This article is written by Soma-Mohanty of KIIT School of Law, Bhubaneswar. In this article, she has mentioned about the process of election of the president, eligibility to be the President and the reason why the indirect election is adopted in the election of the President.
The President of India is elected by a group of members forming an electoral college. The election of President of India is done according to the provisions of Article 55 of the Constitution of India.
Composition of an electoral college
The electoral college consists of
The elected members of the Legislative Assemblies of the States.
The elected members of both the Houses of Parliament.
Composition of Legislative Assemblies of the States
Legislative Assemblies of each States shall consist of members not less than sixty and it should not be more than five hundred. This is regulated according to the provision of Article 333 of the Indian Constitution.
Composition of the Council of States
The President nominates twelve members on the basis of skill or knowledge in literature, science, arts, and social service.
Two hundred and thirty-eight representatives from the States as well as Union Territory.
Composition of the House of the People
Five hundred and thirty members from territorial constituencies in the States who are chosen by direct election. The number of members should not exceed.
Twenty members from Union Territories, who are chosen by the President according to the law. The number of members should not exceed.
Article 38 lays down the qualification required to be eligible for the President of India. The following criteria are:
The person shall be a citizen of India.
He should have attained the age of 35 years
He must have qualified for election as a member of the House of the Parliament.
When a person is holding an office of profit under the Government of India, or Government of any other State or under any local authority, then he won’t be eligible for the election of President.
But the holder of certain offices are exempted from this provision.
The President and Vice President
The Governor
Minister of Union as well as Minister of any State
Process of the election of the president of India
Uniformity in the scale of representation of states
The proportionality between the value of the vote of an MLA to the population of that state is maintained.
Formula.
Value of vote of an MLA= total no.of population of the particular state/ number of elected MLAs of that state divided by 1000.
The balance between the votes of MPs and MLAs
To maintain the balance between the State and the Union, it has been formulated that the total value of votes of MPs should be equal to MLAs.
Single vote system
Each voter has the right to cast only one vote
The value of the vote of an MLA is variable and it varies from state to state.
The value of the vote of MP always remains constant.
Fixed quota
A winning quota is set up for the candidates.
Whoever reaches the quota or exceeds it is declared as the winner.
Formula
Winning qouta= total number of poll/ no.of seats + 1
Preference by electors
In this type of election, the voter casts his vote in accordance with his preference
The vote goes to the first preference.
But if the first preference candidate fails to touch the winning quota and if any of the candidates did not touch the winning quota, then the vote goes to the second preference
Transfer of votes
When after the count of the first preference vote is done and there is no winning candidate.
Then the candidate who secured the lowest vote is eliminated.
And after the elimination, the vote is transferred to the remaining candidates.
Proportional representation
As per Article 55(3) of Indian Constitution the President of India is to be elected by proportional representation by the means of the single transferable vote.
Minority parties, as well as independent candidates, are given a chance of representation and their chances of ruling increases. Thus, new changes are made in the system with evolution in the welfare of society as well as people.
It provides the system of the coalition government. According to it under one government more number of voters can be represented.
It is better than the ordinary straight voting system. Because in this system the candidates who are elected can’t represent the majority of the electorate’s opinion
How single transferable system works?
The single transferable system is mostly used in the representation. In this type of system, the elector has the right to one vote and the number of seats to be filled up is not required. Each voter can rank the candidates in accordance with their preference on the ballot paper.
The quota of surplus vote
The proportional representation system is different from an ordinary straight voting system. In the ordinary method, a candidate who secures the highest number of votes is declared to be elected. But in proportional representation, any candidate who secures the necessary quota is declared to be elected.
Process of calculating
Example
the place “X” is a 5 seated constituency and the number of votes cast is 60,000.
Then the total number of votes cast is to be divided by the number of constituencies plus one.
That is 60,000 divided by (5 plus 1)
5 plus 1 equals to six
60,000 divided by 6 equals to 10,000
10,000 plus 1 is equal to 10,001
Then after fixing the quota in this method, the candidate whose total number of first preference vote is more and the vote exceeds the quota fixed, is declared as the winner.
Distribution of surplus votes
The surplus vote of the first preference of each elected candidate would go in vain. Thus, those votes are transferred to the second preference candidate. The count of the surplus vote is known. This is the process of relocating excess votes.
Elimination of bottom candidate
When all the seats are filled in the second round then the election is completed.
Candidates with the lowest vote count of first preference are dropped out when the requisite number of candidates do not touch the quota while the distribution of surplus vote of first preference is done.
Then the person’s complete vote is transferred to available preference to the next preference
If these steps do not work effectively and still there is a vacancy of seats, then the procedure is repeated again. The candidate who is at the bottom is eliminated and all his votes are transferred to the candidate who is the next preference available according to his papers.
This process is repeated until the seats are filled.
Working of proportional representation
Illustration
Total no.of valid votes are 20,000
There are four candidates “A”, “B”, “C”, “D”
“A” has 8000 votes
“B” has 7000 votes
“C” has 4000 votes
“D” has 1000 votes
Quota of vote= {20000/ (1+1)}+1=10001
One of them got the quota required for winning
Thus “D” having the lowest vote would be eliminated and his vote would be transfered.
Thus the vote would be distributed between “A”, “B”, “C”. now second preference would be recorded.
The vote would be transferred to first preference i.e.
“A”= 8000+200= 8200
“B”= 7000+500= 7500
“C”= 4000+300= 4300
After the second count “c” secures the lowest vote and would be eliminated.
The vote would be transferred to “A” and “B” respectively. And thus third preference would be recorded.
Let the vote of “C”, divided between “A” and “B” be 1900 and 2400 respectively.
The final result
A’s count = 8200+1900= 10,100
B’s count = 7500+2400= 9900
Thus “A” would be the winner as he has secured the quota of winning. The winning quota was 10001 and “A” had secured 10100
Reasons for indirect election of the President of India
Our country has a cabinet system of government and thus it requires a competent person to run it. And it is not possible in part of the voters to differentiate the abilities the post requires to run the office and if the candidate possesses such abilities to run the office or not.
If the direct election process for the election of the President would be adopted, then the candidate has to travel through India for campaigning for which he would require the help of a political party. This would arise political instability.
The President is considered to be the first man of India and thus he deserves respect and his actions should be favourable towards all the parties for a swift running of the country. But direct election arises enmity feeling towards the President.
India’s population is vast and conducting an indirect election for electing President would be expensive and it would affect the economy of the country even.
It is not possible in the part of the Government to provide a huge number of electoral machinery for the smooth running of the election
This system helps the head of State to maintain neutrality.
In a direct election, the President elected may desire to have the real power as he was directly elected by people. And this would create a mess in the cabinet and thus the responsibility of each member would be in confusion.
To know more about President elections in India, please Click Here.
Only those who have value can give away value. You need to know when to give value away for free, and when to refuse to do so.
Recently we created a very detailed Legal Handbook for HR Managers. A leading legal publisher contacted me to publish it in print. The condition was that I must take it down from LawSikho website where it’s available for free download.
I am not willing to do that. I want that handbook to reach as many HR Managers as possible. So far it has been downloaded by more than 3,000 HR managers. I know it will be read by tens of thousands of HR managers and will indirectly benefit lakhs of employees.
Good things can’t be sustained without revenue and resources. What about that? How are we going to take care of all the costs?
We have a course on Employment Law for HR managers. A small percentage of these HR managers who will read the free book and benefit from the same will buy the course to learn more. The revenue enables us to have a team that does further research, editing, updating of free books as well as development of courses.
And that’s how the cycle works.
You need to think of self sustaining systems – without that, good intentions are just that. Good intentions.
But it all starts with giving away value to people. That starts a virtuous cycle of trust building. And then still having more value, to offer at a price, can build empires. This is the new age economy that is killing the old way of doing business. And this new economy starts with building trust, earning credibility and giving a taste of the value that you can generate.
However, most people can’t imagine giving away something that really consider valuable. They are scared to trust strangers, or to rely on a system where they give something valuable first and then eventually hope to capture some value out of it later.
Have you seen how ice cream sellers in malls give you a taste of different kinds of ice cream without any commitment on your part that you will buy a scoop? Of course there are some people who taste and leave without buying. That’s fine. Because the rest of them buy, because after tasting you feel like buying.
I pay my coach INR 20,000 for 4 calls a month. It is more than what I was willing to pay initially. But she has this offer where I can do a free call with her, called a breakthrough session. After I did that, and she generated tremendous value for me in 1 hour, I decided that it was worth paying that. And that decisions really paid off for me, and I have referred many friends to her. And those friends also get a free breakthrough session to decide if they want to work with her.
Notice how that cycle works. It is based on trust and proving what you can do, without any guarantee of return as first.
The entire freemium app model is based around this. Billion dollar software companies have been built around the freemium model. You must have seen apps like that – which are useful, you get to download them for free, and when you begin using them, you want some extra features for which you may want to pay. Or not. Most never pay.
The majority just uses the free version, even though the free version comes with limited functionality, but then there are a small percentage of premium users who pay for advanced features. And that can make billions every year!
Almost all Software-as-a-Service (SaaS) companies follow this business model. Think of Gmail. Or Google Suite. You get 5 GB of free space. But once you run out of that, after using gmail and Google suite for years, you are too tied up to shift. You start paying for it. That’s what happened to me. I know a lot of people who do that.
Free stuff, that leads to users eventually paying for premium privileges.
click above
This is how DropBox became a giant. Their entire marketing is based on giving away free digital storage. They know that you will eventually run of free storage, and one day you will pay for its storage.
Can lawyers do this too?
One great example I can think of is that of a mainstream law firm doing this. Tha is Nishith Desai and Associates. They give away tons of free research, content and information away on their website. They invest significant resources in creating such content.
In this report, Nishith Desai, the managing partner, said as follows: “Sometimes revenues slow down because in the first part of the year we may have spent disproportionately more time on research, training or even social work on pro bono basis.”
Imagine that. This is a law firm that is ready to slow down revenues in order to invest more in research, training and pro bono work. This just goes to show how freemium can work for a law firm. Nisith Desai Associates is a powerhouse, and one of the prime law firms that are expected to break into tier 1 law firm circles. It has grown strength to strength in the last two decades!
I think I understood where this culture come from when I saw a Doordarshan interview by Nisith Desai. He tells the story of his early career in law in this interview. After doing LLB and LLM, he researched on international tax for 3 years. There was no taker for such niche skills back then. It was during the infamous emergency in India, and the government had made American companies like Coke and IBM leave the country.
What does a lawyer do when he doesn’t have work to do? In Nishith Desai’s words, he starts writing articles and lecturing people. In 1991, when the economy started opening up, and companies were looking for expertise on subjects like international construction contacts and international tax, they looked around and didn’t find knowledgeable people in Indian legal industry who could help them with such matters.
Guess what did they find though? Nishith Desai’s articles. This was pre-internet era, and international journals were the vehicle of this knowledge dissemination. And that is how Nishith Desai found his footing in the legal industry.
No wonder today NDA has one of the best presence on the internet in terms of publishing research papers and videos on cutting edge legal issues, which are consumed and followed by the entire legal industry.
Writing articles that potential clients will read, followed by engagement through newsletters and other types of subscriptions is the primary way lawyers market their services in more developed legal markets like the USA or the UK.
Educating clients on their legal issues is one of the most powerful ways for lawyers to build trust and credibility in a market. So is talking in industry events and giving away valuable knowledge. Or even organizing events to educate other lawyers and potential clients!
If other lawyers have learnt something from you, that puts you in a position of authority. It is not something you should be afraid to do.
Are you worried to give away too much free advice to potential clients or random people who may never become your clients? Don’t be. I know lawyers who do it all the time, and they are trusted and loved enough, and gets amazing referrals. You can’t expect quick results, but that is a powerful way to build a brand.
Many lawyers who have a thriving practice in the Supreme Court today started by doing lots of pro bono matters. Let’s say you go to a jail, find out who are the people who have been stuck in jail despite bailable charges just because they can’t furnish a bail. Or some other small technicalities. Help them to get bailed out, free of cost. Do you know what will happen when they are about to walk free? They will tell all the other inmates about what an amazing lawyer and absolute angel you are. An entire network of jailers, inmates, lawyers, judges and other people will hear about your good deeds, and appreciate you for it.
And that builds brand. That ensures you begin to get more matters. That ensures other lawyers and judges have respect for you. That ensures that people do not think that you are a cheap lawyer just out to make a little more money.
Do you have any idea what can that do to your practice?
Here is the thing, I have been doing this for more than 10 years now. For any product my team has created, we create a lot of free give-away content. We want people to benefit from that free content. We want them to see what we are like, what our work is all about, what values we stand by and what kind of learning we can offer.
This is also our answer to all the cheap competitors. What they offer in a course, we can give away better content for free. When some potential learners come and complain about how some others courses are 90% cheaper than ours, I just tell them – sir, please follow our iPleaders blog and LawSikho youtube channel, and also buy the cheaper course. And then please evaluate if the money was well spent.
You do not compromise on your fair price. Never charge below what you deserve. Never give in to competition and price wars. If your only value is that you are cheaper than the next lawyer, or professional, then you have already lost the plot.
You better work on becoming so valuable, that clients will not hesitate to pay a premium to you.
I have a litigation going on in a High Court. It was an important matter. I needed the best lawyer I could find. The best lawyer, however, charges 10 times more than the next best! Can you imagine that? His clerkage is as much as what other senior counsels charge.
I could not afford him. But if I could, I would have gone for him. No question.
I would like you to aim to become a lawyer like that. What does it take to be like that? It’s a long way to go, I know. Can you start taking some steps towards it? Can you shoot for the moon? What would you be doing if you were shooting for the moon? What does that striving look like?
Join us in the journey, because we are committed to that kind of excellence. Is it worth your time and money?
Here is our Legal Practice Development and Management course. This is relevant if you want to create a top notch solo practice or a law firm with the right foundation and grow it with certainty and velocity.
Also, check out these upcoming LawSikho courses in which enrollment is going on:
This article is written by Dhruv Bhardwaj, a student of Amity Law School Delhi. In this article, he will cover the concept of Corporate Veil under the Companies Act, 2013, the need for introducing this concept and circumstances under which the Corporate Veil can be lifted. The article covers the concept in leading nations of the world not just the Indian scenario.
Introduction
Once a business is incorporated according to the provisions laid out in the Companies Act of 2013, it becomes a separate legal entity. An incorporated company, unlike a partnership firm, which has no identity of its own, has a separate legal identity of its own which is independent of its shareholders and its members. This article will go over what this differentiation means, why this demarcation was brought about and how can the members be made personally liable for using the company as a vehicle for undesirable purposes.
What is Corporate Veil ?
A company is composed of its members and is managed by its Board of Directors and its employees. When the company is incorporated, it is accorded the status of being a separate legal entity which demarcates the status of the company and the members or shareholders that it is composed of. This concept of differentiation is called a Corporate Veil which is also referred to as the ‘Veil of Incorporation’.
Meaning of Lifting of Corporate Veil
The advantages of incorporation of a Company like Perpetual Succession, Transferable Shares, Capacity to Sue, Flexibility, Limited Liability and lastly the company being accorded the status of a Separate Legal Entity are by no means inconsiderable, under no circumstance can these advantages be overlooked and, as compared with them, the disadvantages are, indeed very few.
Yet some of them, which are immensely complicated deserve to be pointed out. The corporate veil protects the members and the shareholders from the ill-effects of the acts done in the name of the company. Let’s say a director of a company defaults in the name of the company, the liability will be incurred by the company and not a member of the company who had defaulted. If the company incurs any debts or contravenes any laws, the concept of Corporate Veil implies that the members of the company should not be held liable for these errors.
Basics of Limited Liability
Organizations exist to a limited extent to shield the individual resources of investors or shareholders from individual obligation for the obligations or activities of a company. Almost opposite to a sole proprietorship in which the proprietor could be considered in charge of the considerable number of obligations of the organization, a company customarily constrained the individual risk of the investors. This is why Limited Liability as a concept is so popular.
Puncturing the Veil of Incorporation commonly works best with smaller privately held companies in which the organization has few investors, restricted resources, and acknowledgment of separateness of the partnership from its investors.
Germany
German corporate law built up various speculations in the mid 1920s for lifting the corporate veil based on “control” by a parent company over a subsidiary. Today, investors can be held subject on account of an obstruction devastating the partnership. The company is qualified for at least impartial assets.
United Kingdom
The corporate veil in UK company law is pierced every once in a while. After a progression of endeavors by the Court of Appeal during the late 1960s and mid 1970s to set up a straight jacketed formula for lifting the veil, the House of Lords reasserted a universal methodology. As indicated by a 1990 case at the Court of Appeal, Adams v Cape Industries plc, the main genuine “veil piercing” may happen when a company is set up for false purposes, or where it is set up to avoid a statutory obligation.
Tort Victim and Employees
Tort victims and representatives, who did not contract with an organization or have very inconsistent and limited dealing power, have been held to be exempted from the standards of limited liability in Chandler v Cape plc. In this leading case law, the petitioner was a representative of Cape plc’s entirely claimed subsidiary, which had gone insolvent. He effectively acquired a case of tort against Cape plc for causing him an asbestos sickness, asbestosis. Arden LJ in the Court of Appeal held that if the parent had meddled in the activities of the subsidiary in any capacity, for example, over exchanging issues, then it would be connected with obligation regarding wellbeing and security issues. Arden LJ underscored that piercing the corporate veil was a bit much in this case. The limitations on lifting the veil, found in legally binding cases had no effect.
“Single Economic Unit” Theory
It is a proverbial standard of English company law that a company is an element isolated and unmistakable from its individuals, who are at risk just to the degree that they have added to the company’s capital: Salomon v Salomon. The impact of this standard is that the individual backups inside a combination will be treated as independent elements and the parent cannot be made obligated for the auxiliaries’ obligations on insolvency. This standard particularly applies in Scotland.
While on the face of it, it may look like there are a lot of scenarios for “lifting” or “piercing” the veil, judicial dicta is of the view that the standard in Salomon is liable to special cases are slender on the ground. Lord Denning MR sketched out the hypothesis of the “single economic unit” – wherein the court analyzed the overall business task as an economic unit, instead of a strict legal form -in DHN Food Distributors v Tower Hamlets.
