In this article, Tejaswinee Roychowdhury who is currently pursuing M.A. IN BUSINESS LAWS, from NUJS, Kolkata, discusses Indian Trademark law. Comparison with US and EU.

Be it India or the US or the EU, all three countries have made trademark laws adhering to the eight fundamental principles and the TRIPs Agreement, Paris Convention, and the Madrid Protocol. However, their structure and implementation in certain cases vary and this variation has been addressed hereafter.

Introduction

A trademark comes under the protection of Intellectual Property Rights. WIPO defines a trademark as a sign which is capable of distinctly distinguishing the goods or services of one individual or enterprise from those of other individuals or enterprises. [1]

A trademark is a visual symbol/a distinctive mark or design used by an individual or a company. The trademark helps the consumer identify the products and services of a particular individual/organization/company. They have been in existence as along as trade itself when makers started to “mark” their wares with a word or a symbol to help identify the maker and have been unearthed in excavations from China, India, Persia, Egypt, Rome, Greece, and so on, dating back almost 4000 years. [2]

A trademark’s main functions are identification of goods and distinguishing them, signifying source of goods, signifying quality of goods and advertisement of goods. [3] Additionally, trademark protection aims to prevent the use of fraudulent marks. With developments in trade and commerce in the era of globalization, the need for encouragement of investment flows and transfer of technology and the need for harmonization and simplification of the trademark management system, trademarks have today acquired the goodwill and reputation of consumers. [4]

The international status of Trademark System

To fulfill the object and aims of trademarks, and in consonance with its functions, all the countries have unequivocally accepted the eight fundamental principles of trademark protection. It has been observed that ,

“it is of the highest importance that in such an important branch of commercial law as that relating to trademarks there should be uniformity as far as possible in all countries administering the same system of law.” [5]

The eight fundamental principles governing each of such countries including India, USA, and the EU are as follows:

1. It is common knowledge that trademark registration confers upon the proprietor a monopoly right to use the concerned mark. But, since no right can be absolute some restrictions are to be imposed on the use of certain classes of words/symbols /other representations as marks.
2. It should be maintained that the registration of a trademark should not be interfering with its bona fide use by persons who intend to use it in ordinary sense and ordinary purposes.
3. Since property rights in a trademark are acquired by the use of superior and similar rights obtained by registration, prior users of a trademark should be protected against any monopoly right.
4. The two main interests which are to be protected are – the interest of the public, so that the mark to be registered does not mislead the public; and the interest of the existing traders who may object if the mark is capable of being confused with existing marks. Similar observations were made by Lord Diplock [6] – “It has been held up on grounds of public policy that a trader ought not to be allowed to obtain by registration under the Trade Marks Act a monopoly in what other traders may legitimately desire to use.”
5. Since it is also a matter of public policy, any public who wishes to object to the granting of registration to any trademark must be allowed to present his objections along with reasons. [7]
6. It must be taken into consideration that situations may arise where a trader has been using a particular trademark for years although a similar mark is registered. Such a trader who has not registered his trademark but has been using it honestly and in good faith should not be deprived of the benefits of registration merely because he has not registered. Such registration is to be subject to certain suitable limitations and conditions.
7. The trademark should be put to continuous use. Stopping its use will result in its eventual death as there will be no equitable or logical basis of continuing with the protection of such a trademark.
8. A trademark is an intellectual property. The term ‘proprietor of a trademark’ is therefore used in its definition making it both assignable and transferable like any other property. However, owing to its nature, this kind of property cannot be assigned or transferred without adhering to certain conditions and limitations.

Indian Trademark Law. Comparison with US and EU

In light of the eight fundamental principles mentioned above, it is clear that be it India or the US or the EU, all three countries have made trademark laws adhering to these principles only. However, their structure and implementation in certain cases vary and this variation has been addressed hereafter.

Origin and Development

• The European legal practice of trademark protection has always focused on prevention of mistake, deceptions and any confusion with regard to the origin of the mark. Protection of public policy is, therefore, the primary focus on common law of trademark, protecting both buyers and sellers. Statutes from as early as the thirteenth-century show evidence of the presence of medieval guilds the members of which could control the marks of their co-workers so as to avoid confusions and so that the public policy was adhered to. Manufacturers were also offered valuable methods of marketing their goods. Trademark, mainly served to indicate the origin, “though the identity of the source may be in fact unknown to the public.” [8]
• The trademark laws followed by the European Community were incorporated in the Community Trade Marks (CTM) in 1996 based on the 1946 draft of the “Convention on European Trademark Law”. The European Union focuses on finding registered trademarks and does not adhere to the “first to use” rule used in India and the US.
• The Anglo-American law on trademarks was meant only to prevent ‘palming off’, as in, preventing the passing off of goods of one producer by another producer calling it his own. The legal protection of trademark prevented producers from producing under the mark that was clearly used by someone else.
• Later on, the law developed to allow the producer to promote his products using the mark and giving assurance to consumers as to the quality of such products. Trademark law in the US has been in constant development since 1870, the first of which was declared unconstitutional by the State Supreme Court [9] when the Congress sought to federalise the structure.
• Then in 1905, the interstate use of trademarks was addressed which too were incomplete in essence. Today, the US trademark laws are governed by the Lanham Act, the federal trademark registration, which came into effect from 1946.

• There was no statutory law on trademark in India before 1940 and common law was applicable to the subject as was applicable in England before their first Registration Act in 1875. The first statue introduced was the Trademarks Act, 1940, which introduced the machinery for registration and trademark protection.
• This was replaced by Trade and Merchandise Marks Act, 1958, as the previous statute focused too much on European trademark laws which made governing very difficult in India. With the Act of 1958, it was sought to address these complex difficulties and it was deemed necessary to protect the bona fide interests of other traders from litigations by registered traders.
• This made the Act very complex and extensive as well and a review was sought of the same to harmonize the laws in light of a rapidly globalizing trade and commerce system. India, being a party to the TRIPs Agreement sought to make laws in conformity with the Agreement.

Eventually, the Trade Marks Act, 1999, was adopted which replaced the Act of 1958. “The object of the Act was to amend and consolidate the law relating to trade marks, to provide for registration and better protection of trade marks for prevention of the use of fraudulent marks.” [10]

• Today, a thorough study of the Indian trademark law will show that it has deviated from the European system of focusing mainly on public policy and has adopted the US idea of “first to use” of a mark alongside the public policy concerns. Although it seems to have been adopted via the Trademarks Act, 1999, the principle was followed by the Indian Judiciary prior to the Act thus affording a wider scope to the term “first to use”, i.e., focusing on the concept of common law. Further, unlike in the US, first use is internationally accompanied by a transborder reputation of the mark and similarly, in India too, it is the determinant for ownership of trademark rights in India. [11]

 What constitutes a Mark

• In India, according to the Section 2 (zb) of the Trade Marks Act, 1999, the definition of trademark is not just descriptive but exhaustive as well. The Indian law is very clear on what may be a trademark. There are no stipulations as to what may not be a trademark.
• The Supreme Court in Laxmikant Patel v. Chetanbhat Shah [12] held that the definition of trademark under Indian law is very wide and means a mark which is capable of being represented graphically and is capable of distinguishing the goods or services produced and provided by various persons.
• It, inter alia, includes a name or a word, abbreviation of a word or a name along with shape of goods, their packaging, and combination of colours.

The Section 2 (1) (m) further mentions that “mark” includes – ‘a device, brand, heading label, ticket, name, signature, word letter, numeral shape of goods, packaging or combination of colours or any combination thereof’, making the definition very descriptive and exhaustive.

Position in US

Trademark law in the US is governed by the Lanham Act. Its definition of the term ‘trademark’ is very broad in its description as to what may constitute a mark. It says in Section 1127 that a trademark,

“includes any word, name, symbol, or device, or any combination thereof”.

• This definition, unlike the Indian definition, is only exhaustive as it is not very descriptive compared to the Indian definition. This makes the definition under the Lanham Act much wider than that of the Indian law. This definition is also quite unrestrictive in nature as a symbol or device may be meant to include a wide array of things.

Position in EU

The trademark law followed by the European Union is called the Community Trade Marks (CTM). The CTM does not exclusively define a trademark or state what constitutes a trademark. As compiled from the various regulations, a trademark includes a ‘word mark’ [13]; and other marks consisting of numerals, letters, and signs [14] for which the applicant does not claim any special graphic representation or colour. [15]

What constitutes Use

• As has been seen before, a trademark loses its lifeline when it falls into non-use for a considerable period of time. In India, the registration of a trademark may be attacked on the grounds of non-use under the Indian Trade Marks Act 1999. In such a case the mere fact that the mark is in use outside India or that the mark has an international reputation will not be sufficient to prevent it from its demise. In this aspect, the Indian Judiciary had given a wide meaning to the term ‘use’.
• The Supreme Court held [16] that the use of a trademark may also be ‘non-physical’ but it is pertinent that such use is ‘material’, as in, meaningful. For instance, the use of trademark on invoices is deemed to be ‘use’ in connection with the goods which the mark represents. [17] However, an advertisement will not be used under the Act, unless it is used in relation with the sale of some goods, like it was held by the Supreme Court in a case relating to the use of Toshiba Corporation’s logo in an advertisement in India.

Position in EU

• This test is very similar to the test under the Community Trade Marks (CTM) of the European Union where the use should not be some mere symbolic use. The use should be ‘genuine’ meaning the use should be actual and authentic.

Practically speaking, the definition of ‘use’ in India is much easier to work with. For instance, in the aforementioned Hardie Case [18], “the circulation of a price list for a product that was not yet available for sale” was held to be a material use of the mark in question.

• The point being that the Indian law is much wider when it comes to defining what constitutes ‘use’. The judiciary has been very active in this aspect so as to prevent the hardships of the traders and producers.

Position in US

The US trademark law makes a difference between the actual use of a mark and the intent to use a mark. Although registration can be applied for by producers under both circumstances, i.e., actual use of a mark and bona fide intention of using a mark, the registration is not granted by the Patents Office unless the actual use of the mark is shown and the use of this mark should be shown again after the 5^th and 6^th year and at the time of renewals in order to maintain the registration.

Dilution

• The doctrine of dilution is a concept peculiar to trademark law where if a trademark is well reputed and famous, the proprietor can forbid others from using the mark. The US trademark law allows such a proprietor to sue anyone who uses his famous mark whether by blurring or by tarnishment as both of these instances would give rise to a cause of action against the person who is making any such use of the mark.
• For the doctrine of dilution to apply, it is pertinent that the mark in question be in actual use in the US and for it to be qualified as famous, it is essential that majority of the US “general consuming public” readily identify the mark in relation to its proprietor or the goods or services that the mark purports to represent.

Under the trademark law of the EU, it is not necessary for the mark in question to be ‘famous’ in similar parameters as that in the US. It is enough if a substantial amount of the public can identify with the mark relation to its proprietor or the goods or services that the mark purports to represent. This implies that the mark must be in use in the European Community as well for a cause of action in dilution to arise.

• The doctrine of dilution had been accepted judicially in the Indian trademark law system since a long time. Today, it is distinctly provided for in the Section 29 of the Trade Marks Act, 1999, be the goods similar or otherwise.
• Therefore, in India, globally well-known and famous trademarks have automatic protection from any diluted use by blurring or by tarnishment. Companies such as Apple, Dunhill, Ford, Honda, Hyundai, Cartier, Mercedes-Benz, and Caterpillar have successfully passed off dilution based actions against persons who have used diluted versions of identical marks or similar marks which could not be readily distinguished, whether for similar goods or dissimilar ones.

In this light, the Delhi High Court had held [19] that, “It will be a great perversion of the law relating to trademarks and designs, if a mark of the order of the ‘Mercedes Benz’… is humbled by indiscriminate colourable imitation by all or anyone.”

Distinctiveness

• Indian Law is specific on the fact that a mark should not be ‘deceptively similar’ [20] and should be capable of distinguishing the goods and services of one person from those of others. The Indian Judiciary has incorporated distinctiveness as to being a mandatory quality of a mark in a trademark. The mark must be ‘adapted to distinguish’ the goods and words like ‘good’, ‘best’ or ‘superfine’ are not so adapted. [21]
• Further, user for one year prior to application is not sufficient to acquire distinctiveness under Section 9 to qualify for registration under the section, the mark should have acquired distinctiveness by long user. [22]

Under the US trademark law, a mark is required to be distinct under four classifications – Arbitrary and Fanciful (the distinctiveness is the strongest), Suggestive (the distinctiveness is medium), Descriptive (the distinctiveness is weak) and Generic (the distinctiveness is the weakest and so no protection is given in such cases).

Under the EU also, it must be seen to it that the mark has a distinctive character. Firstly, a mark can be used in a form where the elements differ and do not alter the distinctive character of the mark in the form in which it was primarily registered. [23] Secondly, a word mark may fall into non-use if the words or figurative elements used affects the mark’s distinctive character. Thirdly, if the mark contains a non-distinctive element, the applicant may disclaim any exclusive right to such element, separately. [24] [25] This exclusive right is also granted under the Section 17 of the Indian Trade Marks Act, 1999.

Enforcement

• In India, infringement of trademark protection amounts to penalised offences under the Chapter XII of the Trade Marks Act, 1999. Further, administrative proceedings are available to applicants for dealing with grievances relating to registration. The Act provides for the establishment of the Intellectual Property Appellate Board (IPAB) under Section 83 of the Act where the appeals are to be preferred after proceedings have been conducted before the Registrar of Trademarks.
• The IPAB is to be constituted of a Chairman, Vice-Chairman and a bench comprising of a technical member and a judicial member, as appointed by the Central Government. The proceeding and appeal procedures are to be conducted in accordance with the procedural laws of the country.
• Cancellation of Registration matters may also be preferred before one of the four High Courts of Delhi, Bombay, Calcutta and Madras as these Courts have the authority to try IPR cases. If a particular suit is outside the jurisdiction of these Courts, the suit must be instituted in the relevant District Court.

The Indian Judiciary has been promoting the need for an expeditious disposal of intellectual property infringement cases.

The Supreme Court has observed [26] that “all courts and tribunals in the country hearing IP cases should proceed with such matters on a day-to-day basis and final judgment should be given, normally, within four months from the date of filing of the suit.” There have also been encouragements for alternative remedies such as mediation for determining damages along with injunctions keeping in mind that not every defendant may have a strong finance.

Administrative hearings are also a part of the US and EU trademark law system. In the EU, the Register is maintained by the EUIPO and the trademark protection is valid for 10 years (same as in India under Section 25 of the Indian Trade Marks Act, 1999).

In the US, trademark is registered with the USPTO Trademark Examiner and the entries are made in the Principal Register. Infringement cases can be tried in the Federal courts of the country while cases relating to registration are to be tried before the Trademark Trial and Appeal Board. Additionally, the US Customs has the power to prevent goods bearing infringing marks from being imported into the country.

Conclusion

Being a matter of trade and commerce, capable of derailing the entire system, it is important that the nations keep a certain parity while formulating laws on intellectual property protection, and in this case, specifically trademark protection. India, US and the EU, though a little different in their approaches to the trademark law jurisprudence have been adhering to all the important international agreements and conventions and protocols such as the TRIPs Agreement, The Paris Convention and the Madrid Protocol.

Let’s take the EU to being a single country although it is essentially a community of all the European countries. EU effectively brings an entire set of countries under its umbrella thus creating a larger harmony in the trademark statutes of the world. All three countries have incorporated the definition of trademark, use, and so on from the TRIPs Agreement into their respective legislations. Registration procedures have been orchestrated and echoed through the Paris Convention in all three legislations. India has incorporated special provisions under the Madrid Protocol in Chapter IV A of the Indian Trademarks Act, 1999 through the Amendment Act 40 of 2010. US and EU have also acted and enacted laws with strict adherence to the protocol.

References

[1] http://www.wipo.int/trademarks/en/

[2] William H. Browne, A Treatise on the Law of Trade Marks (1885), p. 14

[3] J. T. Me Carthy, Trade Marks and Unfair Competition (1973), p. 86

[4] Dr. J. K. Das, Intellectual Property Rights

[5] Shredded Wheal, (1940) 57 RPC 137 at 149

[6] Smith Kline’s Appln (1976) RPC 511 at 538

[7] Bass v. Nicholson (1932) 49 RPC 88 at 111 (HL)

[8] United States v. Steffens, 100 US 82 L. Ed. 550 (1879)

[9] United States v. Steffens, 100 US 82 L. Ed. 550 (1879)

[10] Meghraj Biscuits Industries V. Commissioner of Central Excise (2007) 3 SCC 780

[11] Shwetasree Majumder, Fidus Law Chambers, Uttar Pradesh, India; Eesheta Shah, Nabarro LLP, London, UK; Sujata Chaudhri, Cowan Liebowitz & Latman, P.C., New York, New York, USA; Mahua Roy Chowdhury, Solomon & Roy, Mumbai, India, Indian Trademark Law: A Comparison with EU and U.S. Laws, INTABulletin (The Voice of International Trademark Association), Vol. 65 No. 7, April 1, 2010

[12] AIR 2002 SC 275

[13] Article 4 of CTMR

[14] Rule 3 of CTMIR

[15] An overview of conditions for registration and scope of protection for various trade mark categories under comparison from the perspective of the CTMR (http://euipo.europa.eu/en/office/ejs/pdf/von_Kapff.pdf)

[16] Hardie Trading v. Addison Paints, 2003

[17] Vulcan v. Palanichamy, AIR 1969 Cal 43

[18] Hardie Trading v. Addison Paints, 2003

[19] Daimler Benz Aktiegesellschft v. Hybo Hindustan, 1994

[20] Section 2 (h), Trade Marks Act, 1999

[21] Dr. J. K. Das, Intellectual Property Rights

[22] Sarda Plywood Industries Ltd. V. Deputy Registrar of Trade Marks, 2007 (34) PTC 352 (IPAB)

[23] Article 15, CTMR

[24] Article 38 (2), CTMR

[25] An overview of conditions for registration and scope of protection for various trade mark categories under comparison from the perspective of the CTMR (http://euipo.europa.eu/en/office/ejs/pdf/von_Kapff.pdf)

[26] Bajaj Auto Ltd. v. TVS Motor Co. Ltd.

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In this article, Tirumala Chakraborty who is currently pursuing M.A. IN BUSINESS LAWS, from NUJS, Kolkata, discusses difference between Registered and Unregistered Trademark.

Introduction

• From the beginning man possesses rights and there was no time when these rights were not infringed or his rights were free from piracies or invasion. And this is where the requirement of trademarks lies. Trademark is a distinctive sign or an indicator that gives identification or distinguishes the goods or services of an individual or a company from those of another or its competitors in the market.
• Thus trade mark gives protection to the right of one person from getting infringed by another or invaded by means of piracy. With the increase in trade and commerce and with several requests being made; necessity for legislation on trademark was keenly felt by the Indian Trading Public. The demand gained momentum and the then Central Government was compelled to accept the necessity for passing an Act on this subject and a memorandum was prepared and was circulated among all the local governments and commercial bodies for opinions.
• Ultimately on 11^th March 1940, the bill for this was passed and received the assent of the Governor-General. The Trade Marks Act, 1940 was enacted for the protection of trademarks and this Act was modeled on the English Act of 1938. But since then the need has been felt for revising the statute for effective or better protection of trade marks and in recent times the trade mark law has undergone changes to a large extent when the Trade Marks Bill, 1999 was passed. In India, the law relating to trade marks is mainly governed by The Trade Marks Act, 1999 and it provides the mechanism for trademarks registration and once it is registered, it grants status of property to the trademarks.

What is a Trademark

• The Trade Marks Act, 1999 was developed after reviewing the existing law in a comprehensive manner and mainly because of the fast developments and increasing globalization in the field of trade and commerce. This Act was passed as there was a need to simplify the trade mark system and also to encourage the flow of investment and transfer of technology.
• To achieve these objectives, the Act of 1999 amended the definition of trademark, considered registration of trademark for services in addition to goods, registration of which are imitation of those of the well-known trademarks are not permitted, grounds for refusal of registration has been enlarged and defensive trademark was omitted. The procedure for registration of the registered users has been simplified and the period of registration and renewal was increased from seven to ten years. This Act made trademark offences as cognizable and increased the punishment for offences relating to trademarks and provides an Appellate Board for speedy resolution of appeals.
• The term ‘trademark’ has been defined under Section 2(zb) of the Trade Marks Act, 1999. According to this Section, the term ‘trademark’ means a graphical representation of a mark, symbol or sign made in a manner with an objective to distinguish or differentiate the goods or services of one person from another.
• Such differentiation may include shape of goods, their packaging, and combination of colors. It is pertinent to note that in relation to Chapter XII [Offences, Penalties and Procedure] (other than section 107) [Penalty for falsely representing a trade mark as registered] a registered trademark could either be for the purpose of or in connection to trading activities and/with a view to grant rights to the proprietor to use the mark exclusively.
• In furtherance to the same and in relation to other provisions of this Act trademark will also refer to a mark used with a view to carry out trade between the goods or services and/for the purpose giving right to any person who may be a proprietor or a permitted user to use the mark whether with or without any indication of the identity of that person. A trademark also includes a certification trade mark or collective mark.
• A trademark is an indicator or distinctive sign that can include a name, design, symbol, device, brand, label, letter, word, shape of goods, packaging or combination of colors or any such combinations. A trademark is a visual representation of a mark and is used by an individual or an organization or company in order to identify or distinguish his products from those of another.
• The objective of the use of trade mark is to indicate a connection in trade between the goods or services, and some persons having the right to use such either being the proprietor or by way of permitted use. An extract from Milton Wright’s Inventions, Patents and Trade Marks (2^nd Edn., p. 38) that has been universally accepted says that an ideal trademark is a trademark that is easy to speak, remember, spell and is simple in design. An ideal trade mark should be attractive to sound and appearance and suggest the quality of the product. And most importantly an ideal trademark should be made in such a manner that it can be distinctive from other trademarks of the same class and should be registrable and protectable.

In Parle products vs. J.P & Co.,Mysore [AIR 1972 SC 1359, (1972) 1 SCA 184], it was observed by the Hon’ble Supreme Court,  that when a question arises relating to whether one mark is deceptively similar to another, the essential features of the two marks are to be considered before coming to any conclusion. Placing the two marks side by side for pointing out the differences is not adequate. It would be rather enough if the impugned mark has such an overall similarity to the registered mark as would be likely to cause confusion or mislead a person dealing with the registered trademark to the extent that he accepts the product bearing the impugned trademark when offered to him.

A proprietor of a trade mark must understand the class under which it should be registered and choose accordingly as it protects the goodwill of the business. In India, a trademark can be divided into several categories such as word mark, device mark, service mark, collective mark, certification mark, well- known mark and unconventional mark. Different types of

Different types of the trademark are discussed below briefly,

• A word mark is the form of trademark that gives the owner of the mark a right only in word, letter or numerical.
• Where a trademark is in the form of a unique representation of a word, letter or numerical, it is called a device mark.
• A service mark can not be seen in the case of goods but it represents the service offered by a person or a company. A service mark is a mechanism available to protect marks used in the service industry. The Service marks are represented by the symbol SM and not TM.

For example, McDonald’s which has a service mark for restaurant services it provides. Service mark cannot be easily distinguished from other kinds of trademarks and this is the reason why many companies prefer having both.

• The Collective marks are used by a group of companies or an association or public institution or cooperative to inform the general public about a specific feature of the product for which the mark is used. “CA” which denotes the members of Institute of Chartered Accountants is a prominent example.
• Certification marks are used to assure the buyers or the consumers that the product has certain standards and has successfully gone through a standard test specified. Woolmark, Agmark, and ISI are the few commonly used certification marks.
• A trademark achieves the title of a well-known trademark and gets more protection when it is recognized by a large percentage of people.
• Unconventional trademarks are those trademarks which are recognized for their distinctive feature such as color, sound, smell and shape for example when the smell of a perfume is distinctive and cannot be mistaken for an associated product, such can be registered as a smell mark. The Yahoo yodel was the first Sound Mark that was registered in India followed by Nokia tune.

All about registered Trademark

• Once a trademark is registered and approved by the Trademarks Registry, a bundle of rights including the right to use such mark is exclusively conferred upon the owner of such registered trademark owner. In India, registered trademark is any mark that is legally registered under The Trade Marks Act, 1999.
• Registration gives legal protection to the rights of the registered owner and one can approach the judiciary for infringement and can claim damages from the person who is using his trademark without his consent or approval. For registration, the owner of the mark needs to file an application before the Trademark Registry showing that it gives a unique identity to the goods or services, as the case may be, and can be distinguished from the others available in the market.
• And, once a trademark is registered, (R) is added in place of (TM) that indicates trademark and is usually written in the upper right-hand corner of the mark.
• In India, though the registration of trademark is not mandatory, but it is always advisable to register the mark because of certain benefits that derive automatically from such registration. Most importantly registration of the mark is required as it plays a vital role in identifying as well as advertising the product.
• Registration secures the goodwill of the trader and gives protection to the consumers from purchasing the imitation product or the second rate quality product. Chapter IV of the Trade Marks Act, 1999 talks about the effects of registration and by such registration certain rights are conferred under section 28 of the Act. As per Section 27 of the Act, no action for infringement can be taken in case of an unregistered trademark. Whereas, if a registered trademark is infringed, the aggrieved person can sue and take action for such infringement of his mark and can even ask for reliefs.
• According to Section 31 of the Act which is consistent to Section 31 of the Trade and Merchandise Act, 1958, registration of trade marks is to be a prima facie evidence of its validity. This means that the evidence is liable to be rebutted and the burden of proof is on the person alleging invalidity.

The Hon’ble Supreme Court observed in Corn Products Refining Co. versus Shangrila Food Products Ltd [AIR 1960 SC 142, (1960) 1 SCA 536], that the only presumption that follows from a registration of a trade mark is its prima facie evidentiary value of its validity.

• Chapter III of the Trade Marks Act, 1999 deals with the procedure and time period or duration of registration. The time period of registration for a trademark is ten years in India and is subject to renewal on expiration of such time period of 10 years. The entire process of registration in India is governed by the Trade Mark Act 1999.
• The procedure for registration is complex, costly and takes time. The proprietor interested in registering his trademark must make an application as prescribed under Section 18 of the Act.  Once the application is filed, it is examined by the Registrar carefully to find out if there is any discrepancy. The acceptance must be absolute and unconditional. After the application is accepted by the Registrar, the application has to be advertised in the Trademark Journal which is published weekly.
• Trademark Journal contains all the trademarks those are accepted by the Registrar. Once it is published in the Journal, general public have an opportunity to object such registration if he believes that such registration can be a cause of damage to him. Any third party may object within three months from the date of the advertisement of the application or within such further period not exceeding one month, as provided in the Act may object such registration by giving a notice writing to the Registrar in a prescribed manner. The Registrar is also empowered to withdraw the application under section 19 of the Act in case of any defects or errors.
• When no objection or opposition is received by the Registrar, the next step has to be the preparation and issuance of the trademark certificate to the applicant and once the certificate is issued, the trademark is considered to be registered trademark under Section 23 of the Act and then the ® symbol can then be placed next to the Trade Mark logo or the ™ symbol.

All about Unregistered Trademark

• An unregistered trademark is a trademark which is not registered under the Trade Marks Act 1999 and does not have safeguards against infringement. The proprietor of an unregistered trademark does not have the right to use ® symbol. An unregistered trademark only possesses the ™ logo indicating that such trademark is not registered but is distinguishable from other similar goods or services.
• Under the Trademarks Act, an unregistered trademark does not get much protection and cannot stop any third party from using the same mark. An unregistered trademark is one which does not get statutory protection but possess certain common law rights.
• There are traders who use trademarks which are not capable of registration and they just prefer not to apply for registration. Sometimes a trademark remains unregistered as the proprietors do not file an application for registration due to ignorance of the Intellectual Property laws. The whole procedure of registration is complex and quite lengthy and due to this, there are lots of cases pending before the Trademark Registry where an application has been filed by a proprietor but the trademark is yet to be considered as registered.
• An unregistered trademark does not get much security and legal protection as compared to the registered trademarked goods or services. The owner of an unregistered trademark can affix the ™ symbol. This serves as a notice to the public and indicates that mark used by him on his product is unregistered but can be used as a trademark to signify or distinguish his product from those of the other available in the market.
• Though no action can be taken for infringement of an unregistered trademark under the Trade Marks Act but the third party can be sued for passing off. Unregistered trademarks posses certain benefits under common law and the action against passing off is based on the principle which says that “a man may not sell his own goods under the pretense that they are the goods of another man”.
• Passing- off is a mechanism of practicing unfair trade and seeking profit from the goodwill of another associate trader. One of the main essential ingredients of a passing-off action is that some confusion has been formed in the minds of the consumers regarding the trade names and in such matters the test to be applied is whether a person of average understanding and a person of imperfect remembrance would be confused so as to identify the source of the product. It is the responsibility of the aggrieved to prove that there is a similarity and the defendant is fraudulently passing off his products as those of the aggrieved.

Difference between Registered and Unregistered Trademark

A registered trademark can be distinguished from an unregistered trademark on the basis of the grounds that are discussed below:

Validity and burden of proof when challenged

According to Sec 31 of the Trade Mark Act, registration of a trade mark has to be the ‘prima facie’ evidence of its validity. From this it can be easily concluded that with the registration, the trademark posses much benefits in terms of its evidential value. Validation is believed to act only upon trademark which are registered. It is the liability of the owner to prove the value and the goodwill attached to the goods or services in case of an unregistered trademark. In India where, registration of a trademark is not mandatory, an unregistered trademark may gain some protection only after the product earns some level of reputation in the market, manages a highly convincing position in the industry and gets well known among the large percentage of public. Hence the burden of proof lies with the proprietor when the validity of an unregistered trademark is challenged by someone.

Remedies available

A registered trademark gets much protection and if any dispute arises relating to the mark and its validity, the registered owner has a provision for statutory remedy under the Trade Mark Act, whereas, an unregistered mark is less protected and gets benefits under common law. In case any third party uses the mark of the registered proprietor without his consent, the proprietor has a legal remedy in his hand and he can take action for such infringement. An unregistered trademark, on the other hand, does not acquire the statutory right of infringement but can sue the third party and take an action for passing- off. An unregistered trademark can seek for remedies under the common law system.

The judgment given by the Hon’ble Supreme Court in the famous case of State of U.P. Vs. Ram Nath, Partner M/S Panna Lal, [AIR 1972 SC 232] still holds good and applicable on offences, penalties and procedures described in chapter XII of the Trade Marks Act, 1999. In this case, the Hon’ble Supreme Court has clearly distinguished a registered trade mark from an unregistered trade mark. The necessity was felt to interpret certain section such as section 77, 78 and 79 of the Trade and Merchandise Act, 1958 to lay down that the legislature is silent and has deliberately not used the word “registered” before the words trade mark, mark or trade description in the chapter while dealing with offences, penalties and procedure. It further adds that registration of the trade mark is not compulsory for initiating a criminal action. Hence, an unregistered trade mark holder can also take recourse to criminal action.

Right to use the symbol or the logo

The proprietor can use the TM symbol once they apply the mark on their goods or services as the case may be. TM symbol indicates that the mark used by the proprietor is a trademark of that particular proprietor. This logo is usually written in small font and is placed beside the mark. An unregistered trademark holder can use the TM or the trademark symbol but an unregistered trademark holder has no right to use the ® symbol. The ® symbol is a representation of registered trademark. Once a trademark is registered successfully without any objection and the certificate is issued, the proprietor can use the ® logo along with the ™ logo.

Time period or duration of registration and renewal

Once a trademark is registered and entered in the book of Trademark Registry, it lasts long for 10 years. It can be renewed from time to time upon the expiry of the time period of registration. Each renewal has to be made within a period of six months before the expiration of the last registration of the trademark. In case the renewal fee has not been paid by the proprietor at the expiration of the last registration, the Registrar is empowered to remove such trade mark from the Register and make the fact known to the public by advertising such in the Journal. But in case of an unregistered trademark, the proprietor is under the liability to prove the length of time or duration for which the reputation of his good or services exist or existed in the trade market system.

Territory or geographical area

Registered trademark gets nationwide protection resulting from such registration and if any applicant wishes to get his mark registered internationally, then he can do so by making an international application on the form prescribed by the Common Regulations for international registration of the trademark. In short, registration makes it easier for a trademark to survive in the market while on the other hand the proprietor of an unregistered trademark has to prove the geographical area in which his product has gained significant credibility among the consumers.

Conclusion

The Trade Marks Act deals with protections which are only applicable to the registered trademarks therefore registered trademark are more secured and protected when compared to unregistered trademarks. In brief, it is always better to register a trademark even if it is not mandatory in India and many other countries. Registration of a trademark has several incentives. Registration guards it from any action of infringement which somewhat gives relief to the registered trademark holders. The registered trademark holders can file a legal suit for infringement and since the trademark is registered, the burden of proof does not lie upon the holder.  Registered trademarked products create a better brand image in the market and get more preference over the unregistered trademarks by the consumers. And lastly but most importantly registration also plays a vital role in brand development which is extremely crucial for the growth of trade and commerce.

Hence we can say it is important to register a trademark to create good will in the trade market system. To survive in easy manner and for a longer period of time in the market, every individual, partnerships, company or organization, trade unions or legal associations should apply for the trademark provided the requirements of the Trademarks Act are met.

LIST OF ABBREVIATIONS/ SYMBOLS

 INDEX OF AUTHORITIES

• Books referred

Trade Marks Act, 1999 (Bare Act)

Commentary on the Trade Marks Act by Iyengar

• Websites referred

www.manupatra.com

www.indiankanoon.com

www.wikipedia.org

http://www.advocatekhoj.com/library/bareacts/trademarks/index.php?Title=Trade%20Marks%20Act,%201999

https://www.intepat.com/blog/trademark/unregistered-vs-registered-trademark/

http://patentinindia.com/trademark-registration-india/

https://www.indiafilings.com/learn/trademark-registration-process/

• Dictionaries referred

Oxford Dictionary

Black’s law Dictionary

• Table of Case Laws referred

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In this article, Dr.V.Ramprasath Manohar who is currently pursuing M.A. IN BUSINESS LAWS, from NUJS, Kolkata, discusses Lawsuits on Patent Infringements In India And Pharma Patents.

Introduction

Patent gives exclusive rights to the owner to treat his intellectual property well by protecting it from others. Therefore enforcement of patent right is the major function of Indian Patent Act 1970. Whenever any patent applicant or patent right holder is aggrieved in enforcing his patent right under Indian patent act, he can approach the appropriate judicial authority to enforce his patent rights by way of filing law suits for infringement. This essay illustrates the patent jurisprudence in India with various case studies on law suits on patents infringement and pharma patents.

Patent Jurisprudence in India

• The Indian Patent Act 1970 is an act which covers the patent jurisprudence in India. This act was amended in 1999, 2002 and 2005 to adhere to the WIPO and TRIP guidelines on Patents. With these amendments, there is a paradoxical change in patent regime in India.
• The process patent of Indian patent regime is extended to product patent regime and the drugs, agriculture, and pharmaceutical sectors also being covered in new patent regime. Since 2005 amendments, there are many litigations on patent right infringements and therefore patent jurisprudence is evolving with various judgements on many patent related cases by High court and Supreme court.
• Indian patent law protects both product patent and process patent.
• In case of process patent infringement, the burden of proof lies on the defendant and in case of product patent infringement the burden lies on the patentee. It is important to have a strong IP regime in order to promote innovation and also to attract new investments in India. Further strong IP regime also promotes research and development in India and consumer will also be benefitted with new innovative products.

Law suits on Patent Infringements

Patent infringement is not defined in Indian patent Act, but patent rights are described in the act. Patent right includes making, distributing, mortgaging, or selling the invention in India. Therefore, anything which interferes such patent rights may be considered as infringement of patent rights.  Hence, unauthorized making, using, offering for sale, selling any patented invention, or importing into India of patented invention during the live term of a patent may be considered as patent right infringement. In the initial phase, law suits of patent infringement were dealt with the tradition of civil suits of Indian court and civil remedies were awarded. Over the years, patent jurisprudence evolved and judgements on patent suits are centered on enforcement of rights of patent holder.

Over last 2-3 years number and nature of patent litigation has evolved dramatically. Innovators have not restricted themselves to mere gaining patent protection for their invention, but also aggressively protecting their patent right from being infringed upon by their competitors. Therefore, in recent years, protection and enforcement of patent right are the major points of patent litigation. Further, patent holders are also aggressively litigating to challenge the claim of new patent by their rivals.

Case studies on law suits on patent infringements and pharmaceutical patents in India

Gleevec case of Novartis case

• In this case, Novartis , a swizz based pharma company applied for patent right of its beta crystalline form of Imatinib mesylate( Gleevec). The patent claim was objected by CIPLA and other generic drug producers. The patent claim was rejected by Indian patent office and a writ petition was filed in Hon.
• Madras high court. Novartis has questioned the constitutional validity of 3(d) section of the patent act. Novartis contended that the term ‘efficacy’ in section 3(d) is vague and ambiguous and against article 14 of the Constitution of India. However, Hon. Madras High court dismissed writ petition and upheld the constitutional validity of section 3(d).
• Second appeal was filed by Novartis in Intellectual Property Appellate Board (IPAB) and IPAB has upheld the novel and invention aspect of Novartis claim, but rejected the claim of patentability under section 3(d). This order of IPAB was challenged in the Hon. Supreme court of India by filing an SLP.
• However, in 2013, the Hon. Supreme court of India has dismissed SLP and upheld that the Novartis claim was failing on both the test of invention and patentability as per the provisions of section 2(j), (ja ) (l) and section 3(d) of the patent act.
• The landmark judgement in patent litigation is epitome of patent jurisprudence in India. Because, the judgement of the Hon. Supreme court of India is illustration of balancing between the patent holder right and public right. It was clearly stated that evergreening of patent by patent holder and exploitation of general public and prohibition of competition of rivals are not the intention of the patent act.
• Indeed, the Hon. Supreme court upheld in paragraph 191 of the said judgement clearly stated that section 3(d) is valid and it does not disallow any right to patent on incremental innovation provided that the said incremental innovation fits into test of patentability.

