In this article, Aditi Lakhanpal put forth the procedure for filing an RTI.

Right to Information

Exordium 

“Democracy must be built through open societies that share information. When there is information, there is enlightenment. When there is a debate, there are solutions. When there is no sharing of power, no rule of law, no accountability, there is abuse, corruption, subjugation and indignation.” Atifete Jahjaga [i]

In spite of the fact that India has won its battle of sovereignty in 1947 making democracy its big stick, unfortunately, the fact was to some degree different. The superiority was conceded to the societal Democrat, not to the common man at that juncture. There were various occurrences to inquiry the right to information since it was in practice with the framework of the society we survived in. Under the façade of red-tapism, unprofessional conduct, highhandedness, nepotism in addition to above all deep-seated corruption in the most awful and unparalleled practice increased. Right to Information was like a rain on desert as an educative measures an Act to provide for setting out the practical regime of right to information for citizens to secure access to information under the control of public authorities in order to promote transparency and accountability in the working of every public authority, the constitution of a Central Information Commission and State Information Commission and for matters connected therewith or incidental thereto while the Constitution of India has established democratic Republic and whereas democracy necessitates a conversant electorate and transparency of facts which are essential to its operational as well as  to control exploitation and to hold Administrations and their agencies held responsibly.  Disclosure of facts in certain practice is expected to clash with further communal interests although conserving the utmost of self-governing model, at present, hence, it is pragmatic to make available for endowing definite facts and figures to voters who yearning to have it.

Prominence of RTI

The right to Information Act 2005 has welcomed as a revolution in India’s progression as a democracy. RTI has proved to be fruitful to citizens in the following manner,

• A payment of Rs 10 is required to acquire information on the Administration’s actions and verdicts. If an application is being sent thru registered post or courier, the additional cost of Rs .10 to 25 Rupees are required. The fee for receiving the information of around five pages would be Rs. 10. Even if you supplement the postage price of getting the information the entire cost will be about 70 rupees.
• The law makes it necessary that the information has to be provided within 30 days.
• If a few thousand Citizens spend approximately Rs. 70 per month and about 60 minutes in their own house they can file a new RTI application and acquire information about matters, which concern them.
• The authority on getting answerability, plummeting exploitation, impacting policy decisions in addition to safeguarding improved governance are now with us. Individually we can mark an immense role in accomplishing the Realm we want. A minor determination of our own place can bring Swaraj.

Imperative Facts

In the case of, Pradeep S. Ahluwalia v. Delhi Tourism & Transportation Development Corporation[ii], learned council held the following:-

• If the Public Information Officers, First Appellate Authorities and the Commissions allow reiterated RTI applications, at that point, there will be no termination of the ‘information litigation’ and the public powers that will be at the in receipt of an end for no liability of theirs.
• Public dogma concerns that: ‘it is of the importance of the Public that there should be a culmination to litigation’ and ‘no man should be overtaxed, over for the same reason’
• It is embedded from the order and the provisions of the Right to Information Act, 2005 that every single citizen has a right to attain information from a concerned public power, but then, only once and not perpetually.
• Constant filing of RTI applications, by prolonged information-inquirers, has the influence of blockage the public offices by barricading the open flow of information to the eligibility and honest RTI applicants, above and beyond precluding the officers of the concerned public authority from carrying out the responsibilities attached to their office.

In the case of Sarbajit Roy versus DERC[iii]  was the landmark decision of the Central Information Commission. In this case, it was held that private bodies are not included within the domain of the Act directly.

Procedure of filing an RTI

The necessary requisites of an application filed under the RTI Act are[v],

• The aspirant must be the civilian of India.
• The request must cover the details of facts and figures required.
• The proof of payment of application fee should be hemmed in.
• The address of the aspirant should be accessible for directing a reply.

Private particulars excluding those essential for communicating an applicant are not required to be stated.

How to file an RTI plea

The Act proposes a simple process to acquire information. However, some public establishments have their own specific formats; there is no obligation to stick to the prescribed set-up.

• Classify the constituent part one wants to have information from since some matters fall under the purview of State governments and some to local authority such as the municipal administration/Panchayat, while others are controlled by the Central government.
• The application can be submitted either by hand or type, in English, Hindi or the official language of the area. One can also take the assistance of public information officer to put the application in writing.
• The application must be addressed to the State/Central Public Information Officer. Provide the name of the concerned office from where you wish to seek information, and the complete, exact address.
• Mention your request in the specified form and state the period/year your application falls into. In order get documents, the applicant is required to make a payment of Rs. 2 per page.
• Payment of Rs 10 is required to plea the request either by cash, bank draft, money order or a court fee stamp. The application must bear the stamp. Applicants below the poverty line (BPL) are excluded from making any sort of payment provided they attach a copy of the BPL certificate along with the application.
• Your full name and address, contact details, the email address should be mentioned and sign the application properly.
• Send your application either by post or hand it over in person to the concerned department.
• The law mandates that information should be provided within 30 days. If this does not happen, one can file an appeal. The first appeal should be addressed to ‘The Appellate Authority’ mentioning the name and the address of the department. The appellate authority is required to revert within 30 days from the date of receiving of the appeal. If the Appellate authority fails to do so, then further appeals lay with the Information Commission, the Chief Information Commissioner, State/Central Information Commission.

Procedure to file RTI online

At Online RTI, lawyers hired are specialists at handing out RTIs, so one need not fear about it. Basically just click on your problem, submit your application, and your case will be considered at the top of the government’s row.

Certain Guidelines

1. The only fresh application can be filed online.
2. The aspirant is required to mention the necessary details, by clicking on “Submit Request”.
3. Once the form is duly filled, then next comes the making prescribed payment either through debit/credit cards of Master/Visa or using RuPay card. Once payment is made, the application can be submitted.
4. On positive submission of an application, a unique registration number will be dispensed, to the applicant for future references.
5. For the first appeal to the first Appellate Authority, the applicant is required to click at “Submit First Appeal” and then fill up the page that will appear.
6. For first appeal no payment to be made.
7. The applicant should provide his/her mobile number in order to receive SMS alert.
8. Applicants can view the status of their first appeal by clicking on “View Status”. [vi]

This is the link for the same.  https://rtionline.gov.in/

Conclusion

When it comes to RTI, there are ombudsmen on numerous points to safeguard the Act is mailed in letter and spirit. The Act has hired a ‘perform or perish’ approach, also setting up an instrument to give out information.

Every single régime is required to appoint one member as a public information officer (PIO). When a department gets an RTI request, it is the calling of the PIO to make available the information to the candidate within 30 days. Failing to it will result in a monetary penalty that can be levied on the PIO. If PIO makes an aspirant wait a long period of time, then PIO is subjected to more fines that can be imposed on him/her. In the past, it has been observed that PIOs have been asked to pay up the fine in thousands of rupees.

In the absence of the right to information, there cannot be genuine symbolic régime and an approachable government. Setting free from administrative despotism as well as a primate cannot be accomplished if this right to information is established and it is carried out in cooperation of communication and essence. Deprived of an access to information to admin’s process the electorates can never really play a part in the government of the county.

Suggested Readings

How And When To File To RTI

Is The Right To Information Applicable To The Private Sector

Right to Information and Statistics State-wise.

[i] https://www.brainyquote.com/quotes/keywords/information.html

[ii] 1999 VAD Delhi 185, 1999 CriLJ 4145, 81 (1999) DLT 111, II (1999) DMC 461, 1999 (50) DRJ 818

[iii] 30 November 2006

[iv]http://www.thehindu.com/news/cities/chennai/do-you-know-how-to-file-an-rti-plea/article6160644.ece

[v] http://www.rtifoundationofindia.com/how-file-rti-application-2

[vi] https://rtionline.gov.in/guidelines.php?appeal

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In this article, Shatarupa Chaki who is currently pursuing M.A. IN BUSINESS LAWS, from NUJS, Kolkata, discusses  Combination (Merger Control) Regulations.

Abstract of the research undertaken

1. This paper describes Merger Control regulations of India only
2. “Combination” covers “acquisitions, mergers, amalgamations and de-mergers”. While this paper will primarily cover “mergers” but may overlap with other definitions of “combination”. Moreover, “Mergers and Acquisitions” or “M & A” is a commonly used terminology, loosely referring to “combinations”, especially involving mergers and “amalgamations” (as defined by the relevant laws) and the words “Merger” and “Merger and Acquisition” are often used loosely and interchangeably (usually for business and commercial purposes) to refer to “amalgamations” under relevant laws. Hence, the paper covers relevant regulations related to “Combinations” and not just “mergers” in the strictest sense.
3. Legal definitions, where required, have been maintained without any dilution or modifications as provided under relevant laws

What Are “Combinations”

Following the economic liberalization reforms, when India joined the free market economy, Mergers and Acquisitions, or M&As as it is commonly known, became a common phenomenon throughout India, making it one of the most sought after ways for companies to gain strategic advantage in both domestic and international markets, to expand and diversify their businesses, gain competitive advantage, reduce costs, and unlock value.

Looking at a legal and structural distinction between Mergers and Acquisitions:

A Merger is an arrangement, between two or more companies, that assimilates the assets of all the merging companies and vests their control under one company – which can be an existing entity (one of the companies being merged) or a completely new entity. In such cases, all the concerned companies lose their pre-merger identities (forming a completely new entity) or become a part of the identity of the company under which the control is being vested.

An Acquisition happens when one company buys the ownership of another company and its assets, both tangible and intangible. Such a purchase may include one company buying the controlling interest in the share capital of another company or in the voting rights of the other company.

So, in an acquisition situation, the acquiring company purchases the interests of the acquired company’s shareholders who then cease to have any interest or right in the acquired company, whereas in Mergers both companies pool their interests, so that the shareholders of both the companies still have their interests from their existing companies and also get interests in the new merged entity.

Advantages of “Mergers and Acquisitions”

Mergers and Acquisitions are an important way for companies to grow and become stronger and larger organizations. M&As add the following value:

1. Builds a company’s reputation
2. Reduces and optimizes operating expenses and costs
3. Allows scalability
4. Gives access to management and technical talent and manpower, niche skills and knowledge, proprietorial information etc.
5. Gives access to new product lines or expansion of current portfolio, adding of more customer categories etc.
6. Helps companies grow their market share by complementing, supplementing, or diversifying their current business lines / products / services etc.
7. Gives quick access to new markets or allows easy diversification by allowing entry into a new industry
8. Consolidates the market
9. Gives access to new technology, manufacturing capacity or suppliers
10. Builds goodwill through brand acquisition

Background to the Current Regulations

In the wake of liberalization and privatization in India in the early nineties, came the realization that India needed to build a transparent, well-regulated, investor friendly environment, to build an economy that encouraged and nurtured competition by allowing free market forces to shape businesses and companies, while preventing any abuse of power and with that realization, it became obvious that the existing Monopolistic and Restrictive Trade Practices Act, 1969 (“MRTP Act”) was not equipped to handle “competition” especially in the open market / open economy scenario. So, it became imperative to move the focus of competition laws from curbing monopolies to ensuring a climate of growth and investment.

“Competition”. Meaning and benefits

Competition is when sellers (this includes literally anyone, i.e. individuals, companies, businesses, enterprises etc.) work towards attracting buyers / customers (of the goods and services being offered by such sellers) with the expectation of achieving business objectives such as increasing profits, market share, sales volume, market value, customer base, market penetration, changing customer preferences etc.

Competition, when fueled by the free market, gives free rein to entrepreneurial forces, innovation, and productivity, and offers consumers a vast array of cost effective choices while optimizing resource allocation; all of which fuels economic growth and technical break-throughs, creating a positive growth spiral with technology and growth fueling each other.

To ensure that the free market remains free, and that the economy continues to grow, countries across the globe protect their markets and economies by enacting competition laws that protect free market forces while curbing any anti-competitive strategies and practices being employed by companies and enterprises for their own short-term gains.

In the same way, India, also enacted the Competition Act, 2002 as an omnibus code to deal with matters relating to the existence and regulation of competition and curbing monopolies. The Act is intended to supersede and replace the MRTP Act in a phased manner. The Act is procedure intensive and is written in a simple way to make it more flexible and easy to comply with. Though the Act operates in tandem with other laws, the provisions of the Act, takes precedence over other Acts in case of any inconsistencies.

It is through the Competition Act that the Merger Controls are enacted in India.

Key Points on Combination Regulations (Under the Competition Act, 2002):[1]

The Regulatory Framework and The Relevant Regulatory Authorities

The Competition Act 2002 is the principal legislation in India, that regulates combinations, i.e. acquisitions, mergers, amalgamations, and de-mergers. It is an omnibus legislation that works in tandem with other laws and Acts (e.g. The Companies Act 2013). The sections, 5 and 6 of the Act, that deal with the regulation of combinations and have come into force since 1 June 2011.

The procedure for notifying combinations is set out in the following Regulations of the Competition Commission of India

1. Regulations 2011, as amended on 7 January 2016 – this regulation details the procedures related to the transaction of business as related to combinations.
2. Regulations 2009 – details out general regulations

The Competition Commission of India (CCI) is the regulatory authority responsible for reviewing proposals for combinations and assessing whether such combinations are likely to adversely affect competition in Indian markets.

Combinations where the involved companies, exceed the assets/turnover thresholds as defined under the Act (details given below), is mandatorily required to obtain the CCI’s approval for such combinations.

The CCI can charge the Director General (DG) with a Phase II investigation of a combination as required. The DG performs all investigations under the aegis of the CCI.

The Primary Responsibility of CCI

The CCI is primarily responsible for regulating combinations to ensure that “competition” is not adversely affected (“appreciable adverse effect on competition or AAEC”) and uses the following criteria to determine the same:

These are described in section 20(4), of the Competition Act:

• What is the impact this combination will have on the market share in the relevant market?
• What is the extent of barriers to entry?
• What is the level of combination already present in the relevant market?
• What is the degree of countervailing power?
• To what extent are substitutes available?
• What is the extent to which the market is likely to be able to sustain effective competition?
• How much do imports impact the actual and potential level of competition in the market?
• Will this combination eliminate a strong competitor?
• What is the nature of and to what extent is vertical integration taking place with this combination?
• Is there a possibility of a failing business?
• What will be the impact of the nature and extent of innovation?
• Will this combination contribute to economic development despite the likelihood of an AAEC?
• Will the benefits of the combination outweigh any negative impact it may otherwise have?

The Process

1. Companies/enterprise who cross certain thresholds and do not have any exceptions that are applicable to them, as described in the Act are required mandatorily to notify the CCI of the intended combination
2. The CCI is expected to respond (passes an order or issues directions) within 180 days. The Competition Act allows for a deemed clearance if the CCI does not pass an order within 210 days from the date of notification

1. The CCI may conduct a two-phase investigation and at the end of either at the end of Phase I or Phase II, the CCI can reach any of the following decisions:
2. Unconditionally clear the combination
3. Approve the combination, subject to modifications or remedies
4. Block the transaction completely if it believes that the combination is likely to cause an AAEC and that it cannot be addressed adequately through modifications.
5. The Act further defines rights of third parties and prescribes remedies, penalties and appeals and regulation of specific industries
6. Joint ventures and their treatment remain nebulous

Notifiable And Triggering events

Notifiable Events:

1. The acquisition by one or more companies/enterprises /parties of the control, shares, voting rights or assets of one or more companies/enterprises/parties, where the acquiring companies/enterprises/parties meet the specified assets/turnover thresholds as defined in the Act.
2. If a person/party/group takes control over an enterprise with which it competes, where the parties or the acquiring person/party/group meet the specified assets/turnover thresholds.
3. Mergers or amalgamations, where the enterprise remaining, or the new enterprise that is created, or the group to which the enterprise will belong after the merger/amalgamation, meets the specified assets/turnover thresholds.

Thresholds

In event of the following threshold of assets / revenues being exceeded, combinations need to be notified and approval needs to be obtained from the CCI.

The thresholds are as follows (having any one would trigger the approval process)

1. Where the combined assets or turnover of both enterprises within India are either:
   1. Combined assets of the companies are INR 2000 crores
   2. Combined turnover in India of INR 6000 crores
2. Where the combined assets or turnover of both enterprises within India and Worldwide are either:
   1. Combined global assets of USD 1 billion (approx. INR 1200 crores, calculated at an exchange rate of INR 63 to the US Dollar), including combined assets in India of INR 1000 crores
   2. Combined global turnover of USD 3 billion (approx. INR 3600 crores, calculated at an exchange rate of INR 63 to the US Dollar), including a combined turnover in India of INR 3000 crores
3. Where the acquiring group has:
   1. Assets in India of INR 8000 crores
   2. A turnover in India of INR 24000 crores
4. Where the acquiring group has:
   1. Global assets of USD 4 billion (approx. INR 4800 crores, calculated at an exchange rate of INR 63 to the US Dollar), including assets in India of INR 1000 crores
   2. Global turnover of USD 12 billion (approx. INR 14400 crores, calculated at an exchange rate of INR 63 to the US Dollar), including a turnover in India of INR 3000 crores.

Exemptions to the Notification Requirements

1. Where the target enterprise has either Indian assets of less than INR 350 crores or an Indian turnover of less than INR 1000 crores. (This is applicable till March 2021 by the order of the Government of India)
2. Combinations that are not likely to cause an appreciable adverse effect on competition

So, when thresholds are met and no exemption is available then it is mandatory to notify the CCI of the proposed “combination”.

Timeline for Companies entering into a Combination

A combination must be notified to the CCI within 30 days of either,

1. Executing a binding agreement for acquisition
2. Passing of the board resolution approving the combination (in the case of a merger/amalgamation).

However, the following are allowed as an exception, to provide a post facto notification within 7 days from the acquisition of share subscriptions, financing facilities or an acquisition made under an investment agreement or loan agreement:

1. Public financial institutions
2. Foreign institutional investors
3. Banks or venture capital funds

Timelines for CII

The CII is expected to pass an order or issue directions within a period of 180 days from the date of notification.

The Competition Act allows for a deemed clearance if the CCI does not pass an order within 210 days from the date of notification.

Responsibility for notification

For acquisitions, the acquirer must file the notification. For mergers/amalgamations, the parties to the combination must jointly file the notification with the CCI.

References to “Amalgamation / Merger” Under Various Other Acts (Previous and Current with Comparisons)

The Companies Act, 1956 and 2013[2]

The 1956 Act

In the 1956 Act, the terms “amalgamation” and “merger” are used interchangeably, however neither of these two terms are afforded a precise definition under the Act.

Sections 390 to 395 of the 1956 Act, dealt with arrangements, amalgamations, mergers, and the procedures to be followed under them, compromise, scheme of amalgamation, approvals etc. However, once again it fails to define the terms “merger” or “acquisition”.

Company law in India underwent a complete overhaul and a new law was finally passed in 2013.

However, the provisions relating to mergers covered in Sections 230 to 240 have been notified and have been implemented only since December 15, 2016.

The 2013 Act

The following are the key changes introduced in the 2013 Act and comparisons between the 1956 and 2013 Acts regarding “mergers”. In the 2013 Act, also the word “mergers” continues to be used interchangeably with “amalgamations”.

Key changes to the Framework under the 2013 Act

• Definition of “Amalgamation” provided
• Introduction and formation of the National Law Company Tribunal (“Tribunal“) for adjudicating on various matters related to companies (including “amalgamations”). The Tribunal takes over the jurisdiction of High Courts for sanctioning mergers by virtue of having jurisdiction over the Registered offices of companies

Chapter XV of the 2013 Act deals with “Compromises, Arrangements and Amalgamations”, and details out the various provisions related to them. However, other than the provisions covered under Chapter XV, various other provisions also become applicable at different stages in the process of amalgamation.

Amalgamation is defined as below

• In an amalgamation, the property, assets, and liabilities, of one (or more) company are transferred to and absorbed by either an existing company or a new company. So, the transferring company integrates with the company to which it is being transferred and while the first company loses its separate identity it does so without actually closing.

The 2013 Act also introduces a new quasi-judicial body, the National Law Company Tribunal (“Tribunal“) which adjudicates on various matters related to companies and the Tribunal has also been granted the jurisdiction to sanction mergers, that has been with High Courts till now, by virtue of being granted jurisdiction over the Registered Offices of the companies seeking merger.

Changes in the Process under the 2013 Act

• Retention of the “Scheme” with changes in procedures
• Recognition of different types of mergers and separate procedures for the same
• Penalties

Describing the process under the 1956 Act, will help set the context for the changes under the 2013 Act. Some of the key steps described in the 1956 Act are described below.

Under the 1956 Act, companies which have reached a consensus to merge were expected to prepare a “scheme” of amalgamation/merger (“Scheme“). The Lenders (financial institutions and/or banks), if any, of the merging companies were required to provide in principle approval to the “Scheme”, followed by the approval of the respective Board of Directors of the merging entities. Post the approval by the Boards, listed Companies, involved in the merger, then required that all price-sensitive information be communicated to the stock exchange immediately, to seek approval from the capital market regulator, Securities, and Exchange Board of India (“SEBI“), which was done simultaneously with the public notification. The companies would then apply to the relevant High Court seeking an order to convene shareholders’ and creditors’ meeting. This would allow any Shareholder wishing to raise an objection to the Scheme do so during the court proceedings.

The 2013 Act retains the elements of preparing the Scheme and additionally:

• Recognizes cross border mergers
• Sets out separate procedure for merger of small companies and those of holding with wholly-owned subsidiaries
• Prescribes thresholds for objections
• Describes mandatory filings to ensure legal compliance.

What has changed in the process

1. Regulatory/Third party approvals: The 2013 Act requires that notice of the Merger be sent along with such other documents as the Scheme and valuation report, not only to shareholders and creditors, but also to various regulators like the Ministry of Corporate Affairs, the Reserve Bank of India (in cases, where non-resident investors are involved), SEBI and Stock Exchanges (for listed companies), Competition Commission of India (in cases where the prescribed fiscal thresholds are being crossed and the proposed merger could have an adverse effect on competition), Income Tax authorities and any other relevant industry regulators or authorities which are likely to be affected by the merger. This ensures compliance of the Scheme with any and all other regulatory and statutory requirements that need to be followed by the merging entities. The 2013 Act also prescribes a 30-day period for the regulators to make representations, failing which the right would cease to exist. The 1956 Act provided no such period, leading to considerable delays in the court proceedings since it was mandatory to receive approvals from all relevant authorities before proceeding.
2. Approval of the Scheme through postal ballot: The 1956 Act required the presence of the shareholders and creditors in the physical meetings, either in person or by proxy, to cast their vote for/against the Scheme. In the 2013 Act, the shareholders and creditors have also been given the option to cast their vote through postal ballot.
3. Valuation Report: Though the 1956 Act does not require companies to submit a valuation report, most listed companies did so from a perspective of good governance and transparency. The Courts required the valuation report to be submitted along with the application. The 2013 Act mandates that the valuation report needs to be made readily available to shareholders and creditors.
4. Objections: The 2013 Act allows objections to be raised only by shareholders holding 10% or more of equity and creditors whose debt represent 5% or more of the total debt as per the last audited financial statements. This helps companies to avoid frivolous objections/litigation.
5. Accounting Standards: As a matter of practice, frequently the Scheme provided for accounting treatment that would deviate from the prescribed accounting standards necessitating a note to this effect in the balance sheet of the company. This was frowned upon by the tax authorities. Consequently, in case of listed companies, the listing agreement was amended to provide that an auditor’s certificate stating that the accounting treatment is in accordance with the accounting standards was required to be filed for seeking approval of the stock exchanges. The 2013 Act makes such prior certification from an auditor mandatory for both listed and unlisted companies.
6. Merger of a listed company into an unlisted one: The 2013 Act specifically allows the order by the Tribunal to state that the merger of a listed company with an unlisted company will not automatically make the unlisted company listed. It will continue to be unlisted until all the applicable listing regulations and SEBI guidelines have been complied with. In addition, if the shareholders of the listed company choose to exit, the unlisted company would have to facilitate the exit with a pre-determined price formula which shall be within the price specified by SEBI regulations. The 2013 Act captures SEBI guidelines for listing shares of unlisted companies and for merger of listed companies and merger of listed companies with unlisted companies.

The new kinds of mergers being recognised

Apart from the changes mentioned above, the 2013 Act provides for separate provisions for the following:

1. Cross border mergers
2. Merger of two small companies
3. Holding with wholly-owned subsidiaries

However, corresponding changes in other laws are yet to be done, in order for this to be implemented in its entirety.

1. Cross-border mergers: The 1956 Act allowed cross-border mergers only when the Company transferring was a foreign company. However, the 2013 Act allows, in-principle mergers between an Indian and a foreign entity, provided it is located in a jurisdiction notified by the central government in periodic consultation with RBI. Such mergers require RBI approval and the Scheme can allow for payment in cash or depository receipts or both. The payment in cash or depository receipts allows those shareholders to exit, who do not want to be part of the of the merged entity. However, The Income Tax Act only grants tax exemptions on mergers if the receiving Company is an Indian company and does not recognize a foreign company, as the receiving company as described under the 2013 Act.
2. Merger of “small companies” and holding with wholly-owned subsidiaries: The 1956 Act did not differentiate between companies’ basis their nature or size and expected court approval for all companies wishing to enter into an amalgamation. The 2013 Act allows for a separate procedure for small companies and the holding and wholly-owned subsidiaries. Section 233 of the 2013 Act allows for a simplified fast track procedure for these mergers and does not require the approval of the Tribunal, provided consent is obtained from the following: (a) Shareholders holding 90% in value (b) Creditors representing 9/10th of debt (c) Approval of the Scheme by the Regional Director, Ministry of Corporate Affairs with “no objections” from the Official Liquidator and Registrar of Companies. Approval of the Tribunal is not required for such mergers. This allows these smaller merging entities to be exempted from the following: (a) In the case of a listed company – file documents required to be filed under the listing agreement (b) give notice to various authorities, (c) provide auditor’s certificate of compliance with applicable accounting standards. However, if the Regional Director is allowed to approach the Tribunal if s/he believes of the opinion that the Scheme is not in the interest of the stakeholders. The Tribunal may then follow the entire amalgamation procedure, prescribed under the 2013 Act. This allows for both flexibility as well as good governance.

The Income Tax Act, 1961

The Income Tax Act, 1961 defines the term ‘amalgamation’ under section 2(1B) of the Act as the merger of one or more companies to form one company in such a manner that all the properties and liabilities of the amalgamating company(s) become the properties and liabilities of the amalgamated company, and not less than three-fourth shareholders of the amalgamating company become the shareholders of the amalgamated company.