The “single economic unit” hypothesis was in like manner dismissed by the CA in Adams v Cape Industries, where Slade LJ held that cases where the standard in Salomon had been circumvented were just occasions where they didn’t have a clue what to do. The view communicated at first case by HHJ Southwell QC in Creasey v Breachwood that English law “unquestionably” perceived the rule that the corporate veil could be lifted was depicted as a sin by Hobhouse LJ in Ord v Bellhaven, and these questions were shared by Moritt V-C in Trustor v Smallbone, the corporate veil cannot be lifted only because equity requires it. In spite of the dismissal of the “equity of the case” test, it is observed from judicial thinking in veil piercing cases that the courts utilize “fair circumspection” guided by general standards, for example, mala fides to test whether the corporate structure has been utilized as a simple device.
Perfect Obligation
In the landmark case of Tan v Lim, where an organization was utilized as a “façade” (per Russell J.) or in common layman terms, to defraud or to swindle the lenders of the respondent and Gilford Motor Co Ltd v Horne, where an order was conceded against a merchant setting up a business which was simply a vehicle enabling him to evade a pledge in limitation. The common element in these two cases was the element of defrauding the other person via the vehicle of the company. The company in fact was set up for absolutely no other purpose collateral to it. The main purpose was to defraud. Also, in Gencor v Dalby, a suggestive remark was provided that the corporate veil was being lifted where the organization was having an image exactly similar to that of the litigant. In reality however, as Lord Cooke (1997) has noted extrajudicially, it is a result of the different characters of the organization concerned and not regardless of it that value interceded in these cases. They are not occurrences of the corporate veil being pierced but rather include the utilization of different standards of law.
Reverse Piercing
There have been cases in which it is to the benefit of the shareholder to have the corporate structure overlooked. Courts have been hesitant to consent to this. The often referred to case Macaura v Northern Assurance Co Ltd is an example of that. Mr Macaura was the sole proprietor of an organization he had set up to develop timber. The trees were devastated by flame yet the back up plan wouldn’t pay since the strategy was with Macaura (not the organization) and he was not the proprietor of the trees. The House of Lords maintained that refusal was dependent on the different lawful character of the organization.
Criminal Law
In English criminal law, there have been cases in which the courts have been set up to pierce the veil of incorporation. For instance, in seizure procedures under the Proceeds of Crime Act 2002 monies gotten by an organization can, contingent on the specific facts of the case as found by the court, be viewed as having been ‘acquired’ by a person (who is for the most part, yet not generally, a chief of the organization). As a result, those monies may turn into a component in the person’s ‘advantage’ acquired from a criminal lead (and consequently subject to seizure from him). The position with respect to ‘piercing the veil’ in English criminal law was given in the Court of Appeal judgment on account of R v Seager in which the court said:
There was no significant contradiction between direction on the lawful standards by reference to which a court is qualified for “pierce” or “rip” or “evacuate” the “corporate veil”. It is “hornbook” law that an appropriately framed and enrolled organization is a different legitimate element from the individuals who are its shareholders and it has rights and liabilities that are independent of its shareholders. A court can “pierce” the carapace of the corporate element and see what lies behind it just in specific conditions. It can’t do as such basically on the grounds that it thinks of it as may be simply to do as such. Every one of these conditions includes inappropriateness and deceitfulness. The court will at that point be qualified for search for the legitimate substance, not just simply the structure. With regards to criminal cases the courts have recognized at any rate three circumstances when the corporate veil can be pierced. First if an offender endeavors to shield behind a corporate façade, or veil to shroud his crime and his advantages from it. Secondly, where the transaction or business structures comprise a “gadget”, “shroud” or “hoax”, for example an endeavor to mask the genuine idea of the transaction or structure to delude outsiders or the courts.
United States
In the United States, corporate veil piercing is the most contested issue in corporate law. Although courts are hesitant to hold a functioning shareholder at risk for activities that are legitimately the obligation of the organization, regardless of whether the partnership has a solitary shareholder, they will regularly do as such if the enterprise was particularly rebellious with corporate customs, to forestall misrepresentation, or to accomplish value in specific instances of undercapitalization.
To put it plainly, there is no strait-jacketed formula that exists here and the decision entirely depends on customary law points of reference. In the United States, various hypotheses, most significant “modify the sense of self” or “instrumentality rule”, endeavored to make a piercing standard. Generally, they rest upon three essential pillars—namely:
Unity of Interest and Ownership : This is a situation in which the different personalities of the shareholder and organization stop to exist.
Conduct which is Wrongful in Nature: In case the corporation takes steps which are deemed to be wrongful in nature.
Proximate Cause: If the company indulges in wrongful conduct, there must be some foreseeable ramifications that might be arising out of it, so the party which is actually seeking the piercing of the corporate veil must have suffered some harm arising out of the wrongful conduct of the corporation.
Despite all these guidelines laid out, the speculations neglected to explain a genuine methodology which courts could legitimately apply to their cases. Accordingly, courts battled with the confirmation of every circumstance and rather examine every given factor. This is known as “totality of circumstances”.
Another apparent question here is to decide the jurisdiction of a corporate if the business of the corporate entity is not limited to just one state. All enterprises have one place of business where they were initially set up and incorporated, (their “home” state) to which they are incorporated as a “household” company, and in the event that they work in different states, they would apply for power to work together in those different states as a “remote” organization. In deciding if the corporate veil might be pierced, the courts are required to utilize the laws of the company’s home state and not the numerous other states that they might be doing business in.
This issue at first sight may not look like a big thing to worry about but sometimes it can be huge; for instance, Californian law is progressively liberal in enabling a corporate veil to be pierced, the standards that the Californian Corporate Law has set in terms of scenarios under which the Veil can be pierced are quite many in number and even if an organisation simply encroaches a wrongdoing, the Courts might order for the Piercing of the Veil, while the laws of neighboring Nevada are quite strict when it comes to piercing the veil. The law in Nevada may allow the veil to be pierced only under exceptional circumstances and thus it makes doing such things increasingly troublesome.
Therefore, the owner(s) of an organization working in California would be liable to various potential for the company’s veil to be pierced if the enterprise was to be sued, contingent upon whether the partnership was a California residential partnership or was a Nevada remote organization working in California.
By and large, the offended party needs to demonstrate that the incorporation was only a formality and there was nothing more to it and that the enterprise dismissed corporate customs and conventions, for example, using the voting method to approve the daily decisions of the corporate entity. This is regularly the situation when an enterprise confronting lawful obligation moves its benefits and business to another company with a similar administration and shareholders. It likewise occurs with single individual enterprises that are overseen in a random way. All things considered, the veil can be pierced in both common cases and where administrative procedures are taken against a shell enterprise.
Factors for Courts to Consider
Variables that a court may think about when deciding whether or not to pierce the Corporate Veil include the things that are laid out below:
Non appearance/Absence or mistake of corporate records;
In case the members of the corporation are misrepresented or concealed;
Inability to look at corporate conventions regarding conduct and documentation;
Mixing of advantages enjoyed by the enterprise and the shareholder;
Control of assets or liabilities to concentrate them;
Non-working corporate officials as well as chiefs;
Noteworthy undercapitalization of the business (capitalization necessities fluctuate depending on industry, area, and specific conditions of the corporation which may vary from one company to the other);
Directing of corporate assets by the predominant shareholder(s);
Treatment by a person of the advantages of partnership as his/her own;
Was the enterprise being utilized as a “façade” for predominant shareholder(s) individual dealings like we have already seen in the article that some companies are set up only to defraud the other persons or corporations and their incorporation serves absolutely no other purpose.
It is essential to take note that not all these elements should be met all together for the court to pierce the corporate veil. Even if the corporation indulges in a few of the aforementioned bulleted provisions, it is well under the radar for getting its veil pierced. Further, a few courts may locate that one factor is so convincing in a specific case that it will discover the shareholders at risk. For instance, numerous enormous organizations don’t pay profits, with no recommendation of corporate inappropriateness, however, especially for a partnership firm which is small the inability to pay profits may propose monetary impropriety.
Internal Revenue Service
Lately, the Internal Revenue Service (IRS) in the United States has utilized corporate veil piercing contentions and rationale as a method for recovering salary, domain, or blessing tax revenue, especially from business entities which are incorporated for the sole reason of bequest arranging purposes. Various U.S. Tax Court cases including Family Limited Partnerships (FLPs) show the IRS’s utilization of veil-piercing arguments. Since proprietors of U.S. business substances made for resource security and home purposes frequently neglect to keep up legitimate corporate consistency, the IRS has accomplished various prominent court triumphs and victories.
Reverse Piercing
Invert veil piercing is the point at which the obligation of a shareholder is credited onto the organization. All through the United States, the general guideline is that turn around veil piercing isn’t allowed. However, the California Court of Appeals has permitted invert veil piercing against a limited liability company (LLC) in view of the distinction in cures accessible to lenders with regards to joining resources of an account holders’ LLC when contrasted with connecting resources of an enterprise.
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Development of the Concept of “Lifting of Corporate Veil”
Once a company is incorporated, it becomes a separate legal identity. An incorporated company, unlike a partnership firm which has no identity of its own, has a separate legal identity of its own which is independent of its shareholders and its members.
The companies can thus own properties in their names, become signatories to contracts etc. According to Section 34(2) of the Companies Act, 2013, upon the issue of the certificate of incorporation, the subscribers to the memorandum and other persons, who may from time to time be the members of the company, shall be a body corporate capable of exercising all the functions of an incorporated company having perpetual succession. Thus the company becomes a body corporate which is capable of immediately functioning as an incorporated individual.
The central focal point of Incorporation which overshadows all others is a distinct legal entity of the Corporate organisation.
Solomon v Solomon
What the milestone case Solomon v Solomon lays down is that “in inquiries of property and limitations of acts done and rights procured or liabilities accepted along these lines… the characters of the common people who are the organization’s employees is to be disregarded”.
Lee v Lee’s Air Farming Ltd
In Lee v Lee’s Air Farming Ltd., Lee fused an organization which he was overseeing executive. In that limit he named himself as a pilot/head of the organization. While on the matter of the organization he was lost in a flying mishap. His widow asked for remuneration under the Workmen’s Compensation Act. At times, the court dismisses the status of an organization as a different lawful entity if the individuals from the organization attempt to exploit this status. The aims of the people behind the cover are totally uncovered. They are made to obligate for utilizing the organization as a vehicle for unfortunate purposes.
The king v portus ex parte federated clerk union of Australia
In this case, Latham CJ while choosing whether or not workers of a company which was incorporated in the name of the Federal Government were not employed by the Federal Government decided that the company possesses a distinct identity from that of its shareholders. The shareholders are not at risk to banks for the obligations of the company. The shareholders don’t claim the property of the company.
“It is neither fundamental nor alluring to count the classes of situations where lifting the veil is admissible, since that must essentially rely upon the significant statutory or different arrangements, an outcome which is tried to be achieved, the poor conduct, the element of public interest, the impact on parties who may be affected by the decision, and so forth.”
This was reiterated in this particular case.
Circumstances under which the Corporate Veil can be Lifted
There are two circumstances under which the Corporate Veil can be lifted. They are:
This particular section characterizes the distinctive individual engaged in a wrongdoing or a conduct which is held to be wrong in practice, to be held at risk in regard to offenses as ‘official who is in default’. This section gives a rundown of officials who will be at risk to discipline or punishment under the articulation ‘official who is in default’ which includes within itself, an overseeing executive or an entire time chief.
Reduction of membership beneath statutory limit: This section lays down that if the individual count from an organization is found to be under seven on account of a public organization and under two on account of a private organization (given in Section 12) and the organization keeps on carrying on the business for over half a year, while the number is so diminished, each individual who knows this reality and is an individual from the organization is severally at risk for the obligations of the organization contracted during that time.
In this case, the respondent documented a suit against a private limited company and its directors because he had to recover his dues. The directors opposed the suit on the ground that at no time did the company carried on business with individual count which was to go below the statutory minimum and in this manner, the directors couldn’t be made severely at risk for the obligation being referred to. It was held that it was for the respondent being dominus litus, to choose the people himself who he wanted to sue.
Misdescription of name: Under sub-section (4) of this section, an official of an organization who signs any bill of trade, hundi, promissory note, check wherein the name of the organization isn’t referenced in the way that it should be according to statutory rules, such official can be held liable on the personal level to the holder of the bill of trade, hundi and so forth except if it is properly paid by the organization. Such case was seen on account of Hendon v. Adelman.
Power of inspector to explore affairs of another company in the same gathering : It gives that in the event that it is important for the completion of the task of an inspector instructed to research the affairs of the company for the supposed wrong-doing, or a strategy which is to defraud its individuals, he may examine into the affairs of another related company in a similar group.
Subject to the provision of Section 278, this section provides that no individual can be a director of in excess of 15 companies at any given moment. Section 279 furnishes for a discipline with fine which may reach out to Rs. 50,000 in regard of every one of those companies after the initial twenty.
This Section emphasises and offers weightage to the existing proposal of the Company Law Committee: “It is important to see that the general notice which a director is bound to provide for the company of his interest for a specific company or firm under the stipulation to sub-section (1) of Section 91 which is ought to be given at a gathering of the directors or find a way to verify that it is raised and read at the following gathering of the Board after it is given. The section not only applies to public companies but also applies to private companies. Inability to consent and act in consonance to the necessities of this Section will cause termination the Director and will likewise expose him to punishment under sub-section (4).
Section 307 & 308 of the Companies Act, 2013
Section 307 applies to each director and each regarded director. The register of the shareholders should contain in it, not just the name but also how much shareholding, the description of shareholding and the nature and extent of the right of the shareholder over the shares or debentures.
The object of this section is to restrict a director and anybody associated with him, holding any business which provides compensation if the company supports it.
Pretentious Conduct: If over the span of the winding up of the company, it gives the idea that any business of the company has been continued with goal to defraud the creditors of the company or some other individual or for any deceitful reason, the people who were intentionally aware of this and still agreed to the carrying on of the business, in the way previously mentioned, will be liable on a personal level without incurring the liabilities of the company, and will be liable in a manner as the court may direct.
In Popular Bank Ltd, it was held that the Section 542 seems to leave the Court with attentiveness to make an assertion of risk, in connection to ‘all or any of the obligations or liabilities of the company’.
Judicial Interpretations and Pronouncements
Instances are not few in which the courts have resisted the temptation to break through the Corporate Veil. But the theory cannot be pushed to unnatural limits. Circumstances must occur which compel the court to identify a company with its members. A company cannot, for example, be convicted of conspiring with its sole director. Other than statutory arrangements for lifting the corporate veil, courts additionally do lift the corporate veil to see the genuine situation. A few situations where the courts lifted the veil are laid down below as per the following case laws:
In this leading case law, the U.S. Supreme Court held that where a company is solely set up to defeat the statutory norms, justify the wrongdoings of the people of the company who use this corporate entity as a vehicle for the wrongdoing, where defrauding isn’t a collateral purpose of the company but the main purpose, the law will not see the company as a separate legal entity but will see it as an association of the members that it is made up of.
Early examples where the English and Indian Courts neglected the guidelines built up by the landmark Salomon’s ruling are:
In a great deal of cases, it ends up being important to check the character of an organization, to check whether it is a companion or a foe of the country the business is set up in. A milestone managing in this field was spread out in Daimler Co Ltd v Continental Tire and Rubber Co Ltd. The facts of the case are referenced below:
An organization was set up in England and it was set up to sell tires which were thus made by a German organization in Germany. Most of the control in the British organization was held by the German organization. The holders of the rest of the shares with the exception of one, and every one of the chiefs were German, dwelling in Germany. In this way the genuine control of the English organization was in German hands. During the First World War, the English organization started an activity to recover an exchange obligation. What’s more, the inquiry was whether the organization had turned into an adversary organization and should, accordingly, be banned from keeping up the activity.
The House of Lords laid out that an organization consolidated in the United Kingdom is a lawful entity. It’s anything but a characteristic individual with brain or inner voice. It can nor be anyone’s companion nor foe yet it might accept a foe character when people in ‘true’ control of its issues are inhabitants in any adversary nation or, any place the occupants are, are acting under the control of the foes. Just in case the activity had been permitted, the organization would have been utilized as a means by which the motivation behind offering cash to the foe would be practiced.
That would be incredibly against open arrangement. But in case there was no such fear, the courts may decline to tear open the Corporate Veil.
People’s Pleasure Park Co v Rohleder
In People’s Pleasure Park Co v Rohleder, certain terrains were moved by one individual to another interminably ordering the transferee from offering the said property to hued people. He moved the property to an organization made only out of Negroes.
An activity was started for dissolution of this movement on the ground that every one of the individuals from the organization being Negroes, the property had, in break of the confinement, go to the hands of the hued people. The court rejected the contention and held that the individuals exclusively or all in all are not the partnership, which “has a particular presence separate from that of its investors.
Dinshaw Maneckjee Petit, Re.
The court has the ability to slight and infer the corporate substance in case that it is utilized for tax avoidance purposes or to go around expense commitment. An unmistakable and appropriate description of this situation is given in Dinshaw Maneckjee Petit, Re. The assessee was an affluent man getting a charge out of tremendous profit and intrigue pay. He shaped four privately owned businesses and concurred with each to hold a square of speculation as an operator for it. Pay was credited in the records of the organization yet the organization gave back the sum to him as an imagined advance.
Further, he isolated his pay into four sections in an attempt to lessen his assessment obligation. It was held that the organization was shaped by the assessee absolutely and basically as a method for maintaining a strategic distance from super-charge and the organization was just the assessee himself. It did no business however was made essentially as a legitimate substance to apparently get the profits and interests and to hand them over to the assessee as imagined credits.
Government Companies
An organization may some time be viewed as an operator or trustee of its individuals or of another organization and may, accordingly, be esteemed to have lost its distinction for its head. In India, this inquiry has regularly emerged regarding Governmental organizations. Countless privately owned businesses for business purposes have been enrolled under the Companies Act with the president and a couple of different officials as the investors.
The undeniable preferred position of framing an administration organization is that it gives the exercises of the State “a tad bit of the opportunity which was appreciated by private partnerships and the legislature got away from the standards which hampered activity when it was finished by an administration division rather than an administration enterprise. At the end of the day, it gave the administration portion of the robes of the person”.
So as to guarantee this opportunity, the Supreme Court has repeated in various cases that an administration organization isn’t an office or an augmentation of the state. It’s anything but a specialist of the State. As need be, its representatives are not government workers and right writs can’t issue against it. In one of the cases, the court commented:
“The organization being a non-statutory body and one consolidated under the Companies Act there was neither a statutory nor an open obligation forced on it by a resolution in regard of which requirement could be looked for by methods for the writ of Mandamus”.
