In the second part of the series, the author writes about supermarkets and our very own kirana stores, and their relevance in wake of opening up of the retail sector
At the bottom of the pyramid is the consumer who buys his provisions on a day-to-day basis, often limited to Rs5 to Rs10 worth at a time. For this, the kirana shop is the only provider. The consumer virtually no choice and has to be content with what the kirana shop gives him. Of course, there are personal comforts as the shop owner keeps talking to you, knows you and often gives you credit and will have stuff delivered to your home. However, you will not get to see the produce except as is laid out in the sacks and there would be very minimal choices. The kirana shop days are clearly numbered. Few of them will upgrade themselves in to supermarkets and thrive but many of them will surely shut down.
I have been in Chennai for slightly more than a decade. Even at that time, Chennai had its supermarkets—Niligiris and Spencers—for many decades. By the early nineties, many kirana shops had converted or scaled up to supermarkets. Today, these shops, with less space, command high level of footfalls and customer loyalty and offer better choices than the big-name counterparts. Most of these shops are family businesses which keep interacting with the customers and change the stocking profile as per their needs. Chennai is full of shops like these. We do the monthly provisions and groceries purchases from shops like these.
Another segment is the discerning customer who will buy a specific product from a specific location only. For instance, in Matunga, a wealthy suburb of Mumbai, Gujarati households will buy most of their stuff from a store called “Chheda Stores”, which offers premium quality at premium price—a niche that is unlikely to be disturbed.
Once the consumer reaches a level where purchases can be done in one or two rounds a month, he/she would shop in an air-conditioned comfort of a supermarket and look at different labels, and get things done under one roof. This is the aspiration for the consumer who is at the bottom of the pyramid. Everyone has a right to a better experience and this is where the future of retail lies.
Coming to the supermarket chains, there are major issues. Getting space at reasonable rents in most metro cities is ruled out, except maybe the outskirts. Even small format stores in prime locations are unable to make money. To give an example, Wal-Mart is focused on having its presence in smaller towns. It is yet to venture into New York given the rentals there. The present chains have started off in the metros and going in to tier-II cities. A few of them already have foreign tie ups and signal intent to get in to formal partnership once government policies are in place. So, let us not expect any radical changes when foreign brand names appear on the store shingle.
One thing that will become the bone of contention is that retail FDI will also hinge on what is sold through the store. The range of products sold through chains like Wal-Mart, Carrefour, etc is mind boggling and includes virtually everything that a home would need, not just be horticulture produce, textiles or home needs—everything. Whilst the domestic customer will be happy, what will happen is that most of the produce would be imported. For example, if you have been to Andheri, another suburb of Mumbai, there is a shop called ‘Alfa’ that stocks one of the biggest ranges of imported consumer products, from the latest in electronics, soaps, perfumes, toys or furniture! The new retail chains that come in will have all of this and more. Naturally, this will drive the domestic suppliers out of business.
However, it is not that retail FDI will take off in a hurry. The biggest challenge is talent. You have to just go to any retail chain and see the problem. Talking to one of the supermarket chain managers, the feedback I got was about the staff issues relating to competence and integrity. India does not have a set of people who are willing to put in long hours in a store and wear the smile. There is apparently very little effort from the staff to learn the ropes and labour turnover is high.
And, to get the retail chain running, we need infrastructure and power. We need large properties at low rents, with huge parking lots and easy access. We need governments that do not tax movement of goods from one state to another. Without all this, FDI in retail is a non-starter. FDI in retail is like finding a brick; by itself it has no meaning and just a part of an edifice. To put the brick in place, you need everything else.
Retail chains are a financially unviable project so far in India, given that everyone seems to be losing money. Rentals are too high and nothing has been done to improve the supply chain. Going by what is happening so far, we have not even touched the surface. Who will gain?
At the end of the day, the consumer is going to gain. Lower prices? Maybe not. But surely better choice, transparency and fairness. Will the farmer benefit? He will find it very difficult to escape the middleman. Like middlemen in every profession, they will find ways to survive, especially given the reluctance of the white-collar retail chain guys to roll down their sleeves and get cracking. What about the kirana wala? Don’t worry, he will thrive one way or the other. In any case, he does you no good in terms of either quality or price. He is one whose days are numbered and has to upgrade to get better. He has ducked all taxes and cheated most consumers; no need to shed tears for him. Some professions become extinct over time.