Conclusion

The law makers have made every effort to ensure that Combination Regulation is:

1. Simplified
2. Easy to implement
3. Holds authorities and companies accountable to ensure speedy implementation
4. Aligns various laws / Acts and remove contradictions

However, different parts of the Acts have yet to be notified or have existed for too short a period for the industry and law makers to be sure of its efficacy and will continue to require focus from law makers to not only remove any issues that may be there in current legislations and alignments among various Acts, it will also need to be scrutinized periodically to keep the legislation relevant and topical.

[1] Retrieved from http://us.practicallaw.com/0-501-2861?source=relatedcontent, Law stated as at 17-May-2016, Authors: Shweta Shroff Chopra, Partner and Toshit Shandilya, Associate, Shardul Amarchand Mangaldas & Co

[2] “India: Merger Regime Under The Companies Act, 2013”, Author: PSA Legal, Retrieved from http://www.mondaq.com/india/x/289180/Corporate+Commercial+Law/Merger+Regime+Under+The+Companies+Act+2013

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In this article, Tejaswinee Roychowdhury who is currently pursuing M.A. IN BUSINESS LAWS, from NUJS, Kolkata, discusses Distressed assets situation in India.

INTRODUCTION

An asset of a company is its resource which has an economic value and the potential for future benefit. The balance sheet of a company reports such assets, and they are meant to expand the firm’s value or ease the operations of the firm. [1] These assets also act as financial securities for future as in case of bankruptcy, mortgages, payments of debts, etc., these assets are sold so that the company can try to sustain.

Often, it so happens, that a company which is swimming in unpaid debts is forced by the bank (or in some cases by the order of the Court) to sell their assets. In such cases, the company may go into liquidation or wind up. Such sale occurs at a low price and the reason may be bankruptcy, debt recovery, or regulatory constraints. The assets that are put on such sale are known as ‘distressed assets’. If a debt is sold, i.e., assets or property sold with legal incidents, then such a debt becomes a distressed debt. [2]

Today, companies try to sell their assets before attaining complete bankruptcy. The company issues financial instruments that are known as ‘distressed securities’. These securities include corporate bonds, bank debts, trade claims, and common and / or preferred shares. Owing to their incapacity to meet financial commitments, these instruments are lowly valued. There is, however, an implied risk factor that manages to offer high returns to potential investors. [3] This is the reason there is a growing trend towards investments in distressed assets, distressed asset funds, etc. with an increase in Asset Reconstruction Companies (ARCs), Securitization Companies (SCs) and Financial Institutions (FIs).

THE PRESENT SCENARIO IN INDIA

ASSET QUALITY REVIEW

India’s banking sector has been suffering blow after blow in asset quality management given the fact that multiple large scale and small scale projects ran into hurdles along the way, such as, poor evaluation of project, extensive delays in project, poor monitoring and poor accounting leading to cost overruns, which disallowed the borrowers from repayment of their loans. Mostly the public sector banks suffered severe impacts and there was a slowdown in growth of credit.

Therefore, the RBI, following the European Central Bank’s (ECB) tests on supervising the Euro banks after the big financial crisis, came up with certain effective measures to remedy the situation and deal with distressed assets before it’s too late. Such efficacious methods to lower the stress of distressed assets include lowering the financial stress of the project such as the JLF, the SDR technique (necessitating the banks’ debt-for-equity swap process and change of management in companies), and the 5/25 mechanism (so that loans for long-term projects, such as infrastructure industries and core industrial sectors, are refinanced every 5 years when they have a tenure of 25 years or above).

Further, in order to make an assessment of how effectively the ‘Bad Loan Management Schemes’, drawn up by the bank Boards individually, were working and in order to make sure that the banks were taking proactive measures to clean up balance sheets, the RBI launched an Asset Quality Review (AQR) as a part of the bank’s mandate to improve the banking sector, clean up bad loans and boost the quality of their balance sheets by March 2017. [4]

FACTORS CONTRIBUTING TO DISTRESSED ASSETS SITUATION

The most important factors that contribute to the distressed asset situation in India today include,

• Excessive amounts of leverages and over-investments during strong economic phases;
• A steady and persistent economic slowdown after the Financial Year of 2011, thus, impacting corporate demand;
• An ease of access to the external debt market and depreciation of the value of the Indian Rupee;
• Industry-specific issues, such as issues peculiar to mining / infrastructure / textiles / aviation / iron & steel, to name a few, which added to the distressed asset issue within the banking sector. [5]

SALE OF DISTRESSED ASSETS

In 2016, a Data Report by Thompson Reuters Eikon shows that Indian Companies’ distressed assets sales have been the highest in the year of 2016 since the liberalization of the Indian Economy. 2016 has seen sale of distressed assets valued at a total of $40.85 billion. A comprehensive chart of the data as collected from 1986 till 2016 (November 7^th) has been provided below in Fig 1. This data by Reuters covers the Indian companies’ tangible assets, branches, divisions, operations as well as subsidiaries sold off by parent companies. [6]

Fig 1. Data Report by Thompson Reuters Eikon as on 7^th November, 2016. [7]

The sale of distressed assets, as noted earlier, also covers liquidation of companies and bankruptcy of companies. Fig 2 shows the top 10 Indian Companies that have been in the Reserve Bank of India (RBI) defaulters’ list in 2016 (as of April 1, 2016). [8] Further, Fig 3 shows the top 10 Indian Companies that have been in the State Bank of India (SBI) defaulters’ list in 2016 (as of June 30, 2016). [9] These companies, by reason of unpaid debts and bankruptcy, have had their distressed assets sold at comparatively low prices and is fairly responsible for the distressed asset sale boom in 2016 as provided in the Reuters Data. Such companies are also known as ‘wilful defaulters’. A Wilful Defaulter is defined by the RBI as a unit (like a corporation in this case) which has defaulted in making payment or repayment / meeting its payment or repayment obligations to the creditor / lender (mostly banks, LIC, etc.) even when it has the capacity to honour the obligations in question. [10]

Fig 2. Top 10 Indian Companies that have been in the Reserve Bank of India (RBI) defaulters’ list in 2016 (as of April 1, 2016)

Fig 3. Top 10 Indian Companies that have been in the State Bank of India (SBI) defaulters’ list in 2016 (as of June 30, 2016)

PROCEDURE OF SALE OF DISTRESSED ASSETS – CURRENT RBI GUIDELINES ON SALE OF DISTRESSED ASSETS BY BANKS

The RBI has on 1^st September, 2016, issued a notification on “Guidelines on Sale of Stressed Assets by Banks” as a part of the already existing “Framework for Revitalising Distressed Assets in the Economy”. The framework and guideline have been created as a part of the enforcement of and regulations under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act).

The Framework covers the sale of financial assets, procedure and norms to be followed during such sale, reasonable valuation of the assets and powers of functionaries and other such persons regarding the decision making procedure towards such sale.

The Framework aims to enhance transparency in the sale of distressed assets. Such transparency, as per the guidelines, are set to be attained in the following way [11] –

• Identifying distressed assets beyond a specified economic value (as determined by the bank) and Special Mention Account classified assets for sale shall be a decision to be taken by the bank’s corporate head office so as to ensure a proper value realisation for the bank by virtue of early identification of such assets.
• The banks are required to identify and prepare an internal list of the assets that are to be put on sale to FIs, ARCs and SCs. This identification procedure should be held at least once every year, ideally, when the year begins and take approval from their Board prior to it.
• The minimum rate at which the ‘doubtful asset’ is to be sold should be reviewed on a periodic basis by the Board / the Board Committee. A view and a documented rationale should be taken on the exit / sale of such asset. As per the above provisions, the assets that are identified for sale should be listed for the purpose of sale.
• It is not necessary that prospective buyers of distressed assets be restricted to ARCs or SCs. Banks may offer assets to other banks / NBFCs or Financial Institutions with the necessary capital and expertise in resolution of distressed assets. In fact, participation of more buyers entails a better price discovery for the assets.
• Since a wide range of buyers are to be attracted, there should be public solicitation of invitation for bids so as to ensure maximum participation from prospective buyers. It is desirable that an e-auction platform be used in such a situation so that there is ease in conducting the auction sale. Further, the auction should be an open process so that there is better price discovery. Banks are required to formulate and lay down policies approved by the Board in this case.
• The banks are required to provide the prospective buyers an adequate time (with a floor of 2 weeks depending on the size of the assets) for due diligence in determining the authenticity of all documents involved, discover frauds, determine the best price according to the market, etc.
• It is required of the banks to have clear and unambiguous policies with due considerations for the valuation of assets that are to be sold at the auction. There must be clear specifications as to internal valuation acceptance and need for external valuation. However, where the exposure is beyond Rs. 50 crores, the bank is required to obtain two external valuation reports.
• The costs of such abovementioned valuation exercises are required to be borne by the bank so as to ensure the protection of the interests of the bank.
• The rate of discount used by the banks in the valuation procedure has to be spelt out and mentioned in the policy. This may either be the cost of equity or the average cost of funds or opportunity cost or any other relevant rate, subject to a floor of the interest rate which was contracted along with any penalty which may be there.

Further, the Framework also provides for restriction on investment by banks themselves in security receipts which are backed by assets sold by them so as to ensure ‘true sale’ of distressed assets and creation of a vibrant distressed assets market, disclosure of investments on security receipts, debt aggregation (where a bank offering the distressed assets for auction sale offers the first right of refusal to the ARCs and SCs that have already acquired the highest and a significant share, matching the highest bid), Swiss challenge method (for placing the Board Approved Policy for auction in light of Paragraph 2 of the annex of the circular [12]) and buy back of financial assets (The guidelines of the RBI do not prohibit banks from taking over certain standard accounts from ARCs and SCs.

Thus, where the ARCs and SCs have successfully executed a scheme for restructuring the distressed assets acquired by them, the banks, using due diligence, have the option to take over such assets after the ‘specified period’, subject to the account performing satisfactorily during such ‘specified period’. Further, banks may frame a policy approved by the Board which contains multiple aspects governing such take over such as type of assets, due diligence requirements, viability criteria, performance requirement of asset, etc. However, it is to be noted that a bank can never take over from ARCs and SCs the assets that they have themselves sold earlier. [13])

INVESTMENTS IN DISTRESSED ASSETS

Distressed assets in India continue to reach alarming levels with every financial year. With such a surge in distressed assets and bad loans, investors in distressed assets are steadily rising to the occasion. Investing in distressed assets is not just beneficial for the banking sector and economy but also extremely beneficial in managing non-performing assets. Additionally, such investors have the potential of ending up as big time winners where they invest at high prices and the business performs better than what was expected of it once the crisis is over. [14] Such investors can be Financial Institutions (FIs), Asset Reconstruction Companies (ARCs), Banks, Securitization Companies (SCs) and even individual persons. Investors can also create funds for the distressed assets which are discussed after ARCs.

ASSET RECONSTRUCTION COMPANIES

In India, mostly ARCs function as distressed asset investors along with a considerable number of SCs. ARCs function somewhat like an asset management company. They transfer the assets they acquire to trusts at the same price and then these trusts issue security receipts to the ‘qualified institutional buyers’ while the ARCs receive management fees from these trusts. In case of any upside between the realized and acquired price, the same is shared amongst the trust beneficiaries (including FIs and Banks) and the ARCs. [15]

This way the ARCs ensure that the banks are able to concentrate on their core business instead of constantly worrying about bad loans. They also help in shaping up industry expertise in arranging loan-resolutions so as to develop secondary markets for distressed assets. ARCs aim to ‘restore the operational efficiency of financially viable assets’ post acquisition and ‘unlock their true potential value or disposing them of for more effective use of blocked funds.’ This way they also stabilize the economy of the country. [16]

Fig 4 shows the evolution of ARCs in India from 1993 since BIFR formed under the SICA. The BIFR and SICA are discussed at the end of the Article.

Fig 4. ARC Evolution in India. Source – Assocham India, EY, “ARCs at the crossroads of making a paradigm shift”, July 2016 (http://www.ey.com/Publication/vwLUAssets/EY-ARCs-at-the-crossroads-of-making-a-paradigm-shift/$FILE/EY-ARCs-at-the-crossroads-of-making-a-paradigm-shift.pdf)

Some of the top Investors in the Indian Distressed Assets Market include,

Temasek Holdings Pte. Ltd – The Singapore-based firm describe themselves as an equity-only investor wanting to invest in the business of non-performing assets.

Infrastructure Leasing & Financial Services Ltd (IL&FS) – Created a pool with the Lone Star Fund so as to invest almost $2.5 billion in distressed asset purchases.

WL Ross & Co – The US-based firm which also holds a large share in OCM India Ltd, expressed their wish to invest in the textile industry distressed assets.

SREI Alternative Investment Managers Ltd – This Kolkata-based firm is reported to have set aside Rs. 2000 crores in order to invest in debt instruments and assets by buying them.

TPG – The private equity firm has already invested $1.5 billion in India’s distressed assets and are looking to invest more as they see a great investment opportunity in India.

DISTRESSED ASSET FUNDS

While some investors (companies, private equity firms, etc.) invest in distressed assets by buying such assets, transferring them, and by buying loans and debt instruments, there are some investors who choose to set up a fund from where the distressed companies can take easy loans so as to nurture themselves back to health. Such investments are indirect investments.

Often, the Government also helps set up such funds. In fact, it was a bright day for the Indian companies (based in Maharashtra) with distressed assets when Jayant Sinha, Minister of Maharashtra State for Finance, expressed on 31^st May, 2016, “We will have a significant stressed asset fund” as reported by CNBC TV-18. It was further reported that there were plans of infusing Rs. 70,000 crores with the help of SBI and some other global funds into the public sector banks for a period of three consecutive financial years starting FY 2016. [17]

Some of the top National and Global Funding Groups include

Piramal Enterprises Ltd – They partnered with Bain Capital Credit, the private equity fund as there seems to be over $1 billion investing opportunity in distressed assets in India.

State Bank of India – The bank, in association with Canada-based Brookfield Asset Management Inc., launched a Rs. 7,000 crores distressed asset fund.

ICICI Bank Ltd – The bank collaborated with Apollo India Credit Opportunity Management LLC in order to apply for an ARC licence, eventually looking forward to setting up a fund for distressed assets.

Apollo Global Management – The US-based global private equity firm partnered with ICICI Venture in 2014 and raised a fund of $825 million for distressed assets.

Tata Capital Special Situations Fund-Trust – It is a funding venture started by the Tata Group and regulated by the SEBI which invests in companies with ‘under-utilized capacities, high leverage, low profitability compared to industry and which have a potential to grow with financial and operating inputs.’ [18]

CONCLUSION

ROLE OF THE JUDICIARY AND ITS CURRENT POSITION

Recently, on 3rd January, 2017, the Supreme Court had directed the Central Government to publish a list of corporate loan defaulters who owe Rs 500 crores or above to various banks in India. The SC Bench comprising of the the-then CJI TS Thakur, Justice A M Khanwilkar and Justice D Y Chandrachud. Despite RBI’s vehement arguments against the same, the Bench opined that the 57 debtors in the sealed cover had defaulted over Rs. 1 lakh crores (as in October, 2016) and it was a ‘phenomenal amount’ which must be disclosed to the public. “Borrowers have taken money from banks and defaulted in repaying the loan. You call this information confidential? It may affect borrowers but how does making information public affect RBI?” [19]– in these words the SC made it very clear that the path that leads up to such massive debts are a matter of public concern as well and therefore, the names of such defaulters should not remain in a sealed cover. This was the opinion of the Bench in a hearing related to Vijay Mallya’s Kingfisher Airlines case after Mallya was able to flee the country taking advantage of such a secrecy.

This opinion of the Supreme Court can very well be described as the Role of the Judiciary in the context of Distressed Asset situation in India. The banks will eventually have to sell the assets of such companies so as to recover the debts. The Bench had further expressed grave concerns about the current scenario in the 34 Debt Recovery Tribunals (DRTs) in India. Just like every other Court, the DRTs too have a massive number of cases pending and debts to be recovered from various large scale and small scale defaulters. While small scale defaulters such as individuals or small businessmen usually have such small scale defaults that need not be required to be recovered from sale of distressed assets, there are definitely cases where the Court decides execution of the decrees / awards vide attachment and sale of the defaulters’ property. Nevertheless, such cases are not treated with enough importance causing them to remain pending over years. Thus, the cases where big corporate loan defaulters owe more than Rs. 500 crores to the banks should be brought to light, as a matter of public policy, and as a tool for creating awareness to help uplift the situation of the DRTs.

Justice Chandrachud pointed out certain statistics that will be helpful in further understanding the situation of the DRTs in India. The DRTs were set up in India in 1993 and by 1995-96, more than 15 lakh cases had been filed by various financial institutions and nationalized banks seeking to recover over Rs. 6000 crores. By October 2015, the DRTs managed to disposed of only about 1.34 lakh cases and recovering Rs. 70725 crores in the process. Currently, more than 70,000 cases are pending in the 34 DRTs across the country which involves more than Rs. 5 lakh crores recovery; and the corporate loan defaulters alone owe more than Rs. 1 lakh crores. It has thus been pointed out by the eminent judge that improvement of infrastructure of the DRTs is more than necessary at this point. Where DRT cases are supposed to be disposed of within 180 days of filing, there are cases that have been pending for over 10 years.

The situation and infrastructure of the judiciary is something on which the Distressed Assets Situation of India depends a lot. The SC Bench pointed out that absence of infrastructure of DRTs is ‘symptomatic of each DRT’ as they lack the manpower and the resources. The SC directed the Central Government to file an affidavit before the Bench with details of a “specific action plan including time-schedules within which the existing infrastructure (of DRTs) would be upgraded so as to achieve the time-frame of 180 days for disposal of claims”. [20]

REHABILIATAION OF COMPANIES (SICA, 1985)

India is the only country in South Asia that has a formal law of rehabilitation of companies vide the SICA enacted in 1985. The SICA empowered the BIFR, a quasi-judicial body, to take appropriate measures for the revival and rehabilitation of potentially viable sick industrial companies and for the liquidation of unviable companies. Just like the Banks’ Asset Quality Reports, the BIFR also makes inquiries to find out if any company has become a sick company and appoints an Operating Agency to prepare reports of the same. The SICA required that when an industrial company becomes sick, the board of directors of such company should make a reference to the BIFR to determine the steps that need to be taken within 60 days of finalization of duly audited accounts for the financial year when it becomes sick. However, no reference can be filed in case the distressed assets have already been acquired by any ARC. Owing to BIFR’s non-punitive and easy going faulted legislative structure, this system under the SICA has fallen into disrepute and the Central Government has strengthened regulations through the banking sector and the Debt Recovery Tribunals along with the SARFAESI Act. [21]

References

[1] Investopedia (www.investopedia.com/terms/a/asset.asp)

[2] Financial Times Lexicon (http://lexicon.ft.com/Term?term=distressed-asset)

[3] Investopedia (http://www.investopedia.com/terms/d/distressedsecurities.asp)

[4] “On swachh balance-sheet mission, RBI to review banks’ loan quality”, Business Line, 9 December 2015; “RBI expects banks to clean up their balance sheets by March 2017”, Mint, 1 December 2015

[5] Assocham India, EY, “ARCs at the crossroads of making a paradigm shift”, July 2016

(http://www.ey.com/Publication/vwLUAssets/EY-ARCs-at-the-crossroads-of-making-a-paradigm-shift/$FILE/EY-ARCs-at-the-crossroads-of-making-a-paradigm-shift.pdf)

[6] Sachin P. Mampatta, Ashwin Ramarathinam, “India sees highest asset sales since liberalization”, Nov 15 2016, Livemint

(http://www.livemint.com/Companies/6DrlXKxx4HtfUD8TBBg9yK/India-sees-highest-asset-sales-since-liberalization.html)

[7] Reuters Data, 7^th November 2016 (C:\Users\Tejaswinee\Desktop\download)

[8] Garima Chitkara and Manisha Pande, “RBI Defaulters List: Meet the Top 10”, Apr 26, 2016, Newslaundry (https://www.newslaundry.com/2016/04/26/rbi-default-list-meet-top-10)

[9] Dipu Rai, “Meet SBI’s top 100 wilful defaulters”, 5 Nov, 2016, DNA (http://www.dnaindia.com/money/report-meet-sbi-s-top-100-wilful-defaulters-2270272)

[10] Ibid 8

[11] Paragraph 2, Annex, Guidelines on Sale of Stressed Assets by Banks, RBI/2016-17/56, DBR.No.BP.BC.9/21.04.048/2016-17

(https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=10588&Mode=0)

[12] Ibid 11

[13] Paragraph 8, Annex, Guidelines on Sale of Stressed Assets by Banks, RBI/2016-17/56, DBR.No.BP.BC.9/21.04.048/2016-17

(https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=10588&Mode=0)

[14] Dan Caplinger, “Distressed Assets: Investing Essentials”, Aug 14, 2014, The Motley Fool (https://www.fool.com/investing/general/2014/08/14/distressed-assets-investing-essentials.aspx)

[15] Ibid 5

[16] Ibid 5, 15.

[17] Aparna Iyer, “Govt planning fund to invest in distressed assets of banks: Jayant Sinha”, 1 Jun 2016, Livemint

(http://www.livemint.com/Industry/6gC3ratQCcciLUT0j88SaN/Govt-looking-at-a-significant-stressed-asset-fund-Jayant.html)

[18] http://www.tatacapital.com/private_equity/ssf_overview.htm

[19] As Quoted by – Dhananjay Mahapatra, “SC: Make public list of corporate loan defaulters”, 4 Jan 2017, TOI (http://timesofindia.indiatimes.com/india/sc-make-public-list-of-corporate-loan-defaulters/articleshow/56322793.cms)

[20] Ibid 19

[21] Sumant Batra, “Insolvency Laws in South Asia: Recent Trends and Developments”, Insolvency Laws – Issues and Perspectives, Edited by P. Satyanarayana Prasad, Amicus Books, The Icfai University Press, 2007. Pg. 193 – 234

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In this article, Tirumala Chakraborty who is currently pursuing M.A. IN BUSINESS LAWS, from NUJS, Kolkata, discusses Key clauses in employment contracts.

Key clauses in employment contracts

An employment contract is a legally enforceable agreement stipulating the terms and conditions of the employment in addition to recognizing the rights, expectations, and obligations of both the employer and the employee. Employment contract is a bilateral agreement based on an offer, acceptance, consideration, competent parties, legal object and free consent. An employment contract is entered into for an agreed duration with respect to exchange of service and remuneration. There are several regulations which by itself are complex in nature governing the relationship between the employer and employee

Once such agreement is executed with consent between the employer and the employee, the same is said to binding on both parties. The important clauses in a contract of employment are appointment, term of the employment, responsibility, remuneration, payment of salary, sickness and disability, termination, confidentiality, indemnification, notice, restrictive obligations, choice of law and jurisdiction. Every employee executing such contract is under an obligation to perform his part of the duty as has been set out in the contract while it shall be the duty of the employer to protect the employee from harm or injury, and make fair compensation for any loss or damage arising from any job-related accident. In addition to such specified obligations, the contract of employment also includes terms and conditions relating to promotions, rewards and terminations.

NATURE OF SUCH CONTRACTS

An employment agreement laid the foundation of the employment relationship between an employer and employee. It can be made verbally or in writing and like any other agreement it specifies various terms and conditions under which a person who accedes to perform duties as directed by the employer in exchange of salary for an agreed period of time. A contract of employment must include various details in relation to such employment such job description, payments, benefits, rules and regulations for termination etc. An employment contract starts with the acceptance of the offer of employment or the terms and conditions offered by the employer. The acceptance is the assent given to the proposal offered and it has the effect of converting it into a promise and any alteration or modification to such existing contract can be made only with approval of both the parties. Any breach of the terms and conditions to which both the employer and employee are bound will result to repudiation of such contract.

Any contract of employment signed with an Indian company is governed by the Indian labour law. There is no provision in the Indian laws that make it mandatory for an employer to provide a written contract of employment or written statement to his newly hired employee. In India, usually a simple letter of appointment signed between the employer and employee serves the purpose of the employment contract.  The common intention of the parties to create legal obligations and the promise to employ and be employed forms the integral part  of the agreement and thus from a cultural perspective, it can be said that contracts in India are not seen as binding as it is in other developed countries.

KEY CLAUSES OF EMPLOYMENT CONTRACTS

An employment contract is drafted, signed and executed between the employer and employee mainly to prevent nondisclosure of information such as trade secrets, non-competition, non-solicitation as well as protection of confidential information. The key clauses that a contract of employment should include are briefly described below:

CONFIDENTIALITY CLAUSE / NON – DISCLOSURE OBLIGATIONS

A well draft contract of employment should include a confidentiality clause that gives protection to company’s sensitive information such as trade secrets and client data and obligates the employee to keep such information confidential from the public. This particular clause restricts the employee from disclosing confidential information to any third person without the permission of the employer. A separate agreement commonly referred to as non- disclosure agreement can also be drafted and executed for this purpose as the confidentiality clause overlaps with clauses such as restrictive covenants, non- solicitation clauses etc. In the matter of Diljeet Titus versus Mr. Alfred A. Adebare and Others (2006 (32) PTC 609 (Del)), the High Court of Delhi rejected the contentions of the defendants and restrained them from using the information taken away illegally at the termination of the employment. The Court restrained the defendants from using that information as it was necessary to protect the interests of the plaintiff’s business.

It is indeed very important to include a confidentiality clause in an employment agreement as it somewhat gives assurance to the business that the hired employees of the company will not expose the trade secrets to the other competitors in the market. By signing the non- disclosure agreement the employee is agreeing that disclosure of company’s secret or misusing that information lead to breach of such contract. The Indian Penal Code and the Information Technology Act, 2000 provides for Criminal prosecution and imprisonment or fine (or both) as consequences for breach of confidentiality and disclosure provisions. The Information Technology Act, 2000 under Section 66e talks about the punishment for violation of privacy policy and  various other related acts such as tampering with computer source document (Section 65), hacking (sec 66) etc.

In absence of a clearly written confidentiality clause in the contract of employment, the employer will have to count on the judiciary and the rules provided in common law. The most important issue that has to be taken into consideration while adjudicating a matter in relation to this is the whether the revealed information is a secret which is exclusively available to that particular organization or it is just a general information for the public domain.