Ericsson vs. Xiaomi case

• In this law suit, Ericsson filed a suit against Xiaomi in India in December 2014 to protect its patent right on the 8 standard-essential patents. An ex-parte injunction on the sale, manufacture, advertisement and import of Xiaomi’s devices was imposed by the Hon. Delhi High court.
• The Hon. Delhi high court injunction order was challenged by Xiaomi before a Division Bench of the Delhi High Court. A temporary order was issued by division bench to allow Xiaomi to resume the sale, import, manufacture, and advertisement of its mobile devices subject to the condition that Xiaomi would only sell devices having Qualcomm chips and royalty of Rs 100 per device would be deposited by Xiaomi.
• In this case, patent right infringement is averted by issuing injunction order against Xiomi to exploit patent rights of Ericcson and also remedies are provided to balance the right of patent holder as well as the user of patent.

Merck vs. Glenmark case

In this case, the Hon. Delhi High court passed injunction against Glenmark for manufacturing the generic drug Sitagliptin and using patented product of Merck Sharp. In this case, the Hon. Delhi High court upheld that there was Prima facie infringement of patent rights of Merck over its patented product sitagliptin and irreparable injury was also found to be caused to patent holder. Hence, balance of convenience is in favour of patent holder ie. Merck. and therefore the Hon. Delhi High court passed injunction order against Glenmark from manufacturing and selling of Zita and Zitamet. There by, patent rights of  Merck was protected and enforced.

Novartis vs. Cipla case

In another patent suit, Novartis filed suit against Indian generic drug maker Cipla from making or selling generic copy of Novartis’s “Onbrez”. In this case, temporary injunction was issued by Hon. Delhi High court against Cipla to protect the patent right of Novartis. The Hon. Delhi High court has cited Roche vs Cipla case, and observed that a strong prima facia case was established and validity of the patent of Novartis was not strongly disputed by Cipla. Further, Cipla’s counter arguments on the basis of “epidemic” or a “public health crisis”, unable to manufacture the same in India by Patentee and high cost of patented drug were not accepted by the Hon. Delhi High court. Therefore, claim of “urgent unmet need” for the drug in India was rejected by Hon. Delhi High court. Hence, the court granted injunction against Cipla to prevent patent infringement of Novartis.

This case is a classic illustration of patent jurisprudence in India to enforce the patent rights in a fair manner and to prevent inappropriate application of exemption clauses under patent act with a vested interest to infringe the patent rights of patentee. Further, the apprehension about the possibility of discrimination between MNC and Indian company in Indian patent regime was proved to be wrong.

SYMED Labs vs. Glenmark Pharmaceuticals case

In another case of SYMED Labs vs. Glenmark Pharmaceuticals, Glenmark Pharmaceuticals Laboratories was allegedly infringing two of SYMED patents: IN213062 & 213063. SYMED filed suit against Glenmerck in Delhi high court.

The court observed that there was a prima facie case in favour of SYMED. Further, the court also observed that protection to the patent processes ought to be granted to the SYMED as damages will not be an effective remedy. Thus, there will be irreparable loss and injury due to the misuse of patents by Glenmerck. Further, the balance of convenience was also found to be in favour of SYMED. Thus the court granted an ad interim injunction restraining Glenmark from manufacturing, selling, offering for sale, advertising or directly or indirectly dealing in the production of Linezolid. Thus, infringement of the SYMED’s registered Patents was effectively remedied by the court.

Vringo vs. ZTE case

• In this case, Vringo and Vringo Infrastructure alleged that ZTE has infringed patent rights of Vringo patent IN200572. A suit was filed by Vringo against ZTE against infringement of patent in the Hon.
• Delhi High court in 2014. In this case an ad interim ex-parte injunction was granted to restrain ZTE from importing, selling, and advertising, installing or operating devices that comprise the infringing components of Vringo. However, ZTE has contested innovativeness of Vringo patent and Hon. High court has appointed commission to look into the technical aspects of patent.
• This case is illustration that the post grant patent objection is also being considered by the Indian patent jurisprudence during the hearing of patent infringement cases. Therefore, patentability and innovativeness of patent may also be tested after grant of patent. This ensures that patent is not only under scrutiny during grant of patent, but also during its enforcement.

Maj. (Retd.) Sukesh Behl & Anr. vs Koninklijke Phillips case

In this case counterclaim for revocation of the suit under Section 64(1)(m) of the Patents Act, 1970 (for short “the Patents Act”) for non-compliance of the provisions of Section 8 was made by Sukesh Behl. In the original suit Koninklijke Phillips has sued for permanent injunction restraining Sukesh Behl from infringing its patent and for other incidental reliefs. However, the court examined counterclaim for revocation and observed that the failure to comply with the requirement of Section 8 of the Patents Act would invariably lead to the revocation of the suit patent under Section 64(1)(m) of the Patents Act. This is significant judgement in a complex patent jurisprudence to revocation of the suit on patent infringement.

Patent Revocation in Roche case

• In this case, a patent granted to Roche for Valganciclovir was revoked by controller of patents. The patent for Valganciclovir was granted to Roche in 2007 in India. The grant of the patent in India also looked as restrictions or a threat to cheaper generic versions of the drug that cannot enter the market. The principle ground for revocation of the patent was non patentability under section 3 (d) of the Indian Patent Act, 1970.
• Further, the drug formulation was alleged to exist before grant of patent and “efficacy” of patented drug over old drug was also questioned. The arguments were made stating that the drug was having improved bioavailability where whether the improvement of oral bioavailability constitutes enhancement of the known efficacy of that substance was discussed.
• By considering the thorough arguments The Controller ruled that the present patent was a ‘mere use of a known process’ which was not patentable under Section 3(d), Patents Act as well as known by the prior arts. Therefore on consideration of all the above arguments and evidences the patent granted to Valganciclovir was revoked. Thus, this case illustrates the evolution of Indian patent jurisprudence to revoke the patent claim during patent litigation.

Natco and Bristol Meyers Squibb case

• NATCO and BMS has made a settlement in the matter of drug named “Entecavir”. The drug is used in the treatment of hepatitis B infections and the dispute of the patent concerned the use of “Entecavir” oral composition once in a day. Prior to 1995, Indian Patent Act was not granting product patents and hence the drug did not process an Indian patent. Hence, many pharmaceutical companies infringed patent rights of patentee and launched their own generic product.
• Therefore, injunction was granted against Ranbaxy when they had launched the generic version of the same drug. When, the issue was raised against NATCO when they had launched their independent drug, X-Vir and challenged BMS in IPAB and settlement was entered with BMS. Thus, the alternative ways to protection of patent right through settlement among disputed patentee is an innovation of Indian patent jurisprudence.

Conclusion

• The patent regime in India is mainly governed by the Indian Patent Act 1970 which was amended in 1999, 2002 and 2005 to adhere to the WIPO and TRIP guidelines on Patents. Since 2005 amendments, there are many litigations on patent right infringements and therefore patent jurisprudence has evolved over the years with various judgements on many patent related cases by High court and Supreme court. The patent validity is being tested for innovativeness and patentability of patent.
• The claim of patent by the patentee during the law suits are being tested for the above two aspects. If the court is not convinced with these aspects, in many cases, the patent claim of patent applicant was dismissed by Indian judiciary.
• However, if the patent right is established by the patentee, by establishing three essential elements like prima facie case, irreparable injury and balance of convenience, in such cases, injunction orders were passed by the courts to prevent the infringement and suitable remedies to protect the patent right were also passed in various law suits of patent infringement.
• Post grant verification of patent during litigation, revoking of patent on counterclaim and settlement of claim among the disputed patentee are the other alternative innovation of Indian patent jurisprudence to protect and enforce patent rights without affecting public interest. Further, in few case, misuse of exemption clause of pharmaceutical patents was also injuncted by Indian judiciary.
• Non-discriminatory, fair, and innovative patent protection of patent rights and users of patent are the highlights of various patent case judgements in various law suits of patent infringements.

References:

1. Patent infringement suit by Dolby against oppo and vivo by Khurana and khurana
2. Pharma Patent Infringement Cases in India- Intellepedia
3. spicyip.com
4. http://www.thepharmaletter.com/article/plethora-of-pharma-patent-infringement-cases-in-india
5. Landmark pharma patent jurisprudence in India, vol 19 Journal of Intellectual property rights, March 2014.

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In this article, Vincent Kofi who is currently pursuing M.A. IN BUSINESS LAWS, from NUJS, Kolkata, discusses How to start an Event Management Business in India: Process, Compliance, Best Practices, and Relevant Laws.

Introduction

• Currently, according to Getz and Page’s (2016) analysis, the size of the Indian event management industry is about USD 172 million. Broadly, the industry caters to personal, organizational, cultural, and leisure event categories, which can be further categorized into social and corporate events.
• The event management industry in India is at a budding stage and largely unorganized, and it mostly comprises self-employed entrepreneurs and house makers. Getz and Page (2016) further establish that the current growth of the industry is facilitated by the growing company and household incomes, as well as the increasing number and rate of TV and sports events, reality shows, corporate conferences and awards, etc. As people’s incomes grow, people increase their expenditure on parties, weddings, among other social and personal functions.
• There are only a few learning centers providing training related to events management, but from the market trend, the centers are likely to become many as people are becoming aware of the opportunities linked to the industry. This paper discusses how to start an event management business in India, particularly digging into the process, compliance, best practices, and relevant laws.
• However, first, it is important to understand the Indian event management market industry.

The Indian Event Management Market and Industry

• Event management is a very broad market. The market is customer driven since clients have more purchasing power coupled with low brand shifting cost. Although there are not many businesses offering events management services, there is so much competition in the market because of lack of entry barriers.

Accordingly, in Shekhar Singh’s (2014) view, whoever wants to start an event management business in India needs to create a niche for his or her business. For instance, one would choose to specialize in managing marriage or corporate events, or choose to market campaigns. Researching on the niche is very vital because it can reveal about the number of competitors in a specific area of interest, the competitor’s customer base, any unattended areas within the niche, and most significantly, how the competitors bill their clients.

• The corporate market category includes companies as well as charities and nonprofit firms. Based on observation, charities and nonprofit organizations are mostly involved in events meant to increase their public support base and raise money, such as hosting athletic competitions and gala fundraisers.
• There are thousands of this kind of events throughout the year across India (Pai, Sridhar, Badwaik, & Rajeevan, 2015). When they are very large, they need specialized event planning experience. However, it is helpful to start with smaller events as one learns and gains experience to manage larger ones. In addition to nonprofit organizations’ events, there are companies’ hosted events, which include conventions, trade shows, holiday parties, staff and investor meetings, and company picnics.
• Since there is a big market for these kinds of events, it would be wise considering them when one is deciding on the niche into which to venture. The other kinds to consider are social events, which include birthdays, weddings, sweet 16 parties, anniversary parties, reunions, etc. Depending on an entrepreneur’s goal and capability, he or she may choose to manage all types of events or create a niche in one or more of the types. With the proliferation of social media and its influence, the market for anniversaries, birthdays, and other social events is likely to continue growing. This market will mostly comprise the people getting married, parents lionizing golden anniversaries, and others commemorating their wedding anniversaries.
• Most of the event planners rarely work 9-to-5. Events are mostly organized in the evenings, holidays, weekends, and on specific seasons. It then follows that the amount of time an entrepreneur spends managing events depend on the specialization chosen. Almost half of the Indian event management industry is unorganized. However, due to the ubiquity of newspapers and TV channels, advertisers have resolved to using experiential marketing, where they connect with their consumers through events rather than merely on media.
• This way, Lee and Chhabra (2015) argue, the advertisers are getting better and faster results. This approach is intensely practiced by India’s largest event management at the present, Wizcraft. With the improving economy, the live entertainment arm of event management is equally growing and is likely to grow even faster as consumers are growingly becoming discerning. In fact, the discernment is growing from the TV channels increasing reality show content to about 40% (Malur & Lakshmikantha, 2014). These shows broadcast singing and dancing competitions, for instance, which need event management services.
• Because of the promising event management industry in India, there is a significant number of international brands setting camp in the country as investors. For instance, in the recent past, the international mega-brand WPP Digital entered the Indian market through Encompass Events, while Interpublic group entered through investing in Lintas India. There has been a recent joint venture amalgamating Viacom and Network 18 and Viacom—both formed Viacom 18, which is a well performing entertainment and event platform (Sulehria, 2017).
• With the increasing competition, even from the international brands, the local event management firms are becoming more professional and creative. Following the understanding of the current Indian events management market, it is necessary to understand the process, compliance, best practices, and applicable laws.

Process, Compliance, Best Practices, and Applicable Laws

First in the process of venturing into events management is acquiring relevant skills or knowing a way of getting someone with the experience and expertise to help the business grow faster. However, this may not be necessary if an entrepreneur has worked elsewhere and is prepared to apply the acquired planning experience in the new venture.

• Being able to do this, just like in any other business, a prospective entrepreneur must have some critical skills. For instance, to succeed in the market, an entrepreneur needs to be a good decision-maker to be able to evaluate options. The entrepreneur also needs to be able to come up with new and innovative solutions to problems, which also means he or she must have leadership qualities (Zakarevičius, & Župerkienė, 2015).
• To start off well, it is safer basing one’s specialization or choice of niche on personal experience. For instance, if one’s background is corporate, then it is safer specializing on corporate events at first, such as organizing corporate sporting events, and later diving into newer niches.
• An entrepreneur seeking to starting an events management business needs to have impregnable analytical aptitude and an eye for detail. The person needs to be able to market his or her services while selling his or her ideas. When money starts flowing in, the businessperson needs to know how to manage it as he or she tracks financial transactions.
• According to Zakarevičius and Župerkienė (2015), such a person should be a good time manager and able to prioritize work related tasks. The person must be able to motivate himself or herself, as well as others and know how to engage clients and close sales. In other words, the entrepreneur must be able to understand team formation and manage people successfully. Acquiring these skills faster needs one to train and get certified, which will demonstrate one’s competitive distinction in terms of professional experience, knowledge, skills, and capacity to plan and manage an event successfully.

The second in the process is knowing the right people.

• Besides having relevant skills and knowing exactly what to do in running an event management business, whom one knows is equally important, especially in a market that is becoming very competitive. Getz and Page(2016) claim that knowing the right people in the industry helps in equipping one with practical information in starting and running the event management business.
• Accordingly, the entrepreneur interested in the industry can use social media to find relevant people. For instance, LinkedIn would be important in finding and joining appropriate groups and participating in relevant discussions that would help in starting and running the business.
• In addition, the entrepreneur needs to be attending exhibitions, seminars, and trade shows to expand his or her contacts and network. It is also important to attend events managed by the people already in business to create more contacts, including of suppliers, and to create a list of potential sponsors.

After acquiring the necessary skills, knowledge, and contacts, the third step in the process is to plan.

• Locally, one can choose to incorporate as a sole proprietorship, partnership, or private (or public) company (Singh, 2016). When choosing a business structure for an event management business, one needs to consider the structure’s liability, funding, taxation, and ownership and control. Differently said, making the best choice demands balancing various factors, such as the business’s nature and objectives, degree of control the owner desires, amount of capital the business requires and the available and preferred sources of funding, tax implications, and liabilities the structure will bear.
• Creating a business plan will lead to the fourth stage in the process, which involves registering a business entity. Registration at this stage is important because an entrepreneur needs to secure a business name before using it in many other documents and in marketing. In India, one can choose to register a business entity through Ministry of Corporate Affairs (MCA) or Registrar of Firms, or on the Startup India portal or mobile application. There are many business structures from which to choose depending on one’s business needs and objectives.
• Mallen and Adams (2017) advise that the information will be important because knowing one’s audience and competition helps in finding one’s niche and deciding on how and where to promote his or her services.
• The templates provided by banks usually comprise all financial modeling templates that one would need to create year on year projections. The templates sourced from banks will also be very important in case one needs to raise business funds from a bank. The development of a business plan will need the inclusion of the market information obtained from the research in the previous steps.
• An events management firm or entrepreneur needs a good business plan. One of the areas to start searching is banks—banks would be having templates for a business plan of events management.
• Mallen and Adams (2017) advise that the information will be important because knowing one’s audience and competition helps in finding one’s niche and deciding on how and where to promote his or her services.
• The templates sourced from banks will also be very important in case one needs to raise business funds from a bank. The development of a business plan will need the inclusion of the market information obtained from the research in the previous steps.
• An events management firm or entrepreneur needs a good business plan. One of the areas to start searching is banks—banks would be having templates for a business plan of events management. The templates provided by banks usually comprise all financial modeling templates that one would need to create year on year projections.
• If one chooses to incorporate an events management business as a partnership, he or she shall need to be aware that the formation will be governed and regulated under the Indian Partnership Act, 1932. The Limited Liability Partnership Act, 2008 governs and regulates LLPs, while the Companies Act, 1956 governs and regulates companies (Singh, 2016). One is not compulsorily required to register an event management business if he or she chooses a partnership structure.
• However, without registering and being governed and regulated by the Indian Partnership Act, 1932, a partner cannot litigate the business or any other partner to the firm. In addition, neither the business nor its partners can sue a third party. Finally, the business cannot arrogate set off against a suit made by a third party. One cannot start and run a business as an LLP or a company without registering with Registrar of Companies. In addition, for companies, a Certificate of Incorporation is required as conclusive evidence for legal existence (Singh, 2016).
• If the entrepreneur chooses to register as a partnership firm, he or she needs to understand that the firm is not a separate entity from its partners and that it cannot be listed on the stock exchange. While an LLP is a distinct legal entity under the Limited Liability Partnership Act, 2008, it cannot as well be listed on the stock exchange. Partnership firms do not have perpetual succession since their perpetuity depend on the partner’s will.
• However, LLPs and companies have perpetual succession and partners or members may come and go. There are no legal capital requirements if the entrepreneur chooses to start the events management business as a partnership firm or LLP, but as a private company, the entrepreneur must have a minimum paid up capital of Rs.1 lakh, while a public company needs at least Rs.5 lakhs (Chakraborty, 2013).

• In terms of charter documentation, Perry-Kessaris (2016) records, a Partnership Deed is a charter of a partnership business structure that describes its scope of operation, and the partners’ rights and duties.
• An LLP’s charter is an LLP Agreement, which describes its scope of operation and the partners’ rights and duties vis-à-vis LLP’s. A company’s charter is its Memorandum and Article of Association, which also denotes its scope of operation.
• The entrepreneur also needs to understand that if he or she chooses to incorporate as a partnership firm, he or she must be in company of one (1) to nineteen (19) more partners.
• If he or she chooses an LLP structure, he or she needs at least one (1) more partner, but there is no limit on the highest number of members to involve.
• However, a private company legally requires between two (2) and fifty (50) members, while a public company needs at least seven (7) members.

After registering with relevant authorities and securing a name with which to do business, the fifth step in the process is to define exactly what one is going to offer in the events management industry.

• The exact service is dependent on, among other things, the findings of research on the target market and competitors. Based on the findings, for instance, registered events management firm would decide to offer all event planning services under one roof, including registration, hiring venues, promoting events, catering, etc. Otherwise, the firm would specialize in one or two niches. The final stage in preparing is to get relevant papers in order.
• Accordingly, one needs to understand the legal procedures involved in completing the required paperwork. A firm should check to ensure it has all the required licenses and certificates. If possible, the event management firm needs to have business insurance for its employees and the public, especially the people attending the events it organizes and hosts as Hopkin (2017) advises.
• Ahead of planning and hosting any event, an event management firm must seek a set of licenses for compliance and best practices. For the events hosted in hotels, most hotels give event organizers a list of licenses that they must have and hand over to the hotel at least a day before the event. Hypothetically, according to James (1982), every event needs a No Objection Certificate from the Additional Collectors office, a No Objection Certificate from the Fire Brigade, a No Objection Certificate from the Local Police Station, a No Objection Certificate from the Traffic Police Department, a Police Commissioners Note, and Rangbhoomi License.
• If an event has a DJ, then the event management firm needs to add a Phonographic Performance Ltd. License and a Novex License except when the music played is produced by Yashraj Films. Planning and hosting a Live Performance at an event requires an Indian Performing Rights Society Ltd. License.
• If alcoholic beverages are used in the event, then the management needs to have a Liquor License. If the management uses or plans to use a generator at a venue, then a Public Works Department License is required.
• If the event management firm plans to use performers from countries other than India, then a Foreign Artist Permission must be obtained. In addition, the firm needs to submit to authorities the documents required by the law, more especially the performer’(s) copies of passport and visa.
• To get the licenses just described, an event management firm needs to submit to authorities a No Objection Certificate from the venue, the venue’s floor plan, and a Letter of Application to the various identified licensing departments (James, 1982).
• The letter must have a business entity letterhead and be accompanied with an affidavit on a stamp paper. Regarding foreigner artists, in application, the event management business entity needs to submit to authorities the artist’s visa and copy of contract with the entity. It is advisable to get the foreign artistes on business visa rather than an employment visa. If an event involves paid attendants and/or sponsors, the management firm needs an Entertainment Tax directorate.
• In addition to the laws and regulations specific to the event management industry, the event management firm must ensure it does not do anything contrary to India’s supreme law, the Constitution. Closer home, the general business laws must be adhered to ensure compliance and best practices. For instance, the Indian Contract Act of 1872 is still applicable, and it includes such guidelines as those specific to contracts. Since the event management industry is largely about contractors, such as between artists and event planners or suppliers and hotels, the Indian Contract Act of 1872 and newer Acts must be followed closely. In case one chooses a partnership structure for running the business, the Partnership Act of 1932 would be very helpful. India experienced a high economic growth in the start of the 21st century, leading to the passing of the Competition Act of 2002 and the Limited Liability Act in 2008 by the Ministry of Corporate Affairs (Rankin, 2016). These laws serve to push for sustainable competition in markets, promote free trade, hence protect consumer interests, and forbid anti-competitive business activities.
• If the event management firm is a company, it will find the Companies Act of 2013 useful because the law gives guidelines on acquisitions and mergers, shareholding, boardroom decision-making, corporate social responsibility, etc. (Singh, 2016).
• The firm must also understand that the country’s law protects employees as well as employers and consumers. Employees are protected by the Payment of Wages Act of 1936, the 1972 Payment of Gratuity Act, the Payment of Bonus Act of 1965, the Industrial Disputes Act of 1947, and the Industrial Employment Act of 1946. On the other hand, the Indian business laws protecting consumers include the Consumer Protection Act, 1986 and the Consumer Dispute Redressal Forums at national and local levels (Saini & Budhwar, 2014).

Conclusion

India is an emerging market. It is among the biggest and fastest growing economies across the globe today. Accordingly, starting and running any business in India, let alone an events management business, would need investors who can understand some intricate and some simple realities unique to the country, including the government’s evolving policies, revisions to the existing statutes, and the laws enacted recently. While the process, compliance, best practices, and relevant laws discussed in this paper establish the general laws governing a business firm in India, it is important to adhere to local laws. In other words, a business entity must obey the laws of the state and city in which it is incorporated and operates.

References

Chakraborty, I. (2013). Does Capital Structure Depend on Group Affiliation? An Analysis of Indian Firms. Journal of Policy Modeling, 35(1), 110-120.

Getz, D., & Page, S. J. (2016). Event Studies: Theory, Research and Policy for Planned Events. Routledge.

Hopkin, P. (2017). Fundamentals of Risk Management: Understanding, Evaluating and Implementing Effective Risk Management. Kogan Page Publishers.

James, V. G. (1982). Cinema Licensing. Journal of The Indian Law Institute, 24(1), 102- 125.

Lee, W., & Chhabra, D. (2015). Heritage Hotels and Historic Lodging: Perspectives on Experiential Marketing and Sustainable Culture.

Mallen, C., & Adams, L. J. (Eds.). (2017). Event Management in Sport, Recreation and Tourism: Theoretical and Practical Dimensions. Routledge.

Malur, P. G., & Lakshmikantha, D. (2014). Reeling the Reality: A Study on Contemporary Reality Shows and Their Influence on Other Entertainment Program Genres. International Research Journal of Social Sciences, 3(8), 1-3.

Pai, D. S., Sridhar, L., Badwaik, M. R., & Rajeevan, M. (2015). Analysis of The Daily Rainfall Events Over India Using a New Long Period (1901–2010) High Resolution (0.25× 0.25) Gridded Rainfall Data Set. Climate Dynamics, 45(3-4), 755-776.

Perry-Kessaris, A. (2016). Global Business, Local Law: The Indian Legal System as A Communal Resource in Foreign Investment Relations. Routledge.

Rankin, G. C. (2016). Background to Indian Law. Cambridge University Press.
Saini, D. S., & Budhwar, P. S. (2014). Human Resource Management in India. Managing Human Resources in Asia-Pacific, 126-149.

Shekhar Singh, A. (2014). Conducting Case Study Research in Non-Profit Organisations. Qualitative Market Research: An International Journal, 17(1), 77-84.

Singh, B. J. R. (2016). Corporate Social Responsibility in India. International Journal of Higher Education Research & Development, 1(1).

Sulehria, F. (2017). DD and PTV As Victims of Media Globalisation. Asian Journal of Communication, 27(1), 97-112.

Zakarevičius, P., & Župerkienė, E. (2015). Improving the Development of Managers’ Personal and Professional Skills. Engineering Economics, 60(5).

The post How to start an Event Management Business in India: Process, Compliance, Best Practices, and Relevant Laws appeared first on iPleaders.

In this article, Sirmaur Sudhakar from KIIT School Of Law discusses provisions of Bihar Shops and Establishment Act.

Introduction

“The Bihar Shops and Establishments Act, 1953’’ received the assent of the President on 17 March 1954 and was brought into force on 15 February 1955.

The Act has been amended thrice since its formation, First in the year 1961, then 1963 and lastly in the year 1974.

The Act is a social piece of legislation of the State Government to regulate the condition of work and employment and therefore to secure maximum benefits to the employees working in different categories of establishment viz. shops, commercial establishments, residential hotels, restaurant, eating houses, theaters and other places of public amusements or entertainments. The employees are mainly protected by the provisions of this act.

The major breaches of the provisions of the Act consist of non-registration, non-renewal, opening of establishment before prescribed hours, closing of establishments later than prescribed hours, exceeding total hours, continuous work without rest interval, spread over, not granting privilege leave, keeping establishment open on weekly closed day, calling employees for work on their weekly offs, employing female employees after prescribed hours, employing child labour, not providing identity Cards to certain class of  employees, not paying wages as per rates prescribed under Minimum Wages Act, not maintaining prescribed register of employment, etc.

Important Definitions under Bihar Shops and Establishment Act

Child – “Child” means a person who has not completed the age of fourteen years

Young person– “Young person” means a person who is not a child and has not completed the age of eighteen years.

Shop– “Shop” means any premises where goods are sold, either by retail or wholesale or where services are rendered to customers and includes an office, store-room, godown, warehouse and workplace, whether in the same premises or elsewhere, used in connection with such sales or services, but does not include a restaurant, a residential hotel, eating house, theatre or other place of public amusement or entertainment.

Establishment– “Establishment” means an establishment which carries on any business, trade or profession or any work in connection with, or incidental or ancillary to any business, trade or profession and includes —

1. Administrative or clerical service appertaining to such establishment;
2. A shop, restaurant, residential hotel, eating house, theatre or any place of public amusement      or entertainment; and
3. Such other establishment as the State Government may, by notification, declare to be an establishment to which the Act applies; but does not include a ‘motor transport undertaking’ as defined in clause (g) of section 2 of the Motor Transport Workers Act, 1961 (27 of 1961).

Employee– “Employee” means a person wholly or partially employed for hire, wages including salary, reward, or commission in and in connection with any establishment and includes ‘apprentice’ but does not include member of the employer’s family. It also includes person employed in a factory who are not worker within the meaning of the Factories Act, 1948 ( 63 of 1948), and for the purpose of proceeding under this Act, include an employee, who has been dismissed, discharged or retrenched for any reason whatsoever.

Employer– “Employer” means a person who owns or exercise ultimate control over the affairs of an establishment and includes a manager, agent or any other person in the immediate charge of the general management or control of such establishment.

Day– “Day” means a period of twenty-four hours beginning at midnight:

In the case of an employee whose hours of work begins before and extend beyond midnight, day means a period of twenty-four hours beginning at the hour his work commences.

Opened– “Opened” means opened for the service of any customer or for any business connected with the establishment.

Closed– “Closed” means not open for the service of any customer to any business connected with the establishment. 

Few exceptions where the provision of the Bihar Shops and Establishment Act is not applicable

The provisions of the Act do not apply to any precinct or premises of a mine defined under the Mines act,1952. The schedule of the Act specifies establishments, employees or other persons in relation to whom the specified provisions of the Act will not apply. The state government is empowered to add, omit or alter any entries in the Schedule.

Registration of Establishments and renewal under the Bihar Shops and Establishment Act

The State Government may make rules requiring the registration of establishment or any class of establishments or renewal thereof and prescribing manner and the fees payable for such registration or renewal.

Opening and Closing Hours of the Establishments

• No establishment is to be opened earlier than 8 A.M. and closed later than 10 P.M on any day.
• However, if a customer who is being served or is waiting to be served at closing hour in, he may be served during the quarter of an hour immediately following closing hour. The state government is empowered to alter the opening or closing hours for different establishments or for different areas or for different periods of the years. These provisions do not apply in case of an establishment in which two or more trades or business, any of which being sole trade or business are conducted.
• No person is to carry on the sale of any goods in any place, whether a shop or not, before the opening or after the closing hours prescribed under the Act or any other enactment. These provisions do not apply to the hawking of the newspapers. Hawkers on footpath or market street can sell their goods up to 11.p.m.

Hours of Work, Rest Intervals, Spreadover, Weekly Holidays, and Others under the Bihar Shops and Establishment Act

Daily and Weekly Hours of Work of Adult Employees

• No adult employee in any establishment is to be required or allowed to work in such establishment for more than 9 hours in a day and or more than 48 hours in a week. These hours will be exclusive of interval allowed for rest or for meals which together is not less than one hour in any day.
• However, employees, other than children and young persons, engaged during any period of stock-taking or making of accounts or any other prescribed purpose, may be required or allowed to work for a period in excess of these hours, but the total number of hours of work including overtime is not to exceed 10 in any day and 54 in any week and the aggregate of hours of overtime is not to exceed 150 in a year.

The employee required or allowed to work overtime is to be paid overtime wages which will be twice the ordinary rate of wages. Ordinary rate of wages includes basic wage and other allowances, which the employee is entitled to, but does not include a bonus.

Interval for Rest

No employee in any establishment is to be required or allowed to work in the establishment for more than 5 hours continuously on any day unless he has had an interval for rest of at least half an hour. There is not to be more than one such interval for rest during the whole of the working period of any employee on any day.

Spreadover

The periods of work and intervals of rest of an employee in an establishment together in a day are not to spread over more than

1. 8 hours in case of a child,
2. 10 hours in case of a young person, and
3. 12 hours in case of any other employee.

Weekly Holiday

• Every establishment is to remain entirely closed on one day of the week, but the employer may keep the establishment open on weekly holiday if it falls on the opening day of the financial year. The employer is required to specify the weekly holiday in Hindi and, if necessary, in a language understood by majority of the employees, which is to be displayed at a conspicuous and convenient place at or near the main entrance of the establishment and is to be maintained in a clean and legible condition. The weekly holiday so specified is not to be altered more than once in three months and without the prior approval of the Inspecting Officer.
• Subject to the direction of the state government, the Chief Inspecting officer may, in public interest, specify a day in which establishments in a particular area will remain entirely closed and the weekly holiday thus specified will be operative.
• The provision of weekly holiday does not apply to an employee whose total period of employment in the week inclusive of the day of authorised leave is less than 6 days, or who is entitled to an additional holiday in the week. The employee is entitled to his normal wages on weekly holidays.

Other Holidays

Every employee in an establishment to be allowed:

1. Holiday on full pay on the Independence Day, the Republic Day and Mahatma Gandhi’s Birthday each year, and
2. Such other holidays on full pay up to 5 days in a year, in connection with such festivals as the State Government may declare from time-to-time. An employee required to work on any such holiday is to be paid remuneration at double the rate of his normal wages calculated by the hour.

Suspension of Provisions During Public Holidays

The state government may suspend the operation of all or any provisions of the Act in any area and in any establishments on account of public holidays or occasions or for any other reasons for a specified period and prescribe the conditions for the same.

Service Card

Every employee of an establishment is to be furnished by the employer a service card in the prescribed form.

Employment of Children and Young Persons under the Bihar Shops and Establishment Act

Prohibition from Employment of Children

No child below the age of 14 years is to be required or allowed to work as an employee in any establishment covered under the Act.

Furthermore, no young person or women are to be required or allowed to work, whether as an employee or otherwise, in any establishment to which this Act applies before 8 A.M. or after 10 p.m.

Daily and Weekly Hours of Work for Young Persons

No young person is to be allowed to work as an employee in any establishment to which the Act applies for more than 7 hours in any day or 42 hours in any week.

Also, no young person is to be required or allowed to work in such establishment for more than 4 hours continuously on any day unless he has an interval for rest and meals of at least 1 hour.

Provision of leave with wage under the Bihar Shops and Establishment Act.

Annual leave with wages

• Every employee who has worked for 240 days or more in an establishment during a calendar year and who has not been involved in an illegal strike, is to be allowed, during the subsequent calendar year, leave with wages for a number of days calculated at the rate of one day for every twenty days of work performed by him during the previous calendar year.
• For the purpose of computation of the period of 240 days or more, the days of lay-off by agreement or contract or as permissible under the standing orders, days of lock-out, maternity leave for not more than 12 weeks in case of female employees, and leave earned in the previous year are to be included in the days on which the employee has worked. The leave with wages is to be exclusive of all holidays whether occurring during, or at either end of the period of leave.
• If the service of an employee commences otherwise then on the first day of January, he is entitled to leave with wages at the specified rate if he has worked for 2/3^rd of the total number of days in the remaining period of the calendar year.
• An employee, who has been employed for a period of not less than 120 days, is entitled to leave with wages at the specified rate if the ratio of the number of days of his employment is not less than the ratio which 240 bears to 365.

If an employee does not avail of the whole leave in any calendar year, the days of unavailed leave is to be added to the leave allowed to him in the succeeding calendar year, but the total number of days of leave that may be carried forward is not to exceed 45 days.

Application for leave has to be given at least 15 days before the employee intends to go on leave.

• The application for leave is ordinarily not to be refused without recording sufficient cause. An employee aggrieved by the employer’s decision to refuse leave can appeal to the prescribed authority who may also award compensation if the refusal was without sufficient cause. If the leave of an employee having to his credit 45 days of leave is reused, he is entitled to wages for the period for which leave was refused and the amount thus payable will be in addition to the normal wages payable for the period. However, in such a case, the leave to his credit will be reduced by the number of days in respect of which such an amount is received.
• If the service of an employee is terminated by the employer before he has taken the entire leave to which he is entitled or if after applying for leave he quits employment, the employer will pay him the amount which he is entitled to before the expiry of the second working day after the day on which his employment is terminated, and before the next pay day if he quits his employment. If an employee wants to avail himself of the leave with wages due to him to cover the period of illness, he is to be granted such leave even if the application is not made within the specified time and the payment is to be made within 15 days.

Other Kinds of Leave

In addition, to leave with wages earned by him, every employee of an establishment is entitled to,

• Casual leave with full pay for 12 days in a Calendar year and
• Sick leave on half pay for 12 days in a Calendar year on production of a medical certificate.
• Casual leave or the sick leave is not accumulative. Care-takers, guards, and watchmen, who have been in continuous employment for a period of 12 months or more are entitled to, in addition to the leave with wages earned, casual leave and sick leave, 45 days leave with full pay for every completed 12 months of continuous service.

Wages Payable During Period of Leave

Wages payable during the period of leave will be daily average of his total full-time earnings exclusive of any overtime earnings and the annual bonus, but inclusive of attendance bonus, efficiency bonus and other incentive bonuses and dearness allowance and the cash equivalent of any advantage accruing through the sale of foodgrains and other articles at concessional rates for the days on which he worked during the month immediately preceding his leave.

On the demand of an employee proceeding on earned leave, he is to be given an advance payment of the wages for half of period of leave and the wages for the wage-period immediately preceding such leave. The wages for the remaining half period are to be paid to him along with the wages for the first wage-period after he resumes duty. The wages for the period of sick leave shall be payable to the employee along with his wages for the first wage-period after he resumes duty.

Power of State Government to Increase the Amount of Leave

The state government is empowered to increase the total amount of leave and the minimum number of days up to which such leave may be accumulated in specified establishments.

Dismissal or Discharge

No employer is empowered to dismiss or discharge or otherwise terminate the employment of any employee who has been in his employment continuously for a period of not less than six months, except for a reasonable cause and after giving such employee at least one month’s notice or one month’s wages in lieu of such notice. such notice is not necessary where the services of such employee are dispensed with on a charge of such misconduct as may be prescribed by the State Government, supported by satisfactory evidence recorded at an inquiry held for the purpose. An employee who has been in continuous employment for a year or more and whose services are dispensed with otherwise than on a charge of misconduct shall also be paid compensation equivalent to fifteen days average wages for every completed year of service and any part thereof in excess of six months before his discharge in addition to the notice or pay in lieu of notice as prescribed above.

Every employee, dismissed or discharged or whose employment is otherwise terminated, may make a complaint in writing in the prescribed manner, to a prescribed authority within 90 days of the receipt of the order of dismissal or discharge or termination of employment on the one or more of the following grounds, namely : —

1. There was no reasonable cause for dispensing with his services; or
2. No notice was served on him as required above; or
3. He has not been guilty of any misconduct as held by the employer; or
4. No compensation as prescribed above was paid to him before dispensing with his service.

