. v. Theodore Rectanus Co., 248 U. S. 90, 248 U. S. 97 (1918) (trademark right “has little or no analogy” to copyright or patent); McLean v. Fleming, 96 U. S. 245, 96 U. S. 254 (1878); Canal Co. v. Clark, 13 Wall. 311, 80 U. S. 322 (1872). Given the fundamental differences between copyright law and trademark law, in this copyright case, we do not look to the standard for contributory infringement set forth in Inwood Laboratories, Inc. v. Ives Laboratories, Inc., 456 U. S. 844, 456 U. S. 854-855 (1982), which was crafted for application in trademark cases. There we observed that a manufacturer or distributor could be held liable to the owner of a trademark if it intentionally induced a merchant down the chain of distribution to pass off its product as that of the trademark owner’s or if it continued to supply a product which could readily be passed off to a particular merchant whom it knew was mislabeling the product with the trademark owner’s mark. If Inwood’s narrow standard for contributory trademark infringement governed here, respondents’ claim of contributory infringement would merit little discussion. Sony certainly does not “intentionally induc[e]” its customers to make infringing uses of respondents’ copyrights, nor does it supply its products to identified individuals known by it to be engaging in continuing infringement of respondents’ copyrights, see id. at 456 U. S. 855.

[Footnote 20]

Title 35 U.S.C. § 271 provides:

“(a) Except as otherwise provided in this title, whoever without authority makes, uses or sells any patented invention, within the United States during the term of the patent therefor, infringes the patent.”

“(b) Whoever actively induces infringement of a patent shall be liable as an infringer.”

“(c) Whoever sells a component of a patented machine, manufacture, combination or composition, or a material or apparatus for use in practicing a patented process, constituting a material part of the invention, knowing the same to be especially made or especially adapted for use in an infringement of such patent, and not a staple article or commodity of commerce suitable for substantial noninfringing use, shall be liable as a contributory infringer.”

“(d) No patent owner otherwise entitled to relief for infringement or contributory infringement of a patent shall be denied relief or deemed guilty of misuse or illegal extension of the patent right by reason of his having done one or more of the following: (1) derived revenue from acts which if performed by another without his consent would constitute contributory infringement of the patent; (2) licensed or authorized another to perform acts which if performed without his consent would constitute contributory infringement of the patent; (3) sought to enforce his patent rights against infringement or contributory infringement.”

[Footnote 21]

It seems extraordinary to suggest that the Copyright Act confers upon all copyright owners collectively, much less the two respondents in this case, the exclusive right to distribute VTR’s simply because they may be used to infringe copyrights. That, however, is the logical implication of their claim. The request for an injunction below indicates that respondents seek, in effect, to declare VTR’s contraband. Their suggestion in this Court that a continuing royalty pursuant to a judicially created compulsory license would be an acceptable remedy merely indicates that respondents, for their part, would be willing to license their claimed monopoly interest in VTR’s to Sony in return for a royalty.

[Footnote 22]

The record suggests that Disney’s programs at the time of trial consisted of approximately one hour a week of network television and one syndicated series. Universal’s percentage in the Los Angeles market on commercial television stations was under 5%. See Tr. 532-533, 549-550.

[Footnote 23]

The District Court did not make any explicit findings with regard to how much broadcasting is wholly uncopyrighted. The record does include testimony that at least one movie — My Man Godfrey — falls within that category, id. at 2300-2301, and certain broadcasts produced by the Federal Government are also uncopyrighted. See 17 U.S.C. § 105 (1982 ed.). Cf. Schnapper v. Foley, 215 U.S.App.D.C. 59, 667 F.2d 102 (1981) (explaining distinction between work produced by the Government and work commissioned by the Government). To the extent such broadcasting is now significant, it further bolsters our conclusion. Moreover, since copyright protection is not perpetual, the number of audiovisual works in the public domain necessarily increases each year.

[Footnote 24]

See Tr. 2447-2450 (Alexander Hadden, Major League Baseball); id. at 2480, 2486-2487 (Jay Moyer, National Football League); id. at 2515-2516 (David Stern, National Basketball Association); id. at 2530-2534 (Gilbert Stein, National Hockey League); id. at 2543-2552 (Thomas Hansen, National Collegiate Athletic Association); id. at 2565-2572 (Benjamin Armstrong, National Religious Broadcasters). Those officials were authorized to be the official spokespersons for their respective institutions in this litigation. Id. at 2432, 2479, 2509-2510, 2530, 2538, 2563. See Fed.Rule Civ.Proc. 30(b)(6).

[Footnote 25]

Tr. 2863-2902; Defendants’ Exh. PI.

[Footnote 26]

See also Tr. 2833-2844 (similar testimony by executive director of New Jersey Public Broadcasting Authority). Cf. id. at 2592-2605 (testimony by chief of New York Education Department’s Bureau of Mass Communications approving home taping for educational purposes).

[Footnote 27]

“Some public stations, as well as commercial stations, program the ‘Neighborhood’ at hours when some children cannot use it. I think that it’s a real service to families to be able to record such programs and show them at appropriate times. I have always felt that, with the advent of all of this new technology that allows people to tape the ‘Neighborhood’ off the air, and I’m speaking for the ‘Neighborhood’ because that’s what I produce, that they then become much more active in the programming of their family’s television life. Very frankly, I am opposed to people being programmed by others. My whole approach in broadcasting has always been ‘You are an important person just the way you are. You can make healthy decisions.’ Maybe I’m going on too long, but I just feel that anything that allows a person to be more active in the control of his or her life, in a healthy way, is important.”

Id. at 2920-2921. See also Defendants’ Exh. PI, p. 85.

[Footnote 28]

It may be rare for large numbers of copyright owners to authorize duplication of their works without demanding a fee from the copier. In the context of public broadcasting, however, the user of the copyrighted work is not required to pay a fee for access to the underlying work. The traditional method by which copyright owners capitalize upon the television medium — commercially sponsored free public broadcast over the public airwaves — is predicated upon the assumption that compensation for the value of displaying the works will be received in the form of advertising revenues.

In the context of television programming, some producers evidently believe that permitting home viewers to make copies of their works off the air actually enhances the value of their copyrights. Irrespective of their reasons for authorizing the practice, they do so, and in significant enough numbers to create a substantial market for a noninfringing use of the Sony VTR’s. No one could dispute the legitimacy of that market if the producers had authorized home taping of their programs in exchange for a license fee paid directly by the home user. The legitimacy of that market is not compromised simply because these producers have authorized home taping of their programs without demanding a fee from the home user. The copyright law does not require a copyright owner to charge a fee for the use of his works, and, as this record clearly demonstrates, the owner of a copyright may well have economic or noneconomic reasons for permitting certain kinds of copying to occur without receiving direct compensation from the copier. It is not the role of the courts to tell copyright holders the best way for them to exploit their copyrights: even if respondents’ competitors were ill-advised in authorizing home videotaping, that would not change the fact that they have created a substantial market for a paradigmatic noninfringing use of Sony’s product.

[Footnote 29]

The Copyright Act of 1909, 35 Stat. 1075, did not have a “fair use” provision. Although that Act’s compendium of exclusive rights “to print, reprint, publish, copy, and vend the copyrighted work” was broad enough to encompass virtually all potential interactions with a copyrighted work, the statute was never so construed. The courts simply refused to read the statute literally in every situation. When Congress amended the statute in 1976, it indicated that it “intended to restate the present judicial doctrine of fair use, not to change, narrow, or enlarge it in any way.” H.R.Rep. No. 94-1476, p. 66 (1976).

[Footnote 30]

Section 107 provides:

“Notwithstanding the provisions of section 106, the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include — ”

“(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;”

“(2) the nature of the copyrighted work;”

“(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and”

“(4) the effect of the use upon the potential market for or value of the copyrighted work.”

17 U.S.C. § 107 (1982 ed.).

[Footnote 31]

The House Report expressly stated that the fair use doctrine is an “equitable rule of reason” in its explanation of the fair use section:

“Although the courts have considered and ruled upon the fair use doctrine over and over again, no real definition of the concept has ever emerged. Indeed, since the doctrine is an equitable rule of reason, no generally applicable definition is possible, and each case raising the question must be decided on its own facts. . . .”

“* * * *”

“General intention behind the provision”

“The statement of the fair use doctrine in section 107 offers some guidance to users in determining when the principles of the doctrine apply. However, the endless variety of situations and combinations of circumstances that can rise in particular cases precludes the formulation of exact rules in the statute. The bill endorses the purpose and general scope of the judicial doctrine of fair use, but there is no disposition to freeze the doctrine in the statute, especially during a period of rapid technological change. Beyond a very broad statutory explanation of what fair use is and some of the criteria applicable to it, the courts must be free to adapt the doctrine to particular situations on a case-by-case basis.”

H.R.Rep. No. 94-1476, supra, at 65-66.

The Senate Committee similarly eschewed a rigid, bright-line approach to fair use. The Senate Report endorsed the view “that off-the-air recording for convenience” could be considered “fair use” under some circumstances, although it then made it clear that it did not intend to suggest that off-the-air recording for convenience should be deemed fair use under any circumstances imaginable. S.Rep. No. 94-473, pp. 65-66 (1975). The latter qualifying statement is quoted by the dissent, post at 464 U. S. 481, and if read in isolation, would indicate that the Committee intended to condemn all off-the-air recording for convenience. Read in context, however, it is quite clear that that was the farthest thing from the Committee’s intention.

[Footnote 32]

“The Committee has amended the first of the criteria to be considered — ‘the purpose and character of the use’ — to state explicitly that this factor includes a consideration of ‘whether such use is of a commercial nature or is for non-profit educational purposes.’ This amendment is not intended to be interpreted as any sort of not-for-profit limitation on educational uses of copyrighted works. It is an express recognition that, as under the present law, the commercial or nonprofit character of an activity, while not conclusive with respect to fair use, can and should be weighed along with other factors in fair use decisions.”

H.R.Rep. No. 94-1476, supra, at 66.

[Footnote 33]

It has been suggested that

“consumptive uses of copyrights by home VTR users are commercial even if the consumer does not sell the home-made tape, because the consumer will not buy tapes separately sold by the copyrightholder.”

Home Recording of Copyrighted Works: Hearing before the Subcommittee on Courts, Civil Liberties and the Administration of Justice of the House Committee on the Judiciary, 97th Cong., 2d Sess., pt. 2, p. 1250 (1982) (memorandum of Prof. Laurence H. Tribe). Furthermore, “[t]he error in excusing such theft as noncommercial,” we are told,

“can be seen by simple analogy: jewel theft is not converted into a noncommercial veniality if stolen jewels are simply worn, rather than sold.”

Ibid. The premise and the analogy are indeed simple, but they add nothing to the argument. The use to which stolen jewelry is put is quite irrelevant in determining whether depriving its true owner of his present possessory interest in it is venial; because of the nature of the item and the true owner’s interests in physical possession of it, the law finds the taking objectionable even if the thief does not use the item at all. Theft of a particular item of personal property of course may have commercial significance, for the thief deprives the owner of his right to sell that particular item to any individual. Time-shifting does not even remotely entail comparable consequences to the copyright owner. Moreover, the time-shifter no more steals the program by watching it once than does the live viewer, and the live viewer is no more likely to buy prerecorded videotapes than is the time-shifter. Indeed, no live viewer would buy a prerecorded videotape if he did not have access to a VTR.

[Footnote 34]

Cf. A. Latman, Fair Use of Copyrighted Works (1958), reprinted in Study No. 14 for the Senate Committee on the Judiciary, Copyright Law Revision, Studies Prepared for the Subcommittee on Patents, Trademarks, and Copyrights, 86th Cong., 2d Sess., 30 (1960):

“In certain situations, the copyright owner suffers no substantial harm from the use of his work. . . . Here again is the partial marriage between the doctrine of fair use and the legal maxim de minimis non curat lex.”

[Footnote 35]

See also 480 F.Supp. at 451:

“It should be noted, however, that plaintiffs’ argument is more complicated and speculative than was the plaintiff’s in Williams & Wilkins. . . . Here, plaintiffs ask the court to find harm based on many more assumptions. . . . As is discussed more fully in Part IV infra, some of these assumptions are based on neither fact nor experience, and plaintiffs admit that they are to some extent inconsistent and illogical.”

[Footnote 36]

“There was testimony at trial, however, that Nielsen Ratings has already developed the ability to measure when a Betamax in a sample home is recording the program. Thus, the Betamax owner will be measured as a part of the live audience. The later diary can augment that measurement with information about subsequent viewing.”

Id. at 466.

In a separate section, the District Court rejected plaintiffs’ suggestion that the commercial attractiveness of television broadcasts would be diminished because Betamax owners would use the pause button or fast-forward control to avoid viewing advertisements:

“It must be remembered, however, that to omit commercials, Betamax owners must view the program, including the commercials, while recording. To avoid commercials during playback, the viewer must fast-forward and, for the most part, guess as to when the commercial has passed. For most recordings, either practice may be too tedious. As defendants’ survey showed, 92% of the programs were recorded with commercials and only 25% of the owners fast-forward through them. Advertisers will have to make the same kinds of judgments they do now about whether persons viewing televised programs actually watch the advertisements which interrupt them.”

Id. at 468.

[Footnote 37]

“Here plaintiffs assume that people will view copies when they would otherwise be watching television or going to the movie theater. There is no factual basis for this assumption. It seems equally likely that Betamax owners will play their tapes when there is nothing on television they wish to see and no movie they want to attend. Defendants’ survey does not show any negative effect of Betamax ownership on television viewing or theater attendance.”

Id. at 466.

[Footnote 38]

“The underlying assumptions here are particularly difficult to accept. Plaintiffs explain that the Betamax increases access to the original televised material, and that the more people there are in this original audience, the fewer people the rerun will attract. Yet current marketing practices, including the success of syndication, show just the opposite. Today, the larger the audience for the original telecast, the higher the price plaintiffs can demand from broadcasters from rerun rights. There is no survey within the knowledge of this court to show that the rerun audience is comprised of persons who have not seen the program. In any event, if ratings can reflect Betamax recording, original audiences may increase and, given market practices, this should aid plaintiffs, rather than harm them.”

Ibid.

[Footnote 39]

“This suggestion lacks merit. By definition, time-shift recording entails viewing and erasing, so the program will no longer be on tape when the later theater run begins. Of course, plaintiffs may fear that the Betamax owners will keep the tapes long enough to satisfy all their interest in the program and will, therefore, not patronize later theater exhibitions. To the extent that this practice involves librarying, it is addressed in section V. C., infra. It should also be noted that there is no evidence to suggest that the public interest in later theatrical exhibitions of motion pictures will be reduced any more by Betamax recording than it already is by the television broadcast of the film.”

Id. at 467.

[Footnote 40]

The Court of Appeals chose not to engage in any “equitable rule of reason” analysis in this case. Instead, it assumed that the category of “fair use” is rigidly circumscribed by a requirement that every such use must be “productive.” It therefore concluded that copying a television program merely to enable the viewer to receive information or entertainment that he would otherwise miss because of a personal scheduling conflict could never be fair use. That understanding of “fair use” was erroneous.

Congress has plainly instructed us that fair use analysis calls for a sensitive balancing of interests. The distinction between “productive” and “unproductive” uses may be helpful in calibrating the balance, but it cannot be wholly determinative. Although copying to promote a scholarly endeavor certainly has a stronger claim to fair use than copying to avoid interrupting a poker game, the question is not simply two-dimensional. For one thing, it is not true that all copyrights are fungible. Some copyrights govern material with broad potential secondary markets. Such material may well have a broader claim to protection because of the greater potential for commercial harm. Copying a news broadcast may have a stronger claim to fair use than copying a motion picture. And, of course, not all uses are fungible. Copying for commercial gain has a much weaker claim to fair use than copying for personal enrichment. But the notion of social “productivity” cannot be a complete answer to this analysis. A teacher who copies to prepare lecture notes is clearly productive. But so is a teacher who copies for the sake of broadening his personal understanding of his specialty. Or a legislator who copies for the sake of broadening her understanding of what her constituents are watching; or a constituent who copies a news program to help make a decision on how to vote.

Making a copy of a copyrighted work for the convenience of a blind person is expressly identified by the House Committee Report as an example of fair use, with no suggestion that anything more than a purpose to entertain or to inform need motivate the copying. In a hospital setting, using a VTR to enable a patient to see programs he would otherwise miss has no productive purpose other than contributing to the psychological wellbeing of the patient. Virtually any time-shifting that increases viewer access to television programming may result in a comparable benefit. The statutory language does not identify any dichotomy between productive and nonproductive time-shifting, but does require consideration of the economic consequences of copying.

JUSTICE BLACKMUN, with whom JUSTICE MARSHALL, JUSTICE POWELL, and JUSTICE REHNQUIST join, dissenting.

A restatement of the facts and judicial history of this case is necessary, in my view, for a proper focus upon the issues. Respondents’ position is hardly so “unprecedented,” ante at 464 U. S. 421, in the copyright law, nor does it really embody a “gross generalization,” ante at 464 U. S. 436, or a “novel theory of liability,” ante at 464 U. S. 437, and the like, as the Court, in belittling their claims, describes the efforts of respondents.

I
The introduction of the home videotape recorder (VTR) upon the market has enabled millions of Americans to make recordings of television programs in their homes, for future and repeated viewing at their own convenience. While this practice has proved highly popular with owners of television sets and VTR’s, it understandably has been a matter of concern for the holders of copyrights in the recorded programs. A result is the present litigation, raising the issues whether the home recording of a copyrighted television program is an infringement of the copyright, and, if so, whether the manufacturers and distributors of VTR’s are liable as contributory infringers. I would hope that these questions ultimately will be considered seriously and in depth by the Congress and be resolved there, despite the fact that the Court’s decision today provides little incentive for congressional action. Our task in the meantime, however, is to resolve these issues as best we can in the light of ill-fitting existing copyright law.

It is no answer, of course, to refer to and stress, as the Court does, this Court’s “consistent deference to Congress” whenever “major technological innovations” appear. Ante at 464 U. S. 431. Perhaps a better and more accurate description is that the Court has tended to evade the hard issues when they arise in the area of copyright law. I see no reason for the Court to be particularly pleased with this tradition or to continue it. Indeed, it is fairly clear from the legislative history of the 1976 Act that Congress meant to change the old pattern and

Page 464 U. S. 458

enact a statute that would cover new technologies, as well as old.

II
In 1976, respondents Universal City Studios, Inc., and Walt Disney Productions (Studios) brought this copyright infringement action in the United States District Court for the Central District of California against, among others, petitioners Sony Corporation, a Japanese corporation, and Sony Corporation of America, a New York corporation, the manufacturer and distributor, respectively, of the Betamax VTR. The Studios sought damages, profits, and a wide-ranging injunction against further sales or use of the Betamax or Betamax tapes.

The Betamax, like other VTR’s, presently is capable of recording television broadcasts off the air on videotape cassettes, and playing them back at a later time. [Footnote 2/1] Two kinds of Betamax usage are at issue here. [Footnote 2/2] The first is “time-shifting,” whereby the user records a program in order to watch it at a later time, and then records over it, and thereby erases the program, after a single viewing. The second is “library

Page 464 U. S. 459

building,” in which the user records a program in order to keep it for repeated viewing over a longer term. Sony’s advertisements, at various times, have suggested that Betamax users “record favorite shows” or “build a library.” Sony’s Betamax advertising has never contained warnings about copyright infringement, although a warning does appear in the Betamax operating instructions.

The Studios produce copyrighted “movies” and other works that they release to theaters and license for television broadcast. They also rent and sell their works on film and on prerecorded videotapes and videodiscs. License fees for television broadcasts are set according to audience ratings, compiled by rating services that do not measure any playbacks of videotapes. The Studios make the serious claim that VTR recording may result in a decrease in their revenue from licensing their works to television and from marketing them in other ways.

After a 5-week trial, the District Court, with a detailed opinion, ruled that home VTR recording did not infringe the Studios’ copyrights under either the Act of Mar. 4, 1909 (1909 Act), 35 Stat. 1075, as amended (formerly codified as 17 U.S.C. § 1 et seq.), or the Copyright Revision Act of 1976 (1976 Act), 90 Stat. 2541, 17 U.S.C. § 101 et seq. (1982 ed.). [Footnote 2/3] The District Court also held that, even if home VTR recording were an infringement, Sony could not be held liable under theories of direct infringement, contributory infringement, or vicarious liability. Finally, the court concluded that an injunction against sales of the Betamax would be inappropriate even if Sony were liable under one or more of those theories. 480 F.Supp. 429 (1979).

Page 464 U. S. 460

The United States Court of Appeals for the Ninth Circuit reversed in virtually every respect. 659 F.2d 963 (1981). It held that the 1909 Act and the 1976 Act contained no implied exemption for “home use” recording, that such recording was not “fair use,” and that the use of the Betamax to record the Studios’ copyrighted works infringed their copyrights. The Court of Appeals also held Sony liable for contributory infringement, reasoning that Sony knew and anticipated that the Betamax would be used to record copyrighted material off the air, and that Sony, indeed, had induced, caused, or materially contributed to the infringing conduct. The Court of Appeals remanded the case to the District Court for appropriate relief; it suggested that the District Court could consider the award of damages or a continuing royalty in lieu of an injunction. Id. at 976.

III
The Copyright Clause of the Constitution, Art. I, § 8, cl. 8, empowers Congress

“To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”

This Nation’s initial copyright statute was passed by the First Congress. Entitled “An Act for the encouragement of learning,” it gave an author “the sole right and liberty of printing, reprinting, publishing and vending” his “map, chart, book or books” for a period of 14 years. Act of May 31, 1790, § 1, 1 Stat. 124. Since then, as the technology available to authors for creating and preserving their writings has changed, the governing statute has changed with it. By many amendments, and by complete revisions in 1831, 1870, 1909, and 1976, [Footnote 2/4] authors’ rights have been

Page 464 U. S. 461

expanded to provide protection to any “original works of authorship fixed in any tangible medium of expression,” including “motion pictures and other audiovisual works.” 17 U.S.C. § 102(a) (1982 ed.). [Footnote 2/5]

Section 106 of the 1976 Act grants the owner of a copyright a variety of exclusive rights in the copyrighted work, [Footnote 2/6] including

Page 464 U. S. 462

the right “to reproduce the copyrighted work in copies or phonorecords.” [Footnote 2/7] This grant expressly is made subject to §§ 107-118, which create a number of exemptions and limitations on the copyright owner’s rights. The most important of these sections, for present purposes, is § 107; that section states that “the fair use of a copyrighted work . . . is not an infringement of copyright.” [Footnote 2/8]

The 1976 Act, like its predecessors, [Footnote 2/9] does not give the copyright owner full and complete control over all possible

Page 464 U. S. 463

uses of his work. If the work is put to some use not enumerated in § 106, the use is not an infringement. See Fortnightly Corp. v. United Artists Television, Inc., 392 U. S. 390, 392 U. S. 393-395 (1968). Thus, before considering whether home videotaping comes within the scope of the fair use exemption, one first must inquire whether the practice appears to violate the exclusive right, granted in the first instance by § 106(1), “to reproduce the copyrighted work in copies or phonorecords.”

A

Although the word “copies” is in the plural in § 106(1), there can be no question that, under the Act, the making of even a single unauthorized copy is prohibited. The Senate and House Reports explain:

“The references to ‘copies or phonorecords,’ although in the plural, are intended here and throughout the bill to include the singular (1 U.S.C. § 1). [Footnote 2/10]

Page 464 U. S. 464

S.Rep. No. 94-473, p. 58 (1975) (1975 Senate Report); H.R.Rep. No. 94-1476, p. 61 (1976) (1976 House Report). The Reports then describe the reproduction right established by § 106(1):”

“[T]he right ‘to reproduce the copyrighted work in copies or phonorecords’ means the right to produce a material object in which the work is duplicated, transcribed, imitated, or simulated in a fixed form from which it can be ‘perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device.’ As under the present law, a copyrighted work would be infringed by reproducing it in whole or in any substantial part, and by duplicating it exactly or by imitation or simulation.”

1975 Senate Report 58; 1976 House Report 61. The making of even a single videotape recording at home falls within this definition; the VTR user produces a material object from which the copyrighted work later can be perceived. Unless Congress intended a special exemption for the making of a single copy for personal use, I must conclude that VTR recording is contrary to the exclusive rights granted by § 106(1).

The 1976 Act and its accompanying Reports specify in some detail the situations in which a single copy of a copyrighted work may be made without infringement concerns. Section 108(a), for example, permits a library or archives “to reproduce no more than one copy or phonorecord of a work” for a patron, but only under very limited conditions; an entire work, moreover, can be copied only if it cannot be obtained elsewhere at a fair price. [Footnote 2/11] § 108(e); see also § 112(a) (broadcaster

Page 464 U. S. 465

may “make no more than one copy or phonorecord of a particular transmission program,” and only under certain conditions). In other respects, the making of single copies is permissible only within the limited confines of the fair use doctrine. The Senate Report, in a section headed “Single and multiple copying,” notes that the fair use doctrine would permit a teacher to make a single copy of a work for use in the classroom, but only if the work was not a “sizable” one such as a novel or treatise. 1975 Senate Report 63-64; accord, 1976 House Report 68-69, 71. Other situations in which the making of a single copy would be fair use are described in the House and Senate Reports. [Footnote 2/12] But neither the statute nor its legislative history suggests any intent to create a general exemption for a single copy made for personal or private use.

Indeed, it appears that Congress considered and rejected the very possibility of a special private use exemption. The issue was raised early in the revision process, in one of the studies prepared for Congress under the supervision of the Copyright Office. A. Latman, Fair Use of Copyrighted Works (1958), reprinted in Study No. 14 for the Senate Committee on the Judiciary, Copyright Law Revision, Studies Prepared for the Subcommittee on Patents, Trademarks, and Copyrights, 86th Cong., 2d Sess., 1 (1960) (Latman Fair Use Study). This study found no reported case supporting the existence of an exemption for private use, although it noted that “the purpose and nature of a private use, and in some

Page 464 U. S. 466

cases the small amount taken, might lead a court to apply the general principles of fair use in such a way as to deny liability.” Id. at 12. After reviewing a number of foreign copyright laws that contained explicit statutory exemptions for private or personal use, id. at 25, Professor Latman outlined several approaches that a revision bill could take to the general issue of exemptions and fair use. One of these was the adoption of particularized rules to cover specific situations, including “the field of personal use.” Id. at 33. [Footnote 2/13]

Rejecting the latter alternative, the Register of Copyrights recommended that the revised copyright statute simply mention the doctrine of fair use and indicate its general scope. The Register opposed the adoption of rules and exemptions to cover specific situations, [Footnote 2/14] preferring, instead, to rely on the judge-made fair use doctrine to resolve new problems as they arose. See Register’s 1961 Report 25; Register’s Supplementary Report 27-28.

The Register’s approach was reflected in the first copyright revision bills, drafted by the Copyright Office in 1964.

Page 464 U. S. 467

These bills, like the 1976 Act, granted the copyright owner the exclusive right to reproduce the copyrighted work, subject only to the exceptions set out in later sections. H.R. 11947/S. 3008, 88th Cong., 2d Sess., § 5(a) (1964). The primary exception was fair use, § 6, containing language virtually identical to § 107 of the 1976 Act. Although the copyright revision bills underwent change in many respects from their first introduction in 1964 to their final passage in 1976, these portions of the bills did not change. [Footnote 2/15] I can conclude only that Congress, like the Register, intended to rely on the fair use doctrine, and not on a per se exemption for private use, to separate permissible copying from the impermissible. [Footnote 2/16]

Page 464 U. S. 468

When Congress intended special and protective treatment for private use, moreover, it said so explicitly. One such explicit statement appears in § 106 itself. The copyright owner’s exclusive right to perform a copyrighted work, in contrast to his right to reproduce the work in copies, is limited. Section 106(4) grants a copyright owner the exclusive right to perform the work “publicly,” but does not afford the owner protection with respect to private performances by others. A motion picture is “performed” whenever its images are shown or its sounds are made audible. § 101. Like “sing[ing]

Page 464 U. S. 469

a copyrighted lyric in the shower,” Twentieth Century Music Corp. v. Aiken, 422 U. S. 151, 422 U. S. 155 (1975), watching television at home with one’s family and friends is now considered a performance. 1975 Senate Report 59-60; 1976 House Report 63. [Footnote 2/17] Home television viewing nevertheless does not infringe any copyright — but only because § 106(4) contains the word “publicly.” [Footnote 2/18] See generally 1975 Senate Report 60-61; 1976 House Report 63-64; Register’s 1961 Report 29-30. No such distinction between public and private uses appears in § 106(1)’s prohibition on the making of copies. [Footnote 2/19]

Similarly, an explicit reference to private use appears in § 108. Under that section, a library can make a copy for a patron only for specific types of private use: “private study, scholarship, or research.” [Footnote 2/20] §§ 108(d)(1) and (e)(1); see 37

Page 464 U. S. 470

CFR § 201.14(b) (1983). Limits also are imposed on the extent of the copying and the type of institution that may make copies, and the exemption expressly is made inapplicable to motion pictures and certain other types of works. § 108(h). These limitations would be wholly superfluous if an entire copy of any work could be made by any person for private use. [Footnote 2/21]

B

The District Court in this case nevertheless concluded that the 1976 Act contained an implied exemption for “home-use recording.” 480 F.Supp. at 444-446. The court relied primarily on the legislative history of a 1971 amendment to the 1909 Act, a reliance that this Court today does not duplicate. Ante at 464 U. S. 430, n. 11. That amendment, however, was addressed to the specific problem of commercial piracy of sound recordings. Act of Oct. 15, 1971, 85 Stat. 391 (1971 Amendment). The House Report on the 1971 Amendment, in a section entitled “Home Recording,” contains the following statement: .

“In approving the creation of a limited copyright in sound recordings, it is the intention of the Committee that this limited copyright not grant any broader rights than are accorded to other copyright proprietors under the existing title 17. Specifically, it is not the intention of the Committee to restrain the home recording, from broadcasts or from tapes or records, of recorded performances,

Page 464 U. S. 471

where the home recording is for private use and with no purpose of reproducing or otherwise capitalizing commercially on it. This practice is common and unrestrained today, and the record producers and performers would be in no different position from that of the owners of copyright in recorded musical compositions over the past 20 years.”

H.R.Rep. No. 92-487, p. 7 (1971) (1971 House Report). Similar statements were made during House hearings on the bill [Footnote 2/22] and on the House floor, [Footnote 2/23] although not in the Senate

Page 464 U. S. 472

proceedings. In concluding that these statements created a general exemption for home recording, the District Court, in my view, paid too little heed to the context in which the statements were made, and failed to consider the limited purpose of the 1971 Amendment and the structure of the 1909 Act.

Unlike television broadcasts and other types of motion pictures, sound recordings were not protected by copyright prior to the passage of the 1971 Amendment. Although the underlying musical work could be copyrighted, the 1909 Act provided no protection for a particular performer’s rendition of the work. Moreover, copyrighted musical works that had been recorded for public distribution were subject to a “compulsory license:” any person was free to record such a work upon payment of a 2-cent royalty to the copyright owner. § 1(e), 35 Stat. 1075-1076. While reproduction without payment of the royalty was an infringement under the 1909 Act, damages were limited to three times the amount of the unpaid royalty. § 25(e), 35 Stat. 1081-1082; Shapiro, Bernstein & Co. v. Goody, 248 F.2d 260, 262-263, 265 (CA2 1957), cert. denied, 355 U.S. 952 (1958). It was observed that the practical effect of these provisions was to legalize record piracy. See S.Rep. No. 92-72, p. 4 (1971); 1971 House Report 2.

In order to suppress this piracy, the 1971 Amendment extended copyright protection beyond the underlying work and to the sound recordings themselves. Congress chose, however, to provide only limited protection: owners of copyright in sound recordings were given the exclusive right “[t]o reproduce [their works] and distribute [them] to the public.”

Page 464 U. S. 473

1971 Amendment, § 1(a), 85 Stat. 391 (formerly codified as 17 U.S.C. § 1(f)). [Footnote 2/24] This right was merely the right of commercial distribution. See 117 Cong.Rec. 34748-34749 (1971) (colloquy of Reps. Kazen and Kastenmeier) (“the bill protects copyrighted material that is duplicated for commercial purposes only”).

Against this background, the statements regarding home recording under the 1971 Amendment appear in a very different light. If home recording was “common and unrestrained” under the 1909 Act, see 1971 House Report 7, it was because sound recordings had no copyright protection and the owner of a copyright in the underlying musical work could collect no more than a 2-cent royalty plus 6 cents in damages for each unauthorized use. With so little at stake, it is not at all surprising that the Assistant Register “d[id] not see anybody going into anyone’s home and preventing this sort of thing.” 1971 House Hearings 23.

But the references to home sound recording in the 1971 Amendment’s legislative history demonstrate no congressional intent to create a generalized home-use exemption from copyright protection. Congress, having recognized that the 1909 Act had been unsuccessful in controlling home sound recording, addressed only the specific problem of commercial record piracy. To quote Assistant Register Ringer again, home use was “not what this legislation [was] addressed to.” Id. at 22 [Footnote 2/25]

Page 464 U. S. 474

While the 1971 Amendment narrowed the sound recordings loophole in then existing copyright law, motion pictures and other audiovisual works have been accorded full copyright protection since at least 1912, see Act of Aug. 24, 1912, 37 Stat. 488, and perhaps before, see Edison v. Lubin, 122 F. 240 (CA3 1903), appeal dism’d, 195 U.S. 625 (1904). Congress continued this protection in the 1976 Act. Unlike the sound recording rights created by the 1971 Amendment, the reproduction rights associated with motion pictures under § 106(1) are not limited to reproduction for public distribution; the copyright owner’s right to reproduce the work exists independently, and the “mere duplication of a copy may constitute an infringement even if it is never distributed.” Register’s Supplementary Report 16; see 1975 Senate Report 57 and 1976 House Report 61. Moreover, the 1976 Act was intended as a comprehensive treatment of all aspects of copyright law. The Reports accompanying the 1976 Act, unlike the 1971 House Report, contain no suggestion that home-use recording is somehow outside the scope of this all-inclusive statute. It was clearly the intent of Congress that no additional exemptions were to be implied. [Footnote 2/26]

Page 464 U. S. 475

I therefore find in the 1976 Act no implied exemption to cover the home taping of television programs, whether it be for a single copy, for private use, or for home use. Taping a copyrighted television program is infringement unless it is permitted by the fair use exemption contained in § 107 of the 1976 Act. I now turn to that issue.

IV
Fair Use

The doctrine of fair use has been called, with some justification, “the most troublesome in the whole law of copyright.” Dellar v. Samuel Goldwyn, Inc., 104 F.2d 661, 662 (CA2 1939); see Triangle Publications, Inc. v. Knight-Ridder Newspapers, Inc., 626 F.2d 1171, 1174 (CA5 1980); Meeropol v. Nizer, 560 F.2d 1061, 1068 (CA2 1977), cert. denied, 434 U.S. 1013 (1978). Although courts have constructed lists of factors to be considered in determining whether a particular use is fair, [Footnote 2/27] no fixed criteria have emerged by which that

Page 464 U. S. 476

determination can be made. This Court thus far has provided no guidance; although fair use issues have come here twice, on each occasion, the Court was equally divided, and no opinion was forthcoming. Williams & Wilkins Co. v. United States, 203 Ct.Cl. 74, 487 F.2d 1345 (1973), aff’d, 420 U. S. 376 (1975); Benny v. Loew’s Inc., 239 F.2d 532 (CA9 1956), aff’d sub nom. Columbia Broadcasting System, Inc. v. Loew’s Inc., 356 U. S. 43 (1958).

Nor did Congress provide definitive rules when it codified the fair use doctrine in the 1976 Act; it simply incorporated a list of factors “to be considered:” the “purpose and character of the use,” the “nature of the copyrighted work,” the “amount and substantiality of the portion used,” and, perhaps the most important, the “effect of the use upon the potential market for or value of the copyrighted work” (emphasis supplied). § 107. No particular weight, however, was assigned to any of these, and the list was not intended to be exclusive. The House and Senate Reports explain that § 107 does no more than give “statutory recognition” to the fair use doctrine; it was intended “to restate the present judicial doctrine of fair use, not to change, narrow, or enlarge it in any way.” 1976 House Report 66. See 1975 Senate Report 62; S.Rep. No. 93-983, p. 116 (1974); H.R.Rep. No. 83, 90th Cong., 1st Sess., 32 (1967); H.R.Rep. No. 2237, 89th Cong., 2d Sess., 61 (1966).

Page 464 U. S. 477

A

Despite this absence of clear standards, the fair use doctrine plays a crucial role in the law of copyright. The purpose of copyright protection, in the words of the Constitution, is to “promote the Progress of Science and useful Arts.” Copyright is based on the belief that, by granting authors the exclusive rights to reproduce their works, they are given an incentive to create, and that

“encouragement of individual effort by personal gain is the best way to advance public welfare through the talents of authors and inventors in ‘science and the useful Arts.'”

Mazer v. Stein, 347 U. S. 201, 347 U. S. 219 (1954). The monopoly created by copyright thus rewards the individual author in order to benefit the public. Twentieth Century Music Corp. v. Aiken, 422 U.S. at 422 U. S. 156; Fox Film Corp. v. Doyal, 286 U. S. 123, 286 U. S. 127-128 (1932); see H.R.Rep. No. 2222, 60th Cong., 2d Sess., 7 (1909).

There are situations, nevertheless, in which strict enforcement of this monopoly would inhibit the very “Progress of Science and useful Arts” that copyright is intended to promote. An obvious example is the researcher or scholar whose own work depends on the ability to refer to and to quote the work of prior scholars. Obviously, no author could create a new work if he were first required to repeat the research of every author who had gone before him. [Footnote 2/28] The scholar, like the ordinary user, of course could be left to bargain with each copyright owner for permission to quote from or refer to prior works. But there is a crucial difference between the scholar and the ordinary user. When the ordinary user decides that the owner’s price is too high, and forgoes use of the work, only the individual is the loser. When the scholar forgoes the use of a prior work, not only does his own

Page 464 U. S. 478

work suffer, but the public is deprived of his contribution to knowledge. The scholar’s work, in other words, produces external benefits from which everyone profits. In such a case, the fair use doctrine acts as a form of subsidy — albeit at the first author’s expense — to permit the second author to make limited use of the first author’s work for the public good. See Latman Fair Use Study 31; Gordon, Fair Use as Market Failure: A Structural Analysis of the Betamax Case and its Predecessors, 82 Colum.L.Rev. 1600, 1630 (1982). A similar subsidy may be appropriate in a range of areas other than pure scholarship. The situations in which fair use is most commonly recognized are listed in § 107 itself; fair use may be found when a work is used “for purposes such as criticism, comment, news reporting, teaching, . . . scholarship, or research.” The House and Senate Reports expand on this list somewhat, [Footnote 2/29] and other examples may be found in the case law. [Footnote 2/30] Each of these uses, however, reflects a common theme: each is a productive use, resulting in some added benefit to the public beyond that produced by the first author’s work. [Footnote 2/31] The fair use doctrine, in other words, permits works

Page 464 U. S. 479

to be used for “socially laudable purposes.” See Copyright Office, Briefing Papers on Current Issues, reprinted in 1975 House Hearings 2051, 2055. I am aware of no case in which the reproduction of a copyrighted work for the sole benefit of the user has been held to be fair use. [Footnote 2/32]

I do not suggest, of course, that every productive use is a fair use. A finding of fair use still must depend on the facts of the individual case, and on whether, under the circumstances, it is reasonable to expect the user to bargain with the copyright owner for use of the work. The fair use doctrine must strike a balance between the dual risks created by the copyright system: on the one hand, that depriving authors of their monopoly will reduce their incentive to create, and, on the other, that granting authors a complete monopoly will reduce the creative ability of others. [Footnote 2/33] The inquiry is

Page 464 U. S. 480

necessarily a flexible one, and the endless variety of situations that may arise precludes the formulation of exact rules. But when a user reproduces an entire work and uses it for its original purpose, with no added benefit to the public, the doctrine of fair use usually does not apply. There is then no need whatsoever to provide the ordinary user with a fair use subsidy at the author’s expense.

