Introduction
Is it justified to apply the Judiciary’s power to reframe statutes? One after another bench of judges engaged themselves in an interesting and exciting ‘pencil fight’ on this issue for ages. The two most prominent groups among them are the followers of the Red Pencil and Blue Pencil Doctrine. As we know, the three major functions of the Judiciary are (1) Interpretation of Law, (2) Punishment of offenders & (3) Settlement of disputes among aggrieved parties. In order to exercise its role in dispute settlement, shall the Judiciary involve itself in rectifying the errors in statutes of the states or in agreements between the parties? Generally speaking, where the contract’s language does not accurately or fairly reflect the parties’ intention, the courts at common law can exercise the power to reframe or void it. This makes the center point of debate behind the famous Red Pencil v. Blue Pencil fights among the judiciaries.
Origin
To deal with the particular provision of a statute or contract, the Judiciary often follows some standards which are informally named after various colors of pencils according to their resemblance to the applicable colors. In a given situation when a Court has to deal with a defective covenant, it broadly has three options to consider:
- Red Pencil Doctrine: To throw out the entire covenant;
- Blue Pencil Doctrine: To strike out the unenforceable or offending part to retain the remaining valid portion. Blue Pencil Doctrine derives its validity from the Doctrine of Severability (also known as the Doctrine of Separability). According to the Doctrine when some portion of a contract or legislation offends or is against a constitutional limitation, and if that provision is separable from the rest of the statute, only that offending provision will be considered void by the Court and not the entire statute. But where simply striking down offending clauses doesn’t make the covenant enforceable, the blue pencil jurisdiction would yield the same result as a red pencil.
- Purple Pencil Doctrine: To reframe the covenants to be consistent with the parties’ original intent.
In Halsbury’s Laws of England[1], it was stated that a contract will rarely be totally illegal or void, and certain parts of it may be entirely lawful in themselves. In Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co Ltd[2], a 19th-century English case, a landmark judgment was given by the House of Lords to decide whether contractual obligations can be enforced partially. Where the court struck down some part of a contract by running a blue pencil over it and thus established the Blue Pencil Doctrine. Lord M.R. Sterndale, for the first time, used the term blue pencil in the case of Attwood v Lamont[3] and severed some part of the contract by running a blue pencil over it. The blue pencil doctrine evolved in the English and American courts and was confined only concerning trade, particularly the non-compete covenants. In the US, the states differ on the use of red, blue, or purple pencil rule and show numerous variations under multiple jurisdictions. In Haraeus Medical, LLC v Zimmer, Inc.[4], the Indiana Supreme Court revised the provision of a contract by adding language that limited its scope and rendered it following the purple pencil doctrine.
Indian Perspective
The Constitution of India paves the way for Judicial review and legitimate application of the Doctrine of Severability as an extension of Article 13(1)[5], which reads: “All laws in force in the territory of India immediately before the commencement of this Constitution, in so far as they are inconsistent with the provisions of this Part, shall, to the extent of such inconsistency, be void.” According to Article 13(1)[6], the Doctrine of Severability applies to the pre-constitutional law, but it also becomes applicable to the post-constitutional law by virtue of Article 13(2)[7], The concept makes it clear that in order to guarantee fundamental rights for every citizen, if in a statute, violative and non-violative provisions are separable, and if the non-violative provision can survive without the violative one, the non-violative provision shall be recognized as valid.
Indian Judiciary has employed the Blue Pencil Doctrine on many occasions. Some well-known examples are:
- Babasaheb Rahimsaheb v Rajaram Raghunath[8]: A 1931 judgment is specified in an agreement if different clauses are separable; the fact that one clause is void does not necessarily cause the other clauses to fail.
- D. S. Nakara v Union of India[9]: In order to establish equality before the law pursuant to Article 14[10] of the Constitution of India, It was held that it is just and properly which are vulnerable as denying equality be severed and struck down. Under the Central Civil Services (Pension) Rules, 1972 and Regulations governing pension for Armed Forces Personnel, In Exhibit P-1[11], the words: “That in respect of the Government servants who were in service on the 31st March 1979 and retiring from service on or after that date.” and in Exhibit P-2[12], the words: “The new rates of pension are effective from Ist April 1979 and will be applicable to all service officers who became/become non-effective on or after that date”, were held unconstitutional and were “struck down with the specification that the date mentioned therein will be relevant as being one from which the liberalized pension scheme becomes operative. Omitting the unconstitutional part, it is declared that all pensioners governed by the 1972 Rules and Army Pension Regulations shall be entitled to pension as computed under the liberalized pension scheme from the specified date, irrespective of the date of retirement. Arrears of pension prior to the specified date as per fresh computation is not admissible.”