Inspection and Penalties under the Bihar Shops and Establishment Act

Appointment of Inspecting Officer

The appointment of Inspecting Officers is to be made by the state government.

The State Government, by notification in the Official Gazette, appoint any person to be the Chief Inspecting Officer who shall, in addition to such powers as may be prescribed by the Chief Inspecting Officer, exercise the powers of an Inspecting Officer throughout the State.

Powers and Jurisdiction of Inspecting Officer

An Inspecting Officer may within the limits of his jurisdiction —

1. Enter, during such hours as may be prescribed and with such assistance, if any, as may be necessary, any premises which is, or which he has reasons to believe is, an establishment;
2. Inspect, or take extracts from any prescribed registers, records and notices maintained under this Act or the rules made thereunder or seize such records, registers or notices as he may consider relevant in respect of an offence under this Act which he has reason to believe to have been committed by an employer;
3. Take on the spot or otherwise the statement of any person which he may consider necessary for carrying out the purposes of this act. Provided that no person shall be compelled to answer any question or give any evidence tending to incriminate himself; and
4. Exercise such other power as may be prescribed for carrying out the purposes of this Act.

The Inspecting Officer for the purposes of any inquiry under this act have same power regarding the summoning and attendance of witnesses and compelling the production of documents as a Civil Court has under the Code of Civil Procedure, 1908 (V of 1908).

Inspecting Officers to be public servant

Every Inspecting Officer appointed under this Act is deemed to be public servant within the meaning of section 21 of the Indian Penal Code, 1860 (XLV of 1860).

Penalty for obstructing Inspecting Officer

• Any person who voluntarily obstructs an Inspecting Officer in the exercise of any power conferred on him by or under this Act or any person lawfully assisting an Inspecting Officer in the exercise of such power or who fails without sufficient cause to comply with any lawful direction made by an Inspecting Officer is punishable with imprisonment which may extend to 6 months or with fine which may extend to Rs.250, or with both.
• An employer, who contravenes any provisions of the Act or any rule or order made under it, if no other penalty is provided for the offense, is punishable with fine which may extend to Rs.250 for the first offence and to Rs.500 for every subsequent offence after the first conviction.
• The person, who gives a malicious or vexatious application to the prescribed authority relating to deduction of wages or delayed payment, may be directed to pay penalty not exceeding Rs.25 to the employer or other person responsible for the payment of wages.
• If the person contravening the provision of the Act or a rule or order made under it is a company or a partnership firm, every director, partner, manager or secretary is to be deemed to be guilty of the contravention, unless he proves that the contravention took place without his knowledge or that he exercised all due diligence to prevent such contravention.

Cognizance

No court is to take cognizance of an offence punishable under the Act, rule or order except on a written complaint made by Inspecting Officer or any person authorised by the state government within 6 months of the date on which the offence is alleged to have been committed. In certain cases such as annual leave with wages, other kinds of leave, notice of dismissal or discharge and claims arising out of deductions from wages or delay in payment, the court may take cognizance of the offence even after 6 months if it is satisfied that the complainant was prevented by sufficient cause from filing the complaint within this period. No court inferior to that of a magistrate of the first class is authorised to take cognizance or try an offence punishable under the Act.

References

P.R.N Sinha, Indu Bala Sinha & Seema Priyadarshini Shekhar, Industrial Relations, Trade Unions and Labour Legislations (2^nd ed. 2013)

The Bihar Shops and Establishments Act, 1953

Garner Bryana, Black’s law Dictionary, 7th Edn. 1981, West Group

Collin’s Gem English Thesaurus, 8th Edn.2016. Collins

www.manupatrafast.com(MANUPATRA)

www.jstor.org(JSTOR)

labour.bih.nic.in

www.bihar.gov.in

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In this article, P Mohan Chandran who is currently pursuing M.A. IN BUSINESS LAWS, from NUJS, Kolkata, discusses Concept of Acquiescence in IP litigation in India.

CONCEPT OF ‘ACQUIESCENCE’ IN IP LITIGATION IN INDIA

In today’s world of ‘passing off’ and ‘infringement’, you must be extra vigilant in protecting your intellectual property (IP). You just cannot relax by merely filing an application or obtaining a registration, which may just be the first step in a long battle ahead. Whenever it comes to your cognizance that someone else is using your trade mark (TM), never let it go by easily because if you fail to take an action soon, you will be unable to act on it ever unless you are fortunate enough to prove fraudulent usage on part of the other party or person. This article aims to decode the concept of ‘acquiescence’ with respect to TM infringement with the help of the judicial cases in this matter.

WHAT IS ‘ACQUIESCENCE’ IN IP LAW?

Acquiescence implies your passive consent to allow another person to use your registered TM despite knowing that someone else is using your TM. So, once this ‘passive consent’ is not challenged by you within a statutory limit of five years, you lose the opportunity to sue the other party for infringement.

What the Law States

 “If a trader allows another person who is acting in good faith to build up a reputation under a trade name or mark to which he has rights, he may lose his right to complain, and may even by debarred from himself using such name or mark”.[1] 

According to section 33 of the Trade Marks Act, 1999, the other user can take up the defense of acquiescence against TM infringement provided, he has adopted and used the TM in good faith. Here, good faith implies ignorance or lack of knowledge on part of the other user of the existence of the TM infringed by him. However, the scope of this section has been challenged on several occasions. There is still plenty of uncertainty whether this doctrine can deny relief of permanent injunction.

What the Courts Say

If the owner of a TM, even after being aware of the use of his TM by another, fails to take any action against the other user and instead allows him to invest in publicizing his TM and expanding his business over a period of time, then the owner of the TM may not be entitled to the remedy of injunction against the other user of his TM, which he could otherwise bring upon to restrain the other user from the use of his TM. According to the TM law, such conduct of the TM owner conveys an ‘acquiescence’ i.e., implied consent by the TM owner in the use of his TM by the other user.

However, there is an exception to every rule and this one, too, has an exception. Where the other user has applied for registration of ‘your TM’, or for something similar, fully cognizant of the fact that such a TM already exists and you failed to take any action for a period of five years against him, then as per the law, you still have a right to sue the other user as long you prove the mala fide intentions of the defendant. The assumption of ‘good faith’ in such cases is not applicable, as there is clear dishonesty on the part of the defendant. In such cases, the court would well be justified in concluding that the defendant had an intention to commercially benefit from the plaintiff’s name and reputation. This has been the judicial trend in India and continues to be so as held in the case of Emcure Pharmaceuticals Ltd. vs. Corona Remedies Pvt. Ltd., where the High Court of Bombay upheld that “a mere failure to sue without a positive act of encouragement is no defense and is no acquiescence.” 

The judiciary in India has always acknowledged the fact that that a mere procrastination by the owner of a TM in filing a suit against the unauthorized use of his TM by the other user does not indicate the owner’s acquiescence in the use of his TM by the other user.

‘ACQUIESCENCE’ PRIOR TO THE TRADE MARKS ACT, 1999

 Before the enactment of the Trade Marks Act 1999, defense of ‘acquiescence’ was not clearly established under the Trade and Marks Act, 1958, or under the Trade Marks Act 1940, but still the other user of the TM used it as a defense against the owner of the TM under the relevant provision that referred to ‘acquiescence’ by the owner of the TM under the TM law applicable at that time. For instance, legal opinion allowed the other user of the TM to take the defense of ‘acquiescence’ within the expression ‘special circumstances’ in section 10(2) of the Trade Marks Act, 1940, which read as under:

Sec.10 (2): “In case of honest concurrent use or of other special circumstances which, in the opinion of the Registrar, make it proper so to do he may permit the registration by more than one proprietor of trade marks which are identical or nearly resemble each other in respect of the same goods or description of goods, subject to such conditions and limitations, if any, as the Registrar may think fit to impose.”[2] 

Later, when Trade Marks Act, 1940 was revoked and Trade and Merchandise Marks Act, 1958 was effectuated, the other user took the defense of ‘acquiescence’ against the owner of the TM within the expression ‘special circumstances’ under clause (1) of sub-section (b) of Section 30 of the Trade and Merchandise Marks Act, 1958, which read as under:

Sec.30. “Acts not constituting infringement: (1) Notwithstanding anything contained in this Act, the following acts do not constitute an infringement of the right to use of a registered trade mark – (b) the use by a person of a trade mark in relation to goods connected in the course of trade with the proprietor or a registered user of the trade mark if, as to those goods or bulk of which they form part, the registered proprietor or the registered user conforming to the permitted use has applied the trade mark and has not subsequently removed or obliterated it, or has at any time expressly or impliedly consented to the use of the trade mark.”[3] 

The Trade and Merchandise Marks Act, 1958, has been replaced by the Trade Marks Act, 1999. The Trade Marks Act, 1999, which came into force in 2003, has made a clear provision for the defense of ‘acquiescence’ for the other user of the TM against the owner of the TM under sec.33 of the Act.

Sec.33 of the Trade Marks Act, 1999 provides for the defense of ‘acquiescence’ to the other user of the TM against the owner of the TM and is an improvement over the earlier reference to the acquiescence within the statutory provision under the Trade and Merchandise Marks Act, 1958 and Trade Marks Act,1940. Sec.33 of the Trade Marks Act, 1999 establishes the defense of ‘acquiescence’ to the user of the TM against registered owner of the TM with more clarity.

‘ACQUIESCENCE’: NOT FOR THE FRAUDULENT OTHER USER 

The current Trade Marks Act, 1999 – according to sec.33 – clearly provides that the other user of the TM can take the defense of ‘acquiescence’ against the owner of the TM, if he has used the TM in good faith. It is to be noted that even before the enactment of the Trade Marks Act, 1999, while dealing with the defense of ‘acquiescence’ taken by the other user of the TM, judicial opinion in India had firmly established that there is no scope for the doctrine of ‘acquiescence’ where a fraud is involved. The Indian judiciary had persistently held that for the defense of ‘acquiescence’ under TM law, another pre-requisite is that the other user must have used the TM in ‘good faith’ and in total ignorance of the title of the owner of that TM.

The Indian judiciary has clearly established that the other user may prove that the owner of the TM failed to take action even though he was aware about the unauthorized use of his TM, and by his conduct encouraged the other user to use his TM, yet the other user cannot claim the benefit of the defense of ‘acquiescence’ if he is unsuccessful in proving that he had used the TM in good faith and in complete ignorance that the owner had already adopted the TM.

‘ACQUIESCENCE’: ‘DELAY’ COUPLED WITH ‘IMPLIED CONSENT’

When we trace back judgments of the Indian courts since the beginning, i.e., even before the enactment of the Trade Marks Law in India, we discover that judicial opinion in India had firmly established that simple delay by the owner of a TM in filing the suit against the unauthorized use of his TM by the other does not indicate owner’s acquiescence in the use of his TM by the other. For the defense of acquiescence against the owner of TM, the other user of the TM must prove that the owner of the TM, apart from procrastinating in taking action against the unauthorized use of his TM by the other user, also encouraged him to use his TM by his conduct.

In the case of Kanungo Media Pvt. Ltd. Vs. RGV Film Factory, 2007 (34) PTC 591 (Del), it was held that delay in taking action implies acquiescence and that the TM owner’s silence in claiming his rights amounted to a waiver of his rights.

In the case of Ramdev Food Products Pvt. Ltd. vs. Arvindbhai Rambhai Patel and Others, 2006, (33) PTC 281 (SC), the Supreme Court held that ‘acquiescence’ includes an element of delay, when a party allows the other to violate his right and expend money, and the conduct of the party is such that it is inconsistent with the claim for exclusive rights for TM. Mere silence or inaction does not constitute acquiescence. Action and conduct of both parties should be scrutinized to establish whether it would be unfair and arbitrary to prevent the defendants on the ground of delay. Loss of time, unless compounded with other factors, is usually not considered as a bar to grant injunction.

BURDEN OF PROOF ON THE OTHER USER

An analysis of several judicial judgments over a period of time proves that the person claiming the defense of acquiescence has the burden of proving the following:

1. That the TM holder was aware of the infringing activity.
2. That the TM holder was involved in an activity of encouragement – ‘encouragement’ here includes things such as inaction by the TM holder to send any specific notice of infringement to the other user.
3. That the other user has acted upon such act or omission to the detriment of the TM holder.

SELECT CASE LAWS ON ‘ACQUIESCENCE’ IN IP LITIGATION

Case Law-1:

Khoday India Limited vs The Scotch Whisky Association and others (Civil Appeal 4179 of 2008)

Date of Judgment: May 27, 2008

In this case, the issue was whether the TM ‘Peter Scot’ should be deleted from the Register of Trademarks (section 46 of the Trademarks Act provides for rectification of the register).

The following are the brief facts of the case:

In 1968, Khoday India Ltd (KIL) began manufacturing ‘Peter Scot’ whisky, and in 1974 got its TM registered. After 13 years, the Scotch Whisky Distillers Association (SWDA) – an industry body of distillers, blenders and exporters of Scotch whisky – moved the Assistant Registrar Trademarks for cancellation of the registered TM ‘Peter Scot’ because the TM was deceptively similar to a foreign mark (Scotch whisky).

The Supreme Court bench, comprising Justice Sinha and Justice LS Panta, gave the verdict in favor of KIL and said they could continue being the registered proprietor of the ‘Peter Scot’ TM. One of the factors that could have influenced the court to such a judgment was the delay or acquiescence by SWDA, i.e., SWDA waited for 12 long years to move the Registrar for deletion of the said TM, although it was aware about registration of the ‘Peter Scot’ TM as early as September 1974. The court held that because of the peculiar facts and circumstances of the case, the action of the respondents was barred under the principles of acquiescence/waiver.

To sum it up, the point driven home by Justice Sinha is that if you delay enforcing your rights, you run the risk of sending an indirect and wrong indication to the other user that you have either waived your rights or acquiesced it in the infringement.

Case Law-2

SRF Foundation & Another v. Ram Education Trust (1980/2014)

Date of Judgment: May 11, 2015

Facts of the Case:

‘SRF Foundation’ is the plaintiff No.1 in this case. It is a registered non-profit society involved in numerous social and community activities, including administering schools such as ‘The Shri Ram School’. The name/mark ‘Shri Ram’ has been used by the plaintiff No.1 since 1988, who has had a good reputation. While plaintiff No.2 has been involved in instituting schools in India and overseas. With this reputation, the plaintiffs achieved their objective to overcome the shortage of good schools by entering into an agreement with ‘Educomp Infrastructure and School Management’ to establish five schools under the name ‘The “Shriram Millennium School’. ‘Ram Education Trust’, the defendant, started “Shri Ram Global Pre-School” beside the plaintiff no. 1’s school in Gurgaon. The plaintiffs filed for the registration of TM, but subsequently withdrew and the defendant instead registered their TM. The plaintiffs, being the real brother of the defendant’s trustee, sent emails to his brother to caution the defendant of the reputation and goodwill of the name/mark and to prevent using it. However, the defendant continued to use the name/mark ‘Shri Ram’. The plaintiffs advertised declaring that the name/mark of the school does not belong to them. Subsequently, the defendant’s lawyer issued a legal notice to the plaintiffs to retract the advertisement and to tender a public apology. The plaintiffs filed a suit for permanent injunction, ‘passing off’ and account of profits in the Delhi High Court, apart from filing an application seeking interim injunction.

Arguments by the Plaintiffs

The plaintiffs argued that the inherent right to use the name ‘Shri Ram’ rested with each of the members of the Shri Ram family, subject to such right being restricted to its domain of business and not violating upon others rights. They had no objection if the said TM was used by the defendant in other activities or services, but not this activity, as they had been using the name/mark ‘Shri Ram’ for about two-and-a-half decades, the reason being they had goodwill in these services, contributing to monopoly over the name / mark. Though the plaintiff and the defendant belonged to the same family, yet the use by the defendant hampered the plaintiff’s reputation. Due to passing-off the services of the plaintiffs by the defendant, the public were ambiguous about which school belonged to whom. Thus, there was no authorized use of the name/mark. The use of ‘Shri Ram’ in the name/mark caused confusion and was deceptively similar.

The plaintiffs further contended that there was a prior use of the name/mark by them, as the name/mark had been used by them widely for several years before the defendant.

Arguments by the Defendants

The defendants argued that there were parallel rights to use the name/mark, and hence, the defendants were protected under the legacy of the Late Shri Ram Family. The defendant and the plaintiff shared a common family name. Therefore, there contended that there could not be a claim of any proprietary right or monopoly by the plaintiffs. The defendant’s schools are ‘Shri Ram Global School’, ‘Shri Ram Centennial School’, and ‘Shri Ram Global Pre-School’ which are unique from the plaintiffs, which are ‘The Shri Ram School’ and ‘Shri Ram Millennium School’, in terms of different suffixes and logos. The defendants, therefore, argued that there was an authorized use of the TM by the defendants, and the plaintiffs could not have monopoly rights over the TM ‘Shri Ram’. The defendants also further contended that the name/mark was not deceptively similar or confusing as it could be identified because of different logos and suffixes.

The Elements of Passing-off

To succeed in a suit on passing-off, four main requirements should be satisfied by a party who intends to seek the relief of injunction:

1. Prior use
2. Claimant of the right must be the owner of the TM
3. Confusion and deception
4. Delay, if any.

Regarding the first and the second requirements, the defendant already approved the prior use by the plaintiffs, but denied the exclusive right over the mark/name. The defendant informed the court that no such written document existed that stated that the plaintiffs had an exclusive right. However, the plaintiffs had a reputation and no other family member, though involved in contribution to education, had acquired such goodwill, because of the establishment of Mawana School initiated by the Shri Ram family relatives before the use by the plaintiffs was limited to the place, as pointed out by the plaintiffs and, thus, considered by the court.

Regarding the third requirement, it was held that the defendant adopted the TM even though the plaintiffs had been using it for about two-and-a-half decades, thus, creating confusion by starting school with the name/mark ‘Shri Ram’ in the same locality as that of the plaintiffs. Therefore, the name/surname, being unique, is protected as per law.

The delay of about three years in approaching the court was because the plaintiffs, though they were aware about the use of ‘Shri Ram’ by the defendant, did not take any action against them. Thus, there was a procrastination for a significant period of time, leading to the applicability of principle of acquiescence. The reason given by the plaintiffs was of proximity of relation between the founding members of the plaintiff and defendant as they were real brothers, and the plaintiffs tried to caution and resolve the matter amicably.

The Court Observation & Judgment

The court observed that the parties had ‘Shri Ram’ in common and the same was an essential part of their services. It was held in Himalaya Drug Company v/s M/s SBL Ltd., that if the essential features of the TM are same, then the logos are deceptively similar. The TM ‘Shri Ram’ was also used by the defendant like the plaintiff and, therefore, it was also deceptively similar.

The court ordered that the defendant would be allowed to use the mark ‘Shri Ram’ temporarily, but within six months they had to use the disclaimer in their signboard and all stationery material that they had no connection with the plaintiff’s school. They were also restrained from using the TM ‘Shri Ram’ in relation to schools which were under construction. Further, they were directed to give bona fide description that the school was run by Vivan Bharat Ram under the legacy of his grandfather, Shri Ram.

CONCLUSION 

In case of infringement of a registered TM, the owner of the TM can not only prevent the unauthorized use of his TM by the remedy of injunction against the other user, but also can enforce the right to oppose the registration of his TM by the other user under the TM law. But the owner of a TM is not entitled to claim the benefit of these remedies if he deliberately fails to take action against the unauthorized use of his TM by the other user and by his inaction encourages the other user to invest in widely publicizing his TM and expand his business over a period of time. Such an inaction by the owner of a TM despite being aware of the use of his TM by the other person over a period of time implies ‘acquiescence’, i.e., implied consent of the owner of the TM in the use of his TM by the other user.

On the other hand, it is also an established rule of law that the other user of the TM can take the benefit of the defense of ‘acquiescence’ against the owner of the TM only if he establishes that he had used the TM in good faith and in total ignorance of the title of the owner.

It has been observed that before the enactment of the Trade Marks Act, 1999, the judicial opinion in India had firmly decreed that for the defense of ‘acquiescence’ against the owner of the TM, the other user must establish all the four conditions as under:

1. ignorance of the other user about the owner’s right to title to the TM
2. knowledge of the owner of the TM that the other user is using his TM
3. no objection from the owner of the TM despite being aware of unauthorized use of his TM by the other user, and
4. the other user used it over a period of time.

All the aforesaid pre-requisites are statutorily established under sec. 33 of the Trade Marks Act, 1999, which is currently applicable in India. It is also resolved that although under the TM law there can be only single mark, single source and single owner of a TM, yet the ‘acquiescence’ of the owner of a TM in the use of his TM by the other user confers a legal right upon the other user to use not only TM simultaneously with the owner of the TM, but also to apply for the registration of the TM in his name under the TM law in India.

BIBLIOGRAPHY & REFERENCES

[1] Dr. Meenu Paul, “Acquiescence” of Proprietor of a Trade Mark in the Use of His Trade Mark by the Other: “Meaning” and “Consequence” Under the Trade Marks Law in India, NALSAR Law Review, Vol.3, No.1, 2006-07, https://www.nalsar.ac.in/pdf/Journals/Nalsar%20Law%20Review-Vol.%203.pdf.

[2] The Trade Marks Act, 1940, http://www.wipo.int/edocs/lexdocs/laws/en/in/in128en.pdf.

[3] The Trade and Merchandise Marks Act, 1958, http://www.wipo.int/edocs/lexdocs/laws/en/in/in005en.pdf.

1. Devina Choubal, Denial of Injunction on the Grounds of Acquiescence and Delay by Plaintiffs: SRF Foundation v. Ram Education Society, (Aug. 20, 2015, 1:38 PM), https://iiprd.wordpress.com/tag/delay-and-acquiescence/.

2. Swati Bhanot, Court Rules on Passing Off: Denies Injunction Due to “Delay” and “Acquiescence”, (Sept. 18, 2015), https://www.candcip.com/single-post/2015/09/18/INDIA-Court-Rules-on-Passing-Off-Denies-Injunction-Due-to-%E2%80%9CDelay%E2%80%9D-and-%E2%80%9CAcquiescence%E2%80%9D.

3. Shamnad Basheer, Indian Supreme Court on an “IP” Roll: “Scotch” Whisky Denied Protection While Music “Compulsory Licensing” Scope Expanded, (May 28, 2008), https://spicyip.com/2008/05/indian-supreme-court-on-ip-roll-scotch.html.

4. Durga Bhatt, The Law on Acquiescence: Wake Up Before It’s Too Late! (Sept. 18, 2014), http://www.selvamandselvam.in/blog/the-law-on-acquiescence-wake-up-before-its-too-late/.

5. Meenu Paul, “Acquiescence” of Proprietor of a Trade Mark in the Use of His Trade Mark by the Other: “Meaning” and “Consequence” Under the Trade Marks Law in India, NALSAR Law Review, Vol.3, No.1, 2006-07, https://www.nalsar.ac.in/pdf/Journals/Nalsar%20Law%20Review-Vol.%203.pdf.

6. Intellectual Property & Information Technology Laws News Bulletin, Vol.III, Issue 2, (Oct. 2010), http://www.manupatrafast.in/NewsletterArchives/listing/IP%20IT%20Vaish/2010/October-2010.pdf.

7. Gunjan Paharia & Komal Kaul, Indian Courts on Trademark Infringement: An Overview, (June. 15, 2015), INTA Bulletin, Vol. 70, No.11, http://www.inta.org/INTABulletin/Pages/IndianCourtsonTrademarkInfringement_7011.aspx.

8. Vijay Pal Dalmia, Guide to De-Mystifying Law of Trade Mark Litigation in India, (Sept. 29, 2010), http://www.mondaq.com/india/x/111142/Trademark/Guide+to+DeMystifying+Law+of+Trade+Mark+Litigation+in+India.

The post Concept of Acquiescence in IP litigation in India appeared first on iPleaders.

In this article, Ashok Samal from HNLU, Raipur discusses Human Rights violation of prisoners in India.

What are Human Rights

All human beings are born independent, free and equal in dignity and rights. They are endowed with reason and conscience and should act accordingly, living in a high spirit of love and brotherhood.

Human rights are rights inherent to all human beings, irrelevant to our nationality, place of residence, sex, national or ethnic origin, color, religion, language, or any other status. We are all equally entitled to our human rights without discrimination as these rights are fundamental to us because we are human. These rights are all interrelated, interdependent and indivisible.

Universal human rights are often expressed and guaranteed by law, in the forms of treaties, statutes, customary international law, general principles and other sources of international law for example ‘The Universal Declaration of Human Rights’. International human rights law lays down obligations of Governments to act in certain ways or to refrain from certain acts, in order to promote and protect human rights and fundamental freedoms of individuals or groups.

Non-discrimination is a sine-qua-non principle in international human rights law. The principle is present in all the major human rights treaties and provides the central and particular theme of some of the international human rights conventions such as the Convention on the Elimination of All Forms of Discrimination against Women.

The principle applies to everyone in relation to all human rights and freedoms and it prohibits discrimination on the basis of a list of never-ending categories such as sex, race, color and so on. The principle of non-discrimination is complemented by the principle of equality[1],“All human beings are born free and equal in dignity and rights.” Also, at the individual level, while we are entitled our human rights, we should also respect the human rights of others.

Human Rights of Prisoners: World perspective

The principle of universality of human rights is the cornerstone of international human rights law. This principle, as first emphasized in the Universal Declaration of Human Rights in 1948, has been reiterated in numerous international human rights conventions, declarations, and resolutions. The 1993 Vienna World Conference on Human Rights, for example, noted that it is the duty of States to promote and protect all human rights and fundamental freedoms, regardless of their political, economic and cultural systems.

Who are Prisoners

“In our world prisons are still laboratories of torture, warehouses in which human commodities are sadistically kept and where spectrums of inmates range from driftwood juveniles to heroic dissenters”

“Convicts are not by mere reason of the conviction denuded of all the fundamental rights which they otherwise possess.”[2].

The word ‘prisoner’ means any person who is kept under custody in jail or prison because he/she committed an act prohibited by law of the land. A prisoner also known as an inmate is anyone who, against their will, is deprived of liberty. This liberty can be deprived by forceful restrain or confinement.

The Indian socio-legal is based on non-violence, mutual respect and human dignity of the individual. By committing a crime, a person does not change from being human and still is endowed with all the aspects which demand him to be treated with human dignity and respect that a human being deserves.

Human rights are necessitated because of the reason of human life. Being in civilized society organized with law and a system as such, it is essential to ensure for every citizen a reasonably dignified life[3]. Even if the person is confined or imprisoned because of his wrong, he is entitled to their rights unaffected by the punishment for wrongs, simply because if a person under trial or a convict, his rights cannot be denuded.

“No one shall be subject to torture or cruel, inhuman or degrading treatment of punishment”[4]

Prisoners have basic legal rights that can’t be taken away from them. These include:

• The right to food and water.
• Protection from torture, violence and racial harassment.
• Being able to get in touch with an attorney to defend himself.

Human Rights in India

Human rights are those rights that are fundamental to the human life. Human rights are rights to certain claims and freedoms for all human beings all over the world. These rights, besides being fundamental and universal in character, assumed international dimension. These rights ensure to make man free. Universalization of Rights without any distinction of any kind is a feature of human rights. These rights recognize the basic human needs and demands. Every country should ensure human rights to its citizens. The Human rights should find its place in the Constitution of every country.

Human rights in India is an issue complicated by the country’s large size, its tremendous diversity, its status as a developing country and a sovereign, secular, democratic republic. The Constitution of India provides for Fundamental rights, which include freedom of religion. Clauses also provide for freedom of speech, as well as separation of executive and judiciary and freedom of movement within the country and abroad. The country also has an independent judiciary and well as bodies to look into issues of human rights.

The 2016 report of Human Rights Watch[5] accepts the above-mentioned faculties but goes to state that India has “serious human rights concerns”. Civil society groups face harassment and government critics face intimidation and lawsuits. Free speech has come under attack both from the state and by interest groups.

The problem about human rights varies from society to society in India. The entitlement of civil, political, economic, and social right of individuals varies from country to country according to the laws governing these rights of the citizens of that country.

It is the duty of every nation to create such laws and conditions that protect the basic Human rights of its citizens. India being a democratic country provides such rights to its citizens and allows them certain rights including the freedom of expression. These rights, which are called ‘Fundamental Rights’ form an important part of the Constitution of India.

These rights are fundamental in three different ways, first, these are basic human rights as human beings and secondly, our Constitution gives us these fundamental rights and guarantees because these rights are necessary for the citizens of our country to act properly and live in a democratic manner and thirdly, the procedure for the effective enforcement of these guaranteed Fundamental Rights has been mentioned in the constitution itself. Every citizen of India has the right to move to a court of law if he/she is denied these rights. The Constitution is there to safeguard her/his rights.

The Constitution guarantees to us six Fundamental Rights. The six Fundamental Rights as mentioned in our Constitution are, The Right to Equality[6], The Right to freedom[7], The Right against Exploitation[8], The Right to Freedom of Religion[9], The Cultural and Educational Rights[10] and The Right to Constitutional Remedies[11].

Human Rights of Prisoners in India: Current Scenario and Violation

The practice of torture in prison has been widespread and predominant in India since time immemorial. Unchallenged and unrestricted, it has become a ‘normal’ and ‘legitimate’ practice all over. In the name of investigating crimes, extracting confessions and punishing individuals by the law enforcement agencies, torture is inflicted not only upon the accused but also on bona fide petitioners, complainants or informants amounting to cruel, inhuman, barbaric and degrading treatment, grossly derogatory to the individual dignity of the human person. Torture is also inflicted on women in the form of custodial rape, molestation and other forms of sexual torture.

The Hon’ble Supreme Court of India in the case of Joginder Kumar v. State of UP and Ors. said that the “the quality of a nation’s civilization can be largely measured by the methods it uses in the enforcement of criminal law. The horizon of human rights is expanding. At the same the time, the crime rate is also increasing. the court has been receiving complaints about violation of human rights because of indiscriminate arrests. A realistic approach should be made in this direction. The law of arrest is one of balancing individual rights, liberties and privileges, on one hand and individual duties obligations and responsibilities on the other; of weighing and balancing the rights, liberties and privileges of the single individual and those of individuals collectively; of simply deciding what is wanted and where to put the weight and the emphasis; of deciding which comes first ­– the criminal or society, the law violator or the law abider.”[12]

Article 21 of the Constitution guarantees the right of personal liberty and thereby prohibits any inhuman, cruel or degrading treatment to any person whether he is a national or foreigner. No person shall be deprived of his or personal liberty except according to procedure established by law. This Article also protects people for being retrospectively punished for activities which were given a status of crime after they committed the act.[13]

The Hon’ble Supreme Court of India had occasion to deal with the rights of prisoners in the case of Sunil Batra v. Delhi Administration[14]. In that decision, this Court gave a very obvious answer to the question whether prisoners are persons and whether they are entitled to fundamental rights while in custody, although there may be a shrinkage in the fundamental rights. This is what this Court had to say in this regard:

“Are ‘prisoners’ persons? Yes, of course. To answer in the negative is to convict the nation and the Constitution of dehumanization and to repudiate the world legal order, which now recognizes rights of prisoners in the International Covenant on Prisoners’ Rights to which India has signed assent. In Batra case, the Hon’ble Court has rejected the hands-off doctrine and it has been ruled that fundamental rights do not flee the person as he enters the prison although they may suffer shrinkage necessitated by incarceration.

To handcuff is to hoop harshly and to punish humiliatingly. The minimum freedom of movement, under which a detainee is entitled to under Article 19[15], cannot be cut down by the application of handcuffs. Handcuffs must be the last resort as there are other ways for ensuring security.

Article 14[16]; gives the right to equality and equal protection also to the prisoners. If any excesses committed on a prisoner, by the police is considered as a violation of rights and it warrants the attention of the legislature and judiciary. The right to meet friends, relatives and lawyers are provided under article 14 and article 21. Such rights are pretty reasonable and non-arbitrary. Even prison regulations recognize the right of prisoners to have interview with a legal adviser necessary, in a reasonable manner. Right to free legal aid is also provided under this article 14 and 21[17].

ROLE PLAYED BY THE INDIAN JUDICIARY

The Indian Supreme Court has been active in responding to human right violations in Indian jails and has, in the process, recognized a number of rights of prisoners by interpreting Articles 21, 19, 22, 32, 37 and 39-A of the Constitution in a positive and humane way.

Justice V.R. Krishna Iyer in the case of State of M.P. v Shyamsundar Trivedi[18] said that “Convicts are not by mere reason of the conviction denuded of all the fundamental rights which they otherwise possess”

“Like you and me, prisoners are also human beings. Hence, all such rights except those that are taken away in the legitimate process of incarceration still remain with the prisoner. These include rights that are related to the protection of basic human dignity as well as those for the development of the prisoner into a better human being.”[19]

If a person commits any crime, it does not mean that by committing a crime, he/she ceases to be a human being and that he/she can be deprived of those aspects of life which constitute human dignity.

Disturbing conditions of the prison and violation of the basic human rights such as custodial deaths, physical violence/torture, police excess, degrading treatment, custodial rape, poor quality of food, lack f water supply, poor health system support, not producing the prisoners to the court, unjustified prolonged incarceration, forced labor and other problems observed by the apex court have led to judicial activism.[20] Overcrowded prisons, prolonged detention of under trial prisoners, unsatisfactory living condition and allegations of indifferent and even inhuman behavior by prison staff has repeatedly attracted the attention of critics over the years. Unfortunately, little has changed. There have been no worthwhile reforms affecting the basic issues of relevance to prison administration in India.

– (Justice A N Mulla Committee, 1980-83)

Isuues of concern regarding prisoners in India

The Hon’ble Supreme Court of India in the case of Rama Murthy V state of Karnataka[21] specified 9 problems that the Indian Prisons are afflicted with. Those being: –

• 80% prisoners are under trials
• Delay in trial.
• Even though bail is granted, prisoners are not released.
• Lack or insufficient provision of medical aid to prisoners
• Callous and insensitive attitude of jail authorities
• Punishment carried out by jail authorities not coherent with punishment given by court.
• Harsh mental and physical torture
• Lack of proper legal aid
• Corruption and other malpractices.

Solution to those problems. Worldwide and in India

A sentence of imprisonment constitutes only a deprivation of the basic right to liberty. It does not entail the restriction of other human rights, with the exception of those which are naturally restricted by the very fact of being in prison. Prison reforms are necessary to ensure that this principle is respected, the human rights of prisoners protected and their prospects for social reintegration increased, in compliance with relevant international standards and norms.

In order for a prison system to be managed in a fair and humane manner, national legislation, policies, and practices must be guided by the international standards developed to protect the human rights of prisoners. Prison torture in all forms is banned by the 1948 Universal Declaration of Human Rights (UDHR), the 1949 Geneva Conventions (signed 1949), the American Convention on Human Rights (signed 1977), the International Covenant on Civil and Political Rights (signed 1977), and the United Nations Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment (signed 1988).

Prison authorities have a responsibility to ensure that the supervision and treatment of prisoners is in line with the rule of law, with respect to individuals’ human rights, and that the period of imprisonment is used to prepare individuals for life outside the prison following release. But often national legislation and rules relating to the management of prisons are outdated and in need of reform

Human rights of prisoners can be enforced through various methods some of which are listed below,

Prison Welfare Schemes

Prison welfare schemes should be introduced in prisons all around the world so that some productive work is done by the prisoners so that they do not indulge in other nefarious activities while they are in jail and utilize their time in doing some erstwhile activity. The jail authorities help the prisoners or inmates, as referred by jail authorities, to conduct themselves in a better way which helps them lead a better life after their release. The atmosphere provided by the jail authorities compels the prisoners to work which diverts their mind from other mischievous things.

• The prisoners can also participate in games and sports activities within the. For example, sports fest is organized during winter sports festivals, which are popularly known in the jail as “Tihar Olympics”[22]. Drug de-addiction centers can be opened up in every prison so that the drug abuse and drug addiction of the inmates can be curbed so that they can live a better life after prison.
• Prisoners can be made to work in various factories so they understand the importance of work and inculcate these principles in their life outside prison too.
• Recreational facilities can be given to the inmates such as vocational training, education both for adults and formal education, computer courses, games and competitions are held every now and then, also yoga and meditation, creative art therapy, painting etc. These recreational facilities help the inmates to change their behavior and become good citizens.
• Job Placement should be provided to the prisoners so that they can earn their dignity back in the society which they lost when they were arrested.
• The inmates can not only prepare eatable goods but also shirts, carpets, khadi clothes, etc. Other than this a few inmates can be allocated creative work like making furniture, showpieces like small temples, flower vases, braille books for the blind, wooden chairs, tables etc. These goods can not only be sold but can also be used by the inmates.
• Such types of programs should not be optional and this should be strictly enforced by the jail authorities. Every inmate has to be involved in it. This motivates the inmates to live a better life after the end of their term and also these programs help in bringing out gems from people who had sunk into the deep coal mine of crime.

Healthcare

• Equivalence of healthcare and the right to health is a principle that applies to all prisoners, who are entitled to receive the same quality of medical care that is available in the community. However, this right is rarely realized in prisons, where usually healthcare services are extremely inadequate. Prison health services are almost always severely under-funded and understaffed and sometimes non-existent.
• The right to health includes not only the access to preventive, curative, reproductive, palliative and supportive health care but also the access to the underlying determinants of health, which include: safe drinking water and adequate sanitation; safe food; adequate nutrition and housing; safe health and dental services; healthy working and environmental conditions; health-related education and information and gender equality.
• Improved prison management and prison conditions are fundamental to developing a sustainable health strategy in prisons. In addition, prison health is an integral part of public health, and improving prison health is crucial for the success of public health policies.
• Thus, we should[23], in confluence with advocates and social activists working all across India aim at getting prisoners released, especially indigent ones, who are or have been undergoing trials and have been languishing in the prison for a long period of time. For this purpose, we can help the poor prisoners in economic and social ways by filing bail applications, filing for surety bonds and in cases where the indigent prisoners are unable to pay for the same, by providing for monetary assistance in collaboration with NGO initiatives all over India.