The Madhya Pradesh High Court regarded a Government company to be a separate entity for the purpose of enabling a Development Authority to subject it to development tax. The assets of a Government company were held to be not exempt from payment of non-agricultural assessment under an AP legislation. The exemption enjoyed by the Central Government property from State taxation was not allowed to be claimed by a Government company.
Gilford Motor Co v Horne.
The corporate entity is wholly incapable of being strained to an illegal or fraudulent purpose. The courts will refuse to uphold the separate existence of the company where the sole reason of it being formed is to defeat law or to avoid legal obligations. Some companies are just set up simply to defraud their customers or to act in a way which is against the statutory guidelines. This was clearly illustrated in the landmark ruling Gilford Motor Co v Horne. The case of the facts are laid out below:
The litigant was selected as an overseeing chief of the company of the plaintiff depending on the prerequisite condition that he will not, whenever he will hold the workplace of an organisation in which he will oversee the executive work subsequently, open a business similar to the one which he was presently leaving or give the clients of the previous. His work was resolved under an understanding that is mentioned above. In the blink of an eye thereafter he started a business in the name of his wife the role of which was exactly what he had been prohibited to do according to the aforementioned contract. The new business was definitely a competing business and it was soliciting the customers of its previous business which was clearly a provision that was going against what he had agreed to before he left the job in the previous company.It was held that the organization was clearly based on conflicting terms that the defendant had agreed upon.
The respondent organization was an insignificant channel utilized by Horne to empower him, for his very own advantage, to acquire the upside of the clients of the offended party organization, and that the litigant organization should be limited just as Horne.
Where an individual obtain cash from an organization and put it in offers of three distinct organizations in all of which he and his children were the main individuals, the loaning organization was allowed to join the advantages of such organizations as they were made uniquely to dupe the loaning organization.
In this case, the court would not propel the leading group of film censors to enlist a film as an English film, which was in truth created by a ground-breaking American film organization for the sake of an organization enrolled in England so as to dodge certain specialized troubles. The English organization was made with an apparent capital of just a mere 100 pounds, comprising of 100 shares of which 90 were held by the American president of the organization. The Court held that the real producer of the movie was the American organization and that it would be a sham to hold that the American organization and American president were simply operators of the English organization for delivering the film.
In this case, the merchant of a real estate property tried to dodge the particular execution of a contract for the clearance of the land by passing on the land to a company which he shaped for the reason and along these lines, he attempted to abstain from finishing the property deal of his home to the offended party. Russel J. depicting the company as a “devise and a hoax, a veil which he holds before his face and endeavors to stay away from acknowledgment by the eye of equity” and requested both the litigant and his company explicitly to fulfil the obligations of the contract to the offended party.
In this case, it was expressed that a company is likewise not permitted to file a case in the name of fundamental rights by calling itself a collection of individuals who possess the fundamental rights. When a company is framed, its business is the matter of an incorporated body therefore shaped and not of the people that it is composed of and the privileges of such body must be made a decision on that balance and can’t be made a decision on the supposition that they are the rights owing to the matter of the individual that are a part of the organisation.
In this case, the High Court of Delhi allowed to the offended party organization a stay order which restrained the company of the defendant from alienating the properties that they owned on the ground that the defendant had borrowed money fraudulently from the plaintiff companies and the defendant had purchased properties in the name of the defendant companies. The court in this case did not award protection under the piercing of the corporate veil.
Although the names of the petitioners of the case were not expressly mentioned, they were still held to be the parties to the proceedings. Also the managing directors couldn’t be said to be complete outsiders to the company petition although they in their individual limit might not be parties to such proceedings but in their official capacities, they are certainly capable of representing the company in such matters.
In this situation, Hoax or façade is being talked about. A private coal company sold its real estate to the spouses of executives before nationalization of the company. Truth be told,archives were tweaked and back-dated to corroborate that the deal of the selling of the real estate to the wives of the directors was before nationalization of the company. Where such exchange is claimed to be a hoax and deceitful, the Court was supported in piercing the veil of incorporation to discover the genuine idea of the exchange as to realize who were the genuine parties to the deal and whether it was real and in good faith or whether it was between the married couples behind the façade of the different entity of the company.
This case is about a Subsidiary Holding Company. The court, to consider an objection of mistreatment held that the corporate veil can be lifted in the instances of not simply of a holding company, but also its subsidiary when both are belonging to the parent organisation.
The idea of corporate entity was advanced and endorsed to empower the trade,commerce and business scene and not to cheat the general population. In case where the court finds out that the corporate entity was not properly made use of, was set up only for illegal purposes, the court has every right to pierce the Veil and therefore see who actually was behind the Veil using the company as a vehicle for undesirable purposes.
Defendant no. 1 was a private limited company. Defendant no. 2 and 3 were the directors of that company. Defendant no. 4 was the husband of Defendant-3 and the sibling of Defendant -2. On the basis of alleged representation of Defendant-4 that Defendant-1 company was welcoming momentary deposits at great interest rates, the offended party deposited a sum of Rs. 15 lakhs in the company for a time of six months. At the point when the company neglected to pay the sum, the offended party sued it for the said sum alongside interest. Defendant-2 and Defendant-3 denied their risk on the grounds that they couldn’t have been made personally liable under any circumstance as the sum was deposited in the name of the company and not in the name of the directors of the company.
D-4 denied the risk on the ground that it had nothing to do with him as he was neither a director of the company nor a shareholder of the company so he had absolutely no role whatsoever in the case. It was held that Defendant-3 being a housewife had little task to carry out and hence couldn’t be made at risk. The offended party was looked to be put under the cloak of a corporate entity of Defendant-1 and, in this way, the corporate veil was lifted contemplating that Defendant-1 was just a family setting of the rest of the defendants. Defendant-2 was maintaining the business for the sake of the company. So Defendant-1 and Defendant-2 were both liable on a personal level.
This is an instance of ‘default in payment of the provident fund of the employee’’- Certain sum was expected and payable to the provident fund office by the sister concern of the company of the plaintiff, a demand was made by the defendant from the company of the petitioner on the ground that both the companies had two directors in common. It was held that the dispute raised by the respondent that the Court should lift the corporate veil and affix the obligation on the applicant was with no benefits and was unjustifiable. Both the companies were distinct legal entities under the provisions of the Companies Act and there was no arrangement under the Provident Fund Act that a risk of one organization can be secured on the other organization even by lifting the corporate veil, which is why this exercise would have been considered futile.
Richter Holdings Ltd., a Cypriot company and West Globe Limited, a Mauritian company bought all shares of Finsider International Co. Ltd. (FICL), a U.K. company from Early Guard Ltd. another U.K. company. FICL held 51% shares of Sesa Goa Ltd. (SGL), an Indian company. The Tax Department issued a show cause notice to Petitioner claiming that the Petitioner had by implication obtained 51% in Sesa Goa Ltd and was, subsequently, obligated to deduct tax at source before making installment to Early Guard Limited.
The Income Tax Department battled that according to Section 195 of the Act, the Petitioner is at risk to deduct tax at source in regard of installment made for the buy of the capital resource. The High Court of Karnataka held that the Petitioner should answer to the show-cause notice issued by the Tax department and urge every one of their disputes before it. The High Court additionally stressed that the reality of finding authority (Tax Department) may lift the corporate veil to investigate the genuine idea of the exchange to find out the fundamental actualities.
The angle that merits more noteworthy consideration is that the Karnataka High Court shows a distinct fascination for lifting the corporate veil. This has various ramifications. Initially, the Richter Holding Case broadens significantly further the extent of the standards laid out in the Vodafone Case. For instance, in the Vodafone case, the Bombay High Court did not consider lifting the corporate veil to force taxation if there should arise an occurrence of transfers made by indirect measures.
Secondly, it isn’t obvious from the judgment itself whether the tax experts propelled the contention with respect to lifting the corporate veil. For the most part, courts concede to the sacredness of the corporate structure as a different legitimate personality and are moderate to lift the corporate veil, as proven by Adams v. Cape Industries , except if one of the built-up grounds exist.
Conclusion
It ought to be noticed that the rule of Salomon v. A. Salomon and Co. Ltd. is as yet the standard and the occasions of piercing the veil are the exemptions to this standard. The rule that a company has its very own different legitimate character of its own finds a significant spot in the Constitution of India too. Article 21 of the Constitution of India, says that: No individual will be denied of his life and individual freedom with the exception of as per procedure set up by law.
Under Article 21 a company likewise has the option to life and individual freedom as an individual. This was set down on account of Chiranjitlal Chaudhary v. Association of India where the Supreme Court held that fundamental rights ensured by the constitution are accessible not simply to singular natives but rather to corporate bodies also.
Along these lines, an organization can possess and sell properties, sue or be sued, or carry out a criminal offense in light of the fact that the partnership is comprised of and kept running by individuals, going about as operators of the company. It is under the ‘seal of the company’ that the individuals or shareholders submit misrepresentation.
It is conspicuously clear that incorporation of the company does not cut off personal liability at all times and in all circumstances. The sanctity of a separate corporate entity is upheld only in so far as the entity is consonant with the underlying policies which give it life.
This article is written by Poonam Joshi, pursuing a Certificate Course in Companies Act from LawSikho.com. Here he discusses “Whole Time Director providing Consultancy Services to the Company”
Introduction
Section 2(94) of the Companies Act provides that “whole-time director” includes a director in whole-time employment of the company. A whole-time director is an executive director. As per clause2(k)of Companies (Specification of definitions details) Rules, 2014, “Executive Director” means a whole-time director as defined in clause (94) of section 2 of the Act. The whole time director is also covered under the definition of “Key managerial person under section 2(51) (iv) of the Companies Act.
Generally speaking, a whole-time director has a dual capacity, and besides being a director, he is also an employee of the company and the principles. It was held in the case ofRamaben A Thanawala v. Jyoti Ltd. (1957) 27 Com Cas 105 (Bom.)by the Honourable High Court that the expression “whole-tine director” must refer to a director who spends his whole time in the management of the company.
The employer and employee relationship between the director and company may be created either by a service agreement or by the articles of association of the company. However, mere resolution of the Board of Directors allotting work and payment of remuneration is not sufficient without proving and establishing on record that services were rendered by the director as an employee. Merely holding the office of a director of a company and receiving remuneration does not bring about the relationship of employer and employee. This view is supported by the judgement in the case of CIT v. Shanti Devi (1993) 199 ITR 800 (Ori.)
From the definitions and provisions discussed above, it is clear that the director of a company enjoys a dual capacity. He might be a director as well as an employee, but that he is an employee must not be merely on paper, rather it should be proved and established on record as a fact.
Therefore, as per the definition of Whole-time Director and that of an executive director, both conditions should be satisfied to consider a person as whole-time director i.e., he is a director and a Whole Time Employee of the company.
Whether a whole Time Director be a Consultant to the Company
To proceed on this issue it is important to understand the difference between employment and profession. If the services rendered by the director are of professional nature and he is free to offer services to others, he cannot be considered to be in the employment of a company as the same is in his professional capacity. But if a director is appointed in employment by way of an agreement and complying the condition of the service agreement he would be considered to be in the employment of a company.
As per proviso to section 197(4) of the Companies Act, the remuneration to whole-time director paid in any other capacity shall not form part of the remuneration. The proviso provides that if a director renders professional services the remuneration paid for such services shall not be included to arrive at the maximum managerial remuneration in case of inadequacy of profits. This shows that the whole time director can render professional services. Further, remuneration to directors paid in his professional capacity shall not be included in the Nomination and Remuneration Committee is of the opinion that the director possesses the requisite qualification for the practice of the profession. Section 200 of the Companies Act 2013 to has a reference to the professional qualification in relation to managerial remuneration.
The Company can approach the Central Government for its approval/opinion with regard to the qualification of the director for the payment of remuneration in the professional consultant of the company. Once the Central Government gives its opinion that professional fee can be paid to the director as he is qualified for the same then the previous sanction of the Central Government is not necessary for paying remuneration to the director for the professional services as the same is excluded from the total remuneration under section 197.
Citations on Whole Time Director can be a Consultant
STUP CONSULTANTS LTD. v. UNION OF INDIA AND ANOTHER. (1987) 061 Comp Cas 0784 (DEL)
“In this view of the matter, this writ petition succeeds. The order dated January 14, 1983, in so far as it relates to non-expression of opinion regarding the professional qualifications of Shri Alimchandani is quashed, and it is declared that in view of the counter-affidavit filed by the respondents, Shri C. R. Alimchandani has to be treated as a person who has the requisite qualifications for the practice of the profession of a civil engineer, and petitioner is entitled to such opinion from the Central Government, which the respondent is directed to convey to the petitioner company within two months from today.”
SREE GAJANANA MOTOR TRANSPORT CO. LTD. AND ANOTHER v. UNION OF INDIA. (1992) 073 Comp Cas 0348 (KAR)
The decisions in Setup Consultants Ltd. v. Union of India [1987] 61 Comp Cas 784 (Delhi), Ruby Mills Ltd. v. Union of India [1985] 57 Comp Cas 193 (Bom) and R. Gac Electrodes Ltd. v. Union of India [1982] 52 Comp Cas 288 (Ker), on which learned counsel relied, support the submission made by him that the Central Government acted beyond its powers in fixing an upper limit of Rs. 7,000 per annum on the fee payable to a professional for services of a professional nature rendered by a director, while expressing its opinion that the director concerned possesses the requisite qualifications for the practice of the profession.
This petition, therefore, succeeds. In the result, I make the following order :
(i) Rule made absolute.
(ii) That part of the impugned communication certificate dated July 2, 1984, annexure D, which restricts the remuneration payable to the second petitioner for rendering professional services to the first petitioner-company, is quashed.
(iii) No costs.
Tax head under which the income is taxed under the Income Tax Act
The remuneration received as a whole-time director is treated as salary under the Income Tax Act and the same is taxed under the head Salary and the tax is deducted by the company under section 192 of the Income-tax Act. This so because as per proviso to section 197(4) of the Companies Act the remuneration to whole-time director paid in any other capacity shall not form part of the remuneration The director is eligible to claim a standard deduction of Rs.40000/- out of this salary if his age is less than 60 years that is if he is not a senior citizen. However, if the director is a senior citizen he is eligible for a standard deduction of Rs.50000/- from the income charged under the head salary. The professional income earned by the director is taxed under the head Income from Business and Profession and the TDS is deducted under section 194J1(ba). The tax in this section is deducted if any sum is paid in the form of any remuneration or fees other than those on which tax is deductible under section 192, to a director of a company.
The income chargeable under the head Business and profession could be declared u/s 44ADA. As per section 44ADA of the Income Tax Act if the gross receipts do not exceed fifty lakh the income chargeable for income tax purpose would be 50% of gross receipts. And if the director has earned profit which is less than 50% then he is liable to get his accounts audited.
If the director is qualified he can act as a consultant and is eligible to declare his income under the head salary which he has received as remuneration being a whole-time director and declare his income from consultancy under the head Profits from Business and profession.
GST on the remuneration paid to the director as a salary and as a professional fee
The remuneration paid to the executive director i.e., a whole-time director who is an employee of the company is not liable for GST. However, the remuneration paid to the whole time director against professional fee and the remuneration paid to non executive director is covered under the ambit of GST and the Company is liable to pay GST on the same under reverse charge mechanism as per Sr. No. 6 of Notification No. 13/2017 -CGST(Rate) dated 28.6.2017 . The relevant extract of the Notification is enumerated here-in-below:
This notification, notifies that on categories of supply of services mentioned in column (2) of the Table below, supplied by a person as specified in column (3) of the said Table, the whole of central tax leviable under section 9 of the said Central Goods and Services Tax Act, shall be paid on reverse charge basis by the recipient of such services as specified in column (4) of the Table below:
Table
Sl. No.
Category of Supply of Services
Supplier of service
Recipient of Service
(1)
(2)
(3)
(4)
6.
Services supplied by a director of a company or a body corporate to the said company or the body corporate.
A director of a company or a body corporate
The company or a body corporate located in the taxable territory.
Conclusion
From the provisions of Companies Act, Income Tax Act and GST Law it could be seen that all the section speaks about role and taxability of director’s income. Different provisions support the view that the whole time director can be a consultant of the company and the company is liable for following the guidelines as provided under various laws for payment of remuneration to the director for his professional services.
Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skill.
This article is written by Soma-Mohanty of KIIT School of Law, Bhubaneswar. In this article, she has mentioned about the essentials of free consent, exceptions and some case laws.
“A” and “B” are the two parties in a contract. It was seen that there was some crisis and “A” had put a plan forward to solve it. “B” after being made aware of this fact and analysed that it was the perfect solution, agreed to it. In this case, both parties showed their consent.
Elements of free consent
Consent is considered to be free consent when the following factors are satisfied:
It should be free from coercion.
The contract should not be done under the pressure of undue influence.
The contract should be done without fraud.
The contract should not be made through misrepresentation.
The contract made out of free consent protects the validity and enforceability of an agreement.
It provides a protecting shield to the parties from coercion, undue influence, misrepresentation, fraud, and mistake
It provides the parties to withstand their autonomous power to frame their running policy or principle.
The principle of consensus-ad-idem is followed.
Difference between consent and free consent
Basis
Consent
Free consent
Meaning
When both the parties agree to a thing in the same sense of mind or unison of mind, then the agreement is considered to be done with consent.
When an agreement is done with consent and is free from coercion, fraud, misrepresentation, undue influence, and mistake. Then the agreement is considered to be done with free consent.
Essentials
Both parties must be entering into the agreement in the same sense of mind.
Both parties must be entering into the agreement should be agreeing to the same thing.
Consent should be free from:
Coercion
fraud
misrepresentation
undue influence
mistake
Voidability
When there is a lack of consent, the contract would be void.
When there is no free consent, then the voidability of the contract depends on the option of the aggrieved party.
Mistake in the free consent
A mistake is described as an element, which when occurs in a contract makes it void. There are two types of mistakes, which occurs in a contract
Unilateral Mistake
A mistake is said to be unilateral when one party is mistaken in the agreement.
Bilateral Mistake
Mutual mistake
A mistake is said to be mutual when both parties misunderstood each other. Thus it shows that there is a breach in the principle of consensus-ad-idem in the contracts and the contract is to be considered as void.
Illustration, “A” made an offer to “B” to sell his scooter. “A” intended to sell his 3G scooter but “B” believed that “A” would sell his 4G scooter. Thus there was no proper communication and the fact was mistaken. It would amount to an effective agreement.