The making of a videotape recording for home viewing is an ordinary, rather than a productive, use of the Studios’ copyrighted works. The District Court found that “Betamax owners use the copy for the same purpose as the original. They add nothing of their own.” 480 F.Supp. at 453. Although applying the fair use doctrine to home VTR recording, as Sony argues, may increase public access to material broadcast free over the public airwaves, I think Sony’s argument misconceives the nature of copyright. Copyright gives the author a right to limit or even to cut off access to his work. Fox Film Corp. v. Doyal, 286 U.S. at 286 U. S. 127. A VTR recording creates no public benefit sufficient to justify limiting this right. Nor is this right extinguished by the copyright owner’s choice to make the work available over the airwaves. Section 106 of the 1976 Act grants the copyright owner the exclusive right to control the performance and the reproduction of his work, and the fact that he has licensed a single television performance is really irrelevant to the existence of his right to control its reproduction. Although a television broadcast may be free to the viewer, this fact is equally irrelevant; a book borrowed from the public library may not be copied any more freely than a book that is purchased.

It may be tempting, as, in my view, the Court today is tempted, to stretch the doctrine of fair use so as to permit unfettered use of this new technology in order to increase access

Page 464 U. S. 481

to television programming. But such an extension risks eroding the very basis of copyright law, by depriving authors of control over their works and consequently of their incentive to create. [Footnote 2/34] Even in the context of highly productive educational uses, Congress has avoided this temptation; in passing the 1976 Act, Congress made it clear that off-the-air videotaping was to be permitted only in very limited situations. See 1976 House Report 71; 1975 Senate Report 64. And, the Senate Report adds,

“[t]he committee does not intend to suggest . . . that off-the-air recording for convenience would under any circumstances, be considered ‘fair use.'”

Id. at 66. I cannot disregard these admonitions.

B

I recognize, nevertheless, that there are situations where permitting even an unproductive use would have no effect on the author’s incentive to create, that is, where the use would not affect the value of, or the market for, the author’s work. Photocopying an old newspaper clipping to send to a friend

Page 464 U. S. 482

may be an example; pinning a quotation on one’s bulletin board may be another. In each of these cases, the effect on the author is truly de minimis. Thus, even though these uses provide no benefit to the public at large, no purpose is served by preserving the author’s monopoly, and the use may be regarded as fair.

Courts should move with caution, however, in depriving authors of protection from unproductive “ordinary” uses. As has been noted above, even in the case of a productive use, § 107(4) requires consideration of “the effect of the use upon the potential market for or value of the copyrighted work” (emphasis added).

“[A] particular use which may seem to have little or no economic impact on the author’s rights today can assume tremendous importance in times to come.”

Register’s Supplementary Report 14. Although such a use may seem harmless when viewed in isolation,

“[i]solated instances of minor infringements, when multiplied many times, become in the aggregate a major inroad on copyright that must be prevented.”

1975 Senate Report 65.

I therefore conclude that, at least when the proposed use is an unproductive one, a copyright owner need prove only a potential for harm to the market for or the value of the copyrighted work. See 3 M. Nimmer, Copyright § 13.05[E][4][c], p. 13-84 (1983). Proof of actual harm, or even probable harm, may be impossible in an area where the effect of a new technology is speculative, and requiring such proof would present the

“real danger . . . of confining the scope of an author’s rights on the basis of the present technology so that, as the years go by, his copyright loses much of its value because of unforeseen technical advances.”

Register’s Supplementary Report 14. Infringement thus would be found if the copyright owner demonstrates a reasonable possibility that harm will result from the proposed use. When the use is one that creates no benefit to the public at large, copyright protection should not be denied on the basis that a new technology that may result in harm has not yet done so.

Page 464 U. S. 483

The Studios have identified a number of ways in which VTR recording could damage their copyrights. VTR recording could reduce their ability to market their works in movie theaters and through the rental or sale of prerecorded videotapes or videodiscs; it also could reduce their rerun audience, and consequently the license fees available to them for repeated showings. Moreover, advertisers may be willing to pay for only “live” viewing audiences, if they believe VTR viewers will delete commercials or if rating services are unable to measure VTR use; if this is the case, VTR recording could reduce the license fees the Studios are able to charge even for first-run showings. Library-building may raise the potential for each of the types of harm identified by the Studios, and time-shifting may raise the potential for substantial harm as well. [Footnote 2/35]

Although the District Court found no likelihood of harm from VTR use, 480 F.Supp. at 468, I conclude that it applied an incorrect substantive standard and misallocated the

Page 464 U. S. 484

burden of proof. The District Court reasoned that the Studios had failed to prove that library-building would occur “to any significant extent,” id. at 467; that the Studios’ prerecorded videodiscs could compete with VTR recordings and were “arguably . . . more desirable,” ibid.; that it was “not clear that movie audiences will decrease,” id. at 468; and that the practice of deleting commercials “may be too tedious” for many viewers, ibid. To the extent any decrease in advertising revenues would occur, the court concluded that the Studios had “marketing alternatives at hand to recoup some of that predicted loss.” Id. at 452. Because the Studios’ prediction of harm was “based on so many assumptions and on a system of marketing which is rapidly changing,” the court was “hesitant to identify probable effects’ of home-use copying.” Ibid.

The District Court’s reluctance to engage in prediction in this area is understandable, but, in my view, the court was mistaken in concluding that the Studios should bear the risk created by this uncertainty. The Studios have demonstrated a potential for harm, which has not been, and could not be, refuted at this early stage of technological development.

The District Court’s analysis of harm, moreover, failed to consider the effect of VTR recording on “the potential market for or the value of the copyrighted work,” as required by § 107(4). [Footnote 2/36] The requirement that a putatively infringing use

Page 464 U. S. 485

of a copyrighted work, to be “fair,” must not impair a “potential” market for the work has two implications. First, an infringer cannot prevail merely by demonstrating that the copyright holder suffered no net harm from the infringer’s action. Indeed, even a showing that the infringement has resulted in a net benefit to the copyright holder will not suffice. Rather, the infringer must demonstrate that he had not impaired the copyright holder’s ability to demand compensation from (or to deny access to) any group who would otherwise be willing to pay to see or hear the copyrighted work. Second, the fact that a given market for a copyrighted work would not be available to the copyright holder were it not for the infringer’s activities does not permit the infringer to exploit that market without compensating the copyright holder. See Iowa State University Research Foundation, Inc. v. American Broadcasting Cos., 621 F.2d 57 (CA2 1980).

In this case, the Studios and their amici demonstrate that the advent of the VTR technology created a potential market for their copyrighted programs. That market consists of those persons who find it impossible or inconvenient to watch the programs at the time they are broadcast, and who wish to watch them at other times. These persons are willing to pay for the privilege of watching copyrighted work at their convenience, as is evidenced by the fact that they are willing to pay for VTR’s and tapes; undoubtedly, most also would be willing to pay some kind of royalty to copyright holders. The Studios correctly argue that they have been deprived of the ability to exploit this sizable market.

It is thus apparent from the record and from the findings of the District Court that time-shifting does have a substantial

Page 464 U. S. 486

adverse effect upon the “potential market for” the Studios’ copyrighted works. Accordingly, even under the formulation of the fair use doctrine advanced by Sony, time-shifting cannot be deemed a fair use.

V
Contributory Infringement

From the Studios’ perspective, the consequences of home VTR recording are the same as if a business had taped the Studios’ works off the air, duplicated the tapes, and sold or rented them to members of the public for home viewing. The distinction is that home VTR users do not record for commercial advantage; the commercial benefit accrues to the manufacturer and distributors of the Betamax. I thus must proceed to discuss whether the manufacturer and distributors can be held contributorily liable if the product they sell is used to infringe.

It is well established that liability for copyright infringement can be imposed on persons other than those who actually carry out the infringing activity. Kalem Co. v. Harper Brothers, 222 U. S. 55, 222 U. S. 62-63 (1911); 3 M. Nimmer, Copyright § 12.04[A] (1983); see Twentieth Century Music Corp. v. Aiken, 422 U.S. at 422 U. S. 160, n. 11; Buck v. Jewell-LaSalle Realty Co., 283 U. S. 191, 283 U. S. 198 (1931). Although the liability provision of the 1976 Act provides simply that “[a]nyone who violates any of the exclusive rights of the copyright owner . . . is an infringer of the copyright,” 17 U.S.C. § 501(a) (1982 ed.), the House and Senate Reports demonstrate that Congress intended to retain judicial doctrines of contributory infringement. 1975 Senate Report 57; 1976 House Report 61. [Footnote 2/37]

Page 464 U. S. 487

The doctrine of contributory copyright infringement, however, is not well defined. One of the few attempts at definition appears in Gershwin Publishing Corp. v. Columbia Artists Management, Inc., 443 F.2d 1159 (CA2 1971). In that case, the Second Circuit stated that

“one who, with knowledge of the infringing activity, induces, causes or materially contributes to the infringing conduct of another, may be held liable as a ‘contributory’ infringer.”

Id. at 1162 (footnote omitted). While I have no quarrel with this general statement, it does not easily resolve the present case; the District Court and the Court of Appeals, both purporting to apply it, reached diametrically opposite results.

A

In absolving Sony from liability, the District Court reasoned that Sony had no direct involvement with individual Betamax users, did not participate in any off-the-air copying, and did not know that such copying was an infringement of the Studios’ copyright. 480 F.Supp. at 460. I agree with the Gershwin court that contributory liability may be imposed even when the defendant has no formal control over the infringer. The defendant in Gershwin was a concert promoter operating through local concert associations that it sponsored; it had no formal control over the infringing performers themselves. 443 F.2d at 1162-1163. See also Twentieth Century Music Corp. v. Aiken, 422 U.S. at 422 U. S. 160, n. 11. Moreover, a finding of contributory infringement has never depended on actual knowledge of particular instances of infringement; it is sufficient that the defendant have reason to know that infringement is taking place. 443 F.2d

Page 464 U. S. 488

at 1162; see Screen Gems-Columbia Music, Inc. v. Mark-Fi Records, Inc., 256 F.Supp. 399 (SDNY 1966). [Footnote 2/38] In the so-called “dance hall” cases, in which questions of contributory infringement arise with some frequency, proprietors of entertainment establishments routinely are held liable for unauthorized performances on their premises, even when they have no knowledge that copyrighted works are being performed. In effect, the proprietors in those cases are charged with constructive knowledge of the performances. [Footnote 2/39]

Page 464 U. S. 489

Nor is it necessary that the defendant be aware that the infringing activity violates the copyright laws. Section 504(c)(2) of the 1976 Act provides for a reduction in statutory damages when an infringer proves he “was not aware and had no reason to believe that his or her acts constituted an infringement of copyright,” but the statute establishes no general exemption for those who believe their infringing activities are legal. Moreover, such an exemption would be meaningless in a case such as this, in which prospective relief is sought; once a court has established that the copying at issue is infringement, the defendants are necessarily aware of that fact for the future. It is undisputed in this case that Sony had reason to know the Betamax would be used by some owners to tape copyrighted works off the air. See 480 F.Supp. at 459-460.

The District Court also concluded that Sony had not caused, induced, or contributed materially to any infringing activities of Betamax owners. Id. at 460. In a case of this kind, however, causation can be shown indirectly; it does not depend on evidence that particular Betamax owners relied on particular advertisements. In an analogous case decided just two Terms ago, this Court approved a lower court’s conclusion that liability for contributory trademark infringement could be imposed on a manufacturer who “suggested, even by implication” that a retailer use the manufacturer’s goods to infringe the trademark of another. Inwood Laboratories, Inc. v. Ives Laboratories, Inc., 456 U. S. 844, 456 U. S. 851 (1982); see id. at 456 U. S. 860 (opinion concurring in result). I think this standard is equally appropriate in the copyright context.

The District Court found that Sony has advertised the Betamax as suitable for off-the-air recording of “favorite shows,” “novels for television,” and “classic movies,” 480 F.Supp. at 436, with no visible warning that such recording

Page 464 U. S. 490

could constitute copyright infringement. It is only with the aid of the Betamax or some other VTR, that it is possible today for home television viewers to infringe copyright by recording off-the-air. Off-the-air recording is not only a foreseeable use for the Betamax, but indeed is its intended use. Under the circumstances, I agree with the Court of Appeals that, if off-the-air recording is an infringement of copyright, Sony has induced and materially contributed to the infringing conduct of Betamax owners. [Footnote 2/40]

B

Sony argues that the manufacturer or seller of a product used to infringe is absolved from liability whenever the product can be put to any substantial noninfringing use. Brief for Petitioners 41-42. The District Court so held, borrowing the “staple article of commerce” doctrine governing liability for contributory infringement of patents. See 35 U.S.C. § 271. [Footnote 2/41] This Court today is much less positive. See ante

Page 464 U. S. 491

at 464 U. S. 440-442. I do not agree that this technical judge-made doctrine of patent law, based in part on considerations irrelevant to the field of copyright, see generally Dawson Chemical Co. v. Rohm & Haas Co., 448 U. S. 176, 448 U. S. 187-199 (1980), should be imported wholesale into copyright law. Despite their common constitutional source, see U.S.Const., Art. I, § 8, Cl. 8, patent and copyright protections have not developed in a parallel fashion, and this Court in copyright cases in the past has borrowed patent concepts only sparingly. See Bobbs-Merrill Co. v. Straus, 210 U. S. 339, 210 U. S. 345-346 (1908).

I recognize, however, that many of the concerns underlying the “staple article of commerce” doctrine are present in copyright law as well. As the District Court noted, if liability for contributory infringement were imposed on the manufacturer or seller of every product used to infringe — a typewriter, a camera, a photocopying machine — the “wheels of commerce” would be blocked. 480 F.Supp. at 461; see also Kalem Co. v. Harper Brothers, 222 U.S. at 222 U. S. 62.

I therefore conclude that, if a significant portion of the product’s use is noninfringing, the manufacturers and sellers cannot be held contributorily liable for the product’s infringing uses. See ante at 464 U. S. 440-441. If virtually all of the product’s use, however, is to infringe, contributory liability may be imposed; if no one would buy the product for noninfringing purposes alone, it is clear that the manufacturer is purposely profiting from the infringement, and that liability is appropriately imposed. In such a case, the copyright owner’s monopoly would not be extended beyond its proper bounds; the manufacturer of such a product contributes to the infringing activities of others and profits directly thereby, while

Page 464 U. S. 492

providing no benefit to the public sufficient to justify the infringement.

The Court of Appeals concluded that Sony should be held liable for contributory infringement, reasoning that “[v]ideotape recorders are manufactured, advertised, and sold for the primary purpose of reproducing television programming,” and “[v]irtually all television programming is copyrighted material.” 659 F.2d at 975. While I agree with the first of these propositions, [Footnote 2/42] the second, for me, is problematic. The key question is not the amount of television programming that is copyrighted, but rather the amount of VTR usage that is infringing. [Footnote 2/43] Moreover, the parties and their amici have argued vigorously about both the amount of television programming that is covered by copyright and the amount for which permission to copy has been given. The proportion of VTR recording that is infringing is ultimately a question of fact, [Footnote 2/44] and the District Court specifically declined to make

Page 464 U. S. 493

findings on the “percentage of legal versus illegal home-use recording.” 480 F.Supp. at 468. In light of my view of the law, resolution of this factual question is essential. I therefore would remand the case for further consideration of this by the District Court.

VI
The Court has adopted an approach very different from the one I have outlined. It is my view that the Court’s approach alters dramatically the doctrines of fair use and contributory infringement as they have been developed by Congress and the courts. Should Congress choose to respond to the Court’s decision, the old doctrines can be resurrected. As it stands, however, the decision today erodes much of the coherence that these doctrines have struggled to achieve.

The Court’s disposition of the case turns on its conclusion that time-shifting is a fair use. Because both parties agree that time-shifting is the primary use of VTR’s, that conclusion, if correct, would settle the issue of Sony’s liability under almost any definition of contributory infringement. The Court concludes that time-shifting is fair use for two reasons. Each is seriously flawed.

The Court’s first reason for concluding that time-shifting is fair use is its claim that many copyright holders have no objection to time-shifting, and that “respondents have no right to prevent other copyright holders from authorizing it for their programs.” Ante at 464 U. S. 442. The Court explains that a finding of contributory infringement would

“inevitably frustrate the interests of broadcasters in reaching the portion of their audience that is available only through time-shifting.

Page 464 U. S. 494

”

Ante at 464 U. S. 446. Such reasoning, however, simply confuses the question of liability with the difficulty of fashioning an appropriate remedy. It may be that an injunction prohibiting the sale of VTR’s would harm the interests of copyright holders who have no objection to others making copies of their programs. But such concerns should and would be taken into account in fashioning an appropriate remedy once liability has been found. Remedies may well be available that would not interfere with authorized time-shifting at all. The Court of Appeals mentioned the possibility of a royalty payment that would allow VTR sales and time-shifting to continue unabated, and the parties may be able to devise other narrowly tailored remedies. Sony may be able, for example, to build a VTR that enables broadcasters to scramble the signal of individual programs and “jam” the unauthorized recording of them. Even were an appropriate remedy not available at this time, the Court should not misconstrue copyright holders’ rights in a manner that prevents enforcement of them when, through development of better techniques, an appropriate remedy becomes available. [Footnote 2/45]

Page 464 U. S. 495

The Court’s second stated reason for finding that Sony is not liable for contributory infringement is its conclusion that even unauthorized time-shifting is fair use. Ante at 464 U. S. 447 et seq. This conclusion is even more troubling. The Court begins by suggesting that the fair use doctrine operates as a general “equitable rule of reason.” That interpretation mischaracterizes the doctrine, and simply ignores the language of the statute. Section 107 establishes the fair use doctrine “for purposes such as criticism, comment, news reporting, teaching, . . . scholarship, or research.” These are all productive uses. It is true that the legislative history states repeatedly that the doctrine must be applied flexibly on a case-by-case basis, but those references were only in the context of productive uses. Such a limitation on fair use comports with its purpose, which is to facilitate the creation of new works. There is no indication that the fair use doctrine has any application for purely personal consumption on the scale involved in this case, [Footnote 2/46] and the Court’s application of it here deprives fair use of the major cohesive force that has guided evolution of the doctrine in the past.

Page 464 U. S. 496

Having bypassed the initial hurdle for establishing that a use is fair, the Court then purports to apply to time-shifting the four factors explicitly stated in the statute. The first is “the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes.” § 107(1). The Court confidently describes time-shifting as a noncommercial, nonprofit activity. It is clear, however, that personal use of programs that have been copied without permission is not what § 107(1) protects. The intent of the section is to encourage users to engage in activities the primary benefit of which accrues to others. Time-shifting involves no such humanitarian impulse. It is likewise something of a mischaracterization of time-shifting to describe it as noncommercial in the sense that that term is used in the statute. As one commentator has observed, time-shifting is noncommercial in the same sense that stealing jewelry and wearing it — instead of reselling it — is noncommercial. [Footnote 2/47] Purely consumptive uses are certainly not what the fair use doctrine was designed to protect, and the awkwardness of applying the statutory language to time-shifting only makes clearer that fair use was designed to protect only uses that are productive.

The next two statutory factors are all but ignored by the Court — though certainly not because they have no applicability. The second factor — “the nature of the copyrighted work” — strongly supports the view that time-shifting is an infringing use. The rationale guiding application of this factor is that certain types of works, typically those involving “more of diligence than of originality or inventiveness,” New York Times Co. v. Roxbury Data Interface, Inc., 434 F.Supp. 217, 221 (NJ 1977), require less copyright protection than other original works. Thus, for example, informational

Page 464 U. S. 497

works, such as news reports, that readily lend themselves to productive use by others, are less protected than creative works of entertainment. Sony’s own surveys indicate that entertainment shows account for more than 80% of the programs recorded by Betamax owners. [Footnote 2/48]

The third statutory factor — “the amount and substantiality of the portion used” — is even more devastating to the Court’s interpretation. It is undisputed that virtually all VTR owners record entire works, see 480 F.Supp. at 454, thereby creating an exact substitute for the copyrighted original. Fair use is intended to allow individuals engaged in productive uses to copy small portions of original works that will facilitate their own productive endeavors. Time-shifting bears no resemblance to such activity, and the complete duplication that it involves might alone be sufficient to preclude a finding of fair use. It is little wonder that the Court has chosen to ignore this statutory factor. [Footnote 2/49]

The fourth factor requires an evaluation of “the effect of the use upon the potential market for or value of the copyrighted work.” This is the factor upon which the Court focuses, but once again, the Court has misread the statute. As mentioned above, the statute requires a court to consider the effect of the use on the potential market for the copyrighted work. The Court has struggled mightily to show that VTR use has not reduced the value of the Studios’ copyrighted works in their present markets. Even if true, that showing only begins the proper inquiry. The development

Page 464 U. S. 498

of the VTR has created a new market for the works produced by the Studios. That market consists of those persons who desire to view television programs at times other than when they are broadcast, and who therefore purchase VTR recorders to enable them to time-shift. [Footnote 2/50] Because time-shifting of the Studios’ copyrighted works involves the copying of them, however, the Studios are entitled to share in the benefits of that new market. Those benefits currently go to Sony through Betamax sales. Respondents therefore can show harm from VTR use simply by showing that the value of their copyrights would increase if they were compensated for the copies that are used in the new market. The existence of this effect is self-evident.

Because of the Court’s conclusion concerning the legality of time-shifting, it never addresses the amount of noninfringing use that a manufacturer must show to absolve itself from liability as a contributory infringer. Thus, it is difficult to discuss how the Court’s test for contributory infringement would operate in practice under a proper analysis of time-shifting. One aspect of the test as it is formulated by the Court, however, particularly deserves comment. The Court explains that a manufacturer of a product is not liable for contributory infringement as long as the product is “capable of substantial noninfringing uses.” Ante at 464 U. S. 442 (emphasis supplied). Such a definition essentially eviscerates the concept of contributory infringement. Only the most unimaginative manufacturer would be unable to demonstrate that a image-duplicating product is “capable” of substantial noninfringing uses. Surely Congress desired to prevent the sale of products that are used almost exclusively to infringe copyrights;

Page 464 U. S. 499

the fact that noninfringing uses exist presumably would have little bearing on that desire.

More importantly, the rationale for the Court’s narrow standard of contributory infringement reveals that, once again, the Court has confused the issue of liability with that of remedy. The Court finds that a narrow definition of contributory infringement is necessary in order to protect “the rights of others freely to engage in substantially unrelated areas of commerce.” Ante at 464 U. S. 442. But application of the contributory infringement doctrine implicates such rights only if the remedy attendant upon a finding of liability were an injunction against the manufacture of the product in question. The issue of an appropriate remedy is not before the Court at this time, but it seems likely that a broad injunction is not the remedy that would be ordered. It is unfortunate that the Court has allowed its concern over a remedy to infect its analysis of liability.

VII
The Court of Appeals, having found Sony liable, remanded for the District Court to consider the propriety of injunctive or other relief. Because of my conclusion as to the issue of liability, I, too, would not decide here what remedy would be appropriate if liability were found. I concur, however, in the Court of Appeals’ suggestion that an award of damages, or continuing royalties, or even some form of limited injunction, may well be an appropriate means of balancing the equities in this case. [Footnote 2/51] Although I express no view on the merits

Page 464 U. S. 500

of any particular proposal, I am certain that, if Sony were found liable in this case, the District Court would be able to fashion appropriate relief. The District Court might conclude, of course, that a continuing royalty or other equitable relief is not feasible. The Studios then would be relegated to statutory damages for proven instances of infringement. But the difficulty of fashioning relief, and the possibility that complete relief may be unavailable, should not affect our interpretation of the statute.

Like so many other problems created by the interaction of copyright law with a new technology, “[t]here can be no really satisfactory solution to the problem presented here, until Congress acts.” Twentieth Century Music Corp. v. Aiken, 422 U.S. at 422 U. S. 167 (dissenting opinion). But in the absence of a congressional solution, courts cannot avoid difficult problems by refusing to apply the law. We must “take the Copyright Act . . . as we find it,” Fortnightly Corp. v. United Artists Television, Inc., 392 U.S. at 392 U. S. 401-402, and “do as little damage as possible to traditional copyright principles . . . until the Congress legislates.” Id. at 392 U. S. 404 (dissenting opinion).

[Footnote 2/1]

The Betamax has three primary components: a tuner that receives television (RF) signals broadcast over the airwaves; an adapter that converts the RF signals into audio-video signals; and a recorder that places the audio-video signals on magnetic tape. Sony also manufactures VTRS without built-in tuners; these are capable of playing back prerecorded tapes and recording home movies on videotape, but cannot record off the air. Since the Betamax has its own tuner, it can be used to record off one channel while another channel is being watched.

The Betamax is available with auxiliary features, including a timer, a pause control, and a fast-forward control; these allow Betamax owners to record programs without being present, to avoid (if they are present) recording commercial messages, and to skip over commercials while playing back the recording. Videotape is reusable; the user erases its record by recording over it.

[Footnote 2/2]

This case involves only the home recording for home use of television programs broadcast free over the airwaves. No issue is raised concerning cable or pay television, or the sharing or trading of tapes.

[Footnote 2/3]

At the trial, the Studios proved 32 individual instances where their copyrighted works were recorded on Betamax VTR’s. Two of these instances occurred after January 1, 1978, the primary effective date of the 1976 Act; all the others occurred while the 1909 Act was still effective. My analysis focuses primarily on the 1976 Act, but the principles governing copyright protection for these works are the same under either Act.

[Footnote 2/4]

Act of Feb. 3, 1831 , ch. 16, 4 Stat. 436; Act of July 8, 1870, §§ 85-111 , 16 Stat. 212-217; Act of Mar. 4, 1909, 35 Stat. 1075 (formerly codified as 17 U.S.C. § 1 et seq.); Copyright Revision Act of 1976, 90 Stat. 2541 (codified as 17 U.S.C. § 101 et seq. (1982 ed.)).

[Footnote 2/5]

Section 102(a) provides:

“Copyright protection subsists, in accordance with this title, in original works of authorship fixed in any tangible medium of expression, now known or later developed, from which they can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device. Works of authorship include the following categories:”

“(1) literary works;”

“(2) musical works, including any accompanying words;”

“(3) dramatic works, including any accompanying music;”

“(4) pantomimes and choreographic works;”

“(5) pictorial, graphic, and sculptural works;”

“(6) motion pictures and other audiovisual works; and”

“(7) sound recordings.”

Definitions of terms used in § 102(a)(6) are provided by § 101: “Audiovisual works” are

“works that consist of a series of related images which are intrinsically intended to be shown by the use of machines, or devices such as projectors, viewers, or electronic equipment, together with accompanying sounds, if any, regardless of the nature of the material objects, such as films or tapes, in which the works are embodied.”

And “motion pictures” are

“audiovisual works consisting of a series of related images which, when shown in succession, impart an impression of motion, together with accompanying sounds, if any.”

Most commercial television programs, if fixed on film or tape at the time of broadcast or before, qualify as “audiovisual works.” Since the categories set forth in § 102(a) are not mutually exclusive, a particular television program may also qualify for protection as a dramatic, musical, or other type of work.

[Footnote 2/6]

Section 106 provides:

“Subject to sections 107 through 118, the owner of copyright under this title has the exclusive rights to do and to authorize any of the following:”

“(1) to reproduce the copyrighted work in copies or phonorecords;”

“(2) to prepare derivative works based upon the copyrighted work;”

“(3) to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending;”

“(4) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly; and”

“(5) in the case of literary, musical, dramatic, and choreographic works pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly.”

[Footnote 2/7]

A “phonorecord” is defined by § 101 as a reproduction of sounds other than sounds accompanying an audiovisual work, while a “copy” is a reproduction of a work in any form other than a phonorecord.

[Footnote 2/8]

Section 107 provides:

“Notwithstanding the provisions of section 106, the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include — ”

“(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;”

“(2) the nature of the copyrighted work;”

“(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and”

“(4) the effect of the use upon the potential market for or value of the copyrighted work.”

Section 101 makes it clear that the four factors listed in this section are “illustrative and not limitative.”

[Footnote 2/9]

The 1976 Act was the product of a revision effort lasting more than 20 years. Spurred by the recognition that “significant developments in technology and communications” had rendered the 1909 Act inadequate, S.Rep. No. 94-473, p. 47 (1975); see H.R.Rep. No. 94-1476, p. 47 (1976), Congress in 1955 authorized the Copyright Office to prepare a series of studies on all aspects of the existing copyright law. Thirty-four studies were prepared and presented to Congress. The Register of Copyrights drafted a comprehensive report with recommendations, House Committee on the Judiciary, Copyright Law Revision, Report of the Register of Copyrights on the General Revision of the U.S. Copyright Law, 87th Cong., 1st Sess. (Comm. Print 1961) (Register’s 1961 Report), and general revision bills were introduced near the end of the 88th Congress in 1964. H.R. 11947/S. 3008, 88th Cong., 2d Sess. (1964). The Register issued a second report in 1965, with revised recommendations. House Committee on the Judiciary, Copyright Law Revision, pt. 6, Supplementary Report of the Register of Copyrights on the General Revision of the U.S. Copyright Law: 1965 Revision Bill, 89th Cong., 1st Sess. (Comm. Print 1965) (Register’s Supplementary Report). Action on copyright revision was delayed from 1967 to 1974 by a dispute on cable television, see generally Second Supplementary Report of the Register of Copyrights on the General Revision of the U.S. Copyright Law: 1975 Revision Bill, ch. V, pp. 2-26 (Draft Oct.-Dec.1975) (Register’s Second Supplementary Report), but a compromise led to passage of the present Act in 1976.

[Footnote 2/10]

Title 1 U.S.C. § 1 provides in relevant part:

“In determining the meaning of any Act of Congress, unless the context indicates otherwise . . . words importing the plural include the singular. . . .”

[Footnote 2/11]

The library photocopying provisions of § 108 do not excuse any person who requests “a copy” from a library if the requester’s use exceeds fair use. § 108(f)(2). Moreover, a library is absolved from liability for the unsupervised use of its copying equipment provided that the equipment bears a notice informing users that “the making of a copy” may violate the copyright law. § 108(f)(1).

[Footnote 2/12]

For example, “the making of a single copy or phonorecord by an individual as a free service for a blind person” would be a fair use, as would “a single copy reproduction of an excerpt from a copyrighted work by a calligrapher for a single client” or “a single reproduction of excerpts from a copyrighted work by a student calligrapher or teacher in a learning situation.” 1975 Senate Report 66-67; see 1976 House Report 73-74. Application of the fair use doctrine in these situations, of course, would be unnecessary if the 1976 Act created a general exemption for the making of a single copy.

[Footnote 2/13]

Professor Latman made special mention of the “personal use” issue because the area was one that

“has become disturbed by recent developments. . . . Photoduplication devices may make authors’ and publishers’ groups apprehensive. The Copyright Charter recently approved by [the International Confederation of Societies of Authors and Composers] emphasizes the concern of authors over ‘private’ uses which, because of technological developments, are said to be competing seriously with the author’s economic interests.”

Latman Fair Use Study 33-34.

[Footnote 2/14]

The one exemption proposed by the Register, permitting a library to make a single photocopy of an out-of-print work and of excerpts that a requester certified were needed for research met with opposition, and was not included in the bills initially introduced in Congress. See Register’s 1961 Report 26; H.R. 11947/S. 3008, 88th Cong., 2d Sess. (1964); Register’s Supplementary Report 26. A library copying provision was restored to the bill in 1969, after pressure from library associations. Register’s Second Supplementary Report, ch. III, pp. 10-11; see S. 543, 91st Cong., 1st Sess., § 108 (Comm. Print, Dec. 10, 1969); 1975 Senate Report 48.

[Footnote 2/15]

The 1964 bills provided that the fair use of copyrighted material for purposes “such as criticism, comment, news reporting, teaching, scholarship, or research” was not an infringement of copyright, and listed four “factors to be considered” in determining whether any other particular use was fair. H.R. 11947/S. 3008, 88th Cong., 2d Sess., § 6 (1964). Revised bills, drafted by the Copyright Office in 1965, contained a fair use provision merely mentioning the doctrine ,but not indicating its scope: “Notwithstanding the provisions of section 106, the fair use of a copyrighted work is not an infringement of copyright.” H.R. 4347/S. 1006, 89th Cong., 1st Sess., § 107 (1965). The House Judiciary Committee restored the provision to its earlier wording, H.R.Rep. No. 2237, 89th Cong., 2d Sess., 5, 58 (1966), and the language adopted by the Committee remained in the bill in later Congresses. See H.R. 2512/S. 597, 90th Cong., 1st Sess., § 107 (1967); S. 543, 91st Cong., 1st Sess., § 107 (1969); S. 644, 92d Cong., 1st Sess., § 107 (1971); S. 1361, 93d Cong., 1st Sess., § 107 (1973); H.R. 2223/S. 22, 94th Cong., 1st Sess., § 107 (1975). With a few additions by the House Judiciary Committee in 1976, see 1976 House Report 5; H.R.Conf.Rep. No. 94-1733, p. 70 (1976), the same language appears in § 107 of the 1976 Act.

[Footnote 2/16]

In Williams & Wilkins Co. v. United States, 203 Ct.Cl. 74, 487 F.2d 1345 (1973), aff’d by an equally divided Court, 420 U. S. 376 (1975), decided during the process of the revision of the copyright statutes, the Court of Claims suggested that copying for personal use might be outside the scope of copyright protection under the 1909 Act. The court reasoned that, because “hand copying” for personal use has always been regarded as permissible, and because the practice of making personal copies continued after typewriters and photostat machines were developed, the making of personal copies by means other than hand copying should be permissible as well. 203 Ct.Cl. at 84-88, 487 F.2d at 1350-1352.

There appear to me to be several flaws in this reasoning. First, it is by no means clear that the making of a “hand copy” of an entire work is permissible; the most that can be said is that there is no reported case on the subject, possibly because no copyright owner ever thought it worthwhile to sue. See Latman Fair Use Study 11-12; 3 M. Nimmer, Copyright § 13.05[E][4][a] (1983). At least one early treatise asserted that infringement would result

“if an individual made copies for his personal use, even in his own handwriting, as there is no rule of law excepting manuscript copies from the law of infringement.”

A. Weil, American Copyright Law § 1066 (1917). Second, hand copying or even copying by typewriter is self-limiting. The drudgery involved in making hand copies ordinarily ensures that only necessary and fairly small portions of a work are taken; it is unlikely that any user would make a hand copy as a substitute for one that could be purchased. The harm to the copyright owner from hand copying thus is minimal. The recent advent of inexpensive and readily available copying machines, however, has changed the dimensions of the problem. See Register’s Second Supplementary Report, ch. III, p. 3; Hearings on H.R. 2223 before the Subcommittee on Courts, Civil Liberties, and the Administration of Justice of the House Committee on the Judiciary, 94th Cong., 1st Sess., 194 (1975) (1975 House Hearings) (remarks of Rep. Danielson); id. at 234 (statement of Robert W. Cairns); id. at 250 (remarks of Rep. Danielson); id. at 354 (testimony of Irwin Karp); id. at 467 (testimony of Rondo Cameron); id. at 1795 (testimony of Barbara Ringer, Register of Copyrights). Thus,

“[t]he supposition that there is no tort involved in a scholar copying a copyrighted text by hand does not much advance the question of machine copying.”

B. Kaplan, An Unhurried View of Copyright 101-102 (1967).

[Footnote 2/17]

In a trio of cases, Fortnightly Corp. v. United Artists Television, Inc., 392 U. S. 390, 392 U. S. 398 (1968); Teleprompter Corp. v. Columbia Broadcasting System, Inc., 415 U. S. 394, 415 U. S. 403-405 (1974); and Twentieth Century Music Corp. v. Aiken, 422 U. S. 151 (1975), this Court had held that the reception of a radio or television broadcast was not a “performance” under the 1909 Act. The Court’s “narrow construction” of the word “perform” was “completely overturned by the [1976 Act] and its broad definition of perform’ in section 101.” 1976 House Report 87.

[Footnote 2/18]

A work is performed “publicly” if it takes place

“at a place open to the public or at any place where a substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered.”

§ 101.

[Footnote 2/19]

One purpose of the exemption for private performances was to permit the home viewing of lawfully made videotapes. The Register noted in 1961 that

“[n]ew technical devices will probably make it practical in the future to reproduce televised motion pictures in the home. We do not believe the private use of such a reproduction can or should be precluded by copyright.”

Register’s 1961 Report 30 (emphasis added). The Register did not suggest that the private making of a reproduction of a televised motion picture would be permitted by the copyright law. The Register later reminded Congress that, “[i]n general, the concept of performance’ must be distinguished sharply from the reproduction of copies.” Register’s Supplementary Report 22.

[Footnote 2/20]

During hearings on this provision, Representative Danielson inquired whether it would apply to works of fiction such as “Gone With the Wind,” or whether it was limited to “strictly technical types of information.” The uncontradicted response was that it would apply only in “general terms of science . . . [and] the useful arts.” 1975 House Hearings 251 (testimony of Robert W. Cairns); cf. id. at 300 (statement of Harry Rosenfield) (“We are not asking . . . for the right to copy Gone With the Wind'”).

[Footnote 2/21]

The mention in the Senate and House Reports of situations in which copies for private use would be permissible under the fair use doctrine — for example, the making of a free copy for a blind person, 1975 Senate Report 66; 1976 House Report 73, or the “recordings of performances by music students for purposes of analysis and criticism,” 1975 Senate Report 63 — would be superfluous as well. See n. 12, supra.

[Footnote 2/22]

The following exchange took place during the testimony of Barbara Ringer, then Assistant Register of Copyrights:

“[Rep.] BIESTER. . . . I can tell you I must have a small pirate in my own home. My son has a cassette tape recorder, and as a particular record becomes a hit, he will retrieve it onto his little set. . . . [T]his legislation, of course, would not point to his activities, would it?”

“Miss RINGER. I think the answer is clearly, ‘No, it would not.’ I have spoken at a couple of seminars on video cassettes lately, and this question is usually asked: ‘What about the home recorders?’ The answer I have given and will give again is that this is something you cannot control. You simply cannot control it. My own opinion, whether this is philosophical dogma or not, is that sooner or later there is going to be a crunch here. But that is not what this legislation is addressed to, and I do not see the crunch coming in the immediate future. . . . I do not see anybody going into anyone’s home and preventing this sort of thing, or forcing legislation that would engineer a piece of equipment not to allow home taping.”

Hearings on S. 646 and H.R. 6927 before Subcommittee No. 3 of the House Committee on the Judiciary, 92d Cong., 1st Sess., 22-23 (1971) (1971 House Hearings).

[Footnote 2/23]

Shortly before passage of the bill, a colloquy took place between Representative Kastenmeier, Chairman of the House Subcommittee that produced the bill, and Representative Kazen, who was not on the Subcommittee:

“Mr. KAZEN. Am I correct in assuming that the bill protects copyrighted material that is duplicated for commercial purposes only?”

“Mr. KASTENMEIER. Yes.”

“Mr. KAZEN. In other words, if your child were to record off of a program which comes through the air on the radio or television, and then used it for her own personal pleasure, for listening pleasure, this use would not be included under the-penalties of this bill?”

“Mr. KASTENMEIER This is not included in the bill. I am glad the gentleman raises the point.”

“On page 7 of the report, under ‘Home Recordings,’ Members will note that under the bill the same practice which prevails today is called for; namely, this is considered both presently and under the proposed law to be fair use. The child does not do this for commercial purposes. This is made clear in the report.”

117 Cong.Rec. 34748-34749 (1971).

[Footnote 2/24]

The 1909 Act’s grant of an exclusive right to “copy,” § 1(a), was of no assistance to the owner of a copyright in a sound recording, because a reproduction of a sound recording was technically considered not to be a “copy.” See 1971 House Hearings 18 (testimony of Barbara Ringer, Assistant Register of Copyrights); 1971 Amendment, § 1(e), 85 Stat. 391 (formerly codified as 17 U.S.C. § 26) (“For the purposes of [specified sections, not including § 1(a)], but not for any other purpose, a reproduction of a [sound recording] shall be considered to be a copy thereof “). This concept is carried forward into the 1976 Act, which distinguishes between “copies” and “phonorecords.” See n. 7, supra.