RESTRICTIVE CLAUSES

This is one of the key clauses to be included in an employment contract. It is mainly designed to protect the legitimate interest of the business and simply not to avoid competition. This clause restricts an ex employee from using integral information such as business strategy, customer details etc. in relation to his prior employment. Restrictive covenants provide protection both to the business and the employer during the employee’s employment period and even after such period ends. This clause disallows an employee from competing with his ex employer for a certain period of time after he has disassociated himself from the business and stops him from misusing the invaluable information to the competitors those who are seeking to poach upon the market of the business he was associated with.

An employer must be mindful while drafting a restrictive covenant and certain factors such as the extent of geographical area, the time length for imposing such post employment restrictions, type of information that is being protected etc are to be considered in a much substantial way. The extent of restrictive covenants must be in respect to the position of the employee within the business. It is more likely and reasonable to put a restriction on the senior employees as they are more aware of the organization’s sensitive information.

Though there are several types of restriction to be imposed the most common types of restriction that are used by employers are discussed below:

Non-compete covenants

Under a non –compete covenant or contract, it is agreed by an employee not to enter into or start a similar trade or profession in competition against his prior employee. In India, the Contract Act under Section 27 of the Act deals with the legality of non- compete clauses and says that every agreement by which any person is restrained from exercising a lawful profession, trade or business of any kind is void. Whenever a covenant in regard to restraint of trade or profession is call into question, the burden of proof lies on the person who is probing to uphold it and it is the duty of the Court to determine to what extent it establishes a restraint of trade. Non – compete covenants can be effective during the period of employment and can only be challenged on the ground of being onerous. After the termination of employment, restrictive covenants are considered to be void under Section 27 of the Indian Contract Act. Restraining a person from carrying on a trade generally aims at avoiding competition and has monopolistic tendency and this is both against an individual’s interest as well as the interest of the society and on that ground such restrains are discouraged by law. The right to freedom of profession, trade and business is confirmed by the Constitution of India under Article 19(1)(g), so any agreement which interfere this freedom is void.

In England also an agreement made for restraining someone from a trade is void and it was laid down by the House of Lords in the  famous case of Nordenfelt versus Maxim Nordenfelt Guns & Ammunition Co. Ltd. [(1894)  A.C  535]. It was held that both the general and the partial restraint of trade are prima facie void.

Non-solicitation covenants

This is often included in a non – compete agreement, non disclosure agreement but can be also be drafted as a separate agreement. Under this, an employee simply agrees not to solicit or give advice to the client of the organization after he leaves the organization. This particular covenant prevents an ex employee from dealing or soliciting the clients or customers of his former employee; regardless of which party has given the proposition. It also prevents the employee from soliciting his colleagues to quit the job for example trying to recruit them away from the organization.

TERMINATION

An essential part of a contract of employment is the termination clause. A clause containing the employment period and its termination should be included in a contract of employment. It is a statutory clause written in the contract of employment which states that either party to the contract may terminate the relationship of employment by serving a certain amount of notice such as one month notice. A termination clause specifically mentions the terms and obligations to be complied by the employer and employee upon termination of the employment. This clause must include certain details such as the amount of notice period to be served by the employee, compensation to be paid upon such termination etc. Employment contract has an implied term that every employee will serve a reasonable termination notice.

The relationship of employment between an employer and his employee gets terminated either on resignation of the employee or situation arises where an employee gets terminated with or without a cause. Though it is not reasonable to terminate an employee without a justified cause but in such a case, employee is entitled to compensation or damages for the loss of earning caused due to such wrongful termination. The most common legal grounds for terminating an employee include violation of rules and regulations of the contract, grave misconduct or his disability to discharge his duties. An employee is also obligated to indemnify his employer in case he fails to perform his part of duties or for the loss or damage caused to the employer due to his action. In India, the relationship between an employer and his employee is governed by the Industrial Disputes Act, 1947 and this Act is considered as the most important labour law of the country. This Act prescribes the rules to be followed for termination or retrenchment of workmen from the employment and the amount payable as compensation for such termination.

Termination clause is considered to be one of the key clauses in employment contract and must be clear and explicit. It should be properly drafted and executed in order to make it enforceable.

COMPENSATION AND BENEFITS

A standard contract of employment must define compensation. Any compensation or benefits deriving from the employment should be included in the contract. It allows amending the salary, incentives, benefits and other compensation of the employees. It includes the base salary, bonus or incentives, information about hikes. Every particular about the payment of bonus and compensation should be stated in the contract. A separate provision can be made for “no additional compensation” which means even if an employee becomes an elected director of the company, he will not be benefitted with to any additional compensation for such achievement. A “no additional compensation” is mainly inserted in the agreement meant for executive level employees.

The benefit plan and the percentage of benefit to be borne by each party should be stated unambiguously. It should clearly state the type of benefits the company offers its employees for example health insurance. Usually, an amount to premium is required to be paid by the employee for availing such benefits. It should also specify the possibility of sharing profit from the company.

JURISDICTION AND GOVERNING LAWS

It is pertinent to mention that disputes may arise out of a contract and for resolving such legal dispute some parties prefer to go for arbitration and in such case they include an arbitration clause in the contract while other rely on the judiciary to adjudicate the dispute rises between them. By including a jurisdiction clause, the parties to the contract clearly specifies the judicial Court or forum which will have the right to resolve the legal dispute between the employer and the employee in relation to their employment contract. A jurisdiction clause may either provide for exclusive jurisdictional rights which mean the specified courts will only have the rights to dealt with the dispute or they may provide for non – exclusive jurisdiction. In case of a non- exclusive jurisdiction clause, the specified courts may hear the dispute but here the parties are free to approach other courts if they think it to be apropos to refer the matter to some other courts.

A governing law clause in an employment contract sets out the choice of law of the parties to the contract.  Laws relating to employment vary from state to state and hence it is advisable to state the set of governing laws clearly in the contract. This clause of governing laws helps in avoiding the initial confusion regarding which set of laws should be applied to adjudicate the dispute between the parties to the contract. Some of the state laws are much in favor of the employee while others are seen as more beneficial to the employer than the employees. The laws of a particular state will be the governing law if any legal dispute arises between the employer and the employee in relation to the contract irrespective of the fact where it is filed. Where a contract is connected to several places, it is particularly important to set out the choice of law. There are several legal systems with possible relevance to the contract in a case where the parties to the contract are in different countries and the place for performance is a third country. Thus, it is very much essential to decide expressly which legal system will govern such dispute.

RESOLUTION OF DISPUTES AND GRIEVANCES / ARBITRATION CLAUSE

In an employment relationship, a grievance between an employer and employee is a complaint raised by either party against the other and should be dealt either in a formal or in an informal manner for resolution of such grievance in the workplace. There could be several reasons for filling such grievance that include breach of terms and conditions of the contract, discrimination, harassment etc. This is exactly where the need for inclusion of an arbitration clause lies in the employment contract like any other contracts. This clause specifies that any dispute arising out of that employment relationship will be resolved through arbitration, a form of dispute resolution and prevents the party from approaching a judicial Court. Now a days many employers prefer to include an arbitration clause in the contract of employment since this method of dispute resolution is much cost effective and less time consuming. This clause must contain details about the arbitration procedure such as the binding nature of the arbitration award, appointment of arbitrators and the place for arbitration sitting.

OTHER CONTENTS OR CONSIDERATIONS

An employment contract should also have these contents apart from the key clauses that have been discussed above. We may note below certain other contents in a contract of employment:

Name of the parties

In a contract of employment, the first and the foremost thing to be included is the detail of the parties to the contract. Like any other standard form of contract, there must be at least two parties to form an employment contract. The person who makes the proposal is generally called the employer and the person to whom the proposal of employment is made is called the employee. It should contain the details of the employer’s organization as well as the name and full address of the person to be employed.

Appointment

When the proposal of employment is accepted by the employee, a contract of employment has to be made for appointing the employee. The appointment date or the starting date of the employment should be mentioned. The employee should keep in mind that he is starting a fresh and the  employment rights that he gained from his prior employment will no more be taken into consideration. Though, this rule is not applicable in case an employer is taking over the entire organization with the existing employees.

Job description

The contact should mention the primary responsibility to be taken by the employee and it should also include the description of the job specified in the offer letter of the employee. The department or the detail of the reporting person with whom the employee will work should be clearly mentioned by the employer in the contract of employment.

Location

Another important content is the place of work where the employee will work. If there is any probability that the place of work might change in future should also be specified by the employer. This allows greater elasticity for the employer.

Schedule and employment period including hours of work

To give a meaning to the employer- employee relationship, the contract should specify the employment period clearly in the contract. The employee should know whether he is employed for a continuous period or for a set time period. This includes the number of hours an employee is expected to work and other working options such as working at night, working from home etc.

Probationary period, if any

A probationary period is the trial period used by the employer to assess his employees. This trial period is usually applicable in case of new employees as well as existing employees placed in a new position. During this stretch of time the employer expects his employee to learn and fulfill his expectations at the end. The employer has the option to extend the probationary period if he thinks it to be appropriate. Any trial or probationary period which the employer expects his employee to serve before getting the opportunity to work as a permanent employee should be stated in the contract of employment.

Salary including deductions and payment term

An employment contract should clearly specify the gross salary to be offered to the employee for his employment. Any tax deductions, deductions made for the purpose of insurance or any kind of deductions from the employee’s salary should be mentioned. The contract should also state the payment date or when the payment is to be made by the employer.

Other expenses

There are situations where an employee will have to borne certain work related expenses while discharging his duties for example travelling expenses. An employer should specify it to the employee that which all expenses will be reimbursed. This allows maintaining clarity in the employment relationship.

Holidays

A contract should specify the exact number of holidays to be enjoyed by the employee during the period of employment and restrictions on holidays, if any. This should also state whether the employee can carry over any unused holidays into the next year or get any payment in lieu of such holidays on termination of the employment.

Time off and sick leaves

This spells out the number of days an employee can take off from his work and whether the public holidays are included or excluded from this amount of time. It is usually an employer who gets affected when an employee takes time off from his work due to sickness. But it is expected that the employee must inform the employer and provide him with a doctor’s certificate. The provision for any sick pay should be stated clearly in the contract. But it is always better to have a separate policy in regard to sickness and absence in order to avoid complexities.

Vacation policy

There should be a vacation clause in the contract of employment that calculates the amount of vacation days an employee is entitled to enjoy annually or monthly during his employment period. This discretionary power lies on the employer. The clause additionally includes the details regarding rolling-over unused vacation into the coming year and the procedure for scheduling such.

Notice

The notice period applicable in case of both employer and employee should be stated unambiguously in the contract of employment. This clause also includes the actions to be taken by either party in case the other fails to comply with it.

Retirement

A person gets terminated from his employment automatically on reaching the standard retirement age.  Most organizations prefer to draft a separate retirement policy for their employees rather than inserting it as clause in the contract of employment.  The retirement policy ensures the justified retirement age and is not required in cases where employee decides their date of retirement.

Pension

A standard form of employment contract provides a provision for pension to his employees on compulsory termination after attaining the standard age of retirement. This includes the details of the pension scheme to be offered by the organization. If the organization has no provision for pension, it is also required to be mentioned in the contract of employment.

CONCLUSION

The concept of employment agreement is similar to any other contract in force. A comprehensive employment contract provides the key duties and responsibilities of the employee duties and responsibilities and helps him to understand exactly what his employer is expecting him to do. The main object of an employment contract is to prevent disclosure of information, non-competition, non-solicitation as well as protection of confidential information so it is always advisable to execute a written contract of employment between the employer and the employee. In practice, the employer signs a letter of appointment with the proposed employee prior to entering into the employment contract. An appointment letter is usually executed with a view to cover the probation period of an employee till the time such employee is made permanent in the organization by the employer.

BIBLIOGRAPHY

Legislation

• Indian Contract Act, 1872.
• Information Technology Act, 2000.
• Industrial Disputes Act, 1947
• The Constitution of India

Books referred

• Law of Contract by R.K Bangia
• Dutt on Contract by Salil Kumar Roy Chowdhury and H.K Saharay
• K Malik’s Commentary on Industrial Disputes Act, 1947

Dictionaries referred

• Oxford Dictionary
• Black’s law Dictionary

Websites referred

• indiankanoon.com
• wikipedia.org
• mondaq.com
• netlawman.co.in
• findlaw.com
• compactlaw.co.uk
• out-law.com
• pandadoc.com

Case Laws

• Diljeet Titus versus Mr. Alfred A. Adebare and Others (2006 (32) PTC 609 (Del))
• Nordenfelt versus Maxim Nordenfelt Guns & Ammunition Co. Ltd. [(1894) C  535]

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Introduction

The Death penalty is a punitive measure, where the life of a person is taken by the State by following the due procedure of law. Whenever a person commits a crime that is grave enough, in the eyes of judiciary that he/she does not deserve to live anymore is hanged to death. In India, death penalty under Indian Penal Code is approved for murder, gang robbery with murder, abetting the suicide of a child or insane person, rape, waging war against the government and abetting mutiny by a member of the armed forces. Death sentence is also prescribed under some anti-terror laws for those convicted of terrorist activities. But generally, the court announces death sentence for murders that also in ‘rarest of the rare cases’ as stated by the Supreme Court in the Bachan Singh V State of Punjab (1980). This makes the death punishment a unique form of punishment because of the nature of irreversibility attached to it.

Though death penalty has existed since long back, recently there has been a huge uproar about the abolishment of capital punishment. Many countries have eradicated death penalty but it still prevails in around 58 countries today, with highest number of penalties being recorded in Iran and Iraq. India has recorded around 477 death penalties according to a research conducted by NLU-Delhi but the Supreme Court reports on 3-4 deaths per year.

Procedure

As the nature of the penalty is irreversible, the law provides enough chances for scrutiny of the decision. If awarded by the lower court, death penalty should be assented by the high court of that state as to avoid any error [Section 366(1), CRPC]. Further the High Court can look into the case and can announce the judgment accordingly. Even after this the convict has a chance to appeal with the Apex Court [Article 134(1) (a) & (b), COI]. After the final verdict of the Supreme Court, there lies a last opportunity of acquittal for the convict.

Clemency Process

Under Article 72 and Article 161, the Constitution of India has created a provision for leniency of capital punishment. Under these Articles, the President of India and the Governor of the respective state has the power to grant pardon or commute or remit the death sentence in certain cases. For this, a request for pardon is filed before the President or the respective Governor. In case of states first the mercy petition is sent to the Governor and if disapproved it is then sent to the Ministry of Home Affairs for the consideration of President of India. Similarly in case of Union Territories, it is first sent to Lieutenant-Governor / Chief Commissioner / Administrator. The Ministry of Home Affairs renders advice to the president about the petition and the President is bound to act in accordance to that advice. The power to grant pardon includes further examination of related factors that are pertinent to the sentence such as age, sex, mental stability and socio-economic conditions. The president need not provide reasoning for his decision.

Though the judiciary has no rights for reviewing the decision of rejecting the petition as held in Kehar Singh V. Union of India, but in Shatrughan Chauhan V. Union of India courts may review whether all relevant materials were scrutinized by the executive or not. According to the Apex Court if it is found that the executive has not touched upon each and every relevant area before rejecting the plea it will be the Violation of Article 21 of COI and the court will hence be able to commute the sentence of the convict. In Shatrughan Chauhan’s case the judiciary reprimanded the executive for its delayed functioning. The sentence can be commuted on the grounds like- delay in execution, insanity, solitary confinement, dependence on judgment per incuriam and procedural failure. Further, inordinate delay constitutes torture and violates law.

The trend

According to information released by the government under the RTI Act, of the 77 mercy pleas decided by Presidents between 1991 and 2010, 69 were rejected. Only 8 about 10% of those who wanted mercy were securing the scaffold. R Venkataraman rejected 44 mercy pleas, the most by any President. Current President Pranab Mukherjee has also not been merciful as such he has rejected 37 pleas in 4 years of his tenure. Whereas APJ Abdul Kalam has been quite merciful as he took up only 2 pleas and left behind dozens. Such irregularities prove that the Presidents allow their personal view to influencing their decision hence making it very subjective as to which convict may be granted plea and which may not.

Last Rights

Prisoners also have a right to dignity and execution of death sentence should be carried out in a quick and simple manner allowing the convicts to exhaust all legal remedies. Human dignity is one of the foremost right availed even by the death penalty holders enshrined in Article 21. Prisoners have a right to legal Aid and receiving written copy of mercy petition’s result. Regular health checkups are also mandatory. The court also stated that the government should carry put a post-mortem as to prove that the execution was carried out according to the guidelines.

Conclusion

Death penalty is still legal (might not be voted for) in India, though fiercely debated after the Afzal Guru case. So until this debate boils down to a conclusion, capital punishment stands tall and hence needs to be followed with due procedure of law. The president’s pardoning power can indeed save a human life and is the last resort for a convict to escape death. It is expected from the executive to be quick and fair in its decision. But still a parameter has not been fixed as to what amount of time taken will be counted as delay. Also the safety and living conditions of the prisoners often stand jeopardized. Also some presidents have been way too merciful while some sharp. The processes of law need to make sure that the convict is able to use all his legal remedies fully.

REFERENCES

• https://indiankanoon.org/doc/59968841/
• http://ijlljs.in/capital-punishment-in-india-the-unending-conundrum/
• http://www.dnaindia.com/india/report-death-penalty-306-out-of-437-mercy-petitions-accepted-by-presidents-law-commission-2120874
• https://factly.in/different-presidents-different-decisions-the-tale-of-mercy-petitions-in-india/

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In this article, Shriji Pandey put forth legal actions to take when someone sends you a ransomware virus. 

Legal actions against Ransomware attacks

• What can you do when someone is not only playing with your privacy but also, infringing various rights of yours and breaking several laws just by using a computer sitting far away in his house?
• Ransomware, a malware, a type of Trojan virus, which like most computer viruses, often arrives in the form of a phishing email, or spam, or a fake software update – which after infecting the computer when the recipient clicks a link or opens an attachment, holds the computer hostage by encrypting data,  demanding ransom payment for decrypting everything.
• WannaCry ransomware cyber attack is the latest worldwide cyber attack which usually attacks Microsoft Windows Operating systems and the payment demanded in less traceable Bitcoin cryptocurrency. Business and Public Institutions have been one of the major targets but the private individuals aren’t untouched now. The illegal activities come under the category of cybercrime.

Cyber crime is broadly divided into two categories based on the usage of computer as

1. Target (example, Hacking, Virus Attack)
2. Weapon (example, cyber terrorism, IPR violations, pornography)

Ransomware attacks attract both Criminal and Civil legal actions depending upon the individual harms suffered, actions of the criminal and illegality of the actions according to the nature of wrong committed.

Ransomware attack is a breach of Right to personal liberty guaranteed under the Indian Constitution

Prima Facie it is an infringement of our Fundamental Right to Privacy covered under Article 21- Right to Life of Constitution of India. Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011 provides protection to personal information. Prior to these Rules, in India remedies for invasions of privacy existed under tort law and the Supreme Court of India accorded limited constitutional recognition to the right to privacy (under Article 21). These Rules provide the only codified provisions protecting the privacy of individuals and their personal information. Rule 3 of the Rules provides an aggregated definition of sensitive personal data as follows:

Sensitive personal data or information of a person means such personal information which consists of information relating to –

• Password;
• Financial information such as bank account or credit card or debit card or other payment instrument details;
• Physical, physiological and mental health condition;
• Sexual orientation;
• Medical records and history;
• Biometric information;
• Any detail relating to the above clauses as provided to body corporate for providing service; and
• Any of the information received under above clauses by a body corporate for processing, stored or processed under lawful contract or otherwise

Ransomware attack: An act of Extortion under IPC

These malware attacks are a clear case of Extortion. According to Section 383 of IPC, Whoever intentionally puts any person in fear of any injury to that person, or to any other, and thereby dishonestly induces the person so put in fear to deliver to any property or valuable security, or anything signed or sealed which may be converted into a valuable security, commits ‘Extortion’.

Ransomware attack: A tortious lilability

The attack can be covered under Law of Tort under Trespass to Chattel, also known as trespass to goods or trespass to personal property, defined as “an intentional interference with the possession of personal property…proximately causing injury.” Trespass to chattel, does not require a showing of damages. Simply the “intermeddling with or use of…the personal property” of another gives cause of action for trespass. Since CompuServe Inc. v. Cyber Promotions, various courts have applied the principles of trespass to chattel to resolve cases involving unsolicited bulk e-mail and unauthorised server usage as well. Generally, trespass to chattels possesses three elements – Lack of Consent, Actual Harm and Intentionality. In the ransom attack to your computer, these elements constitute the tort covering intangible property like in the case, the computer.

Ransomware attack: Punishment under the IT Act

The present act is also punishable with imprisonment for a term which may extend to three years and with fine under Section 66A of IT Act through 2008 amendment, which states that “Any person who sends, by means of a computer resource or a communication device

• any information which he knows to be false, but for the purpose of causing annoyance, inconvenience, danger, obstruction, insult, injury, criminal intimidation, enmity, hatred or ill will, persistently by making use of such computer resource or a communication device,
• any electronic mail or electronic mail message for the purpose of causing annoyance or inconvenience or to deceive or to mislead the addressee or recipient about the origin of such messages shall be punishable with imprisonment for a term which may extend to three years and with fine.”

Cyber crimes can involve criminal activities that are traditional in nature, such as theft, fraud, forgery, defamation and mischief, all of which are subject to the Indian Penal Code. Cyber Crimes are broadly covered under –

1. The Information Technology Act:

• Tampering with Computer Source documents – Section 65
• Hacking with Computer Systems, Data alteration – Section 66
• Publishing obscene information – Section 67
• Un-Authorised access to protected system ­­– Section 70
• Breach of Confidentiality and Privacy – Section 72
• Publishing false digital signature certificates – Section 73

2. IPC and Special Laws:

• Sending threatening messages by email – Section 503
• Sending defamatory messages by email – Section 499
• Forgery of electronic records – Section 463
• Bogus websites, cyber frauds – Section 420
• Email spoofing – Section 463
• Web-Jacking – Section 383
• E-mail Abuse – Section 500

3. Some Special Acts:

• Online sale of Drugs under Narcotic Drugs and Psychotropic Substances Act
• Online sale of Arms Act

Ransomware attack and data Theft

Data theft is a misnomer as it is no theft under law. Instead, the valid term is Data Crime/Criminals. Depending on the nature of the relationship between the victim and the criminal, the nature of legal actions may defer. For instance if the criminal is amongst one of the employees provided there is an agreement between the employer and the employee, it can be a ‘Criminal Breach of Trust’ which is punishable under Section 405(data treated as a ‘Property’) and the Punishments are covered under Section 406-409 of Indian Penal Code, 1860.

Here, some provisions of IT Act, 2000 can also be invoked to aforesaid provisions of IPC like Section 43(b) which deals with penalties and compensation regarding unauthorised access to the computer and damages suffered due to this. Data Theft is also covered under Section 2(o) of Copyright Act, 1957 which deals with literary works. It is a Criminal offence under Section 63 Of the act which makes it A cognizable and non-bailable offence under First Schedule of Code of Criminal Procedure (CrPC), 1973 and more than 3 years of imprisonment if proven guilty.

How to file a complaint against Ransomware attack

How to seek justice? Like any other criminal case, the ransomware attack victims need to file a complaint first to seek remedy from the Judicial system of the country. The complaint can be filed in the concerned Police Station as a FIR. To tackle the issue of cyber crimes, CIDs (Criminal Investigation Departments) of various cities opened up Cyber Crime Cells in different cities as well. Chapter 10 and 13 of the IT Act talks about the Offences (and the said penalties awarded under it, if proven) under the Act and the power given to the victims against it and during the procedure of investigation, respectively.

Section 48 of the IT Act, 2002 establishes the Cyber Appellate Tribunals around different places in the country. Section 57 provides Appeal to Cyber Regulations Appellate Tribunal. –

(1) Save as provided in sub-section

(2), any person aggrieved by an order made by the controller or an adjudicating officer under this Act may prefer an appeal to a Cyber Appellate Tribunal having jurisdiction in the matter.

Jurisdictional Challenges In Case Of Foreign Defender

India at present does not have a proper extradition law to deal with crimes that have been committed over the Internet.  To address this issue, India should become a signatory to the Convention of cyber crimes treaty and should ratify it. The Supreme Court of India, in the case of SIL Import v. Exim Aides Silk Importers , has recognised the need for the judiciary to interpret a statute by making allowances for any relevant technological change that have occurred. Until there is specific legislation in regard to the jurisdiction of the Indian Courts with respect to Internet disputes, or unless India is a signatory to an International Treaty under which the jurisdiction of the national courts and the circumstances under which they can be exercised are spelt out, the Indian Courts will have to give a wide interpretation to the existing statutes, for exercising Internet disputes. But some of the legislation currently present, can still be helpful.

Section 75 of the Information Technology Act, 2000  implies that the Act shall apply to an offence or contravention committed outside India by any person if the act or conduct constituting the offence involves a computer, computer system or computer network located in India. While

Section 3 and 4 of the Indian Penal Code, 1860 deals with the extra-jurisdictional power given to the Indian Courts.  Code of Criminal Procedure, 1973, Section 188 provides that even if a citizen of India outside the country commits the offence, the same is subject to the jurisdiction of courts in India. In India, jurisdiction in cyberspace is similar to jurisdiction as that relating to traditional crimes and the concept of subjective territoriality will prevail. Moreover, Section 178 deals with the crime or part of it committed in India and Section 179 deals with the consequences of crime in Indian Territory.

In the present scenario where the cyber crimes are increasing to an alarming extent, the present need of the hour is to have broad-based convention dealing with criminal substantive law matters, criminal procedural questions as well as with international criminal law procedures and agreements. The IT Act, 2000 would be crippled without proper means and ways of implementing it.

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In this article, Mohammed G A who is currently pursuing M.A. IN BUSINESS LAWS, from NUJS, Kolkata, discusses Corporate Social Responsibility in India.

INTRODUCTION

The concept of Corporate Social Responsibility (CSR) rests on the philosophy of give and take. As the corporate entities utilize valuable resources from the society in the form of raw materials, human resources etc., for its operations, the corporates should act as trustees of the society and must give back something for the welfare of the society. In common parlance, CSR is a term broadly used for defining the responsibilities of corporate world towards the society & environment. While the term CSR is not novel in this corporate world but its scope and meaning has endured major changes from considering it as a mere voluntary charitable activity in comparison with the obligations of the Corporate towards the outer world. There are many large corporate groups who have been actively involved in the CSR activities but regrettably, the number is relatively less. With the objective of inciting more corporate groups to contribute in the process of development of the society by way of CSR, the Government of India has actually implemented the concept of CSR in the new Companies Act 2013. On February 27, 2014[1], the Government of India has notified the guidelines for CSR spending under Section 135 Companies Act, 2013 and Schedule VII[2] of the Companies Act as well as the provisions of the Companies (Corporate Social Responsibility Policy) Rules, 2014 (CSR Rules) which has come into effect from 1 April 2014.