Common mistake
Section 20 of the Indian Contract Act, 1872 lays down the provision for common mistakes. A contract arising out of common mistake is considered to be void. This type of mistake is possessed by both the parties but this mistake is not the result of mutual mistake, it arises individually.
Free consent examples
Illustration
“A” agrees to sell his land to “B”. “A” has 10 lands in different places and he wanted to sell the land in the west direction but “B” wanted the land in the east part. In this case, it is seen that there is no meeting of minds and the principle of consensus-ad-idem is violated. Thus the agreement would be considered void.
“A” an old man who stays with “B”, his nephew and he takes care of him. “B” demanded to get the property of “A” as he was taking care of him and forces him to sign the papers. In this case, “A” is under undue influence.
Case laws
In the case of Solle v Butcher[1], it was seen that both the parties entered into the contract of lease of Flat. Both the parties believed that the identity of the flat has changed thus the maximum rent which was GBP 140 per annum has also changed. But later the court held that there was no change of identity thus, it was held that there was a mutual mistake of fact and thus the contract was declared to be void.
Elements Vitiating Free consent
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Coercion
When a person commits or threatens to commit an act which is forbidden under the Indian Penal Code, or detains an object unlawfully or threatens to do so with the intention to force a person to enter into a contract, then it is said to be coercion.
Illustration:
“A” cause “B” to enter into an agreement which is forbidden under the Indian Penal Code. “A” had done the act when an English ship was on the high seas. The “A” sues “B” for breach of contract in Mumbai.
This agreement was considered to be void as “A” had employed coercion, though Indian Penal Code was not in force at the place where the act was done.
Effect of coercion
When the agreement made is found to be made out of coercion, then the contract would be rescinded or cancelled, due to which both parties are released from their obligation to perform their duties as per the contract.
Coercion and duress distinguished
Basis
Coercion
Duress
Meaning
When a person commits or threatens to commit an act which is forbidden under the Indian Penal Code, or detains an object unlawfully or threatens to do so with the intention to force a person to enter into a contract, it is said to be coercion.
When a person is subjected to actual violence or threat of violence, it is said to be duress under Common Law.
Effect on contract
When the agreement made is found to be made out of coercion, then the contract would be rescinded or cancelled, due to which both the parties are released from their obligation to perform their duty as per the contract.
When the agreement is done by the means of duress, the chances of contract been void is less.
But if the party voluntarily acted to it, then he is bound to contract.
Detention
Unlawful detention of object amounts to coercion.
Unlawful detention of an object does not amount to duress.
Conviction
A person who is not in the contract or is a stranger, coercion can be employed against him also.
But in duress, it is mandatory to be the party of the contract.
Is a threat to commit suicide coercion?
No, a threat to commit suicide does not amount to coercion.
In the case of Ammiraju v Seshamma,[2] it was seen that there was a threat by the husband to commit suicide, and he demanded his wife to release the property. It was seen that the wife was prejudiced and it can’t be forbidden by law. So here the threat to commit suicide by the husband amounts to coercion on the wife.
When a contract is made between two parties and one of them is in the position to dominate the will of the other party and takes unfair advantage of the position, then the contract is said to be made out of undue influence.
Illustration
“A” an old person appoints “B” as his attendant and “B” is his nephew as well. “B” demands a share of his property and “A” agrees to pay him. In this situation, “A” is under the undue influence of “B”.
The principle of undue influence is based on the doctrine of equity.
Salient features
Either of the parties should be in a state to dominate over other
The party who dominates should have taken undue advantage of his position
Parties that can be affected by undue influence
Real and apparent authority
Fiduciary relationship
Parent and child
Adult child and parent
Husband and wife
Lawyer and client
Doctor and patient
Trustee and beneficiary
Creditor and debtor
Landlord and tenant
A person whose mental capacity is low
Old age
Tender age
Effect of undue Influence
When an agreement is caused due to the impact of undue influence, can be considered void at the opinion of the party whose consent was so caused, according to Section 19A of the Indian Contract Act.
Burden of proof
It is required to prove that the person dominating actually took undue advantage of the person and it should be proved that the person was in such position to dominate.
Mere transfer of gift from one relative to others would not amount to undue influence.
A transaction with parda-nashin women
When a woman can be viewed from the screen or is placed behind the screen i.e, veiled is called pardanashin women.
The protection for pardanashin women is been rooted in the principle of equity and good conscience.
Special laws are made for pardanashin women because they are subjected to ignorance, infirmity, illiteracy, etc and are thus easily influenced.
The burden of proof should be provided against the person who is transacting with pardanashin women. He has to prove that the transaction had taken place with the free will of the women and her decision was taken by her without any enforcement and she was made aware of the provisions mentioned in the document of transaction.
The explanation of the whole transaction won’t be enough to establish the burden of proof.
In the case of Tara Kumari v Chandra Mauleshwar Prasad Singh,[3] it was delivered that the essential to establish the burden of proof is that the party executing them should be a free agent and the woman should be informed, through what she is going through.
In the case of Kuna Dei v Md Abdul Latif[4], it was delivered that showing of the document to the pardanashin women won’t be enough to establish the burden of proof. Thus, he has to show that the women was explained clearly the facts in the document of the transaction.
The distinction between coercion and undue influence
Coercion
Undue influence
Definition
When a person commits or threatens to commit an act which is forbidden under the Indian Penal Code, or detains an object unlawfully or threatens to do so with the intention to force a person to enter into a contract, it is said to be coercion.
When a contract is made between two parties and one of them is in the position to dominate the will of the other party and takes unfair advantage of the position, then the contract is said to be made out of undue influence.
Relationship
Relationship between both the party is not required.
The relationship between parties helps in establishing the burden of proof under this section.
Objective
To force a person to enter into an unlawful contract.
To misuse the power and dominate people, taking their advantage and dominate them.
Nature of offence
Criminal offence
Not a criminal offence
Illustration
“A” cause “B” to enter into an agreement which is forbidden under the Indian Penal Code. “A” had done the act when an English ship was on the high seas. The “A” sues “B” for breach of contract in Mumbai.
This agreement was considered to be void as “A” had employed coercion, though the Indian Penal Code was not in force at the place where the act was done.
“A” an old person appoints “B” as his attendant and “B” is his nephew as well. “B” demands a share of his property and “A” agrees to pay him. In this situation, “A” is under the undue influence of “B”.
Fraud
Fraud means an action that includes the false assertion of facts, concealment of facts and any promise with the intention to deceive a person.
According to Section 17 of the Indian Contract Act, 1872 when a party contracts with the other party with the intention to deceive amounts to fraud. The party may directly make the contract with the other party or it can be done with the help of an agent even.
illustration
“A” agrees to sell his horse to “B”. “A” had the knowledge that the horse is of unsound mind and did not inform it to “B”. “B”, asked “A” if he does not deny the fact then “B” would consider the horse to be sound and “A” kept silence to it. In this case, mere silence amounts to the agreement, thus “A” performed a fraudulent act.
Characteristics
When a party conceals the fact from the other party
When a party promises to perform an act for the other party but has no real intention to fulfil the promise.
The false representation of facts has been made to enter into the contract.
The omission of any act which is considered to be fraudulent in the eyes of law.
Does silence amount to fraud?
Mere silence does not amount to fraud. But when there is a duty to speak and silence is equivalent to speech then it amounts to fraud.
When two parties made an agreement, the parties are not compelled to disclose every fact to the other party. It is the duty of the other party to enquire about things rather than expecting the party to come and disclose the fact.
When a person keeps silencing on the facts which would deceive the other person, then the person can be convicted of fraud.
In the case of Jaswant Rai v Abnash Kaur[5], it was found that the vendor concealed the fact that the material to be sold was defective. Then it was held that the disclosure of the facts amounted to fraudulent activity of the vendor.
In the case of Banque Financiere de la Cite SA v Westgate Insurance Co Ltd[6], it was delivered in the context of negotiation, the party is not obliged to speak.
Effects of fraud
The contract raised out of fraud is a voidable contract.
The party deceived has the right to revoke the contract.
The party is liable to recover the damages due to the fraudulent contract
Misrepresentation
Misrepresentation means a false representation of the fact.
According to Section 18 of the Indian Contract, Act Misrepresentation is the stating of deceiving information which results in the assertion of the other party into entering into a contract and subsequently undergoing loss. The information, however, presented by the guilty party is a result of genuine belief about the matter. Misrepresentation is said to be committed Firstly when the person deceiving positively asserts not warranted information to another misleading them somehow. Secondly, there is a breach of duty which has caused the prejudice of one or another to be at stake. Lastly, a mistake has been committed by another because of the act or information of the one misrepresenting them.
Characteristics
It should be mentioned that the false statement was of material fact and not mere words.
When a party makes a misrepresentation to the other party, it should be proved that at the party believed the fact to be true.
The party should have misrepresented the facts to induce the other party to enter into a contract.
Kinds
There are two kinds of misrepresentation
Negligent misrepresentation
When misrepresentation occurs due to lack of any reasonable ground and carelessness then it is known to be a negligent misrepresentation.
Negligent misrepresentation is established only when the representative owed a duty to the representee to handle carefully.
A person would be liable only when he had neglected the duty mentioned in particular.
The responsibility exists between the two parties even when there is no fiduciary relationship.
Innocent misrepresentation
When the representation is based on good grounds to believe and it lacks negligence and fraudulent intention, then it is said to be an innocent misrepresentation.
When a person enters into a contract with innocent misrepresentation has the right to revoke the contract but is not entitled to damages suffered.
A contract won’t be void unless reasonable grounds are provided. Proving innocence in misrepresentation would be enough to establish the fact.
Effect of misrepresentation
When the party who has suffered due to the misrepresentation while entering into a contract, can opt to cease the contract. There are two remedies provided to the party either to rescind the contract or claim damages.
The claim of damages means that the contract is left intact and the party is to be subjected to money damages during the suit.
Suit for rescission is to cease the performance of the contract that is to restore the party to the original position.
The distinction between fraud and misrepresentation
Fraud
Misrepresentation
Meaning
Fraud means an action that includes the false assertion of facts, concealment of facts and any promise with the intention to deceive a person.
Misrepresentation means a false representation of the fact.
Definition
According to Section 17 of the Indian Contract Act, when a party contracts with the other party with the intention to deceive amounts to fraud. The party may directly make the contract with the other party or it can be done with the help of an agent.
According to Section 18 of the Indian Contract, Act Misrepresentation is the starting of deceiving information which results in the assertion of the other party into entering into a contract and subsequently undergoing loss. The information, however, presented by the guilty party is a result of genuine belief about the matter. Misrepresentation is said to be committed. Firstly when the person deceiving positively asserts not warranted information to another misleading them somehow. Secondly, there is a breach of duty which has caused the prejudice of one or another to be at stake. Lastly, a mistake has been committed by another because of the act or information of the one misrepresenting them.
Intention
Deliberate intention to deceive the other party
Bonafide intention while representing a false fact believing it to be true, with no intention to deceive
Claim of damages
In the case of fraud, the aggrieved party has the right to claim for damage
But in the case of misrepresentation, the aggrieved party has no right to claim for damage
Mistake
According to Section 20 of the Indian Contract Act, a contract is declared void when a mistake is caused by both the parties that bilateral mistake, which violates the essentials to an agreement.
Illustration
“A” made agreement with “B” to sell the goods and the agreement was done. “A” was not aware of the fact that the goods are perished due to some reason. In this case, the contract would be void because the basis on which the contract was made does not exist.
Mistake of law
People should have minimum knowledge about the law, they should be aware of the fact that which act they should restrain from doing and which they are ought to do. And there would be no remedy provided or excused under the fact of mistake of law in these circumstances.
In the case of Ram Chandra v Ganesh Chandra[7], it was seen that the complainant entered into an agreement of lease of coal mining with the respondent. As per the agreement, the complainant made payment in advance to the respondent. But the Privy Council and the decision of the Calcutta High Court questioned the understanding of the law between the parties. Thus the complainant refused to continue the contract and sued the respondent for the refund. Taking precedent of Cooper v Phibbs, it was held that the complainant would be entitled with the refund paid by him.
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Mistake of fact
When there is a bilateral mistake causing a contract void, it is subjected to a mistake of fact and not to mistake of law. When there is a misunderstanding between the parties or omission of facts which leads to the mistake, is said to be a mistake of fact.
Bilateral
When both parties commit a mistake in the contract under the mistake of facts, the mistake is considered as a bilateral mistake. This happens due to the lack of meeting of minds, which is an essential element to constitute free consent. Thus the contract is made void.
There are two types of bilateral mistake
Mutual mistake
Common mistake
Illustration
“A” agrees to sell his car to “B”. but it was found that his car was stolen and he was not aware of the fact while making the agreement. Thus this contract would be considered void.
Bilateral mistake as to the subject matter
Existence of subject matter
When both parties have made an agreement on a subject matter which does not exist, then the contract would be considered void.
Quality of the subject matter
When both parties have made an agreement on a subject matter and it is found that the quality differs from the one which was mentioned. But in the case of bilateral mistake, the contract would be considered void.
Identity of subject matter
When both parties have made an agreement on the identity of a subject matter and it differs than the contract ceases to be void.
Mistake as to the possibility of performing the contract
Physical impossibility
When an agreement is made and it is found that the subject matter is not available anymore, then it becomes impossible for the parties to execute their part of the obligation. This is considered to be a physical impossibility to perform, thus the contract becomes void.
Illustration
“A” made agreement with “B” to sell the goods and the agreement was done. “A” was not aware of the fact that the goods are perished due to some reason. In this case, the contract would be void because the basis on which the contract was made does not exist.
Legal impossibility
When an agreement is done between two countries, but it is seen that war arises between the countries. Thus the contract between the countries becomes legally impossible to be carried out.
Illustration
“A” one country enters into a contract with “B” another country to export petroleum with an agreement for 20 years. But after 10 years it was seen that there was a situation of war arising, thus all the internal export was stopped. In this case, “A” is legally bound to end the contract with “B”.
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This article is written by Shivani Verma, a student of Guru Gobind Singh Indraprastha University, New Delhi. In this article, she has discussed various important aspects of child labour in India and the legal regime around it.
Introduction
Children are always considered close to God. They are considered as bringer of happiness, joy and hope, no matter where they go. The future of the nation depends on the children as they are undoubtedly the stepping stone in shaping the future of any nation. If a nation treats its children properly and provides them with the basic facilities then it would get reflected in the future performance of the nation. The moral duty of the nation is to ensure that the childhood of every child is protected.
Child labour definition
Child labour is a global phenomenon, it is not restricted to only one country. “Child labour” is defined as the employment of children in any manual work. According to the Child Labour (Prohibition and Regulation) Act, 1986, a “child” is a person who has not yet attained the age of 14 years. In this tender age where a child is expected to grow, enjoy his or her childhood to the fullest, seek education, gain a strong value system, he/she is forced to work and earn a living for himself/herself and his/her family. It not only affects his/her physical and mental development but it also puts a very heavy burden of responsibility on the child to support his/her family. It is frequently observed that the children are forced to become labour due to some hardships like lack of strong financial support, lack of proper food, clothing, shelter, livelihood etc.
International Labour Organisation [ILO] defines child labour as a work that not only affects their childhood but also doesn’t let the children attend the school regularly, or have a proper education. Child labour also deprives children of their dignity, potential and childhood. Children working below the age of 14 years are not able to develop mentally, socially, physically or morally[1].
A different definition of child labour is given by the United Nation’s Children’s Fund [UNICEF]. According to it, a child is considered as labour when:
His/her age is between 5 to 11 years, and
At least 1 hour of economic activity is performed by him/her or he/she is doing at least 28 hours of domestic work in a week.
If the children are between 12 to 14 years of age then either they should be doing at least 14 hours of economic activity or at least 42 hours of domestic work per week to be considered as child labour[2].
According to India’s Census 2001, when a child below the age of 17 years participate in economic activity with or without compensation, either physically, or mentally, or both ways. Part-time help or unpaid work on farms, a family business or any other economic activity like cultivation and milk production for sale or domestic consumption will be included in child labour. Child labour is classified into two groups in India:
Main workers: Main workers are those workers who work for at least some months or more per year, and
Marginal child workers: Marginal child workers are those workers who work for less than 6 months in a year and work at any time during the year.
Child labour issue
Child labour is a major issue not only in India but in every developing country because it destroys a child’s physically as well as mentally. Because of poverty, child labour has become more prevalent, not only in India but globally. Children are the hope and future of a nation that is why it constitutes a social problem. Many laws have been enacted in order to prohibit child labour, however they haven’t been effective in curbing the problem. The statistic report of 2017 explains that India is one of the leading countries in Asia as it has 33 million children employed in child labour. According to the 2011 Census, total child population was 259.6 million out of which 10.1 million are either working as main worker or as marginal workers[3].
Causes of child labour
Poverty, illiteracy of parents, social and economic circumstances of the family are the main causes of child labour. Lack of awareness related to the harmful effects of child labour and lack of access to basic and quality education, cultural values of the family and the surroundings of the society in which one is living, also increase the rate of child labour. High rates of unemployment and under-employment also play a vital role in child labour.
Children who discontinue school due to family indebtedness or are expelled from the school are more prone to child labour. Girls from socially disadvantaged groups are at a higher risk of being forced into child labour.
Causes of child labour in India
In India, the major causes of child labour are:
Poverty: Children are considered helping hands of their family. In developing countries, it is almost impossible to control child labour as children not only have to support themselves but their families also and provide them with a living. Due to poverty, the rate of unemployment and underemployment are also very high and so the parents have to send their children to work on low wages.
Previous debts: Due to their poor economic condition people take loans. But they don’t have sufficient money to pay back the loans so they not only work day and night to pay off the loans but they also drag their children to work so that the loan could be paid off before time and easily.
Professional needs: Some industries require delicate and soft hands rather than rough hands that are required in bangle industries. So they prefer children and not adults for such work.
Bonded labour: Children often work for long hours in the sun and they are deprived of water, food. These children are seldom paid. Bonded labour further adds to the large scale increase in child labour.
Domestic help: Small children often work for educated families and irrespective of several laws that violate the employment of children, they often welcome small children so that these children can take care of their homes as well as their children.
Child sex workers: Often, girls who attained the age of puberty are forced into prostitution in lieu of a promise that they would be given opportunities to do glamorous jobs.
Forced begging: Families who can’t support themselves force their children to beg on the roads in subhuman conditions. They get their children maimed in order to get more money from the people.