[Footnote 2/25]

During consideration of the 1976 Act, Congress, of course, was well aware of the limited nature of the protection granted to sound recordings under the 1971 Amendment. See 1975 House Hearings 113 (testimony of Barbara Ringer, Register of Copyrights) (1971 Amendment “created a copyright in a sound recording . . . but limited it to the particular situation of so-called piracy”); id. at 1380 (letter from John Lorenz, Acting Librarian of Congress) (under 1971 Amendment “only the unauthorized reproduction and distribution to the public of copies of the sound recording is prohibited. Thus, the duplication of sound recordings for private, personal use and the performance of sound recordings through broadcasting or other means are outside the scope of the amendment”).

[Footnote 2/26]

Representative Kastenmeier, the principal House sponsor of the 1976 revision bill and Chairman of the House Subcommittee that produced it, made this explicit on the opening day of the House hearings:

“[F]rom time to time, certain areas have not been covered in the bill. But is it not the case, this being a unified code, that the operation of the bill does apply whether or not we specifically deal with a subject or not? . . .”

“Therefore, we can really not fail to deal with an issue. It will be dealt with one way or the other. The code, title 17, will cover it. So we have made a conscientious decision even by omission. . . .”

“* * * *”

“. . . By virtue of passing this bill, we will deal with every issue. Whether we deal with it completely or not for the purpose of resolving the issues involved is the only question, not whether it has dealt with the four corners of the bill, because the four corners of the bill will presume to deal with everything in copyright.”

Id. at 115.

[Footnote 2/27]

The precise phrase “fair use” apparently did not enter the case law until 1869, see Lawrence v. Dana, 15 F.Cas. 26, 60 (No. 8, 136) (CC Mass.), but the doctrine itself found early expression in Folsom v. Marsh, 9 F.Cas. 342 (No. 4,901) (CC Mass. 1841). Justice Story was faced there with the “intricate and embarrassing questio[n]” whether a biography containing copyrighted letters was “a justifiable use of the original materials, such as the law recognizes as no infringement of the copyright of the plaintiffs.” Id. at 344, 348. In determining whether the use was permitted, it was necessary, said Justice Story, to consider

“the nature and objects of the selections made, the quantity and value of the materials used, and the degree in which the use may prejudice the sale, or diminish the profits, or supersede the objects, of the original work. . . . Much must, in such cases, depend upon the nature of the new work, the value and extent of the copies, and the degree in which the original authors may be injured thereby.”

Id. at 348-349.

Similar lists were compiled by later courts. See, e.g., Tennessee Fabricating Co. v. Moultrie Mfg. Co., 421 F.2d 279, 283 (CA5), cert. denied, 398 U.S. 928 (1970); Mathews Conveyer Co. v. Palmer-Bee Co., 135 F.2d 73, 85 (CA6 1943); Columbia Pictures Corp. v. National Broadcasting Co., 137 F.Supp. 348 (SD Cal.1955); Shapiro, Bernstein & Co. v. P. F. Collier & Son Co., 26 USPQ 40, 43 (SDNY 1934); Hill v. Whalen & Martell, Inc., 220 F. 359, 360 (SDNY 1914).

[Footnote 2/28]

“The world goes ahead because each of us builds on the work of our predecessors. ‘A dwarf standing on the shoulders of a giant can see farther than the giant himself.'”

Chafee, Reflections on the Law of Copyright: I, 45 Colum.L.Rev. 503, 511 (1945).

[Footnote 2/29]

Quoting from the Register’s 1961 Report, the Senate and House Reports give examples of possible fair uses:

“‘quotation of excerpts in a review or criticism for purposes of illustration or comment; quotation of short passages in a scholarly or technical work, for illustration or clarification of the author’s observations; use in a parody of some of the content of the work parodied; summary of an address or article, with brief quotations, in a news report; reproduction by a library of a portion of a work to replace part of a damaged copy; reproduction by a teacher or student of a small part of a work to illustrate a lesson; reproduction of a work in legislative or judicial proceedings or reports; incidental and fortuitous reproduction, in a newsreel or broadcast, of a work located in the scene of an event being reported.'”

1975 Senate Report 61-62; 1976 House Report 65.

[Footnote 2/30]

See, e.g., Triangle Publications, Inc. v. Knight-Ridder Newspapers, Inc., 626 F.2d 1171 (CA5 1980) (comparative advertising).

[Footnote 2/31]

Professor Seltzer has characterized these lists of uses as

“reflect[ing] what in fact the subject matter of fair use has in the history of its adjudication consisted in: it has always had to do with the use by a second author of a first author’s work.”

L. Seltzer, Exemptions and Fair Use in Copyright 24 (1978) (emphasis removed). He distinguishes “the mere reproduction of a work in order to use it for its intrinsic purpose — to make what might be called the “ordinary” use of it.” When copies are made for “ordinary” use of the work, “ordinary infringement has customarily been triggered, not notions of fair use” (emphasis in original). Ibid. See also 3 M. Nimmer, Copyright § 13.05[A][1] (1983) (“Use of a work in each of the foregoing contexts either necessarily or usually involves its use in a derivative work”).

[Footnote 2/32]

Williams & Wilkins Co. v. United States, 203 Ct.Cl. 74, 487 F.2d 1345 (1973), aff’d by an equally divided Court, 420 U. S. 376 (1975), involved the photocopying of scientific journal articles; the Court of Claims stressed that the libraries performing the copying were “devoted solely to the advancement and dissemination of medical knowledge,” 203 Ct.Cl. at 91, 487 F.2d at 1354, and that “medical science would be seriously hurt if such library photocopying were stopped.” Id. at 95, 487 F.2d at 1356.

The issue of library copying is now covered by § 108 of the 1976 Act. That section, which Congress regarded as “authoriz[ing] certain photocopying practices which may not qualify as a fair use,” 1975 Senate Report 67; 1976 House Report 74, permits the making of copies only for “private study, scholarship, or research.” §§ 108(d)(1) and (e)(1).

[Footnote 2/33]

In the words of Lord Mansfield:

“[W]e must take care to guard against two extremes equally prejudicial; the one, that men of ability, who have employed their time for the service of the community, may not be deprived of their just merits, and the reward of their ingenuity and labour; the other, that the world may not be deprived of improvements, nor the progress of the arts be retarded.”

Sayre v. Moore, as set forth in Cary v. Longman, 1 East 358, 361, n. (b), 102 Eng.Rep. 138, 140, n. (b) (K.B. 1785). See Register’s Supplementary Report 13.

[Footnote 2/34]

This point was brought home repeatedly by the Register of Copyrights. Mentioning the “multitude of technological developments” since passage of the 1909 Act, including “remarkable developments in the use of videotape,” Register’s Supplementary Report xiv-xv, the Register cautioned:

“I realize, more clearly now than I did in 1961, that the revolution in communications has brought with it a serious challenge to the author’s copyright. This challenge comes not only from the ever-growing commercial interests who wish to use the author’s works for private gain. An equally serious attack has come from people with a sincere interest in the public welfare who fully recognize . . . ‘that the real heart of civilization . . . owes its existence to the author;’ ironically, in seeking to make the author’s works widely available by freeing them from copyright restrictions, they fail to realize that they are whittling away the very thing that nurtures authorship in the first place. An accommodation among conflicting demands must be worked out, true enough, but not by denying the fundamental constitutional directive: to encourage cultural progress by securing the author’s exclusive rights to him for a limited time.”

Id. at xv; see 1975 House Hearings 117 (testimony of Barbara Ringer, Register of Copyrights).

[Footnote 2/35]

A VTR owner who has taped a favorite movie for repeated viewing will be less likely to rent or buy a tape containing the same movie, watch a televised rerun, or pay to see the movie at a theater. Although time-shifting may not replace theater or rerun viewing or the purchase of prerecorded tapes or discs, it may well replace rental usage; a VTR user who has recorded a first-run movie for later viewing will have no need to rent a copy when he wants to see it. Both library-builders and time-shifters may avoid commercials; the library-builder may use the pause control to record without them, and all users may fast-forward through commercials on playback.

The Studios introduced expert testimony that both time-shifting and librarying would tend to decrease their revenue from copyrighted works. See 480 F.Supp. at 440. The District Court’s findings also show substantial library-building and avoidance of commercials. Both sides submitted surveys showing that the average Betamax user owns between 25 and 32 tapes. The Studios’ survey showed that at least 40% of users had more than 10 tapes in a “library”; Sony’s survey showed that more than 40% of users planned to view their tapes more than once; and both sides’ surveys showed that commercials were avoided at least 25% of the time. Id. at 438-439.

[Footnote 2/36]

Concern over the impact of a use upon “potential” markets is to be found in cases decided both before and after § 107 lent Congress’ imprimatur to the judicially created doctrine of fair use. See, e.g., Iowa State University Research Foundation, Inc. v. American Broadcasting Cos., 621 F.2d 57, 60 (CA2 1980) (“the effect of the use on the copyright holder’s potential market for the work”); Meeropol v. Nizer, 560 F.2d 1061, 1070 (CA2 1977) (“A key issue in fair use cases is whether the defendant’s work tends to diminish or prejudice the potential sale of plaintiff’s work”), cert. denied, 434 U.S. 1013 (1978); Williams & Wilkins Co. v. United States, 203 Ct.Cl. at 88, 487 F.2d at 1352 (“the effect of the use on a copyright owner’s potential market for and value of his work”); Encyclopaedia Britannica Educational Corp. v. Crooks, 542 F.Supp. 1156, 1173 (WDNY 1982) (“[T]he concern here must be focused on a copyrighted work’s potential market. It is perfectly possible that plaintiffs’ profits would have been greater, but for the kind of videotaping in question”) (emphasis in original).

[Footnote 2/37]

This intent is manifested further by provisions of the 1976 Act that exempt from liability persons who, while not participating directly in any infringing activity, could otherwise be charged with contributory infringement. See § 108(f)(1) (library not liable “for the unsupervised use of reproducing equipment located on its premises,” provided that certain warnings are posted); § 110(6) (“governmental body” or “nonprofit agricultural or horticultural organization” not liable for infringing performance by concessionaire “in the course of an annual agricultural or horticultural fair or exhibition”).

[Footnote 2/38]

In Screen Gems, on which the Gershwin court relied, the court held that liability could be imposed on a shipper of unauthorized “bootleg” records and a radio station that broadcast advertisements of the records, provided they knew or should have known that the records were infringing. The court concluded that the records’ low price and the manner in which the records were marketed could support a finding of “constructive knowledge” even if actual knowledge were not shown.

[Footnote 2/39]

See, e.g., Famous Music Corp. v. Bay State Harness Horse Racing & Breeding Assn., Inc., 554 F.2d 1213 (CA1 1977); Dreamland Ball Room, Inc. v. Shapiro, Bernstein & Co., 36 F.2d 354 (CA7 1929); M. Witmark & Sons v. Tremont Social & Athletic Club, 188 F.Supp. 787, 790 (Mass.1960); see also Twentieth Century Music Corp. v. Aiken, 422 U. S. 151, 422 U. S. 157 (1975); Buck v. Jewell-LaSalle Realty Co., 283 U. S. 191, 283 U. S. 198-199 (1931); 3 M. Nimmer, Copyright § 12.04[A], p. 12-35 (1983).

Courts have premised liability in these cases on the notion that the defendant had the ability to supervise or control the infringing activities, see, e.g., Shapiro, Bernstein & Co. v. H. L. Green Co., 316 F.2d 304, 307 (CA2 1963); KECA Music, Inc. v. Dingus McGee’s Co., 432 F.Supp. 72, 74 (WD Mo.1977). This notion, however, is to some extent fictional; the defendant cannot escape liability by instructing the performers not to play copyrighted music, or even by inserting a provision to that effect into the performers’ contract. Famous Music Corp. v. Bay State Harness Horse Racing & Breeding Assn., Inc., 554 F.2d at 1214-1215; KECA Music, Inc. v. Dingus McGee’s Co., 432 F.Supp. at 75; Shapiro, Bernstein & Co. v. Veltin, 47 F.Supp. 648, 649 (WD La.1942). Congress expressly rejected a proposal to exempt proprietors from this type of liability under the 1976 Act. See 1975 Senate Report 141-142; 1976 House Report 159-160; 1975 House Hearings 1812-1813 (testimony of Barbara Ringer, Register of Copyrights); id. at 1813 (colloquy between Rep. Pattison and Barbara Ringer).

The Court’s attempt to distinguish these cases on the ground of “control,” ante at 464 U. S. 437, is obviously unpersuasive. The direct infringer ordinarily is not employed by the person held liable; instead, he is an independent contractor. Neither is he always an agent of the person held liable; Screen Gems makes this apparent.

[Footnote 2/40]

My conclusion respecting contributory infringement does not include the retailer defendants. The District Court found that one of the retailer defendants had assisted in the advertising campaign for the Betamax, but made no other findings respecting their knowledge of the Betamax’s intended uses. I do not agree with the Court of Appeals, at least on this record, that the retailers “are sufficiently engaged in the enterprise to be held accountable,” 659 F.2d 963, 976 (1981). In contrast, the advertising agency employed to promote the Betamax was far more actively engaged in the advertising campaign, and petitioners have not argued that the agency’s liability differs in any way from that of Sony Corporation and Sony Corporation of America.

[Footnote 2/41]

The “staple article of commerce” doctrine protects those who manufacture products incorporated into or used with patented inventions — for example, the paper and ink used with patented printing machines, Henry v. A. B. Dick Co., 224 U. S. 1 (1912), or the dry ice used with patented refrigeration systems, Carbice Corp. v. American Patents Corp., 283 U. S. 27 (1931). Because a patent holder has the right to control the use of the patented item as well as its manufacture, see Motion Picture Patents Co. v. Universal Film Mfg. Co., 243 U. S. 502, 243 U. S. 509-510 (1917); 35 U.S.C. § 271(a), such protection for the manufacturer of the incorporated product is necessary to prevent patent holders from extending their monopolies by suppressing competition in unpatented components and supplies suitable for use with the patented item. See Dawson Chemical Co. v. Rohm & Haas Co., 448 U. S. 176, 448 U. S. 197-198 (1980). The doctrine of contributory patent infringement has been the subject of attention by the courts and by Congress, see id. at 448 U. S. 202-212, and has been codified since 1952, 66 Stat. 792, but was never mentioned during the copyright law revision process as having any relevance to contributory copyright infringement.

[Footnote 2/42]

Although VTR’s also may be used to watch prerecorded video cassettes and to make home motion pictures, these uses do not require a tuner such as the Betamax contains. See n. 1, supra. The Studios do not object to Sony’s sale of VTR’s without tuners. Brief for Respondents 5, n. 9. In considering the noninfringing uses of the Betamax, therefore, those uses that would remain possible without the Betamax’s built-in tuner should not be taken into account.

[Footnote 2/43]

Noninfringing uses would include, for example, recording works that are not protected by copyright, recording works that have entered the public domain, recording with permission of the copyright owner, and, of course, any recording that qualifies as fair use. See, e.g., Bruzzone v. Miller Brewing Co., 202 USPQ 809 (ND Cal.1979) (use of home VTR for market research studies).

[Footnote 2/44]

Sony asserts that much or most television broadcasting is available for home recording because (1) no copyright owner other than the Studios has brought an infringement action, and (2) much televised material is ineligible for copyright protection because videotapes of the broadcasts are not kept. The first of these assertions is irrelevant; Sony’s liability does not turn on the fact that only two copyright owners thus far have brought suit. The amount of infringing use must be determined through consideration of the television market as a whole. Sony’s second assertion is based on a faulty premise; the Copyright Office permits audiovisual works transmitted by television to be registered by deposit of sample frames plus a description of the work. See 37 CFR §§ 202.20(c)(2)(ii) and 202.21(g) (1983). Moreover, although an infringement action cannot be brought unless the work is registered, 17 U.S.C. § 411(a) (1982 ed.), registration is not a condition of copyright protection. § 408(a). Copying an unregistered work still may be infringement. Cf. § 506(a) (liability for criminal copyright infringement; not conditioned on prior registration).

[Footnote 2/45]

Even if concern with remedy were appropriate at the liability stage, the Court’s use of the District Court’s findings is somewhat cavalier. The Court relies heavily on testimony by representatives of professional sports leagues to the effect that they have no objection to VTR recording. The Court never states, however, whether the sports leagues are copyright holders, and if so, whether they have exclusive copyrights to sports broadcasts. It is therefore unclear whether the sports leagues have authority to consent to copying the broadcasts of their events.

Assuming that the various sports leagues do have exclusive copyrights in some of their broadcasts, the amount of authorized time-shifting still would not be overwhelming. Sony’s own survey indicated that only 7.3% of all Betamax use is to record sports events of all kinds. Tr. 2353, Defendants’ Exh. OT, Table 20. Because Sony’s witnesses did not represent all forms of sports events, moreover, this figure provides only a tenuous basis for this Court to engage in factfinding of its own.

The only witness at trial who was clearly an exclusive copyright owner and who expressed no objection to unauthorized time-shifting was the owner of the copyright in Mister Rogers’ Neighborhood. But the Court cites no evidence in the record to the effect that anyone makes VTR copies of that program. The simple fact is that the District Court made no findings on the amount of authorized time-shifting that takes place. The Court seems to recognize this gap in its reasoning, and phrases its argument as a hypothetical. The Court states:

“If there are millions of owners of VTR’s who make copies of televised sports events, religious broadcasts, and educational programs such as Mister Rogers’ Neighborhood, and if the proprietors of those programs welcome the practice,”

the sale of VTR’s “should not be stifled” in order to protect respondents’ copyrights. Ante at 464 U. S. 446 (emphasis supplied). Given that the Court seems to recognize that its argument depends on findings that have not been made, it seems that a remand is inescapable.

[Footnote 2/46]

As has been explained, some uses of time-shifting, such as copying an old newspaper clipping for a friend, are fair use because of their de minimis effect on the copyright holder. The scale of copying involved in this case, of course, is of an entirely different magnitude, precluding application of such an exception.

[Footnote 2/47]

Home Recording of Copyrighted Works: Hearing before the Subcommittee on Courts, Civil Liberties, and the Administration of Justice of the House Committee on the Judiciary, 97th Cong., 2d Sess., pt. 2, p. 1250 (1982) (memorandum of Prof. Laurence H. Tribe).

[Footnote 2/48]

See A Survey of Betamax Owners, Tr. 2353, Defendants’ Exh. OT, Table 20, cited in Brief for Respondents 52.

[Footnote 2/49]

The Court’s one oblique acknowledgment of this third factor, ante at 464 U. S. 447, and n. 30, seems to suggest that the fact that time-shifting involves copying complete works is not very significant, because the viewers already have been asked to watch the initial broadcast free. This suggestion misses the point. As has been noted, a book borrowed from a public library may not be copied any more freely than one that has been purchased. An invitation to view a showing is completely different from an invitation to copy a copyrighted work.

[Footnote 2/50]

The Court implicitly has recognized that this market is very significant. The central concern underlying the Court’s entire opinion is that there is a large audience who would like very much to be able to view programs at times other than when they are broadcast. Ante at 464 U. S. 446. The Court simply misses the implication of its own concerns.

[Footnote 2/51]

Other nations have imposed royalties on the manufacturers of products used to infringe copyright. See, e.g., Copyright Laws and Treaties of the World (UNESCO/BNA 1982) (English translation), reprinting Federal Act on Copyright in Works of Literature and Art and on Related Rights (Austria), §§ 42(5)(7), and An Act dealing with Copyright and Related Rights (Federal Republic of Germany), Art. 53(5). A study produced for the Commission of European Communities has recommended that these requirements “serve as a pattern” for the European community. A. Dietz, Copyright Law in the European Community 135 (1978). While these royalty systems ordinarily depend on the existence of authors’ collecting societies, see id. at 119, 136, such collecting societies are a familiar part of our copyright law. See generally Broadcast Music, Inc. v. Columbia Broadcasting System, Inc., 441 U. S. 1, 441 U. S. 4-5 (1979). Fashioning relief of this sort, of course, might require bringing other copyright owners into court through certification of a class or otherwise.

The post Sony Corp. vs. Universal City Studios appeared first on B&B Associates LLP.

VINOD CHATURVEDI ETC. ETC. …PETITIONER
Vs.
STATE OF MADHYA PRADESH …RESPONDENT

DATE OF JUDGMENT 05/03/1984

BENCH:
MISRA RANGNATH
FAZALALI, SYED MURTAZA

CITATION:
1984 AIR 911 1984 SCR (3) 93
1984 SCC (2) 350 1984 SCALE (1)437

ACT:

Appeal against acquittal under section 386 of the Criminal Procedure Code, 1973-Conviction by reversal of the verdict of acquittal relying on the evidence of the same witnesses, who are close relatives of the deceased and who in the earlier trial categorically implicated some other five persons-Appreciation of evidence-Whether the High Court was correct in relying on the said eye witnesses-Evidence Act, section 3-Admissibility of Ex. P. 9, the two letters as corroborative evidence-Penal Code, sections 148, 300, 362 and 367-Conviction Under Applicability of section 148 when the state counsel conceded that the charge u/s 148 did not relate to charge of abduction, but to murder taking place later,

HELD: 1. When in the first trial on the charge of murder and abduction the prosecution had alleged that the deceased had been murdered by a set of five persons different from the present appellants and let in evidence of three eye-witnesses being PWs. 1, 3 and 24 of the Second Trial and who are pamittedly close relations of deceased to the effect that those five accused 94 persons and no others including the appellants were responsible for the death of the deceased, acceptance of the evidence of the very same three eye witnesses in the second trial conducted after a lapse of three years implicating the present appellants as murderers will be highly improper. The fact that these alleged eye-witnesses were prepared to implicate the five persons who were acquitted on the earlier occasion and the present appellants on the subsequent occasions in a serious charge like murder is indicative of the fact that no credence can be given to the evidence of these witnesses and they were willing to lend their oath to any story that the prosecution advanced. Therefore, in an appeal against acquittal the High Court in whose hands there has been a reversal of the acquittal ought not to have found the remaining evidence to be good basis for conviction of the appellants.[96H; 97A-D]

2. The High Court fell into error in relying on the letter of PW 1 Sunderlal to the Superintendent of Police dated 29.4.1973 which is subsequent to the commencement of the investigation of the basis on the First Information Report. Such a letter written by PW 1 who stood in the place of the prosecutor would not at all be admissible in evidence. [97E-F] Kali Ram v. State of Himachal Pradesh. [1973] INSC 175; [1974] 1 SCR 722; followed.

3. To rely on the contents of the letter Ex. P. 9 written by the Superintendent of police to his superior officer, without examining the writer of the letter and without affording an opportunity to the defence to cross- examine the writer, is totally misconceived. The document was not available to be relied upon for any purpose and the High Court in the instant case was wrong in seeking support from it by way of corroboration of the oral evidence. [97G- H]

4. In view of the express words in the definition of “abduction” in Section 362 of the I.P.C., the offence of abduction against the accused has not been fully proved, since the name of Vinod the leader of the party has not been mentioned at all during the investigation and even according to the majority of witnesses, on the persuation of the accused (appellants) he went inside his house and came properly dressed and to accompany the group to village Rampura. [98C-D]

5. The appellants were not liable to be convicted under section 367 of the Penal Code because from the non acceptance by the High Court of the story of murder of the deceased by the appellants and non recording a finding that the grievous hurt leading to death was caused by them, it will be clear that the act of picking of the deceased from his village was unconnected with what happened later. [98F- G]

6. The charge under section 148 I.P.C. has been conceded by the counsel for the State to relate to what followed at Rampura and is not connected with the accusation of abduction. The common object as stated by the prosecution would not be available for sustaining the conviction under section 148 I.P.C. in that background. [98G-H] 95

CRIMINAL APPELLATE JURISDICTION: Criminal Appeal Nos.

192-193 of 1983 Appeals by Special leave from the Judgment and Order dated the 31st January, 1983 of the Madhya Pradesh High Court in Criminal Appeal No. 732 of 1980.

A.N. Mulla and S.K. Gambhir, for the Appellant in C.A.

192 of 1983.

Rajendar Singh and A.K. Mahajan for the Appellants in CA. 193 of 1983.

A.K. Sanghi for the Respondent in both the Appeals.

The Judgment of the Court was delivered by RANGANATH MISRA, J. These appeals by special leave are directed against the judgment of the High Court of Madhya Pradesh reversing the order of acquittal passed by the learned trial Judge. Criminal Appeal No. 192 of 1983 is by Vinod Chaturvedi while the other is by five of the co- accused. All of them had been charged for offences punishable under Sections 148, 364 and 302/149 of the Indian Penal Code and were acquitted by the Additional Sessions Judge. The State of Madhya Pradesh carried an appeal being Criminal Appeal No. 732 of 1980 to the High Court assailing the acquittal and the High Court allowed the appeal and while maintaining the acquittal under Section 302/149 of the Indian Penal Code, convicted the appellants for offences punishable under Sections 148 and 367 of the Penal Code and directed each of them to be sentenced 3 years rigorous imprisonment for each of the offences with a further direction that the two sentences would run concurrently.

According to the prosecution on 27th April, 1973, around 4 p.m. the appellants kidnapped Brindaban, the deceased son of P.W. 1, from village Budha and took him in a jeep to Rampura about one kilometer away on the pretext that a pending dispute between Brindaban and some villagers of Rampura would be settled amicably. It was further alleged that later in the evening Brindaban was done to death by being given several blows by blunt and deadly weapons pursuant to the common object of the appellants of killing him. The dead body was brought to village Budha on the following day. Investigation as taken up on the 96 basis of the first information report and as a result thereof five persons were put on trial in session trial No.

107 of 1973 but they were acquitted by the learned trial Judge by judgment dated 29.1.74. The trial court came to hold that the investigation was defective and the real accused persons had not been brought to trial. Nothing appears to have been done in the matter until 1977 when a fresh investigation was undertaken and it resulted in prosecution of the appellants in the court of session as killers of Brindaban.

Prosecution examined seven eye-witnesses being P.W. 1 Sunderlal, father of the deceased; P.W. 2 Nathu, a co- villager and claimed to be a servant of P.W, 1 by the defence; P.W. 3 Kalua, a nephew of the deceased; P.W, 23 Jhallu, a brother of the deceased, P.W 24, Nanhaibai wife of the deceased, and P.Ws. 13 and 14, two outsiders who have been declared hostile by the prosecution. The trial court assessed the evidence in a fair way and was not prepared to rely upon it. Accordingly he disbelieved the prosecution case and directed acquittal of the accused persons. The High Court did not come to the conclusion on the basis of the ocular evidence that the same was acceptable and on the basis thereof a conviction could be recorded, but heavily relied on two documents-the first being Exhibit P-1, a letter sent by P.W. 1 Sunderlal to the Superintendent of Police dated 29.4.73 and the second, being Exhibit P-9 a confidential letter of the Superintendent of Police to the Deputy Inspector General of the Department The High Court found support for the prosecution case from these two letters and accepting the position that their contents corroborated the oral evidence of the witnesses proceeded to reverse the acquittal. It, however, did not accept the prosecution case relating to the charge of murder. Thus, while sustaining the acquittal in respect of the charge of murder the court convicted the appellants under Sections 148 and 367 of the I.P.C.

The peculiar features of this case are that the prosecution had alleged that Brindaban had been murdered by a set of five persons different from the present appellants and had made them face a regular trial. Three most material witnesses being P.Ws. 1, 3 and 24 of the present trial who are close relations of deceased Brindaban had then testified before the Court that those five accused persons and no others including the appellants were responsible for the death of Brindaban. After the acquittal in 1974 nothing happened in the matter for three years and suddenly 97 on the same old allegations in the hands of the police, fresh investigation was undertaken and the present set of accused persons were arrayed as murderers of Brindaban.

Those three eye-witnesses who on the earlier occasion had deposed that five named assailants were the murderers of the Brindaban changed their version and now spoke that the present appellants were the murderers. The fact that these alleged eye-witnesses were prepared to implicate the five persons who were acquitted on the earlier occasion and the present appellants on the subsequent occasion in a serious charge like murder is indicative of the fact that no credence can be given to the evidence of these witnesses and they were willing to lend their oath to any story that the prosecution advanced. Once the evidence of P.Ws. 1, 3 and 24 is brushed aside on that ground, the residue by itself would not be adequate to support the charge. We have grave doubts whether the High Court in whose hands there has been a reversal of the acquittal would have found the remaining evidence to be good basis for the conviction.

The High Court fell into a clear error in relying on the two letters marked as Exhibit P-1 and Exhibit P-9.

Exhibit P-1 was a letter of P.W. 1, Sunderlal to the Superintendent of Police. Admittedly by 29.4.73 when this letter said to have been written, investigation had started on the basis of the first information report and therefore, a letter written by P.W. 1 who stood in the place of the prosecutor would not at all be admissible in evidence. No detailed reasons are warranted for this conclusion as the position is clearly covered by a decision of this Court in the case of Kali Ram v. State of Himachal Pradesh, Learned counsel for the State did not refute this conclusion.

So far as the other document is concerned, as already indicated by us, it is a letter written by the Superintendent of Police to this administrative superior.

The writer of the letter has not been examined as a witness.

No opportunity has been given to the defence to cross- examine the writer. To rely on the contents of that letter in such circumstances is totally misconceived. The document was not available to be relied upon for any purpose and the High Court clearly went wrong in seeking support from it by way of corroboration of the oral evidence.

98 There are several other unsatisfactory features in the prosecution case which the trial had taken note of but strangely enough those did not commend themselves to the High Court even for consideration. Vinod had not been named as the leader of the party which came to village Budha to pick up Brindaban in the statements given during investigation by several witnesses. These witnesses had been confronted as required by law and apart from pleading either innocence or helplessness, no other answer was given. Some witnesses had deposed that Vinod the main architect of the incident came armed with a gun while others claimed that he was armed with a lathi. There is considerable divergence in the evidence as to whether Brindaban came into the jeep of his own accord or had been forcibly put into it. Most of the witnesses have stated that on being persuaded by the accused persons and Vinod, in particular, he went inside his house and came properly dressed to accompany the group to village Rampura. In that event, it cannot be said that Brindaban was abducted by the accused persons. This is so in view of the definition of ‘abduction’ in Section 362 of the Code where it has been said:

“Whoever by force compels, or by any deceitful means induces, any person to go from any place, is said to abduct that person”.

The High Court has convicted the appellants for the offence punishable under Section 367 of the Penal Code which could be possible if there is abduction with a view to subjecting the abducted person to grievous hurt or slavery etc. The High Court did not accept the story of murder of Brindaban by the appellants nor did it record a finding that the grievous hurt leading to death was caused by the appellants. The resultant position from it should have been that the act of picking of Brindaban from his village was unconnected with what happened to Brindaban later. From it should have followed that the appellants were not liable to be convicted under Section 367 of the Penal Code.

The charge under Section 148, I.P.C. has been conceded by the counsel for the State to relate to what followed at Rampura and is not connected with the accusation of abduction. The common object as stated by the prosecution would not be available for sustaining the conviction under Section 148, I.P.C. in that background.

There are many other aspects with reference to which the trial court had found fault with the prosecution case.

While we 99 accept the submission advanced for the State that we should not reassess the whole evidence with reference to minor details, we are satisfied that the prosecution had failed to establish the charges and the High Court without a proper appraisal of the materials and without meeting the findings reached by the trial court reversed the acquittal.

We accordingly allow the appeals, set aside the judgment of conviction recorded by the High Court by reversing the acquittal of the trial court and while restoring the judgment of the trial court, we direct that the appellants are acquitted of both the charges and the sentences of imprisonment are set aside. Each of the appellants is discharged from his bail-bond.

S.R. Appeal allowed.

The post Vinod Chaturvedi Vs. State of Madhya Pradesh appeared first on B&B Associates LLP.

INDIAN EXPRESS NEWSPAPERS (BOMBAY) PRIVATE LTD. & ORS. ETC.E …PETITIONER
Vs.
UNION OF INDIA & ORS. ETC. ETC. …RESPONDENT

DATE OF JUDGMENT : 06/12/1984

BENCH: VENKATARAMIAH, E.S. (J) REDDY, O. CHINNAPPA (J) SEN, A.P. (J)

CITATION: 1986 AIR 515 1985 SCR (2) 287 1985 SCC (1) 641 1984 SCALE (2)853

CITATOR INFO : R 1989 SC 190 (14)

ACT:

Constitution of India 1950 Article 19(I )(a)- Freedom of speech and expresion- Whether includes Freedom of press- Restrictions other than those In Article 19(2)-Whether reasonable-Interference in the name of Public Interest- Whether justified. D Roll of Press and Newspapers-Duty of Court to held the balance even and to strike down any unconstitutional invasion of press.

Fundamental rights under Article 19(l)(a) and (g)- Whether different from right conferred by First Amendment to American Constitution.

Article 13(3)(a)-Notification under section 25 Customs Act 1962-Contrary to fundamental rights-Whether to be struck down.

Article 14-Classification of newspapers for levying customs duty-Whether discriminatory.

Article 4I-Duty of State to encourage education of masses through media of press-Necessity of. F Entry 87 and 93 List 1. Seventh Schedule-Newspaper Industry-Levy of tax-Competency of Parliament to enact laws- Scrutiny by Courts when arises -Tax transgressing into the field of freedom of speech and expression and stifles that freedom-Whether unconstitutional.

Article 32-Validity of tax-Duty of Court-Not to be burdensome-Newspaper Industry not to be singled out-Custom Duty on newspaper-Whether tax on knowledge-People’s right to know-Imposition of tax-Government to be more cautious.

Interpretation of statutes:

Constitution of India 1950 Article 19(1)(a)- Interpretation of-American 288 cases-Whether sole guide-He1p in understanding the basic principles of freedom of speech and expression.

Statutes Taxing Newsprint-Tests for determining vires of-Different from other taxing statutes-Grounds of challenge.

Customs Act. 1962 Section 25-Power to grant exemption- Whether legislative power-Whether notification a Subordinate piece of legislation Whether questionable on the ground of unreasonableness-Power of Government discretionary but not unrestricted.

Customs Act 1962 Section 25-Notification Substitution of by another- Whether former notification would revive ff the latter is held invalid.

Customs Tariff Act 1975 Section 2 and Second Schedule Heading 48.01/21 -Sub-heading 2-Newsprint-Import duty and auxiliary levy at a flat rate- Validity of.

HELD:

1. The expression ‘freedom of press’ has not been used in Article 19 of the Constitution but, as declared by this Court, it is included in Article 19 (1) (a) which guarantees freedom of speech and expression. Freedom of press means freedom from interference from authority which would have the effect of interference with the content and circulation of newspapers. [310C; 35I]

2. There could not be any kind of restriction on the freedom of speech and expression other than those mentioned in Article 19 (2) and it is clear that there could not be any interference with that freedom in the name of public interest, Even when clause (2) of Article 19 was subsequently substituted under the Constitution (First Amendment) Act, 1951 by a new clause which permitted the imposition of reasonable restrictions on the freedom of speech and expression in the interests of sovereignty and integrity of India, these urity of the State, friendly relations with foreign States, public order, decency or morality in relation to contempt of court, defamation or incitement to an offence. Parliament did not choose to include a clause enabling the imposition of reasonable restrictions in the public interest. [3l2B-C]

3. Freedom of press is the heart of social and political. intercourse The press has now assumed the role of the public educator making formal and non-formal education possible in a large scale particularly in the developing world, where television and other kinds of modern communication are not 291 still available for all sections of society. The purpose of the press is to advance the public interest by publishing facts and opinions without which a democratic electorate cannot make responsible judgments. Newspapers being purveyors of news and views having a bearing on public administration very often carry material which would not be palatable to governments and other authorities. With a view to checking malpractices which interfere with free flow of information, democratic constitutions all over the world have made provisions guaranteeing the freedom of speech and expression laying down the limits of interference with it.

[316B.D; H] It is the primary duty of all the national courts to uphold the said freedom and invalidate all laws or administrative actions which interfere with it, contrary to the constitutional mandate. [317A] Brij Bhushan & Anr. v The State of Delhi [1950] S C.R.

605, Bennett Coleman & Co. & ors v. Union of India & ors.

[1972] INSC 266; [1973] 2 S.C.R. 757, Romesh Thappar v. The State of Madras;

[1950] INSC 16; 1950 S.C.R. 594, Express Newspapers (Private) Ltd. & Anr. v.

The Union of lndia & ors. [1959] S.C R. 12 and Sakal Papers (P Ltd. & Ors v. The Union of India [19621 3 S.C.R. 842, followed.

1 Annals of Congress (1789-96) p. 141; D.R. Mankekar:

The Press under Pressure (1973) p 25; Article 19 of the Universal Declaration of Human Rights [1948: Article 19 of the International Covenant on Civil and Political Rights 1965; Article 10 of the European Convention on Human Rights:

First Amendment to the Constitution of the United States of America; Article by Frank C. Newman and Karel Vasak on ‘Civil and political Rights’ in the International Dimensions of Human Rights (Edited by Karel Vasak) Vo. 1 pp. 155-156;

“Many Voices one World” a publication of UNESCO containing the Final Report of the International Commission for the Study of Communication Problems Part V dealing with ‘Communication Tomorrow’ p. 265; Article entitled ‘Toward a General Theory of the First Amendment’ by Thomas 1. Emerson (The Yale Law Journal Vol. 72 .877 at p. 906; Second Press Commission Report (Vol.l. pp. 3435). referred to.

5. (i) Excluding small newspaper establishments having circulation of less than about 10,000 copies a day, all other bigger newspaper establishments have the characteristics of a large industry The Government has to provide many services to them resulting in a big drain on the financial resources of the State as many of these services are heavily subsidized. Naturally such big newspaper organisations have to contribute their due share to the public exchequer and have to bear the common fiscal burden like all others. 1324C; E] (ii) While examining the constitutionality of a law said to be contravening Article 19 (1) (a) of the Constitution, the decisions of the Supreme Court of the United States of America cannot be solely relied upon for guidance but could be taken into consideration for understanding the basic principles of freedom of speech and expressiyn and the need for that freedom in a democratic country. 1324F-G] (iii) The pattern of Article 19 (1) (a) and of Article 19 (1) (g) of the Indian Constitution is different from the pattern of the First Amendment to the American Constitution which is almost absolute in its terms. The rights guaranteed under Article 19 (1) (a) and Article 19 (1) (g) of the Constitution 292 are to be read alongwith clauses (2) and (6) of Article 19 which carve out areas A in respect of which valid legislation can be made. [324H; 325A]

6. Newspaper industry has not been granted exemption from taxation in express terms. Entry 92 of List I of the Seventh Schedule in the Constitution empowers Parliament to make laws levying taxes on sale or purchase of newspapers and on advertisements published therein. The power to levy customs duties on goods imported into the country is also entrusted to Parliament by Entry 83 in List I of the Seventh Schedule to the Constitution. [325B; 326G]

7. The First Amendment to the Constitution of the United States of America is almost in absolute terms and, therefore, no law abridging the freedom of the press can be made by the Congress. Yet the American Courts have recognised the power of the State to levy taxes on newspapers establishments, subject to judicial review by courts by the application of the due process of law principle. [328E-F]

8. The police power, taxation and eminent domain are all forms of social control which are essential for peace and good government. In India the power to levy tax on persons carrying on the business or publishing newspapers has got to be recognised as it is inherent in the very concept of government. But the exercise of such power should. however, be subject to scrutiny by courts. Entry 92 of List I of the Seventh Schedule to the Constitution expressly suggests the existence of such power. [328G; 329C]

9. It is not necessary for the press to be subservient to the Government. As long as this Court sits’ newspapermen need not have the fear of their freedom being curtailed by unconstitutional means. It is not acceptable that merely because the Government has the power to levy taxes, the freedom of press would be totally lost. The Court is always there to hold the balance even and to strike down any unconstitutional invasion of that freedom. [338G; 339F]

10. Newspaper industry enjoys two of the fundamental rights, namely, the freedom of speech and expression guaranteed under Article 19 (1) (a) and the freedom to engage in any profession, occupation, trade. industry or business guaranteed under Article 19 (1) (g), While there can be no tax on the right to exercise freedom of expression, tax is leviable on profession, occupation, trade, business and industry. Hence tax is leviable on newspaper industry. But when such tax transgresses into the field of freedom of expression and stifles that freedom, it becomes unconstitutional. As long as it is within reasonable limits and does not impede freedom of expression it will not be contravening the limitations of Article 19 (2). The delicate task of determining when it crosses from the area of profession, occupation, trade, business or industry into the area of freedom of expression and interferes with that freedom is entrusted to the courts. [339G-H; 340A-B]

11. While levying a tax on newspaper industry it must be kept in mind that it should not be an over-burden on newspapers which constitute the Fourth Estate of the country. Nor should it single out newspaper industry for harsh treatment. Imposition of a tax like the customs duty on newsprint is an imposition on knowledge and would virtually amount to a burden imposed on 293 a man for being literate and for being conscious of his duty as a citizen to inform himself about the would around him.