This scope of this article begins by developing a general understanding of the concept of CSR, based on global practices, Indian tradition, and the object and provisions of the Companies Act, 2013. It further emphasises the key features of Section 135 of the Companies Act, 2013, Schedule VII of the Companies Act 2013 and the Companies (Corporate Social Responsibly) Rules, 2014 and highlights its implications to companies.

CSR IN GLOBAL CONTEXT

There is no universally accepted definition for the term CSR, but to understand the meaning of it in simple words, one might go through the definition which has been given by the European Commission. The definition states that “CSR is the responsibility of the enterprises for their impact on the society…Enterprises should have in place a scheme to integrate ethical, social, environmental and consumer concerns in their business and core strategy, in close collaboration with their stakeholders”.[3]According to the Unites National Industrial Development Corporation (UNIDO), “Corporate social responsibility is a management concept whereby companies integrate social and environmental concerns in their business operations and interactions with their stakeholders”.[4]

The concept of CSR has been introduced all across the world but different countries have different ways of application. But the common thing is that all the countries use the LBG model to measure the real value and effect of their community investment to the society and business. In developed countries like USA CSR team in the Bureau of Economic and Business Affairs heads the Department’s involvement with U.S. businesses in the advancement of responsible and ethical business practices. In US corporate community contributions by US companies are ten times higher than those of their British counterparts[5] and further, US companies typically disclose CSR activities on their websites like the provision of combating climate change or providing better health care which has not appeared until recently on the websites of European companies.  In EU, the CSR policy is built upon guidelines and principles laid down by the United Global Compact, United Nations Guiding Principles on Business and Human Rights, ISO 26000 Guidance Standard on Social Responsibility and OECD Guidelines for Multinational Enterprises.

The institutional context of CSR for Countries such as Japan, South Korea and Taiwan, was in terms similar to that of European Continent. They are characterized by a high bank and public proprietorship, masculine and long-term service, and coordination and control systems based on long-term relations and partnerships rather than markets. The Japanese ‘Keiretsu’, Taiwanese conglomerates or the Korean ‘Chaebol’ have a legacy of CSR analogous to European companies comprising social services, life-term employment, and health care as a consequence of response from the regulatory and institutional environment of business but not merely due to voluntary corporate policies.

In the developing countries, many multinational companies have been the major driving force for the recent surge in CSR activities in these developing nations. For example, campaigns against Nike’s labour practices in its Asian supply chains and Shell’s role in Nigeria had sparked substantial changes toward more responsible CSR practices in MNCs. Further, the domestic companies in the developing countries have contributed to CSR activities such as improvement of the infrastructure of education, health, and transport etc. Likewise, as the example of the Grameen Bank[6], instituted by Nobel Peace Prize winner Muhammad Yunus substantiates, a vital topic on the CSR agenda is the inspiration of small-scale entrepreneurship through micro-credit, and the financial empowerment of women and other disregarded minorities.

CSR IN INDIA

Philanthropy and CSR are not a new concept for India or Indian Companies. CSR in India has traditionally been seen as a philanthropic activity, which was more of a kind of voluntary spend rather than a statutory obligation under any of the statutes. If we look at the Indian heritage, there were three types of philanthropic or charitable activities which were traditionally practised namely Dana, Dakshina and Diksha. Dakshina was one which was given in exchange/return of something; Diksha was something thing which was given for your own enlightenment and Dana was the purest form of charity which was done without expecting something in return.  Keeping in view of Indian Tradition, this was an activity which was voluntarily performed by the people without any deliberation.  As a consequence of this, there is limited documentation on specific activities related to this concept. Further, the corporates entities in India such as Tata can self-esteem themselves on more than one hundred years of reliable business practices, including far-reaching philanthropic activities and society involvement.[7]

India is the first country in the world to have a statutory compliance requirement on CSR spending whereas, in other countries like UK, France, Germany etc., there have been voluntary guidelines. The Companies Act, 2013 has instituted the idea of CSR under Sec 135 of the Companies Act, 2013, to the forefront and through its disclose-or-explain directive, is promoting greater disclosure and transparency.  The Act stipulates that companies which meet a certain set of criteria will have to spend at least 2% of their average profits in the last three years towards CSR activities.  Schedule VII of the Act, which lists out the CSR activities, advises communities be the focal point. On the other hand, by conversing a company’s relationship with its stakeholders and assimilating CSR into its core operations, the CSR rules suggest that CSR needs to go beyond communities and beyond the concept of philanthropy.  In case, entities are unable to comply with the CSR provisions under the Act, they would be required to give explanations/reasons for not spending the amount on CSR activities. The approach is to ‘comply or explain’. If they fail to do so, they would face action, including a penalty.

CSR under the Companies Act 2013

Some of the key features of CSR under the Companies Act, 2013 have been analyzed under the below subheadings

CSR provisions and applicability

According to Section 135, Companies Act, 2013, the CSR provisions will be applicable to private limited and public limited companies, as well as their holding and subsidiary companies and foreign companies that have offices in India and meets any of the following criteria:

1. Company must have a net worth of INR 500 crore of more in any financial year;
2. Company must have an annual turnover of INR 1,000 crores or more in any financial year;
3. Company must have a net profit of INR 5 crore or more during any financial year.^[8]

Companies that meet any of the aforesaid criteria must spend at least two percent (2%) of their average net profits made during the previous three financial years on CSR activities.

An inclusive definition of CSR

While the Companies Act used CSR as a nomenclature without actually defining it, the notified CSR rules have defined the term “CSR” to mean and include but not limited to:

1. Projects or programs relating to activities enumerated in the Schedule; or
2. Projects or programs relating to activities undertaken by the Board in pursuance of recommendations of the CSR Committee as per the declared CSR policy subject to the condition that such policy covers subjects specified in the Schedule.

This inclusive definition of CSR is of importance as it permits the companies to involve in projects or programs relating to activities enumerated under the Schedule. It also gives flexibility to the companies by permitting them to choose their ideal CSR engagements that are in accordance with the CSR policy.

CSR Committee and Policy

Every qualifying company will be required to constitute a Committee (CSR Committee) of the Board of directors (“Board”) consisting of 3 or more directors, including at least one independent director.[9] The CSR rules 2014, states that an unlisted company and a private company which are not required to appoint an independent director shall constitute a CSR committee without an Independent director.[10] A private company having only two directors shall constitute its CSR committee with two such directors.[11] In the case of a foreign company, the CSR Committee shall consist of at least two persons wherein one person shall be Indian resident and another person shall be nominated by the foreign company.[12]

The CSR Committee shall articulate and endorse to the Board, a CSR policy which shall specify the activity or activities to be undertaken by the company; recommend the amount of expenditure to be incurred on the activities referred and monitor the CSR Policy of the company.[13]The Board shall take into considerations of the suggestions made by the CSR Committee and approve the CSR Policy of the company.[14]

Role of the board and the CSR committee:

Computation of Net profit

Every company incorporated under Companies Act will have to report its net profits accrued during the financial year for the purpose of ascertaining the criteria stated under Section 135(1) of the Companies Act, 2013. There are a distinct set of rules governing the Indian and Foreign Company in this aspect.

(a) Indian Company: The methodology for computation of net profit has been explicitly provided in the CSR Rules. According to the CSR Rules for the determination of the ‘net profit’, of a company profits made by the company from its overseas branches or dividend income received from another Indian company have to be disregarded. Further, the 2% CSR is to be computed as 2% of the average net profits made by the company during the last three financial years.[15] Also, the computation of net profit is in accordance with Sec 198 of the Companies Act, 2013 which is mainly net profit before tax.[16]

(b) Foreign Company: CSR rules states that the net profit of a foreign company incorporated in India shall be determined in conformity with the profit and loss account and balance sheet of a foreign company which will be formulated in accordance with Section 381(1)(a) read with Section 198 of the Companies Act.[17]

Scope Activities under CSR

Schedule VII of Companies Act, 2013, provides a wide spectrum of activities which may be undertaken by the body corporates in India. Apart from the specified activities, the Government may prescribe any other activity which it thinks proper to be included within the ambit of CSR.[18] The activities that can be done by the company to achieve its CSR obligations include

1. eradicating extreme hunger and poverty;
2. promotion of education;
3. promoting gender equality and women empowerment
4. reducing child mortality and improving maternal health,
5. combating human immuno-deficiency virus, acquired, immune deficiency syndrome, malaria and other diseases
6. ensuring environmental sustainability;
7. employment enhancing vocational skills;
8. social business projects;
9. contribution to the Prime Minister’s National Relief Fund or any other fund set up by the Central Government or the State Governments for socio-economic development and relief and funds for the welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and women and
10. such other matters as may be prescribed by the government of India.[19]

General Circular No. 21/2014 of Ministry of Corporate affairs had clarified that the entries in the Schedule VII have to be interpreted liberally so as to encapsulate the crux of the subjects listed in the said schedule. The items enumerated in Schedule VII of the act are based on broad concepts and expected to cover a wide range of activities. The General circular also provides an elucidatory list of activities that can be included under CSR. In a similar manner, CSR expenditure can be spent on many more activities which are relatable to the ones which are enumerated under Schedule VII.[20]

The Ministry of Corporate Affairs, in order to provide clarity to the execution of CSR, has enumerated the activities which shall not be treated as CSR activities. The following do not constitute as activities falling under CSR:

1. Activities undertaken in pursuance of the normal course of business by the company;
2. Activities undertaken outside India;
3. Activities that are exclusively for the benefit of employees of the company and their families;
4. One-off events such as awards/ marathons/ advertisement/ charitable donations/ sponsorships of TV programmes etc. would not be regarded as part of CSR expenditure.
5. Expenses incurred by companies for complying with any Act/ Statute of regulations (such as Land Acquisition Act, Labour Laws etc.)
6. Contributions made either directly or indirectly to any political parties under Section 182 of Companies Act 2013.[21]

Implementation of CSR

As per the Companies Act, 2013, the activities enumerated in Schedule VII can be executed in the following ways:

1. It must be carried out within India, preferably at the local areas and the areas around where the company operates.
2. It may be performed as CSR projects or activities or  programs which may either be fresh or ongoing;
3. It may be carried out with the aid of a registered trust or society, or a charitable company functioning within India which is established by the funding company, its parent, subsidiary or associate company; or which is not established by the funding company, its parent, subsidiary or associate company if it has a proven track record of undertaking similar activities for at least three years;[22] and
4. It may be conducted in association with other companies provided that each eligible company is able to report its CSR activities individually.[23]
5. It may also use up to 5% of its CSR spending in a financial year for training its own employees/personnel for implementing CSR activities or for developing the required facilities/capacities of their own personnel or implementing agencies.

Reporting

It is mandatory for the companies to publish the CSR report on their company’s official websites annually[24]. The Board of directors of the Company must prepare an annual report on the CSR activities of the company in a separate format specified in the CSR rules. The CSR report, inter alia, must contain a brief overview of the CSR policy, the composition of the CSR committee, average net profit in the preceding three financial years, 2% of the average net profit of the company, the amount of expenditure that was spent on CSR activities and any amount which have left unspent. In the case of a foreign company, the balance sheet failed under sub-clause (b) of Section 381(1) shall contain an annexure regarding report on CSR. If the company fails to spend the minimum required portion of its net profit on CSR activities, the reasons for failing to do so must be mentioned in the Board report.

Penalty for Contravention of CSR provisions

According to Section 134(3)(O) the companies Act 2013, the board of directors need to mandatorily disclose all the relevant information about its Company’s CSR policy and its implementation on an annual basis. Section 134(8) of the Act states that if the company fails to comply with the aforementioned provision, it shall be liable to pay a fine which shall not be less than Rs. 50,000 but may extend to INR 25,00,000. Further, every defaulting officer shall be punishable with an imprisonment for a term, not more than 3 years or with a fine which shall not be less than INR 50,000 but may extend to INR 5,00,000 or with both. This essentially infers that the Act penalizes a company for failure to disclose information about its CSR policy but does not hold them liable for not undertaking CSR activities.

However, Section 450 read with Sec 451 of the Act, which deals with general penalties for contravention of the rules and repeat offences, contains a provision for punishing a company or its officers in case no specific punishment is provided for a particular offence. Sec 450 of the Act states that if a company contravenes with any provisions of the Act or any rules thereunder, the company and any defaulting officer are liable to pay a fine which may extend to INR 10,000 and INR 1,000 per day if the contravention continues after the first fine.

According to Section 451 of the Act, where the defaulter is punished either with fine or with imprisonment and where the identical offence is committed for the second or successive occasions within a period of three years, then, that company and every officer thereof who is in default shall be punishable with twice the amount of fine for such offence in addition to any imprisonment provided for that offence.

CONCLUSION

From the above analysis, it is evident that CSR is a noble initiative wherein the corporate entities which reap the benefits of resources available at the society helps to fill the gap of socio-economic inequality prevalent in the country and address the problems faced by the society at large.  In most of the countries, CSR activities was a voluntary obligation by the companies or by regulatory. India is the first country in the world to have a mandatory statutory compliance requirement on CSR spending, which was incorporated under Section 135 of the Companies Act, 2013 and has come into effect from 1 April 2014. As a consequence of this, various companies have taken on extensive projects addressing the socio-economic concerns and have supplemented the government’s efforts of sustainable development and engage the corporate world with the country’s development.

However, there are certain lacunas like; there was no tax clarity on the CSR spending, ambiguity on the computation of financial accounts of foreign companies, an absence of clarity on the regulations of CSR vis-a-vis foreign contribution. Even though there are certain lacunas, they should not be permitted to become an obstacle in implementing the true spirit of CSR.  Thus, the government and corporate entities must mutually work together for an effective implementation and addressing their concerns.

BIBLIOGRAPHY

 STATUTES

• The Companies Act, 1956
• The Companies Act, 2013

RULES

• Companies (Accounts) Rules, 2014
• Companies (Corporate Social Responsibility) Rules, 2014

SCHEEDULES

• Schedule VII of Companies Act, 2013

NOTIFICATIONS

• Ministry of Corporate Affairs. Schedule VII. [GSR 130 E] dated 27^th Feb, 2014.
• Ministry of Corporate Affairs. Corrigenda to Schedule VII.  [GSR 261 (E)] dated 31^st Mar, 2014.
• Ministry of Corporate Affairs. Enforcement Notification S.O. 902(E) dated 26^th Mar 2014.
• Ministry of Corporate Affairs. Further Amendment to Schedule VII. [GSR 568 (E)] dated 06^th Aug, 2014.
• Ministry of Corporate Affairs. Companies (Corporate Social Responsibility Policy) Amendment Rules, 2014. [GSR 644(E)] dated 12^th Sep, 2014.
• Ministry of Corporate Affairs. Further Amendments to Schedule VII. [GSR 74 (E)] dated 24^th Oct 2014.
• Ministry of Corporate Affairs. Companies (Corporate Social Responsibility Policy) Amendment Rules, 2015 [GSR 43(E)] dated 19^th Jan, 2015.
• Ministry of Corporate Affairs. Companies (Corporate Social Responsibility Policy) Amendment Rules, 2016. [GSR 540 (E)] dated 23^rd May, 2016.
• Ministry of Corporate Affairs. Exemption to Specified IFSC Private Company [GSR 09(E)] dated 04^th Jan, 2017.
• Ministry of Corporate Affairs. Exemption to Specified IFSC Public Company [GSR 08(E)] dated 04^th Jan, 2017.

CIRCULARS

• Ministry of Corporate Affairs. Clarifications with regard to provisions of Corporate Social Responsibility under Section 135 of Companies Act,2013.General Circular No. 21/2014 bearing No. 05/01/2014-CSR. (Issued on 18^th June, 2014)
• Ministry of Corporate Affairs. Clarification with regard to the provisions of Corporate Social Responsibility (CSR) under Section 135 of Companies Act, 2013. General Circular No. 36/2014 bearing No. 05/01/2014-CSR. (Issued on 17^th Sep, 2014)
• Ministry of Corporate Affairs. Constitution of a high level committee to suggest measures for improved monitoring for the implementation of Corporate Social Responsibility policies by the companies under Section 135 of Companies Act, 2013. General Circular No. 01/2015 bearing No. 05/09/2014-CSR. (Issued on 3^rd Feb, 2015)
• Ministry of Corporate Affairs. Frequently Asked Questions (FAQs) with regard to Corporate Social Responsibility under Section 135 of Companies Act,2013.General Circular No. 01/2016 bearing No. 05/19/2015-CSR. (Issued on 12^th January, 2016)
• Ministry of Corporate Affairs. Clarifications with regard to provisions of Corporate Social Responsibility under Section 135 of Companies Act,2013.General Circular No. 05/2016 bearing No. 05/01/2014-CSR. (Issued on 16^th May, 2016)

BOOKS

• A Ramaiya, Gudie to Companies Act: Providing Guidance on the Companies Act, 2013 (18^th edition, LexisNexis 2015)
• Taxmann’s, A Comparative Study of Companies Act 2013 and Companies Act 1956

(Taxman Publication Pvt. Ltd., 2013 edition)

ARTICLES

• Elankumaran, S., Seal, R., & Hashmi, A. 2005. Transcending Transformation: Enlightening Endeavours at Tata Steel. Journal of Business Ethics, 59(1): 109-119.
• Brammer, S., & Pavelin, S. 2005. Corporate community contributions in the United Kingdom and the United States. Journal of Business Ethics, 56: 15-26.
• EC, Green Paper, Promoting a European Framework for Corporate Social Responsibility, COM (2001) 366 (18/07/2001), para 20.
• CII and PWC. 2013. Handbook on Corporate Social Responsibility in India. Available at: https://www.pwc.in/assets/pdfs/publications/2013/handbook-on-corporate-social-responsibility-in-india.pdf

WEB SITES

• http://www.mca.gov.in
• http://www.unido.org/csr/o72054.html
• http://www.grameen-bank.net/

References.

[1] Press Release dated 27th February 2014; http://pib.nic.in/newsite/erelease.aspx?relid=104293

[2]Schedule VII deals with the activities which may be included by companies in their CSR policies

[3] EC, Green Paper, Promoting a European Framework for Corporate Social Responsibility, COM (2001) 366 (18/07/2001), para 20, available at http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52001DC0366&from=EN. Accessed on 21 March 2017

[4] http://www.unido.org/csr/o72054.html. Accessed on 21 March 2017

[5] Brammer, S., & Pavelin, S. 2005. Corporate community contributions in the United Kingdom and the United States. Journal of Business Ethics, 56: 15-26

[6] http://www.grameen-bank.net/

[7] Elankumaran, S., Seal, R., & Hashmi, A. 2005. Transcending Transformation: Enlightening Endeavours at Tata Steel. Journal of Business Ethics, 59(1): 109-119

[8] “Any financial year” referred under Sub-Section (1) of Section 135 of the Act read with Rule 3(2) of Companies CSR Rule, 2014, implies ‘any of the three previous financial years’

[9] Section 135(1) of the Companies Act

[10] Pursuant to Section 149 of the Companies Act, 2013 and Companies (Corporate Social Responsibility Policy) Rules, 2014, Rule 5(1(i))

[11] Companies (Corporate Social Responsibility Policy) Rules, 2014, Rule 5(1(ii))

[12] Companies (Corporate Social Responsibility Policy) Rules, 2014, Rule 5(1(iii))

[13] Section 135 (3) of the Companies Act

[14] Section 135 (4) of the Companies Act

[15] Companies (Corporate Social Responsibility Policy) Rules, 2014, Rule 2(1)(f)

[16] Frequently Asked Questions (FAQs) with regard to Corporate Social Responsibility under Section 135 of Companies Act,2013.General Circular No. 01/2016 bearing No. 05/19/2015-CSR. (Issued on 12^th January, 2016)

[17] Section 198 of the Companies Act, 2013 deals with calculation of profits; Companies (Corporate Social Responsibility Policy) Rules, 2014, Proviso to Rule 2(1)

[18] The Companies Act, 2013, Schedule VII

[19] The Companies Act, 2013, Schedule VII

[20] Clarifications with regard to provisions of Corporate Social Responsibility under Section 135 of Companies Act,2013.General Circular No. 21/2014 bearing No. 05/01/2014-CSR. (Issued on 18^th June, 2014)

[21]General Circular No. 21/2014, Ministry of Corporate Affairs, (June 18, 2014), http://www.mca.gov.in/Ministry/pdf/General_Circular_21_2014.pdf

[22] Companies (Corporate Social Responsibility Policy) Rules, 2014, Rule 4(2); See Ministry of Corporate Affairs, Notification Companies (Corporate Social Responsibility Policy) Amendment Rules, 2016. [GSR 540 (E)] dated 23^rd May, 2016

[23] Companies (Corporate Social Responsibility Policy) Rules, 2014; Rule 4(3); See Ministry of Corporate Affairs, Notification Companies (Corporate Social Responsibility Policy) Amendment Rules, 2016. [GSR 540 (E)] dated 23^rd May, 2016

[24]Companies (Corporate Social Responsibility Policy) Rules, 2014, Rule 8 and 9

The post Corporate Social Responsibility in India appeared first on iPleaders.

In this article, Tushar Dey who is currently pursuing M.A. IN BUSINESS LAWS, from NUJS, Kolkata, discusses  Payment Gateway and the law in India.

INTRODUCTION

The world economy is becoming increasingly “electronic”, with more and more transactions occurring online and electronic payments increasing significantly to the extent that they are surpassing paper-based payment instruments. In addition, governments worldwide, particularly in India, are targeting electronic delivery of public services and banking activities. Also, the Internet is being tapped for servicing the rural populace due to significant cost benefits it provided and the reach that it affords. However, to facilitate increasing volumes, security and efficiency are essential and so is the required infrastructure and regulatory environment. An Internet E-Commerce Payment Gateway is thus a critical infrastructural component to ensure that such transactions occur without any hitches and in total security over electronic networks.

WHAT IS A PAYMENT GATEWAY

A payment gateway facilitates a payment transaction by the transfer of information between a payment portal (such as a website, mobile phone or interactive voice response service) and the front end processor or acquiring bank. A Payment Gateway is, therefore, provides an access point to the national banking network. All online transactions must pass through a Payment Gateway to be processed. In effect, Payment Gateways act as a bridge between the merchant’s website and the financial institutions that process the transaction. In other words, a payment gateway is a payment processing service provided by an service provider that authorizes credit card or direct payments processing for businesses whether online retailers or traditional brick and mortar businesses.

The payment gateway services can either be provided by the bank itself to its customers or can be provided by a specialized financial service provider as a separate service.

HOW DOES IT WORK

A Payment Gateway authenticates and routes payment in an highly secure environment between various parties and the concerned banks. The Payment Gateway functions in essence as an “encrypted” channel, which securely passes transaction details from the buyer’s computer or mobile phone to banks for authorization and approval. On acquiring the approval, the Payment Gateway sends back the information to the e-commerce website thereby completing the “order”, and providing verification. Whenever a customer wants to buy something from an e commerce portal, the Payment Gateway comes in the picture for the following functions:

• For Authorization – Verifying buyer’s credit or debit card details
• For Clearing Payment – Transferring the transaction to merchant’s bank
• For Reporting – Recording all transactions

Broadly speaking following Steps are involved in a Payment Gateway Transaction

1. The Consumer visits an e-commerce website and selects the goods or services and clicks on the “purchase” button. A message is then sent to the website regarding the consumer’s desire to buy and make payment.
2. The e-commerce website’s server, after receiving the message from the buyer’s computer, adds its digital certificate to identify the same. This message is now called a “Digital Order” and also includes the consumer’s Internet Protocol address and the transaction amount. The Digital Order is now sent to the Payment Gateway over a secured network. Security is ensured by data encryption.
3. Based on the Digital Certificate, the Payment Gateway authenticates the e-commerce website.
4. The Payment Gateway offers various payment options to the buyer.
5. Buyer chooses his desired payment option, which is transmitted via a secured link to the Payment Gateway.
6. The Payment Gateway sends the payment details to the acquiring bank (in case of card transactions) or seller’s bank (as termed for other instruments).
7. The acquiring bank sends the information to the buyer’s issuing bank (in case of card transactions) or buyer’s bank (as termed for other instruments) over a secure link.
8. Based on the credit limit and the payment instrument’s validity, the issuing bank either accepts or rejects the transaction. The confirmation/rejection message is transmitted to the Payment Gateway through the acquiring bank.
9. The Payment Gateway then transmits digital receipts to the e-commerce website as well as the buyer.
10. The web store then can ship the desired goods/services to the buyer.

ADVANTAGES OF PAYMENT GATEWAY

A Payment Gateway is immensely beneficial on account of the multiple advantages it offers including:

1. The 24 hrs a day, 365 days a year convenience
2. Real-time authorization of credit/debit cards
3. efficient transaction and rapid processing
4. payment options of buyer’s choosing
5. Secure flow of transaction details among buyers, sellers and financial institutions
6. Flexible real-time report generation
7. Multi-currency settlement, if the requirement is such
8. Refund Facility
9. Merchants get rid of extensive processing, large databases, and complex software
10. Certifying Authority authenticated secure servers
11. Collection data in bulk and in a cost-efficient manner, with the additional benefit of being checked for card validity
12. Access to credit/debit card “hot-list” to filter out fraudulent deals
13. Ability to provide value-added services to merchants, acquiring and issuing banks
14. Multiple host interfaces provisioning
15. Comprehensive and simplistic administrative controls
16. Strict security measures to enhance customer and merchant trust in the system.

THE LAW GOVERNING PAYMENT GATEWAYS

The Paramount law governing and regulating Payment Gateways in India is the Payment and Settlement Systems Act of 2007 which sets out the objective of ensuring that all the payment and settlement systems operating in the country are safe, properly secured, sound, efficient, accessible and authorized.