Consequences of child labour
Children are prone to accidents and many other types of hazards at the workplace. Such injuries cause them social and economic harm, the effect of which continues for their entire lives. General injuries like cuts, burns, lacerations, fractures and dizziness are very common. Sexual abuse, STDs, HIV/AIDS, drugs, alcoholism, sexual exploitation of girls, rape, prostitution are also the consequences of child labour. They also face physical neglect in food, clothing, shelter and medical treatment. Because of this, they are not able to go to school which deprive them of basic education due to which they have to live in poverty. Emotional neglect is also the consequences of child labour. Children are prone to physical abuse including beating which often leads to a physical deformity.
Consequences of child labour in India
Child labour affects the economic welfare of a country to a great extent. Children who work are not able to get an education and they are not able to develop themselves physically, intellectually, emotionally, and psychologically. Children are neither equal to adults nor do they have the strength that the adults have and so they are not able to work for longer hours because they totally become exhausted and this reduces their physical strength which makes them more prone to diseases.
For India, child labour has long term adverse effects. The economy of a country will only prosper when the country will have an educated workforce, skills, technology and the younger generation will be a part of human capital in the future. If child labour at a huge extent continues then there will be a trade-off with human capital accumulation. 70% of child labour is employed in agriculture because it requires less skilled work whereas other children are employed in heavy industries.[4]
Industry
Diamond industry
Fireworks manufacture
Silk manufacture
Carpet weaving
Domestic labour
Mining
Year of the report which provides for the number of child labour in India
1999
2002
2012
—-
—
2013
State
—-
Tamil Nadu
Karnataka
—-
—
Meghalaya
No. of child labour employed
In 1997, child labour involved in the diamond industry was between 10,000 to 20,000 out of 1.5 million total workers.
An exact estimate was not provided but child labour was significant in Tamil Nadu’s fireworks industry.
15,000 children working in 1,100 silk factories in 1998.
20% of carpets manufactured in India could involve child labour.
Official estimates-More than 2,500,000
NGO’s estimates- around 20 million.
This state using child labour were discovered and exposed by international media.
Types of child labour in India
There is an increasing involvement of children in home-based work and in the informal sector. Children are involved in the domestic, manual, agricultural sector, in hazardous factories, rag-picking, beedi-rolling, matchbox, brick kilns etc.
According to ILO, the worst types of child labour are:
Slavery: Slavery is when one person works for another person. Slaves don’t have the power to demand anything. They have to work according to the commands of their master.
Child Trafficking: Buying and selling of children either for labour or for sexual exploitation.
Debt Bondage: When people cannot pay off their loans with their money and belongings they are often forced to work as a labour.
Serfdom: When a person works on land that belongs to another person, it is known as serfdom. The labour will either be provided with some pay or no pay will be given.
Forced Labour: When a child works against his/her will then it is termed as forced labour.
Beggary: When poor parents don’t have any other way to earn a living they often beg on roads. They also cut their child’s body part in order to gain sympathy and to get more money. Small children are seen on red lights asking for money for their treatments.
Effects of child labour
Child labour is not something that needs recognition, in fact, if there is an increase in child labour then it shows that the country has failed in providing basic necessities to its citizens, especially children. In such cases, the effects of childhood are only negative. It not only deprives a child of a proper childhood but also make them the victim of physical or mental torture. The child becomes emotionally and mentally mature at an early age which is not a good sign. It does not create but also extends poverty as the child is not able to get basic education and he earns very less amount of money due to this, for his/her family. The child is also paid less. Other effects of child labour are:
Children might suffer from malnutrition, drug dependency and depression.
It might endangers children dignity and morals.
Children may be employed forcefully and they may be sexually exploited.
They might become victims of sexual and physical violence.
Child labour laws in India
As compared to other countries, child labour in India is more prevalent. Out of 179 million children, 90 million who are in the age group of 6 to 14 years are employed and they don’t go to school. It contributes to 50% of children in our country who are involved in child labour. Since 1933, various laws have been made in India to control child labour. These laws include:
Minimum Wages Act, 1948: The State Government fixes minimum wages that are to be provided to the workers/labourers including the child labourers. The government fixed wages according to the type of work and according to the class of workers.
The Plantation Labour Act, 1951: This Act prohibits the employment of children below the age of 12 years, but a child above the age of 12 years can be employed only when the appointed doctor issues a fitness certificate to that child.
The Mines Act, 1952: This Act provides that no child should be present where the work of mining is going on and no child should be employed for such work.
The Merchant Shipping Act, 1958: Except for a training ship, this Act does not allow the employment of children below the age of 14 years in a ship. Also, a person under the age of 18 years cannot be appointed as trimmers under this Act. They can only be appointed under some specific conditions mentioned in this Act.
The Apprentices Act, 1961: Unless a child attains the age of 14 years and satisfy the standard of education and physical fitness test, he cannot undergo an apprenticeship training.
The Indian Factories Act, 1948: No child below the age of 14 years shall be employed in a factory. Also, there are rules that a factory has to follow if they employ pre-adults that are between 15-18 years of age.
The Child Labour (Prohibition and Regulation) Act, 1986: No child who is less than 14 years of age shall be employed in any hazardous occupations that are provided in a list by law. This list is explained further in the article. This list was amended not only in 2006 but also in 2008.
The Right of Children to Free and Compulsory Education Act of 2009: Free and compulsory education must be provided to each and every children below 14 years of age. In fact, to follow this Act efficiently, 25% of seats are also reserved in every private school for children who belongs to the disadvantaged group and for children who are physically challenged.
Children below the age of 14 years are not allowed to work in a factory and it is expressly provided in Article 24 of the Indian Constitution and Section 67 of the Factories Act, 1948.
Free and compulsory education for all children up to the age of 14 years is provided by the Directive Principle of State Policy under Article 45 of the Indian Constitution.
Child labour laws in India its implementation and consequences
According to the Child Labour (Prohibition and Regulation) Act, 1986 a child below the age of 14 years cannot be employed in 16 occupations and 65 hazardous processes that are dangerous to the life of a child. These occupations and processes are mentioned in Part III of this Act. The list of hazardous occupations is provided in the schedule in two parts:
Part A, and
Part B.
Part A lists down various occupations that prohibit the employment of children. These are:
A child should not be employed in any occupation which is related to the transportation of passengers, goods and mail by railway.
A child should not be employed in a building operation in railway premises or picking up cinder and cleaning the ash pit.
Occupation related to travelling from one platform to another or moving out of the train. It also includes any work related to the construction of the railway station.
No child should be employed in a catering establishment at a railway station or any work which is close to the railway lines.
No child is allowed to be employed by the port authority which is within the limits of any port.
Shops that sell crackers and fireworks on the temporary license cannot employ children.
Employment of children are not allowed in garages and Automobile workshops
Workshops related to plastic units and fibreglass cannot employ children as workers.
Mines that are underwater and underground cannot use child labour.
Industries related to handloom and power loom are prohibited from using children as labourers.
Industries that involve the use of inflammable substances or explosives cannot employ children.
Children cannot be employed in foundries.
It also includes occupations that involve children as domestic workers or servants.
Employment of children is also prohibited in dhabas, restaurants, hotels, tea stalls, shops, spas or any other recreational centres.
Diving is also included.
Children are not allowed to work in a circus.
Children cannot take care of an elephant.
Part B lists down various processes in which no child should be employed. These are:
Processes which includes beedi making.
Processes like carpet weaving.
Companies related to the manufacturing of cement, as well as bagging of cement, cannot employ children.
Cloth weaving and dyeing are not allowed to employ children as workers.
Matches, explosive and fireworks manufacturers are cannot employ children.
Processes like mica cutting as well as splitting cannot employ children.
Industries which involves shellac manufacture cannot employ children.
Soap manufacturing units cannot use children as their labour.
Tanning.
Jobs which involve wool cleaning cannot involve children.
Industries related to building and construction are prohibited to employ children.
Manufacturing units related to slate pencils as well as their packing are not allowed to employ children as labourers.
If toxic metals and substances like lead, mercury, manganese, cadmium, benzene, pesticides, asbestos, chromium are used in an industry then such manufacturing industry cannot employ children.
If products of agate are manufactured in any industry then such units are not allowed to employ children.
This part includes all those hazardous processes and dangerous occupations that are defined in Section 2(cb) of the Factories Act, 1948.
It includes all the processes that are notified in the rule that is made under Section 87 of the Factories Act, 1948.
Printing is also included which is defined under Section 2(k) of the Factories Act, 1948.
Processing and descaling of cashew and cashew nuts cannot employ children as labour.
Process of soldering that is present in electronic industries also prohibits child labour.
Dent beating, printing, welding lather work that is mainly present in automobile repairs and maintenance are prohibited from having child labours.
It also includes brick kilns and roof files units.
Hosier goods production, processing and ginning of cotton units cannot seek help from children.
Manufacturing of detergent units cannot employ children as labour.
Ferrous and non-ferrous fabrication workshop units cannot employ children as labour.
Polishing of gem and its cutting are not allowed to have child labour.
Where the work requires proper handling of chromites and manganese ores cannot employ children as labour.
Manufacturing of textile and the making of coir are not allowed to have child labour.
Manufacturing of lime and lime kilns.
Lock making units are not allowed to have child labour.
Units which involves manufacturing of glass, glassware, bangles, fluorescent tubes bulbs and other glass products cannot employ children as labour.
It also includes processes that involve exposure to lead like primary and secondary smelting, welding etc. and works related to manufacturing of cement pipes, cement products are also included in this.
Dyes manufacturer.
Units, where insecticides and pesticides are manufactured, cannot employ children as labourers.
Where factories deal with handling and processing of corrosive and toxic substances, metal cleaning and photo enlarging, cannot employ children as labourers.
Units where coal is burned and there is the presence of coal briquette cannot employ children as labourers.
Sports goods manufacturing which also involves synthetic materials, chemicals and leather cannot employ children as labourers.
Fibreglass and plastics moulding and processing units cannot employ children as labourers.
Oil-expelling, refinery units cannot employ children as labourers.
Units which makes the paper cannot employ children as labourers.
Industries related to potteries and ceramic cannot employ children as labour.
Units, where moulding, cutting, polishing, welding and manufacturing of Brass goods is done, are not allowed to have child labourers.
In agriculture, children are not employed where tractors, threshing and harvesting machines are used.
All processes that included in sawmill are not allowed to have child labourers.
Processes related to sericulture are not allowed to have child labourers.
Lather products manufacturing, skinning dyeing are not allowed to have child labourers.
Crushing and breaking of stone units are not allowed to have child labour.
Manufacture of tobacco, its paste or handling it in any form is not allowed to have child labourers.
Activities that are related to graphite beneficiation, tyre making and its repairing, re-trading are not allowed to have child labourers.
Polishing of utensils and buffing of metal units cannot employ children as labourers.
All processes related to Zari making cannot employ children as labourers.
Manufacturing units related to incense stick cannot employ children as labour.
Electroplating.
Processes that include graphite powdering and incidental processing cannot employ children as labour.
Units cannot employ children as labour.
Industries, where diamond cutting and polishing is done, cannot employ children as labour.
Units that extract slate from mines cannot employ children as labour.
Children are not allowed to do rag picking and scavenging.
The processes which involve exposure of children to either excessive heat or excessive cold.
Mechanised fishing is also included in this.
Food processing units cannot employ children.
Children cannot work in the beverage industry.
Where there is work like timber handling and loading children cannot work there.
Mechanical lumbering.
Warehousing is also included in this.
It also includes processes which include exposure to stone grinding, stone quarries.
Also, on 10th December 1996, the Supreme Court issued a direction which provided for the recovery notice that was issued to the offending officers to collect a sum of Rs. 2,000 per child that was employed under the provision of the Child Labour (Prohibition and Regulation) Act, 1986. A child should not be employed in hazardous occupations. Moreover many states including Haryana have opened child labour rehabilitation cum welfare funds. This is opened at a district level. Separate labour cells have also been made to address the issue of child labour. To provide non-formal education and pre-vocational skills, in 1998 National Child Projects have been implemented by the Central Government. To educate poor and employed children in all the states Sarv Shiksha Abhiyan have been launched in 2001. Non-formal education and vocational training are provided by the Ministry of Women and Child Development. For children’s welfare and their physical, mental, educational development Anganbadies have also been set up.
Obstacles in the proper implementation of child labour laws
The big obstacle in the proper implementation of child labour laws are as follows:
Non-awareness: Non-awareness among people about the labour laws in India is a cause for its poor implementation.
Poverty: There is a vicious circle of poverty. Many families live below the poverty line and they cannot support their living so they send their children to work.
Illiteracy: People who are illiterate are not aware of the rules and regulations due to lack of education.
Lack of political will: Another obstacle is lack of political will as well as the ineffective role played by the government in removing child labour.
Lack of efficiency: Due to inefficient administrative machinery the labour laws are not implemented properly.
Unemployment: People are not able to earn due to unemployment so they send their children to work in order to earn more.
Will of parents: Some parents don’t wish to send their children to school rather than they send them to fields to work for them.
Lack of educational and health facilities: Due to the lack of these facilities labour laws are not implemented properly.
Child labour (Prohibition and Regulation) Amendment Rules, 2017
With the consultation of the stakeholders, the Government of India amended the Child Labour (Prohibition and Regulation) Central Rules, 1986. Broad rules were provided on prevention, protection, prohibition, rescue and rehabilitation of child and adolescent workers. Artists have been provided with safeguards like working hours or working conditions. These safeguards are provided to those who have been given permission to work under this act. It also gives the definition of family with respect to the child. It lays down the duties and responsibilities of enforcement agencies so that all work is done according to the provisions that are provided in this act.
Click Above
Child Labour (Prohibition & Regulation) Amendment Act, 2016
This Act came into force on 1.9.2016. This act completely prohibits the employment of children who are less than 14 years of age and adolescent employment in case of hazardous occupations and processes. This Act also regulated the working conditions where the employment of an adolescent is not prohibited. This Act also provides for punishment in case of violation of any provision of this Act and the employment of children below the age of 14 years would be considered as a cognizable offence. The Appropriate Government can empower the District Magistrate with some powers and duties for the enforcement of the provisions of this Act. For effective implementation of this Act, the State Action Plan is provided to all the States/Union Territories.
Child Labour (Prohibition and Regulation) Act, 1986
This Act provides the definition of a child. It states that a child is a person who has not yet completed 14 years of age. This Act not only regulates the hours of work but also the working conditions of child labourers and prohibit employment of child labour in hazardous industries. Article 24 of the Indian Constitution provides that no child who is less than 14 years of age should be employed in any hazardous industries.
Child Labour Act, 1986
The employment of children who are less than 14 years of age is prohibited by various acts but neither a procedure was laid down for this nor there were provisions made to regulate the working conditions of the child labourers who were employed in exploitative conditions. So, for this, a comprehensive Act was enacted known as the Child Labour (Prohibition and Regulation) Act, 1986. For this, a bill was introduced in the Parliament called the Child Labour (Prohibition and Regulation) Bill to achieve these objectives. After the recommendation made by Gurupadswamy Committee 1976, the Child Labour Act 1986 was passed on 23 December 1986. It was the Act number 61 of 1986.
This Act is divided into four parts which include 26 Sections and two Articles A&B. The act is as follows:
Part I: Preliminary. It includes Section 1 which talks about the short title, extent and commencement of this Act and Section 2 talks about the various definitions that are included in this Act.
Part II: Prohibition of Employment of Children in Certain Occupations and Processes. It includes Section 3,4,5 of this Act. There are two Articles A&B that are concerned with Section 3. Section 3 lists down various occupations and processes that are already mentioned whereas Section 4 talks about the power to amend this Act and Section 5 states that the Central Government is empowered to form a Child Labour Technical Advisory Body.
Part III: Regulation of Conditions of Work of Children. It includes Section 6 to 13 in it. Section 6 includes an application that can be filed, Section 7 talks about the hours and period of work whereas Section 8 talks about the weekly holidays. Section 8 states that how can a notice to the inspector is filed and Section 10 talks about what to do when there is a dispute as related to the age. According to Section 11 maintenance of register is compulsory and Section 12 and 13 talks about other formalities.
Part IV: Miscellaneous consists of Section 14 to Section 28 of the Act. This part talks about provisions related to penalties, the appointment of inspectors, the power to make rules, the power to remove difficulties etc.
Child Labour Act, 2016
The Child Labour (Prohibition and Regulation) Amendment Bill, 2016 was passed by the Parliament in July 2016. This Act not only amends the Child Labour Prohibition and Regulation Act, 1986 but also widen its scope and provides for strict punishments in case of its violation. The Child Labour Prohibition and Regulation Act, 1986 ban the employment in 83 hazardous occupations and processes for the children who are less than 14 years of age. The salient provisions of this Act are as follows:
In every occupations and enterprise, this Act completely prohibits the employment of children who are less than 14 years of age. But if the child is employed in a family business and his/her education is not hampered then he/she can continue to be employed.
A new category of persons is added in this act which is known as “adolescent”. These are the children who are more than 14 years of age but less than 18 years. They are prohibited to take employment in any hazardous occupations.
Child labour is made a cognizable offence through this Act. If a child is employed when he/she is less than 14 years of age then the employer will be liable for imprisonment from 6 months to 2 years or he/she will be liable for a penalty of twenty thousand or fifty thousand or both for the first time. But in the case of a habitual offender, the employer is liable for jail between 1 year to 3 years. If the parent is the offender then a sum of Rs.10,000 is made payable as a fine and the parents are subject to relaxed penal provisions.
Rehabilitation Fund for the purpose of rehabilitation of children is created under this Act.
The hazardous occupation is brought down from 83 to 3. The Union Government is empowered under this act to add or delete any occupation from the list that is provided in this act. The three occupations that are considered as hazardous are mining, inflammable substances and hazardous processes that are provided in the Factories Act, 1948.
This Act provides power to the Government to make a periodic inspection to areas where the employment of children is banned.
In order to ensure that the provisions of the law are properly implemented, for this, the Government can give power to the District Magistrate.
After the passing of this Act, now, the Indian law is also aligned with the convention of ILO. A complete ban on child labour is put so that under the Right to Education every child can get a compulsory education. The Act also realised and allowed children to help their families and run their family business. The penalty for violating the provisions of this act is also increased and it is made as a cognizable offence.
Child labour laws in India pdf
One can refer to the Act and can study the provisions in detail. To see the Act click here
Various constitutional provisions have been provided for the child upliftment such as:
Article 21A: Right to Education
Article 21A of the Indian Constitution states that free and compulsory education must be provided to each and every child who is between the age of 6 to 14 years. Free and compulsory education must be provided in a manner laid down by the State and in a manner law determines.
