Top News Headlines 24th Feb 2022: POCSO Case Against Filmmaker Mahesh Manjrekar: Says ‘I Stand By The Film’

POCSO Case Against Filmmaker Mahesh Manjrekar: Says ‘I Stand By The Film’

• Mahesh Manjrekar’s latest Marathi film Varan Bhat Loncha Kon Nay Koncha has landed him in deep legal trouble. A case has been filed against the filmmaker at Mahim Police Station in Mumbai for the alleged indecent portrayal of young kids and women. 
• Apart from him, the complainant has also mentioned the name of the film’s producers Narendra, Shreyans Hirawat and NH Studioz in the case.
• A Special POCSO Court had asked the Mumbai police to investigate into a complaint filed against Mahesh and those who were associated with the film under section 156(3) of CrPC.
• The case has been registered under the provisions of section 34/292 of IPC, section 14 of POCSO and section 67 and 67B of the Information Technology Act. 
• Back in January, when the trailer of the film was released, the National Commission for Women chief Rekha Sharma wrote a letter to the Ministry of Information and Broadcasting, asking them to check the blatant circulation of sexually explicit content involving minors on various social media platforms. The NCW chief also mentioned that the trailer of the film is offensive as it should minors in very objectionable sexual scenarios. 
• In a recent interview, the filmmaker has said that his lawyers will respond as the opposite party has taken the legal route, but he stands by his film. He said that the film had been passed by the Central Board of Film Certification and that is enough to prove his innocence. “What more can I say” said the filmmaker. 
• So far, no arrests have been made in the case and further probe into the matter is ongoing. 
• The filmmaking industry is often seen in a legal battle regarding what they believe is artistic freedom but is viewed by the majority in the society as a blatant violation of the law coupled with a violation of the moral standards of the society. A balance has to be struck between the freedom of expression which is no doubt held in a very high regard, and the law of the land which imposes reasonable restriction on this freedom of expression, but in matters where the most vulnerable section of our society, that is, children are involved, artistic freedom should, in my humble opinion, give way to the objective of the law to protect these innocent people from prying eyes. 

Bar On Medical Practitioners Receiving Freebies Is No Less A Prohibition On The Part Of The Giver, Or Donor: SC

• The Hon’ble Supreme Court (SC or Court), in the case of Apex Laboratories v DCIT, Large Payer Unit - II, has held that supplying freebies to doctors and medical practitioners is prohibited and hence the same shall also stand disallowed under Section 37(1) of the Income-tax Act, 1961 (Act).  
• The appeal was filed against the order of the Madras High Court (HC), which upheld the order of the Deputy Commissioner of Income-tax (DCIT).  The DCIT had disallowed the Appellant’s expenditure incurred towards gifting freebies to medical practitioners.  
• In 2012, the Central Board of Direct Taxes (CBDT) clarified that expenses incurred by pharmaceutical and allied health sector industries for distribution of incentives (ie, freebies) to medical practitioners will be ineligible for deduction under Section 37(1) of the IT Act.  The reason for this disallowance was the sanctions imposed on doctors, including removal from the Indian Medical Register on acceptance of freebies in 2009.  
• The Appellant’s argument was that regulations imposing sanctions were not applicable to pharmaceutical companies.  It was only the medical practitioners who were barred from accepting freebies and in the absence of any corresponding norm imposed on them, the company could not be denied the benefit of claiming an allowance under Section 37(1).  The Appellant placed reliance on the Max Hospital Pitampura v Medical Council of India and Dr. Anil Gupta v Addl. Commissioner of Income Tax.  
• The Appellant brought the Court’s attention to the memorandum explaining the introduction of Explanation to Section 37(1).  The Appellant submitted that the intention of introducing the said explanation was to disallow tax payers from claiming protection money, extortion, hafta, bribes, etc as business expenditures.  
• Section 37 of the IT Act provides that any expenditure, not being an expenditure covered under Sections 30-36 and of capital nature or personal expenditure of the assessee, laid out or expended wholly and exclusively for the purposes of the business or profession shall be allowed in computing the business income of the assessee.  Explanation to the section clarifies that any expenditure which is prohibited by law shall not be deductible.  
• Regulation 6.8 of the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 (2002 Regulations) puts a bar on acceptance of freebies given by pharmaceutical companies by the medical practitioner.  Contravention of the regulation is punishable with varying consequences.  
• The Counsel for the Respondent submitted that giving away freebies was squarely covered under the phrase ‘prohibited by law’ under the scope Explanation to Section 37(1).  It was also submitted that the 2002 Regulations were introduced to disincentivize the practice of receiving extravagant freebies in exchange for prescribing expensive branded medication over its generic counterparts, thereby burdening patients with unnecessary costs.  
• To elucidate its claims, the Respondent relied on the case of Commissioner of Income-Tax v Kap Scan and Diagnostic Centre P. Ltd and Confederation of Indian Pharmaceutical Industry (SSI) v Central Board of Direct Taxes.  
• Analysing the provisions and rulings relied on by both sides, the Court opined that even if the Appellant contention that it gifting freebies did not amount to indulging in illegal activities were to be accepted, there was no doubt that its actions fell within the purview of “prohibited by law” in Explanation 1 to Section 37(1).  
• The Court also observed that it was a settled principle of law that no court will lend its aid to a party that roots its cause of action in an immoral or illegal act and denial of the tax benefit on such grounds must be construed as penalizing the assessee.  The Appellant is precluded from only claiming such expenditure as deductible, which is prohibited by law.  
• The Court also remarked that medical practitioners have a quasi-fiduciary relationship with their patients.  Their prescription is considered as the final word on the medication irrespective of the cost affordability of the patient’s kin.  
• Further, the Court noted that is a matter of great public importance and concern, when it is demonstrated that a doctor's prescription can be manipulated, and driven by the motive to avail the freebies offered to them by pharmaceutical companies.  The Court went on record to say that such freebies were technically not 'free' – their cost is usually factored into the drug, driving prices up, thus creating a perpetual publicly injurious cycle
• Lastly, the Court observed that the 2002 Regulations placing sanctions are mandated by law, as they are embodied in the code of conduct and ethics, which are normative, and have legally binding effect.  Such sanction was no less a prohibition on the part of their giver, or donor; Appellant in the instant case.  
• Based on the observations made above, the Court dismissed the Appellant’s appeal and upheld the order of the earlier Court.  