1. Payment and Settlement Systems Act, 2007

The Payment and Settlement Systems Act, 2007 (“PSS Act”) empowers the Reserve Bank of India to regulate and oversee all payment and settlement systems in the country and also to provide settlement finality and a sound legal basis for the same. The Act came into effect on 12 August 2008 vide a notification to that effect. The PSS Act specifies that no person, other than the RBI, can operate a payment system except with due authorization issued by the RBI (unless specifically exempted by the terms of the PSS Act itself.). The Act provides for netting and settlement finality and gives formal oversight powers over all payment and settlement systems with the RBI. In the brief, the Act:

1. Anoints the RBI as the authority that regulates payment and settlement systems;
2. Makes it compulsory to obtain RBI authorization to operate a payment system;
3. Warrants the RBI to regulate and supervise payment systems by determining standards and calling for information, regular reports, documents etc;
4. Warrants the RBI to audit and conduct on- and off-site inspections of the payment systems;
5. Warrants the RBI to issue directives; and
6. Provides for netting and settlement to be final and irrevocable.

Mandatory Authorization by RBI

As per the Payment and Settlement Act, 2007 (“Act”), Payment Gateways service provider will fall under the definition of ‘system provider’ which means a person who operates an authorized payment system. The Act, under its Section 5(1) mandates authorization by RBI for commencing or carrying on a payment system. An authorization from RBI for this purpose shall— (a) specify the date on which it takes effect; (b) specify the conditions subject to which the authorization shall be in force; (c) state the payment of fees, if any, to be paid for the authorization to be in force.

Process for making Application for Authorization

Regulation 3 of Payment and Settlement Systems Regulations, 2008 (“Regulation”), provides that the application for authorization can be made under sub-section (1) of Section 5 of the Act to the Bank for grant of authorization under sub-section (1) of section 7 of the Act. Such an application has to be furnished in Form-A prescribed under the Regulation and addressed to the Chief General Manager of Department of Payment and Settlement Systems at Central Office of the RBI at Mumbai, or to such other office or officer of the Bank as may be specified by it in this behalf.

RBI Approval is Discretionary

Under Section 6 of this Act, before an authorization is issued under this Act, the Reserve Bank can make such inquiries as it may consider necessary for the purpose of satisfying itself about the genuineness of the particulars submitted by the applicant and also to check the credentials of the participants.

Factors which shall be taken into account before issuing Authorization

Under Section 7, if reserve bank of India is satisfied after the inquiry that the application is complete in all respects and it conforms to provisions of the Act, it may issue authorization for operating the payment system having regard to the following below mentioned considerations, namely:

1. The need for proposal payment system or the services proposed to be undertaken by it;
2. The technical standards for the payment system, or the design of the proposed payment system;
3. The terms and conditions of operation of the proposed payment system including any security procedure if any;
4. The manner in which transfer of funds may be effected within the payment system;
5. The procedure for netting of payment instructions effecting the payment obligations under the payment system;
6. The financial status experience of management and integrity of the applicant;
7. Interests of consumer, including the terms and conditions governing their relationship with payment providers, and
8. Monetary and credit policies.
9. Timeline for Authorization

Time Bound Authorization

Under section 4 of the Act, RBI is required to process the application for authorization as early as possible and maximum within six months from the date of filing of such application. However, please note that this is not a mandatory period and RBI may process the application in a shorter duration.

Grant of Authorization

If the Bank is satisfied that the requirements of imposed by sub-section (1) of Section 7 of the Act are fulfilled, it may issue an Authorization Certificate in the Form ‘B’ (as annexed with the Regulations) to the applicant to commence or carry on a payment system and specify the date on which such authorization shall take effect, subject to fulfillment of conditions as may be imposed by RBI for grant of the authorization.

Term of the Authorization

An authorization, so granted shall remain to be in force till the authorization is revoked.

Mechanisms for settlement of disputes, penalties, and punishments

The Act lays down a fairly detailed mechanism for settlement of disputes between system participants in a payment system, between system participant and system provider and between system providers. The Act requires the system provider to make provision in its rules or regulations for creation of a panel to decide disputes between system participants. Where any system participant is dissatisfied with the decision of the panel, or where disputes arises between system participant and system provider or between system providers, such disputes are required to be referred to the Reserve Bank for adjudication, whose decision shall be final and binding on the parties. In cases where the Reserve Bank, in its capacity either as a system participant or system provider, is itself a party to the dispute, then there is a provision for referring such cases to the Central Government for adjudication. (Section 24 of Act)

Under the PSS Act, 2007, dishonor of an electronic fund transfer instruction due to insufficiency of funds in the account etc., is an offence punishable with imprisonment or with fine or both, similar to the dishonor of a cheque under the Negotiable Instruments Act 1881. Subject to complying with the procedures laid down under the PSS Act, 2007, criminal prosecution of defaulter can be initiated in such cases. This provision was introduced to discourage dishonor of electronic payment instructions. (Section 25 of the Act)

As per the Act, operating a payment system without authorization, failure to comply with the terms of authorization, failure to produce statements, returns information or documents or providing false statement or information, disclosing prohibited information, non-compliance of directions of Reserve Bank violations of any of the provisions of the Act, Regulations, order, directions etc., are offences punishable for which Reserve Bank can initiate criminal prosecution. Reserve Bank is also empowered to impose fine for certain contraventions under the Act. (Sections 26 and 30 of the PSS Act, 2007)

RBI CIRCULAR ON PROCESSING AND SETTLEMENT OF IMPORT AND EXPORT RELATED PAYMENTS FACILITATED BY ONLINE PAYMENT GATEWAY SERVICE PROVIDERS

To facilitate e-commerce, RBI vide its circular dated September 24, 2015 permitted Authorized Dealer Category- l Banks (AD Category-l banks as notified)  to offer the facility of payment for imports by entering into standing arrangements with the Online Payment Gateway Service Providers (“OPGSPs”).

The consolidated guidelines on such imports and exports as issued under the abovementioned circular were as under:

1. The Authorized Dealer Category-I banks desirous of entering into such an arrangement/s should report the details of each such arrangement as and when entered into to the Foreign Exchange Department, Central Office, Reserve Bank of India, Mumbai.
2. For bringing into effect such arrangements, the Authorized Dealer Category-I banks shall:

• carry out the due diligence of the ONLINE PAYMENT GATEWAY SERVICE PROVIDER;
• maintain separate Export and Import Collection accounts in India for each ONLINE PAYMENT GATEWAY SERVICE PROVIDER;
• satisfy themselves as to the bonafides of the transactions and ensure that the related purpose codes reported to the Reserve Bank are appropriate;
• submit all the relevant information relating to any transaction under such arrangements to the Reserve Bank, as and when advised to do so; and
• Conduct the reconciliation and audit of the collection accounts on a quarterly basis.

3. The Foreign entities, desirous of operating as ONLINE PAYMENT GATEWAY SERVICE PROVIDER, will have to open a liaison office in India with the approval of the Reserve Bank before operationalising the arrangement with any Authorized Dealer category-I bank. It would be incumbent upon the ONLINE PAYMENT GATEWAY SERVICE PROVIDER to:

1. ensure adherence to the Information Technology Act, 2000 and all other relevant laws/regulations in force;
2. put in place a mechanism for resolution of disputes and redressal of complaints;
3. create a Reserve Fund appropriate to its return and refund policy and
4. on-board sellers, Indian as well as foreign, following appropriate due diligence procedure.
5. Resolution of all payment related complaints in India shall remain the responsibility of the ONLINE PAYMENT GATEWAY SERVICE PROVIDER concerned.

The domestic entities functioning as intermediaries for electronic payment transactions in terms of the guidelines stipulated by RBI’s Department of Payment and Settlement Systems and intending to undertake cross-border transactions shall maintain separate accounts for domestic and cross-border transactions.

 Import transactions

1. The facility shall only be available for import of goods and software (as permitted in the prevalent Foreign Trade Policy) of value not exceeding USD 2,000 (US Dollar Two Thousand) only.
2. The balances held in the Import Collection account shall be remitted to the respective overseas exporter’s account immediately on receipt of funds from the importer and, in no case, later than two days from the date of credit to the collection account.
3. The Authorized Dealer Category –I bank will obtain a copy of invoice and airway bill from the ONLINE PAYMENT GATEWAY SERVICE PROVIDER containing the name and address of the beneficiary as evidence of import and report the transaction in R-Return under the foreign currency payment head.
4. The permitted credits in the ONLINE PAYMENT GATEWAY SERVICE PROVIDER Import Collection account will be collection from Indian importers for online purchases from overseas exporters electronically through credit card, debit card, and net banking and charge back from the overseas exporters.
5. The permitted debts in the ONLINE PAYMENT GATEWAY SERVICE PROVIDER Import Collection account will be

• payment to overseas exporters in permitted foreign currency;
• payment to Indian importers for returns and refunds;
• payment of commission at rates/frequencies as defined under the contract to the current account of the ONLINE PAYMENT GATEWAY SERVICE PROVIDER; and
• bank charges

Export transactions

 (i) the facility shall only be available for export of goods and services (as permitted in the prevalent Foreign Trade Policy) of value not exceeding USD 10,000 (US Dollar ten thousand) per transaction.

(ii) Authorized Dealer Category-I banks providing such facilities shall open a NOSTRO collection account for receipt of the export-related payments facilitated through such arrangements. Where the exporters availing of this facility are required to open notional accounts with the ONLINE PAYMENT GATEWAY SERVICE PROVIDER, it shall be ensured that no funds are allowed to be retained in such accounts and all receipts should be automatically swept and pooled into the NOSTRO collection account opened by the Authorized Dealer Category-I bank.

(iii) The balances held in the NOSTRO collection account shall be repatriated to the Export Collection account in India and then credited to the respective exporter’s account with a bank in India immediately on receipt of the confirmation from the importer and, in no case, later than seven days from the date of credit to the NOSTRO collection account.

(iv) The permitted debits to the ONLINE PAYMENT GATEWAY SERVICE PROVIDER Export Collection account maintained in India will be:

• payment to the respective Indian exporters’ accounts;
• payment of commission at rates/frequencies as defined under the contract to the current account of the ONLINE PAYMENT GATEWAY SERVICE PROVIDER; and
• charge back to the overseas importer where the Indian exporter has failed in discharging his obligations under the sale contract.

(v) The only credit permitted in the same ONLINE PAYMENT GATEWAY SERVICE PROVIDER Export Collection account will be repatriation from the NOSTRO collection accounts electronically.

The AD Category-I banks may bring the contents of this circular to the notice of their constituents and customers concerned.

CONCLUSION

With high growth predicted for e-commerce, the financial sector has to remain prepared and equipped to handle various kinds of payment instruments. Further, globally speaking, payment systems are increasingly becoming web-based and web-enabled with a strong drive towards paperless transactions. If Indian industry wants to be in the worldwide reckoning then it has to adopt electronic transactions and build the requisite infrastructure. Both buyers and sellers may have accounts with different banks, and there has to be a sound mechanism to manage such transactions. In addition, with transactions in India being more of “volume-based” rather than “value based”, there has to be a mechanism that can address both micro as well as macro payments. Since it is a time consuming and extremely expensive task for each and every bank to build its own Payment Gateway, a better option or an alternative would be to build a secure National-level Payment Gateway, which will be shared by various banks and which can handle different type of payment instruments. With all this in foreground, it can be safely concluded that the Internet E-Commerce Payment Gateway is a critical infrastructural component to ensure that such transactions occur without any hitches and in total security over e-networks. However along with designing a system which is has sound infrastructure, it becomes also very important that it must have a sound legal and regulatory framework under which it can function smoothly. The Payment and Settlement Act, 2007 (“Act”) in that context seems an effective regulation, which along with relevant RBI circulars has successfully met the challenge.

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In this article, Dr.V.Ramprasath Manohar, who is currently pursuing M.A. IN BUSINESS LAWS, from NUJS, Kolkata, discusses Regulations for Collaboration between Indian and Foreign Educational Institutes.

Introduction

In the era of globalisation and liberalisation, collaboration between Indian and Foreign educational institutions is gaining the momentum in India. Hence, increased aspiration of Indian institution to have collaboration with foreign educational institution to improve their brand value and increased competition among foreign educational institutions to capture the vast Indian educational market have necessitated setting the framework of regulations for regulating such collaboration between Indian and Foreign educational institution. In this essay, an attempt is made to understand the framework of such regulations and its consequences.

Need for Collaboration between Indian and Foreign educational institutes

In the 21^st century of knowledge, it is important to focus on higher education to improve the prosperity of nation. The largest aspiring youth population of India have to be provided with the quality higher education and cutting edge technical skills to compete effectively in global scale. Only few of the Indian educational institutions are being placed in world top class institutions. Indian education system has the advantages like high number of students, English as primary medium in higher education and autonomy of academic institutions etc. Whereas Foreign educational institutions have high technical knowledge, updated curriculum and effective content delivery system etc.  Hence, collaboration between Indian and foreign education institutions will lead to synergy between both Indian and foreign educational institutions in terms of academic and research and development.

Objectives of regulations for collaboration between Indian and Foreign Educational Institutions

The major objectives of regulations for collaboration between Indian and foreign educational institutions are

1. Regulations are aimed at systematise and establish the framework for collaboration and facilitation of mutually beneficial collaboration
2. Regulations are essential to safeguard the interest of students of India from any spurious foreign institutions.
3. Regulations are aimed to ensure maintenance of uniform standards in quality of higher education in compliance to various statutory bodies in India.
4. Regulations are aimed at preventing any non-accredited Indian and foreign educational institutional collaboration and thereby ensuring quality of higher education in India.
5. Regulations are aimed at protection of national interest to prevent any anti-national academic curriculum, research and development in India.

Regulatory bodies and regulations for collaboration between Indian and foreign educational institutions

In India, UGC and AICTE are the regulatory bodies for regulating collaboration between Indian and foreign educational institutions.

AICTE is the regulatory body for regulating such collaboration in the field of Technical Education, Research and Training. AICTE has also issued guidelines for collaboration and twinning programme. This guideline prescribes various eligibility conditions, procedures for approving collaboration between Indian and foreign educational institutions.

Whereas, UGC is the regulatory body for regulating foreign collaboration of Indian universities and colleges other than technical institutions which are regulated by AICTE. For this purpose, UGC has recently repealed it’s 2012 regulations and enacted UGC (Promotion and Maintenance of Standards of Academic Collaboration between Indian and Foreign Educational Institutions) Regulations, 2016. The new enactment is brought out by UGC to enhance the qualitative and effective collaboration between Indian universities and colleges and foreign institutions.

Eligibility criteria for Collaboration as prescribed by UGC and AICTE regulations

UGC regulations 2016, section 3 prescribes the eligibility conditions of collaborating foreign institution as well as Indian institutions.

As per section 3(1) of the said UGC regulations, the foreign institution shall be accredited with the highest grade or threshold level accreditation in their homeland by accreditation agency. Similarly, AICTE guidelines also mandate that the foreign educational institution shall be accredited in their parent country.

As per section 3(2) of the UGC regulations, An Indian Educational Institutions with a grade not less than B grade and have experience of at least six years or have at least two batches of students graduating, are eligible to collaborate with foreign educational institution. Further, UGC guidelines prescribe that the collaborating Indian educational institution should have basic academic infrastructure, including laboratory and workshop facilities and library. However, AICTE regulations mandated that Indian education institution has to be approved by the AICTE with prescribed quality can collaborate with foreign educational institutions.

Further, both the UGC and AICTE regulations impose a condition that, Indian educational institution collaborating with foreign educational institution, shall publicly display academic requirements and details of collaboration programme. In order to safeguard the interest of national security and territorial integrity of India, any programme which is against national security and territorial integrity should not be conducted with foreign institutional collaborations. In order to safeguard the interest of students undergoing such collaborative programme, regulations place onus to redress the grievances of students on the Indian Educational Institution entering into such academic collaboration.

Procedure for approval for Indian and foreign educational institution collaboration

UGC regulation is recently amended to streamline and simplify the procedure of collaboration between Indian and foreign educational institution. Earlier, foreign educational institution had to apply for collaboration. Since, foreign educational institutions are not aware about the legal framework of India, foreign educational institutions are reluctant to collaborate. Therefore, it was amended in order to enable Indian educational institutions to initiate and apply for collaboration with foreign educational institutions. Indian educational institution has to prepare a draft MOU for collaboration and draft MOU is to be approved by UGC. Thereafter, Indian educational institution has to apply in a separate online portal with MOU of collaboration between Indian and foreign educational institutions. The approval for collaboration is valid for minimum two cycles of degree programme and it can be renewed thereafter to continue collaboration.

AICTE also mandates that a tripartite or bipartite MOU between collaborating institutions to be submitted to the council for approval of collaboration. NOC form the embassy of foreign institute’s parent country to be submitted for collaboration and twinning programme.

Further, UGC regulation mandates that students who enrolled for collaborative programme should undergo minimum two semesters in case of degree programme and one semester in case of post graduate programme in parent country of foreign educational institutions. AICTE regulation mandates minimum one semester study in foreign country campus.

Violations of regulations by collaborating institutions

As per UGC regulations, section 7 deals with violations of regulations by collaborating institutions. In case of any collaborating institutions violates the regulatory provisions and also terms and conditions of MOU, the approval of collaboration shall be revoked after hearing the institution. However, while revoking the permission for collaboration, the interest of students who have already enrolled for collaboration programme shall be protected. Further, UGC shall also take action under section 14 of the UGC act against violating institutions. In case, any Indian education institution indulged in false claiming of foreign institutional collaboration or else collaborate without necessary UGC approval, penal action shall be initiated against such institutions.

As per AICTE regulations, any foreign educational institutions which is violating the regulations or else failing to comply with the directions of AICTE, AICTE may withdraw the approval for collaboration. Further, such violations shall be intimated to external affairs ministry and their embassy for further action as per law of their country. The visa issued to employees of such institution may be withdrawn. Repatriation of funds from India to their origin country may be prohibited with the help of RBI.

Importance of regulations for collaboration between Indian and Foreign Educational Institutions

Regulations are important to establish the legal framework for collaboration and to safeguard the interest of students of India from any spurious foreign institutions. Regulations ensure maintenance of uniform standards in quality of higher education in compliance to various statutory bodies in India.

Critical analysis of functioning of regulations for collaboration

Over the years, functioning of regulations for collaboration between Indian and foreign educational institutions are not satisfactory. Prior to 2016 amendment of UGC regulations, UGC has not received any proposals from foreign university for collaboration. This is mainly due to cumbersome procedure or lack of awareness about the procedure of collaboration amongst foreign educational institutions. Further, uncertainty of policy regulations make the foreign university as reluctant.

UGC regulations are cautious approach towards collaboration between Indian and Foreign educational institutions. Previous instance of mushrooming of unhealthy collaborations are being averted by this cautious approach. In 2016 amendments, it was mandatory for both Indian and foreign educational institutions to have accreditation from the prescribed accreditation agencies.

Further, UGC regulations are having provision to safeguard the interest of students who are victim of any failure of collaborating institutions. But there is no detail mechanism on safeguarding the interest of students.

With respect to penal provisions of UGC and AICTE regulations, only withdrawal of approval of collaborations is provided. There are no stringent penal provisions like fine or imprisonment is not being provided in regulations.

Renewal of registration of collaboration after two academic cycles, this provision aimed at maintaining the quality of collaboration after initial approval of collaboration. However, without prescribed criteria for review and renewal of collaboration, this renewal will be arbitrary. Arbitrary procedure to renewal will deter the collaborating institutions from collaborations.

Comparative analysis of distinguished features of UGC Regulations (amendment) 2016 and 2012 regulations

The amendments in UGC (Promotion and Maintenance of Standards of Academic Collaborations between Indian and Foreign Educational Institutes) Regulations, 2012 was brought in 2016 and these amendments are effort to simplify and streamlining the effective collaboration between Indian educational institutions and foreign educational institutions. As well as these amendments are an effort to promote the quality of collaboration with the protection of students interest.

Importantly, 2016 amendment has limited the regulations to programme which are leading to award of degree. Whereas post graduate diploma programme were removed out of regulatory framework of collaboration between Indian and foreign educational institutions. Thus the scope of regulation is limited to only the critical part of higher education. Thus other programmes of higher education provide wide opportunity to collaborating foreign educational institutions to design and develop various collaborative or twinning programmes. Further, the burden of regulation of multiple courses by UGC was lessened. Thereby now, UGC regulatory efforts can be focussed on most critical part of higher education.

Further, 2016 amendment has brought in more focus on quality of higher education. The regulations 2016, has increased the eligibility criteria for quality accreditation requirements for collaboration. More stringent quality parameters were imposed both on Indian and Foreign educational institutions. Further, a subcommittee of experts in international education and jurisprudence is constituted in new UGC regulatory regime to scrutinize the applications of collaboration. This committee will bring in more expertise in scrutiny of application as well as it will enhance more transparency in regulations. Arbitrariness of regulatory body is being minimised by involving experts in subcommittee.

The process of regulations is streamlined with the use of online portal for approval of applications of collaborations. These online applications have to be disposed of within 60 days and the reasons for rejection have to be clearly mentioned. Thus arbitrariness, delay and corruption involved in approval of collaborations are being effectively minimised.

Further, protection of student’s interest is a high priority agenda of UGC regulations 2016. By imposing mandatory condition of minimum duration of study in foreign institutional campus, the quality of collaboration is addressed. For undergraduate programme, minimum two semesters should be spent in foreign university campus and in case of post graduation programme it is minimum one semester. Thus, minimum assured duration of exposure of Indian students in foreign country is being ensured. Thereby the collaboration between Indian and foreign educational institutions will lead to real improvement in quality of education to Indian students. In case of 2012 UGC regulations, there is no such minimum assured foreign exposure to students.

Challenges and scope for evolution of regulatory regime

Though, amended UGC regulations 2016 is a positive step towards enhancing the scope and application of regulation in the field of collaboration between Indian and Foreign educational institutions. But still, there is a great scope for leveraging the collaboration between foreign and Indian educational institutions. But, collaboration among the Indian and foreign educational institution are to be expanded in the field of academic content development, curriculum improvement, sharing of infrastructure, faculty exchange programme, student exchange programme and research and development.

Further, there are regulatory gaps in UGC and AICTE regulations. Such regulatory gaps have to be identified on continuous basis and there should be an innovative approach to resolve such regulatory gaps and failures over the years.

Regulations of collaboration between Indian and foreign educational institutions are mainly focussing on higher and technical education. Many of the professional institutions in the field of medicine, veterinary science, agriculture, horticulture need to be specially regulated to meet their specific requirements. Because, such institutions have their own unique needs and challenges of collaboration with foreign institutions. Therefore, ‘one size fit to all’ approach may not go in long way to address the diversified needs and challenges of collaboration between Indian and foreign educational institutions. In addition, collaboration in the area of primary and secondary education is rarely thought about it. Hence, regulations of collaboration in primary and secondary education are also to be evolved over the years.

Further, there is a growing demand for setting up of foreign educational institutional campus in India. So far it is not being allowed. However, in china and middle East countries, foreign educational institutions are allowed to set up their own campus. Though, Indian regulatory regime has no provisions for such regulations. But over the years, it is going to be an emerging trend in collaborations between foreign and Indian educational institutions. Such collaborations will bring more financial and technological resources from foreign countries to India and revolutionise the field of education in India.

However, free hand to foreign institutions and scrupulous collaboration will also have potential harmful impact on Indian educational institutions and also on Indian education system. Those potential disadvantageous aspects of collaborations to be continuously identified and regulations have to evolve dynamically to explore opportunities and to overcome challenges.

Conclusion

To conclude, collaboration between Indian and foreign educational institutions in higher and technical educations are being regulated by the regulations of UGC and AICTE respectively. These regulations aimed at improving the quality of higher education through collaboration and twinning degree programmes. The collaboration between Indian and foreign educational institution may lead to improvement in curriculum, content and its delivery, infrastructural availability, exposure to the Indian student and faculty. UGC regulations are amended in 2016 to meet the pitfalls of 2012 regulations. Overall, recent amendment in UGC regulations has attempted to streamline, simplify and efficient collaborations between Indian and foreign educational institutions with the more focus on improving quality of collaborations and protection of interest of students. However, the challenges and opportunities of collaboration are unlimited and it needs constant expansion and evolution of regulatory regime in an innovative manner but by always upholding the quality of education and interest of students and nation.

Reference

1. UGC (Promotion and Maintenance of Standards of Academic Collaborations between Indian and Foreign Educational Institutes) Regulations, 2012
2. UGC (Promotion and Maintenance of Standards of Academic Collaborations between Indian and Foreign Educational Institutes) Regulations, 2016
3. AICTE regulations on collaboration & Partnerships between Indian and Foreign Universities / Institutions in the field of Technical Education, Research and Training
4. aicte-india.org
5. ugc.ac.in
6. http://www.ugc.ac.in/pdfnews/3825480_Foreign-Collaboration-Regulations.pdf

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Idol, in the eyes of law, is a legal entity. A legal entity can sue as well as be sued. Therefore, there are legal consequences attached when someone breaks or either attempts to break an idol. Hence, let us look at the legal implications when someone damages an idol in a temple.

Legal status of an Idol

This must have come as a surprise to many of us, Lord Sri Ram fought the legal battle of Ayodhya (Ram Janmbhoomi case) through his representative and also emerged victorious. Under the Indian Judicial system, Idols have been given the status of a legal person.

Who is a juristic person? Does a juristic person have the right to sue?

Human beings can easily be made accountable for the wrongs they have done as well as can ensure their legal well-being. However, there are few non-living entities which cannot protect their own legal rights. Their legal rights are vested on others. These non-living entities are called artificial persons.

Idol of a temple is an artificial temple and can sue when someone tries to damage it. The caretaker of the Idol (Mahant) of the temple will sue on behalf of the Idol.

Therefore, answering the question, can a person who breaks or attempts to break an Idol at a temple be sued, the answer is Yes.

Which law applies when anyone attempts to break an Idol at the temple

Section 295 of the Indian Penal Code

The section clearly lays down that, when a person destroys, damages or defiles any place of worship or objects of worship held sacred, that is an Idol, will be punished with an imprisonment which may extend to two years along with a fine.

Therefore, maximum two years of imprisonment is the punishment when a person deliberately with the prior intention of insulting any class of religion breaks an Idol.

Will breaking of any Idol of God outside the temple will land you in jail

No. For satisfying the above penal provision the Idol must be inside the temple as well as regularly worshiped by the people or it should be in procession on festival occasions when the breaking takes place.

Therefore, breaking any Idol of God anywhere will not land you in jail. It might happen that during a normal shopping procedure an Idol of God might slip from your hand and gets broken. This will not land you in jail. Yes, when a person attempts to defame certain class of people deliberately making defamatory remarks on their religion will obviously land them in jail.