Article 24: Prohibition of employment of children in factories, etc.
Article 24 of the Indian Constitution states that no child who is less than 14 years of age shall be employed in any hazardous factories or occupations or industries.
Article 39: The State shall, in particular, direct its policy towards securing
Article 39(e) of the Indian Constitution states that the factories or industries in which labours are employed, the employer should not abuse the health and strength of the workers be it man, woman or children of tender age. It also provides that citizens due to their economic necessity should not be forced to enter into any employment that is unsuited to their age, health or strength.
Legislative Provisions Prohibiting and Regulating Employment of Children
There are some legislative provisions that not only prohibits but also regulate the employment of children. These are:
According to the Child Labour (Prohibition and Regulation) Act, 1986 a child is a person who is less than 14 years of age.
Section 3 of this Act contains a schedule which provides with various hazardous occupations and processes that abolishes the employment of children.
A Technical Advisory Committee is also constituted under this Act which can add more occupations and processes which they considered hazardous for children.
This Act also regulates the conditions of employment and working hours in all the occupations and processes which are not covered under Part III.
If there is a violation under Section 3 of the Child Labour (Prohibition and Regulation) Act, 1986 then he/she will be liable for penalties under Section 14 of the Child Labour (Prohibition and Regulation) Act, 1986. He/she will be punished with imprisonment not less than three months and it can extend to 1 year or fine which is not less than ten thousand rupees which can also extend to twenty thousand rupees or with both.
The provision of this Act is enforced by the Central and the State Government in their respective spheres.
ILO core conventions related to Child Labour
International Labour Organisation [ILO] was established in 1919. It is a U.N. agency for setting up the labour standards, develop policies and formulate programmes in order to promote work for all women and men. The ILO brings the government, employers and workers representatives of 187 member states together. Conventions and Recommendations are set up by the International Labour Standards. This was the principal action of ILO. The countries that ratify the conventions of the international treaties and instruments create an obligation which is legally binding with the same whereas the Recommendations are not only non-binding but they set out the guidelines orienting the national policies as well as the actions. There are 8 fundamental conventions of the ILO. These are:
Convention number 138 that is the minimun age for admission to employment and Convention number 182 that is the worst forms of child labour are directly related to child labour and this is ratified by India.
Convention Number 138 – Minimum Age
The ILO convention number 138 was adopted by the International Labour Conference in June 1973 at its 58th session. This convention is also known as one of the basic human rights conventions. ILO actively takes part to promote its ratification. Any country who ratified it has to undertake:
For effective abolition of child labour, each country has to design a national policy.
It also specifies the age for the entry to employment and that age should not be less than the age which is necessary for compulsory schooling.
There should be fully physical and mental development of young people.
There should be a guarantee that the minimum age required for the entry in employment should not compromise the health, safety and morals of the young people and it should not be less than 18 years of age.
Convention No.182 on Worst Forms of Child Labour
This convention of ILO accompanies the Recommendation number 190. It was adopted by the ILO in its 87th session which was held at Geneva in June 1999. It is referred to as one of the basic “Human Rights Conventions”. The main provisions of this convention are:
The term child will be applicable to all the persons under the age of 18 years.
The worst form of child labour comprises of:
All forms of slavery and also the practices of slavery. It includes sale, trafficking, debt bondage, serfdom, forced labour, forced labour for use in armed conflict.
Procuring or use and trafficking of children for illicit activities. It also includes the production and trafficking of drugs that is defined in some relevant international treaties.
Using the child for prostitution or pornography or pornographic performances.
It also includes any work that not only harms the health but also the safety and morals of the children.
Article 23 of the Indian constitution
Article 23 and 24 of the Indian Constitution provides for the Right against Exploitation.
Human trafficking and forced labour like beggar is prohibited under Article 23 of the Indian Constitution. The term “beggar” was defined when the British Government and the zamindars used to force the people to carry their goods along with them when they move from one place to another, these people were called beggars. This was called forced labour also because no remuneration was provided to such people. Human trafficking is the modern form of slavery as there is an illegal trade of human beings for various commercial purposes like sexual exploitation, prostitution or forced labour.
The government passed the Immoral Traffic (Prevention) Act, 1956 and the Bonded Labour System (Abolition) Act, 1976 according to the provisions that are provided in the Constitution of India. The State cannot pay workers less than the prescribed minimum wages even if it takes up any relief work. Reasonable wages are to be paid to the prisoners who are sent for rigorous imprisonment. The Supreme Court has provided that if the prisoners are not provided with any such wages then this will not be considered as a violation of Article 23 of the Indian Constitution. The persons who are under simple imprisonment or preventive detention cannot be made to do manual work but they can do the work if they want and they would require wages.
Forced Labour arises not only out of physical and legal force but also out of compulsion due to the economic circumstances. It is completely banned. The Supreme Court of India in the case of People’s Union for Democratic Rights and others Vs. Union of India and others [5] which is also known as Asiad Workers Case provided that when a person provides a service that is a labour service and in return he/she gets remuneration less than the minimum wage then this case falls clearly in the scope of forced labour which is covered by Article 23 of the Indian Constitution.
Minimum age for domestic help in India
According to the Constitution of India, if a child is below the age of 14 years then he/she can not be employed in any factory or mine or any hazardous occupation. The minimum age that is required for employment is 14 years. If this rule is violated then fine and imprisonment can be imposed. For more than six hours a day, no child is allowed to work. These six hours include one hour of rest after three hours of work. Children are not allowed to work at night that is between 7 p.m and 8 a.m and they are also not allowed to do overtime.
Minimum age for hazardous work
The minimum age requirement for hazardous work is 18 years. The children cannot do night work between (22:00 to 6:00) and overtime for more than four and a half hours. All hazardous occupations and processes are defined in the above Article. These are contained in Section 3 of the Child Labour Prohibition and Regulation Act, 1986 in Part A and Part B.
Legal Age for Working in India
Children who are less than 14 years of age cannot be employed in any of the occupations or factories. If employed, the employer will be liable for penalties. And the children who are more than 14 years of age and less than 18 years of age cannot be employed in any of the hazardous occupations or processes.
Children under 14 Years of Age
Any child who has not yet crossed the age of 14 years will not be employed in any occupation. But this restriction is not applicable if the child is employed in his/her own family business and his/her education is also not hampered. Also, a child of this age can work as an artist in industries like audio-visual entertainment, advertisements, films, television serials or any other sports activities but the circus is not included in this.
Adolescents – 14 to 18 Years of Age
According to Section 7 of the Child Labour (Prohibition and Regulation) Act, 1986 no child is allowed to work for more than the prescribed hours. No child will work between 7 p.m and 8 a.m and no child will work for more than three hours per day and the period of three hours can be extended if the child gets a rest interval for one hour. No overtime is allowed.
To employ an adolescent following conditions must be satisfied:
The period of work should not exceed three hours.
Work in more than one establishment is not allowed for an adolescent.
A holiday of one whole day must be provided to every adolescent.
After working for three hours there should be a rest interval for one hour.
An adolescent can only work for six hours a day and not more than that.
Between 7 p.m and 8 a.m, no adolescent can work.
They cannot be forced to do overtime.
Rules for Employing Adolescents
A register with the following information must be maintained by each and every employer employing an adolescent worker:
Name and date of birth of the adolescent worker.
Hours and periods of work he/she is employed for.
The amount of rest interval provided.
The nature of work the adolescent is doing.
The following information must be sent by the employer to the Local Inspector within 30 days of employing an adolescent:
Location and the name of the establishment.
The name of the person who has the authority of actual management of the establishment.
Address on which communications can be sent.
The nature of processes or occupation that is carried out in the establishment.
Punishment for Violation of Child Labour Laws
The punishment that is provided in case of violation of labour laws are:
If there is a violation under Section 3 of the Child Labour (Prohibition and Regulation) Act, 1986 then the employer will be liable for penalties under Section 14 of the Child Labour (Prohibition and Regulation) Act, 1986. He/she will be punished with imprisonment for not less than three months and it may be extended to 1 year or fine which is not less than 10,000 rupees which can also extend to 20,000 rupees or with both. If the offender is liable for continuing offence under Section 3 of the Child Labour (Prohibition and Regulation) Act, 1986 then he/she will be punishable for not less than 6 months and it can extend to 2 years.
Child labour policies in India
Following are the child labour policies in India:
National Policy on Child Labour
Policy
The National Policy of Child Labour that was incorporated in August 1987 provides the action plan that tackles the problem of child labour. It contains:
The legislative action plan.
General development programmes for the benefit of every child.
Project-based action plans that launch the projects in the areas where there is a huge amount of child labour, for the welfare of children.
To rehabilitate the children who are involved in child labour the National Child Labour Policy [NCLP] was started. At first, it aims at rehabilitating the children that are employed in hazardous occupations and processes. For this, the sequential approach was adopted. After the survey on the children that are employed in hazardous occupations and processes, an order was given to withdraw children from those occupations and to provide them with schooling in special schools.
Legislative Action Plan
This plan was formulated for the strict implementation of the Child Labour (Prohibition and Regulation) Act, 1986 and other labour laws. It was made to withdraw the children that are employed in hazardous occupations and processes and make sure that the children are not employed in such activities again and also to regulate the working conditions of those children who are involved in non-hazardous employment. This plan can also identify other occupations and processes as hazardous if they are detrimental to the health and the safety of the children.
Government has been actively taking steps to tackle the problem of child labour by enforcing strict legislative provisions and by providing rehabilitation centres. State Governments have developed various authorities and they have been conducting regular inspections as well as raids to areas where there are cases of violation. Poverty is the root cause of this problem so the State Government is providing the rehabilitation centres in order to improve the economic conditions of poor families.
Right to Education Bill
In 2009, the Right to Education Bill was introduced by the Government of India in order to make education reach everywhere. Implementing this Act at the grassroots level will help to eradicate child labour.
Rehabilitation of Children Working in Hazardous Occupations
By setting up special schools, the Government of India has formulated a programme in order to remove child labour from hazardous occupations and rehabilitate them. Till now, around 2 million children are withdrawn from the hazardous occupations and processes and are enrolled in special schools which provide them basic education, vocational training, monthly stipends, nutrition and health checkups.
Child labour still a big challenge
Despite of several laws that are enforced in India which prohibits the child labour still, there are many children who are employed in homes, nearby restaurants and factories across the country. Including sexual and mental abuse, these children are also subjected to various other types of exploitation. June 12 is observed as Anti-Child Labour Day but activists expressed that due to lack of enforcement of the Child Labour Act, 1986 still there are many cases of child labour all around the world. Moreover, we often encounter child labour several times in our daily life whom we called as a “chhotu” yet we make them do our work rather than helping them and putting them in a rehabilitation centre and help them achieve a good life ahead. Child Labour is still a big challenge that needs to combat in our society.
Role of society in child labour
In society, child labour is affected by various factors like poverty, lack of education, population and industrialization. If there is overpopulation then there will be more number of family members that will lead to more food, so in order to provide a living to their family children have to work, so, in this way, children become the victims of factory owner’s greed. If there is overpopulation then there will be not enough food which will lead to malnutrition, poor education, high birth rates, unemployment/underemployment, unequal wealth distribution, low income, low savings and investments, lack of technology and at last low of productivity.
When there is industrialization, the huge factories are set up which not only need more labour but also prefer child as a labour. Due to lack of education parents don’t understand the importance of education and send their children to work due to family circumstances.
Society plays a big role in increasing the child labour because after knowing all about what kind of evil child labour is and how badly it affects the life of a child they still prefer small kids as their workers in large numbers not only because they are unaware about the minimum wages but also due to unawareness about their rights and duties and it serves as an advantage to all the employers. The employers make them work for longer hours and pay less. So in order to protect children from this evil, the attitude of society that one should be benefited in each and every circumstance must change. Every time one should not only think about his/her benefits but sometimes it is good to think about how to save a child’s life rather than making it worse by one’s own conduct.
Initiatives against child labour in India
Many initiatives were taken by the government as well as non-government organisations in order to curb the problem of child labour in India.
Government initiatives against child labour in India
In 1979, the Gurupadswamy Committee was formed to know and find all about the child labour and ways to tackle it. Based on the recommendations of this committee, the Child Labour Prohibition and Regulation Act was enacted in 1986. To rehabilitate children that are working in hazardous occupations National Policy on Child Labour was formulated. In 1988, 100 industry-specific National Child Labour Projects were implemented by the Ministry of Labour and Employment. To combat the growing problem of child labour the Indian Government has provided various numbers of Acts, laws, organizations and institutions. These include the Child Labour Prohibition and Regulation Act, 1986, this Act provides the definition of a child. It states that a person who has not completed the age of 14 years is considered as a child. This Act not only regulates the hours of work but also the working conditions of child labourers and prohibit the employment of child labour in hazardous industries and to rehabilitate the children involved in child labour, the National Child Labour Policy [NCLP] was started in 1988. At first, it aims at rehabilitating the children that are employed in hazardous occupations and processes. For this, the sequential approach was adopted.
According to the report of Osment, many NGOs like:
Care India,
Child Rights and You,
Global March against child labour,
are implemented to combat child labour by providing education and various resources. However, these efforts proved to be unsuccessful.
Non-Governmental Organisations
NGOs are working to protect the children from the evil of child labour. These NGOs include Bachpan Bachao Andolan, Child Rights and You (CRY), Global March against child labour, Talaash Association, ChildFund, Care India, RIDE India, Childline etc. Many public interest litigations have also been filed on the problem of child labour like “PIL on child labour” which is also known as “Hemant Goswami vs. Union of India” [6].
In this case, a PIL was filed by a social activist Hemant Goswami. A writ was filed that provided there were violation and non-compliance of provisions of the Child Labour (Prohibition and Regulation) Act, 1986 by the Union and the States. Adv. APS Shergill who appeared for the petitioner also cited examples where children were made to work in Punjab University. They also claimed that when these children are recognized they are more victimised rather than rehabilitated. Goswami and the petitioner Vishavjyoti undertook a survey in order to find the number of child labour in the region. The Court held that the person below the age of 18 years is to be treated as a child. There is now a constitutional obligation to follow the provisions of the Child Labour Prohibition and Regulation Act, 1986 and to provide free and compulsory education for them. Facilities have to be made which provide free education.
Demography of child labour
In India, child labour is affected by the factors like poverty, lack of education, population and industrialization etc. According to the Save the Children report, children between 14-17 years of age are engaged in hazardous occupations and processes which is equal to 62.8% of India’s total child labour and there are more boys than girls that is 38.7 million boys are engaged and 8.8 million girls. In rural India, 80% of the children were found working. According to the reports of the United Nations Children’s Fund (UNICEF), there is a 54% increase in child labour in urban areas than in rural areas.[7]
The Campaign Against Child Labour study provides that approximately 12,666,377 child labour is present in India. Uttar Pradesh has 19,27,997 child workers and Delhi, the capital of India has over 1 million child workers. Other states with approximately similar figures are Bihar, Rajasthan, Maharashtra, Madhya Pradesh and Uttar Pradesh.[8]
The National Sample Survey [NSSO] claims that child labour rates are highest among Muslim Indians that is 40% higher than Hindu Indians. There is less child labour in minority religion in India. The rate of child labour in the tribal population is 3.8%. Due to malnutrition, India has more number of child labour that is 48.2% which is equal to Colombia’s population.[9]
According to the report of Children’s Stolen Childhood’s population, 3.1 million children are part of India’s workforce.[10]
CRY
Child Rights and You [CRY] is a non-governmental and non-profitable organisation that was made in order to provide basic children rights to those children who are deprived of it. It was established in 1976. This organisation was started by Rippan Kapur. A simple decision was made by 7 friends to change the lives of India’s underprivileged children. With only 50 rupees and a dining table as resources, these 7 people belief to change the lives of the children who were suffering. This was how this organisation began. This organisation is open for donations so that people worldwide can participate and help in changing the lives of children who are stuck in child labour for a better future. Also, a lot of people can participate in rehabilitating these children by working in this organisation.
Survival, development, protection and participation are the four basic rights on which this organisation focuses. There are some basic Foundation Principles on which CRY works, these are:
Survival: This right is related to the right to life, health, nutrition, name, nationality, in short, it consists of the right to survival.
Development: This right aims to provide education, care, leisure and recreation for the development.
Protection: This right aims at protection from exploitation, abuse and neglect.
Participation: This right aims at providing equal opportunity for participation in expression, information, thought and religion.
These principles are applied to everyone without any discrimination. All categories of children like street children, children of sex workers, physically and mentally challenged children, children who are there in juvenile institutions, children who are there in privileged homes, children who are trapped in bonded labour.
Mission Statement of CRY is to make people take responsibility of the prevailing situation in India and also motivate them to face the situation by collective actions and give the child and themselves equal opportunities to realise their full potential.
Core CRY Principles
Core CRY Principles are as follows:
There should be sustainable changes.
There should be constructive engagement with all the stakeholders.
There must be accountability and transparency.
There must be secularism.
There must be non-violence.
There should be multi-layered interventions that address services, networking and advocacy.
CRY India
CRY looks for promising and grassroots NGOs and provides them with financial, managerial help so that they can achieve sustainability. They provide various types of support like financial requirement, material requirement, information support etc. Since this organisation was set up, more than 300 child initiatives have been implemented which made a positive impact on the lives of millions of children. CRY is a form of a partner which combines with any other NGO who is in need. Its partnership is in the form of direct action that is working with the children and community directly, building capacities in which they provide inputs in the area of organisation building etc. Through networking, in order to make collective efforts, they bring all the organisations working in the same area together and through influencing they influence the Government to make more child policies to save them from various atrocities. CRY also work with some other NGOs at regional, national or state level. These states are Maharashtra, Orissa, West Bengal, Uttar Pradesh, Rajasthan, Delhi, Tamil Nadu. CRY is a part of various alliances such as Campaign Against Child Labour [CACL], End Child Prostitution in Asian Tourism [ECPAT], Donor Agency Network [DAN] and also with the National Alliance for the Fundamental Rights to Education [NAFRE].
CRY follows simple criteria for supporting and take initiative by focusing on children, nascent initiatives. They give priority to the projects where there are no other projects in force and it works basically on its vision and commitment.
If someone wants to work with CRY then they can file an application according to the format that is prescribed. The branch will shortlist the application, then after the recommendation from the heads and approval from the Board of Trustees, the selection is done.