‘The public interest in freedom A of discussion (of which the freedom of the press is one aspect) stems from the requirement that members of a democratic society should be sufficiently informed that they may influence intelligently the decisions which may affect ‘themselves’. [341H; 342A-B]

12. Freedom of expression has four broad social purposes to serve: (i) it helps an individual to attain self fulfilment, (ii) it assists in the discovery of truth, (iii) it strengthens the capacity of an individual in participating in decision making, and (iv) it provides a mechanism by which it would be possible to establish a reasonable balance between stability and social change. All members of society should be able to form their own beliefs and communicate them freely to others. In sum, the fundamental principle is the people’s right to know. Freedom of speech and expression should, therefore, receive a generous support from all those who believe in the participation of people in the administration. It is on account of this special interest which society has in the freedom of speech and expression that the approach of the Government should be more cautious while levying taxes on matters concerning newspaper industry than while levying taxes on other matters. [342C-E]

13. In view of the intimate connection of newsprint with the freedom of the press, the tests for determining the vires of a statute taxing newsprint have, therefore, to be different from the tests usually adopted for testing the vires of other taxing statutes. In the case of ordinary taxing statutes, the laws may be questioned only if they are either openly confiscatory or a colourable device to confiscate. On the other hand. in the case of a tax on newsprint, it may be sufficient to show a distinct and noticeable burdensomeness, clearly and directly attributable to the tax. [342G-H] Constituent Assembly Debates. Vol. IX pp. 1l75-1180 dt.

September 9,1949: Corpus Juris Secundum (Vol. 16) p. 1132;

American Jurisprudence 2d (Vol. 16) p. 662; Article on the First Amendment by Thomas 1. Emerson (The Yale Law journal Vol. 72 at p. 941); Second Press Commission Report (Vol 1) p. 35; Essay No. 84 by Alexander Hamilton in ‘The Federalist; Alice Lee Grosjean supervisor of Public Accounts for the State of Louisiana v. American Press Company [1936] USSC 33; 297 U.S. 233: 80 L. ed. 660; Robert Murdock Jr. v. Commonwealth of Pennsylvania (City of Jeannette). [1943] USSC 91; 319 U S 105: 87 Law.

ed. 1292 and Attorney General & Anr. v. Antigua Times Ltd.

[1975] 3 All E. R. 81, referred to Bennett Coleman & Co. & ors. v. Union of India & ors, [19731 2 S.C.R. 757 and Sakal Papers (P) Ltd. & Ors. v. The Union of India [1961] INSC 281; [1962] 3 S.C.R. 842, distinguished. G Attorney General v. rimes Newspapers [1973] 3 All. E.R.

54, followed.

14, In the instant cases, assuming that the power to grant exemption under section 25 of the Customs Act, 1962 is a legislative power and a notification issued by the Government there under amounts to a piece of 294 subordinate legislation, even then the notification is liable to be questioned on the ground that it is an unreasonable one. [34SC-D]

15. A piece of subordinate legislation does not carry the same degree of immunity which is enjoyed by a statute passed by a competent legislature Subordinate legislation may be questioned on any of grounds on which plenary legislation is questioned. In addition it may also be questioned on the ground that it does not conform to the statute under which it is made. It may further be questioned on the ground that it is contrary to some other statute.

That is because subordinate legislation must yield to plenary legislation. It may also be questioned on the Ground that it is unreasonable, unreasonable not in the sense of not being reasonable, but in the sense that it is manifestly arbitrary.

[345H ;346A-B]

16. In India arbitrariness is not a separate ground since it will come within the embargo or Article 14 of the Constitution. In India any enquiry into the vires of delegated legislation must be confined to the ground on which plenary legislation may be questioned to the ground that it is contrary to other statutory provisions or that it is so arbitrary that it could not be said to be in conformity with the statute or that it offends Article 14 of the Constitution. Subordinate legislation cannot be questioned on the ground of violation of principles of natural justice on which administrative action may be questioned.

[347E-G]

17. A distinction must be made between delegation of a legislative function in the case of which the question of reasonableness cannot be enquired into and the investment by statute to exercise particular discretionary power. In the latter case the question may be considered on all grounds on which administrative action may be questioned, such as, non- application of mind, taking irrelevant matters into consideration, failure to take relevant matters into consideration, etc. etc. On the facts and circumstances of a case, a subordinate legislation may be struck down as arbitrary or contrary to statute if it fails to take into account very vital facts which either expressly or by necessary implication are required to be taken into consideration by the statute or, say, the Constitution. This can only be done on the ground that it does not conform to the statutory or constitutional requirements or that it offends Article 14 or Article 19 (1) (a) of the Constitution. It cannot, no doubt, be done merely on the ground that it is not reasonable or that it has not taken into account relevant circumstances which the Court considers relevant. [ 348A-D]

8. In cases where the power vested in the Government is a power which has got lo be exercised in the public interest, as it happens to be here, the Court may require the Government to exercise that power in a reasonable way in accordance with the spirit of the Constitution. The fact that a notification issued under section 25 (1) of the Customs Act, 1962 is required to be laid before Parliament under section 159 thereof does not make any substantial difference as regards the jurisdiction of the court to pronounce on its validity. [348E-F]

19. Section 25 of the Customs Act, 1962 under which the notifications are issued confers a power on the Central Government coupled with a duty to examine the whole issue in the light of public interest. It provides that if the Central Government is satisfied that it is necessary in the public interest so to 295 do it may exempt generally either absolutely or subject to such conditions, A goods of any description, from the whole or any part of the customs duty leviable thereon. The Central Government may if it is satisfied that in the public interest so to do exempt from the payment of duty by a special order in each case under circumstances of an exceptional nature to be stated in such order any goods on which duty is leviable The power exercisable under section 25 of the Customs Act, 1962 is no doubt discretionary but it is not unrestricted.

[350C-E]

20. Any notification issued under a statute also being a ‘law’ as defined under Article 13(3)(a) of the Constitution is liable to be struck down if it is contrary of any of the fundamental rights guaranteed under Part III of the Constitution. [350H; 351A] Article entitled ‘Judicial Control of Delegated Legislation: The Test of Reasonableness’ by Prof. Alan Wharam, 36 Modern Law Review 611 at pp 622 23; H.W.R Wade:

Administrative Law (5th Edn.) pp. 747-748; Municipal Corporation of Delhi v. Birla Cotton Spinning and Weaving Mills Delhi & Anr. [1968] INSC 48; [1968] 3 S.C.R 251; Kruse v. Johnson [1898] 2 Q.B.D. 91; Mixnam Properties Ltd. v. Chertsey U.D.C. [1964] I Q.B. 214; The Tulsipur Sugar Co. Ltd v. The Notified Area Committee Tulsipur [1980] 2S.C.R.1111;Ramesh Chandra Kachardas Porwal & Ors. v. State of Maharashtra & ors. etc.. [1981] INSC 35; [1981] 2 S C.R. 866; Bates v. Lord Hailsham of St. Marylebone & ors. [1972] 1 W.L.R. 1373 and Associated Provincial Picture Houses Ltd. v. Wednesbury Corporation [1947] EWCA Civ 1; [1948] 1 K.B. 223, referred to.

Narinder Chand Hem Raj & ors. v. Lt. Governor Administrator Union Territory. Himachal Pradesh & Ors.[1972] 1 S.C.R. 940, distinguished E State of Madras v. V.G. Rao [1952] INSC 19; [1952] S.C.R. 597 and Breen v. Amalgamated Engineering Union [1971] 2 Q.B. 175, relied upon.

21. If any duty is levied on newsprint by Government it necessarily has to be passed on to the purchasers of newspapers, unless the industry is able to absorb it. In order to pass on the duty to the consumer the price of newspapers has to be increased. Such increase naturally affects the circulation of newspapers adversely. [352G]

22. The pattern of the law imposing customs duties and the manner in which it is operated, to a certain exposes the citizens who are liable to pay customs duties to the vagaries of executive discretion. While Parliament has imposed duties by enacting the Customs Act, 1962 and the Customs Tariff Act, 1962 the Executive Government is given wide power by section 25 of the Customs Act, 1962 to grant exemption from the levy of Customs Duty, it is ordinarily assumed that while such power to grant exemptions is given to the Government it will consider all relevant aspects governing the question whether exemption should be granted or not. In the instant case, in 1975 when the Customs Tariff Act, 1975 was enacted, 40% ad valorem was levied on newsprint even though it had been exempted from payment of such duty. If the exemption had not been continued, newspaper publishers had to pay 40% ad valorem customs duty on the coming into force of the Customs Tariff Act, 296 1975 Then again in 1982 by the Finance Act, 1982 an extra levy of Rs. 1000 per tonne was imposed in addition to the original 40% ad valorem duty even though under the exemption notification the basic duty had been fixed at 10% of the value of the imported newsprint. Neither any material justifying the said additional levy was, produced by the Government nor was it made clear why this futile exercise of levying an additional duty of Rs. 1000 per tonne was done when under the notification issued under. section 25 of the Customs Act, 1962 on March 1, 1981, which was in force then, customs duty on newsprint above 10% ad valorem had been exempted. While levying tax on an activity which is protected also Article l9(1)(a) a greater degree of care should he exhibited. While it is indisputable that the newspaper industry should also hear its due share of the total burden of taxation alongwith the rest of the community when any tax is specially imposed on newspaper industry, it should he capable of being justified as a reasonable levy in court when its validity is challenged. In the absence of sufficient material. the levy of 40 plus Rs. 1000 per tonne would become vulnerable to attack. [355E-H;356A-C]

23. The reasons given by the Government to justify the total customs duty of 15% levied from March 1, 1981 or total Rs. 825 per tonne as it is currently being levied appear to be inadequate. In the Finance Minister’s speech delivered on the floor of the Lok Sabha in 1981, the first reason given for the levy of 15% duty was that it was intended ‘ to promote a measure of restraint in the consumption of imported newsprint and thus help in conserving foreign exchange.” This ground appears to be not tenable for two reasons. Nobody in Government had ever taken into consideration the effect of the import of newsprint on the foreign exchange reserve before issuing the notification levying 15 duty. Secondly, no newspaper owner can import newsprint directly. News print import is canalised through the State Trading Corporation. If excessive import of newsprint adversely affects foreign exchange reserve, the State Trading Corporation may reduce the import of newsprint and allocate lesser quantity of imported newsprint to newspaper establishments. There is. however, no need to impose import duty with a view to curbing excessive import of news print. It is clear that the Government had not considered vital aspects before Withdrawing the total exemption which was being enjoyed by newspaper industry till March 1, 1981 and industry 15 duty on newsprint. [356D-H; 357A-B]

24. Attention was particularly drawn to the statement of the Finance Minister that one of the considerations which prevailed upon the Government to levy the customs duty was that the newspapers contained ‘piffles’. A ‘piffle’ means foolish nonsense. It appears that one of the reasons for levying the duty was that certain writings in newspapers appeared to the Minister as ‘piffles’. Such action is not permissible under the Constitution. [361H; 362A]

25. Matters concerning the intellect and ethics do undergo fluctuations from era to era. The world of mind is a changing one. It is not static. The streams of literature and of taste and judgment in that sphere are not stagnant.

They have a quality of freshness and vigour. They keep on changing from time to time, from place to place and from community to community. [868A] 297

26. It is one thing to say that in view of considerations relevant to A public finance which require every citizen to contribute a reasonable amount to public exchequer customs duty is leviable even on newsprint used by newspaper industry and an entirely different thing to say that the levy is imposed because the newspapers generally contain ”piffles”. While the former may be valid if the circulation of newspapers is not affected prejudicially, the latter is impermissible under the Constitution as the levy is being made on a consideration which is wholly outside the constitutional limitations. The Government cannot arrogate to itself the power to prejudge the nature of contents of newspapers even before they are printed. Imposition of a restriction of the above kind virtually amounts to conferring on the Government the power to precensor a newspaper. The above reason given by the Minister to levy the customs duty is wholly irrelevant. [363B-D] 27 The argument on behalf of the Government that the effect of the impugned levy i minimal cannot be accepted.

[365C]

28. There are factors indicating that the present levy is heavy and is perhaps heavy enough to affect circulation.

There appears to be a good ground to direct the Central Government to reconsider the matter afresh. [366C ;D] Final Report of the International Commission for the Study of Communication Problems pp. 100 add 141;

Encyclopaedia Britannica [1962] Vol. 16; p. 339; Second Press Commission Report(Vol. 11)pp. 182-183; Bennett Coleman

757; Sakal Papers(P) Ltd & Ors. v. The Union of India [1961] INSC 281; [1962] 3 S.C.R. 842; William B. Cammarane v. United States of America [1959] USSC 23; 358 US 498; 3 Led 2d 462; Jeffery Sole Bigelow Commonwealth of Virginia 421 us 809: L ed 2d60O at 610 and Robert E. Hannegan v. Esquire Inc. 327 U.S. 147: 90 L ed.

586, referred to.

Hamdard Dawakhana (WakS) Lal Kuan Delhi & Anr. v.

Union of India & Ors., [1959] INSC 157; [1960] 2 S.C.R. 671; Lews J.

Yelentine v. F. J. Chrestensen 86 Law ed. 1292 and in re Sea Customs Act [1963] INSC 156; [1964] 3 S.C.R 787, distinguished.

Romesh Thapper v. The State of Madras [1950] S.C.R.

564; Honourable Dr. Paul Borg olivier & Anr. v. Honourable Dr. Anton Buttigieg [1967] A.C. 115 (P.C.); Thomas v.

Collins [1945] USSC 32; [1944] 323 U.S. 516 Martin v. City of Struthers 11943] [1943] USSC 90; 319 U.S. 141, followed.

29. The classification of the newspapers into small, medium and big newspapers for purposes of levying customs duty is not violative of Article 14 of the Constitution. The object of exempting small newspapers from the payment of customs duty and levying 5% ad valorem (now Rs. 275 per MT) on medium newspapers while levying full customs duly on big newspapers is to assist the small and medium newspapers in bringing down their cost of production. Such papers do not command large advertisement revenue. Their area of circulation is limited and majority of them are in Indian languages catering to rural sector. There is nothing sinister in the 298 object nor can it be said that the classification has no nexus with the object to be achieved. [366F-G] Bennett Coleman & Co. & Ors v. Union of India & Ors.

[1972] INSC 266; [1973] 2 S.C.R. 757. referred to.

30. Quashing of the impugned notification dated March 1, 1981, which had repealed the notification dated July 15, 1977 under which total exemption had been granted would not revive the notification dated July IS, 1977. Once an old rule has been substituted by a new rule, it cases to exist and it does not get revived when the new rule is held invalid. Since the competence of the Central Government to repealer annul or supersede the notification dated July 15 1977 is not questioned, its revival on the impugned notifications being held to be void would not arise and, therefore, on the quashing of the impugned notification the petitioners would have to pay customs duty of 40% ad valorem from March 1, 1981 to February 28 1982 and 40% ad valorem plus Rs 1000 per MT from March 1, 1982 onwards In addition to it they would also be liable to pay auxiliary duty of 30% ad valorem during the fiscal year 1982-83 and auxiliary duty of 50% ad valorem during the fiscal year 1983-8 i. They would straightaway be liable lo pay the whole of customs duty and any other duty levied during the current fiscal year also. Such a result cannot be allowed to ensue. The challenge to the validity of the levy prescribed by the customs Tariffs Act, 1975 itself cannot be allowed to succeed. [370F-H]

31. The Government has failed to discharge its statutory obligations While issuing the impugned notifications. the Government is directed to reexamine the whole issue after taking into account all relevant considerations for the period subsequent to March 1, 1981.

The Government cannot be deprived of the legitimate duty payable on imported newsprint. [371D-E]

32. Having regard to the peculiar features of these cases and Article 32 of the Constitution which imposes an obligation on this Court to enforce the fundamental rights and Article 142 of the Constitution which enables this Court in the exercise of its jurisdiction to make such order as is necessary for doing complete justice in any cause or matter the following order was made: [371D-E]

1. The Government of India shall reconsider within six months the entire question of levy of import duty or auxiliary duty payable by the petitioners and others on newsprint used for printing newspapers, periodicals etc.

with effect from March 1,1981. The petitioners and others who are engaged in newspapers business shall make available to the Government all information necessary to decide the question. [37G-H]

2. If on such reconsideration the Government decides that there should be any modification in the levy of customs duty or auxiliary duty with effect from March 1,1981, it shall take necessary steps to implement its decision. [372A]

3. Until such redetermination of the liability of the petitioners and others is made, the Government shall recover only Rs. 550 per MT on imported newsprint towards customs duty and auxiliary duty and shall not 299 insist upon payment of duty in accordance wish the impugned notifications. The concessions extended to medium and small newspapers may, however, A remain in force. [372C]

4. If, after such redetermination, it is found that any of the petitioners is liable to pay any deficit amount by way of duty, such deficit amount shall be paid by such petitioner within four months from the date on which a notice of demand is served on such petitioner by the concerned authority. Any bank guarantee or security given by the petitioners shall be available for recovery of such deficit amounts. [372D]

5. If, after such redetermination, it is found that any of the petitioners is entitled to any refund, such refund shall be made by the Government within four months from the date of such redetermination.

6. A writ shall issue to the respondents. [372F] C B.N. Tiwari v. Union of India & ors, [1965] 2 S.C.R.

421, T. Devadasan v. Union of India & Anr. [1963] INSC 182; [1964] 4 S.C.R, 680 and Firm A.T.B. Mehtab Majid & Co. v. State of Madras & Anr. [1963] Supp 2 S.C.R, 435 at 446. relied on.

Mohd. Shaukat Hussain Khan v. State of Andhra Pradesh [975] I S.C.R. 429, Shri Mulchand Odhavji. Rajkot Borough Municipality A.I.R. 1970 S.C. 685, Koteswar Vittal Kamath v.

K. Rangappa Baliga & Co. [1968] INSC 312; [1969] 3 S.C.R. 40 and The case of State of Maharashtra etc. v. The Central Provinces Manganese Ors Co. Ltd.. [1977] I S.C.R. 1000, distinguished.

& ORIGINAL. JURISDICTION: Writ Petition NOS. 2656-60.

2935-40, 2941-46, 2947-52, 3402, 3467, 3595, 3600-03, 3608, 3632, 3653, 3661, 3821, 3890-93, 4590-93,. 4613-15, 5222, 5576, 5600 02, 5726 27, 7410. 8459-62, 8825, 8944 of 1981, 1325 of 1982, 470-72 of 1984. T C. Nos. 23 of 1983 and 23 of 1984.

AND Writ Petitions Nos. 3114-17 of 1981 WITH
Writ Petitions Nos. 3393-93 of 1981 WITH
Writ Petitions No. 3853 of 1981 WITH
Writ Petitions Nos. 6446-47 of 1181 (Under Article 32 of the Constitutions of India) A.K. Sen, A.B. Divan, F.S. Nariman, K.K. Venugopal, B.R. Agarwala, Miss Vijay Lakshmi Menon, A.K Ganguli P.H.

Parekh, C.S. Vaidyanalingam, D.N. Mishra, Pravin Kumar, KR.

Nambiar, M.C. Dhingra, Miss Sieta Vaidyalingam, P.C. Kapur, Pramod Dayal, CM 300 Nayar, S.S, Munjral, KK .Jain, S.K. Gupta, A.l). Sangar, Ranjan Mukherjee, Sudip Sarkar, P.K. Ganguli, Miss Indu Malhotra, PR. Seetharaman and V. Shekhar for the petitioners.

K. Parasaran, Attorney General of India, Krishna Iyer, P.A. Francis, A. Subba Rao, Dalveer Bhandari and R.N. Poddar for the respondents.

F.S. .Nariman, S. Dholakia, Soli J. Sorabjee, Anil B.

Divan J.B. Dadachandji S. Sukumaran, D.N. Mishra, KP. Dhanda pani, R.C. Bhatia, P.C. Kapur, A.N. Haksar, O.C.. Mathur, Miss Meera Mathur, Dr. Roxna Swamy, Arun Jetley, P.H.

Parekh, Miss Divya Bhalla and Pinaki Misra for the intervener The Judgment of the Court was delivered by VENKATARAMIAH, J.

I Pleadings The majority of Petitioners in these petitions filed under Article 32 of the Constitution are certain companies, their share holders and their employees engaged in the business of editing, printing and publishing newspapers, periodicals, magazines etc Some of them are trusts or other kinds of establishments carrying on the same kind of business. They consume in the course of their 5 activity large quantities of newsprint and it is stated that 60% of the expenditure involved in. the production of a newspaper is utilised for buying newsprint, a substantial part of which is import ed from abroad. They challenge in these petitions the validity of the imposition of import duty on newsprint imported from abroad under section 12 of the Customs Act, 1962 (Act 52 of 1962) read with section 2 and Heading No. 48/01/21 Sub-heading No. (2) in the First Schedule to the Customs Tariff Act, 1975 (Act 51 of 1975) and the levy of auxiliary duty under the Finance Act, 1981 on newsprint as modified by notifications issued under section 25 of the Customs Act, 1962 with effect from March 1, 1981.

The first set of writ petitions challenging the above levy was filed in May, 1981. At that time under the Customs Act, 1962 read with the Customs Tariff Act, 1975, customs duty of 40’% ad valorem was payable on newsprint. Under the Finance Act, 1981 an auxiliary duty of 30% ad valorem was payable in addition to the customs duty. But by notifications issued under section 25 of the Customs Act, 1962, the customs duty had been reduced to 10% 301 ad valorem and auxiliary duty had been reduced to 5% ad valorem in the case of newsprint used for printing newspapers, books and A periodicals.

During the pendency of these petitions while the Customs Tariff Act, 1975 was amended levying 40% ad valorem plus Rs. 1,000 per MT as customs duty on newsprint, the auxiliary duty payable on all goods subject to customs duty was increased to 50% ad valorem. But by reason of notifications issued under section 25 of the Customs Act, 1962 customs duty at a flat rate of Rs. 550 per MT and auxiliary duty of Rs. 275 per MT are now being levied on newsprint i.e. in all Rs. 825 per MT is now being levied.

The petitioners inter alia contend that the imposition of the import duty has the direct effect of crippling the freedom of speech and expression guaranteed by the Constitution as it has led to the increase in the price of newspapers and the inevitable consequence of reduction of their circulation. It is urged by them that with the growth of population and literacy in the country every newspaper is expected to register an automatic growth of at least 5% in its circulation every year but this growth is directly impeded by the increase in the price of newspapers. It is further urged that the method adopted by the Customs Act, 1962 and the Customs Tariff Act, 1975 in determining the rate of import duty has exposed the newspaper publishers to the Executive interference. The petitioners contend that there was no need to impose customs duty on news- print which had enjoyed total exemption from its payment till March 1, 1981, as the foreign exchange position was quite comfortable. Under the scheme in force, the State Trading Corporation of India sells newsprint to small newspapers with a circulation of less than 15,000 at a price which does not include any import duty, to medium newspapers with a circulation between 15,000 and 50,000 at a price which includes 5% ad valorem duty (now Rs. 275 per MT) and to big newspapers having a circulation of over 50,000 at a price which includes the levy of 15% ad valorem duty (now Rs. 825 per MT). It is stated that the classification of newspapers into big, medium and small newspapers is irrational as the purchases on high seas are sometimes effected by a publisher owning many newspapers which may belong to different classes. The petitioners state that the enormous increase in the price of newsprint subsequent to March 1, 1981 and the inflationary economic conditions which have led to higher cost of production have made it impossible for the industry to bear the duty any longer. Since the capacity to bear the duty is an essential element in determining the reasonableness 302 Of the levy, it is urged, that the continuance of the levy is violative of Article 19(1)(a) and Article 19(1)(g) of the Constitution. It is suggested that the imposition of the levy on large newspapers by the Executive is done with a view to stifling circulation of news. papers which are highly critical of the performance of the administration.

Incidentally the petitioners have contended that the classification of newspapers into small, medium and big for purposes of levy of import duty is violative of Article 14 of the Constitution. The petitioners have appended to their petitions a number of annexures in support of their pleas.

On behalf of the Union Government a counter-affidavit is filed. The deponent of the counter-affidavit is R. S.

Sidhu, Under Secretary to the Government of India, Ministry of Finance, Department of Revenue. In paragraph 5 of the counter-affidavit it is claimed that the Government had levied the duty in the public interest to augment the revenue of the Government. It is stated that when exemption is given from the customs duty, the Executive has to satisfy itself that there is some other corresponding public interest justifying such exemption and that in the absence of any such public interest, the Executive has Do power to exempt and that it has to carry out the mandate of Parliament which has fixed the rate of duty by the Customs Tariff Act, 1975. It is also claimed that the classification of newspapers for purposes of granting exemption is done in the public interest having regard to the relevant considerations. It is denied that the levy suffers from any malafides. It is pleaded that since every section of the society has to bear its due share of the economic burden of the State, levy of customs duty on newsprint cannot be considered to be violative of Article 19 (1) (a) of the Constitution. But regarding the plea of P the petitioners that the burden of taxation is excessive, the counter affidavit states that the said fact is irrelevant to the levy of import duty on newsprint. In reply to the allegation of the petitioners that there was no valid reason for imposing the duty as the foreign exchange position was quite comfortable, the Union Government has stated that the fact that the foreign exchange position was quite comfortable was no bar to the imposition of import duty. It is further pleaded that since the duty imposed is an indirect tax which would be borne by the purchaser of newspaper, the petitioners cannot feel aggrieved by it.

II A Brief History of the levy of Customs Duty on Newsprint In order to appreciate the various contentions of the parties 303 it is necessary to set out briefly the history of the levy of customs A duty on newsprint in India.

Even though originally under the Indian Tariff Act, 1934, there was a levy of customs duty on imported paper, exemption had been granted for import of white, grey or unglazed newsprint from the levy of any kind of customs duty in excess of 1.57 per cent ad valorem but subsequently a specific import duty of Rs. 50 per MT used to be levied on newsprint imports upto 1966. The question of levy of customs duty on newsprint was examined by the Inquiry Committee on Small Newspapers. In its Report submitted in 1965 that Committee recommended total exemption of newsprint from customs duty because in 90x/Q of the countries in the world no such levy was being imposed because newspapers played a vital role in a democracy. On the basis of the said recommendation, the Government of India abolished customs duty on newsprint altogether in the year 1966 in exercise of its power under section 25 of the Customs Act, 1962. The price of newsprint was Rs. 725 per MT during the year 1965- 66 but there was a sudden spurt in its price in 1966-67 when it rose to Rs. 1155 per MT. During the period 1966-71 although almost all imported goods suffered basic regulatory and auxiliary customs duty, there was no such levy on newsprint in spite of severe foreign exchange crisis which arose on the devaluation of the Indian Rupee in 1966. But on account of the financial difficulties which the country had to face as a consequence of the Bangladesh war in 1971, a regulatory duty of 2 1.2% was levied on newsprint imports to meet the difficult situation by the Finance Act of 1972. The price of newsprint in the year 1971-72 was Rs. 1134 per MT.

The above 2 1/2% ad valorem regulatory duty was abolished by the Finance Act of 1973 P and was converted into 5% auxiliary duty by the said Act. This levy of 5% was on all goods including newsprint imported into India. On April 1, 1974 under the Import Control order issued under section 3 of the Imports and Exports Control Act, 1947, import of newsprint by private parties was banned and its import was canalised through the State Trading Corporation of India. In 1975, the Customs Tariff Act, 1975 came into force. By this Act the Indian Tariff Act, 1934 was repealed. Under section 2 read with Heading No. 48.01/ 21 of the First Schedule to the Customs Tariff Act, 1975, a levy of basic customs duty of 40% ad valorem was imposed on newsprint. But in view of the exemption granted in the year 1966 which remained in force, the imposition made by 304 the Customs Tariff Act, 1975 did not come into force. Only 5% auxiliary duty which was levied from April 1, 1973 continued to be in operation. In the budget proposals of July, 1977, the 5% auxiliary duty was reduced to 2 1/2% but it was totally abolished by a notification issued under section 25 of the Customs Act on July 15, 1977. The notification dated July IS, 1977 read as follows:

“NOTIFICATION CUSTOMS GSR No. In exercise of the powers conferred by sub section (1) of section 25 of the Customs Act, 1962 (52 of 1962) and in supersession of the notification of the Government of lndia in the Department of Revenue and Banking No. 72-Customs dated the 18th June 1977, the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts newsprint, falling under sub heading (2) of Heading No. 48.01 21 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), when imported into India, from the whole of that portion of the duty of customs leviable thereon, which is specified in the said First Schedule.

sd/– (Joseph Dominic) Under. Secretary to the Government of India.” The price of newsprint during the year 1975-76 was Rs.

3676 per MT. The total exemption from customs duty imposed on newsprint was in force till March 1, 1981. In the meanwhile the Central Government notified increased salaries and wages to k employees of newspaper establishments in December, 1980 on the recommendations contained in the Palekar Award. On March 1, 1981, the notification dated July 15, 1977 issued under section 25 (1) of the Customs Act, 1962 granting total exemption from customs duty was superseded by the issue of a fresh notification which stated that the Central Government had in the public interest exempted newsprint imported into India for printing of newspapers, books and periodicals from so much of that portion of the duty of customs leviable thereon as was in excess of 10 per cent ad valorem. The effect of the said notification was that publishers of newspapers had to pay ten per cent ad valorem customs duty on imported newsprint.

By another notification issued at about the same time auxiliary 305 duty imposed by the Finance Act of 1981 above 5 per cent ad valorem was exempted in the case of newsprint. The net result . was that a total duty of IS per cent ad valorem came to be imposed on newsprint for the year 1981-82.

The explanation given by the Government in support of the above notification was as follows:

“Customs duty on newsprint:

Originally, import of newsprint did not attract any customs duty. The Government of India abolished the -. customs duty on newsprint after the devaluation of the rupee on the recommendation of the Inquiry Committee on Small Newspapers (1965). The Committee had mentioned in its report that 80% of the newsprint in international trade was free from customs duty and had recommended complete abolition of customs duty on newsprint. However, during the Bangladesh crisis in 1971, a2.1/2% ad valorem regulatory duty was imposed on newsprint imports. Subsequently, this was abolished on April 1,1973 and in its place a 5% auxiliary customs duty on newsprint imports was proposed in the Union Budget Proposals for 1973-74. While no customs duty was levied on newsprint because of the exemption granted by Customs Notification No. 235/F.No.527/1/76-CUS (TU) dated August 2,1976 of the Department of Revenue and Banking, 5% auxiliary duty was continued to be levied on imported newsprint till July 15,1977 when the Ministry of Finance, Department of Revenue by its Notification No. 148/F.No. Bud (2) Cus/77 dated July l5,1977 exempted newsprint from the whole of duty of customs. Prior to this the Ministry of Finance, Department of Revenue vide its Customs Notification No.

72/F. No. Bud. (2) Cus/77 dated June 18,1977 had reduced the auxiliary duty to 2 1/2%.

In the Budget proposals for the current year, the Minister of Finance has proposed a customs duty of 15% on newsprint imports which has become effective from March 1,1981 because of the Customs Notification No. 24/F. No. Bud (Cus)/81 dated March 1,1981. This 15% customs duty constitutes 10% basic duty and 5% auxiliary duty.” 306 The price of imported newsprint in March 1,1981 was A Rs. 4,560 per MT. The extract from the speech of the Finance Minister in support of the imposition of a total 15% of duty (10% basic duty and 5% auxiliary duty) on newsprint is given below;

“The levy of 15 per cent customs duty on newsprint has understandably attracted a good deal of comment both within the House and outside. As it has been explained in the Budget speech, this levy is intended to promote a measure of restraint in the consumption of imported newsprint and thus help in conserving foreign exchange. In the light of the observations made by the Hon. Members in the course of the General Debate on the Budget I had assured the House that I would try to work out a scheme of providing relief to small and medium newspapers about which Members had voiced their special concern. We have now worked out the modalities of a scheme for affording relief to small and medium newspapers. Under this Scheme, the State Trading Corporation would sell imported newsprint to small newspapers at a price which would not ! include any amount relatable to import duty. Medium newspapers will get their newsprint at a price which, would include an amount relatable to import duty ‘of S per cent ad valorem. Big newspapers would, however, pay a price which will reflect the full duty burden of 15 per cent ad valorem. There is a definition of small, medium and big newspapers in the Press Council. At the moment the present definition is that these which have a circulation of 15,000 or less are classified as small, those with a circulation of more than 15,000 but less than 50,000 are classified as medium and those with a circulation of over 50,000 are called big newspapers. Therefore, the small newspapers with a circulation of 15,000 and less will not pay any customs duty those with a circulation between 15,000 and 50,000 will pay customs duty of 5 per cent and with a circulation of over 50,000 will pay 15 per cent.

Suitable financial arrangements will be worked out as between’ Government and the State Trading Corporation to enable the STC to give effect to these concessions.

As Hon. Members are aware, the categorisation of newspapers as small, medium and big in 307 terms of circulation is already well understood in the A industry and is being followed by the Ministry of Information and Broadcasting for purposes of determining initial allocation of newsprint and for setting the rates of growth of consumption of newsprint by various newspapers from year to year. The State Trading Corporation will, for purposes of the present scheme, follow, the same categorisation of newspapers into small, medium and big. These arrangements will. in effect, provide a relief of about Rs. 5.86 crores to small and medium newspapers. ” The relevant provisions of the laws imposing customs duty and auxiliary duty on newsprint which arise for consideration are these:

Section 12 of the Customs Act, 1962 reads:

“12. Dutiable goods.-(1) Except as otherwise provided n in this Act, or any other law for the time being in force, duties of customs shall be levied at such rates as may be specified under the Customs Tariff Act, 1975 (5l of 1975), or any other law for the time being in force, on goods imported into or exported from India.

(2)………. , Section 2 of the Customs Tariff Act, 1975 reads:

“2. Duties specified in the Schedules to levied.-The rates at which duties of customs shall be levied under the Customs Act, 1962, are specified in the First and Second Schedules.” The relevant part of Chapter 48 of the First Schedule to the Customs Tariff Act, 1975 which deals with import tariff read in 1981 thus:

“Heading Sub-heading No. Rate of duty Duration No. and description Standard Preferential when of article Areas rates of duty are protective 308 ——————————————————- (1) (2) (3) (4) (5) ——————————————————- 48.01/21……………………………………………

(2) Newsprint containing mechanical wood pulp amounting to not less than 70 per cent of the fibre content 40% – – (excluding chrome, marble, flint, poster, stereo and art paper) ………………………………………………” Newsprint used by the petitioners falls under Sub- heading (2) of Heading No. 48.O1/21 by Which 40% ad valorem customs duty is levied on it. By the Finance Act of 1982 in sub-heading No. (2) of Heading No. 48.O1/21, for the entry in column (3), the entry “40% plus Rs. 1,000 per tonne was substituted.

The relevant part of section 44 of the Finance Act, 1982 which levied an auxiliary duty of customs read thus:

“44. (1) In the case of goods mentioned in the First Schedule to the Customs Tariff Act, or in that Schedule, as amended from time to time, there shall be levied and collected as an auxiliary duty of customs an amount equal] to thirty per cent of the value of the goods as determined in accordance with the provisions of section 14 of the Customs Act, 1962 (hereinafter referred to as the Customs Act).

………………………………………………” The above rate of auxiliary duty was to be in force during the financial year 1982-83 and it was open to the Government to grant exemption from the whole or any part of it under section 25 of the Customs Act, 1962.

Section 45 of the Finance Act, 1983 imposed fifty per cent of the value of the goods as auxiliary duty in the place of thirty per cent imposed by the Finance Act, 1982.

309 But by notifications issued on February 28,1982 under section A 25 (2) of the Customs Act, 1962, which were issued in supersession of the notification dated March 1, 1981, Rs.

550 per tonne was imposed as customs duty on newsprint and auxiliary duty was fixed at Rs. 275 per tonne. In all Rs.

825 per tonne of newspaper has to be paid as duty. The high sale price of newsprint had by that time gone up above Rs.

5,600 per tonne.

What is of significance is that when the Government was of the view that the total customs duty on newsprint in the public interest should be not more than 15 per cent and when these writ petitions questioning even that 15 per cent levy were pending in a this Court, Parliament was moved by the Government specifically to increase the basic customs duty on newsprint by Rs. 1,000 per tonne by the Finance Act, 1982. Hence today if the Executive Government withdraws the notifications issued under section 25 of the Customs Act, a total duty of 90 per cent plus Rs. 1000 per tonne would get clamped on imported newsprint. D The effect of the imposition of 15 per cent duty may to some extent have led to the increase in the price of newspapers in 1981 and it resulted in the fall in circulation of newspapers. On this point the Second Press Commission has made the following observations in its Report (Vol. 1 page 18): E “Fall in circulation during 1981.

94. To examine recent trends in, circulation and their relationship to recent trends in the economic environment, the Commission’s office undertook an analysis of the Audit Bureau of Circulations (ABC) certificates for the period July 1980 to June 1981. It was found that there was a decline in circulation in the period January-June 1981 compared to the previous six-month period in the case of dailies and periodicals.” The two important events which had taken place during the period between July, 1980 to June, 1981 were the enforcement of the Palekar Award regarding the wages and salaries payable in the newspaper industry and the imposition of the customs duty of 15% on the imported newsprint. Under the newsprint policy of the Government there are three sources of supply of newsprint-(i) high 310 seas sales, (ii) sales from the buffer stock built up by the State A Trading Corporation which includes imported newsprint and (iii) newsprint manufactured in India.

Imported newsprint is an important component of the total quantity of newsprint utilised by any newspaper establishment.

III The Importance of Freedom of Press in a Democratic society and the Role of Courts.

Our Constitution does not use the expression ‘freedom of press’ in Article 19 but it is declared by this Court that it is included in Article 19(1)(a) which guarantees freedom of speech and expression. (See Brij Bhushan & Anr.

v. The State of Delhi(l) and Bennett coleman & Co. & Ors. v.

Union of lndia & ors.(2) . The material part of Article 19 of the Constitution reads:

“19. (1) All citizens shall have the right- (a) to freedom of speech and expression;

…………………………………………………

(g) to practise any profession, or to carry on any occupation, trade or business, (2) Nothing in sub-clause (a) of clause (1) shall affect the operation of any existing law, or prevent the State from making any law, in so far as such law imposes reasonable restrictions on the exercise of the right conferred by the said sub-clause in the interests of the sovereignty and integrity of India, the security of the State, friendly relations with foreign States, public order, decency or morality, or in relation to contempt of court, defamation or incitement to an offence.

……………………………….

(6) Nothing in sub-clause (g)of the said said clause shall affect the operation of any existing law in so far as it imposes, or prevent the State from making any law impos- (1) [1950] INSC 15; (1950) S.C.R. 605.