What will be the consequences when a person defames the Idol, hence the religion

Section 295 A of the IPC governs the situation where anyone deliberately does an act which outrages the religious feeling of a class by insulting its religious beliefs. Also, when a person intentionally by speaking, or by writing, or by using signs insults the religious belief of any class, such person will be punished by law for a term which may extend to three years with fine.

Therefore, when a person attempts to defame a religious class by defaming the Idol, section 295A of the IPC comes into action.

Section 296 talks of disturbing religious assembly. Therefore, when a person attempts to break the Idol or defame the Idol, he causes a disturbance to a lawful assembly gathered at the temple for the purpose of prayer. The punishment for this is imprisonment for one year or fine or both.

Section 298 of the Indian Penal Code might also apply where a person with the deliberate intention of defaming anyone’s religious feelings, utters words which downtrodden the religious sentiment of that person will be punished by law.

Idol theft

Indian temples are rich when it comes to antique idols. Protecting the same is the duty of law enforcement agencies. In any Idol theft case, the normal provision of theft as defined under the IPC will apply. Along with this, relevant provisions of Custom’s Act apply too.

Idol Wing of Tamil Nadu Police

The matter relating to Idol theft is such that Indian states like Tamil Nadu have a separate Idol Wing to look into such matters.

Primary functions of the Idol Wing CID

• To investigate cases of theft of idols and antiques exceeding value of Rs.5 Lakhs.
• To investigate idol theft cases referred to it by the State Government.
• To co-ordinate in the investigation of important idol theft cases handled by the District Police
• Collection of intelligence on nefarious activities of antique dealers and art collectors.

Who can file the case

In cases of Idol breaking or Idol theft, ideally, the person who will be filing the case will be the temple represented by its caretakers, or Trustees, where there exists a trust. If no one is taking action then any person belonging to the religion of whole Idol was sabotaged might also file a case on the basis of Section 296 and Section 298 of the Indian Penal Code.

What will be the legal consequences when a person breaks an Idol of a God kept in a residential home

As explained above, for satisfying the above penal provision the Idol must be inside the temple as well as regularly worshiped by the people or it should be in procession on festival occasions when the breaking takes place.

Other provisions of IPC such as

Important Judicial pronouncement on legal rights of Idols

An incident took place in Mumbai where water began to drip from the feet of the statue of Jesus. A rationalist thinker Sanal Edamaruku analysed the incident and gave an explanation of how the water from a nearby blocked drain was dripping from Jesus feet by the phenomenon of what is called the capillary action. He was held guilty under Article 295A of the IPC.

A person named Rajpal published an anonymous pamphlet called ‘Rangeela Rasool’ (Colourful Prophet). The pamphlet made derogatory and scurrilous remarks about the personal life of Prophet Muhammad and soon led to widespread unrest amongst Indian Muslims after gaining sufficient attention.  Since then judiciary has dealt at length with Section 295A, the much controversial issues surrounding freedom of speech and expression and blasphemy laws can be understood in light of the interpretation of the section by various courts in the country.

References

Sankaranarayanan Iyer vs Sri Poovananathaswami Temple; (1949) 2 MLJ 171

Pramatha Nath Mullick vs Pradyumna Kumar Mullick; (1925) 27 BOMLR 1064

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In this article Harmish Patel discusses, All You Need To Know About Real Estate (Regulation and Development) Act, 2016.

Introduction

The Real Estate (Regulation and Development) Act, 2016, the historic point realty law to shield home purchasers from deceitful developers, become operational from 1^st May 2017, nine years after it was imagined. The act was cleared by Parliament in March a year ago. Under the act, states needed to advise the reality guidelines and set up Real Estate Regulatory Authority (RERA) by April 30. Without telling the guidelines, the law won’t end up plainly operational. Notwithstanding, as on April 30, only 13 of the 32 states and Union regions, including Gujarat, Uttar Pradesh, Madhya Pradesh, Maharashtra, Odisha, Delhi, and Andhra Pradesh have informed the standards. Just a single state – Madhya Pradesh – has set up RERA while 9 others including Kerala, Maharashtra, Punjab, Rajasthan, Haryana, and Delhi have set up between time controllers. Lodging service authorities keep up that outstanding states have been coordinated to tell their tenets at the soonest.

Few important provisions of Real Estate (Regulation and Development) Act, 2016

• It makes it compulsory for all manufacturers – building up a venture where the land surpasses 500 square meter – to enroll with RERA before propelling on notwithstanding promoting their venture. Developers have been given time until July 31 to enroll.
• Not complying provisions will welcome up to the greatest detainment of 3 years or fine of up to 10% of the aggregate venture cost.
• Developers should submit and additionally transfer extend points of interest, including endorsed format arrange, timetable, cost, and the deal assertion, that forthcoming purchasers should sign to the proposed controller.
• Only designers who satisfy this exposure proviso would be allowed to promote their venture to imminent purchasers.
• Real Estate Appellate Tribunals to be set up in each state.
• As of now, the real estate area was to a great extent unregulated in India. In the event that a shopper had a dissension against an engineer, they needed to make rounds of purchaser or common courts. Presently, if there should be an occurrence of any grievance, the buyer can go to the real estate controller for redressal.
• Developers should put half of the cash gathered from a purchaser in a different record to meet the development cost of the venture. This will put a check to the general practice by designers to occupy purchaser’s cash to begin another venture as opposed to completing the one for which cash was gathered. This will guarantee that development is finished on time.
• The law is probably going to settle lodging costs. It will prompt improved activity in the part, prompting all the more lodging units provided to the market.
• It will get rid of here now gone again later administrators from the Division and channelise venture into it.
• Builders will likewise profit as the law has corrective arrangements for allottees who don’t pay contribution on time. The manufacturer can likewise approach the controller on the off chance that there is any issue with the purchaser.

The Real Estate (Regulation and Development) Act, 2016 (RERA) will at long run give India’s real estate segment its first controller from Monday, May 1, 2016. The act was passed by parliament a year ago and the Union Ministry of Housing and Urban Poverty Alleviation had given time till May 1, 2017, to detail and tell rules for the working of the controller. RERA looks to bring clearness and reasonable practices that would ensure the premiums of purchasers and furthermore force punishments on errant developers.

So what is RERA? Here is a glance at the real estate controller and how it will impact the real estate sector.

As indicated by RERA, each state and Union region will have its own controller and set of tenets to administer the working of the controller. Focus has drafted the standards for Union domains including the National Capital. While many states are still behind on timetable for warning of RERA principles, many have advised guidelines and a controller will begin working. Some of these states are Haryana, Uttar Pradesh and Maharashtra.

In spite of seeing a drop in the previous three years, the ticket costs are moderately high and inventories are heaping up. Low request is likewise adding to the decreased recuperation of venture by engineers. These reasons have stopped engineers from lessening the ticket costs.

RERA looks to address issues like deferrals, value, nature of development, title and different changes.

Delays in undertakings are the greatest issue confronted by purchasers. The reasons are numerous and the impact is tremendous. Since the most recent 10 years, many projects have seen deferrals of up to 7 years. Ventures propelled after the turn of this decade have confronted delays also. Some have keep running into obstructions even before a block was laid. The reasons incorporate redirection of assets to different activities, changes in regulations by experts, the earth service, national green tribunal and so on and different bodies like those included in foundation improvement and representing transport. In many spots, arrive procurement turns into an issue. Errant manufacturers regularly pitch activities to financial specialists without the endorsement of arrangements, unapproved increment in FAR, terrible nature of development, ventures stuck in a suit and so forth.

Key arrangements of RERA

1. The promoter of a real estate advancement firm needs to keep up a different escrow represent each of their activities. A base 70 for each penny of the cash from speculators and purchasers should be stored. This cash must be utilized for the development of the venture and the cost borne towards the land.
2. To give clearness to purchasers, developers should keep them educated of their other continuous tasks.
3. RERA obliges manufacturers to present the first endorsed plans for their continuous activities and the changes that they made later. They likewise need to outfit points of interest of income gathered from allottees, how the assets were used, the course of events for development, fulfillment, and conveyance that should be ensured by an Engineer/Architect/practicing Chartered Accountant.
4. It will be the obligation of each state controller to enroll real estate activities and real estate specialists working in their state under RERA. The points of interest of every single enlisted venture will be set up on a site for free.
5. RERA discusses the nature of development in ventures. In the course of the most recent couple of years, purchasers have dissented about poor of pads. The controller will guarantee insurance to purchasers in this matter for a long time from the date of ownership. In the event that any issue is highlighted by purchasers before the controller in this period incorporating into nature of development and the arrangement of administrations, the engineer should amend the same in a matter of 30 days.
6. Developers can’t welcome, publicize, offer, offer, market or book any plot, condo, house, building, interest in ventures, without first enlisting it with the administrative specialist. Moreover, after enlistment, all the notice welcoming speculation should bear the one of a kind RERA enrollment number. The enrollment no. will be given venture astute.
7. In the wake of enlisting the venture, developers should outfit points of interest of their money related articulations, legitimate title deed and support reports.
8. On the off chance that the promoter defaults on conveyance inside the concurred due date, they will be required to restore the whole cash contributed by the purchasers alongside the pre concurred financing cost said in the contract in light of the model contract given by RERA.
9. On the off chance that the purchaser picks not to take the cash back, the manufacturer should pay month to month enthusiasm on each postpone month to the purchaser till they get conveyance.
10. After developer enlists with the controller, a page will be made for the developer on the administrative expert’s site. The designer will be given login qualifications utilizing which it will transfer all the data with respect to the enlisted extends on the controller’s site. The number, kind of lots, plots and extends and their finishing status will be refreshed at a most extreme quarterly premise.
11. To add promote security to purchasers, RERA orders that designers can’t solicit more than 10 for every penny of the property’s cost as a propelled installment booking sum before actually consenting to an enrolled deal arrangement.
12. The controller will have the ability to fine and detain errant manufacturers in light of a case by case premise. The detainment can go up to a time of three years for a venture.

Conclusion

The Act is a positive change as far as expanding straightforwardness in the real-estate division, expanding responsibility of the promoters and engineers and building up proficient discussions for grievance review. This will thus prompt lower prosecution because of stringent principles and directions in the very degenerate part. Time bound endorsements and straightforwardness will likewise prompt more prominent stream of speculation both household and remote prompting lessening in cost of obtaining in the real-estate sector.Though it is a win-win circumstance for both the designers and the purchasers and will help the segment develop over the long haul, the inconsistencies in the Act should be desperately tended to. Encourage, the Act can’t be executed viable till the political hesitance in actualizing the Act is expelled which is a noteworthy detour. Consequently, the Act needs authoritative revisions by counseling the partners required as there is a tremendous extent of change combined with expelling any irreconcilable situation that the political class may have in the execution of the Act.

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

Suggested Reading.

Real estate industry and protection of consumer interests in India

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In this article, Aditya Arora who is currently pursuing Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, discusses the liability of Facebook in India if a crime is committed through use of their service.

• Under the Information Technology Act, 2000 the term ‘intermediary’ has been defined under as “intermediary”, with respect to any particular electronic records, means any person who on behalf of another person receives, stores or transmits that record or provides any service with respect to that record and includes Telecom service providers, network service providers, internet service providers, web-hosting service providers, search engines, online payment sites, online-auction sites, online-market places and cyber cafes.[1]”
• The amendment to the 2008 Information Technology Act has further clarified and widened the ambit of intermediary and now also includes telecom providers, internet providers, online payment platforms, online market places, web hosting service providers, etc. ISPs like Airtel, BSNL, Idea and social media websites such as Facebook, Google, etc. have now been included under the term ‘intermediary’ under the Act.
• Since Facebook is a platform giving options to people to socialize, therefore it will be considered to be an intermediary for the purposes of determining its liability under the Information Technology Act. One of the famous examples outlining intermediary’s liability is the Baazee case where the CEO of the service provider was jailed for selling obscene MMS Clip on its platform, otherwise banned by law.
• The Baazee case highlighted the extent of liability to which the online service providers can be exposed to. Though in this case the content was generated by a third party, intermediaries could still be held liable for offences committed by their users while using the services.
• “The Delhi High Court while considering a petition to quash the criminal proceedings against Avnish Bajaj in this case, found that the website which hosted the MMS could be held to be liable for ‘Sale etc… of obscene books’ under Section 292 of IPC as well as Section 67 of IT Act, 2000 relating to publishing of information which is obscene in electronic form. “[2]
• Section 79 of the old Act was vaguely drafted and its interpretation proved to be harsh on the intermediaries. Though the intermediaries were exempted only to the extent if they proved that they had no knowledge of the infringement or they had exercised all due diligence to prevent such infringement or offence, it made the websites liable even if constructive knowledge could be proved. This harsh approach led to the amendment of the old Act.
• In the Information Technology Amendment Act, 2008, it states that “an intermediary shall not be liable for any third party information data or communication link made available or hosted by them”[3]

But such relaxation as seen in the amendment is subjected to a set of conditions:

1. the function of the intermediary is limited to providing access to a communication system over which information made available by third parties is transmitted or temporarily stored or hosted;
2. the intermediary does not initiate the transmission or select the receiver of the transmission and select or modify the information contained in the transmission;
3. the intermediary observes due diligence while discharging his duties.

As a result of the amendment, it releases service providers such as Facebook, Google, Twitter of their liability as long as they satisfy the abovementioned conditions. These conditions also apply to ISPs such as Airtel, Idea, BSNL etc., thereby releasing them from the liability on fulfilling the conditions. This

This immunity, however, is not unlimited and the intermediary would loose such immunity if there is evidence that the intermediary has conspired or abetted or aided or induced whether by threats or promise or otherwise in the commission of the unlawful act.

Section 79 also introduces this concept “notice & takedown” under which it states that an intermediary would lose its immunity if upon receiving actual knowledge or on being notified that any information, data or communication link residing in or connected to a computer resource controlled by it is being used to commit an unlawful act and it fails to expeditiously remove or disable access to that material.

As mentioned above, Section 79 though provides protection to the intermediaries, they could still be held liable under Section 72A of the Amendment Act for disclosure of personal information of any person without their prior consent with the intention of causing wrongful loss in breach of a lawful contract. The Act, by the virtue of it being overridden in nature, prescribes imprisonment as punishment for such breach up to three years or fine up to five lac rupees or both.

Now let us examine various legal issues that will apply to Facebook as well its users in India

Defamation

In India, the reputation of a person is protected under section 499 of the Indian Penal Code. It includes anything in writing, electronically or published, which is not true and directed to offend an individual, will constitute to defamation. Section 500 of the IPC subsequently prescribes the punishment for defamation. Taking Facebook as an example of the social networking site, if an individual with over five thousand followers posts something defamatory pertaining to somebody with intention and such content is not even reviewed by the authorized personnel of Facebook since it is posted directly from the users page. Therefore, the issue will be with regard to the liability of Facebook for merely facilitating the platform. Under Section 4(4) of the Information Technology Rules 2011, the executives of Facebook will be held to be liable along with the user who posted such remarks, if Facebook fails to pull it down within thirty-six hours of the content being published on the platform.

Impersonation

The Information Technology Act also provides for protection of individuals from impersonation. According to section 66D of the Act, “Whoever by means of any communication device or computer cheats by impersonating someone else, shall be punished with imprisonment up to three years and shall be liable to pay a fine of one Lakh Rupees. If Facebook, by the virtue of being an intermediary does not remove the impersonating account as per the guidelines prescribed in the Act, then it would be held criminally responsible for the act and be liable for punishment, along with the individual who has committed the impersonating act, to have committed the offence of impersonation. Facebook subsequently will be unable to invoke the defences as laid down under section 79 of the Act.

Communal Hatred

Any individual who by using Facebook writes content as form of a post, which incites communal hatred and/or violence, will be held accountable under section 153A of the Penal Code, which punishes any individual or a group of individuals who incite communal hatred between two religious communities using words – either in spoken or written form. The punishment stipulated under this section is three years’ imprisonment with a fine. Facebook should remove such content from its servers once it is brought to its notice in order to be eligible to use the defence of section 79 of the Information Technology Act. If it fails to remove the content within the 36 hours stipulated as per the guidelines laid down in the Act, it will lose the protection offered under section 79. In such a situation Facebook may be held responsible as a contributing party and its executives may be charged under section 153A of the Indian Penal Code.

Obscenity

Any form of Pornographic content as well as any other obscene content, is prohibited in India. Therefore, any individual who publishes pornographic/obscene content via any social media platform will be punished with an imprisonment sentence of a minimum of five years, along with a fine of Rupees One Lakh as prescribed under the Act. Facebook is also obliged to take a note of such content being uploaded onto its social networking platform and should remove such offending content within the stipulated time limit in order to avoid prosecution, procedure of which is laid down under the Act.

Section 67 of the Act restricts publishing of electronic information in any platform which is considered to be obscene. “It prohibits any material, which is lascivious, or appeals to the prurient interest, or if its effect would tend to deprave or corrupt persons who are likely to read, see or hear the matter contained or embodied in it. After the 2008 Amendment of the IT Act in India was passed, sections 67A and 67B were subsequently added so as to specifically prohibit publishing or transmitting of material containing sexually explicit acts (depicting children, for example), in electronic form.”[4]

Conclusion

Facebook is considered to be one of the revolutionary social media platform with it being one of the most successful one in the networking sphere. With the biggest consumer base amongst all, it also gives immense responsibility to Facebook to regulate the content posted by its users. Therefore, Facebook should make every possible effort to abide by the laws of India, such as IT Act. Such legislations have been enacted in order to maintain law and order within the internet environment, because without any IT legislation, the internet would be unregulated and could result in social unrest, cyber terrorism etc, which if not stopped at the correct moment, could lead to undermining the very existence of the state.

[1] Section 2 (w) of the Information Technology Act

[2] Software Freedom Law Centre, “Intermediaries, users and the law – Analyzing intermediary liability and IT Rules”

[3] Section 79 of the Information Technology Amendment Act, 2008

[4] Rodney D Ryder and Ashwin Madhavan, Intermediary liability under Indian law, 2013

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In this article, Aishwarya Abhijit who is currently pursuing Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, discusses cases involving international credit theft.

WHAT IS INTERNATIONAL CREDIT THEFT?

Global credit card theft has turned into an inexorably regular wrongdoing because of the ascent of the Internet, which makes it basic for individuals worldwide to take part in plans to get or utilize credit without appropriate approval.

Cases of global credit card theft can include:

• Acquiring individuals’ close to home recognizing data and utilizing that data to open credit cards in another person’s name.
• Acquiring credit card data from many individuals and utilizing that data to make buys or take loans. Phishing tricks are one approach to get credit card data. Skimming, or joining gadgets to card per users, is another basic approach.
• Making false personalities with significant credit agencies utilizing invented or stolen Social Security numbers. Making little buys and paying off charges can bring about credit cutoff points being raised. Expansive aggregates of cash can then be charged on the cards and never reimbursed.

A credit card theft conspiracy gets to be distinctly global at whatever time stolen distinguishing data is imparted to individuals abroad, or at whatever time individuals from different nations take an interest in a plan to disgracefully acquire or utilize credit.  Stolen card numbers and recognizing data can be purchased and sold in underground sites by individuals anyplace on the planet. This implies a casualty’s close to home distinguishing subtle elements or credit data could be utilized by somebody a large number of miles away to buy items or acquire money.

Scenario of United States

The United States government assumes universal praise card extortion genuinely and will seek after forceful legitimate activity against people who are accepted to have been included in credit card extortion plans. In 2013, the FBI detailed that 10 people confronted a 25 check prosecution in light of one of the biggest worldwide credit card extortion plots ever charged by the U.S. Equity Department.

At the point when the administration speculates credit card extortion, government offices collaborate to recognize respondents and reveal confirmation of the charged plan. The Financial Fraud Enforcement Task Force was set up to “wage a forceful, facilitated, and proactive push to examine and indict monetary wrongdoings.” There are more than 20 government offices; 94 U.S. Lawyers’ workplaces, and state and neighborhood accomplices that have met up in the broadest coalition ever gathered to battle credit card theft.

The individuals who are charged can be arraigned by the Economics Crimes Unit of the U.S. Lawyer’s office and can confront various criminal allegations including bank extortion, connivance, wire theft, character extortion, and charges under the 1984 Credit Card Fraud Act.

Every offense could convey jail time, so it is essential to shield enthusiastically against the charges you confront. A New York criminal guard legal advisor can help raise safeguards to credit card extortion charges.

Worldwide credit card theft can challenge for prosecutors in the U.S. to effectively make legitimate move against. One issue is whether a litigant who is in a remote nation will be removed to the United States to stand trial. Battling removal is extremely normal.

Another issue is that if individuals in different nations remain outside of the United States when purchasing and offering card information, and no unlawful business goes through the U.S., the U.S. government will be unable to seek after charges under the Computer Fraud and Abuse Act. The Justice Department has requested that Congress correct the law to make it illicit for anybody anyplace on the planet to purchase or offer a stolen credit card that has been issued by a U.S. bank, regardless of where the exchange happens. Nonetheless, the law has not yet been changed.

A New York credit card guard attorney comprehends the laws that apply to global credit card theft, and additionally the escape clauses and issues with those laws that can make it more troublesome for prosecutors who follow individuals who purportedly took an interest in universal credit card theft. On the off chance that prosecutors can’t demonstrate past a sensible uncertainty that you disregarded the letter of the law, try not to be discovered liable of a theft offense.

Charges for International Credit Card Fraud In the US

The Credit Card Fraud and Abuse Act of 1984 was systematized in 18 U.S. Code Section 1029 and is ordinarily used to arraign the individuals who are included in worldwide credit card extortion. You can be charged under this statute for trafficking, having, as well as utilizing fake get to gadgets or gadget making hardware.

Global credit card extortion can likewise prompt to charges for:

• Wire theft (18 U.S. Code Section 1343)
• Bank theft (18 U.S. Code Section 1344)
• Bothered wholesale fraud (18 U.S. Code Section 1028A)
• Theft and related action regarding PCs (18 U.S. Code Section 1030)
• Wire theft alone could prompt to 30 years detainment and a $1 million punishment when the extortion influences a monetary establishment.

INDIAN SCENARIO

Online Credit Card Payments – RBI elucidates the prerequisite for utilization of second level confirmation by dealers/sellers. Second level confirmation required where the hidden exchange is residential – i.e. between two Indian occupants.  Exchanges utilizing an Indian issued card, and between Indian occupants to be settled in Indian cash by an Indian procuring bank.

On August 22, 2014, the Reserve Bank of India (“RBI”) issued a directive1 (“RBI Directive”) clearing up the necessities for extra verification/approval for credit card exchanges. Because of the inquiries raised by the Association of Radio Taxis in a letter to the RBI prior this month, the RBI Directive indicates that the RBI ordered extra confirmation/approval prerequisites will apply, in each card not present (“CNP”) exchange, where an Indian credit card is utilized to pay for an exchange that is basically between two Indians.

Credit cards, with their birthplace in the mid-1900s, have been being used in India since the 1980s and have seen a monstrous development in the quantity of clients, and in addition, traders tolerating credit card installments in the course of recent years. The development of online administrations and commercial centers has given further catalyst to the utilization of credit cards for ordinary exchanges.

With both E-Commerce and telemarketing developing quickly in India, an expanding number of organizations, regardless of whether administration or item based, require installment on the web or through telephone – prompting to CNP exchanges.

A CNP exchange is basically one where the vendor does not have entry to the card being utilized in light of the fact that the client and the shipper/specialist organization are not physically in a similar area, making it troublesome for the dealer/specialist organization to confirm the personality of the client. There could be circumstances in which installments and exchanges are finished without the learning or approval of the genuine holder of a credit card. A CNP exchange would incorporate exchanges on the web, via telephone, over mail and so forth.

Noticing the developing number of episodes of credit card theft, particularly by means of online installment gateways, the RBI issued a notice in February 20092, commanding the utilization of an extra confirmation/approval framework (likewise alluded to as second level validation/3D check) for online CNP exchanges. The extra verification/approval was to be acquired utilizing data that was not obvious on the credit card itself, i.e. data known or accessible to the holder of the card however not imprinted on the card. One time passwords, web saving money passwords are cases of second level validation. Assist, banks were additionally required to set up an online ready framework which would advise the cardholder of any CNP exchange for INR 5000 or above. The prerequisite for this arrangement of extra verification, was additionally reached out to intelligent voice reaction (IVR) exchanges, normally did over phones, and the necessity for online alarms has been stretched out to all CNP exchanges.

CREDIT/DEBIT CARD THEFT: PUNISHMENTS, PENALTIES, AND CONSEQUENCES

The offenses identified with stolen credit cards have bit by bit expanded in the course of the most recent quite a long while on account of an expansion in credit card use over paper checks. At the point when credit cards were first picking up in prominence, the main credit card theft wrongdoing was taking a credit card client’s announcement out of the post box. The hoodlum would then utilize the individual’s credit card number to make false buys. Credit card theft has developed and today it includes more than simply taking a credit card proclamation from a letter drop. Luckily, the laws for credit card theft have extended and now incorporate more extensive applications, expanded disciplines, and more cover with different offenses.

A few respondents think they will stay away from indictment on the off chance that they just utilize a stolen credit card number rather than physically utilizing the credit card or check card. As a result of the development of credit card laws, credit card theft now incorporates the unapproved utilization of the real credit or check card and the unapproved utilization of the record number identified with the card, in addition to regularly the stick number. It doesn’t make a difference how a respondent got the credit card, the record number, or the stick number. The only thing that is important is he had the card number without approval.

A few states require that a litigant really utilize the card or record number to continue with a credit card theft offense. In any case, a few states will approve a conviction if a litigant simply has a credit card or check card with expectation to utilize it without approval. In these cases, the state won’t require a finished demonstration of utilizing the card. In the event that a state does not have a particular credit card theft statute, then they will have a fundamentally the same as, substitute charge of credit card mishandle. Moreover, in light of the fact that they are comparative in physical and electronic organizations, many states will apply an indistinguishable criminal statute to platinum cards from they do to credit cards.

The genuine punishments for credit card theft or mishandle differ by state. Disciplines run from a wrongdoing to a lawful offense. For instance, some credit card theft offenses in Connecticut are considered crimes. All credit card manhandle cases are considered lawful offenses in Texas. Notwithstanding these varieties, a few states will likewise improve discipline ranges if the credit card was stolen from an elderly person.

Despite the fact that credit/plastic theft is viewed as a crime in many states, the length of potential correctional facility time has a tendency to be far not as much as strike offenses since credit card theft is just coordinated toward property. Prosecutors every now and again utilize suspended sentences or conceded settlings as a strategy for gathering compensation for casualties of credit card theft. The measure of compensation can incorporate any charges caused from the utilization of the credit card and the measure of assets used by a casualty to clear up their credit history.

