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LI responds to notice of BCI’s Mishra: You gave bar exam to company with Rs 0 revenues, did no due diligence & worse

MK Mishra: Real face
MK Mishra: Real face
Legally India has today responded to the legal notice sent by Bar Council of India (BCI) chairman and senior counsel Manan Kumar Mishra on 25 May 2015 to Legally India, Kian Ganz and Prachi Shrivastava.

LI’s response is a detailed 40-page rebuttal of each of Mishra’s allegations, running to more than 200 pages including annexures.

Full documents and annexures below, an executive summary below that.

Full response downloads

Annexures

Defamation denied

In short, defamation, whether civil or criminal, alleged by Mishra is denied categorically by LI  (page 38), with LI’s response stating in part:

The Bar Council of India (BCI) is a great and respected institution that will always command respect by virtue of the vital role it has in supporting and advancing the legal profession.

Your allegation that Legally India has ever set out to malign the image of the BCI is patently false and an attempt to distract from the fact that, if anything, it have been your actions as the BCI's elected chairman that have tarnished the image of the institution. […]

In your entire Letter, you have consistently failed to highlight a single inaccuracy in any report that LI has published, particularly in the one dated 19 May 2015 which is entirely based upon the BCI's own minutes that were released under RTI, for which there is a strong public interest in publication since the BCI is a statutory body.

You should also be aware that truth is an absolute defence to civil defamation.

LI is not a part of Rainmaker, Rainmaker is merely an arms-length advertiser as many others (page 6)

LI rebuts Mishra’s claim in great detail, and states:

Your allegations of any such nexus between LI and Rainmaker are utterly and categorically untrue on all counts. Your repetition of these falsehoods that you claim are “known to all” does not make your statements any less defamatory, ridiculous and completely devoid of any evidence other than your repetition.  […]

Making extraordinary claims such as yours without any evidence, suggests either a reckless disregard for the truth, or malice.

Read section (II)(A) at page 6 of the response for details if interested.

The 2012 tender that gave the All India Bar Exam (AIBE) contract to ITES was deeply flawed (page 7)

LI’s response states:

The only possible explanation for you calling the 2012 tender “fair and transparent” is if you are unaware of what these words mean.

The BCI's minutes raise serious concerns about the 2012 bidding process for the AIBE project, right from the start.

The winning bidder was ITES Horizon Pvt Ltd, competing against four other companies – Aspiring Minds, Manupatra, Pearson Vue and Rainmaker.

  • ITES Horizon does not appear to have submitted its application by the 30 June 2012 deadline for receipt of tenders, unlike the other four bidders (page 7).
  • ITES Horizon does not appear to have tendered a bank draft for Rs 2,000, as required under the BCI's tender notice, but sent a cheque instead (page 8).
  • There are strong doubts about how ITES Horizon even came to pitch on 30 July 2012 with the other bidders.

All bids, summarised (in Rs per candidate)
All bids, summarised (in Rs per candidate)

Despite the other four bidders either having bid similar amounts to ITES or bid less than ITES in some cases, and having considerable practical experience in relevant areas, the bidders were rejected because:

  • According to the BCI’s minutes, Rainmaker reduced its rates per candidate to Rs 650 with study materials from Rs 900 that it charged in the first three AIBEs.

  • According to the minutes, the other three bidders, Perason Vue, Manupatra and Aspiring Minds, all “flatly refused” to provide some office space for a BCI staff member to liaise with them, and to set up a “small liaisoning office” for the purposes of the AIBE within the BCI's premises.

LI’s response states:

First of all, it is hard to believe that those three companies that spent time and effort bidding for the AIBE tender, would knowingly lose a multi-crore contract by deciding to “flatly refuse” what doesn't seem like a very onerous request to depute some of its staff to the BCI offices and vice versa.

But were Aspiring Minds, Pearson Vue and Manupatra informed before the tender that this would be a critical condition to their winning the contract? At what stage of the tender were they asked about this? What were their exact responses? What was ITES told?

ITES did not have the history or experience that is recorded in the BCI’s own minutes

Mishra had said in an interview:

“ITES has been in service for the past 13 years and they have the relevant expertise in conducting such exams.”

ITES has consistently made the claim that it had 13 years of experience on its website too.

ITES also claimed, according to the BCI minutes of its tender, to have revenues of “around Rs 5.4 crores”.

In fact, Robab Khan, ITES' CEO and the holder of 99.9% of ITES' equity who fronted the AIBE tender according to the BCI’s minutes, had only taken over ITES Horizon Pvt Ltd in 2010 from Puneet Tandon and Sheetal Tandon, who had founded the company in 1999 but resigned on 27 August 2012, one day after the AIBE contract was awarded.