(2) [1972] INSC 266; [1973] 2 S.C.R. 757 311 ing, in the interests of the general public, reasonable restrictions on the exercise of the right conferred by the said sub-clause……………… ” The freedom of press, as one of the members of the Constituent Assembly said, is one of the items around which the greatest and the bitterest of constitutional struggles have been waged in all countries where liberal constitutions prevail. The said freedom is attained at considerable sacrifice and suffering and ultimately it has come to be incorporated in the various written constitutions. James Madison when he offered the Bill of Rights to the Congress in 1789 is reported as having said: ‘The right of freedom of speech is secured, the liberty of the press is expressly declared to be beyond the reach of this Government’. ‘(See 1 Annals of Congress (1789-96) p. 141). Even where there are no written constitutions, there are well established constitutional conventions or judicial pronouncements securing the said freedom for the people The basic documents of the United Nations and of some other international bodies to which reference will be made hereafter give prominence to the said right. The leaders of the Indian independence movement attached special significance to the freedom of speech and expression which included freedom of press apart from other freedoms. During their struggle for freedom they were moved by the American Bill of Rights containing the First Amendment to the Constitution of the United States of America which guarnteed the freedom of the press. Pandit Jawaharlal Nehru in his historic resolution containing the aims and objects of the Constitution to be enacted by the Constituent Assembly said that the Constitutions should guarantee and secure to all the people of India among others freedom of thought and expression. He also stated elsewhere that “I would rather have a completely free press with all the dangers involved in the wrong use of that freedom than a suppressed or regulated press” (See D.R. Mankekar: The Press under Pressure (1973) p. 25). The Constituent Assembly and its various committees and sub-committees considered freedom of speech and expression which included freedom of press also as a precious right. The Preamble to the Constitution says that it is intended to secure to all citizens among others liberty of thought, expression, and belief. It is significant that in the kinds of restrictions that may be imposed on the freedom of speech and expression any reasonable restriction impossible in the public interest is not one enumerated in clause (2) 312 of Article 19. In Romesh Thappar v. The State of Madras and Brij Bhushan’s case (supra) this Court firmly expressed its view that there could not be any kind of restriction on the freedom of speech and expression other than those mentioned in Article 19(2) and thereby made it clear that there could not be any interference with that freedom in the name of public interest. Even when clause (2) of Article 19 was subsequently substituted under the Constitution (First Amendment) Act, 1951 by a new clause which permitted the imposition of reasonable restrictions on the freedom of speech and expression in the interests of sovereignty and integrity of India, the security of the State, friendly relations with foreign states, public order, decency or morality in relation to contempt of court, defamation or incitement to an offence, Parliament did not choose to include a clause enabling the imposition of reasonable restrictions in the public interest.

Article 19 of the Universal Declaration of Human Rights, 1948 declares very one has the right to freedom of opinion and expression; this right includes freedom to hold opinions without interference and to seek, receive and impart information and ideas through any media and regardless of frontiers’.

Article 19 of the International Covenant on Civil and Political Rights, 1966 reads:

“Article 19

1. Everyone shall have the right to hold opinions without interference.

2. Everyone shall have the right to freedom of expression; this right shall include freedom to seek, receive and impart information and ideas of all kinds, regardless of frontiers, either orally, in writing or in print, in the form of art, through any other media of his choice.

3. The exercise of the rights provided for in Paragraph 2 of this Article carries with it special duties and responsibilities. It may therefore be subject to certain restrictions, but these shall only be such as are provided by law and are necessary:

313 (a) For respect of the rights or reputations of others;

(b) For the protection of national security or of public order (order public), or of public health or morals.” Article 10 of the European Convention on Human Rights reads:

“Article 10 1. Everyone has the right to freedom of expression.

This right shall include freedom to hold opinions and to receive and impart information and ideas without interference by public authority and regardless of frontiers. This Article shall not prevent States from requiring the licensing of broadcasting, television or cinema enterprises.

2. The exercise of these freedoms, since it carries with it duties and responsibilities, may be subject to such formalities, conditions, restrictions or penalities as are prescribed by law and are necessary in a democratic society, in the interests of national security, territorial integrity or public safety, for the prevention of disorder or crime, for the protection of health or morals, for the protection of the reputation or rights of others, for preventing the disclosure of information received in confidence, or for maintaining the authority and impartiality of the judiciary.” The First Amendment to the Constitution of the United States of America declares:

“Amendment I Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech or of the press, or the right of the people peaceably to assemble, and to petition the government for a redress of grievances.” Frank C. Newman and Karel Vasak in their article on ‘Civil 314 and Political Rights’ in the International Dimensions of Human Rights (Edited by Karel Vasak) Vol. I state at pages 155-156 thus:

“(ii) Freedom of opinion, expression, information and communication. A pre-eminent human right, insofar as it allows everyone to have both an intellectual and political activity, freedom of expression in the broad sense actually includes several specific rights, all linked together in a “continuum” made increasingly perceptible by modern technological advance. What is primarily involved is the classic notion of freedom of opinion, that is to say, the right to say what one thinks and not to be harassed for one’s opinions.

This is followed by freedom of expression, in the limited sense of the term, which includes the right to seek, receive and impart information and ideas, regardless of frontiers, either orally, in writing or in print, in the form of art, or through any other media of one’s choice When freedom of expression is put to use by the mass media, it acquires an additional dimension and becomes freedom of information. A new freedom is being recognised which is such as to encompass the multiform requirements of these various elements, while incorporating their at once individual and collective character, their implications in terms of both “rights” and “responsibilities”: this is the right to communication, in connection with which Unesco has recently undertaken considerable work with a view to its further elaboration and implementation.” “Many Voices, One World” a publication of UNESCO which contains the Final Report of the International Commission for the study of Communication Problems, presided over by Sean Mac Bride, in part V thereof dealing with ‘Communication Tomorrow’ at page 265 emphasizes the importance of freedom of speech and press in the preservation of human rights in the following terms:

“IV. Democratization of Communication.

Human Rights Freedom of speech, of the press, of information and of assembly are vital for the realization of human rights 315 Extension of these communication freedoms to a broader individual and collective right to communicate is an evolving principle in, the democratization process.

Among the human rights to be emphasized are those of equality for women and between races. Defence of all human rights is one of the media’s most vital tasks. We recommend:

52. All those working in the mass media should contribute to the fulfilment of human rights, both individual and collective, in the spirit of the Unesco Declaration on the mass media and the Helsinki Final Act, and the International Bill of human Rights. The contribution of the media in this regard is not Only to foster these principles but also to expose all infringements, wherever they occur, and to support those whose rights have been neglected or violated.

Professional associations and public opinion should support journalists subjected to pressure or who suffer adverse consequences from their dedication to the defence of human rights.

53. The media should contribute to promoting the just cause of peoples struggling for freedom and independence and their right to live in peace and equality without foreign interference. This is especially important for all oppressed peoples who, while struggling against colonialism, religious and racial discrimination, are deprived of opportunity to make their voices heard within their own countries.

54. Communication needs in a democratic society should be met by the extension of specific rights such as the right to be informed, the right to infrom, the right to privacy, the right to practicipate in public communication-all elements of a new concept, the right to communicate. In developing what might be called a new era of social rights we suggest all the implications of the right to communicate to further explored.

Removal of Obstacles Communication, with its immense possibilities for influencing the minds and behaviour of people, can be a powerful means of promoting democratization of society and of widening public participation in the decision-making 316 process. This depends on the structures and practices of the media and their management and to what extent they facilitate broader access and open the communication process to a free interchange of ideas, information and experience among equals, without dominance of discrimination.” In today’s free world freedom of press is the heart of social and political intercourse. The press has now assumed the role of the public educator making formal and non-formal education possible in a large scale particularly in the developing world, where television and other kinds of modern communication are not still available for all sections of society. The purpose of the press is to advance the public interest by publishing facts and opinions without which a democratic electorate cannot make responsible judgments.

Newspaper being surveyors of news and views having a bearing on public administration very often carry material which would not be palatable to governments and other authorities.

The authors of the articles which are published in newspapers have to be critical of the action of government in order to expose its weaknesses. Such articles tend to become an irritant or even a threat to power. Governments naturally take recourse to suppress newspapers publishing such articles in different ways. Over the years, the governments in different parts of the world have used diverse methods to keep press under control. They have followed carrotstick methods. Secret payments of money, open monetary grants and subventions, grants of lands, postal concessions, Government advertisements, conferment of titles on editors and proprietors of newspapers, inclusion of press barons in cabinet and inner political councils etc.

constitute one method of influencing the press. The other kind of pressure is one of using force against the press.

Enactment of laws providing for precensorship, seizures, interference with the transit of newspapers and demanding security deposit, imposition of restriction on the price of newspapers, on the number of pages of newspapers and the area that can be devoted for advertisements, withholding of Government advertisements, increase of postal rates, imposition of taxes on newsprint, canalisation of import of newsprint with the object of making it unjustly costlier etc. are some of the ways in which Governments have tried to interfere with freedom of press. It is with a view to checking such malpractices which interfere with free flow of information, democratic constitutions all over the world have made provisions guaran 317 teeing the freedom of speech and expression laying down the limits of interference with it. lt is, therefore, the primary duty Of all the national courts to uphold the said freedom and invalidate all laws or administrative actions which interfere with it, contrary to the constitutional mandate.

Thomas 1. Emerson in his article entitled ‘Toward a General Theory of the First Amendment’ (The Yale Law Journal, Vol. 72,877 at p. 906) while dealing with the role of the Judicial institutions in a democratic society and in particular of the apex court of U.S.A. in upholding the freedom of speech and expression writes:

“The objection that our judicial institutions lack the political power and prestige to perform an active role in protecting freedom of expression against the will of the majority raises more difficult questions. Certainly judicial institutions must reflect the traditions, ideals and assumptions, and in the end must respond to the needs, claims and expectiations, of the social order in which they operate. They must not, and ultimately can not, move too far ahead or lag too far behind. The problem for the Supreme Court is one of finding the proper degree of responsiveness and leadership, or perhaps better, of short-term and long term responsiveness. Yet in seeking out this position the Court should not under estimate the authority and prestige it has achieved over the years. Representing the “con science of the community” it has come to possess a very real power to keep alive and vital the higher values and goals towards which our society imperfectly strives Given its prestige, it would appear that the power of the Court to protect freedom of expression is unlikely to be substantially curtailed unless the whole structure of our democratic institutions is threatened.” What is stated above applies to the Indian courts with equal force-. In Romesh Thappar’s case (supra) Brij Bhushan’s case (supra), Express Newspapers (Private) Ltd. & Anr. v. The Union of India & Ors.,(l) Sakal Papers (P) Ltd.

&. Ors. v. The Union of India(2) and Bennett Coleman’s case (supra) this Court has very strongly pronoun- (1) [1959] S.C.R. 12.

(2) [1961] INSC 281; [1962] 3 S.C.R. 842.

318 ced in favour of the freedom of press. Of these, we shall refer to some observations made by this Court in some of them.

In Romesh Thappar’s case (supra) this Court said at page 602:

“(The freedom).. .lay at the foundation of all democratic organisations, for without free political discussion on no public education, so essential for the proper functioning of the processes of popular government, is possible. A freedom of such amplitude might involve risks of abuse ……………… C'(nut) it is better to leave a few of its noxious branches to their luxuriant growth, than, by pruning them away, to injure the vigour of those yielding the proper fruits”.” In Bennett Coleman’s case (supra) A.N. Ray, C.J. On behalf of the majority said at page 796 thus:

“The faith of citizen is that political wisdom and virtue will sustain themselves in the free market of ideas, so long as the channels of communication are left open. The faith in the popular government rests on the old dictum ‘let the people have the truth and the freedom to discuss it and all will go well’. The liberty of the press remains an ‘Ask of the Covenant’ in very democracy-…. The newspapers give ideas., The newspaper `give the people the freedom to find out what ideas are correct.” In the very same case, Methew, J, observed at page 818:

“The constitutional guarantee of the freedom of speech is not so much for the benefit of the press as it is for the benefit of the public. The freedom of speech includes within its compass the right of all citizens to read and be informed. In Time v. Hill [1967] USSC 11; (385 U.S. 374) the U.S. Supreme Court said:

“The constitutional guarantee of freedom of speech and press are not for the benefit of the press so much as for the benefit of all the people.” In Griswold v. Connecticut [1965] USSC 128; (381 U.S. 479, 482) the U.S.

Supreme Court was of the opinion that the right of freedom of speech and press includes not only the right to utter or to print, but the right to read.” 319 Justice Mathew proceeded to observe (at pp. 819-820):

“Under Art. 41 of the Constitution the State has a duty to A take effective steps to educate the people within limits of its available economic resources. That includes political education also.

Public discussion of public issues together with the spreading of information and any opinion on these issues is supposed to be the main function of newspaper. The highest and lowest in the scale of intelligence resort to its columns for information.

Newspapers is the most potent means for educating the people as it is read by those who read nothing else and, in politics, the common man gets his education mostly from newspaper.

The affirmative obligation of the Government to permit the import of newsprint by expanding foreign exchange in that behalf is not only because press has a fundamental right to express itself, but also because the 1 community has a right to be supplied with information and the Government a duty to educate the people within the limits of its resources. The Government may, under cl. 3 of the Imports (Control) Order, 1955 totally prohibit the import of newsprint and thus disable any person from carrying on a business in newsprint, if it is in the general interest of the public not to expend any foreign exchange on that score. If the affirmative obligation to expend foreign exchange and permit the import of newsprint stems from the need of the community for information and the fundamental duty of Government of educate the people as also to satisfy the individual need for self exression, it is not for the proprietor of a newspaper alone to say that he will reduce the circulation of the newspaper and increase its page level, as the community has an interest in maintaining or increasing circulation of the newspapers. It is said that a proprietor of a newspaper has the freedom to cator to the needs of intellectual highbrows who may choose to browse in rich pastures and for that he would require more pages for a newspaper and that it would be a denial of his fundamental right if he were told that he cannot curtail the circulation and increase the pages.

A claim to enlarge the volume of speech by diminishing the circulation 320 raises the problem of reconciling the citizens’ right to unfettered exercise of speech in volume with the community’s right to undiminished circulation. Both rights fall within the ambit of the concept of freedom of speech as explained above.” The Second Press Commission has explained the concept of freedom of press in its Report (Vol. I pp. 34-35) thus:

“The expression ‘freedom of the press’ carries different meanings to different people. Individuals, whether professional Journalists or not, assert their right to address the public through the medium of the press. Some people stress the freedom of the editor to decide what shall be published in his paper. Some others emphasize the right of the owners to market their publication. To Justice Holmes, the main purpose of the freedom was to prevent all prior restraint on publication.

16. The theory is that in a democracy freedom of expression is indispensable as all men are entitled to participate in the process of formulation of common decisions. Indeed, freedom of expression is the first condition of liberty. It occupies a preferred position in the hierarchy of liberties giving succour and protection to other liberties. It has been truly said that it is the mother of all other liberties. The press as a medium of communication is a modern phenomenon. It has immense power to advance or thwart the progress of civilization. Its freedom can be used to create a brave new world or to bring about universal catastrophe.

17. Freedom of speech presupposes that right conclusions are more likely to be gathered out of a multitude of tongues than through any kind of authoritative selection. It rests on the assumption that the widest possible dissemination of information from as many diverse and antagonistic sources as possible is essential to the welfare of the public. It is the function of the Press to disseminate news from as many different sources and with as many different facts and colours as possible. A citizen is entirely dependent on the Press for the quality, proportion and 321 extent of his news supply. In such a situation, the exclusive and continuous advocacy of one point of view through the medium of a newspaper which holds monopolistic position is not conducive to the formation of healthy public opinion. If the newspaper industry is concentrated in a few hands, the chance of an idea antagonistic to the idea of the owners getting access to the market becomes very remote. But our constitutional law has been in different to the reality and implication of non-governmental restraint on exercise of freedom of speech by citizens. The indifference becomes critical when comparatively a few persons are in a position to determine not only the content of information but also its very availability.

The assumption in a democratic set-up is that the freedom of the press will produce a sufficiently diverse Press not only to satisfy the public interest by throwing up a broad spectrum of views but also to fulfill the individual interest by enabling virtually everyone with a distinctive opinion to find some place to express it.” D The petitioners have heavily relied upon the decision of this Court in sakal’s case (supra) in which the constitutionality of the Newspaper (Price and Page) Act, 1956 and the Daily Newspaper (Price and Page) Order, 1960 arose for consideration. The petitioner in that petition was a private limited company engaged in the business inter alia of publishing daily and weekly newspapers in Marathi named ‘Sakal’ from Poona. The newspaper ‘Sakal” had a net circulation of 52,000 copies on week days and 56,000 copies on Sundays. The daily edition contained six pages a day for five days in a week and four pages on one day. This edition was priced at 7 paise. The Sunday edition consisted of ten pages and was priced at 12 paise. About 40% of the space in the newspaper was taken up by the advertisements and the rest by news, views and other usual features. The newspaper (price and page) Act, 1956 regulated the number of pages according to the price charged, prescribed the number of supplements to be published and prohibited the publication and sale of newspapers in contravention of the Act. It also provided for the regulation of the size and area of advertising matter contained in a newspaper. Penalties were prescribed for contravention of that Act or the Order made thereunder. As a result of the enforcement of that Act, in order to publish 34 pages on six days in a week as it was doing 322 then, the petitioner had to raise the price from 7 paise to 8 paise per day and if it did not wish to increase the price, it had to reduce the total number of pages to 24- The petitioner which could publish any number of supplements as and when it desire to do so before the Order impugned in that case was passed could do so thereafter only with permission of the Government. The contention of the petitioner in that case was that the impugned Act and the impugned Order were pieces of legislation designed to curtail the circulation of the newspaper as the increase in the price of the paper would adversely affect its circulation and they directly interfered with the freedom of the press. The validity of these pieces of legislation was challenged on the ground that they violated Article 19 (1) (a) of the Constitution. The Union Government contested the petition. It pleaded that the impugned Act and the Order had been passed with a view to preventing unfair competition among newspapers and also with a view to preventing the rise of monopolistic combines so that newspapers might have fair opportunities of free discussion. It was also con tended that the impugned Act and the impugned Order had been passed in the public interest and the petitioner’s business being a trading activity falling under Article 19 (1) (g) of the Constitution any restriction imposed by the said Act and the Order was protected by Article 19 (6) of the Constitution.

This Court negativing the contention of the Union Government observed at page 866 thus:

“Its object thus is to regulate something which, as already stated, is directly related to the circulation of a newspaper. Since circulation of a newspaper is a part of the right of freedom of speech the Act must be regarded as one directed against the freedom of speech. It has selected the fact or thing which is an essential and basic attribute of the conception of the freedom of speech viz. the right to circulate one’s views to all whom one can reach or care to reach for the imposition of a restriction. It seeks to achieve its object of enabling what are termed the smaller newspapers to secure larger circulation by pro visions which without disguise are aimed at restricting the circulation of what are termed the larger papers with better financial strength- The impugned law for from being one, which merely interferes with the right of freedom speech incidentally, does so directly though it 323 seeks to achieve the end by purporting to regulate the business aspect of a newspaper. Such a course is not permissible and the courts must be ever vigilant in guarding perhaps the most precious of all the freedoms guaranteed by our Constitution. The reason for this is obvious. The freedom of speech and expression of opinion is of paramount importance under a democratic Constitution which envisages changes in the composition of legislatures and governments and must be preserved.

No doubt, the law in question was made upon the recommendation of the Press Commission but since its object is to affect directly the right of circulation of news papers which would necessarily undermine their power to influence public opinion it cannot stat be regarded as a dangerous weapon which is capable of being used against democracy itself.” Continuing further the Court observed at pages 867 and 868 thus:

“It was argued that the object of the Act was to prevent monopolies and that monopolies are obnoxious. We will assume that monopolies are always against public interest and deserve to be suppressed.

Even so, upon the view we have taken that the intendment of the Act and the direct. and immediate effect of the Act taken along with the impugned order was to interfere with the freedom of circulation of newspapers the circumstance that its object was to suppress monopolies and prevent unfair practices is of no assistance.

The legitimacy of the result intended to be achieved does not necessarily imply that every means to achieve it is permissible for even if the end is desirable and permissible, the means employed must not transgress the limits laid down by the Constitution, if they directly impinge on any of the fundamental rights guaranteed by the Constitution it is no answer when the constitutionality of the measure is challenged that apart from the fundamental right infringed the provision is otherwise legal.” 324 We have so far seen the importance of the freedom of speech and expression which includes the freedom of press.

We shall now proceed to consider whether it is open to the Government to levy any tax on any of the aspects of the press industry.

IV Do newspapers have immunity from taxation ? Leaving aside small newspaper establishments whose circulation may be less than about 10,000 copies a day, all other bigger newspaper establishments have the characteristics of a large industry. Such bigger newspaper concerns are mostly situated in urban areas occupying large buildings which have to be provided with all the services rendered by municipal authorities. They employ hundreds of employees. Capital investment in many of them is in the order of millions of rupees. Large quantities of printing machinery are utilised by them, a large part of which is imported from abroad. They have to be provided with telephones, teleprinters, postal and telegraphic services, wireless communication systems etc. Their newspapers have to be transported by roads, railways and air services. Arrangements for security of their property have to be made. The Government has to provide many other services to them. All these result in a big drain on the financial resources of the State as many of these services are heavily subsidized. Naturally such big newspaper organisations have to contribute their due share to the public exchequer. They have to bear the common fiscal burden like all others.

While examining the constitutionality of a law which is alleged to contravene Article 19 (1) (a) of the Constitution, we cannot, no doubt, be solely guided by the decisions of the Supreme Court of the United States of America. But in order to understand the basic principles of freedom of speech and expression and the need for that freedom in a democratic country, we may take them into consideration. The pattern of Article 19 (1) (a) and of Article 19 (1) (g) of our constitution is different from the pattern of the First Amendment to the American Constitution which is almost absolute in its terms. The rights guaranteed under Article 19 (1) (a) and Article 19 (1) (g) of the Constitution are to be read along with clauses (2) and (6) of Article 19 325 which carve out areas in respect of which valid legislation can be A made. It may be noticed that the newspaper industry has not been granted exemption from taxation in express terms. On the other hand Entry 92 of List I of the Seventh Schedule to the Constitution empowers Parliament to make laws levying taxes on sale or purchase of newspapers and on advertisements published therein.

It is relevant to refer here to a few extracts from the speech of Shri Deshbandhu Gupta on the floor of the Constituent Assembly opposing the provisions in the Draft Constitution which authorised the State Legislatures to levy sales tax on sale of newspapers and tax on advertisements in newspapers. He said: C “…… No one would be happier than myself and my friends belonging to the press, if the House were to decide today that newspapers will be free from all such taxes. Of course that is what it should be because in no free country with a democratic Government we have any such taxes as the sales tax or the advertisement tax ………………………… I claim that newspapers do deserve a distinctive treatment. They are not an industry in the sense that other industries are.

This has been recognised all over the world. They have a mission to perform. And I am glad to say that the newspapers in India have performed that mission of public service very creditably and we have reason to feel proud of it. I would, there. fore, expect this House and my friend Mr. Sidhva to bear it in mind at the time when God forbid any proposal comes before the Parliament for taxation. That would be the time for them to oppose it.

Sit, after all, this is an enabling clause. It does not say that there shall be sales and advertisement tax imposed on newspapers. It does not commit the House today to the imposition of a tax on the sales of or a tax on advertisements published in newspapers, All that we have emphasised is that newspapers as such should be taken away from the purview of the provincial Governments and brought to the Central List so that if at all at any time a tax is to be imposed on newspapers it should be done by the representatives of whole country realising the full 326 implications of their action. It should not be an isolated A act on the part of some Ministry of some province. That was the fundamental basis of our amendment ……………………………………………… If today all news papers including those published from Delhi are opposing the imposition of these taxes with one voice and demanding their inclusion in the Central List, they do so, not because it is a question of saving some money, but be cause the fundamental question of the liberty of the press is involved. By advocating their transfer to the Central List we are prepared to run the risk of having these takes imposed in Delhi, and in other provinces which have not sought to impose such taxes so far. But we do not want to leave it to the Provinces so that the liberty of the press remains unimpaired. We have faith in the Parliament:

we have faith in the collective wisdom of the country and we have no doubt that when this matter is viewed in the correct perspective, there will be no such taxes imposed on the newspapers, but we have not got that much faith in the Provincial Ministries. It is in that hope and having a full realisation of the situation that we have agreed, as a matter of compromise, or should I say as a lesser evil, to have these two taxes transferred from the Provincial to the Central List.” (Vide Constituent Assembly Debates .Vol. IX, pp. 1175-1180 dated September 9, 1949).

Ultimately the power to levy taxes on the sale or purchase of newspapers and on advertisement published therein was conferred on Parliament by Entry 92 of List I of the Seventh Schedule to the Constitution. This shows the anxiety on the part of the framers of our Constitution to protect the newspapers against local pressures. But they, however, did not agree to provide any constitutional immunity against such taxation. The power to levy customs duties on goods imported into the country is also entrusted to Parliament by Entry 83 in List I of the Seventh Schedule to the Constitution.

On the power of t e Government in the United States of America to levy taxes on and to provide for the licensing of news papers, Corpus Juris Sequndum (Vol. 16) says at page 1132 as follows:

327 “213. (13), Taxing and Licensing “The Constitutional guaranties of freedom of speech and of the press are subject to the proper exercise of the government s power of taxation, and reasonable license fees may be imposed on trades or occupations concerned with the dissemination of literature or ideas.

As a general rule, the constitutional guaranties of freedom of speech and of the press are subject to the proper exercise of the government’s power of taxation, so that the imposition of uniform and non-discriminatory taxes is not invalid as applied to persons or organisations engaged in the dissemination of ideas through the publication or distribution of writing. The guaranty of freedom of the press does not forbid the taxation of money or property employed in the publishing business, or the imposition of reasonable licenses and license fees on trades or occupations concerned with the dissemination of literature or ideas.

A license or license tax to permit the enjoyment of freedom of speech and freedom of press may not, however, be required as a form of censorship, and where the purpose of the tax or license is not for revenue, or for reasonable regulation, but is a deliberate and calculated device to prevent, or to curtail the opportunity for, the acquisition of knowledge by the people in respect of their governmental affairs, the statute or ordinance violates the constitutional guaranties, and particularly the Fourteenth Amendment to the federal Constitution. While an ordinance imposing a tax on, and requiring a license for, the privilege of advertising by distributing books, circulars, or pamphlets has been held valid, an ordinance requiring the payment of a license tax by street vendors or peddlers is invalid as applied to members of a religious group distributing religious literature as part of their activities, at least where the fee is not merely a nominal one imposed to defray the cost of regulation, notwithstanding the ordinance is non-discriminatory. A governmental regulation requiring a license to solicit, for compensation, memberships in organizations requiring the payment of dues is invalid, 328 where it fixes indefinite standards for the granting of a license to an applicant. A provision of a retail sales tax act providing that a retailer shall not advertise as to the non-collection of sales tax from purchasers does not deprive retailers of the constitutional right of free speech.” The above subject is summarised in American Jurisprudence 2d (Vol. 16) at page 662 thus:

“Speech can be effectively limited by the exercise of that taxing power. Where the constitutional right to speak is sought to be deterred by a state’s general taxing program; due process demands that the speech be unencumbered until the state comes forward with sufficient proof to justify its inhibition. But constitutional guaranties are not violated by a statute the controlling purpose of which is to raise revenue to help defray the current expenses of state government and state obligations, and which shows no hostility to the press nor exhibits any purpose or design to restrain the press.” It may be mentioned here that the First Amendment to the Constitution of the United States of America is almost in absolute terms. It says that the Congress shall make no law abridging the freedom of the press. Yet the American Courts have recognised the power of the State to levy taxes on newspaper establishments, of course, subject to judicial review by courts by the application of the due process of law principle. “Due process of law does not forbid all social control; but it protects personal liberty against social control, unless such social control is reasonable either because of a constitutional exercise of the police power, or of the power of taxation or of the power of eminent domain”. If any legislation delimiting personal liberty is held to be outside of all three of these categories, it is taking away of personal liberty without due process of law and is unconstitutional. The police power, taxation and eminent. domain are all forms of social control which are essential for peace and good government.

‘The police power is the legal capacity of the severeignty or one of its governmental agents, to delimit the personal liberty of persons by means which bear a substantial relation to the end to be accomplished for the protection of social interests which reasonably need protection. Taxation is the legal capacity of sovereignty or one of its govern 329 mental agents to exact or impose a charge upon persons or their property for the support of the government and for the payment for any other Public purposes which it may constitutionally carry out. Eminent domain is the legal capacity of sovereignty or one of its governmental agents, to take private property for public use upon the payment of just compensation.’ It is under the above said sovereign power of taxation the government is able to levy taxes on the publishers of newspapers too, subject to judicial review by courts notwithstanding the language of the First Amendment which is absolute in terms. In India too the power to levy tax even on persons carrying on the business of publishing newspapers has got to be recongnised as it is inherent in the very concept of government. But the exercise of such power should, however, be subject to scrutiny by courts. Entry 92 of List I of the Seventh Schedule to the Constitution expressly suggests the existence of such power.

Thomas I. Emerson in his article on the First Amendment (The Yale Law Journal, Vol. 72 at p. 941, has made certain relevant observations on the power of the State to impose taxes and economic regulations on newspaper industry.

He says:

“(a) Taxation and Economic Regulation.

Regular tax measures, economic regulations, social welfare legislation and similar provisions may, of course, have some effect upon freedom of expression when applied to persons or organisations engaged in various forms of communication. But where the burden is the same as that borne by others engaged in different forms of activity, the similar impact on expression seems clearly insufficient to constitute an “abridging” of freedom of expression. Hence a general corporate tax, wage and hour or collective bargaining legislation, factory laws and the like are as applicable to a corporation engaged in newspaper publishing as to other business organisations. On the other hand, the use of such measures as a sanction to diminish the volume Of expression or control its content would clearly be as impermissible an “abridgment” as direct criminal prohibitions. The line may sometimes be difficult to draw, the more so as the scope of the regulation is narrowed.

Two principles for delineating the bounds of “abridg- 330 ing” may be stated. First, as a general proposition the validity of the measure may be tested by the rule that it must be equally applicable to a substantially larger group than that engaged in expression. Thus a special tax on the press alone, or a tax exemption available only to those with particular political views or associations, would not be permitted. second, neither the substantive nor procedural provisions of the measure, even though framed in general terms, may place any substantial burden on expression because of their peculiar impact in that area. Thus the enforcement of a tax or corporate registration statute by requiring disclosure of membership in an association, where such disclosure would substantially impair freedom of expression, should be found to violate first amendment protection. (Underlining by us).

This view appears to have been accepted by our Second Press Commission in its Report (Vol. I) at page 35. The Commission observes:

“21. Economic and tax measures, legislation relating to social welfare and wages, factory laws, etc., may have some effect upon freedom of the Press when applied to persons or institutions engaged in various forms of communication. But where the burden placed on them is the same as that borne by other engaged in different forms of activity, it does not constitute abridgment of freedom of the Press. The use of such measures, however, to control the content’ of expression would be clearly impermissible.” In Alice Lee Grosjean, Supervisor of Public Accounts for the State of Louisiana v. American Press Company(l) in which the appellants had questioned the constitutional validity of an Act of Louisiana which required every person engaged in the business of selling or making any charge for, advertising or for advertisements, printed or published in any newspaper, periodical etc. having a circulation of more than 20,000 copies per week to pay, in addition to all other taxes, a license tax for privilege of engaging in such business in the State of Louisiana of two per cent (2%) of the gross receipts of such business, the Supreme Court of the United States observed at pages 668-669:

—————————————- (1) [1936] USSC 33; 297 U.S. 233: 80 L. ed. 660.

331 “In the light of all that has now been said, it is evident that the restricted rules of the English law in respect of the A freedom of the press in force when the Constitution was adopted were never accepted by the American colonists, and that by the First Amendment it was meant to preclude the national government, and by the Fourteenth Amendment to preclude the states, from adopting any form of previous restraint upon printed publications, or their circulation, including that which had theretofore been effected by these two well known and odious methods It is not intended by anything we have said to suggest that the owners of newspapers are immune from any of the ordinary forms of taxation for support of the government. But this is not an ordinary form of tax, but one single in kind, with a long history of hostile misuse against the freedom of the press.

The predominant purpose of the grant of immunity here invoked was to preserve an untrammelled press as a vital source of public information. The newspapers, magazines and other journals of the country, it is safe to say, have shed and continue to shed, more light on the public and business. affairs of the nation than any other instrumentality of publicity;

and since informed public opinion is the most potent of all restraints upon misgovernment, the suppression or abridgment of the publicity afforded by a free press cannot be regarded otherwise than with grave concern.

The tax here involved is bad not because it takes money from the pockets of the appellees. If that were all, a wholly different question would be presented. It is bad because, in the light of its history and of its present setting, it is seen to be a deliberate and calculated device in the guise of a tax to limit the circulation of information to which the public is entitled in virtue of the constitutional guaranties. A free press stands as one of the great interpreters between the government and the people. To allow it to be fettered is to fetter ourselves.” (Underlining by us) The levy imposed by Louisiana was quashed by the Supreme 332 Court of the United States of America in the above case on the ground that it violated the First Amendment to the Constitution of the United States of America since it was of the view that the tax levied in this case was a device to limit the circulation of information. The Court, however, did not say that no tax could be levied on the press in any event.

In Robert Murdock, Jr. v. Commonwealth of Pennsylvania (City of Jeannette)(1) the Supreme Court of the United States of America declared as unconstitutional and violative of the First Amendment to the Constitution of the United States of America which guaranteed freedom of speech and expression, an ordinance which imposed a licence tax on persons canvassing for and soliciting within the city of Jeannette orders for goods, paintings, pictures, wares or merchandise of any kind or persons delivering such articles under orders so obtained or solicited. The petitioners in that case were ‘Jehovah’s witnesses’ who went about from door to door in the city of Jeannette distributing literature and soliciting people to purchase certain religious books and pamphlets.

None of them obtained a licence by paying the prescribed fee and they were convicted for violating the Ordinance by the Superior Court of Pennsylvania. The Supreme Court of the United States of America quashed the conviction holding that the Ordinance violated the First Amendment. Douglas, J. who wrote the majority opinion observed at pages 1299 and 1300 thus:

“In all of these cases the issuance of the permit or license is dependent on the payment of a license tax. And the license tax is fixed in amount and unrelated to the scope of the activities of petitioners or to their realized revenues. It is not a nominal fee imposed as a regulatory measure to defray the expenses of policing the activities in question. It is in no way apportioned. It is a flat license tax levied and collected as a condition to the pursuit of activities whose enjoyment is guaranteed by the first Amendment.

Accordingly, it restrains in advance those constitutional liberties of press and religion and inevitably tends to suppress their exercise. That is almost uniformly recognised as the inherent vice and evil of this flat license tax………….

(1) [1943] USSC 91; 319 U.S. 105: 87 Law. ed. 1292.

333 The fact that the ordinance is ”nondiscriminatory” A is immaterial. The protection afforded by the First Amendment is not so restricted. A license tax certainly does not acquire constitutional validity because it classifies the privileges protected by the First Amendment along with the wares and merchandise of hucksters and peddlers and treats them all alike. Such equality in treatment does not save the ordinance. Freedom of press, freedom of speech, freedom of religion are in a preferred position.” (Underlining by us).

Justice Reed who dissented from the majority observed at page 1306 thus:

“It will be observed that there is no suggestion of freedom from taxation, and this statement is equally true of the other State constitutional provisions. It may be concluded that neither in the state or the federal constitutions was general taxation of church or press interdicted.

Is there anything in the decisions of this Court which indicates that church or press is free from the financial burdens of government ? We find nothing. Religious societies depend for their exemptions from taxation upon state constitutions or general statutes, not upon the Federal Constitution. Gibbons v. District of Columbia, [1886] USSC 32; 116 US 404, 29 L ed 680[1886] USSC 32; , 6 S Ct 427. This Court has held that the chief purpose of the free press guarantee was to prevent previous restraints upon publication. Near v. Minuesota [1931] USSC 154; 283 US 697, 713, 75 L ed 1357[1931] USSC 154; , 1366, 51 S Ct 625. In Grosjean v.

American Press Co.[1936] USSC 33; , 297 US 233, 250, 80 L ed 660, 668[1936] USSC 33; , 56 S Ct 444, it was., said that the predominant purpose was to preserve “an untrammelled press as a vital source of public information.” In that case, a gross receipts tax Oil advertisements in papers with a circulation of more than twenty thousand copies per week was held invalid because a deliberate and calculated device in the guise of a tax to limit the circulation…..”.

There was this further comment:

“It is not intended by anything we have said to suggest 334 that the owners of newspapers are immune from any of the ordinary forms of taxation for support of the government.

But this is not an ordinary form of tax, but one single in kind, with a long history of hostile misuse against the freedom of the press.” Id. 297 Us 250, 80 L ed 668. [1936] USSC 33; 56 S Ct 444.

It may be said, however, that ours is a too narrow, technical and legalistic approach to the problem of state taxation of the activities of church and press; that we should look not to the expressed or historical meaning of the First Amendment but to the broad principles of free speech and free exercise of religion which pervade our national way of life. It may be that the Fourteenth Amendment guarantees these principles rather than the more definite concept expressed in the First Amendment. This would mean that as a Court, we should determine what sort of liberty it is that the due process clause of the Fourteenth Amendment guarantees against state restrictions on speech and church……

Nor do we understand that the Court now maintains that the Federal Constitution frees press or religion of any tax except such occupational taxes as those here levied. Income taxes, ad valorem taxes, even occupational taxes are presumably valid, save only a license tax on sales of religious books. Can it be that the Constitution permits a tax on the printing presses and the gross income of a metropolitan newspaper but denies the right to lay an occupational tax on the distributors of the same papers ? Does the exemption apply to book sellers or distributors of magazines or only to religious publications ? And, if the latter, to what distributors ? Or to what books ? Or is this Court saying that a religious practice of book distribution is free from taxation because a state cannot prohibit the “free exercise thereof” and a newspaper is subject to the same tax even though the same Constitutional Amendment says the state cannot abridge the freedom of the press ? It has never been thought before that freedom from taxation was a perquisite attaching to the privileges of the First Amendment.” Justice Reed added at pages 1307 and 1308 thus:

335 “It is urged that such a tax as this may be used readily to restrict the dissemination of ideas, This must be conceded but the possibility of misuse does not make a tax unconstitutional. No abuse is claimed here. The ordinances in some of these cases are the general occupation license type covering many businesses. In the Jeannette prosecutions, the ordinance involved lays the usual tax on canvassing or soliciting sales of goods, wares and merchandise. It was passed in 1898. Every power of taxation or regulation is capable of abuse. Each one, to some extent, prohibits the free exercise of religion and abridges the freedom of the press, but that is hardly a reason for denying the power. If the tax is used oppressively the law will protect the victims of` such action.” (Underlining by us.) Justice Frankfurter who also dissented from the majority observed at pages 1310 and 1311 thus:

“It cannot be said that the petitioners are constitutionally exempt from taxation merely because they may be engaged in religious activities or because such activities may constitute an exercise of a constitutional right…..

Nor can a tax be-invalidated merely because it falls upon activities which constitute an exercise of a constitutional right. The First Amendment of course protects the right to publish a newspaper or a magazine or a book.

But the crucial question is-how much protection does the Amendment give, and against what is the right protected ? It is certainly true that the protection afforded the freedom of the press by the First Amendment does not include exemption from all taxation. A tax upon newspaper publishing is not invalid simply because it falls upon the exeacise of a constitutional right. Such a tax might be invalid if it invidiously singled out newspapers publishing, for bearing the burdens of taxation or imposed upon them in such ways as to encroach on the essential scope of a free press. If the Court could justifiably hold that the tax measures in these cases were Vulnerable on that ground, I would unreservedly agree. But the 336 Court has not done so, and indeed could not.” (Under lining by us) In the above case it may be noticed that Douglas, J.

who gave the majority opinion did not say that no tax could be levied at all on a press, but he did not approve of a uniform license tax unrelated to the scope of the activities of the persons who had to beat it. The dissenting opinions have clearly stated that the press does not enjoy any immunity from taxation. They, however, say that the taxation should not encroach upon the essential scope of a free press.