A respondent being accused of credit card theft is possibly subject to different charges. On the off chance that a state has other criminal codes for mail theft, fabrication, or fake utilization of distinguishing data, then many will approve the prosecutor to look for a conviction for each relevant statute.

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In this article, Anusha who is currently pursuing Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, discusses Regulatory compliances to be taken care of while starting your own E-wallet.

I am sure most of you must have used an e-wallet to pay for a transaction, especially after the demonetisation. Advancement in technology, especially since the advent of ecommerce websites has brought online buying of commodities into the mainstream. The web based payment apps like paytm, freecharge, etc. allow users to pay for online purchases, travel tickets, movie tickets and even electricity bills. With payTm advertising itself with the jingle “paytm karo”, it is really evident that online payment is catching up in India.

For making online transactions easier, websites have payment gateways (in association with banks) which redirect the customer to enter their card/bank details and transfer the money to an account held in that bank. That money then is transferred to the merchant’s account. But now we don’t even need to do that because we can just store our money in an e-wallet and pay for our transactions. It won’t be inaccurate to say that internet banking, and specially e-wallets are truly making our transactions and in turn our economy, digital.

The first question that arises is: What is an e-wallet?

An e-wallet is like an online pre-paid account which enables you to store your money in it, just like a real wallet. The account is linked to your bank account from which you can easily transfer the money. The advantage of paying through an e-wallet is that it saves you from entering your card/bank details over and over again at the payment gateway, though you will have to enter the password for the e-wallet. Also, you can just enter the mobile number of the person you want to transfer money to and it’s done.

Everyone accepts payment through e-wallets now, from restaurants to the pani-puri wala and from the shopkeeper at the Sarojini Market to the autorickshaw driver. The emergence of e-wallets has made carrying cash around redundant.

With the popularity the e-wallets have nowadays and the push from the government to go cashless and digitalise the economy, there was a need for some guidelines to be put in place to regulate the e-wallets.

Statutes regulating set up and use of e-wallet

The Payment and Settlement Systems Act, 2007

• Enacted on 20^th December 2007 to provide for regulation and supervision of payment systems in India. Under the Act “payment system” includes the systems enabling credit card operations, debit card operations, smart card operations, money transfer operations or similar operations and hence covers e-wallets as well.
• Section 3 of the said Act authorises Reserve Bank of India to regulate and supervise the payment systems in India.
• Section 4 states that no person other than Reserve Bank shall commence or operate a payment system except after obtaining permission from the Reserve Bank.
• Any person may apply for the authorisation from the Reserve Bank under Section 5 and the Reserve Bank may issue authorisation under Section 7 after being satisfied of inquiry (under Section 6) and the nine considerations enumerated in Section 7 itself, like terms and conditions of operation of the proposed payment system including any security procedure, the manner in which transfer of funds may be effected within the payment obligations under the payment system, the financial status, experience of management and integrity of the applicant, etc.
• The application for authorization has to be made as per Form A under Regulation 3(2) of the Payment and Settlement Systems Regulations, 2008. The application is required to be duly filled up and submitted with the stipulated documents to the Reserve Bank.
• Under Section 25, dishonor of an electronic fund transfer instruction due to insufficiency of funds in the account is an offence punishable with imprisonment or with fine or both, similar to the dishonour of a cheque under the Negotiable Instruments Act 1881.

The RBI Master Circular “Policy Guidelines on Issuance and Operation of Pre-paid Payment Instruments in India”

Released on 1^st July, 2014 and updated in December, 2014 sets a comprehensive set of rules and regulations regarding pre-paid payment instruments in India.

• The circular identifies three types of payment instruments in the country:
• Closed system payment Instruments: These instruments are created by the entity for facilitation of payments to itself for services rendered by it. These payment instruments do not permit cash withdrawal or redemption and do not facilitate payments and settlements for third parties. Hence, they do not require approval of the Reserve Bank. Example: Ola Money.
• Semi-Closed system payment Instruments: These provide financial services at a group of clearly identified merchant locations/establishments which have a specific contract with the issuer to accept the payment instruments. These instruments do not permit cash withdrawal by the holder. Example: e-wallets.
• Open System payment Instruments: These payment systems allow fund transfer at any card accepting merchant location (point of sale terminals) and also permit cash withdrawal at ATMs. Example: Debit Cards.

Eligibility to issue prepaid payment instruments (PPI)

All banks who comply with the eligibility criteria can issue all categories of PPI. However, only those banks are allowed to launch mobile based PPIs which have been permitted to provide Mobile Banking Transactions by the Reserve Bank India.

NBFCs and other persons are permitted to issue only closed and semi-closed system payment instruments, including mobile phone based PPIs.

• Foreign Exchange PPIs are exempted from these guidelines. The use of such payment instruments is limited to permissible current account transactions and subject to the prescribed limits under Foreign Exchange Management (Current Account Transactions) Rules, 2000.

Capital Requirements

Banks and Non-Banking Financial Companies complying with Capital Adequacy requirements prescribed by Reserve Bank are permitted to issue PPIs.

All other persons should have a minimum paid up capital of Rs. 500 Lakh and minimum positive net worth of Rs. 100 lakh at all times.

Applicant companies having FDI/FII are required to meet minimum capital requirement as applicable under Consolidated FDI policy guidelines of Government of India.

• Only Companies incorporated in India are eligible to apply for authorisation from the Reserve Bank of India.
• Know Your Customer (KYC), Anti-Money Laundering (Prevention of Money Laundering Act 2002) and Combating Financing of Terrorism guidelines issued by Reserve Bank of India are applicable to persons issuing PPIs.
• Maximum value of any PPI shall not exceed Rs 50,000/-.

The following types of semi closed pre-paid payment instruments can be issued on carrying out Customer Due Diligence as detailed,

1. upto Rs.10,000/- by accepting minimum details of the customer provided the amount outstanding at any point of time does not exceed Rs. 10,000/- and the total value of reloads during any given month also does not exceed Rs. 10,000/-. These can be issued only in electronic form;
2. from Rs.10,001/- to Rs.50,000/- by accepting any ‘officially valid document’ defined under Rule 2(d) of the PML Rules 2005, as amended from time to time. Such PPIs can be issued only in electronic form and should be non-reloadable in nature;
3. upto Rs.1,00,000/- with full KYC and can be reloadable in nature. The balance in the PPI should not exceed Rs.1,00,000/- at any point of time.

Transaction Limits

Though there is no separate limit on purchase of commodities using PPIs, transaction limits and monthly caps are applicable on fund transfers under Domestic Money Transfer Guidelines.

Validity

All PPIs issued in the country have a minimum validity period of six months from the date of activation/issuance to the holder.

In the case of non-reloadable pre-paid payment instruments, the transfer of outstanding amount at the expiry of the payment instrument to a new similar payment instrument of the same issuer, purchased by the holder may be permitted.

PPI issuers shall caution the PPI holder at reasonable intervals, during the 30 days’ period prior to expiry of validity period of PPI, before forfeiting outstanding balances in the PPI, if any.

The caution advice shall be sent by SMS/e-mail/post or by any other means in the language preferred by the holder indicated at the time of on-boarding the customer (sale of PPI). Further, the information about expiry period as well as forfeiture policy should be made known to the customer at the time of sale / reload of the PPI, and should be clearly enunciated in the terms and conditions of sale of PPI. Where applicable, it should also be clearly outlined on the website of the issuer.

Data Protection

For security of data and information, the provider must have in place adequate infrastructure and systems to prevent and detect frauds. A centralized database/MIS to prevent multiple purchases of payment instruments at different locations is necessary.

Customer Protection

All PPI issuers are bound to disclose all terms and conditions in clear and simple language comprehensible to the holders while issuing the instruments. These disclosures shall include.

1. All charges and fees associated with the use of the instrument.
2. The expiry period and terms and conditions pertaining to expiration of the instrument.
3. The customer service contact details (telephone numbers and website URL).

The RBI circular has very comprehensively provided for the establishment of PPIs but does not provide for stringent security measures (as the security measures are left to the discretion of the parties). This leaves the information and data available with persons issuing PPIs open to infringement and clearly indicates that there is a need to strengthen data protections laws in India.

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In this article, Bhawana Tiwari who is currently pursuing Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, discusses Types of E-Commerce Business in India.

Introduction

Electronic commerce is popularly known as e-commerce. An e-commerce business model “enables a firm/individual to conduct business over an electronic network, typically the Internet.”[1] The biggest advantage of an e-commerce is that the size of the market gets enlarged, hence the business gets bigger and the consumers have better access to quality products and services. The consumer and seller or service provider interaction gets better and efficient.

With the better access to the Internet e-commerce is also taking a root in India; however, it is still in its infancy. The emergence of middle class with good purchasing power is also an important reason for the growth of e-commerce in India. In addition to this the schemes of government like Startup India, Make in India and Digital India and policies like cashless India are also affecting the e-commerce in India. In this assignment, we are looking into various e-commerce business models.

Types of ecommerce business model

There are various business models that can be followed in pursuance of the objective of the business and to achieve the desired results. These business models are as follows

1. Online Subscriptions
2. Exclusive Brand Stores
3. Deals Websites
4. Marketplace

We will look into these models one by one.

Online Subscriptions

These websites work like an offline subscription. Here the users can choose from subscriptions available on the website and subscribe according to their needs. The payment for subscription can be made online and also the recurring payments can be made in the same manner and the consumer can get the services.

Hence, online payment for the service is the pressure point here. This makes the services more accessible and easier payment options make it more attractive to the users.

In India magazines like Frontline can be subscribed online and so can the newspapers like The Hindu. Amazon.com has also started the monthly subscription service where it provides the consumers the option of monthly subscription with discounts from normal rates and the consumers can pay the subscription fees on their website.

Online Exclusive Brand Stores

Here the brands create their own online brand stores. The brand’s catalog is uploaded on the website where the consumers see it which is also available in their physical stores. Here the consumers get the advantage of shopping from their trusted brands online without having to visit the physical stores.

Examples of online exclusive brand stores are HP, Samsung, Peter England, Monte Carlo etc.

Deals Websites

there are various ecommerce websites which provide the best deals to the consumers. Such websites give the consumers various deals available on other websites or stores. For example coupondunia.in etc.

Marketplace

Here the consumers and sellers are provided with a platform to interact with each other. Based on this there are various websites with different models that they follow. These models are:

Business to Consumer (B2C)

This is the most common business model that usually people know about. Here the sellers of products or services, as well as the buyers of such products or services, are present on an online platform. Virtual stores give the consumers access to wider variety of products at cheaper rates. The best example for this is Amazon.in, Flipkart.com, Myntra.com, Snapdeal.com etc where the consumers can find almost anything be it books, electronic products like washing machines, USB storage devices, clothes, shoes or personal care etc.

In India the B2C model is growing at a fast pace, however, there are still various challenges. The major challenge is poor internet connectivity. Also most consumers do not posses credit cards. Most consumers still depend on cash on delivery mode of payment. In addition to this the ecommerce websites do not have very good customer services leaving the consumers doubtful about using these websites and apps.

Business to Business (B2B)

here both the parties are involved in business activities. Here commercial transactions take place between both the parties. The parties involved can be a manufacturer and wholesaler or a wholesaler and retailer.[2] In India the B2B model has 100% Foreign Direct Investment allowed through automatic route, unlike the B2C model. However, this model is still in its nascent stage in India. Online business transactions in India are limited and the market is less receptive. However, the experts do believe that this situation shall change in coming times and the B2B ecommerce space is expected to grow almost 2.5 times by 2020.[3]

Some of the ecommerce B2B companies in India are as follows[4]

• com- this is the first B2B ecommerce company set up in India. The objective of the company was to empower the small and medium sized enterprises by making the raw materials accessible for them. The company deals in variety of things like hardware, medical supplies, electrical etc.
• com- this B2B ecommerce space provides industrial goods and supplies. Its business is expanding exponentially.
• com- this ecommerce space connects the manufacturers and the retailers thereby eliminating the distributors. It empowers the retailers to buy the products after registering their business. Credit facility is also available to the retailers.
• com- this is subsidiary of IndiaMart which aims at providing raw materials for small and medium sized enterprises. It deals in hardware, lab supplies, handtools etc.
• in- the company deals in buying and selling in bulk of the packaging materials.
• in- it is based in United States of America. It is aimed at providing products in bulk and wholesale prices. The company deals in a variety of products like cleaning and laundry, mobile and accessories etc.

Consumer to Consumer (C2C)

Here both the parties are individuals undertaking a business activity on a platform. Here the individual can sell something they no longer need or can sell products made by them as they engage in a small home based business activity like bags or some handicraft items. The best example of this model in India is Ebay.in, OLX.com, Quikr.com etc.

OLX and Quikr are almost alike and provide a platform to the consumers to connect and buy and sell anything be it land, flats, paying guest facilities, mobiles, laptops, bikes, bicycles etc. The companies have become very successful and work as electronic classifieds.

Consumer to Business (C2B)

In this model the consumer sell their products and services to businesses. The best examples for this model are the job portals.

In India websites like Monster.com, TimesJobs.com etc can be put in this category. Here the consumer, the job seeker, puts her resume on the website in order to get a job offer from employers.

The ecommerce business models are selected by the companies as per their objectives, desired results and target consumers. There can be modifications done in these business models as per the requirement of the companies.

Conclusion

We have seen various types of ecommerce models that are prevalent and the examples of such models in Indian context. Indian economy is growing at a very fast pace and as such the new avenues like ecommerce is here to stay and grow in India. However, there are various challenges that must be overcome in order to make ecommerce efficient in India.

The major problem is poor e-infrastructure. The internet in India is still not very easily accessible. The penetration of internet is very low at 34.8% of the total population,[5] as compared to other countries. Also the ecommerce companies face logistic issues. As a start up this issue is more pressing. In addition to this the long held habit of Indian consumers to see and inspect what they are buying makes them doubtful of the ecommerce. Also the major part of ecommerce business is limited to the urban areas and excludes the rural areas and the major portion of the population is still rural hence, there is a need to make ecommerce inclusive of rural areas and population. Hence, there is a need to frame a strategy to make the Indian economy more conducive to the new and upcoming ecommerce market and accommodate in the economy.

However, recently ecommerce has seen a growth in India basically because of easy access to smart phones. Most of the urban population is on the internet and have access to at least netbanking and debit cards. Although even in the developing countries India lags behind many countries in ecommerce it is growing at a fast pace.

With the schemes like Startup India, Make in India and Digital India the future of ecommerce seem to be bright. The young entrepreneurs are making full use of technology to make their business plans success. Where the ecommerce space has ability to connect the young entrepreneur with the global market its importance cannot be neglected for long and will see improvement in the near future.

References

[1] http://www.investopedia.com/terms/e/ecommerce.asp last visited on 15th February 2017

[2] http://www.investopedia.com/terms/b/btob.asp last visited on 15th February 2017

[3]http://www.hindustantimes.com/business/now-investors-turn-to-b2b-e-commerce/story gTosGSG0dNzz9iyaL2A3iP.html last visited on 20th February 2017

[4]http://indianonlineseller.com/2016/08/6-business-to-business-b2b-online-marketplaces-in-india-worth-exploring/ last visited on 21^st February 2017

[5] https://cluecommerce.com/blog/scope-of-ecommerce-business-in-india last visited on 20th February 2017

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In this article, Debmalya Banerjee who is currently pursuing Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, discusses the legal implications regarding offensive messages on social media and on SMS

Today it’s an era of cyber world and there is massive expansion in the growth of technology. As Information Technology evolved it gave birth to the cyber space where internet provides unrestricted access and opportunities to any people to have access to any information, data storage at anytime with the help of high technology. This led to the inevitable misuse of technology in the cyber world and as a result giving rise to various “cyber crimes” at the domestic as well as in the international level.

The growth of Social Networking

As popularly known as “social networking” is the new fad in India and very few person could escape from its clutch. Consequently, this has also given rise to many legal issues as well. Most of these legal issues pertains to online acts or omissions that are resulting in giving rise to civil and criminal liabilities.

The age of Internet Today: A newly found freedom of Speech and Expression

At this jun, ture it is noteworthy that Article 19 (1) (a) of the Constitution of India, 1950 guarantees “Right to freedom of speech and expression”. This is a fundamental right guaranteed to all citizens of India. The freedom of expression is not an absolute freedom which anybody can claim to enjoy. It is always subject to certain reasonable restrictions which the State may impose in the interest of the citizen or the country.

Laws regulating contents on Social Media

Social media law India is regulated by the Information Technology Act which was enacted in the year 2000 to regulate, control and deal with the issues arising out of the IT. Social networking media is an “intermediary” within the meaning of Indian information technology act 2000 (IT Act 2000). Thus social networking sites in India are liable for various acts or omissions that are punishable under the laws of India.

Section 66A of the IT Act has been enacted to regulate the social media law India and assumes importance as it controls and regulates all the legal issues related to social media law India. This section clearly restricts the transmission, posting of messages, mails, comments which can be offensive or unwarranted. The offending message can be in form of text, image, audio, video or any other electronic record which is capable of being transmitted. In the current scenarios such sweeping powers under the IT Act provides a tool in the hands of the Government to curb the misuse of the Social Media Law India in any form.

However, in 2015, in a landmark judgments upholding the right to free speech in recent times, the Supreme Court in Shreya Singhal and Ors. vs Union of India, struck down Section 66A of the Information & Technology Act, 2000. The ruling which is being lauded by the common man and legal luminaries alike, found the Cyber law provision to be open-ended, vague and unconstitutional owing to the restriction it caused to the Indian citizens’ right to free speech.

The repeal of S.66A does not however result in an unrestricted right to free speech since analogous provisions of the Indian Penal Code (IPC) will continue to apply to social media online viz. Intentionally Insulting Religion Or Religious Beliefs (S. 295A), Promoting Enmity Between Groups On Grounds Of Religion, Race Etc. (S. 153A), Defamation (S. 499), Statements conducing to Public Mischief (S. 505), Insulting The Modesty Of A Woman (S 509), Criminal Intimidation (S 506), Sedition (S124-A), etc.

One of the important section that would be effective against posting offensive messages on social media would be invoking sec 499 and 500 of IPC. Under the IPC, the defamatory statement could be oral or written or in sign language or by visible representation and should be made/ published with intention to harm or with knowledge about its defamatory character (IPC, section 499). Thus, section 499, IPC is wide enough to encompass the publication and dissemination of defamatory content via electronic means. Defamation is punishable under section 500, IPC.

Further, the law against obscenity is a reasonable restriction on the “fundamental right to freedom of speech and expression”. Technology has expanded the ambit of the offence of obscenity. Today, obscene material (including pornography) is easily available at the click of a mouse and people can access it in the privacy of their homes. The Internet facilitates the creation as well as rapid transmission of such material across the world.  Legal regulation is complicated by the fact that there is no universally acceptable definition of obscenity. What is considered obscene material in one country may not be considered so in another. Technologically also, there is absence of effective filters to screen out objectionable material on the Internet.

The traditional law dealing with obscenity (including pornography) in India is contained in sections 292-294 of the IPC. Section 292, IPC prohibits sale, letting on hire, distribution, public exhibition and circulation etc., of obscene material. Section 293 provides enhanced punishment for sale etc. of obscene material to any person under the age of twenty years. Even an offer or attempt to do so is punishable. Publishing as well as circulating of obscene photographs of women is also punishable under sections 3 and 4 of the Indecent Representation of Women (Prohibition) Act, 1986. These provisions can also be used for punishing people who circulate obscene material in electronic form.

In view of the above, though sec 66A of the IT Act has been held unconstitutional by the apex court but still a victim of cyber offence would not be rendered remediless and could invoke the appropriate section and law to get desired relief.

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In this article, Kriti Kothari discusses What legal actions can be taken against a Packers and Movers company if they fail to deliver your goods safely?

Moving from one part of the country to another is not an easy job and involves tedious work. It involves a lot of tasks such as finding a new home in a completely unknown city or finding and getting children admitted in school or colleges and the list continues. One of the most complicated tasks is to shift all your belongings to one city to another. They are generally done with the help of huge loading vans and trucks and involve a lot of risk as some of the objects are brittle in nature and can be damaged easily during the shifting. There are risks of theft and robbery as well during the travel. Proper packing of the material by using proper packing material is also required. To solve all these problems and making the task easy for the people these days there are PACKERS AND MOVER companies which exist in the market.

WHO ARE PACKERS AND MOVERS?

• Packers and movers are those people who will help you to pack your belongings and them move those belongings to the place where you want in the most safest and convenient way.
• One of the most striking features of the packers and movers is that they accept the full responsibility of the belongings and if any damage is caused to the belongings it is them who need to recover those damages.
• When these types of services started in India there were two different sets of people who used to deal with two different set of tasks that is one used to pack all your materials in proper kinds of packing materials and then the other was responsible for the transportation of those goods. However, with the time both of these services are provided by the same single service provider

There are generally two types of packers and movers which exist in the market. Firstly, the public or local packers and movers which help the local public to shift their belongings from one place to another when they shift their houses and secondly the industrial packers and movers who help the industries to shift their goods for various purposes from one place to another. Generally, a person should prefer using a professional company which provides these services as they provide better guarantee and insurance of your goods.

Misappropriation of goods during transportation

Several cases of theft and robbery have been reported by the people where the drivers of the trucks have misappropriated their belonging while shifting their materials and have fled away. However, a packers and movers company takes the full responsibility of your goods. However, there are problems with the packers and movers company as well. Several cases have been reported where there is a deficiency in the services on the behalf of packers and movers. In this case legal remedies are available to the people and are described in the further article.

Types of deficiencies on the part of Packers and Movers

There are certain deficiencies which can be observed on the part of the packing and moving services and before complaining about the company you need to recognize the deficiency so that you can claim damages in a better way:

Late Delivery of Goods

While hiring a packers and movers service you will always need to sign a contract in which the date of delivery of goods will be stipulated and if a company fails to deliver your goods on that particular date you have a complete right to sue or take action against the company. This is not a big deal if the local belongings of a person needs to be shifted but in the case of industrial transfer it is a serious issue as a minor delay of two to three days can lead to huge loss for the industries.

Lost or damaged goods

This is one of the most important areas of concern during the transportation of goods and needs to be dealt with utmost concern. People often report that the goods were broken after the delivery or goods are often misplaced in certain cases. This is a serious mistake on the part of the company as they take the responsibility of appropriating your goods properly and safely.

Extra delivery charges

It is often observed that the packers and movers company charge extra delivery charges when they deliver the goods even when it is nowhere mentioned in the contract signed by you and in some cases they already charge you for the services beforehand only. It is the responsibility of the customers to be aware of the terms and conditions which they have signed in the contract and not to get befooled by the companies.

Legal actions against Packer and Movers company if they fail to deliver your goods safely

If you have hired a packers and movers services and suffer from any such deficiency in the services provided by them then you can avail the following legal remedies:

1. Before going for any legal proceedings or any legal suit the first step you should take to resolve your issue is to contact the company directly and ask them to solve their grievances. If they fail to do so or they do not pay attention to your queries then you should go for a legal procedure. One most important thing which you should keep in mind while communicating with the company is that always use a method of communication which can be used as an evidence in the court of law for further legal proceedings. You should try to contact them with the help of emails or written letters rather than telephonic conversations.

Filing of Consumer Complaint against packers and movers company

• If the company does not pay attention to your grievances or does not pay you the damages then you can file a CONSUMER COMPLAINT under section 12 of the Consumer Protection Act 1986 in the consumer forum or can file a consumer complaint online.
• The consumer forums were introduced in India keeping in mind that the consumer’s rights should be protected and they should not be discriminated.
• It is clearly stated by the consumer court that the movers and packers company are a part of services under this act and one can approach the consumer courts to get the remedies.
• Filing a consumer complaint is beneficial over legal proceedings as it includes less expenditure, as well as the time taken, is also less. One more advantage of filing a consumer complaint is that you need not hire an advocate to fight for your case and you can present your case on your own before the consumer forum.
• There are consumer cells as well where cases can be solved with the help of mediation also which is very beneficial these days.
• If you are not satisfied by the way consumer court works or are not satisfied with the decision of the court you can file a separate civil suit in the court of law. You can hire an advocate and send a legal notice to the company and then the proceedings will be held in the court. You can also file a consumer complaint and a case in the court of law at the same time. There is no bar to it.

Can a FIR be filed against Packers and Movers company alleging fraudulent intention

• You can also file an FIR against the Packers and Movers Company at your nearest police station but generally the police does not file FIR in the cases related to unofficial enquiry but when a prime facie deceit is proved the police will lodge a FIR under section 421 of the Indian penal code under FRAUD. You can also file a consumer case and a FIR simultaneously.
• If you have taken the insurance of the goods you can immediately claim for insurance from the insurance companies so that you can recover the damages easily. Claiming insurance is no bar to lodging FIR. You can lodge FIR for the insured goods as well.

These are few remedies which can be sought by the people if they are cheated by the movers and packers company or there is a deficiency in services on behalf of them.

Precautions

As it is rightly said that precaution is always better than care there are few precautions which can be taken before hiring a packers and movers company:

• Always hire a registered company: You should always avail services from a registered company and which has a license to do so. Always check the credibility of the company. You can also check the reviews about the company on various online platforms.
• Read the terms and conditions of the contract carefully The companies often try to mislead the customers by manipulating the contract which they sign and then discriminate the customers on the basis of it. You should always read all the terms and conditions of the contract and then sign the agreement.

REFRENCES:

http://www.indiacom.com/yellowpage/category-gyan/articles/packers-and-movers/packers-and-movers-introduction.asp?category=packers-and-movers

http://www.findmovers.in/moving-guide/how-to-file-a-complaint-against-movers-and-packers-company-22

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In this article, Deepika Vasisht who is currently pursuing Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, discusses Website Defacement and the punishment for it.

The greater part of the world is doing business online, vandals have been coerced to grow within the digital revolution. In lieu of defacing tangible property, hackers are now proficient of defacing the websites of businesses. Internet, which is open for exploration, unfortunately, has the potential to lead to exploitation. It may be used for stealing and destroying valuable information. The confidentiality, which is the most important aspect of various commercial and financial transactions, may easily be breached on Internet.