Child labour can be stopped through various measures. By analysing the situation, reviewing national laws regarding child labour. By taking protective measures like checking the age of the employees, identifying the hazardous works and carrying out a workplace risk assessment, child labour can be brought under control. Immediate actions are required by not hiring children below the age of 14 years, removing children from hazardous work or reducing the hours for children and providing them with at least minimum age can help in lowering the rate of child labour or making the position of these children in the society better.
Strategic actions like applying a safety and health management system, using collective bargaining agreements, providing a code of labour practices. By supporting education and children that are found trapped in child labour, this problem can be reduced. We should adapt our business to a child labour free environment and make sure that new suppliers don’t use child labour. If required, one or more monitoring systems should be set up.
Conclusion
Child labour is still a problem before the nation. The various measures have been taken by the Government to deal with this problem of child labour actively. However, due to the socio-economic problems like poverty, illiteracy which are the main cause of child labour, it cannot be solved unless and until there are collective efforts of all the members of the society. If every individual takes the responsibility of child labour then this problem can be solved and we can have a better and developed India. If the public supports the functions of the Government then the problem of child labour can be controlled to a great extent. It is important to spread the awareness about the evil of child labour and make people understand that it is important for a child to grow and enjoy his/her childhood as they are future of our country.
My first client was an IIT Kharagpur graduate, who founded a data protection software company. I was a 4th-year law student when he first started engaging me in drafting contracts. Soon, I drafted and negotiated an investment agreement for FDI involving investors from Hong Kong and the USA. It was an amazing learning experience for me, and being able to earn a handsome amount gave me much confidence at the time.
I later became friends with the founder, Vikram. But more importantly, he was an early adopter of iPleaders, and the legal risk management service I was trying to peddle at the time. This is when I began to understand how entrepreneurs can have great advantage from knowing the law. Beginning to create online courses for entrepreneurs and lawyers was not too far from that signpost.
I stopped practicing law after going full time with iPleaders in 2012. However, Vikram has always leaned on me for many legal needs of his, and I have taken out time for him to do his bidding, not because it was my line of work, but simply because he trusted me.
Friendship, mutual admiration and respect. These things define the relationship between early adopters and entrepreneur-innovators.
When we were still building LawSikho.com, we ran a crowdfunding program. We just wanted to raise 3 lakhs. This was kind of the seed money for LawSikho.com being set up. This money helped a lot with our initial technology development.
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We also wanted to know if people wanted to buy our courses, under a new brand called LawSikho, without any university or government recognised certificates. Will this concept work?
We made things very attractive. If someone paid us INR 5,000, they could get courses worth 25,000 in the next 2 years. Similarly, if anyone paid INR 3,000 they would get course credits worth 10,000.
Around 50 people opted for this, and we overshot our target of 3 lakhs in a week.
Please realise that this was not a no brainer back then. LawSikho.com had only a rudimentary version up. We had no live classes. Compared to today, our material and methodology were primitive. We promised to launch a lot of new courses in the next one year, but people had to trust our word for that.
And people did. We had little proof to offer that we would deliver good courses. But over 50 people poured in money. And we had our target fulfilled super quick!
We knew we were on the right track. But we were incredibly grateful to these initial set of early adopters who helped us to get off the ground.
Many of these early backers came back later and bought more courses too.
You guys are the best, thank you!
So when we launch new products, we keep the prices low. Let the early adopters benefit. Very soon, we will have success stories. There will be word of mouth publicity, and more people will pour in. But all that can happen only because early adopters had the courage to try out a completely new thing!
For example, for the first time in India, or anywhere in the world as per my knowledge, we are launching three unique courses. These are very niche courses, and will appeal to lawyers who want to work in these areas only.
The first batch will definitely be early adopters.
To make it easy for them, we are keeping the price very low till 15th August. After that, prices go up to normal levels.
Normally, our 3 months executive certification courses cost 14,000 if you pay at once, and 15,000 if you pay in two installments.
For a change, you can pay just 12,000 for enrolling in the following 3 courses until 15th (one-time fee).
We never give discounts, but we favour our early adopters.
If you have any other ideas about how we could honor our early adopters, do tell me.
How do you do it? How do you honor early adopters in your practice? What would you like to do if you had your own business or practice?
In my opinion, the earlier you get into LawSikho, the better treatment you should get! Just like those who have bought Master Access or Litigation Library when we first launched them. These early adopters benefited from an incredible pricing, extra privileges. I personally scheduled Also, note that our groundbreaking Legal Practice Development and Management course is also launched and enrollment for the first batch is going on. This is not a recurring course, and we may not repeat it again, given that it is so hard to get time from top lawyers of the country to teach a course like this. If you want to grow your legal practice, as a solo lawyer or a law firm, this will be a gamechanger for you. Here is the landing page. Check out the syllabus for yourself, and you will know: https://lawsikho.com/course/legal_practice_development_and_management
We have just 15 seats for that course. So do not delay if you are interested. If you have any questions, just give us a call. My team can set up a call with me too, if you feel the need to speak with me.
The Stakeholders of the company deals with Corporate Governance matters in the daily phase of life. But, they face problems due to non-compliance with the requirements. The Listing Obligation and Disclosure Requirements 2018come to existence on 5th October 2017. After this, the requirements become more ever strict made By SEBI. By this, we can analyze that the Requirements are pretty essential for proper corporate governance, It’s suggested by the Kotak Committee to make proper control and functioning Regulations for Company.
These 4 are the essential pillars of Corporate Governance which are necessary:-
Accountability:- It means to accept all the liabilities that come from default made by any person himself, Not making any kind of excuse to avoid liability.
Transparency:- It intends to hide nothing from another person and to disclose everything whatever necessary to prevent fraud of any kind.
Responsibility:- It implies that Every person has to work as per the task is given to him and no to neglect any kind of duty given and Everybody being responsible is essential.
Fairness:- It’s referred to as Everybody must be treated equally while distributing share and while providing any information, There must not be any kind of disparity in between.
These are the principles which are being taken essentially in Corporate Governance Activity, but these are not enough to complete the Governance, there is also a need for Listing Obligation and Disclosure Requirements 2018 being taken into consideration
To fulfill these aims the regulation comes into play:-
Developing the position, no. of members and their working
Assuring independence in the spirit of Independent Directors and their effective cooperation in the functioning of the company
Improving protection and acknowledgment pertaining to Related Party Transactions
Improving clarity in accounting and auditing exercises by the listed companies
Directing problems faced by investors on polling and support in general meetings
Efficient monitor by group entities
Disclosure and transparency-related problems, if any.
The regulation is very important for the proper functioning of corporate governance
Statistics show How good Corporate Governance has an impact on company growth
By this, we come to know How Important is these regulations, So, the LODR Regulation 2018 being mandatory for every company for making safeguard environment of the Stakeholders.
What are the requirements of Listing Obligation Disclosure Requirements in relation to Corporate Governance?
There are ten basic requirements for proper corporate governance as per the regulations of LODR. For the explanatory document, you can visit this. These are given below:-
Composition and Role of the Board of Directors
The board of directors is being responsible for the whole company and the stakeholders related to the company all are under the head of the director
Minimum number of Directors
The minimum number of directors which was given 3 under the Company Act, 2013 is now 6 after the amendment of Sebi, 2018. It will come into effect from 1 April 2019 for top 1,000 listed entities and from 1 April 2020 for top 2,000 listed entities.
Gender diversity on the Board
At least one woman director to be required as a board of director. For top 500 listed entities by 1 April 2019 and for the top 1000 listed entities by 1 April 2020.
Disclosure of expertise/Skills of Directors
It also requires disclosure of those skills that it’s board members actually possess, without disclosing the names of the directors. This is to be made effective from the financial year ending 31 March 2019
Skills of each and every member of the board along with their names required from the financial year ending 31 March 2020.
Institution of Independent Directors
Definition of Independence Director
After amendments, the person excluding “promoter group” of a listed company to exclude the “board inter-locks” possibilities. The Non-independent directors even excluded from this definition.
Companies will need to comply with the amended definition of Independent Directors with effect from 1 October 2018.
Eligibility Criteria
This changed the criteria for evaluation of IDs by the board necessitating an evaluation If
Working of the directors.
Independence criteria as in the SEBI (LODR) Regulations and their independence from the management.
Alternate Directors for Independent Directors
The Amendments prohibit an alternative director to be designated or resume as an independent director of a listed entity by 1 October 2018.
Board Committees
There are many committees being established for the proper functioning of the company in various sectors by various groups like audit, remuneration, and risk management committee.
Audit Committee
It has to regularly keep an eye on the spending of loan and advances by the company from investor exceeding INR 100 CR or 10% of the asset size of a subsidiary by April 1, 2019.
Nomination and Remuneration Committee
Senior Management defined as All the member of management one level lower to the Chief Executive and Chief Financial Officer also Company Secretary.
Recommendation of all payment made being transferred to Senior Management.
Role of Risk Management Committee
It is now extended to 500 listed entities in the market. cover cybersecurity, given the increase in the use of cyber and digital technology. As the role increase the protection from cyber-attacks also increase.
Enhanced Monitoring of Group Entities
With the increase in the entities, globalization comes to happen which further leads to some technicalities that’s why monitoring comes into play
“Definition of “Material Subsidiary”
The Amendments widen the ambit of a material subsidiary to mean a subsidiary if income exceeds 10% (from the current 20%) of net worth, respectively, of the listed entity and its subsidiaries in the immediately preceding accounting year. That’s why independent director appoint in the listed entity for an unlisted material subsidiary, whether incorporated in India or not.
The company with a large number of subsidiaries need to have large numbers of monitoring mechanisms by April 1, 2019
Promoters/Controlling shareholders and RPTs
Most of the Indian Companies are dependent on the Promoters as their controller that’s why this amendment takes place to make changes in the Related Party Transactions.
Definition of “Related Party”
Any person or entity which belongs to the promoters group come under the Related Party, as per the observation certain promoter entity are not a related party.
Amendment of Disclosure
The listed company or promoter which holds 10% or more share need to disclose it by half-year ending 31 March 2019. Also, include in accounting standards of the annual year.
Disclosures and Transparency
The company should disclose with time and accuracy to the stakeholders, this is for building trust with stakeholders.
Submission of Annual Reports
Now it’s required to submit within the 21 working days, approved and adopted in AGM. It has to submit a report to AGM if any change, then inform within 48 hours.
Disclosures of key changes in Financial Indicators
It includes Debtors turnover 2. Inventory turnover 3. Interest coverage ratio 4. Current ratio 5. Debt equity ratio 6. Operating profit margin (%) 7. Net profit margin (%)
For significant changes of 25% or more.
Accounting and Audit-Related Issues
The accounts and auditing being the most essential parts of the company to show the actual position of the company, which influence stakeholders the most
Amendment makes something mandatory which are not quantifiable:-
Management makes an estimate, which auditor has to analyze and report.
Notwithstanding the above, if Management does not provide going on or sub- juice concern for which the auditor make the report on the same.
Audit/limited review of quarterly consolidated financial results
The Amendments introduce a requirement for the listed entity to ensure quarterly consolidated monetary outcomes, that at least 80% of the total consolidated fund out of profit must be audited, in case of tamed limited review.
Investor participation in meetings of listed entities
More investor participation involves more they are being encouraged to enrich share in that listed entity
Timeline for annual general meetings of listed entities
Now it reduces the duration of holding of AGM to 5 months from the end of the financial year. This requirement is applicable to top 100 listed entities by market capitalization, determined as on 31 March of every financial year. This also reduces holding of AGM for Global Concern and to avoid bunching of AGMs (especially in August/ September), which further leads to fewer shareholders participation. Currently, the Companies Act requires listed entities in India to carry AGM within six months from the end of the monetary year. There are no specific provisions in SEBI (LODR) Regulations on this.
Also, webcast makes it more convenient to attend meetings in easy access anywhere.
Recommendations referred to other agencies
The group given below have necessary to take recommendation Includes
Group Audits, Internal Financial Controls (IFCs), Audit quality Indicators, Strengthening the role of review ICAI, Strengthening the independent functioning of the quality review board (QRB)
These all need to take advice and recommendation of the Kotak committee for better functioning and have a positive outcome.
Quorum and Separation of Roles
The quorum for board meetings
According to the Companies Act, A quorum of two board of director or one-third of the total. But there isn’t fixed quorum. Now it’s one-third of total directors or three directors, whichever is higher, at least one independent director. It takes place by Audio-Visual Method. The above amendment for top 1,000 listed entities shall come into effect from 1 April 2019 and for top 2,000 listed entities shall come into effect from 1 April 2020.
Separation of the roles of non-executive
Chairperson and managing director / CEO it also require the chairperson of the board as a non-executive director and not be related to the managing director or the chief executive officer as per Companies Act, 2013. The separation leads to a better and proper governance structure by enabling more effective supervision of the management. This amendment shall come into effect from 1 April 2020 for top 500 listed entities. But it’s not applicable to that listed entity in which there is promoter not identified.
By this, we can ensure that every company needs to take into consideration the requirements as per their qualifications to ensure better corporate governance as per Kotak committee. These include the recent amendment impact on requirements.
Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skill.
This article is written by Richa Singh of Faculty of Law, Aligarh Muslim University. In this article, she has discussed the meaning of mutual funds and its working in India along with the regulations by which it is managed in the country.
Introduction
The Indian industry of mutual funds is evolving continuously. There are several Indian industries bodies which are investing in investor education. Investing in Mutual funds is still considered a risky option. The types of mutual fund options available to an investor make it one of the most flexible and comprehensive investments that are helpful for the people who are willing to invest.
The regulations of RBI and SEBI on mutual funds make it a safer option to maximize your profits and invest money in something useful.
Concept of mutual funds in India
The name itself suggests that a ‘Mutual fund’ is like an investment channel that helps several investors to combine their resources to purchase stocks, bonds, and other securities for their earnings.
These combined funds which are referred to as Assets Under Management (AUM) are then invested in a mutual fund company’s manager who has expertise in it. The mutual fund company is called as an Asset Management Company (AMC).
This combined underlying holding of the fund is called the ‘portfolio’ and each investor owns some portion of this portfolio and this portion which the person holds is in the form of units.
History of mutual funds in India
In India, the industry dealing with mutual funds was established in the year 1963 with the development of the Unit Trust of India (UTI) which was an initiative of the Indian government and the Reserve Bank of India.
The SBI Mutual Fund became the first NON-UTI mutual fund in India in the year 1987.
The year 1993 heralded a new era in this industry of mutual funds as it was marked by the entry of private companies.
The SEBI Mutual Fund Regulations came into being in 1996 after the passing of the Securities and Exchange Board of India (SEBI) Act of 1992.
After this, the Mutual fund companies have extended and grown exponentially with the help of foreign institutions setting companies in India through joint ventures and properties.
The Association of Mutual Funds in India (AMFI), a non-profit organization, was founded in 1995 as the industry developed. It was formed with the objective of promoting healthy and ethical marketing practices in the mutual fund industry of India.
SEBI has made the certificate of AMFI mandatory for all those who are engaged in marketing mutual fund products.
Objective of mutual funds
The objectives of mutual funds are as follows:
It helps in generating an additional source of income other than the general earnings.
It helps in financing some of the future needs a person dreams of, such as buying a home, post-retirement plans, education of children and their education, legacy planning, etc.
It can help in increasing the savings a person possesses.
It is useful in reducing tax liabilities.
It helps in protecting your savings from inflation.
What is a mutual fund?
A mutual fund is a commercial product that invests in stocks or bonds.
A mutual fund is a pool of investment which is managed professionally for the purpose of purchasing various securities and culminating them into a strong portfolio that will give you attractive returns over and it will be above the risk-free returns which are currently being offered by the market.
If you own a mutual fund then it is like getting a slice of an apple. Just like that the investors get units of the fund which are in proportion to their investments.
For example, if there is a mutual fund that has total assets of $5000 and someone invests $500, he/she will receive 10% units of that fund.
Mutual funds meaning
Mutual Fund is like a financial vehicle that consists of all the money collected from different investors in securities such as stocks, bonds, and assets.
It is operated by money managers who allocate the fund’s assets and produce income for the fund’s investors.
It gives investors access to diversified portfolios at a low price.
It is divided into several kinds of categories on the basis of investment objectives, kinds of securities they invest in, and the type of return they are expecting.
It charges annual fees known as expense ratio or in some cases commissions.
How mutual funds work in India
The working of mutual funds in India is the same as that of the USA. These funds are regulated by SEBI in India.
In order to start funding, the starters need to have at least 5-year experience in the financial industry.
He should have maintained a net worth for 5 years after he gets registered.
A minimum start-up capital of about Rs. 500 million and Rs. 200 million is required for open-ended and close-ended schemes respectively.
SEBI registration is compulsory. After it, the sponsor should form a trust to hold all the assets of the fund either by appointing a new company or by choosing any existing Asset Management Company (AMC).
The trust’s job is to overlook the funds and it should be done considering the best interests of the shareholders.
The Asset Management Company manages the portfolio of the fund and then shares the information with the shareholders.
The funds are invested in various sectors like IT, real estate, etc.
In case one sector is unable to perform well then the others will compensate for it and average out the loss suffered.
The fund managers will send the account statements quarterly to the investors. The financial reports of the fund are also sent to the investors so that they can monitor how the fund is performing.
Mutual fund investment is flexible in nature and it can be done in many ways as the minimum investment amount is Rs. 500.
An investor can invest offline, online, directly or through fund managers.
It provides easy liquidity to investors as one can easily encash the money at the time of need.
There is a transparency in the investment making since it is under the SEBI guidelines.
A monthly report is shared by investors to make the investment more transparent.
A load fund charges commission on the purchase and sometimes at the time of sale. But no-loan funds are free from commissions.
MF Utility
MF Utility (MFU) is an application that connects investors to banks, fund houses, KYC registration agencies, registrars, etc.
MF Utility is a shared service initiated by Amfi subsidiary MF Utilities India. It’s a transaction aggregation portal that enables consumers to invest in multiple schemes in the fund market.
It’s a free-of-cost service for those who sign up with the utility.
The existing investments of investors will not be migrated. After the creation of Common Account Number (CAN), MFU will map the existing folios of investors across all the fund houses to the CAN, based on their Permanent Account Number (PAN) and the pattern.
All the transactions submitted through Mutual Fund Utility are then forwarded to the respective Asset Management Company (AMC). No change is there in its processing or brokerage.
For availing the facilities of MF Utility, an investor needs to get himself a CAN number by submitting the CAN registration form. Then, the investors will be provided the login access to MF Utility.
KYC compliance is required for CAN creation.