We may usefully refer here to a passage in the foot note given below the Essay No 84 by Alexander Hemilton in ‘The Federalist’. it reads:

“It cannot certainly be pretended that any degree of duties, however low, would be an abridgment of the liberty of the press. We know that newspapers are taxed in Great Britain, and yet it is notorious that the press nowhere enjoys greater liberty than in that country. And if duties of any kind may be laid without a violation of that liberty, it is evident that the extent must depend on legislative discretion, regulated by public opinion ;” At this stage we find it useful to refer to a decision of the Privy Council in Attorney General & Anr. v. Antigua Times Ltd.( Where the Judicial Committee of the Privy Council was called upon to decide about the validity of the imposition of a licence fee of p S 600 annually on the publisher of a newspaper under the News papers Registration (Amendment) Act, 1971. Section 10 of the Constitution of Antigua read as follows:

“10. (1) Except with his own consent, no person shall be hindered in the enjoyment of his freedom of expression, and for the purposes of this section the said freedom includes the freedom to hold opinions and to receive and impart ideas and information without interference, and freedom from interference with his correspondence and other means of communication (1). [1975] 3 All E.R. 81 337 (2) Nothing contained in or done under the authority of any law shall be held to be inconsistent with or in contravention of this section to the extent that the law in question makes provision-(a) that is reasonably required-(i) in the interests of defence, public safety, public order, public morality or public health; or (ii) for the purpose of protecting the reputations, rights and freedoms of other persons, or the private lives of persons concerned in legal proceedings, preventing the disclosure of information received in confidence, maintaining the authority and independence of the courts, or regulating telephony, telegraphy, posts, wireless, broadcasting, television or other means of communication, public exhibitions or public entertainments; or (b) that imposes restrictions upon public officers.” Lord Fraser who delivered the judgment of the Privy Council upheld the levy of the licence fee as being reasonably required in the interests of defence and for securing public safety etc. referred to in section 10 (2) (a) (i) of the Constitution of Antigua, The learned Lord observed in that connection thus:

Revenue requires to be raised in the interests of defence and for securing public safety, public order, public morality and public health and if this tax was reasonably required to raise revenue for these purposes or for any of them, then S. IB is not to be treated as contravening the Constitution.

In some cases it may be possible for a court to decide from a mere perusal of an Act whether it was or was not reasonably required. In other cases the Act will not provide the answer to that question. In such cases has evidence to be brought before the court of the reasons for the Act and to show that it was reasonably required ? Their Lordships think that the proper approach to the question is to presume, until the contrary appears or is shown, that all Acts passed by the Parliament of Antigua were reasonably required.

This presumption will be rebutted if the statutory provisions in question are, to use the words of Louisy J, ‘so arbitrary as to compel the conclusion that it does not involve an exertion of the 338 taxing power but constitutes in substance and effect the direct execution of a different and forbidden power.’ y the amount of the licence fee was so manifestly excessive its to lead to the conclusion that the real reason for its imposition was not the raising of revenue but the preventing of the publication of newspapers, then that would justify the conclusion that the law was not reasonably required the raising of revenue.

In there Lordships’ opinion the presumption that the newspapers Registration (Amendment) Act, 1971 was reasonably required has not been reputed and they do not regard the amount of the licence fee as manifestly excessive and of such a character as to lead to the conclusion that S. IB was not enacted to raise revenue but for some other Purpose.” (Underlining by us) Here again it is seen that the Privy council was of the view that the law did not forbid the levy of fee on the publisher of a newspaper but it would be open to challenge if the real reason for its imposition was not the raising of revenue but the preventing of the publication of newspaper.

At this stage it is necessary to refer to a forceful argument addressed before us. It was urged on behalf of the petitioners that the recognition of the power of the Government to levy taxes of any kind on the newspaper establishments would ring in the death-knell of the freedom of press and would be totally against the spirit of the Constitution. It is contended that the Government is likely to use it to make the press subservient to the Government. It is argued that when once this power is conceded, newspapermen will have to run after the Government and hence it ought not to be done. This raises a philosophical question Pressversus Government- We do not think it is necessary for the press to be subservient to the Government. As long as ‘this Court sits’ newspapermen need not have the fear of their freedom being curtailed by unconstitutional means. It is, however, good to remember some statements made in the past by some wise men connected with newspapers in order to develop the culture of an independent press. Hazlitt advised editors to stay in their garrets and avoid exposing themselves to the sub-leties of power. Walter Lippman in his address to the International Press Institute some 339 years ago said that the danger to the independence and integrity of journalists did not come from the pressures that might A be put on them; it was that they might be captured and capitivated by the company they keep. Arthur Krock after 60 years of experience said that it ‘is true that in most cases, the price of friendship with a politician is so great for any newspaperman to pay’. A. P.

Wadsworth of the Manchester Guardian said “that no editor should ever be on personal terms with our leaders for fear of creating a false sense of relation of confidence.” James Margach says that ‘when leading media figures see too much rather than too little of Prime Minister that the freedom of press is endangered.’ Lord Salisbury told Buckle a famous editor in England “you are the first person who has not come to see me in the last few days who is not wanting something at my handsplace or decoration or peerage. You only want information.” Charles Mitchell wrote in ‘Newspaper Directory’. The Press has row so great and so extensive an influence on public opinion…that…. its conductors should be GENTLEMAN in the true sense of the word. They should be equally above corruption and intimidation incapable of being warped by personal considerations from the broad path of truth and honour, superior to all attempts at misrepresenting or mystifying public events’. If the press ceases to be independent the healthy influence of the press and public opinion will soon be substituted by the traditional influences of landlordism and feudalism. The press lords should endeavour to see that their interest do not come into conflict with their duties. All this is said only to show that Government alone may not always be the culprit in destroying the independence of the press. Be that as it may, it is difficult to grant that merely because the Government has the power to levy taxes the freedom of press would be totally lost. As stated earlier, the court is always there to hold the balance even and to strike down any unconstitutional invasion of that freedom.

Newspaper industry enjoys two of the fundamental rights, namely the freedom of speech and expression guaranteed under Article 19 (l) (a) and the freedom to engage in any profession, occupation, trade, industry or business guaranteed under Article 19 (1) (g) of the Constitution, the first because it is concerned with the field of expression and communication and the second because communication has become an occupation or profession and because there is on invasion of trade, business and industry 340 into that field where freedom of expression is being exercised. While there can be no tax on the right to exercise freedom of expression, tax is leviable on profession, occupations trade, business and industry. Hence tax is leviable on newspaper industry. But when such tax transgresses into the field of freedom of expression and stifles that freedom, it becomes unconstitutional. As long as it is within reasonable limits and does not impede freedom of expression it will not be contravening the limitations of Article 19 (2). The delicate task of determining when it crosses from the area of profession, occupation, trade, business or industry into the area of freedom of expression and interferes with that freedom is entrusted to the courts.

The petitioners, however, have placed strong reliance on the Sakal’s case (supra) and the Bennett Coleman’s case (supra) in support of their case that any tax on newsprint which is the most important component of a newspaper is unconstitutional. They have drawn our attention to the following passage in the decision in Sakal’s case (supra) which is at page 863:

” It may well be within the power of the state to place, in the interest of the general public, restrictions upon the right of a citizen to carry on business but it is not open to the State to achieve this object by directly and immediately curtailing any other freedom of that citizen guaranteed by the Constitution and which is not susceptible of abridgement on the same grounds as are set out in cl.

(6) of Art. 19. Therefore, the right of freedom of speech cannot be taken away with the object of placing restrictions on the business activities of a citizen.

Freedom of speech can be restricted only in the interests of the security of the State, friendly relations with foreign State, public order, decency or morality or in relation to contempt of court, defamation or incitement to an offence. It cannot, like the freedom to carry on business, be curtailed in the interest of the general public. If a law directly affecting it is challenged it is no answer that the restrictions enacted by it are justifiable under cls.

(3) to (6). For, the scheme of Art. 19 is to enumerate different freedoms separately and then to specify the extent of restrictions to which they may be subjects and the object for securing which this could be done.

A citizen 341 is entitled to enjoy each and every one of the freedoms together and cl. (1) does not prefer one freedom to A another. That is the plain meaning of this clause. It follows from this that the State cannot make a law which directly restricts one freedom even for securing the better enjoyment of another freedom. All the greater reason, therefore, for holding that the State cannot directly restrict one freedom by placing an otherwise permissible restriction another freedom. ” In Bennett Coleman’s case (supra) the question which arose for consideration related to the validity of a restriction imposed under the newsprint policy which had certain objectionable features such as (i) that no newspaper or new edition could be started by a common owner-ship unit even within the authorised quota of newsprint (ii) that there was a limitation on the maximum number of pages, no adjustment being permitted between circulation and pages so as to increase pages, (iii) that a big newspaper was prohibited and prevented from increasing the number of pages, page area, and periodicity by reducing circulation to meet the requirement even within its admissible quota etc..

The majority held that the fixation of page limit had not only deprived the petitioners of their economic vitality but also restricted their freedom of expression. It also held that such restriction of pages resulted in reduction of advertisement, revenue and thus adversely affected the capacity of a newspaper to carry on its activity which is protected by Article 19(1)(a) of the Constitution.

We have carefully considered the above two decisions.

In the first case the Court was concerned with the newspaper price-page policy and in the second the newsprint policy imposed by the Government had been challenged. Neither of them was concerned with the power of Parliament to levy tax on any goods used by the newspaper industry As we have observed earlier taxes have to be levied for the support of the Government and newspapers which derive benefit from the public expenditure cannot disclaim their liability to contribute a fair and reasonable amount to the public exchequer. What may, however, have to be observed in levying a tax on newspaper industry is that it should not be a over- burden on newspapers which constitute the Fourth Estate of the country. Nor should it single out newspaper industry for harsh treatment. A wise administrator should realise that the imposition of a tax like the customs duty on 342 new newsprint is an imposition on knowledge and would virtually amount to a burden imposed on a man for being literate and for being conscious of his duty as a citizen to inform himself about the world around him. ‘The public interest in freedom of discussion (of which the freedom of the press is one aspect) stems from the requirement t that members of a democratic society should be sufficiently informed that they may influence intelligently the decisions which may affect themselves’. (Per Lord Simon of Glaisdale in Attorney General v. Times Newspapers(l). Freedom of expression, as learned writers have observed, has four broad social purposes to serve: (i) it helps an individual to attain self fulfilment, (ii) it assists in the discovery of truth, (iii) it strengthens the capacity of an individual in participating in decision-making and (iv) it provides a mechanism by which it would be possible to establish a reasonable balance between stability and social change. All members of society should be able to form their own beliefs and communicate them freely to others. In sum, the fundamental principle involved here is the people’s right to know. Freedom of speech and expression should, therefore, receive a generous support from all those who believe in the participation of people in the administration. It is on account of this special interest which society has in the freedom of speech and expression that the approach of the Government should be more cautious while levying taxes on other matters concerning newspapers industry than while levying taxes on matters. It is true that this Court has adopted a liberal approach while dealing with fiscal measures and has upheld different kinds of taxes levied on property, business, trade and industry as they were found to be in the public interest. But in the cases before us the Court is called upon to reconcile the social interest involved in the freedom of speech and expression with the public interest involved in the fiscal levies imposed by the Government specially because newsprint constitutes the body, if expression happens to be the soul.

In view of the intimate connection of newsprint with the freedom of the press, the tests for determining the vires of a statute taxing newsprint have, therefore, to be different from the tests usually adopted for testing the vires of other taxing statutes. In the case of ordinary taxing statutes, the laws may be questioned only if they are either openly confiscatory or a colourable device to confiscate. On the other hand, in the case of a tax on newsprint, (1) [1973] 3 All. E.R. 54 343 it may be sufficient to show a distinct and noticeable burdensomeness, clearly and directly attributable to the tax. A While we, therefore, cannot agree with the contention that no tax can be levied on newspaper industry, we hold that any such levy is subject to review by courts in the light of the provisions of the V Are the impugned notifications issued under section 25 of the Customs Act. 1962 beyond the reach of the Administrative Law.

It is argued on behalf of the Government that a notification issued under section 25(1) of the Customs Act granting, modifying or withdrawing an exemption from duty being in the nature of a piece of subordinate legislation, its validity cannot be tested by the Court by applying the standards applicable to an administrative action. Reliance is placed on the decision of this Court in Narinder Chand Hem Raj & Ors. v. Lt.. Governor, Administrator. Union Territory, Himachal Pradesh & Ors. (1) in support of the above contention. In that case the appellants were wine merchants carrying on business in Simla. At the auction held for the purpose of granting the privileges to sell the Indian made foreign liquor the appellants were the highest bidders. It appears that before the auction was held the Collector of Excise and Taxation had announced that no sales tax would be liable to be paid on the sale of liquor and despite this assurance the Government had levied and collected from the appellants a certain amount by way of sales tax. The appellants prayed for the issue of a writ to the Governments restraining them from levying any sales tax and to refund what had been recovered from them by way of sales tax already. It was contended on behalf of the Government of Himachal Pradesh that non-collection of sales Tax possible only on the issue of a notification by the Government pursuant to its statutory power under the Punjab General Sales Tax Act, which was in force in the area in question shifting ‘liquor’ which was in Schedule ‘A’ to Schedule ‘B’ to the Punjab General Sales Tax Act, and that such a notification could not be issued because the Central Government had not given its requisite approval. Hence it was urged by the Government that since sales tax had been imposed by law on all items in Schedule ‘A’ it could not disobey the mandate of law. It further contended that the Court could not issue a mandamus to the Government to issue a notification to amend the Schedules to the statute as the act of issuing such a notification was a legislative act and no writ could be issued to a 344 legislative body or a subordinate Legislative body to a make a law or to issue a notification, as the case may be, which would have the effect of amending a law in force. This Court upheld the contention of the Government. The Court said:

“Our attention has not been drawn to any provision in that, Act empowering the Government to exempt any assessee from payment of tax. Therefore it is clear that appellant was liable to pay the tax imposed under the law. What the appellant really wants is a mandate from the court to the competent authority to delete the concerned entry from Schedule A and include the same in Schedule B. We shall not go into the question whether the Government of Himachal Pradesh on its own authority was competent to make the alteration in question or not. We shall assume for our present purpose that it had such a power. The power to impose a tax is undoubtedly a legislative power. That power can be exercised by the legislature directly or subject to certain conditions, the legislature may delegate the power to some other authority. But the exercise of that power whether by the legislature or by its delegate is an exercise of a legislative power. The fact that the power was delegated to the executive does not convert that power into an executive or administrative power. No Court can issue a mandate to a legislature to enact a particular law. Similarly no court can direct a subordinate legislative body to enact or not to enact a law which it may be competent to enact. The relief as framed by the appellant in his writ petition does not bring out the real issue calling for determination. In reality he wants this Court to direct the Government to delete the entry in question from Schedule A and include the same in Schedule B.

Art. 265 of the Constitution lays down that no tax can be levied and collected except by authority of law.

Hence the levy of a tax can only be done by the authority of law and not by any executive order. Unless the executive is specially empowered by law to give any exemption it cannot say that it will not enforce the law as against a particular person . No court can give a direction to a Government to refrain from enforcing a provision of law. Under these circumstances, we must held that the relief asked for by the appellant cannot be granted.” (Underlining by us) 345 The above decision does not in fact support the contention of the Government in the cases before us. It is noteworthy that the Court in the passage extracted above has made a distinction between the amendment of the Schedule to the Punjab General Sales Tax Act by the issue of a notification by the Government of Himachal Pradesh in exercise of its power delegation by the legislature and the power of that Government to grant exemption under a power to grant K exemption. In the present cases we are concerned with a power to grant exemption conferred on Government by section 25 of the Customs Act, 1962 and not with a power to amend the Act by means of a notification. Moreover this was just a case relating to business in liquor.

We shall assume for purposes of these cases that the power to grant exemption under section 25 of the Customs Act, 1962 is a legislative power and a notification issued by the Government thereunder amounts to a piece of subordinate legislation. Even then the notification is liable to be questioned On the ground that it is an unreasonable one. The decision of this Court in Municipal Corporation of Delhi v. Birla Cotton, Spinning and Weaving Mills, Delhi & Anr.(l) has laid down the above principle. In that case Wanchoo, C.J. while upholding certain taxes levied by the Corporation of Delhi under section 150 of the Delhi Municipal Corporation Act, 1957 observed thus:

“Finally there is – another check on the power of the Corporation which is inherent in the matter of exercise of power by subordinate public representative bodies such as municipal boards. In such cases if the act of such a body in the exercise of the power conferred on it by the law is unreasonable, the courts can hold that such exercise is void for the unreasonableness. This principle was laid down as far back as 1898 in Kruse v. Johnson [1898] 2 Q.B.D. 91” But it appears that the principle enunciated in Kruse v. Johnson (2) is not being applied so stringently in England now.

A piece of subordinate legislation does not carry the same degree of immunity which is enjoyed by a statute passed by a com- (1) [1968] INSC 48; [1968] 3 S.C.R. 251.

(2) [1898] 2 Q.B.D. 91.

346 petent legislature. Subordinate legislation may be questioned on any of the grounds on which plenary legislation is questioned. In addition it may also be questioned on the ground that it does not conform to the statute under which it is made. It may further be questioned on the ground that it is contrary to some other statute.

That is because subordinate legislation must yield to plenary legislation. It may also be questioned on the ground that it is unreasonable, unreasonable not in the sense of not being reasonable, but in the sense that it is manifestly arbitrary. In England, the judges would say “Parliament never intended authority to make such rules. They are unreasonable and ultra vires”. The present position of law bearing on the above point is stated by Diplock, L.J. in Mixnam Properties Ltd. v. Chertsey U.D.C.(1) thus:

‘The various grounds upon which subordinate legislation has sometimes been said to be void -…- – can, I think, today be properly regarded as being particular applications of the general rule that subordinate legislation, to be valid must be shown to be within the powers conferred by the statute. Thus the kind of unreasonableness which invalid dates a by-law is not the antonym of ‘reasonableness’ in the sense of which that expression is used in the common law, but such mainfest arbitrariness, injustice or partiality that a court would say: ‘Parliament never intended to give authority to make such rules: they are unreasonable and ultra vires.. -‘ If the courts can declare subordinate legislation to be invalid for ‘uncertainty,’ as distinct from unenforceable-this must be because Parliament is to be presumed not to have intended to authorise the subordinate legislative authority to make changes in the existing law which are uncertain. ” Prof. Alan Wharam in his Article entitled ‘Judicial Control of Delegated Legislation: The Test of Resonableness’ in 36 modern Law Review 611 at pages 622-23 has summarised the present position in England as follows:

“(i) It is possible that the courts might invalidate statutory instrument on the grounds of unreasonableness or uncertainty, vagueness or aribitrariness; but the writer’s (1) [1964] 1 Q.B.. 214.

347 view is that for all practical purposes such instruments must be read as forming part of the parent statute, subject only to the ultra vires test.

(ii) The courts are prepared to invalidate by- laws, or any other form of legislation, emanating from an elected, representative authority, on the grounds of unreasonableness uncertainty or repugnance to the ordinary law; but they are reluctant to do so and will exercise their power only in clear cases.

(iii) The courts may be readier to invalidate by-laws passed by commercial undertakings under statutory power, although cases reported during the present century suggest that the distinction between elected authorities and commercial undertakings, as explained in Kruse v. Johnson, might not now be applied so stringently.

(iv) As far as subordinate legislation of non- statutory origin is concerned, this is virtually obsolete, but it is clear from In re French Protestant Hospital [1951] ch. 567 that it would be subject to strict control.” (See also H.W.R. Wade: Administrative Law (5th Edn.) pp. 747-748).

In India arbitrariness is not a separate ground since it will come within the embargo of Article 14 of the Constitution. In India any enquiry into the vires of delegated legislation must be confined to the grounds on which plenary legislation may be questioned, to the ground that it is contrary to the statute under which it is made, to the ground that it is contrary to other statutory provisions or that it is so arbitrary that it could not be said to be in conformity with the statute or that it offends Article 14 of the Constitution.

That subordinate legislation cannot be questioned on the ground of violation of principles of natural justice on which administrative action may be questioned has been held by this Court in The Tulsipur Sugar Co. Ltd. v. The Notified Area Committee, Tulsipur(l), Rameshchandra Kachardas Porwal & Ors. v. State of (1) [1980] 2 S.C.R- 1111.

348 Maharashtra & Ors. etc(1). and in Bates v. Lord Hailsham of St Marylebone & Ors(2). A distinction must be made between delegation of a legislative function in the case of which the question of reasonableness cannot be enquired into and the investment by statute to exercise particular discretionary powers. In the latter case the question may be considered on all grounds on which administrative action may be questioned, such as, nonapplication of mind, taking irrelevant matters into consideration, failure to take relevant matters into consideration, etc. etc. On the facts and circumstances of a case, a subordinate legislation be may struck down as arbitrary or contrary to statute if it fails to take into account very vital facts which either expressly or by necessary implication are required to be taken into consideration by the statute or, say, the Constitution. This can only be done on the ground that it doe- not conform to the statutory or constitutional requirements or that it offends Article 14 or Article 19 (1) (a) of the Constitution. It cannot, no doubt, be done merely on the ground that it is not reasonable or that it has not taken n into account relevant circumstances which the Court considers relevant.

We do not, therefore, find much substance in the contention that the courts cannot at all exercise judicial control over the impugned notifications. In cases where the power vested in the Government is a power which has got to be exercised in the public interest, as it happens to be here, the Court may require the Government to exercise that power in a reasonable way in accordance with the spirit of the Constitution. The fact that a notification issued under section 25 (1) of the Customs Act, 1962 is required to be laid before Parliament under section 159 thereof does not make any substantial difference as regards the jurisdiction of the court to pronounce on its validity.

The power to grant exemption should, however, be exercised in a reasonable way. Lord Greene M.R. has explained in Associated Provincial Picture Houses Ltd. v. Wednesbury Corporation(U) what a ‘reasonable way’ means as follows:

“It is true that discretion must be exercised reason ably. Now what does that mean ? Lawyers familiar with (1) [1981] INSC 35; [1981] 2 S.C.R. 866.

(2) [1972] 1 WLR 1373.

(3) [1947] EWCA Civ 1; [1948] 1 K.B. 223.

349 the phraseology used in relation to exercise of statutory A discretions often use the word ‘unreasonable’ in a rather comprehensive sense. It has frequently been used and is frequently used as a general description of the things that must not be done. For instance, a person entrusted with a discretion must, so to speak, direct himself properly in law. He must call his own attention to the matters which he is bound to consider. He must exclude from his consideration matters which are irrelevant to what he has to consider. If he does not obey those rules, he may truly be said, and often is said to be acting ‘unreasonably’. Similarly, there may be some- thing so absurd that no sensible person could ever dream that it lay within the powers of the authority. Warrlngton L.J.

in short Y, Poole Corporation [1926] Ch. 66 gave the example of the red-haired teacher, dismissed because she had red hair. This is unreasonable in one sense. In another it is so unreasonable that it might almost be described as being done in bad faith; and, in fact, all these things run into one another.” Hence the claim made on behalf of the Government that the impugned notifications are beyond the reach of the administrative law cannot be accepted without qualification even though all the grounds that may be urged against an administrative order may not be available against them.

Now, the notifications issued on March 1, 1981 and February 28, 1982 under section 25 of the Customs Act, 1962 which grant exemptions from payment of certain duty beyond what is mentioned in them are issued by the executive Government. They were issued in substitution of earlier notifications which had granted total exemption. Such notifications have to be issued by the Government after taking into consideration all relevant factors which bear on the reasonableness of the levy on the news- print. The Government should strike a just- and reasonable balance between the need for ensuring the right of people to freedom of speech and expression on the one hand and the need to impose social control on the business of publication of a newspaper on the other. In other words, the Government must at all material times be conscious of the fact that it is dealing with an activity protected by Article 19 (1) (a) of the Constitution 350 which is vital to our democratic existence. In deciding the reasonableness of restrictions imposed on any fundamental right the court should take into consideration the nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the disproportion of the imposition and the prevailing conditions at the relevant time including the social values whose needs are sought to be satisfied by means of the restrictions. (See the State of Madras v. V.G. Rao(l)). The restriction in question is the burden of import duty imposed on newsprint. Section 25 of the Customs Act, 1962 under which the notifications are issued confers a power on the Central Government coupled with a duty to examine the whole issue in the light of the public interest. It provides that if the Central Government is satisfied that it is necessary in the public interest so to do it may exempt generally either absolutely or subject to such conditions goods of any description from the whole or any part of the customs duty leviable thereon. The Central Government may if it is satisfied that in the public interest so to do exempt from the payment of duty by a special order in each case under circumstances of an exceptional nature to be stated in such order any goods on which duty is leviable. The power exercisable under section 25 of the Customs Act, 1962 is no doubt discretionary but it is not unrestricted, It is useful to refer here to the observations of Lord Denning M.R, in Breen v. Amalgamated Engineering Union(2) at page 190 read thus:

“The discretion of a statutory body is never unfet -tered. It is a discretion which is to be exercised according to law. That means at least this:

the statutory body must be guided by relevant considerations and not by irrelevant. If its decision is influenced by extraneous considerations which it ought not to have taken into account then the decision cannot stand. No matter that the statutory body may have acted in good faith nevertheless the decision will be set aside. That is established by Pad-field v.

Minister of Agriculture Fisheries and Food [1968] A.C.

997 which is a landmark in modern administrative law.” In any event any notification issued under a statute also (1) [1952] INSC 19; [1952] S.C.R. 597.

(2) [1971] 2 Q.B. 175.

351 being a ‘law’ as defined under Article 13 (3) (a) of the Constitution is liable to) be struck down if it is contrary to any of the fundamental rights guaranteed under Part III of the Constitution.

VI Has there been proper exercise of power under section 25 (1) of the, Customs Act 1962 ? Freedom of press as the petitioners rightly assert means freedom from interference from authority which would have the effect of interference with the content and circulation of newspapers. The most important raw material in the production of a newspaper is the newsprint. The cost and availability of newsprint determine the price, size and volume of the publication and also the quantum of news, views and advertisements appearing therein. It is not disputed that the cost of newsprint works out to nearly 60% of the cost of production of newspaper. In the case of a big newspaper the realisation by the sale of newspaper is just about 40% of its total cost of production. The remaining cost is met by advertisements revenue which is about 40%, by revenue from waste sales and job work which comes to about 5% and revenue from other sources such as the income from properties and other investments of the newspaper establishment. These figures have been derived from the statement furnished by one of the big newspapers. The case of all other big newspapers may be more or less the same.

The financial and other difficulties felt by the newspaper press in securing newsprint in recent years which have become an international phenomenon are set out in the Final Report of the International Commission for the Study of Communication Problems referred to above at page 141 thus:

“Extremely serious on an international scale has been the effect of high costs of important materials or facilities.. -… -.-.-.-Paper is a material consumed in vast quantities whose price in recent years has spiralled out of proportion to the general world-wide inflation… -… -As for newsprint, its price on world markets rose from a datum figure of 100 in 1970 to 329 in May 1977, and has continued to rise since. A sad by-product of this situation has been the intro- 352 duction of a covert form of censorship, as some Governments limit the import of newsprint, distribute it by official allocation schemes, and use these schemes to discriminate against the opposition newspapers.” In Chapter 4 of the same Report at page 100 the Inter- national Commission has observed thus:

“While newspapers which are commercial enterprises expect to sustain themselves by sales and advertising, they are not always viable on this traditional basis. Capital and profits from other media and from business in general are often injected into the newspaper industry. In many cases, the financing, or at least the deficits are covered by governments or political bodies. Assistance from the State has taken various forms, including tax concessions not enjoyed by other industries, reduced postal and telephone rates, guaranteed Government advertising, and subsidies to the price of newsprint. Although the press is suspicious of Government involvement in its affairs, a desire to preserve variety by keeping the weaker papers alive has led to consideration of various schemes. Direct grants to papers in need are made in seven European nations.

Smaller newspapers and some parts of the “quality” or “specialized” press have experienced difficulties from a contraction of operations and size, which has led to limitations on the variety of information sources. This has induced many governments to examine the possibility of subsidies to help keep newspapers alive or to establish new ones, in monopoly circulation areas and to promote plurality and variety in general.

If any duty is levied on newsprint by Government, It necessarily has to be passed on to the purchasers of newspapers” unless the industry is able to absorb it. In order to pass on the duty to the consumer the price of newspapers has to be increased. Such increase naturally affects the circulation of newspapers adversely.

In Sakal’s case (supra), this Court has observed thus;

353 “The effect of raising the selling price of newspaper A has been considered by the Press Commission. In Paragraph 164 of the Report it is observed:

“The selling price of a paper would naturally have an important effect on its circulation. In this connection we have examined the effect of price cuts adopted by two English papers at Bombay on the circulation of those two papers as well as of the leading paper which did not reduce its price. Prior to 27th October 1952, Times of India which had the highest circulation at Bombay was being sold at Re. 0-2-6 while Free Press Journal and National Standard which rank next in circulation were being sold for Re. 0-2-0.

On 27th October, 1952, Free Press Journal reduced its price to Rs. 0-1.0 and within a year had claimed to have doubled its circulation. On 1st July, 1953, the National Standard was converted into a Bombay edition of Indian Express with a selling price of Rs. 0-1-6. Within six months it too claimed to have doubled its circulation During this period the Times of India which did not reduce its selling price continued to retain its readership. Thus it would appear that Free Press Journal and Indian Express by reducing their price have been able to tap new readership which was latent in the market but which could not pay the higher prices prevailing earlier.” ” Though the prices of newspapers appear to be on the low side it is a fact that even so many people find it difficult to pay that small price. This is what has been pointed out by the Press Commission in Paragraph 52 of its report. According to it the most common reason for people in not purchasing newspapers is the cost of the newspaper and the inability of the household to spare the necessary amount. This conclusion is based upon the evidence of a very large number of individuals and representatives of Associations. We would, therefore, be justified in relying upon it and holding that raising the price of newspaper even by a small amount such as one 354 nP. in order that its present size be maintained would adversely affect its circulation.” This is not a novel phenomenon. A stamp tax on newspapers came to be levied in England in 1712. It virtually crippled the growth of the English press and thus became unpopular. There was a lot of agitation against the said tax. But on its abolition in 1861, the circulation of newspapers increased enormously. The following account found in the Encyclopaedia Britannica (1962) Vol. 16 at page 339 is quite instructive:

“Abolition of “Taxes on knowledge”.-The development of the press was enormously assisted by the gradual abolition of the “taxes on knowledge,” and also by the introduction of a cheap postal system……..

To Lord Lytton, the novelist and politician, and subsequently to Milner Gibson and Richard Cobden, is chiefly due the credit of grappling with this question in Parliament to secure first the reduction of the tax to a penny in 1836, and then its total abolition in 1855. The number of news papers established from the early part of 1855, when the repeal of the duty had become a certainty, and continuing in existence at the beginning of 1857, amounted to 107; 26 were metropolitan and 81 provincial. The duties on paper itself were finally abolished in 1861.

The abolition of the stamp taxes brought about such reductions in the prices of newspapers that they speedily began to reach the many instead of the few.

Some idea of the extent of the tax on knowledge imposed in the early 19th century may be gathered from the fact that the number of stamps issued in 1820 was nearly 29,400,000, and the incidence of the advertisement tax, fixed at 3s. 6d. in 1804, made it impossible for the newspaper owner to pass on the stamp tax to the advertiser. In 1828 the proprietors of the Times had to pay the state more than 68,000 in stamp and advertisement taxes and paper duty. But after the reduction of the stamp tax in 1836 from four pence to one penny, the circulation of English news papers, based on the stamp returns, rose from 39,000,000 to 122,000,000 in 1854.” 355 The Second Press Commission in its Report (Vol. II) at pages 182-183 has stated that the figures of circulation of newspaper A compiled by the Audit Bereau of Circulation (ABC) for the period January to June 1981 indicated that the circulation of newspapers in the period January to June 1981 was 1.9% lower than in the previous six months period The decline in the circulation of dailies was more in the case of very big newspapers with circulation of one lakh and above than in the case of smaller papers. The Commission said that the decline in circulation would appear to be attributable mainly to two factors-increase in the retail price of newspapers in September-October, 1980 and again in April-May, 1981 and that the increase in retail prices appeared to have become necessary following continuing increase in newsprint prices in the last few years including levy of import duty in 1981 and increase in wages and salaries cost on account of Palekar Award. Of these factors which were responsible for increase in prices, the imposition of import duty on newsprint was on account of State action. This aspect of the matter is not seriously disputed by the Government.

The pattern of the law imposing customs duties and the manner in which it is operated to a certain extent exposes the citizens who are liable to pay customs duties to the vagaries of executive discretion. While parliament has imposed duties by enacting the Customs Act, 1962 and the Customs Tariff Act, 1975, the Executive Government is given wide power by section 25 of the Customs Act, 1962 to grant exemptions from the levy of Customs duty. It is ordinarily assumed that while such power to grant exemptions is given to the Government it will consider all relevant aspects governing the question whether exemption should be granted or not. In the instant case in 1975 when the Customs Tariff Act, 1975 was enacted, 40% ad valorem was levied on newsprint even though it had been exempted from payment of such duty. If the exemption had not been continued, newspaper publishers had to pay 40×6 ad valorem customs duty on the coming into force of the Customs Tariff Act, 1975.

Then again in 1982 by the Finance Act, 1982 an extra levy of Rs. 1,000 per tonne was G imposed in addition to the original 40% ad valorem duty even though under the exemption notification the basic duty had been fixed at 10% of the value of the imported newsprint. No information is forthcoming from the Government as to whether there was any material which justified the said additional levy. It is also not clear why this futile exercise of levying an additional duty of 356 Rs. 1,000 per tonne was done when under the notification issued under section 25 of the Customs Act, 1962 on March 1, 1981 which was in force then, customs duty on newsprint above 10% ad valorem had been exempted. As mentioned elsewhere in the course of this judgment while levying tax on an activity which is protected is also by Article 19(1)(a) a greater degree of care should be exhibited. While it is indisputable that the newspaper industry should also bear its due share of the total burden of taxation alongwith the rest of the community when any tax is specially imposed on newspaper industry, it should be capable of being justified as a reasonable levy in court when its validity is challenged. In the absence of sufficient material, the levy of 40% plus Rs. 1,000 per tonne would become vulnerable to attack. If the levy imposed by the statute itself fails, there would be no need to question the notifications issued under section 25 of the Customs Act, 1962. But having regard to the prevailing legislative practice let us assume that in order to determine the actual levy we should take into consideration not merely the rate of duty mentioned in the Customs Tariff Act, 1975 but also any notification issued under section 25 of the Customs Act, 1962 which is in force. Even then the reasons given by the Government to justify the total customs duty of 15% levied from March 1, 1981 or Rs. 825 per tonne as it is currently being levied appear to be inadequate. In the Finance Minister’s speech delivered on the floor of the Lok Sabha in 1981, the first reason given for the levy of 15% duty was that it was intended “to promote a measure of restraint in the consumption of imported newsprint and thus help in conserving foreign exchange”. This ground appears to be not tenable for two reasons. In the counter-affidavit filed on behalf of the Government, it is stated that the allegation that the position of foreign exchange reserve is comfortable is irrelevant, it. This shows that nobody in Government had over taken into consideration the effect of the import of newsprint on the foreign exchange reserve before issuing the notifications levying 15% duty. Secondly no newspaper owner can import newsprint directly- newsprint import is canalised through the State (Trading Corporation.

If excessive import of newsprint adversely affects foreign exchange reserve, the State Trading Corporation may reduce the import of newsprint and allocate lesser quantity of imported newsprint to newspaper establishments. There is however, no need to impose import duty with a view to curbing excessive import of newsprint. In the Finance Minister’s speech there is no reference to the capacity of the newspaper industry to bear the levy 15% of 357 duty. In the counter-affidavit it is asserted that the extent of A burden faced by the newspaper industry in India is irrelevant to the levy of import duty on newsprint. This clearly shows again that the Government had not also considered a vital aspect of the question before withdrawing the total exemption which was being enjoyed by newspaper industry till March 1,1981 and imposing 15% duty on newsprint.

The petitioners have alleged that the imposition of customs duty has compelled them to reduce the extent of the area of the newspapers for advertisements which supply a major part of the sinews of a newspaper and consequently has adversely affected their revenue from advertisements. It is argued by them relying upon the ruling in Bennett Coleman’s case (supra) that Article 19(1) (a) is infringed thereby.

Our attention is drawn to the following passages in Bennett Coleman’s case (supra) which are at pages 777778 and at page 782:

“Publications means dissemination and circulation The press has to carry on its activity by keeping in view the class of readers, the conditions of labour, price of material, availability of advertisements, size of paper and the different kinds of news comments and views and advertisements which are to be published and circulated The law which lays excessive and prohibitive burden which would restrict the circulation of a newspaper will not be saved by Article 19(2). If the area of advertisement is restricted. price of paper goes up. In the price goes up circulation will go down. This was held in Sakal Papers Case (supra) to be the direct consequence of curtailment of advertisement. The freedom of a newspaper to publish any number of pages or to circulate it to any number of persons has been held by this Court to be an integral part of the freedom of speech and expression. This freedom is violated by placing restraints upon something which is an essential part of that freedom. A restraint on the number of pages, a restraint on circulation and a restraint on advertisements would affect the fundamental rights under Article 19(1)(a) on the aspects of propagation, publication and circulation……..

The various provisions of the newsprint import policy have been examined to indicate as to how the petitioners’ II 358 fundamental rights have been infringed by the restrictions on page limit, prohibition against new newspapers and new editions. The effect and consequences of the impugned policy upon the newspapers is directly controlling the growth and circulation of newspapers. The direct effect is the restriction upon circulation of newspapers. The direct effect is upon growth of newspapers through pages. The direct effect is that newspapers are deprived of their area of advertisement. The direct effect is that they are exposed to financial loss. The direct effect is that freedom of speech and expression is infringed.” In meeting the above contention the Government relying on the decision in Hamdard Dawakhana ( Wakf ) Lal Kuan, Delhi & Anr. v. Union of India & Ors.(1) has pleaded in defence of its action that the right to publish commercial advertisement is not part of freedom of speech and expression. We have carefully considered the decision in Hamdard Dawakhana’s case (supra). The main plank of that decision was that the type Of advertisement dealt with there did not carry with it the protection of Article 19(1)(a). On examining the history of the legislation, the surrounding circumstances and the scheme of the Act which had been challenged there namely the Drugs and Magic Remedies (Objectionable Advertisements) Act 1954 (21 of 1954) the Court held that the object of that Act was the prevention of self-medication and self-treatment by prohibiting instruments which may be used to advocate the same or which tended to spread the evil. The Court relying on the decision of the American Supreme Court in Lewis J. Valentine v. F.J.

Chresten sen (2) observed at pages 687-689 thus:

“It cannot be said that the right to publish and distribute commercial advertisements advertising an individual’s personal business is a part of freedom of speech guaranteed by the Constitution. In Lewis Valentine v. F.). Chrestensen it was held that the constitutional right of free speech is not infringed by prohibiting the distribution in city streets of handbills bearing on one side a protest against action taken by public officials and on the other advertising matter. The object of affixing of the protest to the (1) [1959] INSC 157; [1960] 2 S.C.R. 671.

(2) [1942] USSC 80; 86 Law ED. 1262.

359 advertising circular was the evasion of the prohibition of a city Ordinance forbidding the distribution in the city streets of commercial and business advertising matter. Mr.