To sum up, FDI in retail is merely a talking point for politicians. It makes no difference if it is closed or open. In any case, organised retail is spreading out big. Maybe FDI glamour will spread it out much quicker. It is best to recognise that change is upon us. Those state governments and the so called leftists, who oppose this for the sake of it, do not know what they are shouting at. They are like the dogs that bark, simply because it knows nothing else.
(The author can be reached at [email protected].)
The Supreme Court has over-ruled its previous judgements in order provide relief to the holders of bounced cheques under the provisions of the Negotiable Instruments Act
It has been observed lately that the trend of reversing important judicial decisions has been on a rise i.e. a decision is reversed due to a difference in the opinion of the different benches presiding over matters pertaining to the same question of law and sharing the same background as to the facts of the case. Such a practise is being adopted more often by the Supreme Court, which being the highest court of law is regarded as the epitome for all legal issues. The practise of reversing a decision is considered appropriate and necessary only in the wake of adopting a dynamic approach towards law instigated by a constant change in the business dynamics and influenced by external factors.
To cite a recent example of such practise, reference shall be made to the case of Bhatia International Vs Bulk Trading SA1 (Bhatia International), the decision of the Supreme Court by virtue of which it was held that Part I of the Indian Arbitration and Conciliation Act (Arbitration Act), dealing with the power of a court to grant interim relief, could be applied to arbitration disputes with a foreign seat unless the parties specifically opted out of such an arrangement, was overruled by a subsequent decision of the court in Bharat Aluminium Co Vs Kaiser Aluminium Technical Services Inc2. In this landmark judgment, a constitutional bench of the Supreme Court held that Part I of the Arbitration Act will have no effect on international commercial arbitration held outside India unless it has been agreed that such awards shall be enforceable in India in accordance with the provisions contained in Part II of the Arbitration Act. Thus, in case of an international commercial arbitration, no application for interim relief will be maintainable as the application of Part I of the Arbitration Act is limited only to arbitrations taking place within India.
Such inconsistency should be discouraged in the course of imparting justice on substantial matters of law. Moreover, in a country where high reliance is placed on judicial precedents both by the citizens as well as the courts, difference in the opinion will prejudicially affect the rights of the parties directly involved, thus, consequentially acting to the detriment of the society and causing a significant decline in the faith held by the citizens on our judicial system.
SC over-rules prior decision: Assigns true intent to Section 138 of NI Act
The Supreme Court while deciding the scope of Section 138\142 of the Negotiable Instruments Act, 1881 (hereinafter referred to as ‘NI Act’), has over-ruled its previous decision thus importing true character to the intent of the legislature. Section 138 aims to promote better compliances in terms of honouring cheques and discharging liabilities by imposing a penalty for any default committed in this respect. It is a medium of speedy remedy provided for the protection of the holder/payee of the cheque, where the debtor seeks to discharge his obligation through cheque but does not intend to honour it.
However, the current practice adopted by the courts and the time spent to arrive at a final decision has inadvertently failed to meet the intent of the Legislature behind this provision and made it worthless in the statute books. The case to be dealt with subsequently is an apt example depicting the inability of the courts to provide speedy remedy as in this case, the aggrieved party had to strive for a period of ten years (approximately) before they could be accorded relief.
As per the proviso to the Section, there are three essential pre-requisites which are to be fulfilled for the application of this Section:
Further Section 142 of the NI Act requires the complaint to be made within one month of the date on which the “cause of action” arises under clause (c) of the proviso to Section 138 i.e. failure of the drawer to make payment within 15 days of receipt of notice by the holder/payee.
So, an essential question which arose for determination is when does a “cause of action” arise and whether a payee/holder can in due course initiate proceedings under Section 138 after a subsequent dishonour of cheque by the drawer if he has not initiated any action on earlier cause of action?
These questions have been a matter of debate in various rulings. The matter of Sadanandan Bhadran Vs Madhavan Sunil Kumar3(hereinafter referred to as ‘Sadanandan’s case’), decided by the apex court was a landmark judgment before it was over-ruled in Msr Leathers Vs Palaniappan and Anr.4(‘Msr Leathers’) by the Supreme Court itself.