Understanding website defacement

Defacement is an act of defacing an instance of visibly marring or disfiguring something. An act of voiding or devaluing or nullification of the face value.  Website Defacement refers to any unapproved changes made to the outward form of either a single webpage, or an entire site. It is equivalent to drawing graffiti on a wall, only it happens virtually. Websites’ outward form change – pictures and/or words are scribbled across the defaced website. It’s kind of a vandalism in which a website is marked by hackers who are trying to make their mark and it’s a common type of cyber attack.

The subject matter of the defaced web page may be partially changed or may be fully replaced by another page or a hacker may inject code in order to add images, popups, or text to a page that were not previously present or insertion of harmful code with the intent of infecting the computers of explorer, thus making them vulnerable to viral attacks and other problems. In this way, website defacement is not only proficient of embarrassing an attacked business or organization on a visual level, but it may also create problem to its followers. It is because of this that these practices are illegal, and can lead to fines and/or imprisonment when the wrongdoer is apprehended.

Defacement mainly takes place on a famous website with large number of viewers. The vandalism usually contains images of the victim, which are mostly photo-shopped as a joke or to show hatred. The hacker then shows his pseudoname for publicity. The websites that have been defaced are coerced to go offline to undergo maintenance, causing a loss to the organization in the form of wasted time and effort. The defacement of a website will also harm the site’s explorer and provide the impression that the defaced website may not be safe and is incapable of protecting its own website. Defacements usually consist of an complete page. Sometimes, the Website Defacer makes fun of the system administrator for failing to maintain server security. Most times, the defacement is harmless and is only done to show off a system cracker’s skills or for Hacktivism; however it can sometimes be used as a distraction to cover up more sinister actions such as uploading malware or deleting essential files from the server. Website defacement is equivalent to drawing graffiti on a wall, only it happens virtually. Websites’ outward form change – pictures and/or words are scrawled across the defaced website.

How does an intruder deface a web page?

Once an intruder finds a security flaw on a website, he may use some specially designed penetration tools to attack the website.  For example, server ,the intruder may encash vulnerabilities on the operating system of the web server or find loopholes in the program codes of a web based application. In this way, the intruder can execute some specific codes hence, can obtain privileges to control the website, and destruct it. For this reason, all unnecessary program privileges in a system must be deleted in order to lessen the effect if the system has been intruded.

Common methods of Defacing

• Via SQL injections – Attackers encash a vulnerability to insert malicious SQL statements in a website. It allows gaining administrative access. Another method of defacement is through FTP once the username and password are obtained.
• Via compromised content management systems – In 2013, attackers compromised numerous websites hosted on publicly available subject matter management systems such as WordPress.
• By gaining access to web servers – Attackers who obtain credentials to gain access to web servers can manipulate sites/pages hosted on these web servers.

Why Websites are Defaced

• to fulfill their political objectives,
• some hack the site of their competent to get the valuable and reliable information to get over them,
• to deface a website for fun – to make joke out of site owners by finding website vulnerabilities and exploiting these to deface the website. These attackers “taunt” the site owners. Website owner’s reputation once their sites are defaced gets tainted
• to deface a website as a means to protest a message or to propogate their cause. The Hackers may take down the pages of those with different beliefs or messages, or may replace their subject matter as a means to “expose” these opponents or make it seem as though the victim of the web defacement is actually with the hacker’s cause,
• to engage in website defacement out of pure malice. For eg.,a hacker may choose to break into a website’s code and leave a message that indicates that the business affiliated with the page has been closed which will drive customers away. The longer such message stays up, the more people will see it and believe that this false information is true, thus, harming business.

Common targets of defacement

Religious and government sites are regularly targeted by hackers in order to display political or religious beliefs, whilst defacing the views and beliefs of others.

What are the potential threats you will face if a webpage has been defaced?

If the content if the web page has been defaced , the web page may spread some fake messages and by that trick explorer, spoil corporate images and reputation, or cause financial loss.They may also secretly tamper other subject matters like hyperlinks on a webpage. The hyperlinks could redirect users to a harmful websites and try to intrude user’s computer by downloading and installing malicious code such as Trojan Horse. This term has its origin in the word ‘Trojan horse’. In software field, this means an unapproved programme, which passively gains control over another’s system by representing itself as an authorised programme. The most common form of installing a Trojan is through e-mail.

What should you do to prevent web defacement?

• configure web servers according to the security guidelines from the service provider and the organisation,
• use strong passwords,
• encrypt sensitive data during data transmission, processing or storage,
• backup your data and programs regularly,
• review the logo of computer systems everyday,
• perform security assessment and audit regularly,
• installing anti- malicious code software such as anti-virus software,
• install firewall,
• install latest security patches,
• scheduling a weekly full scan and enabling Auto Update features of relevant softwares,
• check system and application vulnerabilities on critical servers including web servers,
• monitor for any unapproved changes on critical servers such as web server, DNS server, and database servers,
• monitor for unexpected excessive load/traffic to web server & DNS servers
• monitor for new webpage setup or new URL path accessed,
• monitor for signs of communication with command & control servers from within your network,

It’s always a good idea to have someone looking out for the website and monitoring it regularly. There’s nothing more humiliating than getting to know that one’s website has been defaced days after the fact. By this point, countless explorer have seen the defacement and the owner been in the dark. Although the owner may not have the time to regularly check the website for signs of hacking, it’s smart to enlist the help of a service with the means to monitor at regular periods for defacement. This will allow any problems to be made swiftly so that a company will not be impacted by potential website defacement.

Punishment for Website Defacement

Computers work on operating systems, which are composed of millions of  codes. Due to human errors, if some loophole occurs, the cyber criminals use that to penetrate into the system. At the time of crime investigation, collection of evidence plays an important role. Collection of data outside the territorial extent is very difficult. This makes cyber criminals think that they are safe.

There are two main statutes that govern the online criminal liabilities are the Indian Penal Code, 1860 and the Information Technology (IT) Act, 2000. The IT Act, was passed and enforced on 17th May 2000.

Under Section 66 of IT Act,2000: Hacking with computer system is a cognizable act which is non-bailable and is triable by a first class Magistrate. This section is to protect the information residing in a computer resource and to protect the integrity and security of computer resources from attacks by unapproved persons seeking to enter such resource. The punishment of the offence under this section is imprisonment up to three years, or with fine up to Rs.2 lakhs or with both. The presence of a criminal intention will differentiate S.66 from S.43 of It Act, 2000.

For Tampering with computer source documents- Under Section 65 of IT Act,2000: Alteration or destruction of any computer source code when the source code is required to be kept or maintained as per law. Imprisonment extending up to 3 years or fine of 2 lakhs.

Conclusion

The very nature of cyber crimes itself brings with it the transboundary effects destroying the legislative wisdom. In India, since we don’t have a super legislation covering all forms of cyber crimes, becoming party to the respective international conventions and treaties is desirable so that we can implement those provisions by enacting relevant municipal laws in that regard.

References

www.wikipedia.com

www.geek.com

www.hackstation.org

www.techopedia.com

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In this article, Jimsi Tassar who is currently pursuing Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, discusses Laws on Net Neutrality in India

Net Neutrality Laws refers to Laws and Regulations which enforce the Principle of Net Neutrality. So, what is Net Neutrality Principle? Do we have any Laws in India, to regulate access to data and information on the internet?

Internet is defined in Wikipedia, as a global Networking Computer providing a variety of Information, and communication facilities, consisting of interconnected networks using standardized communication protocols. It is a Network of Networks that consists Private, Public, Academic, Business, and Government Networks of Local to global Scope, linked by broad array of electronic, wireless, and Optical networking Technologies. The ‘Internet Epoch’, which began in our lifetime, initially started as a small networking program with computation called the Arpanet for the USA military and developed by funded Research for US Defence known by the name of Advanced Research Project Agency ( ARPA), which later changed to Defence Advanced Research Projects Agency ( DARPA), and later could actually be traced to the last decades of the 20^th century and over the last years, there have been numerous developments of Applications both in the form of Hardware and Software, to support such linkages set up and for easy access to such exchanges and information on the World Wide Web.

What ‘Neutrality’ means when we talk of Net Neutrality

Neutrality in this context means the easement of linkages, routes, and free access to any services or resources available on the internet provided by the third Party, and various other service providers, without any discrimination or hindrance from the Internet Service Provider or ISPS.

Net Neutrality is thus, a governing Principle for the Internet Service Providers. Net Neutrality of Internet Service Providers without preferential conduct towards certain Data, Websites and Programmes, domains etc, but being neutral, to have a free flowing internet service through its servers, and without having any authority or dictation over the Customer’s choice to have an access to any kind of information or service from any part of the world, either through Global Network or Local Network, available on the Internet.  The idea of Net Neutrality Principle is to have equal treatment of all data, without any preferential treatment of any data based on speed, inflow of data or access to the data.

Net Neutrality was coined as a terminology by Academician, Tim Wu, who stated that it was best defined as a network design principle. The idea is that a maximally useful public information network aspires to treat all content, sites and platforms equally. Most jurisdictions, including those that are said to have adopted a NN framework; however, do not explicitly define this term in their policy/regulatory framework.

In fact, the idea and the concept of Net Neutrality is a very recent phenomenon wherein, the whole communication processes that actually happened through Calls and Text Messages, Voice and Video calls, provided by the Telecom Companies worldwide, were extensively replaced by various internet services like Skype, Google Chat, Facebook, Twitter etc, due to invention of smart phones, these services became accessible. The Internet services have been possible with the Broadband Services that is a Service provided by the Telecom Companies. The governing principle of telecom companies for Tele services since its inception, has been very liberal without any control of the telecom providers on who a person makes a telephonic conversation or to whom a person sends a text messages and from where a person calls and for what reason or anything as such which is of no concern to the Service Providers of Telecom Services.

Also, the fact exist that, telecom companies and Tele communication service providers are only focussed on the tariffs and rates of the Service provided without controlling the traffic of calls or restricting the callers to communicate. Thus, this principle has been existing and forwarded to Broad band services too. With the advent of such internet voice and video calling services, the telecom Companies to recover the revenues from the loss from such Internet programmes and services, had taken up the steps to charge those services from such websites and domain services, and also make certain charges or profitable relationship based on partiality and Preferential grounds rather than being neutral to all the service providers, thus eventually, the Consumer bear the brunt of charged services if it is so, along with the internet service charges, which would be double charges or could also mean paying for the internet service as well as charges for accessing to the Website or domain service. Thus, this fact, and circumstances resounded a fast cry all over the USA, and Europe and also India.

The topic of Net Neutrality was largely debated on various Grounds world over, and with the involvement of three parties to the idea of Net neutrality

1. The Consumers of Internet Service: who gain access to various information from the broadband Internet Services by paying the Internet Service Providers (ISPS) i.e Telecom Companies for the service, like the BSNL, Airtel and many other ISPS in India.
2. The Internet Service Providers- Telecom companies: The service providers that has introduced Broad band services along with telecom services, and would like to charge service payment for the internet Provider services to the Domain and Website providing free calling and services to the Internet users.
3. The Website and Application Providers: The Website could include any kind of services available on the internet like Social Media; Facebook, Twitter, Google Chat etc; E-Commerce and Marketing like Amazon, Flipkart, Snapdeal, Alibaba.com etc. The interest of the Service provider would be to protect itself from the effect of preferential spaces given by the Internet Service Providers, and especially the interests of the smaller investors and service providers who would want to protect their interests as against bigger service providers of bigger applications with global presence like Google, Wikipedia etc.

The Idea and concept of Net Neutrality thus have significance in the fields of Information Technology and the Rights of the “Netizens” to have the freedom of accessibility of the information as well to have the liberty of selecting the network or services to gain information and not being directed to access to information as per service selected not on the basis of liberty to choose, but due to the preferences and choices made by the Internet Service providers or the Telecom Services which could be possibly a very biased selective due to various reasons other than merit or preferences of the Customers, or any other reason which curtails the freedom and liberty of accessibility to Information available in the Public domain.

It has been found that, Internet is being used wide across USA, China, Europe and India.  So far, USA has been the country with the biggest online debate on the Net Neutrality with almost 3.7 million people participating on an online survey and discussion on Net Neutrality which is also adapted as ‘Open Internet Order’. However, there still has not been any landmark legislation on the same.

NET Neutrality Laws and Rules have been so far legislated in four countries

Chile

Chile is the first country to make Net Neutrality Provisions in its General Telecommunications Law in 2010. The opponents have shown discern on the blanket application of the Net Neutrality.

Netherlands

Netherlands is the second country to adopt Net Neutrality, in 2011. It bans Mobile Telephone operators from blocking or charging consumers extra for using communication services that are internet based, and therefore, the telephone operators raised charges overall to compensate for the revenue lost on the process.

Brazil

Brazil adopted a Net Neutrality Legislation on April 22, 2014 that bars the telecom companies from charging high rates to access the content requiring higher bandwidth, such as video streaming etc. Also, the Legislation puts a limitation on collecting of Meta data, and also holds the large Telecom Companies accountable for the security of Brazilian’s data, no matter where it is stored.  The law has dubbed Brazil’s legislation as Brazil’s, ‘Internet Constitution’. This remarkable legislation has been lauded globally, and makes global social network like Face-book and Google for subjected to Brazil’s laws and courts, therefore, it establishes that Service Providers are accountable for content published by Users, and must comply with Court orders to remove libel or offensive materials posted on their site or on the net.  Tim Burners Lee has lauded Brazil’s Internet constitution to be a balancing act between the freedom of internet and its decentralization, while balancing the rights and duties of Corporations, Government and the user of the internet.

The first big global debate started on Net Neutrality in USA when a service provider called the Verizon sought to ask extra charges on Netflix for streaming its movies. In USA, the Internet Service Providers (ISPS) are controlled by the Federal Communications Commission (FCC).  The FCC in USA had tried to control the Net neutrality by shutting down few services by the name of Comcast. However, in the year 2010, the US Court overrode such action of the FCC and issued certain rules as guidelines, very strictly there was no discrimination to be made between lawful Applications and Websites, and also, that there should be no charges taken up for such service/ application or website for generating revenue, even if such websites or applications are competing with the voice or video calling applications of the Telephonic Communications.

Opposition to Net Neutrality laws

There has been an alternate voice to Net Neutrality, wherein those opinionated against Net Neutrality Enforcement claim Regulation or Rules are unnecessary, as it is, that broadband services around the world, would never block content or degrade network performances as it would effects its own commercial benefits.

Also, it is consistently argued that, instead of any imposed discrimination by      the Broad band providers, the best solution is to encourage greater competition among such providers as it will increase the quality and also, increase its area of coverage, as it is currently limited in many areas. Therefore, the alternate view of those opposing any regulation or laws are based on sound understanding of world wide scope of Internet Service Providers with the ever increasing usage of net.

Net Neutrality in India

In India, there is no Legislation in place as such for Net Neutrality. There are no statutes or Legislations or Acts passed by the Parliament on Internet Service Providers and its authority over Freedom and liberty of the consumers. However, due to private players in the sector of telecom, there has been a need for independent regulations. Thus the Telecom Regulatory Authority of India was established with effect from 20th February 1997 by an Act of Parliament, called the Telecom Regulatory Authority of India Act, 1997, to regulate telecom services, including fixation/revision of tariffs for telecom services which were earlier vested in the Central Government. The main objective of TRAI is to provide a fair and transparent policy environment which promotes a level playing field and facilitates fair competition

In India, the first Public Debate on Net Neutrality started with Face-book and Skype going to be charged with certain service charges by the ISPS. There was widespread public debate online and with academicians etc.

In the consultation paper for possible regulations, TRAI recognised that while there are several definitions of Net Neutrality, the term is generally understood to mean the principle that Telecom Service Providers (TSPs) must treat all Internet traffic on an equal basis, without regard to the type, origin, or destination of the content or the means of its transmission. In recognition of the complex set of issues surrounding this concept and the diverse viewpoints on the subject, the Authority initiated a deeper enquiry into the various issues relevant to the subject.

As per TRAI reports, India has peaked more than 1 billion mobile phone subscribers, right after China. The newspaper reported that the Communication and Information Technology Minister Ravi Shankar Prasad comment, “It is a matter of great pride for us. It shows an empowered India and an engaged India and a tech-savvy India, it will mean more data, more government-to-government connectivity, more broadband.”- reports the Hindu.

Thereafter, following the first consultation, on February 2016, Telephone Regulatory Authority of India (TRAI) published a Regulation titled, the ‘Prohibition of Discriminatory Tariffs for Data Services Regulation, 2016, whereby different pricing rate for different services or for a certain type of services were allowed.

 Besides, the Regulatory and Facebook loggerheads, for Facebook to have attempted to divert from the idea of Net Neutrality Policy by bringing up social media debate on this announcement of free internet service in rural India.

Thus, TRAI brought in further Consultation for the engagement of public and authorities with expertise to bring forth policies on Net Neutrality and way forward in the context of India.

However, TRAI has so far been able to address the issue with two consultations and public consultation papers.

The TRAI consultation paper is on Public domain, and frameworks within which the Net Neutrality could be taken up as future course are the Regulatory Authorities: Telecom Regulatory Authority of India has been allocated the authority to regulate Licensing and all aspects of Regulation. The Telecom Regulatory Authority of India Act, 1997 (TRAI Act) confers direct responsibilities on the Authority on some aspects such as determination of tariffs and quality of services, while on others it has only recommendatory powers and the Licensing.

The Licensing for Regulatory structure

In India, issues of licensing and allocation of spectrum are dealt with by DoT while regulatory aspects are dealt with by TRAI. Moreover, the Telecom Regulatory Authority of India Act, 1997 (TRAI Act) confers direct responsibilities on the Authority on some aspects such as determination of tariffs and quality of services, while on others it has only recommendatory powers.  And the Licensing regime in India is divided into many licence service areas, and the boundaries of these areas may vary for different types of license. Therefore, within the boundaries of India, an end user may use data services while roaming across the Boundaries. Thus, Data services accountability could be a concern for policy makers.

Traffic Management Policies

Transparency of the Traffic Management Policies: Transparency is one of the main important aspects to be included in the Net Neutrality Regulatory Framework for they acknowledge that transparency obligations do impose both direct and indirect constraints on the ability of TSPs to engage in discriminatory conduct. Besides, the Quality of Service (QOS) requires to be maintained for the end consumers and the competition of the Internet Service Providers in the Market and most importantly, Transparency in information for the informed consent and informed choice of Service end user.

TRAI in its Consultation Paper has managed to address this concern of the disclosure procedures to be ascertained that would be provided by the Telecom Service to the Consumers for their informed choice. Disclosures to be provided to the Regulator of Internet Service and Information, Disclosure to be provided to the General Public.

In India, so far TRAI being the Regulatory Authority as mentioned in the Press Information Bureau Report, The Authority has therefore mandated the following in the Regulations:

1. No service provider shall offer or charge discriminatory tariffs for data services on the basis of content.
2. No service provider shall enter into any arrangement, agreement or contract, by whatever name called, with any person, natural or legal, that has the effect of discriminatory tariffs for data services being offered or charged by the service provider for the purpose of evading the prohibition in this regulation.
3. Reduced tariff for accessing or providing emergency services at times of public emergency has been permitted.
4. Financial disincentives for contravention of the regulation have also been specified.

TRAI would impose a fine of Rs. 50,000 per day, subject to maximum amount of Rs. 50 lakhs, for any violation of these Regulations, by the Internet service providers. An exemption, however, has been made for offering emergency services to the consumers.

TRAI rolled out a 2^nd Consultation Paper on Net neutrality for public Consultation which is to be rolled back by the end of this February 2017.

Conclusion

Net Neutrality Laws and Regulation would be the most forth coming in the near future, with policy makers logging head on bringing forth Policies and regulations around it for balancing the interests of all the stakeholders along with the interest of the Governance and legal implications on any legal issues which relates to data security and storage in locations beyond the territorial jurisdiction of any Country.

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In this article, Joseph Gregory who is currently pursuing Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata discusses Is access to Internet a Human Right? 

Every human being is entitled to some basic rights. Human right is a generic term and it embraces civil rights, civil liberties and social, economic and cultural rights. Thus it can be said that all people have by virtue of being human certain rights, these rights are called Human Rights. The idea of human rights is bound up with the idea of human dignity. Chief Justice of India, J.S.Verma has stated, ‘human dignity is the quintessence of human rights’. D.D.Basu defines human rights as those minimum rights which every individual must have against the State or other public authority by virtue of his being a member of human family, irrespective of any other consideration.

Human rights have been classified by the United Nations into two kinds mainly,

1. Civil and Political Rights – those rights which are related to the protection of the right to life and personal liberty

2. Economic, Social and Cultural Rights – those related to the guarantee of minimum necessities of the life to human beings.

• In the current techno world, everything and anything is done with the help of internet from basic school project to research for your Ph.D thesis. Internet has become an integral part of everyone’s life. Unlike the earlier economic indicators – Food, Shelter and Clothing, many countries have included access to internet a basic indicator for Human Development Index.
• A minute without internet is just practically but also mentally possible for the current generation. In such a situation, can Internet be considered a Human Right, a right which cannot be dispensed with or which defines basic dignified lifestyle.
• According to International Covenant on Economic, Social and Cultural rights, article 11(1) states,

“The States Parties to the present Covenant recognize the right of everyone to an adequate standard of living for himself and his family, including adequate food, clothing and housing, and to the continuous improvement of living conditions. The States Parties will take appropriate steps to ensure the realization of this right, recognizing to this effect the essential importance of international co-operation based on free consent.” The term ‘continuous improvement of living conditions’ states any further needs which is required for good living conditions. Further article 15(3) states “The State Parties to the present Covenant undertake to respect the freedom indispensable for scientific research and creative activity.” Hence in this digital world, Internet is and should be a human right guaranteed to all.

In a recent resolution, A/HRC/32/L.20., passed by United Nations, the UN has declared that “online freedom” is a human right”, and one that must be protected. Further cementing this view, in July 2016 a declaration was issued indicating the importance of “applying a comprehensive human-rights based approach when providing and expanding access to internet and for the internet to be open, accessible and nurtured. The UN Human Rights Commission has also passed a non-binding resolution that effectively makes internet access a basic human right and any country denying it violates the human rights to its citizens. Unfortunately, India along with other countries opposed this stating that they are open to idea of internet access to all, but they want absolute control over it.

Right to Broadband: A Fundamental Right in many jurisdictions

The Right to Internet is also known as Right to Broadband, has been included as a Fundamental right in amongst many international communities. Former US President Barack Obama in 2015 said,

“Today, high-speed broadband is not a luxury, it’s a necessity.”

In Costa Rice, a 2010 Ruling by its Supreme Court said that technology has impacted the way humans communicate. It has become a basic tool to exercise democratic participation, education, freedom of expression, access to information and public services online and hence it includes fundamental right to access internet or World Wide Web. In Estonia, the government argued that internet is essential for life in the 21^st century and massive accessibility programmed was launched. Further countries like Finland, Greece, Spain, France all have moved a step ahead and has brought access to internet under the fundamental rights of its citizens.

International Conventions ratified by India

India has ratified many international conventions relating to human rights, thus is under obligation to implement the rights stipulated to individuals. But unfortunately, India hasn’t chalked out policies and haven’t yet enacted them for citizens to avail of them. Of the many, India also ratified the two Covenants – International Covenant on Civil and Political Rights and Economic, Social and Cultural Rights. Unfortunately, only the human rights embodied in Part III of the Constitution, which is the fundamental rights, are enforceable in the courts in India. Further the Human Rights Commission’s mandate, established in 1993, cannot extend to those human rights which have been recognised in international treaties signed and ratified by India.

In a country where basic human rights are far from achievable, accessibility to internet is still a far-sighted concept, in other words still a long way to go. The push for the need to have internet access has not just been raised by social forums and the media but also by the courts as well.

In the case of Secretary, Ministry of Information and Broadcasting v. Cricket Association of Bengal (1995 AIR 1236) it was held that every citizen has a fundamental right to impart as well as receive information through the electronic media. A broad interpretation of “electronic media” can definitely mean Internet as well. Enough time has passed since the time Rajiv Gandhi first introduced computers, today everything runs and functions with Internet. In fact, the demonization move introduced by PM. Narendra Modi emphasized the need to push India into a digital country, a cashless country with digital money. The transition is taking place with railway stations and airports offering free internet, internet growth is booming. The growth trajectory of broadband penetration still in its nascent stage, private companies are skeptical about the returns on their investment, especially in the backdrop of the economic doldrums the country is experiencing. Our

In fact, the demonization move introduced by PM. Narendra Modi emphasized the need to push India into a digital country, a cashless country with digital money. The transition is taking place with railway stations and airports offering free internet, internet growth is booming. The growth trajectory of broadband penetration still in its nascent stage, private companies are skeptical about the returns on their investment, especially in the backdrop of the economic doldrums the country is experiencing. Our

Our policy makers, however, should have the vision to understand the potential that the rural market offers from the perspective of business as well as development of people. The Digital India Programme by Union cabinet aiming to achieve digital empowerment by connecting all gram panchayats by broadband internet, e-governance but yet the main ground for all this should be accessibility to all. India has the necessary resources to enforce this right. Unfortunately lack of infrastructure and high cost of Internet connectivity act as an impediment. Even with a high demanding consumer base,

Even with a high demanding consumer base, still the country’s cost per MB is very high, compared to the First World countries possessing fraction of India’s connected user. Hence there is a wide gap that has to be filled prior to declaration of right to internet as a human right in India much less a legal right. Fortunately, The National Telecom Policy 2012 has set a target of 175 million broadband connections by 2017, and 600 million 2020 at minimum 2 Mbps download speed and making available higher speeds of at least 100 Mbps on demand. The policy is also expected to look at ways to increase broadband penetration and convergence of various platforms like cable TV, optical

The policy is also expected to look at ways to increase broadband penetration and convergence of various platforms like cable TV, optical fiber, wireless connection through spectrum, VSAT and satellite. Currently, these platforms fall under different departments. Cable TV for example, comes under the Ministry of Information and Broadcasting, while satellite related issues are majorly governed by the Department of Space. With the new policy, DoT will have more control over various communication and broadcast technologies. While this might make it easier for a company to launch all these services in one go, it increases the risk of every communication medium being affected in case DoT comes out with bad policies in the future.

India ranks 130^th in the HDI, lowest amongst the BRICS nations. With these figures, India still has lot of basic priorities to sort out before it begins its digitalisation move and hence the single answer to whether it is a basic human right or not is simply a big “NO”. Yet again, by increasing cyber knowledge and skills associated, India can set an example amongst developing countries as to how one can progress amidst tough constraints. The integration of rural economy with technology can bring the economic miracle like in Japan and China.

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