The prisoners who are in prison for long periods of time need constant care and support because they do not lose their humanity by committing a crime. They are endowed with and deserve an equivalent amount of human dignity and respect. The prisoners need to be visited regularly to ease them of their rigorous prison life and need to be talked to about the problems that they are facing. Also educational, rehabilitation and mental health counseling can be provided to the prisoners.

The prison is supposed to be for a reformatory purpose. However, the entire purpose fails when the prisoners are denied the very rights that are fundamental to their being a human being. Thus, we should take steps to ensure that their basic human rights are not infringed and that they live with dignity, because, after-all, they are humans too.

References

[1] Article 1 of the Universal Declaration of Human Rights

[2]  Justice V.R. Krishna Iyer.

[3] Article 21 of the Constitution of India.

[4] Universal Declaration of Human Rights, 1948

[5] https://www.hrw.org/publications

[6]   Article 14-18 of The Constitution of India,1950.

[7]   Article 19-22 of The Constitution of India, 1950.

[8]   Article 23-24 of The Constitution of India, 1950

[9] Article 25-28 of The Constitution of India, 1950

[10] Article 29-30 of The Constitution of India, 1950

[11] Article 32 of The Constitution of India, 1950

[12] (1994) 4 SCC 260

[13] Selvi v. State of Karnataka; (2010) 7 SCC 263

[14] (1980) 3 SCC 488 W.P. (C) No. 406

[15] The Constitution of India, 1950

[16] Ibid footnote 9

[17] The Constitution of India, 1950.

[18] (1994) 4 SCC 395

[19] Charles Shobraj vs. Superintendent, 1978

[20]  NHRC, 1993

[21] (1997) 2 SCC 642

[22] http://www.delhi.gov.in/wps/wcm/connect/lib_centraljail/Central+Jail/Home/Reformation

[23] Human Rights Law Network

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In this article, Sankalp Jain who is currently pursuing M.A. IN BUSINESS LAWS, from NUJS, Kolkata, discusses Patent enforcement through courts in India.

Patent enforcement through courts in India

The word ‘Patent’ is used to denote a set of exclusive rights to be used or monetized in regards to an invention. Patent is a grant made by the governmental authority to an inventor, assigning and confirming him the exclusive right to make, use and sells his invention for a term of 20 years. Patent is granted if the invention is new and beneficial. Patents are jurisdictional rights and are therefore restricted to a nation that allows the patent. The use or exploitation of a patent may be affected due to a conflict with other laws of countries which have not awarded the patent. The law relating to recognition and enforcement of patent rights in India is mainly governed by the Patents Act 1970(‘the Act’) and the rules issued under the Act. The Act has been substantially amended by the Patents (Amendment) Act 2005 in order to bring the Indian patent regime into line with the Agreement on Trade-Related Aspects of Intellectual Property Rights 1994 (TRIPs). The Indian Patents (Amendment) Act, 2005 provided for the launch of product patents in India and heralded the beginning of a new patent regime aimed at protecting the intellectual property rights of patent holders.

Sources of development of Patent Law

India has developed a patent law regime with application of various sources of law i.e. by adoption of principles of international law, enacting the principles laid down through global best practices in IPR and through ongoing refinement of domestic statutory laws and judicial decisions. Court decisions are a relevant source of patent law in India. Indian courts also rely on decisions of both European and US courts as sources of patent law.

In recent years, Indian courts have decided on a number of substantive patent law issues including,

• Infringement (Merck Sharpe and Dohme Corporation v Glenmark (CS(OS) 586/2013 judgment dated 7 October 2015); F Hoffman La Roche v Cipla Ltd. (RFA(OS) 92/2012, judgment dated 27 November 2015));
• Patentability (Novartis v Union of India ((2013) 6 SCC 1); Merck Sharpe and Dohme Corporation v Glenmark (supra); F. Hoffman La Roche v Cipla Ltd. (supra));
• Fair, reasonable and non-discriminatory licensing (Telefonaktiebolaget LM Ericsson v Intex Technologies (Cs(Os) No.1045/2014, judgment dated 13 March 2015);
• Telefonaktiebolaget LM Ericsson v M/s Best IT World (India) Pvt Ltd (iBall)). (CS (OS) 2501/2015, judgment dated 2 September 2015)).

International treaties/conventions

India is a signatory in the following international treaties:

• India ratified TRIPS in 1995.
• India ratified WIPO Paris Convention for the Protection of Industrial Property 1883 on 7 December 1998.
• India ratified Patent Cooperation Treaty on 7 December 1998.
• India ratified Budapest Treaty on the International Recognition of the Deposit of Microorganisms for the Purposes of Patent Procedure 1977 on 17 December 2001.
• On 18 February 1994, India ratified Convention on Biological Diversity 1992.
• On May 25, 1990, India ratified Washington Treaty on Intellectual Property in Respect of Integrated Circuits 1989

In case of a conflict in the application of different sources of law, the order of priority is as follows,

National statutory law.

The law made by the Indian Parliament or the state legislatures is considered binding law and is the main source in the case of conflict between sources.

Judicial pronouncements.

Decisions passed in India through various Courts i.e. High Courts and Supreme Court of India.

International treaties.

Provisions of international treaties or conventions cannot be applied directly by courts. Domestic legislation influenced by the outcome of these international conventions gives effect to these conventions based on laws passed by the Indian Parliament or the state legislatures. However, in certain unique situations, where there is no statutory guidance, courts draw reference and are inclined to the direct application of international conventions.

Enforcement of Patents

In India, there are four dispute resolution machinery and their scope of jurisdiction with respect to patent disputes is as under:

Indian Patent Office (IPO)

The IPO examines patent applications and grants them if they conform to Indian patent laws. It also maintains records of renewal and working of patents. The IPO participates in resolving disputes related to grant of patents and post-grant oppositions. The key administrative functions of the IPO include formulating and implementing rules and procedures.

IP Appellate Board (IPAB)

In April 2007, the IPAB became operational to hear patent related disputes in the country. It is equivalent to the Indian High courts. It hears revocation proceedings and the appeals arising out of decisions of the controller of patents. The IPAB has technical and legal experts to handle IP matters.

District courts and High courts

The Indian district courts are the first judicial machinery (adjudicating body) which can hear cases concerning patent infringement in the form of suits. The Indian High courts hear and decide upon the appeals arising out of the decisions of the district courts.

Supreme Court

The Supreme Court of India hears and decides appeals against the decisions of the IPAB and the High Courts. Since, Supreme Court is the highest court of appeal, the decision of Supreme Court is final and is not appealable.

Civil proceedings

• Patent infringement is the unauthorized manufacturing, using, offering for sale, selling any patented invention within India, or importing into India of any patented invention during the term of a patent.
• Patent infringement proceedings take the form of a civil suit instituted before a civil court exercising its original jurisdiction. A patent holder can start civil proceedings when seeking to enforce its rights.  No Criminal proceedings for patent infringement cannot be instituted under the Patents Act 1970.
• Under the Patents Act 1970, the District Court is the court of first line for patent infringement actions. Patent infringement disputes in India starts with a suit that a plaintiff files in the District Court, which is followed by a reply to the suit by the defendant. Subsequently, a hearing is held in the District Court, taking into consideration evidences, scientific experts testimony, statements of the witness etc. After considering the defenses put by defendants the District Court decides the dispute and awards the damages or prescribes the penalties, provided the infringement is found. If any of the plaintiff and the defendant are not satisfied, they can approach the High Court and further to the Supreme Court.

Injunction

An injunction is an equitable remedy in the form of a court order, whereby a party is required to do, or to refrain from doing, certain acts. An injunction may be preliminary or permanent. A preliminary injunction is a provisional remedy granted to restrain activity of a defendant on a temporary basis until the Court can make a final decision after trial and a permanent injunction is one which is granted after the trial. Preliminary (temporary or interim) injunction and permanent injunction are provided under Order 39, Rule 1-2 of Code of Civil Procedure, 1908.

For the court to order an injunction, the plaintiff has to fulfil the following criteria,

1. Establish his case only at a prima facie level, i.e., the plaintiff has to show that he has potential to succeed and that his claim is not vexatious;
2. Demonstrate irreparable injury if a temporary injunction is not granted; and
3. Demonstrate that the balance of convenience is in favor of the plaintiff (i.e. the plaintiff will be more disadvantaged because of the non-grant of the injunction that the defendant will be disadvantaged because of the grant of one).

Permanent injunction is granted only after the trial when the Court concludes that the defendant’s product infringes the patent of the plaintiff.

Judicial process of the Court.

1. Concerned parties, plaintiff and defendant, are notified in advance of the judicial rights and the judicial obligations they shall comply with during lawsuits.
2. Before the trial begins, the parties are required to exchange the evidence. When the plaintiff accuses the defendant of infringement, the plaintiff is responsible for providing the proof. During the trial, parties concerned are required to verify and cross-examine disputed facts and evidence. If the defendant is accused of infringing a process patent, then reversal of burden of proof is implemented. Therefore, the party who is accused of infringement is responsible for providing evidence for the manufacturing process of such product.
3. Either of the plaintiff and the defendant may appeal to the Appellate board against the decision of the Controller and other matters within 3 months from the date of the decision.
4. The plaintiff should bring the suit in the court within 3 years from the date of infringement (being the limitation period). The limitation period for the suit starts from the date of infringing act and not from the date of the grant of the patent.

Section 77 of the Patents Act, 1970 confers powers of a Civil Court on the Controller General of Patents, Designs and Trade Marks (‘Patent Controller’) in following matters:

1. The Patent Controller can summon and enforce the attendance of any person and examine him on oath;
2. Every party is entitled to know the nature of his opponent’s case. The Patent Controller can direct and obtain the documents from plaintiff for handing it to defendant or vice versa;
3. The Patent Controller can receive evidence on affidavits from the plaintiff or defendant;
4. During the proceeding of suit some people are exempted from appearing in person. In such circumstances, the Patent Controller is empowered to issue Commissions for the examination of witnesses or documents;
5. The Patent Controller can award costs which are reasonable with regard to all the circumstances of the case;
6. The Patent Controller can be requested to review his decision. This can be done by filling form 24 along with prescribed fee within one month from the date of decision;
7. The Patent Controller can set aside an order passed in absence of any party at the hearing. However, the affected party should make a request to set aside an order. This can be done by filing form 24 along with the prescribed fee within one month from the date of communication; and
8. The Patent Controller also has the power of taking oral evidence. He may also allow any party to be cross-examined on the contents of his affidavit. The Patent Controller may also accept documentary evidence unaccompanied by an affidavit.

Time Frame

Indian courts, specifically the High Court of Delhi, have appreciated the idea of fast-track litigation in intellectual property matters. Expedited litigation is becoming increasingly common in patent litigation in light of the relatively lower chances of obtaining an interim injunction, as well as the limited term of exclusivity available under the patent regime. It is expected that the full trial of an infringement suit can be easily concluded within two or three years from the institution.

Several cases in which intellectual property cases have been disposed of within a few months, including:

• Bajaj Auto Limited v TVS Motor Company Limited (2009) (2009 (41) PTC 398 (SC), where the Supreme Court directed the lower court to dispose of the suit within two and a half months from the date of the order.
• F Hoffmann-La Roche Ltd, & Anr v Cipla Limited (2009), where the court direction was to conclude the trial as expeditiously as possible.
• B Braun v Rishi Baid (2010) (2009 (40) PTC 193 (Del)), where the court direction was to dispose of the suit within four months, and the court set up a schedule to that effect.

The courts have developed a speedy process under which they set out a timeline for the submission of evidence and to proceed with the matter towards final arguments within about 18 months of the institution of a claim. This ensures that the interests of the parties are balanced, as the lawsuit is decided quickly and effectively and the defendant is not prevented from carrying on activities during the pendency of the suit.

New Development/alternatives

• The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act 2015 (‘CC Act’) has been enacted by the Indian Parliament to hear commercial disputes, including IPR disputes related to patents. It provides for a separate division in High Courts to deal with commercial matters (including intellectual property disputes), and unique procedures will be followed for these matters.
• Patent enforcement actions are subject to the regular rules on litigation before civil courts. The civil courts have exclusive jurisdiction to hear and decide issues concerning patent infringement. However, the IPO and the IPAB have jurisdiction to decide on issues of patent invalidity.
• Prior to the CC Act, the lawsuits involving commercial disputes were being tried by the regular Civil Courts and judges taking up all civil cases. The Commercial Courts have been formed to address the concerns related to pendency of law suits and slow disposal of commercial matters which include disputes related to intellectual property rights (IPRs).
• Under the CC Act, the IPR’s would include unregistered and registered trademarks, patents, copyright, geographical indications, designs, domain names and semiconductor integrated circuits.  The Commercial Courts will have jurisdiction to try all suits and applications pertaining to commercial disputes of a specified value (subject matter of which is not less than INR 10 million (approx. USD 160,000) or such higher value as may be notified by the Central government).
• The CC Act provides for the establishment of Commercial Courts by the State government (total 29 states).  The territories where the High Court acts as the court of first instance e.g. Delhi, Chennai, Mumbai, Kolkata and J&K commercial division will be established at the High courts.
• Further, the Commercial Appellate Division will be constituted to hear appeals from the Commercial Courts/Commercial Division.  The CC Act requires that all concerned suits and applications qualifying the specified value pending in a Civil Court/High Court be transferred to the Commercial Division. The CC Act has created special Commercial Courts with an objective of speedy and effective resolution of commercial disputes and also brought amendments into the Civil Procedure Code (CPC) of India to speed up the trial process for such disputes.

The below amendments, in particular, are aimed at controlling undue delays and simplifying the procedures resultantly curbing the practice of seeking adjournment of hearing without any tangible basis.

Strict time lines have been provided for the following activities

• Arguments to be concluded within six months from the date of first case management hearing;
• Written arguments to be submitted before four weeks of the oral hearing following revised written arguments, if any post oral hearing within one week.
• Judgement to be pronounced within 90 days of the conclusion of arguments;
• Recording of evidence on a day to day basis;
• Six month period for disposal of appeals;
• No Adjournments permitted on account of appearing advocate not being present.

Global Best practices

Case management hearing – A mandatory meeting will be arranged by the Court between the parties to decide upon a timeline for most important stages in a proceeding such as the recording of evidence, instituting written arguments. The court is further authorized to pass a wide variety of orders at such case management hearings to ensure the smooth and effective disposal of the suit.

Disclosure of documents – The CC Act has provided detailed procedures regarding discovery, disclosure, inspection, admission and denial of documents. These procedures will reduce the current practice of denials of even basic pleadings and documents or further having the pleadings amended at any stage and without proper reasons.

Summary Judgements –  For summary disposal of cases, elaborate procedures have been laid down. Any party can request for such summary judgment at any stage prior to framing of issues. The CC Act follows the principles of natural justice and requires both parties to provide their individual explanations including documentary evidence as to why a summary judgment should or should not be passed.

Costs Issues – The CC Act empowers payment of costs against the defaulting party in case of procedural delays in the suit. The guidelines reflecting the manner of determination of costs payable by one party to the other have been clearly laid down. The CC Act has specifically provided that “legal fees” and “fees and expenses of witnesses” are to be taken into consideration while awarding costs to the successful party. Thus, bringing in the principle of real costs to be imposed on the party.

The CC Act would require the four High Courts (Delhi, Bombay, Kolkata, Chennai) that hear the majority of IP cases, exercising original jurisdiction or acting as a court of first instance, to designate benches to hear commercial matters.  The old cases that do not fall within the specified value, that is INR 10 million (approx US $ 147,000), will be transferred to district court unless of course the Plaintiff amends the prayer and pays the additional court fees (of approx. US $ 1350) to take advantage of the new procedure.

Summary

The effectiveness of procedures for enforcement of patents is more than ensuring that intellectual property rights are revered. The obligations under the TRIPS Agreement are now being widely implemented in national legislations of the member states of the WTO. Most countries implement various procedures and remedies for intellectual property enforcement. However, intellectual property right owners, especially multinational companies which make huge investments in research and development, innovation, constantly demand further government-led efforts for strengthening intellectual property right protection. Developing countries like India are facing increased pressure from developed countries to increase their efforts on the enforcement of IPR. India needs to improve its enforcement record to a level that potential innovators believe that the public will respect their IPRs whether voluntarily or for fear of official enforcement. However, there are existing challenges which India needs to navigate, with regard to enforcement, the major problem being judicial delays. There is an inadequacy of the enforcement machinery resulting in slow judicial process.

To strengthen the enforcement and litigation system powerful, it is proposed that India should implement a progressive court driven IP litigation system. The objective is to ensure that IP disputes can be dealt with in a sophisticated way using a variety of procedural tools; the legal costs involved can significantly be well reduced and that the disputes can well be adjudged with a reasonable time frame (less than a year). Although establishment of commercial courts is a boon and seeks to expedite the resolution of IP disputes, there is still a big backlog of large cases and full implementation is a challenge. Irrespective of the complexity or the nature of the case, this system can ensure effective adjudication of IP disputes which can be handled by experts with appropriate fairness and justice.

References

1. http://www.ipindia.nic.in
2. The Patents Act, 1970, No. 39, Acts of Parliament, 1970 (India).
3. Bajaj v. TVS, Supreme Court, Sep. 16, 2009; TVS v. Bajaj, Madras High Court, May 18, 2009; Bajaj v. TVS, Madras High Court, Feb. 16, 2008
4. Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015.

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In this article, Meet Chandresh Kachhy who is currently pursuing M.A. IN BUSINESS LAWS, from NUJS, Kolkata, discusses What structuring advice will you give to an Indian entrepreneur who wants to receive foreign direct investment.

What is Foreign Direct Investment (FDI)

• Businesses need capital to grow, and capital needs to be put to its most optimal use for it to grow, generate returns and create value in the society. It is a simple supply-demand situation where excess capital finds its way to businesses which are in need of capital.
• The situation today is such that a lot of innovation and growth is happening in economies and regions which are deprived of capital, whereas a lot of capital is waiting to be deployed in developed regions where the scope for growth isn’t as much.
• When this surplus capital is invested in business across geographical borders, it is referred to as Foreign Investment in the recipient country. One of the forms of this investment is FDI. Hence, FDI is just another form of investment into growing businesses, albeit coming from outside the country, and hence it is governed by certain rules and regulations.

Foreign investment can come into a country in various forms, but the three predominant forms are as below:

1. Foreign Portfolio Investment (FPI)
   • Refers to any foreign entity which invests in the financial assets of an Indian company, such as stocks, bonds, mutual funds, etc
   • Typically, a FPI investor is not interested in having any operational or management control in the company, but only interested to the extent of making a financial return on its investment
   • As a benchmark, the amount up to which point an investment is considered a FPI is a 10% stake in the investee company
   • This is considered a short term investment, typically done in liquid assets for a purely financial return
2. Foreign Institutional Investment (FII), which is another class of FPI but is done only by institutions registered with SEBI
3. Foreign Direct Investment (FDI)
   • Refers to any investment by a foreign individual or entity into creating or building a business in India, via obtaining a controlling (operating or management) stake in an Indian business
   • It typically refers to an equity stake of more than 10% in the domestic investee company, and could involve setting up a business or investing in assets such as manufacturing facilities, plant & machinery, technology transfer, organizational skills, participating in a joint venture or a merger, re-investment of profits in host country, etc.
   • It has the connotation of a lasting interest in the domestic business, and not just a passing financial investment
   • This is the subject of interest in the present case.

FDI in India

As per the economic survey of 2016-17, India has become of the leading recipients of Foreign Direct Investment, running currently at an annual rate of USD 75 billion, very similar to the kind of amounts China was receiving about a decade ago.

The FDI limits for some key sectors is as follows:

Eligible investee entities

1. Any Indian company can accept FDI and issue capital against it

2. Partnership Firm or Proprietorship

A Non-Resident Indian (NRI) or a Person of Indian Origin (PIO) resident outside India can invest in the capital of a firm or a proprietary concern in India on non-repatriation basis provided

• Amount is invested by inward remittance or out of NRE/FCNR(B)/NRO account maintained with Authorized Dealers/Authorized banks.
• The firm or proprietary concern is not engaged in any agricultural/plantation or real estate business or print media sector.
• Amount invested shall not be eligible for repatriation outside India.

Investments with repatriation option:

• NRIs/PIO may seek prior permission of Reserve Bank for investment in sole proprietorship concerns/partnership firms with repatriation option.
• The application will be decided in consultation with the Government of India.

Investment by non-residents other than NRIs/PIO:

• A person resident outside India other than NRIs/PIO may make an application and seek prior approval of Reserve Bank for making investment in the capital of a firm or a proprietorship concern or any association of persons in India.
• The application will be decided in consultation with the Government of India.

Restrictions: An NRI or PIO is not allowed to invest in a firm or proprietorship concern engaged in any agricultural/plantation activity or real estate business or print media.

3. Trusts

• FDI is not permitted in Trusts other than in ‘VCF’, registered and regulated by SEBI and ‘Investment vehicle’.

4. Limited Liability Partnerships (LLPs)

FDI in LLPs is permitted subject to the following conditions:

• FDI is permitted under the automatic route in Limited Liability Partnership (LLPs) operating in sectors/activities where 100% FDI is allowed, through the automatic route and there are no FDI-linked performance conditions.
• An Indian company or an LLP, having foreign investment, is also permitted to make downstream investment in another company or LLP in sectors in which 100% FDI is allowed under the automatic route and there are no FDI-linked performance conditions.
• FDI in LLP is subject to the compliance of the conditions of LLP Act, 2008.

5. Investment Vehicle

   1. An entity being ‘investment vehicle’ registered and regulated under relevant regulations framed by SEBI or any other authority designated for the purpose including Real Estate Investment Trusts (REITs) governed by the SEBI (REITs) Regulations, 2014, Infrastructure Investment Trusts (InvIts) governed by the SEBI (InvIts) Regulations, 2014, Alternative Investment Funds (AIFs) governed by the SEBI (AIFs) Regulations, 2012 and notified under Schedule 11 of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 is permitted to receive foreign investment from a person resident outside India (other than an individual who is citizen of or any other entity which is registered / incorporated in Pakistan or Bangladesh), including an Registered Foreign Portfolio Investor (RFPI) or a non-resident Indian (NRI).

6. FDI in other Entities FDI in resident entities other than those mentioned above is not permitted.

Sectoral Rules for FDI

Foreign Direct Investment into an Indian entity can be done by individuals and/or entities. As far the FDI policy is concerned, it treats individuals and body corporate/partnerships the same with regards to the FDI policy. Any foreign investment in an Indian entity will be governed by the latest FDI policy circular (http://dipp.nic.in/English/Policies/FDI_Circular_2016.pdf). The said circular defines in very clear terms the amount of foreign shareholding allowed, the mode of investment, and the definition of a non-resident investor.

1. Amount of foreign shareholding allowed
   • The government of India has defined the maximum thresholds of the foreign shareholding allowed in various sectors of industry.
   • For example, the government allows 100% FDI in ‘non-news and current affairs’ television channels, but only 49% in ‘news and current affairs’ television channels.
2. Mode of investment: There are two approved modes of FDI into an Indian company
   • Automatic route: Under the automatic route, the investor doesn’t require any approval from the government for its investment. It is possible that a particular sector could have automatic approval up to a certain level of investment, beyond which government approval is required. For example, investment up to 49% stake in any defence undertaking is covered under the automatic route, but government approval is required for investment above 49%
   • Government route: Under the government route, prior approval of the government is required for the investment to go ahead. This approval is provided by a body called the Foreign Investment Promotion Board (FIPB), which comprises of secretaries from ministries of finance, commerce & industries and external affairs.
3. Definition of foreign investment
   • Foreign investment into an Indian company includes both direct and indirect foreign investment.
   • Direct investment means investment which has come from a non-resident entity directly into the target resident entity
   • Indirect foreign investment means that investment which has come from a non-resident entity into a resident entity, which then further invests into the target resident entity.
     • If the investing resident entity is such that even after the non-resident investment, it is still owned and controlled by an Indian person/entity, then downstream investment into the Opco will not be considered as a foreign investment

So any decision about the proposed structure of the entity accepting the FDI will first have to be filtered through the above-described FDI rules and regulations.

What is the optimal structure to attract FDI?

FDI into LLP Structure

An LLP structure could be a very attractive option for the entrepreneur and the investor, as long as it would operate within the constraints described above with respect to FDI into LLPs

FDI into a Company

In light of the above rules governing FDI into an Indian company, there are various options to structure the business depending on the level of FDI planned for and the kind of business the company is in. Below we look at some of the options and discuss their suitability for different kinds of businesses.

Let us define two entities first, Hold-Co (Holding Company), and Op-Co (Operating Company).

1. FDI into the main operating company

   • The FDI comes into the entity which is conducting the underlying business, also known as the Op-co or the Operating Company
   • This means that the underlying business of the Op-Co should be such that it is eligible to receive FDI in the first place, as the respective sectoral & modal restrictions will apply
   • This structure will work best when the underlying business of the Op-Co is one where the extant FDI policy allows up to 100% FDI under the automatic route.
   • The promoter must note that once the FDI crosses 50%, the company becomes classified as a foreign company, and hence will be liable to pay taxes at a higher rate of 40%, and any downstream investment by the company will be considered FDI
   • From an operational perspective, this structure will have a lot of compliances as any FDI coming in at this level will be governed by the extant FDI regulations as well as all the required RBI filings

2. FDI into an operating Hold-co, with Op-co as a subsidiary of the Hold-Co

   • The FDI comes into a holding company, or Hold-Co, which holds the Op-co as a subsidiary. It is critical that the Hold-Co has some business operations and is not a pure investment vehicle Hold-Co
   • This is one of the most flexible structures as the Hold-Co can have FDI upto 49% while continuing to be classified as a domestic entity. This allows the Hold-Co to invest downstream as a domestic entity, without any restrictions
   • In such a structure, the underlying business of the venture can be split into a regulated portion, and an unregulated portion which would sit in the Hold-Co
   • Once the Hold-Co receives FDI under the automatic route, as long as the FDI at Hold-Co level remains < 49%, it will be able to make any investment downstream like a domestic company.
   • This structure only makes sense where parts of the underlying business can be separated, and are treated differently under the extant FDI regulations
   • For example, if a company has a news broadcasting-cum-website business, then the website / digital business can be taken into the Hold-Co, which would have a subsidiary housing the news broadcasting business
     • Digital and website businesses do not have any restrictions on FDI limits or mode of approval, essentially allowing up to 100% under automatic route, while news uplinking businesses have an FDI limit of 49%, which also requires government approval
     • As long as the FDI in Hold-Co remains < 50%, the Hold-Co continues to be classified as a domestic company. This allows the Hold-Co to attract FDI at the parent level, and then invest downstream into the new uplinking businesses, as a domestic parent, without any restrictions.
   • Operationally, this structure provides the most flexibility as once FDI has come into the company, and as long as it remains < 50%, there is complete flexibility on usage of funds downstream, without any regulatory requirements
   • Once the FDI in Hold-Co > 50%, then the Hold-Co is classified as a foreign entity, and any downstream investment by the Hold-Co will be treated as FDI
   • A drawback of this structure is that any FDI will have to come at Hold-Co level, thus making it difficult for potential investor to make targeted investments into specific subsidiary businesses

3. FDI into a pure Hold-co, with Op-co as a subsidiary of the Hold-Co

   • The FDI comes into a Hold-Co, which is essentially a pure investment vehicle Hold-Co
   • In such a structure, the Hold-Co is classified as an NBFC, in which FDI is allowed up to 100%, but only via government approval
   • Also, any downstream investment will be treated as an indirect FDI, and hence any sectoral FDI restrictions applicable to the subsidiary will be triggered, regardless of the extent of FDI at the Hold-Co. Hence, there is no flexibility at the Hold-Co level with regards to usage of funds downstream
   • Additionally, since the Hold-Co will be classified as a NBFC/CIC, it will need to get a NBFC CoR and all the NBFC compliances and restrictions will apply as well
   • The only benefit of this structure is that it allows a single platform for any investor to come in, especially when the business of the company can be split into multiple subsidiaries, and investors are interested in different parts of the businesses
     • For example, if a company has a news broadcast businesses, a news website and a newspaper, then any investor who is interested only within one or two of these businesses, will prefer a structure where a pure Hold-Co has 3 subsidiaries each housing a different businesses, and each investor can pick and choose which subsidiary to invest in
   • Operationally, this can be a challenging structure as each time FDI comes in, the Hold-Co will have to clearly specify the exact downstream investment use, and seek relevant approvals depending on the sectoral rules applicable to the downstream investment

4. Foreign investment into a pure investment company

   • Foreign investment into a company engaged only in the activity of investing other Indian business entities, will require prior Government approval for any amount of investment
   • These companies, which are classified as CICs under the RBI, will have to follow all relevant RBI compliances
   • For undertaking activities which are under automatic route and without foreign investment linked performance conditions, Indian company which does not have any operations and also does not have any downstream investments, will be permitted to have infusion of foreign investment under automatic route
   • However, approval of the Government will be required for such companies for infusion of foreign investment for undertaking activities which are under Government route, regardless of the amount or extent of foreign investment.
   • Whenever such a company decides to make downstream investments, it will have to comply with the relevant sectoral conditions

Which structure is best suited from a Returns perspective?

One of the main reasons for new businesses to be formed, and invested into, is that the promoters and investors are looking to make outsized returns from betting big at an early stage into what they believe would be successful businesses of the future. While promoters can often start a venture out of passion for the underlying business, and could even continue doing the same for many years, non-promoter investors are always investing from the perspective of generating returns, either for themselves or for their clients whose money they are managing.

Hence, one of the key points of discussion & negotiation in any such deal is the exit strategy of the business, and the various exit options available to the investors. These options and rights can be materially impacted by the corporate structure of the business. Below, we examine the question at hand and how it will impact the return of capital to the investors:

1. Dividends

   • Once the operating business has paid its income taxes, and subject to the rules governing dividend distribution under the Companies Act 2013, it is free to pay dividends to the Holdco after withholding the dividend distribution tax
   • The above rule is applicable regardless of whether the parent (Holdco) is domiciled in India or abroad
   • In terms of the 3 options applicable to a company, the best option for the investor is option 1 as the other two options (with Hold-Co/Opco structures) will lead to tax leakage on account of dividends being taxed at two company levels

2. Exit via sale/listing of shares

   • This is the primary mode of exit as well as the primary motivation for investors to invest into a business
   • In any exit scenario, having a pure Hold-co structure at the top invariably leads to a valuation discount due the tax leakage inherent in such a structure, so long as the exit is being done at the Hold-co level
     • All the value is created in the underlying subsidiaries, and any return of such value to the ultimate investor will be taxed at two levels (operating company, and Hold-Co)
   • If the intention is to spin-off/exit subsidiaries independent of each other, then the pure Hold-co structure would be more beneficial as it could provide for a clean exit

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In this article, Debarati Tripathi who is currently pursuing M.A. IN BUSINESS LAWS, from NUJS, Kolkata, discusses Indian laws and policy on generic drugs.

Introduction

• The Pharmaceutical industry in India was more or less non-existent prior to 1947, there were no production units of allopathic medicine in the country. Today, in the 21st century the Indian pharma sector is well recognized and a major provider of medicines and healthcare products globally.*India is now a leading pharmaceutical producer, with a fast-growing generics and biosimilar market. India currently ranks fourth in the world among the highest generic pharmaceuticals producers and contributes 20% of global generic drug exports – as per a report by Equity Master.
• Several attractive reasons for India’s rising prominence in pharmaceuticals can be cited, including economic labor, strong government support, infrastructure and legislature, and lower production costs. While India’s domestically-owned pharmaceuticals companies may be few in number, many multinational pharma giants appear to be taking advantage of the country’s inexpensive labor through India-based subsidiaries. India also boasts lower research and development (R&D) and manufacturing costs, given government initiatives that support the pharmaceuticals sector, including fiscal incentives and streamlined development procedures.
• The cost of production has been a leading source of India’s industry strength, as India is 60% cheaper than the U.S. and 50% cheaper than Europe in terms of drug production costs.
• The growth and development of any business are dependent on infrastructure, policies, and legislations of the land for ease of doing business; Pharma is no different. It is worthwhile to mention that the flexible provisions of the Patent Act of 1970 and other supportive policies of the Government of India played an instrumental role in the growth and development of this industry.
• We recognize the importance of public policies in influencing the present structure of the industry and aim to present in brief the important policy changes that have taken place in this sector and also the current status of the legislature.

In India, the approval, production, and marketing of quality drugs at reasonable prices is ensured by the following regulatory bodies,

The Central Drug Standards and Control Organization (CDSCO),

• CDSCO functions under the Ministry of Health and Family Welfare
• Prescribes standards and measures for ensuring the safety, efficacy, and quality of drugs, cosmetics, diagnostics and devices in the country;
• Regulates the market authorization of new drugs and clinical trials standards;
• Supervises drug imports and approves licenses to manufacture the above-mentioned products;

The National Pharmaceutical Pricing Authority (NPPA), 1997

• The NPPA functions under the Department of Chemicals and Petrochemicals.
• fixes or revises the prices of decontrolled bulk drugs and formulations periodically
• updates the list under price control through inclusion and exclusion of drugs in line with prescribed guidelines priodically;
• maintains data on production, exports and imports and market share of pharmaceutical firms;
• monitors the shortage of medicines in addition to providing inputs to Parliament in issues pertaining to drug pricing.

The Ministry of Health and Family Welfare examines pharmaceutical issues within the larger context of public health while the focus of the Ministry of Chemicals and Fertilizers is on industrial policy. In July 2008,the cabinet Secretariat, created a new department under Ministry of Chemicals and Fertilisers – the Department of Pharmaceuticals, with the objective of giving greater focus and thrust on the development of Pharmaceutical Sector in India and to regulate various complex issues related to pricing and availability of affordable medicines, research & development, protection of intellectual property rights and international commitments related to pharmaceutical sector which require integration of work with other ministries.

All the drugs and pharmaceuticals, unless specifically allotted to any other department, would come under the purview of the Department of Pharmaceuticals. The main functions and responsibilities of the Department are as follows,

• All matters relating to NPPA including its functions of price control and monitoring.
• Responsible for the drugs and pharmaceuticals, excluding those specifically allotted to other departments, and for the development of infrastructure, manpower and skills for the pharmaceutical sector
• Work for the promotion and coordination of basic, applied and other research in areas related to the pharmaceutical sector and for international co-operation in pharmaceutical research.
• Entrusted with the task of maintaining inter-sectoral coordination between organizations and institutes, both under Central and State Governments, related to areas concerning the subject.
• To deal with all matters relating to planning, development, and control of, and assistance to, all industries in the pharmaceutical segment.
• Promotion of Public Private Partnership (PPP) in pharmaceutical related areas.

However, other ministries also play a role in the regulation process.

• The Ministry of Environment and Forests, Ministry of Finance, Ministry of Commerce and Industry and the Ministry of Science and Technology also have a part to play in the regulation process. The process for drug approval requires the coordination of different departments, in addition to theDCGI, depending on whether the application in question is a biological drug or one based on recombinant DNA technology.
• The Department of Industrial Policy and Promotion and Directorate General of Foreign Trade, both under the aegis of Ministry of Commerce and Industry and the Ministry of Chemicals and Fertilizers, look into matters related to industrial policy such as the regulation of patents, drug exports, and government support to the industry.
• Licensing, quality control issues, market authorization is regulated by the Central Drug Controller, Ministry of Health and Family Welfare, Department of Biotechnology, Ministry of Science and Technology (DST) and Department of Environment, Ministry of Environment and Forests.

State drug controllers have the authority to issue licenses for the manufacture of approved drugs and monitor quality control, along with the Central Drug Standards Control Organization (CDSCO).

The important regulatory mechanisms are summarized below to give an understanding of the various legislatures that are present and govern the Pharmaceutical practice in India.

Drugs and Cosmetics Act of 1940 and Rules 1945

In India, drug manufacturing, quality and marketing is regulated in accordance with the Drugs and Cosmetics Act of 1940 and Rules 1945. Over the last few decades, this act has undergone several amendments. The Drugs Controller General of India (DCGI), who heads the Central Drugs Standards Control Organization (CDSCO), assumes responsibility for the amendments to the Acts and Rules. Other major related Acts and Rules include the Pharmacy Act of 1948, The Drugs and Magic Remedies Act of 1954 and Drug Prices Control Order (DPCO) 1995 and various other policies instituted by the Department of Chemicals and Petrochemicals.

Some of the important schedules of the Drugs and Cosmetic Acts include:

• Schedule D: dealing with exemption in drug imports,
• Schedule M: to control spurious drugs, incorporated in 1995 that lays down Good Manufacturing Practices(GMP) at par with WHO standards.involving premises and plants
• Schedule Y: which, specifies guidelines for clinical trials, import and manufacture of new drugs

In accordance with the Act of 1940, there exists a system of dual regulatory control or control at both Central and State government levels. The central regulatory authority undertakes approval of new drugs, clinical trials, standards setting, control over imported drugs and coordination of state bodies’ activities. State authorities assume responsibility for issuing licenses and monitoring manufacture, distribution and sale of drugs and other related products.