The facts of both the cases being essentially the same are that the holder/payee had served notice under clause (b) of proviso to Section 138 on the first default by the drawer, yet did not file a complaint despite failure of the accused to make payment of the amount covered by the cheques, on assurance being given by the drawer that the cheques will be honoured on being presented again. However, even on subsequent presentation of the cheque for encashment by the holder/payee, the cheques were dishonoured again for want of insufficient funds. Notice was served by the payee and on failure of the drawer to pay the money; complaint was filed under Section 138.
In Sadanandan’s case5, the scope of Section 138\142 of the NI Act was given a limited meaning wherein the Supreme Court held that the “cause of action” under clause (c) of the proviso to Section 138 can arise only once and failure of the aggrieved holder/payee of the dishonoured cheque to file a complaint within 30 days of the first cause of action shall be treated as an absolution of his right. The apex court in this case adjudged that the subsequent presentation of cheques and the default committed thereby shall hold no relevance despite the fulfilment of all the preconditions stipulated for an offence to take place under Section 138 of the NI Act.
However, the recent judgment of the Supreme Court in Msr Leathers6 has brought out the essence of Section 138 of the NI Act, totally in sync with the intent of the legislature and the very object of Section 138, i.e. to impart credibility to negotiable instruments in business transactions and uphold the efficacy of and faith in the banking system. In the instant case, the question before the Supreme Court was similar to that in Sadanandan’s case (supra). The court negated its earlier ruling, observing the following:
“There is in our opinion no real or qualitative difference between a case where default is committed and prosecution immediately launched and another where the prosecution is deferred till the cheque presented again gets dishonoured for the second or successive time.” (emphasis supplied)
Therefore, based on the above observations, the Supreme Court upheld that the prosecution based upon second or successive dishonour of the cheque is also permissible so long as the same satisfies the requirements stipulated in the proviso to Section 138 of the Negotiable Instruments Act.
The landmark judgments of the Supreme Court over-ruling its previous decisions are inevitable in as much they have given effect to the true intention of the legislature by adopting a fair and just approach and fulfilling the purpose for which the statutes have been enacted that is to protect the interests of different classes of people. However, the frequent negation of earlier judgments is not a healthy approach and should be discouraged unless a substantial question of law is involved or it is mandatory to do so in the interests of promoting justice and equity.
1 (2002) 4 SCC 105
3 (1998) 6 SCC 514
Warning that the higher judiciary would be compelled to take drastic action of suspending the judicial officer if it continued to receive petitions, the Chief Justice of Madras HC pointed out to the recent case of Ramanathapuram District Judge, who was suspended on five counts, including corruption and sleeping during hearings
Chennai: Issuing a stern warning against corruption in judiciary, Madras High Court Chief Justice MY Eqbal on Thursday said 500 petitions against judicial officers were under the Court's scrutiny and anyone coming under a cloud should better quit, reports PTI.
In a candid talk while administering oath of office to the newly appointed civil judges, he said the common opinion of general public was not appreciative and Judicial officers are also equally blamed along with any other government servants.
"At present there are about 500 petitions under the scrutiny of High Court as against about 900 judicial officers working now. In all the complaints we are not taking drastic action of suspension or removal from service, but we will be keeping a watch of all the petitions received," he said.
Warning that the higher judiciary would be compelled to take drastic action of suspending the judicial officer if it continued to receive petitions, he pointed out to the recent case of Ramanathapuram District Judge, suspended on five counts, including corruption and sleeping during hearings.
"If we receive petitions continuously, then we will be compelled to take the drastic action of suspending the Judicial Officer, whether they are at the higher level in the cadre of District Judge or lower level in the cadre of Civil Judge Junior division," the Chief Justice said.
There were complaints about some judicial officers of the last batch which were being carefully scrutinised, he said.
Observing that judiciary is the last resort of an affected common man and every one looks upon a judicial officer with utmost respect and reverence, he said that respect and reverence must be kept up.
"If anybody raises a little finger against any judicial officer making allegation of corruption or favouritism, then it is better to quit the job and can resume practice again instead of continuing as judicial officer," he said.
"I have to say these harsh words because nowadays the common opinion of the general public is not appreciative.
Judicial officers also are equally blamed along with any other government servants," he said.