For The Purpose Of Section 142 Of The NI Act, The Company Will Be The Complainant And Employee Representing The Company Will Be The Defacto Complainant: SC

• The Hon’ble Supreme Court (SC or Court), in the case of M/s TRL Krosaki Refractories Ltd v M/s SMS Asia Private Limited & Anr, has observed that in cases concerning cheque bounce under Section 138 of the Negotiable Instruments Act, 1881 (NI Act), the complainant/ payee, being a company, can be represented by its authorised employee.  
• The Respondent issued several cheques to the complainant amounting to ₹1,10,00,000.  The cheques were dishonoured by the Bank and returned with the endorsement, ‘account closed’.  The Appellant issued notices neither complied with noir responded by the Respondent.  
• The Appellant filed a complaint with the Sub Divisional Judicial Magistrate, (JM) under Sections 138 and 142 of the NI Act.  The learned JM, being satisfied that the complaint under Section 138 of NI Act against the accused is in accordance with law, took cognizance of the plaint and directed summons to the Respondent.  
• The Respondent, however, filed a petition under Section 482 of the Criminal Procedure Code (CrPC) before the High Court (HC), contending that complaint filed was filed by the General Manager (Accounting) (GM), representing the complainant company, who neither had knowledge about the alleged transaction, nor was he a witness to the transaction.  
• Accepting the contention of the Respondent that the complaint did not specify the manner in which the Appellant had authorised it’s GM and no averments were also made whether the GM had knowledge about the transaction or if he was a witness to the transaction.  The Court also noted that no Board Resolution or authorisation in favor of the GM was filed before the Magistrate.  In this regard, the HC placed reliance on an earlier judgment passed by the Court in the case of A.C. Narayanan v State of Maharashtra & Anr.  
• Before the SC, the Appellant contended that the HC misconstrued the principle laid out in A.C. Narayanan (supra) to nonsuit it.  The Appellant contended that the order passed by the learned JM taking cognizance would indicate that the learned JM perused the complaint and the entire record placed before it.  The Appellant also submitted that a perusal of the agreement between it and the Respondent disclosed that the GM was a witness to the transaction and he was also the one who signed and dispatched the notices sent to the Respondent when the cheques were dishonoured.  Thus, the GM was fully aware of the case and also a competent person to maintain the plaint.  
• However, the Respondent still pressed on sustaining the judgment of the HC on the ground that there should be explicit averment to the effect that the person filing the complaint is authorized by the complainant and has knowledge of the transaction in question so as to maintain the complaint.  Further, since the judgment was passed relying on an earlier order, the same should not be interfered with.  
• Taking note of the contention put forth by both sides and analysing the relevant provisions of the NI Act, the Court observed that a perusal of the complaint would disclose that the Appellant filed the complaint in its name through the GM and it was also the payee in the cheques dishonoured.  Thus, the requirement of Section 142 of the NI Act that the complaint should be filed by the payee stood satisfied.  This also satisfies the requirement laid down in the case of A.C. Narayanan (supra).  
• On the contention that there was no averment in the plaint whether the GM was aware of the transaction or whether he was a witness to the transaction, the SC noted that the agreement between the Appellant and Respondent was signed by a witness from each side and the GM was the witness from the Appellant’s side.  The Court also made note of the notice and reconciliation statement signed by the GM.  
• The Court observed that what can be treated as an explicit averment, cannot be put in a straitjacket but will have to be gathered from the circumstance and the manner in which it has been averred and conveyed, based on the facts of each case.  What is necessary to be taken note of is whether the contents in the pleading would convey the meaning to the effect that the person who has filed the complaint, is stated to be authorized and claims to have knowledge of the same.  
• The Court further noted that Section 142 of the NI Act only requires that the complaint should be in the name of the payee.  Where the complainant is a company, who will represent the company and how the company will be represented in such proceedings, is not governed by CrPC but by the law relating to the Companies.  Section 200 of the Code mandatorily requires an examination of the complainant; and where the complainant is an incorporeal body, evidently only an employee or representative can be examined on its behalf.  As a result, the company becomes a de jure complainant and its employee or other representative, representing it in the criminal proceedings, becomes the de facto complainant.  
• In view of the above, the Court held that the opinion of the High Court in entertaining the petition by the Respondent was not justified.  In effect, the appeal was allowed with an instruction to conclude the proceedings not later than 6 months from the date of the instant order.