The Act has been amended several times as listed below,

1. The Drugs (Amendment) Act, 1955 (11 of 1955)
2. The Drugs (Amendment) Act, 1960 (35 of 1960)
3. The Drugs (Amendment) Act, 1962 (21 of 1962)
4. The Drugs and Cosmetics (Amendment) Act, 1964 (13 0f 1964)
5. The Drugs and Cosmetics (Amendment) Act, 1955 19 of 1972)
6. The Drugs and Cosmetics (Amendment) Act, 1982 (68 of 1982)
7. The Drugs and Cosmetics (Amendment) Act, 1986
8. The Drugs and Cosmetics (Amendment) Act, 1995 (71 of 1995)

Narcotic Drugs And Psychotropic Substances Act

The Narcotic Drugs and Psychotropic Substances Bill, 1985 was introduced in the Lok Sabha in August 1985 and subsequently passed by both the Houses of Parliament.It came into force on 14 November 1985 as The Narcotic Drugs And Psychotropic Substances Act, 1985 (shortened to NDPS Act). Under the NDPS Act, it is illegal for a person to produce/manufacture/cultivate, possess, sell, purchase, transport, store, and/or consume any narcotic drug or psychotropic substance. Under one of the provisions of the act, the Narcotics Control Bureau was set up with effect from March 1986. The Act is designed to fulfill India’s treaty obligations under the Single Convention on Narcotic Drugs, Convention on Psychotropic Substances, and United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances. The Act has been amended three times – in 1988, 2001, and most recently in 2014.

Prevention of Illicit Trafficking in Narcotic Drugs and Psychotropic Substances Act

• The Prevention of Illicit Trafficking in Narcotic Drugs and Psychotropic Substances Act is a drug control law passed in 1988 by the Parliament of India. It was established to enable the full implementation and enforcement of the Narcotic Drugs and Psychotropic Substances Act of 1985.
• The Narcotics Control Bureau (NCB) is the chief law enforcement and intelligence agency of India responsible for fighting drug trafficking and the abuse of illegal substances. It was created on 17 March 1986 to enable the full implementation of the Narcotic Drugs and Psychotropic Substances Act (1985) and fight its violation through the Prevention of Illicit Trafficking in Narcotic Drugs and Psychotropic Substances Act (1988).
• There exists a published list that mentions the names of all substances banned or controlled in India under the NDPS Act – 237 line items. The list uses the International Nonproprietary Name (INN) of the drugs but in some cases mentions drugs by their chemical name also widely known drugs such as ganja, cocaine, heroin etc. are mentioned as such. Cultivation/production/manufacture, possession, sale, purchase, transport, storage, consumption or distribution of any of the following substances, except for medical and scientific purposes and as per the rules or orders and conditions of licenses that may be issued, is illegal and a punishable offense.

The Patents Act

• Concerned by the high price of medicines and the lack of domestic infrastructure, the government constituted the Hathi Committee in 1974 ‘to probe into the problems and suggest a rational drug policy that would meet the medicinal needs of the country’. Recommended by the Committee’s report, the government amended the Patent Act of 1970 and enacted the Foreign Exchange Regulation Act (FERA) 1973 in its New Drug Policy (NDP) of 1978.
• The Patent Act of 1970 recognized only process patents. The life of the patent was also reduced significantly from 16 to 5 years from the date of sealing or 7 years from the date of filling a complete application, whichever is shorter; in other words, the maximum period of patent was 7 years. Further, in the amended Act an MNC could patent only one process.
• The Patent Act of 1970 and the changes in domestic regulation virtually curbed the monopoly of MNCs. Adopting the flexible provisions of the amended patent act, indigenous companies started imitating the patented product and could eventually come out with better processes for the same product.
• The industry also embarked on the path of high growth during this period. The other significant outcomes were fall in the prices of the medicines and the introduction of a large number of generic versions of patented products. The drug policy of 1978 was, however, revised in 1986 to dilute the mechanism of check and control with respect to the production of certain categories of drugs. NDP 1986 also regularized the production of a large number of drugs that were earlier questionable on regulatory grounds.
• The Patent Law was amended under the WTO compulsion to recognize product patent from 2005 onward. This was implemented in a staggered manner in three phases. The first phase of it was implemented in 1995 in which the ‘mail-box’ system was recognized.
• On January 1, 2000, a Second Amendment was introduced where the salient features were re-defined patentable subject matter, extended the term of patent protection to 20 years and amended the compulsory licensing system.
• A third amendment of patent law was made on January 1, 2005 to introduce product patent regime in areas, including pharmaceuticals that were hitherto covered by process patents only.

In summary, there is a gradual shift in public policy from the regime of control and process patents to a regime of decontrol and product patents.

Pricing and tax policies through DPCO and NPPA

• Price control on medicines was first introduced in India in 1962 and has subsequently undergone evolution through the Drug Price Control Order (DPCO). As per the directive of NPPA, the criterion for price regulation is based on the nature of the drug in terms of whether it enjoys mass consumption and in terms of whether there is lack of adequate competition for the drug.
• In 1978 selective price controls based on disease burden and prevalence was brought about by the Government. Thereafter, the list of prices under DPCO underwent a gradual decrease over a period of time. Around 80% of the market, with 342 drugs, was under price control in 1979. The number of drugs under DPCO decreased from 142 drugs in 1987 to 74 in 1995.
• The major objective of DPCO 1995 was to decrease monopoly in any given market segment, further decrease the number of drugs under price control to 74 and the inclusion of products manufactured by small scale producers under price control list.

In 1997, the National Pharmaceutical Pricing Authority [NPPA] was constituted in order to administer DPCO and deal with issues related to price revision.

• The NPPA also regulates the prices of bulk drugs or pharmaceutical actives. The MRP excise on medicines was levied by the Finance ministry in 2005 with the objective of increasing revenue and lowering prices of medicines by using fiscal deterrent on MRP. This change may have had some impact in terms of magnifying the advantage to industries located in the excise free zones.
• Drugs with high sales and a market share of more than 50% are part of the price regulation exercise. These drugs are referred to as scheduled drugs. Historically the NPPA would intervene only if the annual price increases were more than 20%.
• However, post-2007, the NPPA intervenes in cases where drugs have significant sales and where the annual price increases by 10%.
• The National Pharmaceuticals Policy 2006, proposed various measures such as increasing the number of bulk drugs under regulation from 74 to 354, regulating trade margins and instituting a new framework for drug price negotiations so as to make drugs more affordable for the Indian masses, to name a few.

Good Manufacturing Practices and policies

• World Health Organization GMP guidelines were instituted in 1975 in order to assist regulatory authorities in different countries to ensure consistency in quality, safety and efficacy standards while importing and exporting drugs and related products. India is one of the signatories to the certification scheme.
• The WHO-GMP certification, which possesses two-year validity, may be granted both by CDSCO and state regulatory authorities after a thorough inspection of the manufacturing premises.
• WHO defines Good manufacturing practice (GMP) as a system for ensuring that products are consistently produced and controlled according to quality standards. It is designed to minimize the risks involved in any pharmaceutical production be it manufacturing, packaging, testing, labeling, distributing and importing, that cannot be eliminated through testing the final product – drug or device or any formulation. The GMP protocols are largely concerned with parameters such as drug quality, safety, efficacy and potency.
• India has made progress in the domain of GMP through the enforcement of Schedule M Compliance. The requirements specified under the upgraded Schedule ‘M’ for GMP have become mandatory for pharmaceutical units in India from July 1, 2005. Schedule M classifies the various statutory requirements mandatory for drugs, medical devices and other categories of products as per the current Good Manufacturing Practices (cGMP). Schedule M contains various regulations for manufacturing, premises, waste disposal, and equipment.
• Schedule M protocols have been revised to harmonize it along the lines of WHO and US-FDA protocols. These revised protocols include detailed specifications on infrastructure and premises, environmental safety and health measures, production and operation controls, quality control and assurance and stability and validation studies.
• Schedule M compliance is the next thing, smaller pharmaceutical units may take longer to be compliant whereas large-scale firms have shown greater willingness to comply with the revised norms in order to increase their competitiveness in the global arena. According to state regulatory sources, units in states like Gujarat, Karnataka, Maharashtra and Andhra Pradesh have achieved a high percentage of Schedule M compliance in comparison to units in other states.
• Export of drugs, devices, and formulations to developed countries from India requires that Regulators from these countries visit Indian manufacturers to carry out a thorough inspection of their manufacturing units before registering the concerned product.
• A large number of domestic players are seeking international regulatory approvals from agencies like US-FDA, MHRA UK, TGA Australia and MCC South Africa in order to export their products, mostly generic medicines, in these markets. Indian drug makers have the largest number of FDA-approved plants outside the US and accounted for 39 per cent of all approvals for generic drugs during 2013.

Policies relating to clinical trials

• Till about a decade ago, there was little or no visibility with regard to the conduct of quality clinical trials in India-compliant to regulatory standards and ethics. The Central Drugs Standards Control Organization (CDSCO) has played a critical role in bringing about a positive change in the clinical trials landscape for India.The progression towards Good Clinical Practice (GCP) has largely been a gradual and slow process.
• In 1988 local clinical trials for new drug introductions were first made mandatory in India. Along with the changeover to product patents in January 2005, India also amended the schedule Y of the ‘‘Drugs and Cosmetics Rules’’ to allow drug trials without a phase lag in the country, that is, Phase II and Phase III trials were permitted only after these had been carried out elsewhere in the world.
• The new rule permitted conducting the concurrent trials of the same phase in India. Also Drugs Technical Advisory Board (DTAB) made GLP practices mandatory for all laboratories and in-house units of pharmaceutical firms and Contract Research Organizations (CROs).
• Reports of incidents of ethical violations related to informed consent and conduct of trials by multinational and domestic organizations were known prior to the year 2000. In 2000, the regulators – the Central Ethics Committee on Human Research (CECHR) and Indian Council of Medical Research (ICMR) took proactive initiative to conceptualize and issue the Ethical Guidelines for Biomedical Research on Human Subjects.
• The Good Clinical Practice (GCP) guidelines were developed in line with the latest WHO and ICH guidelines in 2001 by Central Expert Committee -set up for the purpose by Central Drugs Standards Control Organization (CDSCO)
• Subsequently in 2005, the requirements of data submission on animal testing for permission to undertake Phase I, Phase II and Phase III clinical trials were laid down in the revised Schedule Y of the Drugs and Cosmetics rules.
• Clear responsibilities for investigators; and sponsors were specified and notifying changes in the protocol were made mandatory. Expert clinicians & scientists from the industry assist the evaluation of the relevant data submitted to the Drugs Control General of India (DCGI)
• Similarly, for registration and approval of new drugs, which have already been registered and used in the country of origin, The DCGI mandates Phase II trials in about 100 prior to allowing such products to be marketed in India. Normally, new drug approval is usually granted for a period of about two years. The trials are conducted only after clearances are obtained from the Institutional Ethics Committees. Consent of patients for participation in such trials is an integral part of the regulatory framework.
• However, there remains a need for the establishment of pharmacovigilance centers at national, zonal and regional levels to monitor adverse drug reactions to be met.

Policies and guidelines are evolving in the allied fields of Medical devices and Biotechnology in India.

Medical devices

• The JJ Hospital controversy, involving the use of unapproved and untested stents on 60 patients and the subsequent recommendations made by the Mashelkar Committee in 2004 resulted in the Department of Medical Education and Research (DMER) banning the use of unapproved stents and stressing on regulatory approvals from the country of manufacture or US-FDA approval for medical devices.
• Following on from the incident, in June 2007, the DCGI introduced a new set of guidelines for the import and manufacture of medical devices in the country.
• The Mashelkar Committee subsequently recommended the creation of a specific medical devices division within the CDSCO in order to address the management, approval, certification and quality assurance of all medical devices.
• This essentially consisted in alteration of the status of sterile medical devices, intended for internal or external use to medical drugs and creation of suitable provisions and amendments to the Drugs and Cosmetics Act of 1940.
• The Drugs Consultative Committee approved these recommendations in 2005, ensuring that in future all devices would be licensed for manufacture, distributed and sold by the CDSCO, with special evaluation committees in order to ensure that the concerned manufacturing units complied with the requisite GMP requirements.

Biotechnology and related products

• The Department of Biotechnology [DBT] constituted under the Ministry of Science and Technology is the parent body for policy, promotion of R&D, international cooperation and manufacturing activities.
• Together with DBT, Genetic Engineering and Approval Committee [GEAC] constituted under Ministry of Environment and Forests [MoEF] is the key regulatory body in Biotechnology in India. Several committees have also been constituted under the said ministries to regulate the activities involving handling, manufacture, storage, testing, and release of genetic modified materials in India.
• The Institutional BioSafety Committee (IBSC), Review Committee on Genetic Manipulation (RCGM) and the Genetic Engineering Approval Committee (GEAC) to monitor rDNA research, product development and commercialization. The ISBC functions as the nodal point for interaction within the institution for the implementation of the rDNA Biosafety guidelines. The RCGM essentially monitors the safety related aspects of activities involving genetically engineering organisms or hazardous microorganisms.
• The GEAC undertakes the responsibility of approval of activities involving large-scale use of genetically modified/hazardous microorganisms and products thereof in research and industrial production and their safety in terms of environmental protection. In addition, the DCGI and state drug controllers as per the Drugs and Cosmetics Act 1945 and its subsequent amendments regulate biologicals.

With continuous improvements in laws and policies along with mechanisms for enforcement viz. checks, audits and enablement of the sector by the Government, the pharma industry has emerged as a stable, long term sector across decades and through various economic trends. This latest report from India Brand equity, cited below shows the increasing investments in the sector, with a projection of crossing $ value of 50$ by 2020.

Bibliography :

* https://www.omicsgroup.org/journals/pharma-regulations-for-generic-drug-products-in-india-and-us-case-studies-and-future-prospectives-2167-7689.1000119.php?aid=27336

http://www.nistads.res.in/indiasnt2008/t4industry/t4ind18.htm

Adapted from Dun & Bradstreet (D&B) 2007

https://en.wikipedia.org/wiki/Drugs_and_Cosmetics_Act,_1940

http://www.ibef.org/industry/indian-pharmaceuticals-industry-analysis-presentation

https://en.wikipedia.org/wiki/Drug_policy_of_India

https://www.rroij.com/open-access/an-overview-of-regulatory-process-for-pharmaceutical-sector-in-india.php?aid=34904

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In this article, Rittika Chowdhary who is currently pursuing M.A. IN BUSINESS LAWS, from NUJS, Kolkata, discusses what structuring advice will you give to an Indian entrepreneur who wants to expand to UK?

India, the land of opportunities! But is it really!

• India is a huge market with entrepreneurs carrying out their business in various forms and manners; a country with 29 states and 7 union territories, which proudly boasts of population of approximately 1’25 billion, being second highest in the globe, with the commendable network of 4.69 Mio Kms of road networks, 70,000 Kms of railway networks and approx. 346 airports across the country, India stands as one among the top nations in the matter of connectivity.
• No doubt it is touted as the next big superpower in the world economy; gone are the days when India was part of the “Third World”. With GDP of US $2.2T, it has made a remarkable growth rate of 7.3% in the GDP in FY 2016; with FDI inflow of USD 25 Billion in FY 2014, and not to mention that the Inflation factor is improving over the years in the country.
• Yet one has to admit that it is a notoriously difficult place to do business, and having local help on board is the key to unlocking the country’s vast economic potential. With this vast economic potential, traversing the diverse and complicated corporate landscape can be a daunting task without the right help on board.
• Not only is India one of the fastest-growing countries in the world, it is also going through a period of unprecedented economic liberation,  with opening its vast consumer base to international firms and granting overseas investors more access to its vast and varied market than ever.
• A large, young population and a strong export sector awaits for expansions of businesses, with a potential consumer base that far outstrips most other nations in the developed and developing world.

The hassles of doing business in India

Irrespective of all these potential opportunities there are some critical factors which are stopping and making one rethink while establishing/establishing their business in India. Let’s have a glance of these critical factors.

Establishment of business

• The cost of starting a business in India is extremely huge, and the procedures corresponding in establishing the business is more laborious. There are stringent laws which are to be adhered with, various licenses and permissions which are to be availed by the businessman.
• A series of compliances await an entrepreneur on the central government level, and state specific laws as well. There are 12 procedures to complete in the initial set up of a business costing 49.8% of income per capita. It takes almost a month (27 days) to complete the tasks on average, which is well above the OECD average of 12 days. Furthermore, there is no single window concept for complying with all procedures.

Registering property

• Registering a property requires quite a bit of legal work and can also incur substantial charges. Stamp duty of 5% of the property and another 1% charge on the market value of the property incurred at the Sub-Registrar of Assurances are the 2 fees to look out for, although the lawyer charges and fees at the Land & Survey Office also add to the bill.

Getting credit

• India performs the best of all South Asian economies for ease of getting credit, ranking 23rd in the world according to the World Bank and International Finance Corporation. The 2013 report this to when a “unified collateral registry, which is centralized geographically, became operational in India strengthening access to credit and the secured transaction regime”.

Protecting investors and enforcing contracts

• Concept of protection of investors has gain prominence of late; there are new bodies viz SEBI which has been set up late 90’s. Enforcing contracts will also be an area that must be looked at; India ranks as one of the worst countries in the world for the ability to enforce a contract, taking an average of 1,420 days.

Paying taxes

• India is witnessing extremely complicated tax structure across the globe. Business units are bound to bare the huge burden of taxes and to undergo the stringent procedures for the compliances. There are several tax laws some are unified by Central government and some are specified by the individual state government. India has miserably failed to unify its tax structure across the country.

Trading Across Borders

• Despite India opening its borders to international trade, there are still several hurdles to overcome when importing and exporting goods. Several layers of bureaucracy make it very challenging to move goods efficiently, and companies must file a long list of documents before moving goods across borders.
• Culture: India is a cultural hotbed, and business is more about building relations than presenting figures and sums.

Exploring other opportunities

Across the globe, in order to attract the attention of entrepreneurs, governments are on a spree and are ready to shell out money and stops so as to figure out the best way to keep business in their country. New startups bring about innovativeness and exciting business opportunities, which are seen as a great way to stimulate the economy; they help in creation of new jobs and are in a unique position to generate real value just from an idea.

According to the World Bank, the UK is the seventh easiest place to do business in the world.

An article published by Forbes had listed a couple of reasons as to why UK is one of the most attractive business hub, given the fact that the UK government had been regularly (and annually) announced changes in their budget so as to help nurture the growing ecosystem.

• The barriers to starting a company have been falling: whether it is for a freelancer or for a exploring other commercial ventures, the regulatory and legal requirements have been made lot more simpler; be it getting registered as self-employed and doing your tax return through UK’s color-coded online system, or incorporating a company within an hour or so for £14, the barriers to getting started have been steadily getting lower.
• The British tax man is dealing with startups more intelligently: the fact that a business does not necessarily start yielding profits from day 1 has been adequately addressed in almost all countries’ tax structure now, and UK has not been far behind; for example, allowances on research & development expenses, a benefit which can later enable a switch to tax credits after the business is at break-even point is an attractive tax rule from the business point of view.
• A variety of helpful financial schemes: Various financial schemes are offered by the British government, which provides significant tax benefits to smart investors, founders and even employees of companies, regardless of who can afford expensive tax advice.
• The benefits are not just limited to British citizens: Anyone resident in the European Economic Area can relocate to Britain, but from last year, a new category of visa was created to allow anyone from anywhere in the world to enter the UK and establish a company, so long as they have £50,000 of UK-based investment.

Doing business in the United Kingdom

Now that we can see that UK is such an attractive business hub, the following are the considerations that one must keep in mind while thinking of doing business in the UK.

We are looking at this from the perspective of expanding a business. The website of the Government of the United Kingdom is an extremely structured one which lists out the actions for an entrepreneur wanting to set up a business in the UK.

As is applicable for each type of business, there are separate registration procedures for,

• Sole proprietor (https://www.gov.uk/set-up-sole-trader)
• Partnership Business (https://www.gov.uk/set-up-business-partnership)
• Private Limited Company (https://www.gov.uk/limited-company-formation)
• Social enterprise (https://www.gov.uk/set-up-a-social-enterprise)
• Overseas Company (https://www.gov.uk/register-as-an-overseas-company)
• Unincorporated associations (https://www.gov.uk/unincorporated-associations)

Since we are expanding our business to the UK, it is pertinent to take a registration as an overseas company; in addition to the normal procedure for setting up a business, Form OS IN01 needs to be filled out and sent it to Companies House within 1 month of opening for business along with £20 registration fee with the form (cheque or postal order).

Register (incorporate) a company in the UK

By incorporating a company, there will be a formation separate legal entity in the UK, which is known as a private limited company. The process to register (incorporate) a private limited company in the UK is straightforward and shall typically take less than 24 hours.

Before commencing the process of registration, an entrepreneur shall keep following information ready,

• A name for the company
• An address, which can be any UK address, to act as the registered address of the company
• At least one director (does not need to be UK resident)
• At least one shareholder (can be corporate or an individual)

Memorandum of Association is a compulsory document for the incorporation of an UK company. These documents must be in place at the time of incorporation. One can select standard documents at the date of incorporation, or professional advisers can prepare and file tailored documents on behalf of company.

While it is not a legal requirement to have a UK resident director or shareholder to set up a UK company, many banks will prefer this before they will open a UK business bank account for business establishment.

Register a UK branch of a foreign company

By registering a branch in the UK, a foreign company does not create a separate legal entity but is registering a foreign entity to do business in the UK. A branch does not offer the limited liability benefits that come with a UK company.

This is known as the registration of a UK establishment of an overseas company.

It will take longer to register a UK branch because the foreign registering company must submit additional documents and information to Companies House. The review process for this can take up to 4 weeks.

Compliance and Procedures regarding Accounting and Business Tax

Any company which is a registered entity in the United Kingdom, and carrying out its operations, has to comply with the established provisions for accounting and business tax:

• In the United Kingdom, the financial year runs from 1 April to 31 March for the purposes of corporation tax and government financial For the self-employed and others who pay personal tax the fiscal year starts on 6 April and ends on 5 April of the next calendar year.

Accounting period of a corporation can’t be longer than 12 months, however shorter period is allowed in the event of newly formed company or during closure of its operations.

• Accounting year will affect the deadlines for payment of Corporate Tax. After the end of financial year, every company is required to file its accounts and tax returns with Companies House and HM Revenue and Customs (HMRC). Following table summarizes the deadlines for filing the accounts and tax returns with HMRC:

• Capital Gain Tax on Business is also applicable when a business entity sells business asset viz. Lands and Buildings, Furniture and Fixtures, Plant and Machinery etc.
• Corporate Tax rate in United Kingdom stands at 20%.
• United Kingdom follows Value Added Tax as an Indirect Tax for the purpose of taxing the trading transaction. VAT is charged on transactions like:
  • business sales – for example when transaction involves buying and selling of goods and services
  • hiring or loaning goods to someone
  • selling business assets
  • commission transactions
  • items sold to staff – for example canteen meals
  • when business goods are used for personal purpose which are potential VAT transactions.
  • ‘non-sales’ like bartering, part-exchangeand gifts

It’s a duty of every business house to charge VAT on all their goods and services irrespective of the fact that they receive cash in return or it involves any barter transactions.

Every business house must register with HMRC if the turnover exceeds £83,000 unless every product sold by the business house is exempt from payment of VAT. Upon the registration for the VAT business house will receive VAT Number and the registration certificate.

Every registered business house shall submit the VAT return along with payment for VAT before the deadline date details are provided in website https://www.gov.uk/vat-returns

• HMRC is the monitoring authority of both direct and indirect taxes in United Kingdom. However, any assessee is having a right to appeal with the tribunal established by the law of country. Appealable topics and the procedures of an appeal are provided in the website. https://www.gov.uk/tax-tribunal/appeal-to-tribunal

Importing Procedures

When a business house involves in wider volume of transactions transaction across the country becomes more important. In United Kingdom, following procedures shall be followed by the business entities while indulging in Imports.

Procedures and Compliances are depending on from where the imports takes place,

• Within the European Union
• Outside the European Union

Procedures while importing from the European Union

When moving goods from European Union (EU) countries, one need to get a commodity code and pay VAT, but not import duty. Import licenses are not mandatory for this.

Imports within the EU are called ‘acquisitions’. However following procedures shall be strictly adhered with.

Commodity codes

Business House needs a commodity code if the goods are moving out from other EU countries. The code classifies the materials involved for tax and regulations.

Import licenses

Import licenses are need not be obtained for while moving goods from the EU countries except if the goods involved in the transaction is fire arm.

Paying VAT for EU acquisitions

• If we move goods from another EU country we must add these acquisitions and any tax due in the VAT Return. One can reclaim the VAT paid if the goods are for you to make taxable supplies or use in your business.
• Instant declaration shall be submitted to the authorities if the value of the goods involved in the transaction is more than £1,500,000.
• VAT shall be paid at the rate specified in the United Kingdom for the goods imported within the European Union.

Paying duty on acquisitions from EU countries

One need not pay any duty on goods that have been produced in the EU. These goods are ‘in free circulation’ in all EU countries.

This also covers goods from outside the EU if duty has already been paid on them.

Procedures while importing from Non-European Union Countries

When an organization involves in the importing of goods from non-European countries briefly the following procedures shall be followed with.

• Finding out the appropriate commodity code to classify the goods for tax and regulatory purposes.
• Registration for EORI Numbers.
• Declaring the value of imports with customs.
• Payment of duty

Import license may be necessary for restricted items.

Payment of duty on imports from Non- European Union Countries

• If the goods are routed through the EU countries then the business house is need not pay the duty. However if the goods are imported directly from Non EU countries duty shall be paid on it.
• The amount of duty you pay depends on how the goods are classified under the UK Trade Tariff and how they’ll be used.
• Business houses have an option to apply for reduced or zero rate duty for goods from certain countries as long as you can prove their origin. This is known as ‘preference’.
• Goods will not be released by customs until you’ve paid all duty and UK VAT.

Customs warehousing

• It’s possible to import goods from non-EU countries without paying duty or VAT as long as they stay in a customs warehouse. These warehouses are places where duty is suspended.
• For example, business house can import goods from the USA, store them in a customs warehouse in the UK and move them into a customs warehouse in Spain without paying duty.
• Import Duty and VAT will only be paid when the goods are put into free circulation within the EU.

Other points

• Sectors identified for doing business in the UK: With pro-business legislation and an appetite for innovation, UK business sectors are renowned for being world-leading. From revolutionary developments in automotive components through to filming the latest and greatest blockbusters, the UK is the next logical step for your business.
  • Aerospace
  • Advanced Manufacturing
  • Automotive
  • Creative
  • Energy creation
  • Financial services
  • Food and Drink manufacturing
  • Health and life sciences
  • Retail
  • Technology
  • Asset management
  • Automotive research and development
  • Automotive supply chain
  • Creative content and production
  • Data analytics in the UK
  • Freeform foods
  • Medical technology in UK
  • Motorsport
  • Nuclear Energy
  • Offshore wind
  • Oil and gas in the UK
  • Pharmaceutical manufacturing in the UK
• Licenses and licence applications is a separate and detailed topic, with sector specific licencing requirement, which has been explained in detail in the website

( https://www.gov.uk/browse/business/licences)

• Across the globe there are multiple UK Trade and Investment desks are established to help investors who are keen to explore the business in UK.

Conclusion

• Any business regardless of how it is conducted works best when it gets the adequate environment for flourishing. In this context, as has been pointed out earlier, governments are in a continuous upgradation process, so as to attract more and more investors, and bring about more entrepreneurs who are bubbling with energy, who can contribute to the economy in smarter ways which were unthought of in the past.
• Bringing in tax holidays for such entrepreneurs, opening up software and technology parks which are exclusively dedicated to the promotion and development of technology are some measures which have been taken by governments across the globe. The place where European countries take the lead from their Asian counterparts is availability of right resources to the right person in the right format, that is to say that doing business is not seen as a means of “only” earning profits in these countries, they are also looked up as a means to make lives simpler.
• Business is not an option; it is a matter of choice. The choice is made more attractive by means of easier policies, lesser regulations, stricter compliances and stringent penalties. The cost of non-compliance is far more than the benefit drawn out of the floating of law. Our Indian lawmakers can take a strong cue from such measures which have upheld the idea of innovation and conducting business across the globe.
• Several Initiatives has been put forward by the government of India viz. Make in India, Export Promotion schemes, exemptions etc. Inspite of all this we have a long way to go in ensuring proper inflow of the investment and retaining the domestic investment. More emphasis shall be given on providing the ease of doing business, with the single window procedure to comply with the provisions of law and regulations. Corruption free Procedures, better infrastructures will improve the business scenario in India.

The post What structuring advice will you give to an Indian entrepreneur who wants to expand to UK? appeared first on iPleaders.

In this article, Raghav Gupta who is currently pursuing M.A. IN BUSINESS LAWS, from NUJS, Kolkata, discusses Financial investment solutions for Non-Residential Indians (NRI).

Areas to invest in India

• Real estates
• Financial estates

Real estate assets

• Popular investment scheme amongst NRI’S
• Lots of legislative measures to be followed
• Possession and maintenance need physical presence and attention
• Time and effort consuming because it needs attention
• It is more likely this invites black money into investing activity
• It is a long term investment

Financial estate investment

• Not popular amongst NRI investors because they have various alternatives out of our country
• Free of many legalities
• Online facility helps the NRIs to take easy care of their documents
• Online finance handling takes few minutes as its intangible form of asset
• There is zero possibility of black money investment

Over the years the opportunities to invest for Non-Resident Indians (NRIs) in safe investment options has increased tremendously.

There was a time when NRIs found it safe to invest in real estate. But banks today also offer a great number of financial solutions. If you are an NRI, it is suggested to invest in financial assets rather than real estate. Real estate is a popular option but comes with its own set of challenges which NRIs and even locals routinely underestimate, only to repent later.

Financial assets are much easier to handle from abroad and are free from legal issues, possession and maintenance issues, require lower time and effort from you, and of course, don’t require you to handle “black” money. Also, most transactions can be done online from wherever you are, giving you significant control. NRIs can also consider fixed deposits or mutual fund schemes. Mutual funds tend to be slightly risky investment as compared to some of the other instruments. Fixed deposits can be considered the best plan for financial investment in India.

It is important to remember for NRIs that some additional documentation may be required. These include a passport photocopy with a valid visa, overseas employment letter, PAN Card and a local address proof.

The length of your financial investment in India depends upon you and your assets. However, these are the few commonly available options,

• Very short term – A few days/weeks/months: Bank Fixed deposits, Liquid/Ultra Short Term Funds
• Short Term – 1 to 3 years: Short Term Debt Funds
• Medium term – 4 to 7 Years: Combination of Debt and Equity Funds with Debt portion being higher
• Long Term – 8 to 14 Years: Combination of Debt and Equity Funds with Equity portion being higher
• Very Long Term – 15 years or more: Equity Funds

Always consider the taxation policy before investing in India. It should never be taken for granted that the tax policy of one country is same as the other. If you are new to the entire investment scenario, it is advised to seek professional help. Professional services will help you chalk out your entire investment plan. You can also learn about new methods of investment.

If you’re considering investing a significant portion of your hard earned money in India, do look for customised, honest and professional advice by engaging a qualified, fee-based financial planner/advisor in India.

Investment opportunities

For very short term say one week or a month

• Bank fixed deposits, liquid
• Ultra soft term funds

For 1 to 3 years

• Short term debt funds

For 4 to 7 year investment

• Combine debt and equity fund with high debt proportion making it less risky+

For 8 to 14 year investment

• Combination of debt and equity funds with higher equity

For 15 or more years investment

• Equity is preferred because it is viable to take risk for such period of time

Channels of banking for NRIs

• NRE- NON RESIDENT RUPEE
• NRO- NON RESIDENT ORDINARY RUPEE
• FRCNR- FOREIGN CURRENCY NON-REPATRIABLE ACCOUNT

PROCEDURE TO OPEN SUCH ACCOUNTS:-

Interest Rate

ON FIXED DEPOSITS FOR 5 YEARS:-

• NRE- 8.50%
• NRO- 8.50%
• FCNR- NA

ON SAVINGS ACCOUNT EARNING:_

• NRE- 4%
• NRO- 4%
• FCNR- NA

Investment into real estates

Smart city projects offer great upside for the NRI investors

In recent years Indian government has announced an allocation of 7060 crore rupees for new smart city projects. Gurgaon was a part of this plan too. A total of 100 new smart cities are planned. The possibility of high returns and safety gives the NRIS a great opportunity to invest in such projects all over India. Since most of these big budget projects are developed with the help or coordination or in joint venture with international realty developers, there are lesser chances of delays in project and the projects also finish on time. What’s more various smart city projects on which work is currently underway are already reaping good rewards with impressive returns of 10 to 15% in than one year.

According to the FEMA and RBI an NRI is allowed to make specific investment in Real estate. An NRI is allowed to do following investment in REAL ESTATE

• Any immovable property can be purchased by any NRI in India except an agricultural land, plantation property and a farm house.
• He can get an immovable property mentioned above as a gift from any Indian resident, Indian citizen residing outside Indian or anyone who is of Indian origin.
• Obtain any property by inheritance.
• He can transfer the immovable property to any resident of India by the way of sale.
• He can transfer agricultural land, plantation property or farm land as a gift to any resident of India.
• He can also transfer his residential or commercial property to anyone residing in India or abroad or a person of Indian origin by the way of gift.

Source of finance

NRIs consider financial institutions as easy option available in India for purchasing any property. At the same time financial institutions think that NRIs are their main clients. Financial institutes provide home loans easily, efficiently and sooner to those people living out of India as they are prompt with repayment. Further remittance can be easily done through proper banking channel. If someone is already getting income in India from rent or dividend he/she can directly repay the loan.

Norms by RBI

1. A maximum of 80% amount can be financed by Financial institutes as per RBI regulation and the rest have to be paid by the NRIs
2. The remittance of the amount of down payment can be done from the place of residence by normal banking channels i.e NRO/NRE account in India.
3. The NRI has to repay the principal amount as well as the interest part from the similar channel only.

Documents required to buy property in India

• A copy of passport and visa of the person who intends to invest in real estate in India.
• Salary certificate in English, specifying name, date of joining, designation and salary details.
• Both domestic (NRO/ NRE/ FCNR) and international bank statements for last six months.
• If you are available in India when the application form is submitted, then a general power of attorney duly attested by the Indian consulate in your resident country needs to be submitted. If you will be in India then the power of attorney can be locally notarised.
• A copy of your appointment letter as well as a contract.
• In case you are employed in merchant navy, you need to submit a copy of your CDC as well as your contract slip with income details.
• Passport size photographs.

Tax implications for NRIs on property

• An NRI has to shell out stamp duty as well as registration fees during the time of the purchase. He is entitled to avail all sorts of benefits at par with Indian resident for interest paid in home loan.
• As the amount of income received from such actions comes under heads of house property then standard deduction under IT act is applicable as per standard slab. In this case the NRI has to pay the applicable tax if he is residing in the country where the worldwide income is taxable unless the country has double tax avoidance agreement with India.
• The special advantage for the NRI is that the amount paid by him for the interest of home loan is deductible from NRIs taxable income without any upper limit. The NRI is legally responsible to pay tax under capital gains tax of Income tax act in case he sells his property.

For a hassle free transaction

1. The name of property ought to be clear of problems and the vendor ought to have the specified right to sell it, particularly if it is inherited or any joint property.
2. Without fail check whether there is any outstanding water bills or electricity bills or any other dues unfinished with the property. Take a no dues certificate from the vendor at the time of the purchase.
3. It is always good to acquire bank release letter from the concerned bank to check whether the property has been mortgaged in past or not.
4. In terms of construction the property of approval must have all approvals and permits from the civic authority.

NRI Investment in financial market

How can NRIs invest in Indian stock market?

India being one of the fastest growing economies of the world is an investment heaven for the NRIs. More and more people are becoming drawn towards investing in Indian stock market nowadays. Indian law allows foreign individuals to invest in the domestic market.

What can NRIs buy in Indian stock market?

• Dated government securities (other than bearer securities) or treasury bills
• Units of domestic mutual funds
• Bonds issued by public sector undertaking (PSU) in India
• Shares in public sector enterprises being disinvested by the government of India
• Exchange traded funds (ETFs)

How to start investing in India?

All investments made by the NRIs should be in local currency that is rupees and not in any foreign currency at all. Mutual Funds in India are not allowed to accept investments in foreign currency and they can only accept our domestic currency that is rupees. In order for an NRI to invest in Mutual funds in Indian stock market he needs to have one of these three bank accounts and they are NRO, NRE or FRCN account mentioned above. If any of the three accounts are not opened then the NRI won’t be able to invest in the mutual funds. The relationship managers help the NRIs to open NRI/ NRO/ FRCN account to attain PIS approval ad open a DEMAT and trading account.

Taxation for NRIs in India for investing

• Financial year ending in India is March 31^st
• Last date for filling IT returns is July 31^st
• Long term capital gains (LTCG): zero or exempt. Any gains made on stock held on for more than one year is exempt from any taxes.
• Short term capital gain (STCG): 15% on any gain made on stock before one year.
• Trading income from F and O: considered as business income and taxed according to the income tax (IT) slabs in India.

Trading in derivatives can only be done from an NRO account by an NRI. An approval from the clearing member to clear trades for the allotment of the custodial participants (CP) code. The NRI client must have only one clearing member at any given point of time.

Important points for NRIs to invest in Indian stock exchange

• NRIs need to go through Reserve bank of India guidelines to start investing in India.
• NRIs wants to invest in shares of any particular company there is a limit of 5% in paid up values of shares.
• They have to invest in stock market in Indian currency
• An NRI cannot hold more than 10% of the total holdings in an Indian listed company (20% in case of public sector banks)
• NRIs cannot trade shares in India on a non delivery basis, which means they cannot do day trading or short selling. If they buy a stock today they can only sell after two days.
• An NRI cannot hold more than one PIS account each for repatriable and non repatriable shares.
• A power of attorney to a person in India must be assigned to manage the assets. Power of attorney can be assigned generally (all powers with one individual) or particular to particular asset class (property, bank account etc)
• The tax liabilities arousing out of stock investment must be ignored. Although tax liabilities of an NRI investing in India are the same as that of a resident investor, tax is deducted at source (TDS) in case of former. This leads to a question that are NRIs subjected to double taxation once in India and again in the country of residence? Well, it depends on the country of residence. If the Indian government has an avoidance of double taxation treaty with other country. NRI will be saved from double taxation.