Justice Roberts, delivering the opinion of the court said:

“This Court has unequivocally held that the streets are proper places for the exercise of the freedom of communicating information and disseminating opinion and that, though the states and municipalities may appropriately regulate the privilege in the public interest, they may not unduly burden or prescribe its employment in these public thoroughfares. We are equally clear that the Constitution imposed no such restraint on government as respects purely commercial advertising y-.. -If the respondent was attempting to use the streets of New York by distributing commercial advertising the prohibition of the Code provisions was lawfully invoked against such conduct.” It cannot be said, therefore, that every advertisement is a matter dealing with freedom of speech nor can it be said that it is an expression of ideas. In every case one has to see what is the nature of the advertisement and what activity falling under Art. 19(I) it seeks to further. The advertisements in the instant case relate to commerce or trade and not to propagating of ideas; and advertising of prohibited drugs or commodities of which the sale is not in the interest of the general public cannot be speech within the meaning of freedom of speech and would not fall within Art. 19(1)(a). The main purpose and true intent and aim, object and scope of the Act is to prevent self-medication or self-treatment and for that purpose advertisement commending certain drugs and medicines have been prohibited. Can it be said that this is an abridgement of the petitioners right of free speech ? In our opinion it is not. Just as in Chamarbaugwalla’s case [1957] INSC 32; 1957 S.C.R. 930 it was said that activities undertaken and carried on with a view to earning profits e.g. the business of betting and gambling will not be protected as falling within the guaranteed right of carrying on business or trade, so it cannot be said that an advertisement commending drugs and substances an 360 appropriate cure for certain discases is an exercise of the right of freedom of speech.” In the above said case the Court was principally dealing with the right to advertise prohibited drugs, to prevent self-medication and self-treatment. That was the main issue in the case. It is no doubt true that some of the observations referred to above go beyond the needs of the case and tend to affect the right to publish all commercial advertisements. Such broad observations appear to have been made in the light of the decision of the American Court in Lewis J. Valentine v. F. .J. Chrestensen (supra), But it is worthy of notice that the view expressed in this American case has not been fully approved by the American Supreme Court itself in its subsequent decisions. We shall refer only to two of them. In his concurring judgment in William B. Cammarano v, United States of America(1) Justice Douglas said ” Valentine v. Chrestensen held that business of advertisements and commercial matters did not enjoy the protection of the First Amendment, made applicable to the States by the Fourteenth. The ruling was casual, almost off hand. And it has not survived reflection”. In Jeffrey Gole Bigelow v. Commonwealth of Virginia(2) the American Supreme Court held that the holding in Lewis J. Valentine v. F.J.

Chrestensen (supra) was distinctly a limited one. In view of the foregoing, we feel that the observations made in the Hamdard Dawakhana’s case (supra) are too broadly stated’ and the Government cannot draw much support from it. We ate of the view that all commercial advertisements cannot be denied the protection of Article 19 (1) (a) of the Constitution merely because they are issued by businessmen. In any event the Government cannot derive any assistance from this case to sustain the impugned notifications.

It was next urged on behalf of the Government that the levy of customs duty on newsprint was not strictly a levy on newsprint as such since though customs duties were levied with reference to goods, the taxable event was the import of goods within the customs barrier and hence there could be no direct effect on the freedom of speech end expression by virtue of the levy of customs duty on newsprint. Reliance was placed in support of the above contention (1) [1959] USSC 23; 358 US 498: 3 L ed 2d 462 (2) [1975] USSC 109; 421 US 809: 44 L ed 2d 600 at 610 361 On the decision in In re Sea Customs Act.(l) That decision was A rendered on a reference made by the President under Article 143 of the Constitution requesting this Court to record its opinion on the question whether the Central Government could levy customs duty on goods imported by a State. The contention of the majority of the States in that case was that the goods imported by them being their property no tax by way of customs could be levied by reason of Article 289 (t) of the Constitution which exempted the property of a State from taxation by the Union. This Court (majority 5, minority 4) held that in view of clause (1) of Article 289 which was distinct from clause (2) thereof which provided that nothing in clause (1) of Article 289 would prevent the Union from imposing or authorising the imposition of any tax to such extent, if any, as Parliament might by law provide in respect of a trade or business of any kind carried on by or on behalf of a State or any operations connected therewith or any property used or occupied for the purposes of such trade or business or any income accruing or arising in connection therewith and the other provisions of the Constitution which enabled the Union to levy different kinds of taxes, customs duty levied on the importation of goods was only a to levied on international trade and not on property. The Court further held that the immunity granted under Article 289 (1) in favor of States had to be restricted to taxes levied directly on property and even though customs duties had reference to goods and commodities they were not taxes on property and hence not within the exemption in Article 289 (1). The above decision is again of very little assistance to the Government since it cannot be denied that the levy of customs duty on newsprint used in the production of newspapers is a restriction on the activity of publishing a newspaper and the levy of customs duties had a direct effect on that activity. There exists no analogy between Article 289 (l) and Article 19 (1) (a) and (2) of the Constitution. Hence the levy cannot be justified merely on the ground that it was not on any property of the publishers of newspapers.

Our attention has been particularly drawn to the statement of the Finance Minister that one of the considerations which prevailed upon the Government to levy the customs duty was that the newspapers contained ‘piffles’. A ‘piffle’ means foolish nonsense. It appears (1) [1963] INSC 156; [1964] 3 S.C.R. 787.

362 that one of the reasons for levying the duty was that certain writings in newspapers appeared to the Minister as piffles’. Such action is not permissible under our Constitution for two reasons-(i) that the judgment of the Minister about the nature of writings cannot be a true description of the writings and (ii) that even if the writings are piffles it cannot be a ground for imposing a duty will whiohhinder circulation of newspapers. In this connection it is useful to refer to the decision of the American Supreme Court in Robert E. Hannegan v. Esquire, Inc.(l) in which it was held that a publication could not be deprived of the benefit of second class mailing rates accorded to publications disseminating “information of a public character, or devoted literature, the sciences, arts, or some special industry” because its contents might seem to the Postmaster General by reason of vulgarity or poor taste, not to contribute to the public good. Justice Douglas observed in that decision thus:

“It is plain, as we have said, that the favorable second class rates were granted to periodicals meeting the requirements of the Fourth condition, so that the public good might be served through a dissemination of the class of periodicals described. But that is a far cry from assuming that Congress had any idea that each applicant for the second-class rate must convince the Postmaster General that his publication positively contributes to the public good or public welfare. Under our system of government there is an accommodation for the widest varieties of tastes and ideas. What is good literature, what has educational value, what is refined public information, what is good art, varies with individuals as it does from one generation to another. There doubtless would be a contrariety of views concerning Cervantes’ Don Quixote, Shakespeare’s Venus & Adonis, or Zola’s Nana. But a requirement that literature or art conform to some norm prescribed by an official smacks of an ideology foreign to our system. The basic Values implicit in the requirements of the Fourth condition can be served only by uncensored distribution of literature. From the multitude of competing offerings the public will pick and choose. What seems to one to be trash may have for others fleeting or even enduring values.” (1) [1946] USSC 25; 327 U.S. 146: 90 L. Ed. 586 363 Matters concerning the intellect and ethics do undergo fluctuations from era to era. The world of mind is a changing one. A It is not static. The streams of literature and of taste and judgment in that sphere are not stagnant.

They have a quality of freshness and vigour. They keep on changing from time to time, from place to place and from community to community.

It is one thing to say that in view of considerations relevant to public finance which require every citizen to contribute a reasonable amount to public exchequer customs duty is leviable even on newsprint used by newspaper industry and an entirely different thing to say that the levy is imposed because the newspapers generally contain ‘piffles’. While the former may be valid if the circulation of newspapers is not affected prejudicially, the latter is impermissible under the Constitution as the levy is being made on a consideration which is wholly outside the constitutional limitations. The Government cannot arrogate to itself the power to prejudge the nature of contents of newspapers even before they are printed. Imposition of a restriction of the above kind virtually amounts to conferring on the Government the power to precensor a newspaper. The above reason given by the Minister to levy the custom duty is wholly irrelevant.

To sum up, the counter-affidavit filed on behalf of the Government in these cases does not show whether the Government ever considered the relevant matters. It says that the extent of burden on the newspaper industry imposed by the impugned levy is irrelevant. It says that the position that foreign exchange reserve is comfortable is not relevant. It does not say that the increasing cost of imported newsprint was taken into consideration. The Finance Minister says that the levy was imposed because he found piffles’ in some newspapers. There is no reference to the effect of the implementation of the Palekar Award on the newspaper industry. It does not also state what effect it will have on the members of the public who read newspapers and how far it will reduce the circulation of newspapers.

It is argued on behalf of the Government that the effect of the impugned levy being minimal, there is no need to consider the contentions urged by the petitioners. As observed by Lord Morris of Borth-Y-Gest in Honourable Dr.

Paul Borg Olivier & Anr v. Honourable Dr. Anton Buttigieg(l) a case from Malta, that where (1) 11967] A.C. 115 (P.C.) 364 fundamental rights and freedom of the individual are being considered, a court should be cautious before accepting the view that some particular disregard of them is of minimal account. The learned Lord observed in the above case that there was always the likelihood of the violation being vastly widened and extended with impunity. He also referred to the words of Portia-‘Twill be recorded for a precedent, and many an error by the same example will rush into the state’, and the following passage from the American case i e Thomas v. Collins (I) “The restraint is not small when it is considered what was restrained. The right is a national right, federally guaranteed. There is some modicum of freedom of thought, speech and assembly which all citizens of the republic may exercise throughout its length and breadth, which no state, nor all together, not the nation itself, can prohibit, restrain or impede. If the restraint were smaller than it is, it is from petty tyrannies that large ones take root and grow. This fact can be more plain than when they are imposed on the most basic right of all. Seedlings planted in that soil grow great and, growing, break down the foundations of liberty.” In the above decision the Privy Council cited with approval the view expressed by this Court in Romesh Thappar’s case (supra) and in Martin v. City of Struthers(2) The Privy Council observed thus:

“A measure of interference with the free handling of the newspaper and its free circulation was involved in the prohibition which the circular imposed.

It was said in an Indian case Romesh Thappey v. State of Madras):

“There can be no doubt that freedom of speech and expression includes freedom of prepagation of ideas and that freedom is secured by freedom of circulation.

‘Liberty of circulation is as essential to that freedom as the liberty of publication. Indeed without circulation the publication would be of little value.” (2) [1945] USSC 32; [1944] 323 U.S. 516 (3)[1943] [1943] USSC 90; 319 U.S. 141 365 Similar thoughts were expressed by Black J. in his judgment in Martain v. City of Struthers when he said:

“Freedom to distribute information to every citizen wherever he desires to receive it is so clearly vital to the preservation of a free society that, putting aside reasonable police and health regulations of time and manner of distribution, it must be fully preserved”.

We respectfully endorse the high principle expounded by the Privy Council in the above case. Moreover in the absence of a proper examination of all relevant matters, it is not possible to hold that the effect of the levy is minimal. In fact the impact of the impugned levy in these cases is not minimal at all. For example, The Tribune Trust has to pay Rs. 18.7 lacs and The Statesman Ltd. has to pay Rs. 35.9 lacs by way of customs duty on newsprint imported during 1983-84. Other big newspapers have also to pay large sums by way of customs duty annually.

The question in the present cases is whether the tax has been shown to be so burdensome as to warrant its being struck down ? The petitioners have succeeded in showing a fall in circulation but whether it is a direct consequence, of the customs levy and the increase in price has not been duly established. It may be due to various circumstances.

The fall in circulation may be due to the general rise in cost of living and the’ reluctance of people to buy as many newspapers as they used to buy before. It may be due to bad management. It may be due to change of editorial policy. It may be due to the absence of certain feature writers. It may be due to other circumstances which it is not possible to enumerate. Except the synchronizing of time, there is nothing to indicate that the slight fall in circulation is directly due to the levy of customs duty. One curious feature of the case is that the petitioners have made no efforts to produce their balance sheets or profit and loss statements to give us a true idea of how burdensome the customs levy really is. On the other hand, the Government also has made no efforts to show the effect of the impact of the levy on the newspaper industry as a whole. All these years, the very exemption which they granted was an indication that the levy was likely to have a serious impact on the newspaper industry. Even now the exemption given to the small and medium newspapers shows that there is bound to be an impact. No effort has been made on the part of the Government to show 366 the precise nature of the impact. On the other hand, the case of the Government appears to be that such considerations are entirely irrelevant, though the outstanding fact remains that for several years, the Government itself thought that the newsprint deserved total exemption. On the material now available to us, while it is not possible to come to the conclusion that the effect of the levy is indeed so burdensome as to affect freedom of the press, we are also not able to come to the conclusion that it will not be burdensome. This a matter which touches the freedom of the press which is, as we said, the very soul of democracy. This is certainly not a question which should be decided on the mere question of burden of proof. There are factors indicating that the present levy is heavy and is perhaps heavy enough to affect circulation. On such a vital issue, we cannot merely say that the petitioners have not placed sufficient material to establish the drop in circulation is directly linked to increase of the levy when, on the side of the Government the entire exercise is thought to be irrelevant. Hence there appears to be a good ground to direct the Central Government to reconsider the matter afresh in the light of what has been said here.

Is the classification of newspapers made for the purpose of exemption violative of Article 14 7 We do not, however, see much substance in the contention of some of the petitioners that the classification of the newspapers into small, medium and big newspapers for purposes of levying customs duty is violative of Article 14 of the Constitution. The object of exempting small newspapers from the payment of customs duty and levying 5% ad valorem (now Rs. 275 per MT) on medium newspapers while levying full customs duty on big newspapers is to assist the small and medium newspapers in bringing down their cost of production. Such papers do not command large advertisement revenue. Their area of circulation is limited and majority of them are in Indian languages catering to rural sector. We do not find anything sinister in the object nor can it be said that the classification has no nexus with the object to be achieved. As observed by Mathew, J. in the Bennett Coleman’s case (supra) it is the duty of the State to encourage education of the masses through the medium of the press under Article 41 of the Constitution. We? therefore, reject this contention.

367 VIII Relief Now arises the question relating to the nature of relief that may be granted in these petitions. These cases present a peculiar difficulty which arises out of the pattern of legislation under consideration. If the impugned notifications ale merely quashed, they being notifications granting exemptions, the exemptions granted under them will cease. Will such quashing revive the notification dated July 15,1977 which was in force prior to March 1,1981 under which total exemption had been granted ? We do not think so. The impugned notification dated March 1, 1981 was issued in supersession of the notification dated July 15,1977 and thereby it achieved two objects-the notification dated July 15,1977 came to be repealed and 10% ad valorem. customs duty was imposed on newsprint. Since the notification dated July 15,1977 had been repealed by the Government of India itself, it cannot he revived on the quashing of the notification of March 1,1981. The effect of such quashing of a subsequent notification on an earlier notification in whose place the subsequent notification was issued has been considered by this Court in B.N. Tiwari v. Union of India and Ors.(1) In that case the facts were these: in 1952, a ‘carry forward’ rule governing the Central Service was introduced whereby the unfilled reserved vacancies of a particular year would be carried forward for one year only. In 1955 the above rule was substituted by another providing that the unfilled reserved vacancies of a particular year would be carried forward for two years. In T. Devadasan v. The Union of India & Anr.(2) the 1955 rule was declared unconstitutional. One of the questions which arose for consideration in this case ‘Tiwari’s case (supra) was whether the 1952 rule had revived after the 1955 rule was struck down. This Court held that it could not revive. The following are the observations of this Court on the above question:

“We shall first consider the question whether the carry forward rule of 1952 still exists. It is true that in Devadasan’s case, the final order of this Court was in these terms:- “In the result the petition succeeds partially and (1) [1964] INSC 287; [1965] 2 S.C.R. 421 (2) [1963] INSC 182; [1964] 4 S.C.R, 680 368 the carry forward rule as modified in 1955 is declared invalid.” That however does not mean that this Court held that the 1952-rule must be deemed to exist because this Court said that the carry forward rule as modified in 1955 was declared invalid. The carry forward rule of 1952 was substituted the carry forward by rule of 1955.

On this substitution the carry forward rule of 1952 clearly ceased to exist because its place was taken by the carry forward rule of 1955. Thus by promulgating the new carry forward rule in 1955, the Government of India itself canceled the carry forward rule of 1952.

When therefore this Court struck down the carry forward rule as modified in 1955 that did not mean that the carry forward rule of 1952 which had already ceased to exist, because the Government of India itself canceled it and had substituted a modified rule in 1955 in its place, could revive. We are therefore of opinion that after the judgment of this Court in Devadasan’s case there is no carry forward rule at all, for the carry forward rule of 1955 was struck down by this Court while the carry forward rule of 1952 had ceased to exist when the Government of India substituted the carry forward rule Of 1955 in its place.” In Firm A.T.B. Mehtab Majid & Co. v. State of Madras & Anr.(1) also this Court has taken the view that once an old rule has been substituted by a new rule, it ceases to exist and it does not get revived when the new rule is held invalid.

The rule in Mohd. Shaukat Hussain Khan v. State of Andhra Pradesh(2) is inapplicable to these cases. In that case the subsequent law which modified the earlier one and which was held to be void was one which according to the Court could not have been passed at all by the State Legislature. In such a case the earlier law could be deemed to have never been modified or repealed and would, therefore, continue to be in force. It was strictly not a case of revival of an earlier law which had been repealed or modified on (1) [19631 Supp. 2 S.C.R. 435 at 446.

(2) [1974] INSC 116; [1975] 1 S.C.R, 429 369 the striking down of a later law which purported to modify or repeal A the earlier one. It was a case where the earlier law had not been either modified or repealed effectively.

The decision of this Court in Shri Mulchand Odhavji v.

Rojkot Borough Municipality is also distinguishable. In that case the State Government had been empowered by section 3 of the Saurashtra Terminal Tax and Octroi Ordinance (47 of 1949) to impose octroi duty in towns and cities specified in Schedule I thereof and section 4 authorised the Government to make rules for the imposition and collection of octroi duty. These rules were to be in force until the City Municipalities made their own rules. The rules framed by the Municipality concerned were held to be inoperative. Then the question arose whether the rules of the Government continued to be in force. The Court held a “The Government rules, however, were to cease to operate as the notification provided “from the date the said Municipality put into force their independent by laws.” It is clear beyond doubt that the Government rules would cease to apply from the time the respondent-Municipality brought into force its own bye- laws and rules under which it could validly impose, levy and recover the octroi duty. The said notification did not intend any hiatus when neither the Government rules nor the municipal rules would be in the field.

Therefore,- it is clear that if the bye-laws made by the respondent-Municipality could not be legally in force some reason or the other, for instance, for not having been validly made, the Government rules would continue to operate as it cannot be said that the Municipality had ‘put into force their independent bye- laws”. The Trial Court, as also the District Court, were therefore, perfectly right in holding that the respondent-Municipality could levy and collect octroi duty from the appellant-firm under the Government rules. There was no question of the Government rules being revived, as in the absence of valid rules of the respondent-Municipality they continued to operate. The submission of counsel in this behalf, therefore, cannot be sustained.” In the cases before us we do not have rules made by two (1 ) A.l.R. 1970 S.C. 685 370 different authorities as in Mulchand’s case (supra) and no intention on the part of the Central Government to keep alive the exemption in the event of the subsequent notification being struck down is also established. The decision of this court in Koteswar Vittal Kamath v. K Rangappa Baliga & Co.(1) does not also support the petitioners. In that case again the question was whether a subsequent legislation which was passed by a legislature without competence would have the effect of reviving an earlier rule which it professed to supersede. This case again belongs to the category of Mohd. Shaukat Hussain Khan’s case (supra). It may also be noticed that in Koteswar Vittal Kamath’s case (supra) the ruling in the case of Firm A.T.B. Mehtab Majid & Co. (supra) has been distinguished.

The case of State of Maharashtra etc. v. The Central Provinces Manganese Ore Co. Ltd.(2) is again distinguishable. In this case the whole legislative process termed substitution was abortive, because, it did not take effect for want of the assent to the Governor-General all the Court distinguished that case from Tiwari’s case (supra). We may also state that the legal effect on an earlier law when the later law enacted in its place is declared invalid does not depend merely upon the use of words like, ‘substitution’, or ‘supersession’. It depends upon the totality of circumstances and the context in which they are used.

In the cases before us the competence of the Central Government to repeal or annul or supersede the notification dated July 15, 1977 is not questioned- Hence its revival on the impugned notifications being held to be void would not arise. The present cases are governed by the rule laid down in Tiwari’s case (supra) Hence if the notification dated July 15, 1977 cannot revive on the quashing of the impugned notifications, the result would be disastrous to the petitioners as they would have to pay customs duty of 40% ad valorem from March 1, 1981 to February 28, 1982 and 40% ad valorem plus Rs. 1,000 per MT from March 1, 1982 onwards. In addition to it they would also be liable to pay auxiliary duty of 30% ad valorem during the fiscal year 1983-84 and auxiliary duty of 50% ad valorem during the fiscal year 1982-83. They would straigtaway be liable to pay the whole of customs duty and any other duty levied during the current fiscal year also.

Such a result cannot be allowed to ‘ensue.

(1) [1968] INSC 312; [1969] 3 S.C.R. 40.

(2) [1977] I S.C.R. 1002.

371 It is no doubt true that so me of the petitioners have also questioned the validity of the levy prescribed by the Customs Tariff Act, 1975 itself. But we are of the view the it is unnecessary to quash it because of the pattern of the legislative provisions levying customs duty which authorise the Government in appropriate cases either to reduce the duty or to grant total exemption under section 25 of the Customs Act, 1962 having regard to the prevailing circumstances and to very such concessions from time to time. The Governmental practice in the matter of customs duties has made the law imposing customs virtually a hovering legislation. Parliament expects the Government to review the situation in each case periodically and to decide what duty should be levied within the limit prescribed by the Customs Tariff Act, 1975. Hence the validity of the provision in the Customs Tariff Act, 1975 need not be examined now. Since it is established that the Government has failed to discharge its statutory obligations in accordance with law while issuing the impugned notifications issued under section 25 of the Custom Act, 1962 on and after March 1, 1981, the Government should be directed to re- examine the whole issue relating to the extant of exemption that should be granted in respect of imports of newsprint after taking into account all relevant considerations for the period subsequent to March 1,1981- We adopt this course since we do not also wish that the Government should be deprived of the legitimate duty which the petitioners would have to pay on the imported newsprint during the relevant period.

In the result, in view of the peculiar features of these cases and having regard to Article 32 of the Constitution which imposes an obligation on this Court to enforce the fundamental rights and Article 142 of the Constitution which enables this Court in the exercise of its jurisdiction to make such order as is necessary for doing complete justice in any cause or matter pending before it, we make the following order is these cases:

The Government of India shall reconsider within six months the entire question of levy of import duty or auxiliary duty payable by the petitioners and others on newsprint used for printing newspapers, periodicals etc.

with effect from March 1, 1981. The petitioners and others who are engaged in newspaper business shall make available to the Government all information necessary to decide the question.

2. If on such reconsideration the Government decides that 372 there should be any modification in the levy of customs duty or A auxiliary duty with effect from March 1, 1981, it shall take necessary steps to implement its decision.

3. Until such redetermination of the liability of the petitioners and others is made, the Government shall recover only Rs. 550 per MT on imported newsprint towards customs duty and auuiliary duty and shall not insist upon payment of duty in accordance with the impunged notifications. The concessions extended to medium and small newspapers. may, however, remain in force.

4. If, after such redetermination, it is found that any of the petitioners is liable to pay any deficit amount by way of duty, such deficit amount shall be paid by such petitioner within four months from the date on which a notice of demand is served on such petitioner by the concerned authority. Any bank guarantee or security given by the petitioners shall be available for recovery of such deficit amounts.

5. If, after such redetermination, it is found that any of the petitioners is entitled to any refund-such refund shall be made by the Government within four months from the date of such redetermination.

6. A writ shall issue to the respondents accordingly in these cases. Parties shall, however, bear their own costs.

The petitions are accordingly allowed.

A.P.J.

Petitions allowed..

The post Indian Express Newspapers (Bombay) Private Ltd. & Ors Vs. Union of India & Ors appeared first on B&B Associates LLP.

A.L.KALARA …PETITIONER
Vs.
THE PROJECT & EQUIPMENT CORPORATION OF INDIA LIMITED. …RESPONDENT

DATE OF JUDGMENT 01/05/1984

BENCH : DESAI, D.A.

BENCH : DESAI, D.A. REDDY, O. CHINNAPPA (J) VARADARAJAN, A. (J)

CITATION : 1984 AIR 1361 1984 SCR (3) 646 1984 SCC (3) 316 1984 SCALE (1)798

CITATOR INFO : F 1985 SC1046 (6) RF 1986 SC1571 (60,66,67) F 1991 SC1010 (35,223)

ACT:

A Writ Jurisdiction of the High Court under Article 226 of the Constitution- Public sector undertakings and other instrumentalities of the State, whether amenable to the writ jurisdiction.

B Effect of concession in the Supreme Court by the State as to the maintainability or amenability to the writ jurisdiction-Though the normal procedure is to remit to the High Court, the Supreme Court, in order not to protract the litigation involving the livelihood of a party before it can itself hear the appeal on merits.

C. Constitution of India, 1950 Art. 14-Whether there should be any specific pleading in the Petition pointing out whether anyone else was either similarly situated as the petitioner or dissimilarly treated for entertaining the charge of discrimination and granting relief on that ground D. Legislative Policy, whether judicially reviewable by the courts-Constitution of India, 1950 Arts. 226,32 and 13.

E. Constitution of India 1950-Distinction between Part XIV and Part III of the Constitution-Whether the employees of the Corporation entitled to the protection under Part XIV of the Constitution.

F. Project and Equipment Corporation of India Ltd.

Employees’ (Conduct, Discipline and Appeal) Rules, 1975-Rules 4,5 and 25, Scope of-Rule 4 does not specify any misconduct and Rule 5 does not specify that violation of Rule 4 is per se misconduct-No disciplinary action, there. fore will arise under Rule 4 of the 1975 Rules.

G. The Project and Equipment Corporation of India House Building Advance (Grant and Recovery) Rules Rule 10 (1) (ii) and the Profits and Equipments Corporation of India Ltd. conveyance Advance (Grant and Recovery) Rules 8 and 10 (1)- Whether the non-utilisation of the advances within the stipulated time for the purposes of and no refund thereof immediately on the expiry of the period, constitute “misconduct” within the meaning of the expression in Rule 4 (i) (iii) of the 1975 647 Rules and if not whether the domestic enquiry and the punishment of the dismissal of service is warranted.

H. Relief for a declaration in cases of contract for public employment-whether cannot be specifically enforced.

I. Domestic Enquiry-Whether the Inquiry Officer and the Punishing Authority must give reasons before the major punishment is imposed- Whether non giving of the reasons makes the decision of dismissal arbitrary and against principles of natural justice.

HELD: 1: 1. Public sector undertakings and other instrumentalities of the State are comprehended in the expression other authority” in Article 12 of the Constitution. [660A] 1: 2. Once it is conceded that the respondent- corporation is an instrumentality of the State and is therefore, comprehended in the expression ‘other authority’ in Art. 12 of the Constitution, it is indisputable that it is amenable to the writ jurisdiction under Arts. 32 and 226 of the Constitution. Apart from the concession, the tests collated in the decision of the Constitution Bench of this Court in Ajay Hasia etc v. Khalid Mujib Sheravardi and Others etc [1980] INSC 219; [1981] 2 S.C R. 79 for determining whether a particular body is an instrumentality of the State are fully satisfied and therefore on precedent and concession it is satisfactorily established that the respondent-Corporation is an instrumentality of the State within the 649 meaning of the expression ‘other authority’ under Art. 12 of the Constitution and is amenable to the writ jurisdiction.

The writ petition filed by the appellant in the High Court was thus maintainable. [660D-E]

2. When once it is conceded that the respondent was amenable to the writ jurisdiction, the question that will arise is whether the matter should be remitted to the High Court as the High Court has rejected the writ petition in limine on the ground that the respondent was not amenable to the writ jurisdiction of the High Court. In order not to protract the litigation involving livelihood of the party approaching the Supreme Court for justice, the Court can set down the appeal for final hearing on merits, which they did in the instant case. [660F-H] 3:1 It cannot be said that executive action which results in denial of equal protection of law or equality before law cannot be judicially reviewed nor can be struck down on the ground of arbitrariness as being violative of Art. 14. [661E-F] 3:2 The scope and ambit of Article 14 have been the subject matter of a catena of decisions. It is well settled that Article 14 strikes at arbitrariness in executive/administrative action because any action that is arbitrary must necessarily involve the negation of equality.

One need not confine the denial of equality to a comparative evaluation between two persons to arrive at a conclusion of discriminatory treatment. An action per se arbitrary itself denies equal protection of law. It is thus too late in the day to contend that an executive action shown to be arbitrary is not either judicially reviewable or within the reach of Article 14.

[662A, F-G, 663A-B] Ajay Hasaia etc. Khalid Majid Shehravardi and Ors[1981] 2 S.C.R 79; E.P.Royappa v. State of Tamil Nadu and anr.

[1973] INSC 214; [1974] 2 S.C.R. 348; D. S. Nakara v. Union of India [1983] I S C. C. 305 and Maneka Gandhi v. Union of India [1978] 2 S.

C. R. 621 followed.

4. Wisdom of the legislative policy may not be open to judicial review but when the wisdom takes the concrete form of law, the same must stand the test of being in tune with the fundamental rights and if it trenches upon any of the fundamental rights, it is void as ordained by Art. 13, Conceding for the present purpose that legislative action follows a legislative policy and the legislative policy is not judicially reviewable, but while giving concrete shape to the legislative policy in the form of a statute, if the law violates any of the fundamental rights including Art.

14, the same is void to the extent as provided in Art. 13.

If the law is void being in violation of any of the fundamental rights set out in Part II of the Constitution, it cannot be shielded on the ground that it enacts a legislative policy. [661F-H]

5. Even if the respondent Corporation is an instrumentality of the State as comprehended in Art. 12, yet the employees of the Corporation are not governed by Part XIV of the Constitution. However it could not be 650 said that the protection conferred by Part III on the public servant is comparatively Less effective than the one conferred by Part XIV. Therefore the distinction sought to be drawn between protection of part XIV of the Constitution and part III has no-significance. [663B-C, 665A] Managing Director. Uttar Pradesh Warehousing Corporation & Anr. v. Vinay Narayan Vajpayee; [1980] INSC 5; [1980] 2 S.C.R.. 773 at p. 784, relied upon.

6:1. Even if the facts alleged in two heads of charges are accepted as wholly proved, yet that would not constitute misconduct as prescribed in Rule 5 and no penalty can be imposed for such conduct, for the reason that while Rule 25 which prescribes penalties specifically provides that any of the penalties therein mentioned can be imposed on an employee for misconduct committed by him. Rule 4 does not specify a misconduct. Rule 4 styled as ‘General’ specifies a norm of behaviour but does not specify that its violation will constitute misconduct. In Rule 5, it is nowhere stated that anything violative of Rule 4 would be per se a misconduct in any of the sub-clauses of Rule 5 which specifies misconduct. [666B-D] 6:2. A general expectation of a certain decent behaviour in respect of employees keeping in view corporate culture may be a moral or ethical expectation. Failure to keep to such high standard of moral; ethical or decorous behaviour befitting an officer of the company by itself cannot constitute misconduct unless the specific conduct falls in any of the enumerated misconduct in Rule 5. Any attempt to telescope Rule 4 into Rule 5 must be looked upon with apprehension because Rule 4 is vague and of a general nature and what is unbecoming of a public servant may vary with individuals and expose employees to vagaries of subjective evaluation. What in a given context would constitute conduct unbecoming of a public servant to be treated as misconduct would expose a grey area not amenable to objective evaluation. Where misconduct when proved entails penal consequences, it is obligatory on the employer to specify and if necessary define it with precision and accuracy so that any ex post facto interpretation of some incident may not be camouflages as misconduct. [665 D-G] M/s Glaxo Laboratories (I) Ltd v. Presiding Officer, Labour Court, Meerut & Others; [1984] 1. S.C.C. 1, followed.

7:1. Seeking advance and granting the same under relevant rules is at best a loan transaction. The transaction may itself provide for payments and the consequences of failure to repay or to abide by the rules.

If the rules for granting the advance themselves provided the consequence of the breach of conditions, it would be idle to go in search of any other consequence by initiating any disciplinary action in that behalf unless the 1975 Rules specifically incorporate a rule that the breach of House Building Advance Rules and the conveyance advance rules, would by themselves constitute a “misconduct”. Therefore Rule 4 (1) is not only, not attracted but in this case no attempt was made to establish the correction. And 651 as far as Rule 4 (1) (iii) is concerned, an advance not refunded in time where it was recovered by withholding the salary of a highly placed officer may not disclose a conduct unbecoming of a public servant. Therefore, the first head of charge is an eye-wash, It does not constitute a misconduct if it can be said to be one even if it remains unrebutted.

The inquiry officer has not said one word how the uncontroverted facts constitute a conduct unbecoming of a public servant, or he failed to maintain absolute integrity.

Regarding the conveyance advance the position is the same.

The appellant for no fault has been punished sub-silencio.

[667F-H, 668A, D-E, 669H] 7:2. Now if what is alleged as misconduct does not constitute misconduct not by analysis or appraisal of evidence, but per se under 1975 Rules the respondent had neither the authority nor the jurisdiction nor the power to impose any penalty for the alleged misconduct. An administrative authority who purports to act by its regulation must be held bound by the regulation. [670H, 671A]

8. In the matter of public employment if the termination is held to be dba, a declaration can be granted that the man continues to be in service. [671G, 672A] Sukhdev Singh & Ors. v. Bhagatram Sardar Singh.

Raghuvanshi & Anr. [1975] INSC 43; [1975] 3 S.C.R. 619 @ 655. Western India Automobile Association v. Industrial Tribunal, Bombay and Ors.[1949] F.C.R. 321 at 340.

9:1. The duty to give reasons would permit the court hearing a petition for a writ of certiorari to ex facie ascertain whether there is any error apparent on the record.

A speaking order will at its best be reasonable and at its worst be at least a plausible one. If reasons for an order are given there will be less scopes for arbitrary or partial exercise of power and the order ex facie will indicate whether extraneous matters were taken into consideration by authority passing the order. [672D-E] M.P. Industries Ltd. v. Union of India and Others [1965] INSC 154; [1966] 1 S.C.R. 466 at 472; Vadacha Mudaliar v. State of Madras, A.I.R. 1952 Madras 276; Bhagat Raja v Union of India and Others, [1967] INSC 76; [1967] 3 S.C.R. 302 @ 320; referred to.

9:2. Here, the findings of the inquiry officer are merely his ipse dixit. No reasons are assigned for reaching the finding and while recapitulating evidence self- contradictory positions were adopted that either there was no misconduct or there was some misconduct or double punishment was already imposed. Rule 27 (19) casts an obligation upon the inquiry officer at the conclusion of the inquiry to prepare a report which must inter alia include the findings on each article of charge and the reasons therefore. The report is prepared in contravention of the aforementioned rule. The situation is further compounded by the fact that the disciplinary authority which is none other than Committee of Management of the Corporation while accepting the report of the inquiry officer which itself was defective did not assign any 652 reasons for accepting the report of the inquiry officer.

Further sub rule (ii) of Rule 35 provides amongst others that the Appellate Authority shall consider whether the findings are justified or whether the penalty is excessive or inadequate and pass appropriate orders within three months of the date of appeal. In order to ascertain whether the rule is complied with, the order of the appellate authority must show that it took into consideration the findings the quantum of penalty and other relevant considerations. There is no material for showing that the appellate authority acted in consonance with its obligation under Rule 35. [672E-H, 673A-D-E] 9:3. Therefore, the order of removal passed by the Disciplinary Authority is illegal and invalid for the reasons (i) that the action is thoroughly arbitrary and is violative or Art. 14; (ii) that the alleged misconduct does not constitute misconduct within the 1975 Rules; (iii) that the inquiry officer himself found that punishment was already imposed for the alleged misconduct by withholding the salary and the appellant could not be exposed to double jeopardy; and (iv) that the findings of the inquiry officer are unsupported by reasons and the order of the Disciplinary Authority as well as the Appellate Authority suffer from the same vice. [673H. 674A-B] 10:1. Once the order of removal from service is held to be illegal and invalid and the appellant being in public employment, the necessary declaration must follow that he continues to be in service uninterruptedly. Ordinarily, it is well-settled that if termination of service is held to be bad, no other punishment in the guise of denial of back wages can be imposed and therefore, it must as a necessary corollary follow that he will be entitled to all the back wages on the footing that he has continued to be in service uninterruptedly. If the appellant had procured an alternative employment he would not be entitled to wages and salary from the respondent But it is equally true that an employee depending on salary for his survival when he is exposed to the vagaries of the court litigation cannot hold on to a slender distant hope of judicial process coming to his rescue and not try to survive by accepting an alternative employment, a hope which may turn out to be a mirage. Therefore, the appellant was perfectly justified in procuring an alternative employment in order to keep his body and soul together as also to bear the expenses of litigation to vindicate his honour, integrity and character.

[674B-G] 10:2. However, in the instant case, the appellant should be paid 50% of the back wages for the rest of the period during which he remained unemployed. This is so because the conduct of the appellant cannot be said to be entirely in consonance with corporate culture. As a highly placed officer he was bound to strengthen the corporate culture and he should have acted within the spirit of the regulations both for house building advance and conveyance advance, which are devised to help the employees. There has been lapse in totally complying with these regulations by the appellant though it neither constitutes misconduct to attract a penalty nor substantially good enough for initiation of disciplinary inquiry. [675A-C] 653

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2703 of 1981.

From the Judgment and Order dated the 23rd July, 1981 of the Delhi High Court in C.W. No. 1648 of 1981.

M.K. Ramamurthi, L.C. Goyal and Ms. Sumitra Goyal for the Appellant.

Lal Narain Sinha, M.C. Bhandare and P.P. Singh for the Respondent.

The Judgment of the Court was delivered by DESAI, J. Failure to adjust the antena to the operative channel and dipping the head like the proverbial ostrich in the sand so as not to view the changing kaleidoscope of the law can alone be said to be responsible for this trivial matter to be brought to this Court.

Respondent is the Project & Equipment Corporation of India Ltd. (‘Corporation’ for short) since its formation in 1971 a wholly owned subsidiary company of State Trading Corporation (‘STC’ for short), a Government of India Undertaking upto 1976 when it was separated and since then it functions as a Government of India undertaking. The appellant A.L. Kalra joined as Upper Division Clerk in the STC on August 6, 1963. On November 1, 1969, he came to be promoted as Assistant and earned a further promotion on May 22, 1974 as Accountant. On the setting up of the Corporation, the appellant exercising his option came to be transferred as Accountant to the Corporation on November 9, 1976. Under the relevant conditions of transfer, he continued to be governed in the matter of recruitment and promotion by the relevant rules of the STC. He was promoted in an officiating capacity as Deputy Finance Manager Grade II on June 29, 1978 and he was put on probation after being promoted as Deputy Finance Manager Grade II on regular basis effective from February 5, 1979. The appellant applied for and obtained an advance in the amount of Rs. 16,050 for purchasing a plot of land on April 4, 1979 for which he executed the requisite agreement on April 4, 1979. The rules under which advance was obtained are styled as ‘The Project and Equipment Corporation was India Ltd. House Building Advance (Grant & Recovery) Rules for House Building Advance’ for short) framed in exercise of the powers conferred upon the Board of Directors by the Articles of Association of the Corporation. The appellant also applied for and obtained an advance in the amount of Rs. 11,000/- for purchase of a 654 new motor cycle on July 7, 1979. This advance is governed by what are styled as the Projects & Equipment Corporation of India Ltd. Conveyance Advance (Grant & Recovery) Rules (‘Conveyance Advance Rules’ for short).

In respect of the house building advance according to the respondent-Corporation, in view of Rule 10 (1) (c) (i) the appellant was required to utilise the amount drawn by him for the purpose for which advance was granted within two months of drawal and submit the documents evidencing the purchase of plot within the prescribed time failing which he was liable to refund at once the entire amount together with interest to the Corporation. The agreement dated April 4, 1979 executed by the appellant also obligated him to utilise the advance for the purpose for which the same was sanctioned and to produce the sale-deed for verification by the Corporation failing which the whole of the advance had to be refunded with interest. It was alleged that the appellant neither utilised the advance for the purchase of plot nor refunded the amount despite several reminders and ultimately on November 13, 1979 a memorandum was served upon him cautioning him that if he failed to refund the entire amount forthwith, disciplinary proceedings will be initiated against him. As the appellant failed to comply with the request made in the memorandum, his salary from November 7, 1979 as a whole was withheld for adjusting the amount of advance and the interest payable thereon. He was also charged penal interest for the default committed by him.