According to financial statements, the ‘Rs 5.4 crore’, ‘13-year-old’ company ITES Horizon Pvt Ltd had:

  • Revenues of zero Rupees between 2004 and 2011.

  • Between 2005 and 2010:

    • Expenses of less than Rs 4,000 per year,

    • Zero fixed assets and a bank balance of zero.

  • As at 31 March 2012, four months before it was bidding for the AIBE tender:

    • ITES did not even hold computer equipment on its balance sheets and owned only Rs 17,280 worth of “furniture and fixtures”, and Rs 9,912 worth of “office equipment”.

    • “No person was employed by the company hence Provisions of Gratuity Act, Provident Fund Act and ESI are not applicable”, according to item number 5 in the “other notes” section to its balance sheet dated 31 March 2012.

    • ITES was running a loss of Rs 19,760 that year, while still carrying forward historical losses of Rs 540,645 from previous years.

  • As at 31 March 2013, after ITES had conducted the first AIBE, the picture looked radically different:

    • The company made profits of Rs 15.4 lakh, which were its first profits since 2003 and perhaps even since its incorporation in 1999.

    • It's bank account balance jumped from Rs 5,745 the previous year to Rs 37.5 lakh.

    • ITES finally had computers on its balance sheets again for the first time since 2004, owning Rs 55,794 worth of computers as fixed assets. ITES also bought furniture & fixtures worth around Rs 1.01 lakh, and office equipment worth Rs 89,788. The value of its fixed assets were nearly 10 times the value of its total fixed assets a year earlier.

ITES summary of financial history from 2002 to 2013
ITES summary of financial history from 2002 to 2013

IT company ITES did not have a website until 2012 (and when it did build one, it looked dubious)

LI’s response states:

For an IT company that claimed “website designing” and “website development” as its top areas of operation, revenues of Rs 5.4 crores and a track record of 13 years, it is conspicuous that it did not appear to have a website at the http://www.iteshorizon.com/ domain between May 2002 until perhaps as late as September 2012, according to the Internet Archive's Wayback Machine, which preserves websites for posterity.

  • The domain name iteshorizon.com was unregistered until 2004, while in 2008 the owner of the domain was based in China, according to historical domain ownership information obtained via domaintools.com. Only on 14 July 2012 – two weeks after the tender deadline – did someone affiliated to ITES – Rakesh Neelam - register the domain name. Neelam told Legally India on 20 November 2012 that he exited his franchise agreement with ITES just a month later, saying: “After that I found it was not a reputed company I can work with.”
  • None of the experience and prior work ITES lists on its website is verifiable or credible.
  • The experience that the BCI minutes record ITES as having mentioned in its AIBE tender (that it “conducted exam of Global Open University”) is not mentioned on its website, and Global Open University appears to be an institution with a questionable track record.

There have been data privacy breaches at the BCI of the AIBE candidate database (page 21)

There has been at least one breach of security of the AIBE’s candidate database.

  • Mishra had told LI on 30 October 2014 that around 6,000 AIBE candidates contact details had been stolen by a contractor from the AIBE database, with that contractor then having been caught red-handed trying to sell that data. No action was taken against the contractor, other than removing the contractor, said Mishra.
  • Kian Ganz was also approached in July 2014 via email by a person purporting to be able to sell 18,638 candidate names, email addresses, date of birth, phone numbers and addresses.

LI’s response states:

This episode demonstrates either a lack of operational or information security by ITES and/or the BCI in dealing with confidential information entrusted to them by AIBE candidates, and calls into question the suitability of ITES and/or the BCI to conduct the tender.

ITES did not deliver on its contract with the BCI (page 23)

Under the binding MOU Mishra entered into with ITES, ITES promised to build the BCI a new website, deliver study materials from AIBE 5, create practice questions for candidates.

ITES has done none of these things to date.

LI’s response states:

Almost nothing in the bargain struck with ITES seems like you, the BCI or the legal profession got a particularly great deal, particularly when you had four other companies with a wealth of experience of the legal profession or in conducting competitive examinations on- and off-line.

AIBE under ITES doubled in cost (page 25)

  • The AIBE cost increased for no obvious reason by almost 100%, to Rs 2,500 per candidate.

LI’s response states:

You may claim that the increased fees went straight to the BCI and the state bar councils who used the money for the “welfare of lawyers”, according to the minutes you shared with us via RTI (at Rs 1,900 per candidate, that translated to Rs 800 for the BCI, Rs 650 to ITES, and Rs 550 for the state bar councils).

Notwithstanding the apparent arbitrariness of the price hikes, it goes without saying that at the very least you must then provide a full itemisation of how the funds from the AIBE have been utilised by the BCI and the state bar councils for the “welfare of lawyers” or otherwise.