General documents required to open a share investment account

• Self attested copy of passport and visa
• Self attested copy of Indian address proof and international address proof
• Self attested copy of pan card
• Passport size photos
• Bank statement of 3 months
• A cancelled cheque and a cheque for an initial investment.

The banks and share brokers are increasingly interested in bringing back money of the NRIs and make investment in Indian stock market, mainly because of huge investment potential of NRI’s and opportunity of making revenue from the investment.

Advantages of investing in India

• FDI up to 100% in many sectors and activities which include many manufacturing activities, non-banking financial services, hospital, private oil refineries, software development, electricity generation (non-atomic), transmission and distribution, roads& highways, hotel & tourism, research, and development etc.
• Multiple forms of entry are allowed for a corporation depending on its requirements and needs. Different forms include entry through setting up a Joint Ventures, Wholly Owned Subsidiaries, Liaison or Representative Office, Project Office or Branch Office.
• A mature and favorable taxation system with low custom duties and excise duties and low corporate taxes. Numerous tax holidays or rebates depending on the sector and geographical location of investment provided. For an example, there is a tax holiday often years for foreign investment in infrastructure projects taken up in certain backward areas of the North Eastern States and Sikkim, units located in specified zones, projects which are 100% export oriented etc
• India has already entered into a Double Taxation Avoidance Agreement (DTAA) with 65countries, under which the income generated in India will be taxed in India only and would not be re-taxed in the home country of the investor. Only the difference in the tax rate between the home country and India would be payable.  This is quiet a relief for the NRIs who are worries about investment in India which will ead to double taxation and instead of earning some profit they will incur losses.
• Establishment of Foreign Investment Implementation Authority (FIIA) to assist in implementation of FDI approvals along with the formation of the Foreign Investment Promotion Board (FIPB) to assess FDI proposals and appointment of Grievances Officer-Cum-Joint Secretary in the Ministry of Commerce and Industry to cater to the complaints of potential and current investors
• Various rules and regulations to protect intellectual property rights such as The Trademarks Act, Patents Act, Geographical Indicators of Goods Act and The Designs Act.
• Liberal foreign exchange regulations, under the Reserve Bank of India.
• Huge availability of skilled workforce added by a low average age close to 25 years make India a suitable destination for investor.
• To ensure up-to-date information on current policies and procedures, various points of call have been set up which are easily accessible. For example, the Secretariat for Industrial Assistance (SIA) has been set up for this purpose

As we all know every coin has the other side and this question has always been raised is it worth investing in India even though it is the fastest growing economy in the World. This question is asked by many NRIs and its not easy to answer because there are flaws and loopholes in our system which at times make it difficult for NRIs to invest so few of them are :-

• The faulty infrastructure is a big problem. Though India has developed impressively fast and the after we have our new Prime Minister we are suddenly seeing a boom in FDI but still the infrastructure in our country is not up to the mark.
• Corruption is another huge predicament that has to be minimised as much as possible if India is to become an apple of the investors’ eyes. The Indian courts have huge backlog of more than 27 million cases, with many cases taking more than a decade to get solved! Unfriendly labour laws, difficulty in getting patent rights, and various other legal and ethical challenges add to India’s affliction. What officials put forth is not exactly how the true picture is.
• The laws are too vigorous and there are different amendments happening almost every year which makes it tough and unpredictable.
• The sudden decisions like the demonetisation scheme which was introduced to kill the shadow economy and black money also had a bad troll on the investment cycle. Our GDP fell and stock market was at a loss but these steps surely insure a better future for NRIs investing in India as it will lower the black money rate and bribery will be reduced at a huge rate making things easier.

On a whole India has been a breeding ground for investors and businessmen always so why not an NRI investment. There are far more advantages than disadvantages in investing in the fastest economy of the world.

The post Financial investment solutions for Non-Residential Indians appeared first on iPleaders.

In this article, Harshit Anand who is currently pursuing M.A. IN BUSINESS LAWS, from NUJS, Kolkata, discusses How to increase authorised share capital of a company in India: Process, compliance, best practices and relevant law

Introduction

A company upon its incorporation records the foundation upon which it is built – its objectives, founding members and importantly its authorised share capital in its charter documents. The Companies Act, 2013 (Act) defines “authorised capital” or “nominal capital” to mean the maximum amount of share capital, as authorised by the company’s memorandum i.e. the maximum value of shares the company may issue. What this denotes is the maximum value of securities that the company can issue in a legal manner.

Now, as the business grows and expands, its natural needs foremost include getting funding. This can be in the nature of either debt or equity. Whenever a company chooses to go for the equity route to raise money, it is then supposed to first check the value of share capital already issued and subscribed against the authorised share capital of the company.

Generally, in all cases of share subscription fresh shares are issued to a new investor in the company and in all such cases where the ceiling of the authorised capital has already been reached, the company has to first undertake an increase in its authorized share capital.

For a better understanding, please see below sample language in the Articles and Memorandum of a company related to the authorized share capital:

Articles

Definition of “Authorised Equity Share Capital”

Authorised Share Capital shall mean Rs. 10,00,00,000 (Rupees Ten Crores) divided into 1,00,00,000 (One Crores) equity shares of Rs. 10 (Rupees Ten).

Capital

• The Authorised Share Capital of the Company is Rs. 10,00,00,000 (Rupees Ten Crores) divided into 1,00,00,000 (One Crores) equity shares of Rs. 10 (Rupees Ten). Subject to other provisions of these Articles, the Company has the power from time to time to increase or reduce its capital or divide the shares in the capital for the time being into other classes, and to attach thereto respectively such preferential, deferred, or other special rights, privileges, conditions or restrictions, as may be determined by the Directors in accordance with these Articles and to vary, modify or abrogate any such right, privilege, condition or restriction in such manner as may for the time being be permitted by these Articles or the legislative provisions for time being in force in that behalf.
• If at any time the share capital is divided into different classes of shares, the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class) may, subject to the provision of the Act, and whether or not the Company is being wound up may not be varied except as provided in these Articles and with the consent in writing of the holders of three-fourths of the issued shares of that class, or with the sanction of a special resolution passed at a separate meeting of the holders of the shares of that class.
• The rights conferred upon the holders of the shares of any class issued with preferred or other rights shall not, unless otherwise expressly provided by the terms of issue of the shares of that class, be deemed to be varied by the creation or issue of further shares ranking pari passu therewith.
• Subject to the provisions of the Act, the Company shall have power to issue preference shares and the resolution authorizing such issue shall prescribe the manner, terms and conditions of such preference shares.
• The Company may subject to the provisions of the Act, from time to time by special resolution reduce its capital and any capital redemption reserve account or any share premium account in any manner for the time being authorised by applicable law, and in particular, capital may be paid off on the footing that it may be called up again or otherwise.

Memorandum

The Share Capital of the Company is Rs. 10,00,00,000 (Rupees Ten Crores) divided into 1,00,00,000 (One Crores) equity shares of Rs. 10 (Rupees Ten).

So now that we have a basic idea of what is the authorised capital of a company and the related provisions under the Articles of Association of the company and its Memorandum of Association, we can proceed to look at the procedure that a company has to follow whenever it proposes to increase its share capital.

Procedure for increase of share capital

Before we delve into what is the procedure, we may briefly look into the relevant provisions of law which govern the increase of share capital of a company:

Section 61 of The Companies Act, 2013 – Power of limited company to alter its share capital

The key feature of the section is:

A limited company which is authorised by its Articles of Association to do so, may at a general meeting of its shareholders alter its memorandum to, “S. 61 (1)(a) increase its authorised share capital by such amount as it thinks expedient”

“61. Power of limited company to alter its share capital

(1) A limited company having a share capital may, if so authorised by its articles,

alter its memorandum in its general meeting to—

(a) increase its authorised share capital by such amount as it thinks expedient;

(b) consolidate and divide all or any of its share capital into shares of a larger

amount than its existing shares:

Provided that no consolidation and division which results in changes in the

voting percentage of shareholders shall take effect unless it is approved by the Tribunal

on an application made in the prescribed manner;

(c) convert all or any of its fully paid-up shares into stock, and reconvert that

stock into fully paid-up shares of any denomination;

(d) sub-divide its shares, or any of them, into shares of smaller amount than is

fixed by the memorandum, so, however, that in the sub-division the proportion between

the amount paid and the amount, if any, unpaid on each reduced share shall be the

same as it was in the case of the share from which the reduced share is derived;

(e) cancel shares which, at the date of the passing of the resolution in that

behalf, have not been taken or agreed to be taken by any person, and diminish the

amount of its share capital by the amount of the shares so cancelled.

(2) The cancellation of shares under sub-section (1) shall not be deemed to be a

reduction of share capital.”

Section 64 of The Companies Act, 2013– Notice to be given to Registrar for alteration of share capital

The key feature of the section is:

Notice is to be given to the Registrar of Companies, “1) Where— (a) a company alters its share capital in any manner specified in sub-section (1) of section 61;”

“64. Notice to be given to Registrar for alteration of share capital

(1) Where—

(a) a company alters its share capital in any manner specified in sub-section (1)

of section 61;

(b) an order made by the Government under sub-section (4) read with

sub-section (6) of section 62 has the effect of increasing authorised capital of a

company; or

(c) a company redeems any redeemable preference shares,

the company shall file a notice in the prescribed form with the Registrar within a period of

thirty days of such alteration or increase or redemption, as the case may be, along with an

altered memorandum.

(2) If a company and any officer of the company who is in default contravenes the

provisions of sub-section (1), it or he shall be punishable with fine which may extend to one

thousand rupees for each day during which such default continues, or five lakh rupees,

whichever is less.”

Procedure

Authorisation in Articles of Association

To increase the authorised share capital, the company’s Articles of Association must authorise it to increase the authorized share capital of the company. It is important to note here that Section 61 of the Companies Act, 2013, mandatorily requires that to increase the authorised share capital of the company, there must always be such an authorization in the Articles of Association of the company.

Basically, the company’s Articles of Association must always contain a provision authorising it to increase its authorised share capital. This is also very important to note while drafting the Articles of Association of a company, thereby, keeping in mind the potential future needs of a company.

Now, in case there is an enabling provision in the Articles of Association of the company for increasing the authorised share capital of the company, we may move to the next step, otherwise, in case there is no such provision in the Articles of Association of the company, then the company has carry on the alteration of its Articles of Association as per Section 14 of the Companies Act, 2013, with the objective of inserting a clause which allows an increase in the authorised share capital of the Company.

Board Meeting of the Company

A notice has to be issued as per Section 173(3) of the Companies Act, 2013 so as to convene a meeting of the board of directors of the company. The agenda for such a board meeting of the company should among other things (as applicable) for the purposes of increase in the share capital of the company include the following items:

1. Obtaining an in-principal approval of the directors of the company to increase the authorised share capital of the company;
2. Fixing of the date and time and the place for holding an extraordinary general meeting of the company so as to get the approval of the shareholders of the company for increase in the share capital of the company, by passing an ordinary resolution for increase in the authorised share capital of the company. This increase in the authorised share capital of the company has to be in accordance with and as per the requirement of Section 61 of the Companies Act, 2013;
3. The board of directors will have to approve the notice of the extraordinary general meeting of the company along with the agenda and the explanatory statement to be annexed to the notice of the extraordinary general meeting of the company as per the requirement of Section 102(1) of the Companies Act, 2013;
4. The board of directors will have to authorise a director or the company secretary of the company to issue the notice for the extraordinary general meeting of the company to authorise the increase in share capital of the company.

A notice of the extraordinary general meeting of the company to authorise the increase in share capital of the company has to be issued to all members, directors and the auditors of the company in accordance with Section 101 of the Companies Act, 2013 read with the mandatory provisions of the Secretarial Standard – 2 issued by the Institute of Company Secretaries of India;

Extraordinary general meeting of the company

At the extraordinary general meeting of the company held on the due date and time, the shareholder of the company have to pass the necessary ordinary resolution under Section 61(1)(a) of the Companies Act, 2013, and thereby approve an increase in the authorised share capital of the Company.

Form filing with the Registrar of Companies

The company is mandatorily required to file form SH-7 (within 30 days of the resolution passed at point 4 above, with the concerned Registrar of Companies, and Form SH-7 has to be accompanied with the following attachments as per the requirement of Section 64 of the Companies Act, 2013:

1. notice of the extraordinary general meeting of the company to authorise the increase in share capital of the company;
2. certified true copy of the resolution passed at the extraordinary general meeting of the company to authorise the increase in share capital of the company; and
3. the altered memorandum of association of the company

The Registrar of Companies will thereon first verify the form and the attachments thereto and thereafter the Registrar of Companies will approve the increase in the authorize share capital of the company.

Stamp duty is also required to be paid for increase in the authorised share capital of the company which can be paid electronically.

Form MGT-14 is also required to be filed along with a certified true copy of the resolution, notice of the extraordinary general meeting of the company to authorise the increase in share capital of the company, and explanatory statement thereto within 30 days from the passing of resolution along with the amended memorandum of association of the company and the articles of association of the company along with the requisite fee as specified in the Companies (Registration Offices and Fees) Rules, 2014. It is important to note here that unlike in the case of form SH 7 the date of filing of form MGT-14 would not be the effective date regarding the increase in the authorised share capital of the company.

As a matter of best practice it is always advisable that the company while passing the relevant board resolution and shareholder resolution authorises two or more – directors and/or company secretary of the company for the purposes of carrying on relevant actions to give final effect to the increase in the share capital of the company, and also, more importantly, to ensure that all legal compliances have been carried on properly and in due time.

Further, it must always be kept in mind that there should be a complete compliance of any sectoral laws that may be applicable to the company, thereby requiring additional compliance to be undertaken by the company – these may depending on the nature of the business undertaken by the company, include filing and consent requirements with respect to the relevant sectoral regulators.

To supplement the practical knowledge, the relevant minutes of the resolution to be passed by the company for the above process is provided below, the language of the shareholder resolution may be seen therein.

MINUTES OF THE EXTRA-ORDINARY GENERAL MEETING OF___HELD ON ___ FROM ____ To ____ AT ____

_______ was unanimously elected as the Chairman of the meeting. The Chairman took the Chair and welcomed the members present to the Extra-Ordinary General Meeting of the Company.

After ascertaining the presence of proper quorum, and taking note of the consents received from both the shareholders of the Company for holding the Extra Ordinary General Meeting on a shorter notice, the Chairman declared the meeting to be duly constituted and commenced the proceedings.

Due to certain prior commitments, ____ and _____, Directors of the Company were unable to attend the meeting. Further, the Chairman informed the members present that ____, the statutory auditors of the Company have been exempted from attending the meeting.

The notice of the meeting already circulated amongst the Members was taken as read.

Special Business

1. Authorizing increase in the authorized share capital of the Company, and the consequent amendment of the Memorandum of Association of the Company

The Chairman informed the meeting that the authorized share capital of the Company was proposed to be increased from the existing Rs. __ to ___ and accordingly appropriate amendments would be required to be made to the memorandum of association of the Company to record the proposed increase in the authorized capital. The Chairman accordingly proposed the resolution in relation to increase in the authorized share capital of the Company, and the consequent amendment of the memorandum of association of the Company, in accordance with the applicable provisions of the Companies Act, 2013. The said resolution was put to vote as an ordinary resolution and the following resolutions were passed unanimously by the shareholders authorized to vote on the same, by way of show of hands as an ordinary resolution:

“RESOLVED THAT in accordance with the provisions of Section 61 and other applicable provisions of the Companies Act, 2013 and applicable provisions of the Articles of Association of the Company, the authorised share capital of the Company be and is hereby increased from the existing_____consisting of ___ equity shares having a face value of Rs. 10/- (Rupees Ten) each to ___ equity shares having a face value of Rs. 10/- (Rupees Ten) each by creation of additional ____ equity shares having a face value of Rs. 10/- (Rupees Ten)  each.

RESOLVED FURTHER THAT the existing Clause ____ of the Memorandum of Association of the Company be substituted with the following new clause:

“V. The authorized share capital of the Company is___divided into ___ equity shares of Rs. 10/- each.”

RESOLVED FURTHER THAT each of the Directors of the Company be and are hereby authorised, jointly and/ or severally, to take all necessary steps that may be required to give effect to the aforesaid resolution including but not limited to filing of relevant forms with the Registrar of Companies.”

2. Vote of Thanks

There being no other business to discuss, the meeting ended with a vote of thanks to the chair.

____________

Chairman

Place: ____

Date:____

To further supplement practical knowledge a sample clause of a share subscription agreement whereby share subscription is undertaken and the company is thereafter required to increase its share capital is provided below:

Subscription of allotment of shares

• Subscription of Equity Shares

Subject to and in accordance with the terms and conditions contained in this Agreement, and in reliance of the representations, warranties, covenants and undertakings of the Company and [],_____ agrees to subscribe to the Subscription Shares at a price of INR ____ per Subscription Share and agrees to pay the Company an aggregate sum of Subscription Amount on the Closing Date. The Company agrees to, issue and allot the Subscription Shares, free and clear of all Encumbrances, to_____, in lieu of the Subscription Amount.

• As on the Closing Date, the Subscription Shares shall represent such percentage of Shareholding in the Company on a Fully Diluted Basis, as stated in Schedule ____ of this Agreement.
• The Subscription Amount for the Subscription Shares shall be paid on the Closing Date by wire transfer of funds into a designated account of the Company simultaneously against the allotment and issue of the Subscription Shares, provided that details required to make the wire transfer are delivered to [] at least three (3) Business Days prior to the Closing Date by the Company.

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In this article, Bhargav Chetankumar Thakkar who is currently pursuing M.A. IN BUSINESS LAWS, from NUJS, Kolkata, discusses  Delhi High Courts Rules On The Amended Provisions Of The Arbitration And Conciliation Act, 1996.

Introduction

• The amendments made under various sections of the Arbitration and Conciliation Act, 1996 (the “Act”) and rules made thereof, have recently been enforced by the Delhi High Court (“Court”). It was held by the Court, with respect to the pro-arbitration approach that the choice of a foreign law or a foreign seat or foreign institutional rules does not amount to implied exclusion of Section 9 of the 1996 Act.
• The Court demonstrated its pro-arbitration approach in adopting an effective and purposive interpretation of the provisions to further the intention of the legislature regardless of an apparent lacuna in the law so as to make the provisions of the Amendment Act effective immediately.
• Further, in Picasso Digital Media Pvt. Ltd (“Picasso”) v Pick-A-Cent Consultancy Service Pvt. Ltd (“Pick-A-Cent”) the court held that the Court would necessarily have to appoint an arbitrator where a valid arbitration agreement has been entered into by the parties. The arbitrator would examine any allegations as to arbitrability of the dispute or the jurisdiction of the tribunal and not by the court.
• The Court, in the Dream Valley Farms Pvt. Ltd & Anr. (“Dream Valley”) v Religare Finvest Ltd & Ors. (“Religare”) on the grounds held that the arbitrator presiding over the arbitral proceedings had made misleading disclosures, entertained a petition seeking an appointment of the arbitrator. There was a mandatory obligation on a person approached in connection with the appointment of an arbitrator to disclose any circumstances which were likely to give rise to justifiable doubts as to his/her impartiality of the independence as per the emphasis of Court on the amendments made to Section 12 and 13 of the Act. In same manner the Court also give some significant lead to the Law Commission for amendment to the act through the Judgement in the case of Sri Krishna vs Anand.

The significant cases as mentioned hereinabove are discussed in brief as follows.

The Delhi High Court has given such rules to amendment provisions of the Act through the various judgements in the following cases:

1. Raffles Design International India Pvt. Ltd. vs. Educomp Professional Education Ltd

• In Raffles Design International India Private Limited and Ors V Edu comp Professional Education Limited and Ors, the High Court of Delhi held that an award passed by an emergency arbitrator seated outside India will not be enforceable in India. The party will have to file a suit under Section 9 to enforce such an award.
• They have stated a relevant part as follows: ““It is relevant to mention that Article 17H of the UNCITRAL Model Law contains express provisions for enforcement of interim measures.
• However, the Act does not contain any provision parameter to Article 17H for enforcement of interim orders granted by an Arbitral Tribunal outside the India. Section 17 of the Act is clearly not applicable in respect of arbitral proceedings held outside India.
• The Court clarified that Section 26 of the Amendment Act is in two parts, the first couched in negative form, and the second in the affirmative. Relying upon the decision of the Supreme Court in Thyssen Stahlunion Gmbh v. Steel Authority of India273, the Court observed that the usage of the word ‘to’ in the first limb instead of ‘in relation to’ clearly restricts the import of the first limb of Section 26.
• The Court therefore holds that the use of the phrase “in relation to” indicates that the legislature intended the second limb of the provision to have a wider sweep thus covering all proceedings connected to arbitral proceedings, and that therefore the amendments would apply to Court proceedings instituted post commencement of the Amendment Act.

In coming to such a conclusion, the Court has upheld recent judgments of the Madras High Court274, the Bombay High Court275 and the Calcutta High Court276which came to similar conclusions.

• The Court however, also observed that the two limbs of Section 26 of the Amendment Act are not exhaustive as the first limb refers only to proceedings commenced in accordance with Section 21 (found in Part 1) of the 1996 Act, and that therefore Section 26 is silent regarding applicability of the Amendment Act to proceedings which are not expressly indicated therein.
• Due to the lack of any express indication as to the applicability of the Amendment Act to arbitrations instituted outside India, the Court adopts a purposive interpretation, sets out the legislative intent behind the Amendment Act, and holds that even in cases where there is no express provision regarding retrospective applicability of the new law, the Courts should look to further intention of the legislature.
• Considering that the very purpose of the amended Section 2 (2) of the 1996 Act was to enable a party to approach Indian Courts for interim relief even in foreign seated arbitrations, the Court clarifies that the position regarding non-applicability of Part I of the 1996 Act in foreign seated arbitrations, as held in Bharat Aluminum Company Vs. Kaiser Aluminium Technical Services Inc., stands amended as far as Section 2 (2) of the 1996 Act is concerned and that parties now have recourse to Section 9 of the 1996 Act even in foreign seated arbitrations. The Court, therefore, allowed the Petition and made it clear that the choice of a foreign law or a foreign seat or foreign institutional rules does not amount to implied exclusion of Section 9 of the 1996 Act.

The question of law regarding the retrospective applicability of the Amendment Act to arbitral proceedings vis-à-vis court proceedings however, is currently pending before the Supreme Court.

2. Picasso Digital Media Pvt. Ltd. v. Pick-A-Cent Consultancy Services Pvt. Ltd

• On July 1, 2009, there was a Memorandum of Understanding (“MoU”) between Picasso and Pick-A-Cent, according to which Picasso was to grant Pick-A-Cent a franchisee of the “Picasso Animation College” in Bangalore. The disputes arising from the agreement were to be referred to a sole arbitrator as mentioned in the MoU.
• The existence of a valid MoU or arbitration agreement was not contested by either party, but there was an allegation by Pick-A-Cent that Picassso had made certain misrepresentations regarding ownership of intellectual property transferred between the parties. Pick-A-Cent argued that allegations of fraud must be settled in Court and not through arbitration relying on N. Radhakrishnan v M/s Maestro Engineers & Ors.
• The Court noting that the decision cited had been passed prior to the amendments to the Act denied the claim. Sub- section 6A of Section 11 under the amended Act, requires that the court should confine its examination of petitions under Section 11 to the existence of an arbitration agreement.
• The court, at this stage of proceedings, observed that it was impossible to examine whether Pick-A-Cent has a justified claim of fraud against Picasso which arbitrator in the arbitration proceedings would have to determine. Thus, the court was bound to appoint an arbitrator as long as the parties agreed about the existence of an arbitration agreement.

The Court restricted itself to only examining the existence of an arbitration agreement, even though the Respondent had raised a defence that Petitioner’s claim was based on allegations of fraud which were non arbitrable according to the Respondent.

• Rather than towing the line of the Supreme Court in Swiss Timings Ltd. v. Commonwealth Games Organizing Committee, wherein the Supreme Court in an application under Section 11 of the 1996 Act for appointment of an arbitrator, had held that even allegations of fraud are arbitrable, in the present case, the Delhi High Court has left it upon the arbitral tribunal to adjudicate upon its jurisdiction in line with the internationally recognized ‘Kompetenz Kompetenz’ doctrine.

3. Dream Valley Farms Pvt. Ltd. v. Religare Finvest Ltd

• A sole arbitrator was appointed in pursuance of the arbitration proceedings started by the Dream Valley and Religare. The arbitrator was required to disclose in writing any circumstances that were likely to give rise to justifiable doubts as to the his independence or impartiality as per the amended Section 12, sub-clause (1).
• The arbitrator in the declaration in the format of the Sixth Schedule of the amended Act, stated that he had been presiding over 20 arbitrations out of which a majority formed a part of disputes in connection with the group companies without mentioning their connection to Religare.
• A further disclosure after the commencement of the proceedings by the arbitrator revealed that he had been appointed by Religare in twenty matters, where in fact he was serving as an arbitrator in twenty-seven matters related to Religare. Dream Valley instead of initiating a process of challenging the appointment of the arbitrator under Section 13, filed the present petition under Section 11 for appointment of a new impartial arbitrator.
• The Court held that the arbitrator to stringent and onerous obligations of disclosure that the amended Act has introduced. While the obligation to disclose had existed prior to the amendment, it remained at the discretion of the arbitrator acting in good faith. The amended Section 12 has defined the obligation to narrow down the scope of discretion resting with arbitrators.
• Further, the Fifth Schedule has identified specific circumstances which give rise to justifiable doubts as to the independence, in the present case the arbitrator had contravened Clauses 22 and 24 of the Fifth Schedule while misleading Dream Valley- suppressing facts that ought to have been disclosed in the first instance, having the option of application under Section 13 in the normal course.
• Thus, the Court held noting that the arbitrator had become de jure disqualified from continuing in his position in terms of Section 14(1)(a) of the Act, having his mandate terminated accordingly. The Court thus deviated from the procedure established under the Act which may lead to a situation where parties come forth with petitions for appointment of arbitrators and contest removal of the serving arbitrators thereunder.

4. Sri Krishan vs. Anand

• The amended section 12(5) has now mandated that arbitrator cannot be appointed if the arbitrator and any of the parties to the dispute are in a relationship which falls under the categories mentioned in the Seventh Schedule of the Act. Thus, employees cannot be appointed as arbitrators by the government or private companies under the amended law.
• The case of Assignia –VILJV v Rail Vikas Nigam Ltd further solidified the position of law. High Court of Delhi decided the case by placing reliance on Section 12(5) of the Amended Act and further held that in-house arbitrators can no longer be said to be impartial. The importance of compliance with the Seventh Schedule was stressed by the judgement while appointing the arbitrators was stressed by the court.
• For the arbitration agreement been entered into before 2015 Amendment i.e 23^rd October, 2015, the judgement reflects that if the dispute arises after the Amendment Act, then Section 12(5) will apply and the arbitrator to be appointed will have to be in compliance with the Seventh Schedule.

The case of Sri Krishan v Anand made Delhi High Court to resolve the lacuna of Section 17 as mentioned by laying down the principle that any person falling to comply with the order of the tribunal under section 17 would be deemed to be “making any other default” or “guilty of any contempt to the arbitral tribunal during the conduct of the proceedings” under section 27 (5) of the 1996 Act.

• The aggrieved party can apply to the arbitral tribunal for making a representation to the Court to mete out appropriate punishment for a remedy. The Court once the representation is received from the arbitral tribunal would be competent to deal with such party in default as it is in contempt of an order of the Court i.e either under the provisions of the Contempt of Courts Act, 1971 or under the provisions of Order Rule 2A of the CPC.
• The 2015 amendment has gone ahead of the Model Law even though arbitration agreement has limited scope of the arbitral tribunal in passing interim orders has ensured that the interim orders of the arbitral tribunal will be enforceable as an order of the Court under the CPC.
• There has been a deletion of the words “in respect of the subject matter of the dispute” in this amendment and also powers have been granted to the arbitral tribunal to pass an interim measure of protection which it feels is just and convenient. A party can approach an arbitral tribunal for interim measures of protection not only during the arbitration proceedings, but also after the making of the award under Section 17(1).
• Hence, power is given to the arbitral tribunal for retaining the jurisdiction to order interim measures even after it has made a final award. An inconsistency exists for the above mentioned power of the arbitral tribunal as it is in conflict with Section 32 of 1996 Act that provides the determination of the mandate of arbitral tribunal after making the final award.
• Thus, on the arbitral tribunal ceasing to have jurisdiction after passing the final award, it is inconceivable of determining how it would have the power to order interim measures after making the final award. The conflict is expected to be rectified by appropriate amendments to Section 32.
• Further, Section 9 has been made available subject to relief under Section 17 of the 1996 Act. The amount of intervention by the judiciary in terms of interim measures is reduced by the insertion of Section 9(3). The powers under Section 9 and 17 could be exercised concurrently which was a danger.
• If an express change was given, ordinarily Section 9 proceedings will not be available to the parties during the pendency of the arbitration. The measures can be resorted to when Section 17 proceedings are ineffective. A party which will specifically plead would prefer an application seeking interim measures from the Court under Section 9.
• It was held in Sri Krishan v Anand by the Delhi High Court that a person failing to comply with an order of arbitral tribunal then the remedy of the aggrieved party would be to apply to the arbitral tribunal for making a representation to the Court to mete out appropriate punishment.

The report by Law Commission held that the judgement of the Delhi High Court in Sri Krishan v. Anand is not a complete solution and recommended amendments to Section 17 of 1996 Act due to which the orders of the Arbitral Tribunal would be enforceable in the same manner as Orders of a Court.

The remedies of enforceability of interim measures under Section 17 are provided in the 2015 Act. The main aim of the above amendments to Section 9 of the 1996 Act are to ensure that parties ultimately resort to the arbitration process and get their disputes settled on merit through arbitration.

Analysis

The following steps have been undertaken by the Court for giving effect to the amended provisions of the Act,

The Court in the case of Raffles Design International India Pvt. Ltd. vs. Educomp Professional Education Ltd demonstrated its pro-arbitration approach in adopting an effective and purposive interpretation of the provisions to further the intention of the legislature regardless of an apparent lacuna in the law so as to make the provisions of the Amendment Act effective immediately. Such an approach adopted by Courts would go a long way in enhancing the effectiveness of the alternate dispute resolution scenario in India. Parties can now choose a foreign seat and foreign law and still retain the benefit of seeking recourse to Indian courts for interim measures.

The Court in the case of Picasso Digital Media Pvt. Ltd. v. Pick-A-Cent Consultancy Services Pvt. Ltd restricted itself to examining only the existence of an arbitration agreement, even though according to the Respondent, the Petitioner’s claim was based on allegations of fraud which were non-arbitrable.

The Delhi High Court in the present case has left it upon the arbitral tribunal to adjudicate upon its jurisdiction- in line with the internationally recognized competenze-competenze doctrine, rather than towing the line of the Supreme Court of India (“Supreme Court”) in Swiss Timings Ltd. v Commonwealth Games 2010 Organizing Committee, wherein the Supreme Court in an application under Section 11 of the Act for appointment of an arbitrator held that even allegations of fraud are arbitrable.

The Court in the case of Dream Valley Farms Pvt. Ltd. v. Religare Finvest Ltd. held that the arbitrator to stringent and onerous obligations of disclosure that the amended Act has been introduced. Though the obligation to disclose existed prior to the amendment, it remained at the discretion of the arbitrator acting in good faith. The obligation to narrow down the scope of discretion resting with arbitrators has been defined in the amended Section 12. There are specific circumstances identified which gives rise to justifiable doubts as to the independence in the Fifth Schedule. Disclosure would be compulsory and not at the discretion of the arbitrator in the cases of circumstances that fall within the Fifth Schedule.

However, before the removal of the serving arbitrator, in the second case, the Court had admitted a petition for appointment of an arbitrator. For removal, Dream Valley should have filed an application under Section 13 of the Act. Thus, there comes a situation where parties come forth with petitions for appointment of arbitrators and contest removal of the serving arbitrators thereunder when court deviates from the procedure established under the Act.

Thus, the approach of the Court towards implementing the amendments to the Act as well as its support in affirming the best practices of arbitration is commendable.

Conclusion

From the above-mentioned legal propositions, the following conclusion can be drawn,

• While deciding an application for appointment of an arbitrator, the scope of inquiry must be confined to the existence of an arbitration agreement.
• It has been ruled that the arbitrators prior to their appointment are ought to make active disclosures about any relations with the parties in the arbitration that may give rise to justifiable doubts about their impartiality or independence.
• The amendments have made disclosures in terms of the Fifth Schedule of the Act mandatory even though disclosure was at the discretion of the arbitrators in the pre-amendment regime.

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In this article, Dheerajendra Patanjali, who is currently pursuing M.A. IN BUSINESS LAWS, from NUJS, Kolkata, discusses how to start a collective investment scheme: Process, compliance, best practices and relevant law

Introduction

An investment for better return has several avenues in securities market to avail and collective investment scheme is one of them. Collective Investment schemes serve as a flexible savings vehicle for individuals, corporate bodies etc. to add funds for future needs.

The term Collective Investment Scheme (commonly referred to as ‘CIS’) is a general term used to describe a number of different ways in which Investors can pool contributions and invest collectively in certain investments. This mechanism not only provides larger chunks for investment to investor but also provide good opportunity to contributors to earn higher return.

In India, CIS operation is regulated one and onus to regulate the same lies on securities and Exchange Board of India (SEBI). SEBI has prescribed a detailed mechanism to properly run the CIS and same has contained in Securities and Exchange Board of India (Collective Investment Schemes) Regulations, 1999(CIS Regulations), as amended from time to time. The Regulation deals with all aspects of CIS in detail.

Development Collective investment scheme In India

• Collective investment scheme is not a new phenomenon for India, it was present in our society since long although in scattered and non-uniformed manner. Investor used to collect money from the contributor and same was invested primarily in agro-related activities.
• However, post-independence the CIS has grown greatly. The non-uniformed and largely irregulated environment has provided good scope to mischief to misuse the funds. Large scale miss-utilisation of funds and consequent fraudulent activities lead to establishing a regulated system for the operation of CIS.
• The Government of India, vide its press release dated November 18, 1997, decided that an appropriate regulatory framework for regulating schemes through which instruments like agro bonds, plantation bonds etc. are issued, has to be put in place. The government decided that the schemes through which such instruments are issued would be treated as “Collective Investment Schemes” coming under the provisions of the SEBI Act[1].
• Towards this end, and in order to examine and finalize the draft regulations for Collective Investment schemes, market regulator SEBI appointed a committee under the Chairmanship of Dr. S. A. Dave in 1997. The committee was tasked to come with a detailed regulatory framework for the operation of CIS in India duly taking into account the best practices of other countries and with an aim to provide a Philip to such activities.

• The preliminary report and regulations were released by SEBI to the public on December 31, 1998. Subsequently, a number of suggestions were received from investors and corporates alike, these were sifted through by the Dave Committee and the ones found to be appropriate for the transparent working of CISs were incorporated in the Final Report dated April 5, 1999.
• Thus, on the basis of the recommendations of the Dave Committee, Section 11AA was added to the SEBI Act and the CIS Regulations were framed[2]. CIS Regulations were framed primarily for the protection of investors in the schemes launched by various entities seeking to dupe bonafide investors into putting their life savings at risk by promising high returns.

 It is important to note that committee also took great pain in defining the term CIS. The definition finalised by the Committee reads as[3],

“collective investment scheme” means any scheme or arrangement:-

1. With respect to property of any description, the purpose of which is to enable the investors to participate in the arrangements by way of contributions and to receive profits or income or produce arising from the management of such property or investments made thereof; and
2. The contributions of the investors, by whatever name they are called. are pooled, and are ·utilised solely for the purposes of the scheme or the arrangement; and
3. The property or such contributions is managed as a whole on behalf of the investors, whether or not such properties or contributions and the investments made thereof are evidenced by identifiable properties or otherwise; and
4. The investors do not have day to day control over the management/operation of the property/scheme.

• The committee recommended that a collective investment scheme shall be constituted in the form of a trust and the instrument of the trust shall be in the form of a deed registered under the provisions of the Indian Registration Act, 1908 and executed by the Collective Investment Management Company (CIMC) in favour of the trustees named in such an instrument.

As a result, presently CIS is Any scheme or arrangement made or offered by any company under which the contributions, or payments made by the investors, are pooled and utilised with a view to receive profits, income, produce or property, and is managed on behalf of the investors is a CIS. Investors do not have day to day control over the management and operation of such scheme or arrangement[4], and same is regulated under Securities and Exchange Board of India (Collective Investment Schemes) Regulations, 1999 and is required to fulfil the criteria led down in the regulation.

Definition and CIS Participants

The expression Collective Investment Scheme (CIS) has been understood to mean any scheme, whereby funds were raised from the members of the general public for the purpose of making investment in any property with an objective of having good return. However, SEBI Act defines Collective Investment Scheme (CIS) under Section 11AA of the SEBI Act, 1992 and lays down the conditions which need to be satisfied before any scheme or arrangement launched by a particular company can be called a CIS. The section runs as under-

Section 11AA of the SEBI Act, 1992

(1) Any scheme or arrangement which satisfies the conditions referred to in sub-section (2) shall be a collective investment scheme.

(2) Any scheme or arrangement made or offered by any company under which,-

(i) the contributions, or payments made by the investors, by whatever name called, are pooled and utilized for the purposes of the scheme or arrangement;

(ii) the contributions or payments are made to such scheme or arrangement by the investors with a view to receive profits, income, produce or property, whether movable or immovable, from such scheme or arrangement; 

(iii) the property, contribution or investment forming part of scheme or arrangement, whether identifiable or not, is managed on behalf of the investors;

(iv) the investors do not have day to day control over the management and operation of the scheme or arrangement.