In respect of the conveyance advance, which was sanctioned on July 7, 1979, the appellant is alleged to have committed a default by not purchasing the motor cycle within a period of one month as required by Rule 10 of the Conveyance Advance Rules, and on November 13, 1979 he was advised to refund the amount by November 14, 1979 failing which he was threatened with disciplinary action. It is, however, admitted that the appellant purchased a scooter in April, 1980 and submitted the documents which appear to have been accepted by the Corporation. The balance of advance was also refunded.

A memorandum dated July 22, 1980 was served upon the appellant stating therein that the competent authority proposes to hold an enquiry against him under Rule 27 of the Project and Equipment Corporation of India Ltd. Employees’ (Conduct, Discipline & Appeal) Rules, 1975 (‘1975 Rules’ for short). There were 655 two heads of charges in the charge-sheet drawn-up against the appellant on which disciplinary enquiry was proposed to be held. These two heads of charges read as under :

“Article I Shri A.L. Kalra while functioning as Deputy Finance Manager-Grade II in the Finance Division of the PEC during April, 1979 applied and drew an advance of Rs. 16,050 for purchase of a plot of land at Faridabad.

The did not furnish the relevant documents in the office nor did he refund the amount of advance to the Corporation within two months of the date of drawal of the advance as required under Rule 10 (1) (c) (i) of PEC House Building Advance (Grant and Recovery) Rules.

Shri Kalra by his above act exhibited lack of integrity and conduct unbecoming of a public servant and violated Rule 4 (1) & (iii) and Rule 5 (5) of the PEC Employees’ (Conduct, Discipline & Appeal) Rules and Rule 10 (1) (c) (i) of PEC House Building Advance (Grant & Recovery Rules and thereby committed misconduct punishable under the PEC employees (Conduct, Discipline and Appeal) Rules. 1975.

Article-II Shri, A.L. Kalra drew a conveyance advance of Rs.

11,000 in July, 1979 for purchasing a motor-cycle, but did not utilise the amount for the above purpose and did not furnish cash receipt etc. evidencing purchase of the vehicle within one month as required under Rule- 8 of the PEC Conveyance Advance (Grant & Recovery) Rules. Nor did he refund the amount of advance to the Corporation as required under Rule 10 (1) ibid.

Shri A.L. Kalra by his above act exhibited lack of integrity and conduct unbecoming of a Public servant and violated Rule-4 (1) (i) & (iii) and Rule 5 (5) of PEC Employees (Conduct, Discipline & Appeal) Rules and also violated Rule-8 and Rule-10 (is of the PEC Conveyance Advance (Grant & Recovery) Rules and thereby committed misconduct punishable under the PEC Employees’ (Conduct, 656 Discipline & Appeal) Rules, 1975.” The appellant was also asked to submit his defence statement within 10 days from the date of the receipt of the memorandum. The appellant by his letter dated February 13, 1980 requested for extension of time to file the defence statement. It appears that he sought further extension of time by three weeks which request was declined by the memorandum dated Feb. 23, 1980.

The Committee of Management in exercise of the powers conferred by sub-rule (4) of Rule 27 of the 1975 Rules appointed Shri A.S. Nangia, Chief Marketing Manager as the Enquiry Officer to enquire into the charges against the appellant submitted on June 13, 1980 a detailed statement pointing out that the inquiry was the outcome of malice for various reasons therein mentioned and also explaining why there was delay in refunding the advances and specifically pleaded that in view of the fact that the first advance was sought to be recovered by withholding his salary and adjusting the pay towards advance and charging penal interest and in the second case by accepting the document evidencing purchase of scooter, no misconduct could be said to have been committed by the appellant and the disciplinary enquiry was uncalled for. Various other contentions were also raised in the defence statement. The inquiry officer conducted the enquiry in respect of the aforementioned two charges. One U.S. Aggarwal, Finance Manager of the Corporation appeared as Presenting Officer. The appellant conducted his own defence.

In Para 4 of his report, the Inquiry officer states that the ‘preliminary hearings of the inquiry was held on 3rd and 9th April, 1980 and then inquiry was held regularly on various dates from 23rd April 1980 to 22nd May, 1980 The appellant was called upon to submit his statement of defence which he had submitted on June 30, 1980.

The findings purported to have been recorded by the inquiry officer were the subject matter of a heated debate between the parties and therefore, the report of the Inquiry Officer may be broadly scanned here. After recapitulating in paras 1 to 4 the various stages through which the enquiry progressed, in para 5, it is stated that at the ‘preliminary hearing on 3rd April, 1980, Shri A.L. Kalra, (appellant) pleaded guilty to all the charges mentioned in Annexure I and also agreed to the statement of imputation of his misconduct in support of the articles of charges framed against him.’ In part 5 (3), the inquiry officer discussed the first head of charge in respect of the 657 house building advance. It was found as a fact that the advance was taken for the purchase of a plot and that the appellant had negotiated for a purchase of a plot from Shri J.C. Chugh who was examined as a management witness and who admitted that he waited for six months to complete the transaction but after that he disposed of the plot. Evidence of Shri J.C. Chugh revealed that the deal was delayed because Haryana Estate Officer demanded some additional amount and there was dispute between the appellant, the vendee and J.C. Chugh, the vendor as to who should bear the extra burden. In paragraph 5.1.4 after recapitulating the reminders sent to the appellant to refund the advance, it is observed that it is not clear from the relevant rule as to which is the competent authority to grant extension of time for utilisation of the amount. And then in paragraph 5.1.5 he recommended that the sanction of the competent authority should be taken before granting any extension. There ends the discussion on the charge in respect of house building advance.

The inquiry officer then proceeded to examine the second head of the charge. After recapitulating the fact about sanction of advance and drawal of the same, it was observed that the appellant drew the advance on July 9, 1979 and on April 7, 1980 he submitted the documents such as cash receipt in respect of purchase of a scooter, insurance certificate, receipt of balance amount deposited with the cashier, original insurance policy and registration book evidencing the purchase of scooter. It is then observed that under the relevant rules motor cycle had to be purchased within one month from the date of the drawal of the advance or else he should have obtained fresh sanction for the purchase of a scooter instead of a motor cycle. Then comes the particular observation which may be extracted :

“He (appellant) did not obtain any fresh sanction for purchase of a scooter but simply submitted the papers for regularisation of the advance and although no specific letter for sanction of the purchase of a scooter was issued by the Personnel Division yet the fact that he was asked to refund the balance amount tantamounts to agreeing defacto sanction for the purchase of the same.” The inquiry officer then proceeds to dispose of the contention of the appellant that in other cases of similar advance and default, no action was taken but he was singled out for a harsh treatment 658 for the reasons alleged by him but with which we are not concerned at this stage. The inquiry officer then noticed that the full salary payable every month to the appellant was stopped by the Corporation from November 16, 1979 in addition to the inquiry under which disciplinary action was proposed to be taken. The inquiry officer concluded his report as under :

“While deciding the case, the fact that the salary was stopped from 16th November, 1979 may be kept in view as this may, I feel, tantamount to double punishment. Normally even where an employee is suspended certain amount of subsistence allowance is granted whereas in this case the salary was completely stopped and nothing has been paid since then.” What is referred to as the report of the enquiry which is minutely scanned in the preceding paragraphs merely seems to be the record of inquiry and recapitulation of allegations and explanation. What is styled as findings of the inquiry officer are separately filed being Annexure M to the petition. This is a bald document of two paragraphs in which the inquiry officer records that the appellant has contravened Rule 10 (1) (c) (i) of House Building Advance Rules and has thereby committed misconduct punishable under Rule 4 (1) (iii) of 1975 Rules. In paragraph 2, it is stated that the appellant has committed breach of Rule 8 and Rule 10 (i) of the Conveyance Advance Rules and has thereby committed misconduct punishable under Rule 4 (1) (iii) of 1975 Rules. By what process this conclusion is reached or what evidence appealed to him is left to speculation. The reasons in support of the conclusion are conspicuous by their absence. The findings are the ipse dixit of the inquiry officer.

Pursuant to this report of the inquiry officer the Executive Director for and on behalf of the Committee of Management of the Corporation made an Order No. PEC.P ; 5 (8)/77 dated February 4, 1981. The heads of charges are reproduced in paragraph 1. Paragraphs 2 and 3 are devoted to the stages through which the enquiry progressed. In paragraph 4, the findings unsupported by reasons are reproduced. In paragraph 5, it is stated that the Committee of Management agrees with the findings of the inquiry officer and imposes the punishment removal from service with effect from the date of the order.

The appellant preferred an appeal to the Appellate Authority being the Board of Directors of the Corporation on February 21, 659 1981. One Anand Krishna claiming to act for and on behalf of the Board of Directors, Appellate Authority issued memorandum dated May 21, 1981, Annexure P to the petition in which it is stated that the appeal of the appellant was considered by the Appellate Authority and after going through the records of the case, the Appellate Authority has decided to uphold the decision of the authority and to confirm the penalty of removal imposed upon him.

The salient feature which flies into the face about the findings recorded by the inquiry officer and the order by the Disciplinary Authority as well as the Appellate Authority is that none of them made a reasoned order or speaking order and their conclusions are mere ipse dixit unsupported by any analysis of the evidence or reason in support of the conclusions.

The appellant approached the High Court of Delhi under Art. 226 of the Constitution questioning the correctness and validity of the findings of the inquiry officer and the decision of the Disciplinary Authority as well as the Appellate Authority inter alia on the ground that the enquiry was held in violation of the principles of natural justice and the quasi-judicial authority failed to give reasons in support of its order and the action taken against the appellant was per se arbitrary and in violation of Art.

14 and Art. 16 of the Constitution inasmuch as the allegations contained in the heads of charges, even if unrebutted, do not constitute a misconduct within the meaning of the expression in 1975 Rules. In order to sustain the maintainability of the writ petition, the appellant also contended that the respondent is an instrumentality of the State and is comprehended in the expression ‘other authority’ in Art. 12 of the Constitution.

The writ petition came-up for admission before a Division Bench of the Delhi High Court. It was dismissed in limine observing that the writ petition is not maintainable on the facts presently set out in the petition. Hence this appeal by special leave.

In order to obtain any decision on merits, the appellant will have to clear the roadblock about the maintainability of the writ petition in the High Court.

Happily this untenable contention was not pursued in this Court. In para 2 (vi) of the counter-affidavit filed by one Mahanand Khokher on behalf of the respondents it was unambiguously stated that the ‘respondent-Corporation is advised not to dispute the maintainability of the petitioner’s petition as 660 regards applicability of Art. 12 of the Constitution.’ Further in para 5.1 of the same affidavit, it was stated that as regards the assertion of the appellant that the respondent-Corporation is an instrumentality of the Central Government and hence within Art. 12 of the Constitution, the respondent Corporation does not dispute the same. This admission was reiterated in para 5.2. Further in the written submissions dated September 30, 1983 filed on behalf of the respondent, it is conceded that the respondent is a State within the meaning of Art. 12 for the purposes of Part III of the Constitution, with this reservation that the employees of the respondent are not members of a civil service of the Union or all India civil service or a civil service of a state or holds the civil posts under the Union or the State and therefore, would not be entitled to the protection of Part XIV of the Constitution. This concession absolves us from the obligation to examine the status and character of the respondent-Corporation to determine whether it is an instrumentality of the State and therefore, comprehended in the expression ‘other authority’ in Art. 12 of the Constitution. Once it is conceded that the respondent-Corporation is an instrumentality of the State and is therefore, comprehended in the expression ‘other authority’ in Art. 12 of the Constitution, it is indisputable that it is amenable to the writ jurisdiction under Arts. 32 and 226 of the Constitution. Apart from the concession, the tests collated in the decision of the Constitution Bench of this Court in Ajay Hasia etc. v.

Khalid Mujib Sehravardi & Ors. etc., for determining whether a particular body is an instrumentality of the State are fully satisfied and therefore on precedent and concession it is satisfactorily established that the respondent- Corporation is an instrumentality of the State within the meaning of the expression ‘other authority’ under Art. 12 of the Constitution and amenable to the writ jurisdiction. The writ petition filed by the appellant in the High Court was thus maintainable.

Once when in this Court it was concluded that the respondent was amenable to the writ jurisdiction of the High Court, the question arose whether the matter should be remitted to the High Court as the High Court has rejected the writ petition in limine on the ground that the respondent was not amenable to the writ jurisdiction of the High Court. Ultimately, in order not to protract the litigation involving livelihood of the appellant, the appeal was set down for final hearing on merits. The respondent- Corporation was accordingly directed to file its affidavit as also the documents on which it seeks to rely. The appeal was thereafter heard on merits.

661 Before we deal with the contentions raised on behalf of the appellant, it is necessary to dispose of a contention having a flavour of a preliminary objection raised by Mr.

Lal Narain Sinha on behalf of the respondent-Corporation. It was urged that in the absence of any specific pleading pointing out whether any one else was either similarly situated as the appellant or dissimilarly treated the charge of discrimination cannot be entertained and no relief can be claimed on the allegation of contravention of Art. 14 or Art. 16 of the Constitution. It was submitted that the expression discrimination imports the concept of comparison between equals and if the resultant inequality is pointed out in the treatment so meted out the charge of discrimination can be entertained and one can say that equal protection of law has been denied. Expanding the submission, it was urged that the use of the expression ‘equality’ in Art. 14 imports duality and comparison which is predicated upon more than one person of situation and in the absence of available material for comparison, the plea of discrimination must fail. As a corollary, it was urged that in the absence of material for comparative evaluation not only the charge of discrimination cannot be sustained but the executive action cannot be struck down on the ground that the action is per se arbitrary. Proceeding along, it was urged that making law is a matter of legislative policy and the degree of reasonableness in every such law is equally a matter of policy and policy of the legislature is not judicially reviewable on the specious plea that it is either arbitrary or unreasonable.

It is difficult to accept the submission that executive action which results in denial of equal protection of law or equality before law cannot be judicially reviewed nor can it be struck down on the ground of arbitrariness as being violative of Art. 14. Conceding for the present purpose that legislative action follows a legislative policy and the legislative policy is not judicially reviewable, but while giving concrete shape to the legislative policy in the form of a statute, if the law violates any of the fundamental rights including Art. 14, the same is void to the extent as provided in Art. 13. If the law is void being in violation of any of the fundamental. rights set out in Part III of the Constitution, it cannot be shielded on the ground that it enacts a legislative policy. Wisdom of the legislative policy may not be open to judicial review but when the wisdom takes the concrete form of law, the same must stand the test of being in tune with the fundamental rights and if it trenches upon any of the fundamental rights, it is void as ordained by Art. 13.

662 The scope and ambit of Art. 14 have been the subject matter of a catena of decisions. One fact of Art. 14 which has been noticed in E.P. Rayappa v. State of Tamil Nadu & Anr. deserves special mention because that effectively answers the contention of Mr. Sinha. The Constitution Bench speaking through Bhagwati, J. in concurring judgment in Royappa’s case observed as under:

“The basic principle which, therefore, informs both Arts. 14 and 16 is equality and inhibition against discrimination. Now what is the content and reach of this great equalising principle ? It is a founding faith, to use the words of pedantic or lexicographic approach. We cannot ‘countenance any attempt to truncate its all-embracing scope and meaning, for to do so would be to violate its activist magnitude. Equality is a dynamic concept with many aspects and dimensions and it cannot be “cribbed, cabined and confined” within traditional and doctrinaire limits. From a positivistic point of view equality is antithetic to arbitrariness.

In fact equality and arbitrariness are sworn enemies;

one belongs to the rule of law in a republic while the other, to the whim and caprice of an absolute monarch.

Where an act is arbitrary it is implicit in it that it is unequal both according to political logic and constitutional law and is therefore violative of Art.

14, and if is affects any matter relating to public employment, it is also violative of Art. 16. Arts. 14 and 16 strike at arbitrariness in State action and ensure fairness and equality of treatment.” This view was approved by the Constitution Bench in Ajay Hasia case It thus appears well-settled that Art. 14 strikes at arbitrariness in executive/administrative action because any action that is arbitrary must necessarily involve the negation of equality. One need not confine the denial of equality to a comparative evaluation between two persons to arrive at a conclusion of discriminatory treatment. An action per se arbitrary itself denies equal of protection by law. The Constitution Bench pertinently observed in Ajay Hasia’s case and put the matter beyond controversy when it said ‘wherever therefore, there is arbitrariness in State action whether it be of the legislature or of the executive or of an “authority” under Article 12, Article 14 immediately springs into action and strikes down such State action.’ 663 This view was further elaborated and affirmed in D.S. Nakara v. Union of India. In Maneka Gandhi v. Union of India it was observed that Art. 14 strikes at arbitrariness in State action and ensure fairness and equality of treatment. It is thus too late in the day to contend that an executive action shown to be arbitrary is not either judicially reviewable or within the reach of Art. 14. The contention as formulated by Mr. Sinha must accordingly be negatived.

It must be conceded in fairness to Mr. Sinha that he is right in submitting that even if the respondent-Corporation is an instrumentality of the State as comprehended in Art.

12, yet the employees of the Corporation are not governed by Part XIV of the Constitution Could it however be said that a protection conferred by Part III on public servant is comparatively less effective than the one conferred by Part XIV ? This aspect was examined by this Court in Managing Director, Uttar Pradesh Warehousing Corporation & Anr. v.

Vinay Narayan Vajpayee where O. Chinnappa Reddy, J. in a concurring judgment has spoken so eloquently about it that it deserves quotation:

“I find it very hard indeed to discover any distinction, on principle, between a person directly under the employment of the Government and a person under the employment of an agency or instrumentality of the Government or a Corporation, set up under a statute or incorporated but wholly owned by the Government. It is self evident and trite to say that the function of the State has long since ceased to be confined to the preservation of the public peace, the exaction of taxes and the defence of its frontiers. It now the function of the State to secure ‘social, economic and political justice’, to preserve ‘liberty of thought, expression, belief, faith and worship’, and to ensure ‘equality of status and of opportunity’. That is the proclamation of the people in the preamble to the Constitution. The desire to attain these objectives has necessarily resulted in intense Governmental activity in manifold ways. Legislative and executivity have reached very far and have touched very many aspects of a citizen’s life.

The Government, directly or through the Corporations, set up by it or owned by it, now owns or manages, a large number of industries and institutions. It is the biggest builder in the country. Mam- 664 moth and minor irrigation projects, heavy and light engineering projects, projects of various kinds are undertaken by the Government. The Government is also the biggest trader in the country. The State and the multitudinous agencies and Corporations set up by it are the principal purchasers of the produce and the products of our country and they control a vast and complex machinery of distribution. The Government, its agencies and instrumentalities, Corporations, set up by the Government under statutes and Corporations incorporated under the Companies Act but owned by the Government have thus become the biggest employers in the country. There is no good reason why, if Government is bound to observe the equality clauses of the constitution in the matter of employment and in its dealings with the employees, the Corporations set up or owned by the Government should not be equally bound and why, instead, such Corporations could become citadels of patronage and arbitrary action. In a country like ours which teems with population, where the State, its agencies, its instrumentalities and its Corporations are the biggest employers and where millions seek employment and security, to confirm the applicability of the equality clauses of the constitution, in relation to matters of employment, strictly to direct employment under the Government is perhaps to mock at the Constitution and the people. Some element of public employment is all that is necessary to take the employee beyond the reach of the rule which denies him access to a Court to enforce a contract of employment and denies him the protection of Arts. 14 and 16 of the Constitution. After all employment in the public sector has grown to vast dimensions and employees in the public sector often discharge as onerous duties as civil servants and participate in activities vital to our country’s economy. In growing realization of the importance of employment in the public sector, Parliament and the Legislatures of the States have declared persons in the service of local authorities, Government companies and statutory corporations as public servants and extended to them by express enactment the protection usually extended to civil servants from suits and prosecution. It is, therefore, but right that the independence and integrity of those employed in the public sector should be secured as much as the independence and integrity of civil servants.” 665 There fore the distinction sought to be drawn between protection of part XIV of the Constitution and Part III has no significance.

And now to the facts. The gravamen of the two heads of charges is that the appellant is guilty of misconduct as prescribed in Rule 4 (1) (i) and (iii).

It reads as under:

“4 (1) Every employee shall at all times:

(i) maintain absolute integrity;

(ii) _______ __________ _______ (iii) do nothing which is unbecoming of a public servant.” Rule 5 prescribes various misconducts for which action can be taken against an employee governed by the rules.

Rule 4 bears the heading ‘General’. Rule 5 bears in the heading ‘misconduct’. The draftsmen of the 1975 Rules made a clear distinction about what would constitute misconduct. A general expectation of a certain decent behaviour in respect of employees keeping in view Corporation culture may be a moral or ethical expectation. Failure to keep to such high standard of moral, ethical or decrous behaviour befitting an officer of the company by itself cannot constitute misconduct unless the specific conduct falls in any of the enumerated misconduct in Rule 5. Any attempt ‘ to telescope Rule 4 into Rule 5 must be looked upon with apprehension because Rule 4 is vague and of a general nature and what is unbecoming of a public servant may vary with individuals and expose employees to vagaries of subjective evaluation. What in a given context would constitute conduct unbecoming of a public servant to be treated as misconduct would expose a grey area hot amenable to objective evaluation. Where misconduct when proved entails penal consequences, it is obligatory on the employer to specify and if necessary define it with precision and accuracy so that any ex post facto interpretation of some incident may not be camouflages as misconduct. It is not necessary to dilate on this point in view of a recent decision of this Court in M/s Glaxo Laboratories (I) Ltd. v. Presiding officer, Labour Court, Meerut & Others where this Court held that ‘everything which is required to be prescribed has to be prescribed with precision and no argument can be entertained that something not prescribed can yet be taken 666 into account as varying what is prescribed. In short it cannot be left to the vagaries of management to say ex post facto that some acts of omission or commission nowhere found to be enumerated in the relevant standing or is nonetheless a misconduct not strictly falling within the enumerated misconduct in the relevant standing order but yet a misconduct for the purpose of imposing a penalty.’ Rule 4 styled as ‘General’ specifies a norm of behaviour but does not specify that its violation will constitute misconduct.

In Rule 5, it is nowhere stated that anything violative of Rule 4 would be per as a misconduct in the sub-clauses of Rule 5 which specifies misconduct. It would therefore appear that even if the facts alleged in two heads of charges are accepted as wholly proved, yet that would not constitute misconduct as prescribed in Rule 5 and no penalty can be imposed for such conduct. It may as well be mentioned that Rule 25 which prescribes penalties specifically provides that any of the penalties therein mentioned can be imposed on an employee for misconduct committed by him. Rule 4 does not specify a misconduct.

Mr. Ramamurthi, learned counsel for the appellant further contended that the very initiation of the disciplinary enquiry and imposition of punishment of removal from service is thoroughly arbitrary and discloses a vindictive attitude on the part of the respondent Corporation. It was urged that the two heads of charges per se do not constitute any misconduct and they can be styled as trumped-up which even if held approved would not render the appellant liable for any punishment. The two heads of charges have been extracted hereinbefore. Charge No. 1 refers to the drawal of a House Building Advance and failure to comply with the requisite rules prescribed for House Building Advance. According to the finding recorded by the inquiry officer, the failure of the appellant to refund the amount of advance to the respondent-Corporation within two months of the date of the drawal would be violative of Rule 10 (I) (c) (i) of the House Building Advance Rules and it would constitute misconduct within the meaning of the expression in Rule 4(1) (iii) of 1975 Rules. Rule 10 (I) provides that the advance shall be drawn in instalments as prescribed in various sub-clauses. The relevant sub-clause in this case is sub-cl. (C) which provides that “when advance is required partly for purchase of land and partly for constructing a single storeyed new house thereon; (i) not more than 20% of the sanctioned advance on execution by the applicant employees an agreement in the required form for repayment of the advance. The amount will be payable to the applicant only for purchasing a 667 developed plot of land on which construction can commence immediately and sale deed in respect thereof be produced for the inspection of CPM/RM within two months of the date on which 20% of the advance is drawn or within such further time as the CPM/RM may allow in this behalf failing which the employee shall be liable to refund at once the entire amount to the Corporation together with interest thereon.” A bare reading of the relevant rule will show that in provides for obtaining advance which in this case was taken for purchasing a plot. The inquiry officer accepts the evidence of Mr. Chugh that the appellant had negotiated with him for purchase of a plot but some dispute arose about some additional expenditure and the negotiations protracted over a period of six months. Now para 1 sub-cl.(C) confers on CPM/RM power to extend the time for finalising the deal or call upon the employee to refund the entire amount and he is liable to pay interest thereon. This is the only consequence of taking advance and failure to keep to the time-schedule.

The relevant rule is a self contained provision providing for the condition for grant of advance, time table for repayment and consequence of failure to keep to the time schedule. The House Building Advance was drawn on April 4, 1979. On November 13, 1979 the appellant was asked to refund the entire amount. Immediately on November 16, 1979, an order was made withholding the entire salary of the appellant. Even the inquiry officer was constrained to observe that the appellant was exposed to double jeopardy inasmuch as his salary as a whole was withheld and he was being removed from service. It is also pertinent to note that the inquiry officer is not clear when he said ‘that once the power to extend the time to repay the advance is conferred and penal interest is charged, is any rule violated.’ This is not an attempt to re-appreciate evidence in the case but the entire thing is being analysed to point out that the action apart from being arbitrary is motivated and unjust.

If the rules for granting the advance themselves provided the consequence of the breach of conditions, it would be idle to go in search of any other consequence by initiating any disciplinary action in that behalf unless the 1975 Rules specifically incorporate a rule that the breach of House Building Advance Rules would by itself constitute a misconduct. That is not the case here as will be presently pointed out.

Seeking advance and granting the same under relevant rules, is at best a loan transaction. The transaction may itself provide for 668 repayment and the consequence of failure to repay or to abide by the rules. That has been done in this case. Any attempt to go in search of a possible other consequence of breach of contract itself appears to be arbitrary and even motivated. However, the more serious infirmity in framing this head of charge is that according to the inquiry officer this failure to refund the advance within the time frame in which it was sanctioned constitutes violation of Rule 4 (1) (iii). Let us turn to the charge-sheet drawn-up against the appellant. Under the first head of charge it was stated that the appellant was guilty of misconduct as prescribed in Rule 4 (1) (i) and (iii). Rule 4 (1) (i) provides that every employee shall at all times maintain absolute integrity. How did the question of integrity arise passes comprehension.

The appellant applied for House Building Advance. Inquiry officer says that the appellant had negotiated with Mr.

Chugh for purchase of a plot. There is not even negative evidence or evidence which may permit an inference that the house building advance was utilised for a purpose other than for which it was granted. Therefore Rule 4 (1) (i) is not only attracted but no attempt was made before us to sustain it. And as far as Rule 4 (1) (iii) is concerned, we fail to see how an advance not refunded in time where it was recovered by withholding the salary of a highly placed officer discloses a conduct unbecoming of a public servant.

Therefore, the first head of charge is an eye-wash. It does not constitute a misconduct if it can be said to be one even if it remains unrebutted. The inquiry officer has not said one word how the uncontroverted facts constitute a conduct unbecoming of a public servant, or he failed to maintain absolute integrity.

Turning to the second head of charge, it is alleged that the appellant applied for and obtained a conveyance allowance of Rs. 11,000 on July 7,1979 but did not utilise the amount for the purpose for which it was granted and did not furnish cash receipt evidencing purchase of a vehicle within one month as required by Rule 8 of the Conveyance Advance Rules, nor did he refund the amount to the Corporation as required by Rule 10 (I). It is not in dispute that the respondent applied for a motor-cycle advance which was sanctioned and on being sanctioned he drew the same on July 9, 1979. As required by the respondent, the appellant executed an agreement on July 6, 1979, a day preceding the sanction of the advance guaranteeing that if the motor-cycle was not purchased and hypothecated within one month from the date of the drawal of the 669 advance, the whole of the advance together with the interest accrued thereon would become refundable. As the appellant did not keep to the time-schedule, memos dated August 20, September 24, November 12 and November 13, 1979 were served upon him calling upon him to either furnish the requisite documents or to refund the advance latest by November 14, 1979. The inquiry officer in this connection, recapitulated the facts in paragraphs 5.2. 5.2.1, and 5.2.2. Then he proceeded to record a finding that the appellant on April, 7, 1980 submitted the documents namely cash receipt in respect of purchase of a scooter, insurance certificate, receipt showing deposit of the balance of advance with cashier, original insurance policy and registration book for purchase of the scooter. The report does not show the date of purchase which could have been ascertained with certainty from the insurance certificate as well as the cash receipt.

After recapitulating these undisputed facts, he stated that the fact that ‘he (appellant) was asked to refund the balance amount tantamount to agreeing de facto sanction for the purchase of the same (scooter)’. In the last paragraph, he has stated that a stoppage of the salary effective from November 16, 1979 in the opinion of the inquiry officer tantamounts to imposition of double punishments and this is compounded by not paying even a subsistence allowance. We scanned the report minutely with the able assistance of the learned counsel for the respondent subjecting it to microscopic analysis to ascertain whether the inquiry officer recorded any finding in respect of this charge adverse to the appellant. We found none. On the contrary, a comprehensive reading of the report clearly indicates that the inquiry officer was satisfied that the delay in submitting the documents and purchasing a scooter instead of a motor cycle should not have been visited with such drastic punishment of stoppage of salary altogether and yet compelling the appellant to render service without quid pro quo. Curiously, however, in a separate document recorded as finding, the inquiry officer has held that the appellant contravened Rule 10 (I) of the Conveyance Advance Rules which would constitute misconduct within the meaning of the expression in Rule 4 (I) (iii) of the 1975 Rules. The report and the findings are wholly irreconcilable and left us guessing about the approach of the inquiry officer, his conclusion and his finding. This aspect considerably troubled us because we would presently point out that the disciplinary Authority as well as the appellate authority have declined a peep into the working of their minds by making a reasoned or a speaking order. The appellant appears to us to have been convicted sub silencio.

670 The first question we must pose to ourselves is whether taking the findings of facts as recorded by the inquiry officer and accepting for the present purpose that they are not open to a judicial review, do they constitute misconduct so as to invite penalty ? According to the inquiry officer, failure either to produce the documents or to refund the amount within a period of one month from the drawal of the conveyance advance constitutes contravention of Rule 10 (I) of the Conveyance Advance Rules. Rule 10 reads as under:

“10. (1). Where an employee after taking advance is unable to purchase the vehicle for any reason, he shall refund within one month of drawal of advance the full amount with interest thereon to the Corporation. If he fails to do so, he shall be liable to disciplinary action for misconduct in addition to liability for payment of additional interest in accordance with Sub Rule (2).

(2) Where an amount of advance is retained by an employee beyond one month or where the employee fails to produce evidence of purchase, insurance policy of registration book, the normal rate of interest under Rule 5 will be charged for the first month and for the period in excess of one month in addition to the normal rate of interest, additional interest at a rate equivalent to difference between the borrowing rate of the Corporation and the normal rate chargeable under Rule 5 will be charged. The additional rate of interest will be compound interest and it will be merged with the principal at monthly intervals for the purpose of calculating interest for subsequent periods.” In this connection, our attention was drawn to Circular dated December 11, 1979 issued by the respondent-Corporation which provides that henceforth a penal interest will be levied/charged ‘on the total drawn amount under the Conveyance Advance Rules in cash vouchers or receipts are not produced to the Personnel Division within the prescribed period, or in case the amount drawn is refunded without utilisation.’ It thus transpires that drawal of the advance, if not utilised within the prescribed period or if not refunded within the same time, will expose the drawer to a liability to penal interest. And in this case, it has been so charged.

Now if what is alleged as misconduct does not constitute misconduct not by analysis or appraisal of evidence, but per se under 1975 671 Rules the respondent had neither the authority nor the jurisdiction nor the power to impose any penalty for the alleged misconduct. An administrative authority who purports to act by its regulation must be held bound by the regulation. ‘Even if these regulations have no force of law the employment under these corporations is public employment, and therefore an employee would get a status which would enable him to obtain a declaration for continuance in service, if he was dismissed or discharged contrary to the regulations.’ [Sukhdev Singh & Ors. v.

Bhagatram Sardar Singh Raghuvanshi and Anr.] If thus it is satisfactorily established that the employment under such Corporation like the respondent which is an instrumentality of the State, is public employment it is difficult to entertain the submission of Mr. Sinha which did prevail for some time in the days gone by that contract of public service cannot be specifically enforced. Mr. Sinha in this connection relied upon Sec. 14 of the Specific Relief Act, 1963 and urged that where the origin of employment is in a contract the breach of it cannot be remedied by directing specific performance of a contract of personal service. He also drew our attention to Western India Automobile Association v. Industrial Tribunal, Bombay and Ors. Where a Constitution Bench of this Court has observed as under:

“It is true that this Tribunal can do what no Court can, namely, add to or alter the terms or conditions of the contract of service. Express power to do so is given by the regulation, while there are no words conferring a power to reinstate or revive a contract lawfully determined.” Reference was also made to Dr. S.B. Dutt v. University of Delhi wherein it was held that an arbitrator appointed by the parties and functioning under the Arbitration Act, 1940 cannot by his award enforce a contract of personal service in contravention of the provisions of the Specific Relief Act and this discloses an error apparent on the face of the award. But neither Sec. 14 nor the aforementioned two decisions can render any assistance to the respondent because it is well-settled that in the matter of public employment if the termina- 672 tion is held to be bad, in view of the latest decisions in Sukhdev Singh and Uttar Pradesh Warehousing Corporation’s cases a declaration can be granted that the man continues to be in service.

Mr. Ramamurthi on behalf of the appellant further contended that the order of removal from service is void as it is passed in violation of the principles of natural justice and at any rate an order imposing penalty by a quasi-judicial tribunal must be supported by reasons in support of its conclusions. It was urged that duty to give reasons would permit the court hearing a petition for a writ of certiorari to ex facie ascertain whether there is any error apparent on the record.) It was conceded that for the present submission adequacy or sufficiency of reasons is not questioned. What is contended is that the inquiry officer has merely recorded his ipse dixit and no reasons are assigned in support of the findings. The mental process is conspicuously silent. A speaking order will at its best be reasonable and at its worst be at least a plausible one (M.P. Industries Ltd. v. Union of India & Others). What prevents the authority authorised to impose penalty from giving reasons ? If reasons for an order are given, there will be less scope for arbitrary or partial exercise of power and the orders ex facie will indicate whether extraneous circumstances were taken into consideration by authority passing the order. This view in Vedachala Mudaliar v. State of Madras was approved by this Court in Bhagat Raja v. Union of India and Others. As pointed out earlier, the findings of the inquiry officer are merely his ipse dixit.

No reasons are assigned for reaching the finding and while recapitulating evidence self-contradictory position were adopted that either there was no misconduct or there was some misconduct or double punishment was already imposed.

Rule 27 (19) casts an obligation upon the inquiry officer at the conclusion of the inquiry to prepare a report which must inter alia include the findings on each article of charge and the reasons therefor. The report is prepared in contravention of the aforementioned rule.

The situation is further compounded by the fact that the disciplinary authority which is none other than Committee of Management of the Corporation while accepting the report of the inquiry officer which itself was defective did not assign any reasons for accepting the report of the inquiry officer. After reproducing the findings of the 673 inquiry officer, it is stated that the Committee of Management agrees with the same. It is even difficult to make out how the Committee of Management agreed with the observations of the inquiry officer because at one stage while recapitulating the evidence the inquiry officer unmistakably observed that appellant was subjected to double punishment and at other. place, it was observed that granting extension of time and acceptance of documents and balance advance would tantamount to extending the time which would make the affair look wholly innocuous. This shows utter non-application of mind of the Disciplinary Authority and the order is vitiated.

A detailed appeal was submitted by the appellant to the Board of Directors running into about 8 pages. The only order while dismissing the appeal brought to our notice is a communication by a gentleman Anand Krishna whose authority and designation are not stated, but who purported to act on behalf of the Board of Directors, that the appellate authority, after going through the records of the case, has decided to uphold the decision of the disciplinary authority and to confirm the penalty of removal from service imposed upon the appellant. Rule 35 of 1975 Rules deals with appeals. Sub-rule (ii) of Rule 35 provides amongst others that the Appellate Authority shall consider whether the findings are justified or whether the penalty is excessive or inadequate and pass appropriate orders within three months of the date of appeal. In order to ascertain whether the rule is complied with, the order of the appellate authority must show that it took into consideration the findings the quantum of penalty and other relevant considerations. There is no material for showing that the appellate authority acted in consonance with its obligation under Rule 35. However, in para 5.14 to 17 of the counter affidavit, it was stated that ‘full inquiry report with annexure can be shown to the court at the time of hearing, if desired.’ If the respondent was anxious to sustain its action, it was obligatory upon it to disclose the full inquiry report. Nothing was shown to us nor any attempt to show the proceedings of the appellate authority to disabuse our mind that the appellate authority was guilty of utter non-application of mind and discharged its duty under Rule

35. No attempt was made to urge that the three authorities had ever assigned reasons in support of their conclusions.

For this additional reason also, the initial order of the Disciplinary Authority as well as the Appellate Authority are liable to quashed and set aside.

To sum up the order of removal passed by Disciplinary Authority is illegal and invalid for the reasons:(i) that the action is thoroughly arbitrary and is violative of Art.

14, (ii) that the alleged 674 misconduct does not constitute misconduct within the 1975 Rules; (iii) that the inquiry officer himself found that punishment was already imposed for the alleged misconduct by withholding the salary and the appellant could not be exposed to double jeopardy; and (iv) that the findings of the inquiry officer are unsupported by reasons and the order of the Disciplinary Authority as well as the Appellate Authority suffer from the same vice. Therefore, the order of removal from service as well as the appellate order are quashed and set aside.

The last question then is to what relief the appellant is entitled ? Once the order of removal from service is held to be illegal and invalid and the appellant being in public employment, the necessary declaration must follow that he continues to be in service uninterruptedly. This aspect does, not present any difficult and the declaration is hereby granted.

When removal from service is held to be illegal and invalid, the next question is whether: the victim of such action is entitled to backwages. Ordinarily, it is well- settled that if termination of service is held to be bad, no other punishment in the guise of denial of back wages can be imposed and therefore, it must as a necessary corollary follow that he will be entitled to all the back wages on the footing that he has continued to be in service uninterruptedly. But it was pointed out in this case that the appellant was employed as Factory Manager by M/s KDR Woollen Mills, A-90, Wazirpur Industrial Area, Delhi from where he resigned with effect from August 8, 1983. It was also submitted that he was drawing a salary of Rs. 2500 per month. Now if the appellant had procured an alternative employment, he would not be entitled to wages and salary from the respondent. But it is equally true that an employee depending on salary for his survival when he is exposed. to the vagaries of the court litigation cannot hold on to a slender distant hope of judicial process coming to his rescue and not try to survive by accepting an alternative employment, a hope which may turn out to be a mirage.

Therefore, the appellant was perfectly justified in procuring an alternative employment in order to keep his body and soul together as also to bear the expenses of litigation to vindicate his honour, integrity and character.

The submission of the respondent that the appellant had accepted employment with M/s KDR Woollen Mills may be accepted in view of the evidence tendered in the case.

Therefore, the appellant would not be entitled to salary for the period he was employed with M/s KDR Woollen Mills.

675 Even for the rest of the period, the conduct of the appellant cannot be said to be entirely in consonance with corporate culture. As a highly placed officer he was bound to strengthen the corporate culture and he should have acted within the spirit of the regulations both for house building advance and conveyance advance, which are devised to help the employees. There has been lapse in totally complying with these regulations by the appellant though it neither constitutes misconduct to attract a penalty nor substantially good enough for initiation of disciplinary inquiry. Accordingly, having regard to all the aspects of the case, the appellant should be paid 50% of the back wages for the period since his removal from service upto his reinstatement excluding the period for which he had procured an alternative employment. The respondent shall also pay the costs of the appellant quantified at Rs. 3000.

S.R. Appeal allowed.

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