The lawyers who voted for you in state bar council elections and the young lawyers who paid increased AIBE fees have a right to be informed of this information, other than your general duty of accountability as the chairman of a body created by statute.

Mishra's tenure at the BCI has been opaque (page 26)

Just because the 2010 tender was opaque, does not absolve 2012’s tender under Mishra from outside scrutiny, in particular since Mishra has been far more opaque than his preceding chairmen.

LI’s response states:

The Times of India reported that you complained at a national seminar on the RTI Act 2005 at Patna Law College that “the BCI's examination department has to deal with at least 10 RTI cases, relating to all India bar examination, every week ever since it has been introduced.”

That is not surprising, since under your tenure you have voluntarily released as good as no information about the AIBE, leaving candidates and advocates in an information vacuum.

Bar exam preparation courses are fine, despite Mishra’s attempt to grant ITES an exclusive licence to hold prep courses (page 31)

LI’s response states:

That sounds nice in theory as another revenue source for the cash-strapped BCI. But it's just slightly ironic that you accuse Barhacker of selling AIBE prep courses “in order to exploit” students, when ITES and the BCI signed an agreement to apparently do exactly the same thing.

It also raises a horrifying potential for conflict of interest when the entities that are running and setting an exam, also want to sell students a course that will help them pass that very exam. If that's not the definition of exploitation of a captive and vulnerable audience, it would be hard to see what is.

Perhaps it is therefore just as well that ITES' “Test Prep Series” is yet another project contained in the ITES MOU that has never taken off.

Ps: Kian is not a foreign agent and LI’s stories have always been fair and factual (page 35)

Mishra claimed that LI was pressuring the BCI to allow foreign lawyers into India because Kian was a foreign agent.

LI responds:

Your statements are untrue and highly defamatory of both Legally India and Kian, who have at all times fairly reported both sides of the liberalisation debate, including repeatedly giving space to your very own comments against the entry of foreign lawyers, as well as comments of others opposed to the process.

In fact, you yourself told Kian via email, in an article published in Mint and on LI in March 2015, that:

“Government is waiting for the opinion of Indian lawyers. We are thinking in positive direction, but it all depends on the attitude of foreign countries: how they reciprocate? It can't be one-sided. We can't put our lawyers or law firms in loss.”

Similar statements have been made by other traditional opponents to the entry of foreign law firms too and the reason is not LI or Kian, but you should take up your grievance with the Hon'ble Prime Minister of India, Narendra Modi, instead who recently said: “Why should we need to go outside the country for global arbitration? We shouldn't think that if foreign lawyers come here, they will take away our jobs.”

You might also want to discuss your views with commerce secretary Rajeev Kher, who has been working hard on a practical approach to the phased entry of foreign law firms.

Both of these gentlemen have a far greater interest and ability to apply pressure than LI or Kian do in this matter.

Conclusion

LI concludes its response with the following demand:

There is the possibility that your Letter can be ascribed to a genuine and honest mistake on your part with respect to the facts, as evidenced by your apparent inability to distinguish between LI and other independent companies operating in the space, as well as the many other factually false and/or unproven statements made by you in your Letter.

Alternatively, it is possible that you have perhaps been the victim of misinformation spread to you mischievously by people who want to commit mischief against LI, Kian and Prachi.

If that is the case, LI, Kian and Prachi would accept the following from you as an initial offer that would go some way towards reducing the reputational damage you intended to cause LI, Kian and Prachi with your Letter, as well as repair the damage that your baseless allegations and vexatious legal threats have caused to the great and respected institution of the Bar Council of India:

  1. A full, unconditional and personal apology from you and a clarification of all falsehoods contained in your Letter as set out above. Your apology and clarification, a draft of which is to be approved by LI in writing by email, must be circulated to all 146 email recipients of your original letter, sent to any others with whom you, the BCI or other parties may have shared hard copies of your Letter at your behest, and published prominently on the BCI website.

  2. Publication of all historical and future meeting minutes of the BCI during your tenures as its chairman on the BCI's website in a prompt and easily accessible manner.

If you are unwilling to agree to the above, despite having been made incontrovertibly aware of the numerous falsehoods and highly damaging assertions made in your Letter, as set out above, LI, Kian and Prachi reserve the right to seek all available legal remedies under civil or criminal law to protect their respective reputations.

For the avoidance of doubt, this response will be published on the Legally India website and LI reserves the right to circulate this response to the same email and other recipients that you circulated your Letter to.

Legally India thanks the many amazing lawyers who have generously shared their time to provide Legally India with advice and guidance on Mishra’s legal notice.

Download: Legally India Response to Manan Kumar Mishra (PDF)

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