(3) Notwithstanding anything contained in sub-section (2), any scheme or arrangement-

(i) made or offered by a co-operative society registered under the Co-operative Societies Act, 1912 (2 of 1912) or a society being a society registered or deemed to be registered under any law relating to co-operative societies for the time being in force in any State;

(ii) under which deposits are accepted by non-banking financial companies as defined in clause (f) of section 45-I of the Reserve Bank of India Act, 1934 (2 of 1934);

(iii) being a contract of insurance to which the Insurance Act, 1938 (4 of 1938), applies;

(iv) providing for any Scheme, Pension Scheme or the Insurance Scheme framed under the Employees Provident Fund and Miscellaneous Provisions Act, 1952 (19 of 1952);

(v) under which deposits are accepted under section 58A of the Companies Act, 1956 (1 of 1956);

(vi) under which deposits are accepted by a company declared as a Nidhi or a mutual benefit society under section 620A of the Companies Act, 1956 (1 of 1956);

(vii) falling within the meaning of Chit business as defined in clause (d) of section 2 of the Chit Fund Act, 1982 (40 of 1982);

(viii) under which contributions made are in the nature of subscription to a mutual fund; shall not be a collective investment scheme.”

For above it is very clear that under sub section 2 of above section the detailed condition of CIS scheme i.e. the money collected from investors should be pooled and then utilized as a whole for the purposes of the scheme, the investors should have contributed their money with the objective of deriving profits in any form, whether “income, produce or property”, the entire working and operation of the scheme is managed by the concerned company on behalf of the investors, and the investors have no modicum of control over daily activities with respect to the arrangement in question, has been provided.

CIS Participants

Collective Investment Management Company

A Collective Investment Management Company is a company incorporated under the provisions of the Companies Act, 1956 and registered with SEBI under the SEBI (Collective Investment Schemes) Regulations, 1999, whose object is to organise, operate and manage a Collective Investment Scheme.

Trustee

A person who holds the property of the collective investment scheme in trust for the benefit of the unit holders, in accordance with these regulations and safeguards the assets and ensures compliance with the laws and rules. it is required under the CIS regulation 1999 that A collective investment scheme shall be constituted in the form of a trust and the instrument of trust shall be in the form of a deed duly registered under the provisions of the Indian Registration Act, 1908 (16 of 1908) executed by the Collective Investment Management Company in favour of the trustees named in such an instrument. Further, Collective Investment Management Company shall appoint a trustee who shall hold the assets of the collective investment scheme for the benefit of unit holders.

A fund manager or investment manager who is a professionally qualified person and manages the investment decisions of the scheme and also provides the trading, reconciliations, valuation and unit pricing of the scheme.

The shareholders or unitholders who contribute the money in the scheme and are the owner (or have rights to) the assets and associated income generated by the scheme.

Legal Framework

In India, establishing, operating and winding-up a CIS is a regulated activity and has to be carried out by duly following the related acts, rules, and regulations. We may trace the evolution of regulatory framework with press release dated November 18, 1997, of Government of India, whereby it was decided that an appropriate regulatory framework for regulating schemes through which instruments like agro bonds, plantation bonds etc. are issued, has to be put in place. The government decided that the schemes through which such instruments are issued would be treated as “Collective Investment Schemes” coming under the provisions of the SEBI Act.

Accordingly, SEBI, notified the provisions of section 12(1) (B) of the SEBI Act which prohibits any person from sponsoring or causing to be sponsored any Collective Investment Scheme without obtaining a certificate of registration from the Board in accordance with the regulations.

The section specifically says that “No person shall sponsor or cause to be sponsored or carry on or cause to be carried on any venture capital funds or collective investment schemes including mutual funds, unless he obtains a certificate of registration from the Board in accordance with the regulations”. That is to say registration by the Board is sine qua non for starting of Collective Investment Scheme.

Eligibility Criteria for CIS Registration[5]

The Board shall not consider an application for the grant of a certificate unless the applicant satisfies the following conditions, namely,

1. The applicant is set up and registered as a company under the Companies Act, 1956;
2. The applicant has, in its Memorandum of Association specified the managing of collective investment scheme as one of its main objects;
3. The applicant has a net worth of not less than rupees five crores: Provided that at the time of making the application the applicant shall have a minimum net worth of rupees three crores which shall be increased to rupees five crores within three years from the date of grant of registration;
4. The applicant is a fit and proper person for the grant of such certificate;
5. The applicant has adequate infrastructure to enable it to operate collective investment scheme in accordance with the provision of these regulations;
6. The directors or key personnel of the applicant shall consist of persons of honesty and integrity having adequate professional experience in related field and have not been convicted for an offence involving moral turpitude or for any economic offence or for the violation of any securities laws;
7. At least fifty per cent of the directors of such Collective Investment Management Company shall consist of persons who are independent and are not directly or indirectly associated with the persons who have control over the Collective Investment Management Company;
8. no person, directly or indirectly connected with the applicant has in the past been refused registration by the Board under the Act.

The CIS regulation made it mandatory for every CIS to be registered by providing that no person other than a Collective Investment Management Company which has obtained a certificate under these regulations (CIS Regulation) shall carry on or sponsor or launch a collective investment scheme[6] and must be launched by collective investment management company through a registered trust by categorically stating that a collective investment scheme shall be constituted in the form of a trust and the instrument of trust shall be in the form of a deed duly registered under the provisions of the Indian Registration Act, 1908 (16 of 1908) executed by the Collective Investment Management Company in favour of the trustees named in such an instrument[7]. Further, the trustee shall hold the assets of the collective investment scheme for the benefit of unit holders.

SEBI has further prescribed other condition to instill confidence of the contributor and maintain more transparency in the operation of the scheme. It obligates Collective Investment Management Company to make such disclosures to the unit holders as are essential in order to keep them informed about any matter which may have an adverse bearing on their investments[8].The regulation further deepened the trust control by mandating that no appointment of Director of CIMC shall be made without the prior approval of the trustee. Furthermore, to curb these companies from fooling the innocent masses, it has been made strictly prohibited for these companies to provide guaranteed or assured returns[9]. The restriction on business activities of Collective Investment Management Company has been provided by prescribing that CIMC shall not undertake any activity other than that of managing the collective investment scheme or to act as a trustee of any other collective investment scheme[10].

Thus CIS Regulation prescribes as referred above, that there has to be a minimum capital requirement. It has prescribed certain corporate governance in the company. For example, at least 50 per cent directors should be independent directors. There should be a trust. The trustees and directors should be fit and proper. They have to be approved by SEBI Board. They cannot appoint on their own. The type of investments that they can make, that has been prescribed along with restriction on the activities of CIMC.

Adoption of International best practices[11]

• Countries in which CIS are well established have been perfecting standards within their domestic financial systems sector for decades. At the same time, there has been considerable sharing of experience among officials responsible for CIS oversight in various countries and articulation of common standards.
• As a result, a considerable body of international standards and best practices has evolved over the past few decades. The objective of international cooperation in CIS regulation is to strengthen domestic legal and regulatory foundations for CIS and to limit the potential for cross-border CIS activity to affect investors’ interests adversely in order to foster the development of the CIS sector.
• In subsequent years, the International Organisation of Securities Commissions (IOSCO) has assumed the leading role in setting global standards as part of IOSCO’s broader mission of promoting international cooperation among securities market regulators. In 1994, IOSCO issued “Principles for the Regulation of Collective Investment Schemes”, and in 1997 issued “Principles for the Supervision of CIS Operators”. 37.
• Both the OECD Standard Rules and the subsequent work of IOSCO address the basic features that all CIS should have in order to be acceptable for public offerings. Such features include an adequate legal and regulatory framework, the segregation of the CIS assets, the role of the depositary/custodian, norms for valuation of assets and the redemption of positions and the obligations of full disclosure.
• Despite agreement on international principles for CIS governance, no legal form or governance regime for CIS has been acknowledged as inherently superior to other systems. Thus each country must choose its own means of implementing international principles. In implementing international principles for CIS governance in their own jurisdictions, countries may wish to make use of the experience of countries that are acknowledged to have high quality CIS sectors.
• Domestic standards and practices should be consistent with internationally accepted standards and principles developed by recognised international bodies. The legal and governance forms and practices in countries where high quality CIS sectors are found constitute an additional source of standards, which are required to be followed.

Conclusion 

Collective Investment scheme, a scheme or arrangement made or offered by any company under which the contributions, or payments made by the investors, are pooled and utilised with a view to receiving profits, income, produce or property, and is managed on behalf of the investors, is not a new phenomenon for India and was present in different structure primarily for the investment in agro-related activities.

In the 1990s, in order to regulate such entities and their businesses, the Government issued a press identifying schemes which would be treated as Collective Investment Schemes under the SEBI Act, 1992. SEBI was tasked with formulating regulations to govern CISs which would lead to the furtherance of licit investment in the securities market. With this goal, a committee was formed under the deft chairmanship of Dr. S. A. Dave by SEBI. Thus, on the basis of the recommendations of the Dave Committee, Section 11AA was added to the SEBI Act and the CIS Regulations were framed primarily for the protection of investors in the schemes launched by various entities seeking to dupe bonafide investors into putting their life savings at risk by promising high returns.

CIS Regulations, inter alia, prescribes certain condition for establishing, running and winding up of the CIS scheme e.g. that there has to be a minimum capital requirement. It has prescribed certain corporate governance in the company. For example, at least 50 per cent directors should be independent directors. There should be a trust. The trustees and directors should be fit and proper. They have to be approved by SEBI Board. They cannot appoint on their own. The type of investments that they can make, that has been prescribed along with restriction on the activities of CIMC.

Apart from the above salutary efforts of market regulator SEBI, Domestic standards and practices should be consistent with internationally accepted standards and principles developed by recognised international bodies. The legal and governance forms and practices in countries where high quality CIS sectors are found constitute an additional source of standards, which are required to be followed.

References

[1] SAT, Appeal No. 124 of 2013,DOD 23.07.2013,page no 18

[2] http://www.sebi.gov.in/cms/sebi_data/pdffiles/21683_t.pdf, Retrieved on 27.02.2017

[3] http://www.sebi.gov.in/cms/sebi_data/pdffiles/21683_t.pdf,retrived on 27.02.2017

[4] http://www.sebi.gov.in/sebiweb/home/list/4/37/26/0/Collective-Investment-Schemes, retrieved on 27.02.2017

[5] Securities and Exchange Board of India (Collective Investment Schemes) Regulations, 1999

[6] Regulation 3,Securities and Exchange Board of India (Collective Investment Schemes) Regulations, 1999,

[7] Regulation 16,Securities and Exchange Board of India (Collective Investment Schemes) Regulations, 1999,

[8] Regulation 50,Securities and Exchange Board of India (Collective Investment Schemes) Regulations, 1999

[9] Regulation 25,Securities and Exchange Board of India (Collective Investment Schemes) Regulations, 1999

[10] Regulation 13, Securities and Exchange Board of India (Collective Investment Schemes) Regulations, 1999

[11] GOVERNANCE OF COLLECTIVE INVESTMENT SCHEMES (CIS) Discussion Draft For Comment July 2004,OECD,page no 8

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In this article, Ranjit Krishnan Ramanath who is currently pursuing M.A. IN BUSINESS LAWS, from NUJS, Kolkata, discusses Assignment and Licensing of Trademarks in India

Abstract of the research undertaken

The trademark assignment in the handling to license under the original Trade markets Act 1999. (The exchange of the former Trademark Act 1958) is concerned only to the ‘permitted use’ and ‘registered use ‘ because the former Act was expanded to reach the range of the word   ‘permitted use only. The trademark should be accomplished to authorize the outsiders without need to enroll the license as the ‘registered user’. The demand is to note with a Government Agency, Which is the trademark Office has been eliminated to with the failure to enroll should not permit a license invalid (Anon, 2010).  In the course of recent years, the law of government trademark licensing has adjusted radically in the reaction of the new commercial factors of supplying the trades and administrations. Because the slow adjustment is to move towards the licensing.

It slowly accepted in point of commercial development in the law. It refuses that the license trade markets has turned into a commercial practicing hub. However, in the meantime,  the law has given to satisfaction of specific conditions, viz. ‘quality control’ or ‘association in course of exchange’, which should be confirmed to as the trademark holder chooses to go into a permit game plan. Also, it is recommended that a trademark proprietor ought to maintain a strategic distance from a restrictive permit since it might be perused as a task. Likewise, despite the fact that the arrangement of keeping records of enlisted clients of the trademark is not any more predominant, enrollment keeps on conveying extra points of interest for a trademark proprietor under the present plan of the Act. Moreover, area 53 of the Indian Trademark Act, 1999 makes a motivating force for enlistment by denying the unregistered licensees of the privilege made by the excellence of Section 52.

Assignment and Licensing of Trademarks in India

The thought of responsibility for a development and its security is not new to humankind. To make a clear distinction of clear process for the prevention of crime over individual attempted goals will do have a low quality of merchandise creation process in the infringer reassessed. Taking a trademark process well known that would help in developing a trust in merchandise and have potential customer process. Taking a point of recheck and their implied need for maker directly reflects individual personal stake.

In the medieval times two essential sorts of imprints could be found:-

• Merchants Mark
• Production Mark

Using these process for Mark demonstration of these production needs and their origin are made as per specifications. It is more of additionally etched process in boats and other given specifically for their technique for trademarks for their occurrence for ship destruction for a proof ad there conceivable. Other individuals working together or in societies began declaring it as a blemish on their merchandise. This made the producer in charge of the nature of the merchandise that was being created and helped them to hold their clients[1].

What is trademark authorizing?

• Trademark permitting is the point at which you as a trademark proprietor approve an outsider to utilize your check in course of exchange thought of sovereignty over the offers of items or administrations authorized under the trademark[2].
• By and large, there is “established trademark permitting” done under which the licensee can make items utilizing the trademark authorized. Different types of permitting incorporate marketing, diversifying and so forth. So trademark[3] permitting is the point at which a trademark proprietor permits others to utilize the check without exchanging of possession.

Why would it be a good idea for one to permit a trademark?

It’s the most ideal path in which you can extend your business in locales you haven’t, as of now. All the more imperatively, it is monetarily truly gainful for both the licensor and the licensee. To be more particular, from the licensor’s perspective, it is that compelling business methodology that will just outcome in your officially all around perceived trademark to end up distinctly much more rumored. Like specified before, it is likewise a decent approach to extend your trademark’s topographical reach, enhance mark deceivability and other like things.

From the licensee’s perspective, it allows you to partner yourself with a very much perceived trademark; in this manner giving you a high ground on your rivals. Similarly as on account of physical property, for example, arrive, each proprietor of a Brand or Trademark has the privilege to offer, permit, exchange, and so forth its particular image or trademark as per legitimate strategies. Taking a view on varied factors of branding and trademark will make an impact with that of rights and its methods and task. As per Indian process, the trademarks Act,1999 would have authorization based on it. Simply put, if there should be an occurrence of a task of a trademark, there is an adjustment in the responsibility for enlisted mark and in the event of permitting; the privilege in the exchange stamp keeps on resting with the first proprietor yet just far few confined rights to utilize the brand/check are given to the outsider.

Business Objectives

• Entities can negotiate lump some  prices for the transferring of assignment of their respective trade mark for which is ethically a new arena of business in the current society. The business objectives further extends to allowing entities from other part of the world to render service or manufacture goods under the owner’s trademark by duly establishing a relationship through a trademark licence agreement.
• Having a trade mark also benefits by teaming up with respective partners , increasing the capacity of producing , services and marketing  without the requirement to expanding ones own company.  This opens up new route for delivery or partitioning in the market. By getting the Trade mark licensed, the Company enters into a new area of business which is not used by any entities in the market of the specific geographical area.
• Every entities can have their selections based on what appears to be challenging and more appealing for them in terms of the concerned business the party intends to participate.  In case if there disputes, insurgency, acquisition or insolvency of the Company, the owners can take decision to converge a few or can be abandoned by the owners of the Company.
• The Owner can also retain such ownership of the trade mark or can lease it to somebody else so that the owner could continue in doing the business under the said trade mark without abandoning its business in the Public Domain. The owner can still acquire revenues having the same trademark license. In the current world, Partnership licensing is beyond the horizon of merely lending a logo into establishing a true partnering of business relationship which gives a lot of drive and success to the key business of the Company. For example when Paper pulp manufacturer and a Temporary ceasing Contractor teamed up to develop false ceiling tiles which was not a simple Licensing but was an established business tie up of developing a product which was truly a great success for both the parties.
• Sometimes the mark is fringed by another entity with an object to tampering the brand name, quality and compromising the reputation of the Company. In several instances,  many local vendors use others brand to promote their sale of goods.   The infringers can basically convince the owners of potential business in a tie up and get into business. For most of the Companies, registering a trademark is mere a recognition than a source of revenue. Company shows keen interest in increasing the Customer recognition of the product that the revenue or sales as a part of promotion or advertisement. While another Entity partners the brand, the promotional or the advertisement costs are shared.

Financial and Commercial considerations of a Trademark

• The Royalties or the payments can be paid or received in a form of a lump amount wherein at the time when the rights of the license is granted upon another entity. This can either be a fully paid agreement or can be periodically paid until the period over the term of the License. Under the royalties, the most common kind of consideration provided by the Entities by some kind of upfront fee  or based on the success in sales.

Royalty has to be dealt with in the following ways,

1. We need to ascertain when the Royalties are required to be paid,
2. What kind of penalties are to be imposed for failing to pay on time,
3. Any issues of holding international taxes where there were a requirement to pay out the monies in the Country of established business,
4. Any accrued interest on the outstanding payments or due to kind of payment.

Typically if we look into various Trade Mark Licensing agreement , the Royalty calculation would depend on a number of other factor which would include a relative bargaining skill of the Licensor and licensee, Its potential to acquire profit  and how well the TM could be known in the marketplace that deals with that particular kind of product or service. The Competitive situation of the market is quite challenging and the Royalties would surely depend on the extent of its success through the market. The base calculation of Royalties whether it is from the gross sale or the net sale, all other associated costs of the overheads , profit margins , the calculation depends

The base calculation of Royalties whether it is from the gross sale or the net sale, all other associated costs of the overheads, profit margins, the calculation depends on a pre-determined rate at which the owner feels would be appropriate within a range of his profit margins. In short, Royalties is a rewarding gesture from the Owner in connection with his performance and appreciation of the parties involved in the business mutually supporting to enhance business.

Procedure of Registration of Trademark in India

The process required for the enrollment of the trademark in India is shown in the figure,

Assignment of Trademarks in India

The assignment of a trademark takes place when the ownership of such trademark is transferred from one entity to another, which may either be along with or without the goodwill of the trademarked business and which has to be recorded in the register of trademarks.

Following is the process of assignment of trademark in India:

• Complete Assignment of trademark from one entity to another: The owner transfers all his rights held in the trademark to the other entity.
• Assignment of trademark with respect to only certain goods and services: Here, the ownership of trademark is limited to only certain products or services. For example, “A” is the owner of a brand and uses his trademark for selling computers, television sets, and air-conditioners. “A” assigns “B” the rights in the brand with respect to only the Air-conditioners, and whereby “A” retains the rights in the brand with respect to computers and television sets.
• Assignment with the goodwill: Here, the absolute ownership over the rights and value of a trademark associated with the product is transferred from one entity to another. For example,”A” is the owner of a brand and uses his trademark for selling computers. “A” sells his brand to “B” whereby “B” retains all such rights vested in the brand and can use the brand trademarks for selling computers as well as other electronic products of his choice.
• Assignment without the goodwill: The assignment without goodwill is also known as “gross assignment”. Here, the assignment refers to restrictions of rights of the buyer whereby it limits the new owner of using the brand on products that the original owner is already For example, “A” is the owner of a brand and uses his trademark for selling computers. “A” sells his brand to “B” such that “B” will have no rights to use the brand trademark for selling his computer products. However, “B” can use the brand trademark in the chain of businesses other than a computer.

Using the case process of Trademarks Act 1999, there is a restriction of these process as per the registered process and their confusion amid various other clear public users and other clear deliverables.

Such restrictions are

• Giving an account of these assignments and their results would have rights in a more desperate work have effective goods and services. It further has a clear need for association as per deeds.
• Taking the approach of these Assignments and their results would have different effective process in a larger Spectrum.

Licensing of a Trademarks in India

• The licensing of a trademark allows the licensee to use the trademark, albeit the trademark itself is not assigned to the other entity, that is to say, the ownership has not been transferred but the mere use of the trademark is permitted to be used by the licensee.
• Licensing of trademark has a plethora of benefits for both entities. Here, the licensor may enjoy his rights to the trademark by generating royalties for its use, whereby the licensee is able to broaden his market chain operations by using the said trademark for building reputation and brand value.

In layman words, a licensor has the right to license his rights over the trademark as he may be pleased with, such as by restricting the rights of the licensee in the trademark with respect to products or services. The licensor may restrict the time and area within which said trademark can be used by the licensee with respect to the product and services.

Agreements for Transmission

Trademark assignments are generally executed by way of trademark assignment agreements under which the transmission of transfer takes place from one entity to another[1].

The following points are to be ensured while drafting such agreements for the assignment and licensing of trademarks in India,

• That the rights of the trademark brand do not tend to cause harm due to obligations prescribed in such agreement.
• The provision with regard to the assignment is with or without the goodwill of the business should be properly negotiated and explicitly mentioned in the agreement.
• The agreement must be drafted in accordance with the purpose of the transaction in question.
• The rights and duties of the licensee must be distinctively pre-determined and defined.
• The license agreement should be registered with the trademark Registrar, although it is not compulsory but in a legal perspective, it is most advisable.

It is more of the licensed for their agreement for Trademark Act 1999, relieved which do provide registration for the license agreement. Using the process of the Trademark Assignment will do make an impact in rights and duties for their distinctively determined and further relieved.

Conclusion

Understanding the process of assignment and licensing of trademarks in India is a paramount issue. The process of marketing and strategic management would surely open a plethora of broadening horizons in this domain, for the licensor and licensee likewise. It all depends upon the development of a brand, and the use of the brand, which collectively form a factor to boost marketing in various sectors.

Having an agreement which set an example for creating IPR and do allow intellectual property transfer of these commercial returns. It is further ensured that various deliverable monetary gain will have utilization as per the Agreements and have purchase value using the benefit of right made up and also provide legal and equitable rights for law and other important Issues. Further acceleration of these IPR would do study the IP rights more rigorously and have companies own valuable needs more carefully understandable and have IPR made out of scope and address the needs of the resource.

It further defines and also provides clear obligations for not able to disclose and create clause to address the issue with the jurisdiction of Alternative Agreement clause for these issues legal contract for their compliance exist laws.

It is, however, worth to note that the ability of a Company to Sell or buy is very much required to sustain in the market. Although the Trademark does not take much of space, too much of IP can actually be a burden to the Company due to the funds required to maintain the registering fees, for its proper defense if there is any third party claim or for manufacturing and sale for a final production. , or creating and marketing a final product. For a Company to sell an unused IP, this can usher the Company’s financial position and could generate revenues and decrease the overall Costs.  Selling unused or surplus intellectual property can have an immediate positive effect on a company’s finances, generating revenue and decreasing costs.  When the Company plans to enhance its business, Company looks forward in purchasing trademark to support their business motive, creating an identity for themselves and ensure that this is properly marketed.

This was all about Assignment and Licensing of Trademarks in India. Please comment below and let us know what are your views on Assignment and Licensing of Trademarks in India. Do not forget to share.

Bibliography

Ng, D. L. a. P. W., 2010. Intersect between Intellectual Property Law and Competition Law. Journal of Management.

Anon, 2010. REGULATION OF INTELLECTUAL PROPERTY IN THE LEGISLATIVE CONTEXT WITH SPECIAL REFERENCE TO. Journal of Management.

Anupam Goyal, 2003. “Recognizing the property rights regime for indigenous knowledge of biodiversity in face of TRIPS Agreement”. National Capital Law Journal, 6(9), pp. 129-153.

Dutta, R., 2008. Critical Analysis: Reflection of IP in Competition Law of India.

kumar, B. a., 2006. law of trademarks in India. 2nd ed. Delhi: center for law.

L, W. B., 2000. law relating to patents, trademarks, copyright, designs and geographical indications. 2nd ed. Delhi: universal law publishing co pvt .

S.Chakravarthy, 2005. Evolution of Competition Policy and Law in India. New Delhi: Academic Foundation.

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In this article, Nidhi Shetty who is currently pursuing M.A. IN BUSINESS LAWS, from NUJS, Kolkata, discusses Protection of movie titles through Intellectual Property laws.

Introduction to Intellectual Property Laws

• Right from pre-historic era, man has made his way through the fight of survival. This fight eventually turned into a ‘competition’ to survive amongst the other survivals. Evolution of humankind bought various developments and innovations. It became a need for every person to secure their innovations in order protect their credit.
• Thus, Intellectual Property became a key element to maintain the competitiveness in the market. It became an integral and core part of almost all business process as for every business growth, protection of their business idea, mark, design, procedure or any other intellectual property related to their business is necessary. It ensures that their intellectual property is secure from any infringement from a third party. Intellectual property rights gained substantial importance with the onset of the knowledge and era of information technology.
• Eventually, Intellectual Property on its own and the various rights attached to it have become extremely important commodities and thus are being protected. India is a signatory to the Agreement on Trade-Related Intellectual Property Rights (“TRIPS”) The Indian Constitution has no mention of Intellectual Property.

However, it deals with just the word ‘property’ in following Articles:

1. Article 19: Freedom to acquire, hold and dispose off property
2. Article 31: Protection from deprivation of property
3. Article 32: Property could be possessed or acquired for public purpose only by law and only on payment of compensation.

Intellectual Property Rights is a collective term and it can be protected under different acts, depending on its type. IPRs is an umbrella term. IPRs consists of the following,

• Patents
• Trademarks
• Copyright
• Geographical Indications
• Design or Industrial Designs

Protection of movie titles through Intellectual Property laws

An Introduction to Media and Films

Communication is the name we give” [1], to the countless ways that humans have of keeping in touch- not just words and music, pictures and print, nods and becks, postures and plumages; to every move that catches someone’s eye and every sound that resonates upon another’s ear. The need for communication is as basic as the hunger for drink and food. Media is a source of such communication. Films are considered a major mass medium because of their mass appeal and influence on society. ‘Film is a term that encompasses motion pictures as individual projects, as well as the field in general. [2]

Importance of Registration under Intellectual Property Laws:

1. Developments and inventions of new products its techniques and processes, names of the brands, the matter and the content, etc. are a process or set of related processes that requires significant system resources or time, or requires exclusive access to large amount of data. They usually require large investments.
2. Thus, an individuals or entities expectation of creating them have the want that they become the sole and exclusive owners and have exclusive rights over their invention or creation, such that it does not bestow rights over any other person. Intellectual Property rights majorly provides such exclusivity to the creators. For some forms of Intellectual Property like copyright and trademark, the right begins the very moment the work is made or created in these types of intellectual property, registration may not compulsory or mandatory but registration provides the creator or the author certain and advantages and benefits like proof of the ownership in prima facie.
3. It makes it easier for the creator to enforce their Intellectual Property right in the court of law. In the event, where the Intellectual Property is not registered, the creator will have to prove his case in the court that the Intellectual Property belongs to the creator when the intellectual property is infringed by any third party (infringer).
4. Under The Trademark’s Act, 1999 a Trademark can be claimed only by a registered proprietor of that particular trademark and only he can sue the infringer for infringement. Therefore, it can be concluded that Intellectual Property Rights are made to protect and help the true registered creator or owners to get the benefits of the returns of their knowledge and investments by preventing any other person from infringing or using the creation without the registered owner’s permission.

Protection of Film Titles under Intellectual Property Laws

• Title or a name of any work creates an identity for that particular work. On the onset of every film the makers of that film strive to choose an exclusive and distinctive title or a name for their movies. This helps the film makers to associate the audience to their film. It becomes utmost important for the film makers to protect their movie titles to protect the distinctiveness.
• “Under Indian Copyright Act, protection is conferred on literary works, dramatic works, musical works, artistic works, cinematograph films and sound recording but not to titles alone. Thus copying of a title alone and not the plot of the movie, the characters, songs etc does not fall under the ambit of copyright protection.
• It is common, rather it is imperative, to give title to literary or entertainment works. The literary work produced by the author or the work of entertainment produced by a producer needs a name. It is only then that such work would be identified. The term ‘literary title’ is used to encompass the titles of books, periodicals, newspapers, plays, motion pictures, television series, songs, phonograph records, cartoon features and the like.”[3]
• Initially, neither copyright nor trademark law may protect titles of a film. Copyrights secure the originality of creativity by protecting its original expression. Therefore, to qualify to be protected under copyright law, a work must have some amount of “authorship”.
• On the other hand, trademark act intends to distinguish and identify the origin of a product. A mark has to be distinctive to qualify under trademark. It means that a mark cannot be generic or descriptive. Therefore the need of registration of movie titles rose.
• In India, a film title is registered with any authorized associations such as the Association of Motion Pictures and Television Programme Producers (AMPTTP), the Film and Television Producers’ Guild of India (Guild) and Indian Motion Picture Producers’ Association (IMPPA).
• The aforementioned associations work constantly with the motive of encouraging and motivating the film productions and eventually protecting the monetary and commercial interest of the movies that are produced in India.
• These associations regulate the Indian Film Industry. The procedure to register a particular film title involves the association substantiating with the remaining associations to find out whether a film with the same or deceptively similar title has been registered with any another association.
• It is very important for a film maker to be creative and innovative in choosing a title of their film as a unique and catchy title can instantly make the viewers and the audience relate to the film making the first and lasting impression on such audience.

Titles of cinematographic films in India shall be registered under Class 41 of NICE Classification of the Trademarks Act 1999. Film titles can be further divided into two heads, that is, titles of series of movies, like for instance ‘Once upon a time in Mumbai ’ and ‘Once upon a time in Mumbai Dobaara’ and title of a single movie. In case of a movie with single title, it is necessary to establish that the title has acquired secondary meaning amongst the mass at large. The test of secondary meaning for literary titles is basically to determine whether in the memories of a large significant number of viewers, the title in question is set with a single source of the literary work.

Limitations on registration of film titles

Registration of every Cinematography film title has a set of limitations involved under the Trademark Act, 1999.

The Trademark Law protects the title of a film under two instances[4]:

1. The title of the series of literary work where the title of the series of the film enjoys standard trademark protection to indicate that each edition comes from the same source as the others and can, therefore, be registered as a trademark. Therefore, in India, the producers seeks or apply for registration of film titles under Schedule 4, class 41 of Trademarks Act, 1999 that incorporates number of services including entertainment.
2. The title of single literary work where in order to be entitled to the protection of trademark, the title need to have acquired secondary meaning to qualify as registrable trademark. The fundamental assumption behind this is that the question of likelihood of confusion of source, affiliation, sponsorship or connection in the minds of potential buyers/users would arise and can be contended only if the disputed title has acquired the secondary meaning and is capable of associating itself with the particular work or source. Even if the work has not been released, a sufficient amount of pre-release publicity of the title may cause a title to acquire recognition, sufficient for protection under the proviso clause stated under clause (1) of Section 9 of Trademark Act, 1999 which specifically gives trademark registration to well-known mark or mark which acquired distinctive character as a result of the use made of it.

Case study of important judicial pronouncements

Krishika Lulla and Ors. vs. Shyam Vithalrao Devkutta and Ors[5]

The Honourable Supreme Court held in the above-mentioned case that copyrights do not subsist in the titles of literary works, including movies. Protection for the same can be granted only by trademarks. The facts of the said case is that the respondents claimed to have written a synopsis with the title ‘Desi Boys’ and the same was forwarded via email to two other persons. On release of the movie ‘Desi Boyz’, the respondents filed a suit against the appellants for the infringement of the copyright. The issue in hand before Court of law was whether the respondents had a copyright ownership in the title of the said movie. The Court stated that as per Section 13 of the Copyright Act, 1957[6], titles cannot be considered as ‘works’ for the purpose of copyrights.

Sholay Media and Entertainment Pvt Ltd. v. Parag M. Sanghavi[7]

The High Court of Delhi granted trademark protection and issued an ex parte injunction for title of the famous film ‘Sholay’ released in 1975. This led to the change of title of ‘Ram Gopal Verma ki Sholay’ to ‘Ram Gopal Verma ki Aag’.

It was stated by the Court that since the title ‘Sholay’ had acquired the status of honor amongst other movies, the defendants were made to refrain from using trademarks that were same or deceptively similar to that of the plaintiffs.

Biswaroop Roy Choudhary v. Karan Johar[8]

An interim injunction was sought by the plaintiff from the Delhi High Court to use title of film which plaintiff had registered with Registrar of Trademarks to restrain the defendant from using the tile “Kabhi Alvida Naa Kehna” for the defendant’s movie. The Court, however,  was of the view that although the defendant had not registered the title with the Registrar of Trademarks contrary of what was done by the plaintiff, the defendant was the actual user of the mark, and had also completed the production of the film which was ready for release. Thus, the Delhi High Court further stated that the actual use of the trademark was always a relevant factor which would deter the Court from granting injunctory relief. Hence, the Court resulted in denial of interim relief to the plaintiff were that Kabhi Alvida Naa Kehna was a phrase in common parlance and therefore could not be used with exclusivity and furthermore there was delay in approaching the Court.

Kanungo Media (P) Ltd v RGV Film Factory[9]

The above-mentioned case is an appraisable attempt by the judiciary to establish a position that even a single title of the film can acquire trademark protection under the Trademark Act, 1999. The court stated that “title of the film fall into two categories firstly, titles of series of film and secondly titles of single copyrighted works. Protection is certain as regards titles of series of film, and such titles enjoy standard trademark protection. However, the court found that in order to extend this protection to the title of a single copyrighted work, it must be proven that such title has acquired a wide reputation among the public and the industry that is, has acquired secondary meaning. Therefore, in order to obtain an injunction, the onus is on the plaintiff to establish that its film title has acquired secondary meaning. And had also concluded that the law with respect to the protection of move title under trademark in India is similar to the law of trademark in United States”.

Movie Title Protection beyond India

United States of America: in the year 1922, Motion Picture Association of America (MPAA) became the first association to be formed. This organization was formed to represent the interests of the film industry, home video and television industries of America both within the country and internationally through MPAA. The Association works with the purpose of promoting and encouraging the film making and production. It also helps in protection of commercial interest of the movies that are to be produced. It aids protection of the films from any copyright theft. The Trademark protection is also available under MPAA related to movie title. However, it is subjected to certain limitations. The limitations are as follows:

“Registration of titles as trademarks with the United States Patent and Trademark Office requires that the work designated by the title is not a single film, television show, or book. If it is being used on a television series, book series or other continuing work, registration is possible and recommended. The USPTO refuses registration of a proposed mark related to the title of a single book and/or movie including marks being: a surname; geographically descriptive of the origin of the goods/ services; disparaging or offensive; a foreign term that translates to a descriptive or generic term; an individual’s name or likeness”[10]

A portion of the title of any single creative work is registrable only if the applicant can show that the portion of the title meets the following criteria[11]:

1. It creates a separate commercial impression apart from the complete title;
2. It is used on series of works; and
3. It is promoted or recognized as a mark for the series.

Thus, the law of trademark under USPTO marks the refusal to register titles of a single work regardless of whether it is a television program, a movie or a book.

In the case of Paramount Pictures Corporation v. Pete Gilchrist[12], the Courts in the United States of America have given trademark protection to literary title of single works. However, it will happen only upon a showing of secondary meaning, even in the case where the work’s title may not be merely descriptive of the contents of the work. The Court found that the Respondent registered the disputed domain names primarily with the intention of taking advantage of the Complainant’s trademark rights. It determined that the use of complainant’s trademark is confusingly similar does not constitute a legitimate non – commercial or fair use of the domain names. Therefore the restrained the respondent from using the disputed domain name.

Warner Brothers Entertainment v. The Global Asylum, Inc[13]:

The plaintiff who owned several trademarks that included the word “Hobbit,” filed a trademark infringement suit against the defendant to seek a temporary injunction order against the distribution of defendant’s film “Age of Hobbits”.

The court established four-factor test for injunctive relief that is:

1. likelihood of success on the merits,
2. likelihood of irreparable harm to them if the injunction were not granted,
3. a balance of hardships favoring plaintiffs and
4. that an injunction would benefit the public.

The plaintiff satisfied all the four-factor test and the court held that plaintiff had an interest that had to be protected in the mark “HOBBIT” and that the defendant’s use of the mark was likely to cause consumer confusion. The court rejected the defendant’s contention and granted an injunction on the basis of public interest.

Conclusion

• Copyright laws can protect the expression of an idea but a simple mere idea cannot come under the ambit of the Copyright Act. Titles of books, songs, movies and other copyrightable works although appear to be protectable under copyright is given their nature of works; yet are not due to the lack of requisite creativity[14].
• Also, copyrights laws are made to protect the honesty and nobility of creative works of ownership and authorship, and movie or book titles do not warrant such a protection. It is only now that this principle has gained a place jurisprudence under the Indian Law. Any cinematographic film or any such work is remembered by the audience and the viewers by its title and name for a very long period.
• The viewers are ought to associate the concept and the idea behind the work by associating it with the  film title and therefore it is becoming an obvious first step of all the film makers to first register the title of the film with association in order to protect and preserve the monetary and other commercial interest in the film.
• Such registration simply protects the work and rights of the owner and it also aids the owner with such copyrights, an exclusive and sole right over the title of such work. Moreover, registering the title of film helps to restrain the unfair and unauthorized use or adoption by another.
• In case of any infringement, registration of titles help the owner to knock the doors of the judiciary for relief that are justified and righteous. Such suits can also help the registered owner to get compensation for any kind of loss occurred or a royalty(if applied) can be collected by the infringer. “India recognizes trademark rights to the title of the movie even in case of single literary work under the Trademark protection in India. The title that acquires secondary meaning and the use of the same by another may cause overlapping of the source and likely to create confusion in the mind of the consumer.”[15]

That was all on  Protection of movie titles through Intellectual Property laws. What are your views on  Protection of movie titles through Intellectual Property laws? Please comment below and let us know.