One step ahead of its European and American counterparts, the Indian Judiciary used the doctrine of the blue pencil to arbitration clauses also. In Union Construction Co. (P) Ltd. v. Chief Engineer[13], it was held that the principle of the “blue pencil” test is applicable to the arbitration Clause. Another example is the case of Sunil Kumar Singhal vs. Vinod Kumar[14] was to decide on an appeal under Section 39[15] of the Arbitration Act, 1940 against the order passed by the court, which was held that “Applying the test of severability, as laid down in the aforestated decision to the facts of the present case, the agreement between the parties, the italic part as demonstrated in the arbitration agreement, already quoted above, can be severed or marked with “blue pencil.” The remaining part of the arbitration agreement survives, and there is no infirmity of any kind whatsoever. It does not amount to rewriting the contract, nor it is in the nature of de novo contract.”
Conclusion
Differences of opinion relating to the standards of Judicial actions manifested in the selective trend of applying those pencil doctrines in various countries and in various states within the same country. The application of the Doctrine of severability has made its own place in the Judicial system. The blue pencil approach thus acquired popularity in the majority. From using Judicial power by throwing the entire covenant like “a baby away of the bathwater” in red pencil doctrine, a more liberal approach by using blue pencil doctrine like an “eraser” is evident. In very few instances though Judiciary considered re-framing “erased” unenforceable provisions by using the purple pencil doctrine, so far, it has shown a conservative approach to take the bargains of re-writing. The role of the Indian Judiciary in the matter under discussion is clear as day in the following judgment by the Supreme Court: “The proper test for deciding validity or otherwise of an agreement or order is ‘substantial severability’ and not ‘textual divisibility. It is the duty of the court to severe and separate trivial or technical parts by retaining the main or substantial part and by giving effect to the latter if it is legal, lawful and otherwise enforceable. In such cases, the Court must consider the question of whether the parties could have agreed on the valid terms of the agreement had they known that the other terms were invalid or unlawful. If the answer to the said question is in the affirmative, the doctrine of severability would apply and the valid terms of the agreement could be enforced, ignoring invalid terms. To hold otherwise would be “to expose the covenanter to the almost inevitable risk of litigation which in nine cases out of ten he is very ill able to afford, should he venture to act upon his own opinion as to how far the restraint upon him would be held by the court to be reasonable, while it may give the covenantee the full benefit of unreasonable provisions if the covenanter is unable to face litigation.”[16]
Author(s) Name: Saumen Chakraborty (Magadh University, Bodh-Gaya)
References:
[1] Halsbury’s Laws of England (4th Edition, Lexis Nexis 2012) 297.
[2] Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co Ltd (1894) AC 535.
[3] Attwood v Lamont (1920) 3 K.B. 571.
[4] Heraeus Med., LLC v Zimmer, Inc.(2019) 123 N.E.3d 158.
[5] Constitution of India 1950, art. 13(1).
[6] Ibid.
[7] Constitution of India 1950, art. 13(2).
[8] Babasaheb Rahimsaheb v Rajaram Raghunath Alpe (1931) 33 BOMLR 260.
[9] D.S. Nakara & Others v Union of India (1983) AIR 130.
[10] Constituion of India 1950, art. 14.
[11] Central Civil Services (Pension) Rules 1972, exhibit P-1.
[12] Central Civil Services (Pension) Rules 1972, exhibit P-1.
[13] Union Construction Co. (P) Ltd. v Chief Engineer, Eastern Command (1960) AIR 72.
[14] Sunil Kumar Singhal Son Of Sriram v Vinod Kumar Son Of Lala Gopi Chand (2007) ALL 10-49.
[15] Arbitration Act 1940, s 39.
[16] Shin Satellite Public Co. Ltd. v Jain Studios Ltd. (2006) 2 SCC 628.