References

[1]Äshley Montagu and Floyd Matson, The Human Connection (McGraw Hill, 1979).

[2]Media Law, Dr. S.R. Myneni

[3]McCarthy on Trademarks and Unfair Competition, Third Edition (1995) Vol. I

[4]http://www.mondaq.com/india/x/295382/Trademark/MOVIE+TITLE+PROTECTION+UNDER+LAW+OF+TRADEMARK

[5] ILC-2015-SC-CRL-Oct-9

[6] Section 13- Works in which copyright subsists.- (1) Subject to the provisions of this section and the other provisions of this Act, copyright shall subsist throughout India in the following classes of works.

[7] CS (OS). 1892/2006

[8] 2006(33)PTC381(Del)

[9] 2007(34)PTC591(Del)

[10] http://www.uspto.gov/trademarks/basics/BasicFacts.pdf

[11] http://www.uspto.gov/trademarks/resources/exam/ examguide4-06.jsp

[12] Administrative Panel Decision Case No. D2007-0128

[13] CV 12-9547 PSG (CWx) decided on 12 December, 2012

[14] http://www.mondaq.com/india/x/463448/Copyright/Movie+Titles+Entitled+To+IP+Protection

[15]http://www.mondaq.com/india/x/295382/Trademark/MOVIE+TITLE+PROTECTION+UNDER+LAW+OF+TRADEMARK

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In this article, Charmi Chhadva who is currently pursuing M.A. IN BUSINESS LAWS, from NUJS, Kolkata, discusses Salient features of the Real Estate (Regulation and development) Bill, 2016

Real estate is one of the evolving sectors in India. It is one important instrument of investment. The prices of real estate has been on a rise since past ten years and it has been necessary for the Parliament to look into this matter to stop the current practice of selling on the basis of ambiguous super built-up area for a real estate project. Such practices of selling real estate projects are illegal in nature. As per the current scenario, if a project is delayed, then the developer does not suffer in any way. And after the inclusion of the newly amended bill, the law ensures that any delay in project completion will make the developer liable to pay the same interest as the EMI being paid by the consumer to the bank back to the consumer. Any default by the developer shall imply maximum jail term for three years with or without a fine.

Real Estate (Regulation and Development) Bill, 2016

The Real Estate (Regulation and Development) Bill, 2016 is an act of the Parliament of India to protect home-buyers as well as commercial real estate investors. The law vests authority on the real estate regulator to govern such transactions.  The bill was passed by the Rajya Sabha on 10 March 2016 and by the Lok Sabha on 15 March 2016 and it has received the presidential assent on 25 March 2016. The Act is seen as a significant move towards ensuring consumer protection and normalising business practices and transactions in the real estate sector. This Bill has been passed to protect the consumers and investors who invest huge amounts in the real estate sector and to bring about better protection and transparency with safety of such investors. The law bars developers from advertising as well as bars them to sell homes until they obtain all approvals from local authorities.

Also they will have to be registered with regulators that will be set up in every state alongside appellate tribunals for dispute resolution. The law holds the promoters accountable for not registering their projects with the Real Estate Regulatory Authority (Regulatory Authority) and even for providing insufficient information about their project. The real estate broker are also accountable under the law.

All the ongoing projects which are over 17,000 currently will have to register with the authority. The buyer can contact the developer in writing within one year of taking possession to demand after sales service if any deficiency in the project is noticed.

Urban Development Minister Venkaiah Naidu said in the Rajya Sabha that “The consumer should be king here too”.

Some of the important amendments in the Bill are as under,

Real Estate Regulatory Authority

The purchasers under the real estate projects from a developer would have a specialised forum called the “Real Estate Regulatory Authority” which will be active within one year from the date of coming into force of the Act. Until the Regulatory Authority is functional, the appropriate Government (i.e., the Central or State Government) shall designate any other regulatory authority or any officer preferably the Secretary of the department dealing with Housing, as the Regulatory Authority.

Registration

1. The promoter has to register their project (residential as well as commercial) with the Regulatory Authority before booking, selling or offering apartments for sale in such projects. In case a project is to be promoted in phases, then each phase shall be considered as a standalone project, and the promoter shall obtain registration for each phase.
2. Further, projects which have not received a completion certificate and are on-going, the promoter of such project shall make an application to the Regulatory Authority for registration of their project within a period of three months of the commencement of the Act.

The following types of projects shall not be required to be registered before the Regulatory Authority:

1. • Where the area of land proposed does not exceed 500 square meters or the number of apartments to be constructed in the project does not exceed eight apartments. However, the appropriate Government (Central and State Government), if it considers appropriate may also reduce the threshold limit if it thinks fit;
   • The projects for which the completion certificate has been received prior to the commencement of the Act;
   • Projects for the purpose of renovation or repair or re-development which does not involve marketing, advertising, selling and new allotment of any apartment plot or building.

The application for registration must disclose the following information

1. 1. Details of the promoter which should include the registered address, type of enterprise;
   2. A brief detail of the projects by the promoter, in the past five years, whether already completed or under development mentioning the current status of the projects and any delay in its completion with details of cases pending and type of land and payments pending;
   3. An authenticated copy of the approval and commencement certificate received from the competent authority and when in phases, an authenticated copy of the approval and commencement certificate of each of such phases;
   4. The sanctioned plan, layout plan and specifications of the project, plan of development works to be executed in the proposed project and the proposed facilities to be provided thereof and the locational details of the project;
   5. Proforma of the allotment letter, agreement for sale and conveyance deed proposed to be signed with the allottees;
   6. Number, type and carpet area of the apartments and the number and areas of garages for sale in the project;
   7. The names and addresses of the promoter’s real estate agents, if any, and contractors, architects, structural engineers affiliated with the project; and,

A declaration by the promoter supported by an affidavit stating that:

1. 1. • He has a legal title to the land, free from all encumbrances, and in case there is an encumbrance, then details of such encumbrances on the land including any right, title, interest or name of any party in or over such land along with the details;
      • the time period within which he undertakes to complete the project or the phase; and
      • 70% of the amounts realised for the real estate project from the allottees, from time to time, shall be deposited in a separate account to be maintained in a scheduled bank to cover the cost of construction and the land cost and shall be used only for that purpose.

Carpet Area

The developers can sell units only on carpet area. This excludes the area covered by the external walls, areas under services shafts, exclusive balcony or verandah area and exclusive open terrace area, but includes the area covered by the internal partition walls of the apartment.

70% of realisation from allottees in a separate bank account

1. Most important feature of the Bill is that according to the Act, the promoter shall deposit 70% of the amount realised from the allottees, from time to time, in a separate account to be maintained in a scheduled bank. This is intended to cover the cost of construction and the land cost and thus the amount deposited shall be only used for the concerned project and for no other purpose.
2. The promoter can be entitled to withdraw the amounts from the separate account, to cover the cost of the project, in proportion to the percentage of completion of the project.
3. The promoter must also get his accounts audited within six months after the end of every financial year. Such an audit is a must to verify the accounts of the promoter that the amounts have been used correctly and without any default by the promoter.

Post registration procedure

1. After the promoter has applied for registration, the Regulatory Authority shall within a period of 30 (thirty) days, either grant or reject the registration.
2. Upon granting a registration, the promoter will be provided with a registration number which shall include a login Id and password for accessing the website of the Regulatory Authority and to create his web page and to fill in the details of the project.
3. If the Regulatory Authority fails to reject the application within period of 30 (thirty) days from the date of the application, then the project shall be deemed to have been registered.
4. The registration, if granted, will be valid until the period of completion of the project as committed by the promoter to the Regulatory Authority. This period shall be extended by the Regulatory Authority for a period not exceeding one year, only due to specific reasons as mentioned in the Act and along with the payment of such fee as may be specified by the Regulatory Authority.

Revocation or lapse of registration

1. The Regulatory Authority may revoke the registration granted on receipt of a complaint or suo moto or if there has been a recommendation of the competent authority in case of any default by the promoter or when the promoter violates any terms of the approvals in the project or when the promoter is involved in any kind of unfair trade practice.

In the event the registration is revoked by the Regulatory Authority or it lapses:

1. • the promoter would be stopped from accessing the website for the project and will be specified in the list of defaulters on the website;
   • the remaining development works shall be carried out by another competent authority or in any other manner as may be determined by the Regulatory Authority;
   • the Regulatory Authority shall direct the scheduled bank where the project activities are carried out, to freeze the account and take such further necessary actions.

Advertisement/prospectus

1. The advertisement or prospectus by the promoter must mention the website address of the Regulatory Authority, where anyone can find all details of the registered project along with the registration number and other such important details which are important for the people to know before investing in such a project;
2. Where any person has relied on such advertisement or prospectus and makes an advance or a deposit, and then if such a person sustains any loss or damage if such information on the advertisement or prospectus is incorrect, false statement, he shall be compensated by the promoter in the manner as provided under the Act. The person can also withdraw the entire amount from the project as per his wishes.

Limit on receipt of advance payment

The promoter cannot accept more than 10% percent as the advance payment or an application fee, from a person without first entering into a written agreement of sale and register the said agreement of sale, under any law for the time being in force.

Addition and alteration in the plan

1. The promoter cannot make any addition or alteration in the approved or sanctioned plans, its designs, specifications and amenities of the apartment, plot or building without the previous consent of the allottee.
2. The promoter also cannot make any other addition or alteration in the approved or sanctioned plans, its designs and specifications of the apartment, plot or building and common areas within the project without the previous written consent of at least two-thirds of the allottees, other than the promoter, who have agreed to take apartments in such a apartment, plot or building.

Structural defect

In case any structural defect which is brought to the notice of the promoter within a period of five years by the allottee from the date of handing over the possession of the unit, the promoter shall rectify such defect without any further charge, within thirty days. If the promoter fails to rectify such defect within such time, the aggrieved allottee shall be entitled to receive appropriate compensation in the manner as provided in the Act.

Restriction on transfer and assignment

The promoter cannot transfer or assign his rights and liabilities in respect of a project to a third party without obtaining prior written consent from two-thirds of the allottees, except the promoter, and without the prior written approval of the Regulatory Authority.

Delay in handing over possession

In case of any delay in handing over the possession of the unit by the promoter to the allottee, the promoter shall be liable to return the amount received by him from the allottee with interest and compensation at the rate as provided under the Act. This relief will be available without prejudice to any other remedy available to the allottee and when the allottee does not intend to remove himself from the project, he shall be paid interest by the promoter for every month of delay, till the handing over of the possession, at a prescribed rate.

Adjudicating Officer

The Regulatory Authority shall appoint (in consultation with the appropriate Government) one or more judicial officers for adjudging the compensation to be paid by the promoter in default, who is or has been a District Judge, to be an adjudicating officer for holding an inquiry in this regard.

The Real Estate Appellate Tribunal

1. The Bill proposes to establish a Real Estate Appellate Tribunal (Appellate Tribunal) within one year from the date of commencement of the Act.
2. Any person aggrieved by the decision made by the Regulatory Authority or by an adjudicating officer, may make an appeal before the Appellate Tribunal within a period of 60 (sixty) days from the date of receipt of a copy of the order or any such direction.
3. The Appellate Tribunal shall dispose the appeal within a period of 60 (sixty) days from the date of receipt of appeal.
4. The Appellate Tribunal shall have same powers as a civil court and shall be deemed to be a civil court. An appeal against the order of the Appellate Tribunal may be filed before the jurisdictional High Court within a period of 60 (sixty) days from the date of communication of the decision or order of the Appellate Tribunal.

Other relevant provisions

1. The rate of interest payable by the allottee and the promoter in the event of their respective defaults shall be the same.
2. After the promoter executes an agreement for sale for any apartment, plot or building, no mortgage or charge can be created by the promoter on such apartment, plot or building.
3. The promoter may cancel the allotment only in terms of the agreement for sale. However, the allottee may approach the Regulatory Authority for relief, if he is aggrieved by such cancellation and such cancellation is not in accordance with the terms of the agreement for sale.
4. The promoter shall also obtain insurance as notified by the appropriate Government, including but not limited to the title of the land and building and construction of the project. The promoter shall also be liable to pay the premium and charges in respect of the insurance.
5. The promoter shall execute a registered conveyance deed in favour of the allottee or the association of allottees in respect of the undivided proportionate title in the common areas, and hand over of the possession within the time limit as provided in the law. In the absence of any such law, the conveyance deed shall be carried out by the promoter within a period of three months from date of issue of the occupancy certificate.
6. The promoter shall compensate the allottees in case of any loss caused to him due to defective title of the land in the manner as provided under the Act and such a claim shall not be barred by any limitation provided in any other law for the time being in force.
7. The physical possession of the apartment, plot or building shall be made within a period of two months of the occupancy certificate by the allottee.

Offences and Penalties

1. Stringent penal provisions have been prescribed under the Act against the promoter in case of any non-compliance with the rules and/or provisions of the Act or orders or directions of the Regulatory Authority or the Appellate Tribunal which are the following:

• If the promoter does not register its project with the Regulatory Authority within such period of time as provided in the Act then the promoter shall be liable to a penalty which may be up to 10% of the estimated cost of the project as determined by the Regulatory Authority;
• And if the promoter does not comply with the aforesaid order of the Regulatory Authority then the promoter shall be liable to a imprisonment which may be up to three years and a further penalty of up to 10% of the estimated cost, or both; and
• In case the promoter provides any false information while making an application to the Regulatory Authority or contravenes any other provision of the Act then the promoter shall be liable with a penalty which may be up to 5% of the estimated cost of the project.

1. These penal provisions have also been prescribed for any contravention or violation committed by the real estate agent or the allottee.

2. If any allottee fails to comply with, or contravenes any of the orders, or directions of the Regularity Authority, there may be a penalty for the period during which such default continues, which may cumulatively extend up to 5% of the cost of the plot, apartment or building.

Further, if any allottee fails to comply with, or contravenes any of the orders or directions of the Appellate Tribunal, he may be liable for an imprisonment up to one year or with fine for every day during which such default continues, which may cumulatively extend up to 10% of the cost of the plot, apartment or building, as the case may be, or with both.

The Bill prevails

The provisions of this Act/Bill shall prevail in case there is any inconsistency between the provisions contained in this Act/Bill and in any other law (including a state law) for the time being in force

Conclusion

This is the best move by the Parliament to ensure transparency and accountability for the home-buyers and the investors in the real estate sector and it shall serve justice to all such home-buyers and investors and now the Government needs to establish the Regulatory Authority (or any other authority, in the interim) within the timeline prescribed under the Act to start implementing the provisions of the Act and make the Act functional.

This was all about Real Estate (Regulation and Development) Bill, 2016. What are your views on the Real Estate (Regulation and Development) Bill, 2016? Comment below and let us know.

The post Salient features of the Real Estate (Regulation and development) Bill, 2016 appeared first on iPleaders.

In this article, Shital Dharak Mandhana who is currently pursuing M.A. IN BUSINESS LAWS, from NUJS, Kolkata, discusses laws related to Migrant Labourers in India.

Laws related to Migrant Labourers in India

A large number of studies have found that migration earnings are used mainly for ‘consumption; i.e. food, clothing, house repairs, social events and religious pilgrimages. But this underplays their importance in improving family nutrition and reducing the need to borrow for essentials. Furthermore, new evidence shows that migration earnings are being invested in agriculture, small enterprise, education, health and housing all of which contribute to improving household well-being. On the negative side, male migration from nuclear families can lead to loneliness and increased work burdens for women.

Poor migrants are often employed in risky jobs- industrial accidents, exposure to hazardous chemicals, long working hours and unhygienic conditions are the norm. Especially hazards are dying, other chemical industries, stone crushing, brick making, steel utensil production and loading. Migrants are susceptible to infectious diseases because of the very poor, crowded and unhygienic living conditions (migrants are identified as high-risk group by the National Aids Control Organisation). They often face exclusionary processes that prevent them from acquiring new skills and moving up the job ladder.

Hence, there is a need for laws relating to migrant laborers. Let us take a look a look at, “Laws related to migrant labourers in India

The law related to migrant labourers in India is “Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979” which was passed by both the houses of Parliament and President of India gave his assent on 11/06/1979.

This Act makes provision for availing with the onsite services of interstate workers by the contractors/establishments to overcome only the temporary shortage of required skilled workers in a state. The purpose of this act is not to encourage interstate migration of workers against the interests of local workers as the principal employers would have to incur more cost in deploying interstate workers. (Wikipedia)

Meaning of inter-state migrant labourers under the Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979

According to section 2(1) (e) of Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979, “inter-State migrant workman” means any person who is recruited by or through a contractor in one State under an agreement or other arrangement for employment in an establishment in another State, whether with or without the knowledge of the principal employer in relation to such establishment. (Act)

Historical Overview: (Laws related to Migrant labourers)

The story of inclusion of Inter- State Migrant Legislation in the statutory book is a tale of dispensing social justice to the migrant workmen. There are two crucial factors responsible for influencing the problem of migrant labours.

1. Firstly, at the international level, when the demand outstripped the ability of Arab State to supply labour because of massive investment program by the oil producing Arab countries and resulting increase in demand for workers from Asia, namely, Pakistan, India, Sri Lanka, Bangladesh, Thailand, Philippine, Korea and Indonesia.
2. Secondly, South Asian workers accepted job and wages that Arab workers refused to take. However, these factors of migrant labour are not directly or intimately concerned with the problem under investigation, because such problems have altogether a different perception at the international arena for which sufficient studies have been conducted by International Labour Organization.
3. Thirdly, the inter-state migrant workers accept jobs and wages in other states other than their home states because of extreme poverty and income inequality.

The National commission opined that the necessity of abolition of contract labour has long been felt because of the benefits of the labour legislation not reaching to such class of workers owing to the enlargement of the definition of workers in the Factories Act, 1948, The Mines Act, 1952, The Plantation Labour Act, 1951, The Employees’ State Insurance Act, 1948. Obviously, since the submission of the Commission report, the policy- makers have been taking various steps to give piece- meal relief to contract labour. The judiciary also discouraged the practice of employment of contract labour since such workers were not getting wages according to law and lack of conducive working conditions.

Applicability of this Act

This act applies to,

• every establishment in which five or more Inter-State migrant workmen (whether or not in addition to other workmen) are employed or who were employed on any day of the preceding twelve months

• every contractor who employs or who employed five or more Inter-State migrant workmen (whether or not in addition to other workmen) on any day of the preceding twelve months. [section 1(4)]

Duties of Contractors employing inter-state migrant workers

It shall be the duty of every contractor employing inter-state migrant workers:

To furnish such particulars in the prescribed form to the prescribed authority in State from which the inter-state migrant worker is recruited, within 15 days from the date of employment, and where any change occurs in any particulars so furnished, such change shall be notified to the specified authorities of both the State.

To issue to every such worker, a passbook affixed with a passport size photograph of the worker and indicating in Hindi and English and also in the vernacular language of the worker:

• The name and place of the establishment wherein the workman is employed;
• The period of employment; the proposed rates and modes of payment of wages;
• The proposed rates and modes of payment of wages;
• The displacement allowance payable;
• The return fare payable to the workman on the expiry of the period of his employment and in such contingencies as may be prescribed and in such other contingencies as may be specified in the contract of employment;
• Deductions made; and
• Such other particulars as may be prescribed;
• To furnish to the State from which the inter-state migrant worker is recruited and also in which he ceases to be employed, a return in prescribed form, a declaration that all the wages and other dues payable to the worker and the fare for the return journey back to his State have been paid.

The Contractor shall maintain the pass-book up-to-date and cause it to be retained with the inter-state migrant worker concerned.

Wages and other conditions of service of inter-state migrant workers: (section 13, 14, 15, 16)

The wage rates, holiday, hours of work and other conditions of service shall be:

• In case the inter-state migrant worker works in an establishment, with same or similar kind of work being performed, be same as those applicable to such other workmen.
• In any other case, as prescribed by appropriate Government.

Provisions under the stated sections

• The wages payable to the inter-state migrant worker shall be paid in cash.
• The contractor shall, at the time of recruitment of inter-state migrant worker, pay displacement allowance equal to 50% of monthly wages or Rs. 75, whichever is higher and this amount shall not be refundable and shall be in addition to the wages and other amounts payable to the inter-state migrant worker.
• The inter-state migrant worker shall be paid an amount not less than the fare from his place of residence in his State to the place of work in other State by the contractor as Journey allowance for both outward and return journeys and shall also be entitled to the payment of wages during the period of such journeys as if he were on duty.

It shall be the duty of every contractor employing inter-state migrant worker,

• To ensure regular payment of wages to such worker
• To ensure equal pay for equal work irrespective of sex;
• To ensure suitable conditions of work to such workers having regard to the fact that they are required to work in a State different from their own State;
• To provide and maintain suitable residential accommodation to such workers during the period of their employment;
• To provide the prescribed medical facilities to the workers, free of charge;
• To provide such protective clothing to the workers as may be prescribed; and
• In the case of fatal accident or serious bodily injury to any such worker to report to the specified authorities of both the States and also the next-of-kin of the worker.
• Despite the contribution made by migrants to the National Economy, most remain on the margins of society, contributing cheap labour but unable to influence their pay or working and living conditions, and without political voice, especially where they migrate to other states.
• Migrants are preferred over local labour by employers because they are cheaper and work harder. As migrants become one of the most important sources of labour across the country, services and support for migrant workers need to be seen as an essential investment for India’s development trajectory.

What if a migrant worker has taken a loan from the contractor or the principal employer? (Section 19)

The loan taken by the inter-state migrant worker shall remain outstanding only till the time he remains in employment of the contractor or the principal employer. On the completion of such term, it shall be deemed to have been extinguished and not suit or other proceedings shall lie in any Court or before, any authority for the recovery of such debt or any part thereof.

Condition of Migrant laborers in Kerala: (Case Study: Kerala)

Inter-state migrant workers migrate to Kerala from West Bengal, Bihar, Assam, Orissa and north-eastern states of India. The major reasons to migrate were less daily wages, poverty, indebtedness, and joblessness at origin state. These migrant workers have their basic occupation as agriculture but they are employed in the construction sector in destination place, making them unskilled and unprofessional on site. They receive higher compared to their native state but quite less when compared to the daily workers in Kerala. This helps the employers of Kerala in making huge profit. The migrant labourers also send money to their natives leaving very less in their own hands making them difficult to survive.

Unorganized Workers Social Security Act, 2008

According to section 2(n) of the “Unorganised Workers Social Security Act, 2008, “Wage worker” means a person employed for remuneration in the unorganised sector, directly by an employer or through any contractor, irrespective of place of work, whether exclusively for one employer or for one or more employers, whether in cash or in kind, whether as a home based worker, or as a temporary or casual worker, or as a migrant worker, or workers employed by households including domestic workers, with a monthly wage of an amount as may be notified by the Central Government or State Government, as the case may be.

Now let us see the meaning of the term “Unorganized Workers”.

According to section 2(m) of Unorganized Workers Social Security Act, 2008”, “unorganized worker” means a home-based worker, self-employed worker or a wage worker in the unorganized sector and includes a worker in the organized sector who is not covered by any of the Acts mentioned in Schedule II to this Act.

Since definition of unorganized workers includes wage workers and wage workers include migrant workers, hence this act also applies to the migrant workers.

Section 3 of this enactment talks about the social security benefits for the unorganized workers. The scheme framed is as under:

1. The Central Government shall formulate and notify, from time to time, suitable welfare schemes for unorganized workers on matters relating to-
2. Life and disability cover
3. Health and maternity benefits
4. Old age protection and
5. Any other benefit as may be determined by the Central Government
6. The schemes included in the Schedule 1 to this Act shall be deemed to be the welfare schemes under sub-section (1).
7. The Central Government may, by notification, amend the Schedules annexed to this Act.

8. The State Government may formulate and notify, from time to time, suitable welfare schemes for unorganized workers, including schemes relating to-

   1. Provident fund
   2. Employment injury benefit
   3. Housing
   4. Educational schemes for children
   5. Skill upgradation of workers
   6. Funeral assistance
   7. Old age homes.

The schemes which are included in Schedule 1 of the act for the purpose of the benefit of unorganized workers are,

Indira Gandhi National Old Age Pension Scheme (IGNOAPS): (scheme)

Eligibility: All individuals above the age of 60 who live below the poverty line are eligible to apply for IGNOAPS

Pension amount: The beneficiaries aged 60-79 years receive a monthly pension of Rs. 300 (Rs. 200 by central government and Rs. 100 by state government). Those 80 years and above receive a monthly pension amount of Rs.500.

Computerisation of database: A system should be devised so as to credit the amount of pension payable to each beneficiary directly into his account either in a Post Office or in a scheduled commercial bank. In compliance of the said directions and also in order to increase the transparency and accountability in the implementation, it had been decided to computerize the database of the beneficiaries under various schemes of NSAP (National Social Assistance Scheme).

Janani Suraksha Yojana (JSY): (scheme)

Applicability: JSY is an Indian Government scheme proposed by the Government of India. It was launched on 12^th April, 2005 by the then Prime Minister of India.

Feature of the Scheme: JSY aims to decrease the neonatal and maternal deaths happening in the country by promoting institutional delivery of babies. This is a safe motherhood intervention under the National Rural Health Mission (NRHM). It is a 100% centrally sponsored scheme it integrates cash assistance with delivery and post-delivery care. The success of the scheme would be determined by the increase in institutional delivery among the poor families.

Janashree Bima Yojana (JBY): (scheme)

Applicability: JBY was launched on 10^th August 2000. This scheme has replaced Social Security Group Insurance Scheme (SSGIS) and Rural Group Life Insurance Scheme (RGLIS).

Eligibility: Persons between aged 18 years and 59 years and who are the members of the identified 45 occupational groups are eligible to be covered under the Scheme.

Benefits of the Scheme: JBY provides life insurance protection to people who are below the poverty line or marginally above the poverty line. The monetary benefits to be received are:

Benefits:

 The premium for the scheme is Rs. 200/- per member, 50 % premium under the scheme is met out of Social Security Fund set up in the year 1988-89 which is maintained by LIC. The balance 50% premium is borne by the member and/ or Nodal Agency.

Aam Admi Bima Yojana (AABY): (scheme)

Applicability: AAM ADMI BIMA YOJANA, a Social Security Scheme for rural landless household was launched on 2nd October, 2007 at the hands of the then Hon’ble Finance Minister at Shimla.

Eligibility: The head of the family or one earning member in the family of such a household is covered under the scheme. The premium of Rs.200/- per person per annum is shared equally by the Central Government and the State Government. The member to be covered should be aged between 18 and 59 years.

Benefits under the Scheme:

A separate fund called “Aam Admi Bima Yojana Premium Fund” has been set up by Central Govt. to pay the Govt. contribution. Fund is maintained by LIC. A free add-on benefit in the form of scholarship to children is also available under the Scheme.

Rashtriya Swasthya Bima Yojana (RSBY): (Scheme)

Applicability: RSBY has been launched by Ministry of Labour and Employment, Government of India to provide health insurance coverage for Below Poverty Line (BPL) families.

Eligibility: Unorganized sector workers belonging to BPL category and their family members (a family unit of five) shall be the beneficiaries under the scheme.

Benefits under the Scheme: The State Governments are advised to incorporate the following minimum benefits in the package/scheme:

• The unorganised sector worker and his family (unit of five) will be covered.
• Total sum insured would be Rs. 30,000/- per family per annum on a family floater basis.
• Hospitalization expenses, taking care of most common illnesses with as few exclusions as possible
• All pre-existing diseases to be covered
• Transportation costs (actual with maximum limit of Rs. 100 per visit) within an overall limit of Rs. 1000.

National Scheme for Welfare of Fishermen and Training and Extension: (scheme)

Applicability: The National Scheme on Welfare of Fishermen has ensured that there are a lot of welfare activities being carried out for the service of the fishermen community. This particular scheme was started in 1991-92 by combining two different schemes of Janta Accident Policy and National Welfare Fund for Fishermen.

Eligibility: Assistance under the scheme is provided to all fishermen and fishing villages.

Objective of the Scheme:

1. To provide basic amenities like housing, drinking water, community hall etc. for fishers.
2. To facilitate better living standards for fishers and their families
3. To uplift social and economic securities for active fishers and their dependents and
4. To update knowledge and improving skills of fishers in regard to modern fishing technology.

Handloom Weavers’ Comprehensive Welfare Scheme:

Two schemes are covered under HWCWS.

1) Mahatma Gandhi Bunkar Bima Yojana (MGBBY) and

2) Health Insurance Scheme (HIS)

MGBBY: (Scheme)

Applicability: The Government of India introduced Bunkar Bima Yojana and this scheme shall be administered by LIC.

Eligibility: All weavers, whether male or female, between the age group of 18 and 59 years are eligible to be covered under the scheme, including minorities, women weavers and weavers belonging to NER. The basic objective of the “Mahatma Gandhi Bunkar Bima Yojana‟ is to provide enhanced insurance cover to the handloom weavers in the case of natural as well as accidental death and in cases of total or partial disability

Benefits:

 Premium:

The annual premium of Rs. 470/- per member will be shared as under:

 HIS: (Scheme)

Applicability: The Government of India introduced the Health Insurance Scheme for Handloom Weavers in 2005-06. The weaver should be earning at least 50% of his income from handloom weaving.

Eligibility: The scheme is to cover not only the weaver but his wife and two children, to cover all pre-existing diseases as well as new diseases. The weaver should be earning at least 50% of his income from handloom weaving. The scheme will cover the weaver’s family of four i.e. self, spouse and two children. The scheme is to cover people between age group of 1 day to 80 years.

Benefits:

Exclusions: Corrective cosmetic surgery or treatment, HIV, AIDS, Sterility, Venereal diseases, Intentional self-injury, use of intoxicating drug or alcohol, war, riot, strike, terrorism acts & nuclear risks.

Conclusion (Laws relating to Migrant Labourers in India)

The socio-legal study of Inter -State Migrant Workmen Legislation reveals that though the industrialization has contributed towards the progressive movement of the society, yet it has its inbuilt problems. This law has been enacted as a war against poverty ridden migrant workmen when they leave their home-state and go to the migrant state in search of some job which may bring lucrative wages. Besides wages, the law also provides certain safeguards to the migrant workmen, namely, security of job, non-exploitation at the hand of the employers/contractors, conducive working conditions, etc, at the hands of the employers/contractors, conducive working conditions.

This was all on laws related to migrant labourers in India. What are your views on laws related to migrant labourers in India? Comment below and let us know.

The post Laws related to Migrant Labourers in India appeared first on iPleaders.

In this article, Kirti Kothari from Institute of Law, Nirma University, discusses few important provisions under the Goa Civil Code.

Personal laws in India

India has been belaboring about its recent and extraordinary developments in the field of Science, Technology, Medicine, Astronomy and the list continues. At the same time, we have failed to acknowledge the fact that a major section of our Indian society is deprived of its basic rights and are being discriminated in various spheres of life.

In India, there exists discrimination within the laws itself. One such sphere where women are highly discriminated and have suffered since decades is the existence of PERSONAL LAWS for different religions in our country. As India is a land having many religions each having its own beliefs and faith they are guided by their own set of rules in matters related to family affairs that are marriage, divorce, adoption, succession etc.

Discrimination within the personal laws

One major flaw which exists in almost all personal laws is that they tend to be biased towards men and give women a subordinate position in the society. There are certain provisions in these personal laws which tend to discriminate women in matters related to marriage, succession, inheritance. An example is, a Hindu woman has no right to adopt a child on her own without the permission of her spouse and such similar disturbing provisions are there in personal laws of every religion.

The idea of Uniform Civil Code

• To solve all such problems there has been a plethora of debate on the implementation of the UNIFORM CIVIL CODE in the country which means that all the personal laws in the country will be replaced by a single set of laws common for all the religions in the matters of marriage, divorce, adoption, and inheritance.
• The principle of the uniform civil code is laid down in the article 44 of the constitution under the directive principles of the state policy. The framers of the Indian constitution have been in the support of the implementation of the uniform civil code as well as the honorable Supreme court of India has also stated the dire need for the implementation of the uniform civil code in several landmark judgments.
• However religious personnel have been continuously rejecting the implementation of the uniform civil code taking the defense of the Article 25 of the constitution of India.
• According to the views negating the proposition of implementation of the UCC, the matters of marriage, divorce, adoption and succession reflects the religious beliefs and sentiments.
• However the above-stated view have failed to accomplish the fact that it has clearly being stated sub-clause 2 of Article 25 that all the SECULAR activities are outside the purview of the protection under the article and it has been clearly stated by the honorable supreme court that the matters related to marriage, succession etc are clearly secular activities related to religion.

On one hand where women in the whole country is suffering due to the flaws which occur in the personal laws, the courts are flooded with cases related to cruelty and discrimination towards women.

GOA, the smallest Indian state has a common code for all the citizens residing in the state irrespective of their religion commonly known as the GOA CIVIL CODE.

• When Goa became a part of India in the year 1961 by the Goa Daman and Diu administration act 1962 the parliament authorized the Portugal civil code of 1867 in Goa which shall be amended as per the necessary requirements and shall be repealed by competent legislature. There have been several amendments in the Goa civil code after its implementation.
• In 1981 the government of India appointed a personal law committee to determine if personal laws could be implemented in the state but it failed to do so. The most recent development in the Goa civil code has been the passing of the Goa succession act in the year 2012 by the parliament.
• The Goa civil code provides a model for rest of the country of how equal rights can be provided to both men and women without hurting the sentiments of any religion or any particular section of the society.
• It also put forward an example before various communities to stop discriminating women in the name of religion. Some very unique features of Goa civil code are as follows.

• A unique feature of the Goa civil code is that it is in consonance with the article 44 of the constitution that is the directive principles for the state policy which is in fact a major achievement for the state.
• There are certain provisions in which the Goa civil code is far better than the existing personal law but in this article we will only deal with the provisions related to marriage and point out that how the Goa civil code is better and how it ensures gender equality which is one of the major concerns for the country.

Provisions of marriage under Goa civil code

• Under the Goa civil code marriage is  a contract between two persons of different sex that is man and woman with the purpose of living together and constitute a legitimate family together
• Any form of polygamy or bigamy is strictly prohibited under the Goa civil code except for certain special cases. Monogamy is the prescribed form of marriage.
• Men cannot marry before they attain the age of 21 and the same is 18 in the case of women.
• Consent is required from both men and women before and at the time of marriage.
• All the marriages should be lawfully registered under the court of law and any marriage if not registered shall be considered as null and void before the court of law.
• Under the Goa civil code there are four methods of marriage. Three of them are the conventional methods of marriage and the fourth one is the communion of assets
• Under the law of communion of assets as soon as the person gets married his spouse automatically gets half of the assets thus each having undivided rights over others assets.
• There should be consent of both husband and wife in the case they file a divorce case in the court of law and proper grounds must be presented before the court for the divorce
• There are certain restrictions due to which a certain category of persons are not allowed to marry under certain circumstances.

Reasons for supporting marriage under the Goa civil code over personal laws

• As marriage is a contract between men and women which is recorded under the court of law there are hardly any chances of men denying the marriage and abandoning the women which are seen on several instances in cases of marriage under the personal laws. It provides security to women.
• One of the most striking features of the Goa civil code s that the property is divided equally among both men and women and women is the legal heir of the property which provides a sense of financial security to women.
• As Goa permits only monogamy, problems such as triple talaq and polygamy which is a major problem of other personal laws are solved automatically.
• As even after the divorce the property is divided equally among both men and women the women are often saved from the harsh and difficult life as it has been seen in divorce under several personal laws

In a whole to sum up it has been seen and observed that the provisions under the Goa civil code are far more better than the other personal laws and women has a greater sense of security and are often at equal par with the men. However like every other system of laws the Goa civil code is also not without any loopholes. There are lacunae in the code and there is a scope of improvement as well.

Lacunae in the Goa civil code

• One of the major problems in implementing the Goa civil code is that as it is derived from the Portuguese Law it is difficult to understand and convert the same into the English language. Very few efforts have been taken to solve this issue which creates an inconvenience for the lawyers and the whole judiciary to interpret the law.
• It is often claimed that the Goa civil code is in itself uniform in nature, however, this does not hold to be true. There are certain provisions in the code itself which promotes bigamy for Hindus in certain special cases as well as there are certain provisions which tend to discriminate women.
• Even after the implementation after the uniform civil code there have been certain cases in the court of law in which the women are discriminated in the name of religion and personal laws.

Conclusion

Uniform civil code is the need of the hour. It has been suggested by the judiciary as well as the legislature on several instances for the implementation of the uniform civil code. As far as the Goa civil code is considered we can definitely take it as a model to implement it in the rest of the country. There is no system in which there are no loopholes but that does not mean that we reject the system as a whole. There is always a scope for betterment and improvement and the same applies to the Goa civil code as well.

References:

• http://www.goaholidayhomes.com/information/uniform-civil-code-in-goa.html
• http://www.telegraphindia.com/1151104/jsp/opinion/story_51223.jsp#.V4KEprh97IU
• http://www.livelaw.in/uniform-civil-code-unique-goa-experience/
• https://thelogicalindian.com/story-feed/exclusive/everything-you-need-to-know-about-uniform-civil-code/
• Aditi Pratap Sampat,Uniqueness Of The Goan Family Laws, Ipleader
• Gauri Kulkarni, Uniform Civil Code, Legalserviceindia.comhttp://mmascgoa.tripod.com/id12.html

Suggested Readings.

Civil Code Of Goa Vs Personal Laws In India

The Need For Uniform Civil Code In India

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