The CAN provides a lot of facilities to the investors and distributors. In order to avail the MF Utility facilities, a CAN number is required.
The CAN is not transferable and in case of eventualities, the holders have to request the transmission with MFU India.
Structure of mutual fund in India
Mutual Funds have a 3-tier system in India.
The 1st tier is the Sponsor, 2nd tier is Public trust and the 3rd tier is Asset Management Company.
A sponsor is a person who establishes a mutual fund and is associated with another corporation.
It is necessary for a sponsor to seek approval from the Securities and Exchange Board of India.
After the approval, the sponsor has to make the Public Trust as per the Indian Trusts Act, 1882.
The Trust itself cannot enter into any contract as it does not have any legal identity. So, for that purpose trustees are appointed to act on behalf of the Trust.
The instrument of Trust must be in the form of a deed agreement between the Sponsor and the trustees of that mutual fund under the Indian Registration Act, 1908.
After that, the Trust gets registered with SEBI leading to the creation of the fund.
The trust, when registered, is known as a mutual fund.
The sponsor and trust are two separate entities.
The Trust acts as an internal regulator of the mutual fund. Its main task is to check whether the money is managed properly or not as per the objectives.
Then the Trustees appoint an Asset Management Company (AMC) to manage the collected money through the mutual fund.
The approval of SEBI is required for AMCs.
The Board of Directors of an AMC has at least 50% of independent directors.
The AMC functions under the control and supervision of its Board of Directors, SEBI and the directions of the Trust.
AMC floats new schemes in the name of the Trust and manages these schemes by selling and buying securities.
For this purpose, the AMC needs to follow the guidelines given by the SEBI as per the agreement signed between the company and the Trust.
Types of mutual funds
Mutual fund types can be classified as:
Based on Asset Class
Equity Funds
These funds, primarily, invest in stocks.
They invest the money collected from different investors into shares of different companies.
The performance of these shares determines the returns or losses in the market.
These funds come with quick growth. So, the risk is comparatively higher in investing money in these funds.
Debt Funds
They invest in fixed-income securities such as bonds, securities, treasury bills, etc.
They have fixed maturity date and interest rates.
They are good for a small but regular income and risk involvement is also minimal.
Money Market Funds
They are for the investors who trade money in the money market ( also known as capital market or cash market).
Usually, they are run by the government, corporations or banks by issuing securities like bonds, T-bills, etc.
The fund manager invests the money and disburses regular dividends in return.
They are good for short-term plans and are relatively less risky.
Hybrid Funds
They are also known by the name Balanced Funds.
They are a mix of bonds and stocks, thereby, bridging the gap between Debt Funds and Equity Funds.
There is no fixed ratio. It may be variable or fixed.
They are good for the investors who are ready to take high risks rather than holding to lower but regular income.
Based on Structure
Open-Ended Funds
These funds do not have any issue regarding the time period or the number of units.
An investor can trade funds and exit whenever he likes at the current Net Asset Value.
This is the reason for the constant changing of its unit capital with new entries and exits.
They may also stop taking in the investors due to management or other problems.
Close-Ended Funds
Their unit capital is fixed and they cannot sell more than a pre-agreed number of units.
They may be deadlines to buy units.
The specific maturity period is there and fund managers are open to diverse fund sizes.
SEBI mandates that investors under this fund type should be given either the repurchase option or listing on stock exchanges in order to exit.
Interval Funds
These funds have the characteristics of both Open and Close-Ended Funds.
They have a specific time to purchase and exit the scheme and it should be done at intervals only.
No transactions will be permitted, under this type of fund, for at least 2 years.
These are suitable for those investors who want to have a lump amount of savings for an immediate goal.
Based on Investment goals
Growth Funds
These put a huge portion in shares and growth sectors.
They are suitable for those who have a surplus of money to invest in riskier plans or they have some positive belief in the scheme.
Income Funds
They distribute the money in a mix of bonds, certificates of deposits and securities.
They have historically earned investors better returns than deposits.
They are best suited for investors who are risk-averse from a 2-3 years perspective.
Liquid Funds
They also belong to the debt-fund category as they invest in debt instruments with a tenure up to 91 days.
The maximum amount you can invest is Rs. 10 Lakhs.
The difference between liquid funds and debt funds is the calculation of the Net Asset Value (NAV).
NAV of liquid funds is calculated considering all the 365 days including Sundays but others are calculated considering business days only.
Tax-Saving Funds
Equity Linked Saving Scheme is gaining popularity these days as it serves double benefits as well as save on taxes in the lowest lock-in period of 3 years.
They make you earn non-taxed returns from 14-16%.
They are best suited for long-term investments by salaried investors.
Aggressive Growth Funds
They are a bit risky and are designed to make steep monetary benefits.
They should be chosen as per the beta (a tool to gauge the movement of the fund in the market).
Capital Protection Funds
They are to protect your principal amount.
In order to serve this purpose, they earn relatively small.
The fund manager invests the amount in bonds and the rest in equities.
The incurrence of loss is nil.
You need at least 3 years to safeguard the money you invested and the returns will be taxable.
Fixed-Maturity Funds
In order to bring down the tax burden, investors go for this funding scheme.
If an investor is uncomfortable taking the debt market risks, Fixed Maturity Funds provide a great opportunity.
They have a fixed maturity period which could range from 1 month to 5 years.
The fund manager puts the investment for the same time period to receive accrual interest at the time of maturity.
Pension Funds
This fund type is for those who want to put away some amount of their income to secure their financial needs after retirement.
They can solve many problems like medical emergency, children’s weddings, etc.
Relying only on savings is not recommended though.
Based on Risks
Very Low-Risk Funds
These are liquid funds and are short-termed (1 month to 1 year).
They are not risky at all.
These are low-return funds (6% at best)
They are useful in fulfilling small financial needs and in securing their money until then.
Low-Risk Funds
When a currency depreciates or any unexpected national crisis is going on then investors don’t want to take risk of investing money in riskier funds.
In such situations, putting money either in one or in a combination of liquid, ultra-short-term, etc. is recommended.
Returns will be somewhere between 6-8%.
Investors are allowed when valuations of the fund become stable.
Medium-Risk Funds
They are neither very risky nor very safe as the risk factor is of medium level.
The fund manager invests a portion in debt and the remaining in equity funds.
The average money that one can make out of this is 9-12% and the NAV is not very volatile.
High-Risk Funds
This fund type is suitable for those investors who are aiming for high returns with no risk-aversion.
These need active fund management.
Regular performance reviews are compulsory in these type of funds as they are highly volatile.
The expected return percentage is 15% and more.
Specialized Mutual Fund Types
Sector Funds
These are theme-based mutual funds and they invest in one specific sector.
The risk factor is high as the investment is made only in one sector.
The sector-trends must be considered while investing in such funds and if decline starts then you should exit immediately.
They are not always risky, they also offer great returns.
There are some areas like pharma, IT, banking, etc. which have witnessed huge growth in the investment sector and proved to be promising as well.
Index Funds
These are best suited for passive investors.
Money is put in an index and is not managed by a fund manager.
In this fund type, the identification of stocks and the corresponding ratio is considered and then the money invested is put in a similar proportion and in similar stocks.
They cannot outdo the market and that’s why not much popular in India.
Funds of Funds
These are multi-manager mutual funds and diversified in nature.
They put money in diverse fund categories.
It involves buying a single fund that can invest in many funds.
Like this, it achieves diversification as well as save on costs.
Emerging Market Funds
Investing in an emerging market is considered to be a risky option as it has given negative returns too.
India is itself an emerging market and in order to gain high returns, investors often fall prey to market levites.
In a long-term perspective, they are helpful and contribute to the growth of the country.
International Funds
It is for investors who want to spread their investment to other countries.
This fund helps them in getting good returns.
The concentration of International fund is solely on the foreign market.
Global Funds
Global funds are different from those of International funds.
It includes both – investment markets worldwide and investment in your home country.
They are quite risky as it goes through different policies, approach, variations, market, etc.
Investing in this market has historically given high long-term returns and acts as a break against inflation.
Real Estate Funds
Investing in real estate comes with high risk and people avoid investing in these.
An investor just puts his money in an already established real estate companies indirectly, making him a participant in the investment.
It is a long-term investment.
It negates risk factors in purchasing a property and has the liquidity to some extent.
Commodity-Focused Stock Funds
It is suitable for investors who can easily take risks and looking to diversify their portfolio.
They give a chance to invest in multiple and diverse trades.
Returns are not periodic.
It is either based on the performance of the stock company or the commodity itself.
The only mutual fund which can invest directly in India is gold.
Market Neutral Funds
This is for the investors who want protection from unfavourable market tendencies and it offers good returns as well.
This is useful for small investors also.
They come with better risk-adaptability.
Inverse Funds
It is best suited for investors who are looking for diversified trades and have a high-risk appetite.
No periodic returns are there.
Returns are based either on the commodity of the performance of the company with which stocks are invested.
Asset Allocation Funds
These are greatly flexible funds as they combine debt, equity, and gold in a ratio.
They are helpful in regulating the equity-debt distribution.
It requires great expertise in allocating and in choosing the stocks and bonds from the fund manager.
Gift Funds
These funds can be gifted to anyone to secure their financial needs in the future.
Exchange-Traded Funds
It is from the Index funds family.
It is a fund type which is bought and sold on exchanges.
It has unlocked a world of investment prospects.
It gives investors exposure to stock markets and specialized sectors.
It can be traded in real-time and it falls and rises many times a day.
The term “regulation” means a rule or directive made and controlled by an authority.
Mutual funds are regulated by the Securities and Exchange Board of India (SEBI).
In 1996, SEBI formulated the Mutual Fund Regulation.
SEBI is additionally the apex regulator of capital markets and its intermediaries.
The issuance and trading of capital market instruments also come under the purview of SEBI.
Along with SEBI, mutual funds are regulated by RBI, Companies Act, Stock exchange, Indian Trust Act and Ministry of Finance.
RBI acts as a regulator of Sponsors of bank-sponsored mutual funds, especially in the case of funds offering guaranteed returns.
In order to provide a guaranteed returns scheme, a mutual fund needs to take approval from RBI.
The Ministry of Finance acts as a supervisor of RBI and SEBI and appellate authority under SEBI regulations.
Mutual funds can appeal to the Ministry of finance on the SEBI rulings.
Who regulates mutual funds in India
Primarily, mutual funds are regulated by the Securities and Exchange Board of India (SEBI).
A mutual fund should have the approval of RBI in order to provide a guaranteed returns scheme.
The Ministry of Finance acts as a supervisor of RBI and SEBI and appellate authority under SEBI regulations.
The Association of Mutual Funds in India (AMFI) has been made to develop this Mutual Fund Industry of India on professional and ethical lines and to enhance and maintain standards in all areas with a view to protect and promote the interests of mutual funds and their unitholders.
Advantages of mutual funds
It offers you professional management. Through mutual funds, investors get access to the professional money managers who have expertise and experience in the field of buying, selling and monitoring investments by the investors.
It helps you in holding a wide variety of shares at a much lower price than you really could own by yourself. If one investment in the Fund decreases in value that does not mean that the other will also be decreased, it may increase as well. By holding shares in the market you can take advantage of the changing environment in the industry. It helps in diversification.
It gives opportunities to the small investors to take part in the professional asset management and they can have low investment minimums.
Most of the mutual funds allow investors to deal with shares on any business day. Many funds provide you with an automatic purchase program. It is according to the convenience of the investors and helps them in gaining the best out of the money invested.
Mutual fund benefits
There are various benefits of investing in Mutual Funds, such as:
The higher level of diversification since the basket of a portfolio will be aimed at spreading the investment in order to offer protection against concentration risks.
They provide regular liquidity as shareholders of open-ended funds and unit investment trusts may sell their holdings back to the fund at regular intervals at a price equal to the NAV of the fund’s holdings.
Managed by professional investors who have rich experience in investment and can understand the nerves of the market.
Since mutual funds are regulated by a Government body i.e. AMFI in India, it offers protection and comfort to the investors before considering investment opportunity.
All mutual funds are required to report the same level of information to the investors which makes it relatively easier for comparison in case of diversification.
These funds provide regular reports of their performance and are also easily available on the internet to understand past trends as well as the strategies implemented.
Investing mutual funds in India
After submitting an application form along with a cheque or bank draft at the branch office or designated Investor Service Centres (ISC) of mutual Funds or Registrar & Transfer Agents one can invest in mutual funds.
Investment can also be made online through the websites of the respective mutual funds.
One may also invest through a Mutual Fund Distributor registered with AMFI or choose to invest directly.
A Mutual Fund Distributor can be – an individual or a non-individual entity e.g. Banks etc.
Association of mutual funds in India
The Association of Mutual Funds in India has been established to develop the industry of Mutual funds in India. Its aim is to make this industry on professional, ethical and healthy lines. This is done to enhance this industry and maintain standards so that the interests of the shareholders are promoted and protected.
AMFI was incorporated on 22nd August 1995 as a non-profit organization.
It is an association of SEBI registered mutual funds in India of all the registered Asset Management Companies.
AMFI Registration
Who can apply for registration?
Only the below mentioned people can apply for the AMFI Registration Number (ARN).
Any postal agent.
The minimum age for obtaining ARN is 18 years.
Any class III and above and equivalent, retired government official or semi-government official who has served for not less than 10 years.
Retired teachers with not less than 10 years of service.
Retired banking officers with not less than 10 years of experience.
Any agent or intermediary who is engaged in the distribution of financial products such as FD agent, insurance agent, etc. But it must be registered with any other regulator of Financial Services.
Appointed business correspondents by banks.
Persons who are 50 years of age or above.
Any other person including students who have NISM Certificate by passing the NISM V-B exam.
No distributor should have more than one ARN card.
Requirements for registering with AMFI
They need to submit a self-attested copy of identity proof and address proof as stated in KYC application form.
For new cadre distributors, a self-attested copy of the NISM certificate is required.
If the person is a student then he needs to submit the Certificate of passing the exam NISM series V-B.
Allotment of ARN
After the proper scrutiny of the documents a photo identity card which contains a unique ARN, Employee Unique Identity Number (EUIN) indicating validity period would be issued to the applicant.
After this, they can approach AMCs.
Now, one can sell units of mutual fund schemes as given in SEBI Circular dated September 13, 2012.
Renewal of ARN
An ARN must be renewed on or six months before the expiry date of the ARN.
For this, you need to pass the V-B examination which is designed for new cadre distributors by NISM.
Mutual fund investment online
Through the online portals go to the website of the AMCs in whose mutual fund you want to invest.
Create a portfolio there in AMCs.
The options you will get there are – “Direct” or “Through Distributors”.
If you want to invest directly then click on ‘Direct’ option if you want to invest through distributors then click on ‘Through Distributors’ option.
You need to fill the application form and select your option in both the cases if it is direct or through distributors.
To make your investments you have to log in to AMCs.
Mutual Funds RBI
The Reserve Bank of India (RBI) was established in 1935 through the Reserve Bank of India Act, 1934. It is the apex bank of the country. Its function is to formulate and regulate monetary policies, thus, plays a key role in maintaining stability and ensure the smooth flow of credit in all the productive sectors of the country. It has prescribed a code of conduct for banking and financial systems within the country.
The guidelines of the RBI for Mutual Funds are as follows:
The mutual funds which deals exclusively with the money market need to be registered with RBI and all the other schemes require registration with SEBI.
RBI regulations for NRIs investing in India are:
A mutual fund other than deposits and bank accounts must be invested in units of domestic mutual funds.
All the other investments must be invested in units of money market mutual funds and domestic mutual funds in India.
RBI supervises the operations of funds that are owned by banks.
Any issue regarding the AMC’s ownership by banks is regulated by RBI.
Sebi guidelines for mutual funds
Mutual funds are regulated by the Securities and Exchange Board of India (SEBI). SEBI formulated the Mutual Fund Regulation in the year 1996.
These regulations and guidelines must be followed in order to set up a mutual fund and maintaining it.
How to get registered as a Mutual Fund?
After an investor fills the application for registration as a mutual fund, the SEBI will guide him step-by-step after that.
During the process of registration, all the replies are sent within 21 working days from the date of each communication.
The total time required for registrations depends on how fast the communication is with the applicant of the fund.
For the purpose of getting a certificate of registration, the following must be fulfilled by the applicant:
The sponsor of the fund should have a soundtrack record and general reputation of fairness and integrity in all his business transactions.
The ‘sound track record’ means:
The sponsor should have a business in the field of finance for not less than 5 years.
In the preceding 5 years, the net worth is positive.
The net worth in the previous year should be more than the contributed capital of that sponsor in the AMC.
After providing for depreciation, interest, and taxes the sponsor has profits left in all the preceding years including the last year i.e. 5th year.
The person who is applying for the fund is fit and proper.
If there is already an existing fund, such funds should be in the form of trust and the board must have approved the trust deed for the same.
The sponsor contributes or has contributed not less than 40% to the AMC. only the person who holds 40% or more of the net worth, shall be considered as a sponsor and will be allowed to fulfil the criteria specified in the regulation.
The sponsor, any principal officer to be employed by a mutual fund or its Board of Directors should not have been guilty of fraud or any other offence which involves moral turpitude or any economic offence.
The appointment of trustees should be according to the regulations.
The appointment of Asset Management Company should also be in accordance with the regulations given.
The appointment of the custodians to keep securities and perform various other functions, as may be authorized by the trust.
Important SEBI Regulations for mutual funds
For a mutual fund, the AMC set up should consist of 50% independent directors, a separate board of trustees company with 50% independent trustees and independent custodians so that some distance can be managed between fund managers, custodians, and trustees.
As AMC manages the funds and trustees hold the custody of all the assets. A balance must be maintained between them so that both can keep a check on each other.
SEBI takes care of the Sponsor, financial soundness of the fund and probity of the business while granting permission.
Mutual funds must adhere to the principles of advertisement.
In the case of an open-ended scheme and closed-ended scheme, the minimum of 50 crores and 20 crores corpus is required as per the guidelines of SEBI.
A mutual fund should invest the money raised for these savings schemes within 9 months.
By this, the funds do not get invested in bullish markets and suffering from poor NAV also reduces.
The maximum amount that a mutual fund can invest in the money market is 25% in the first 6 months after closing the funds and 15%of the corpus after six months so that short-term liquidity requirements can be met.
SEBI checks mutual funds every year in order to make it in compliance with the regulations and guidelines.
Are Mutual funds allowed to do cryptocurrency trading?
Cryptocurrency is a digital currency that is not monitored by any central authority. It is a medium of exchange that uses cryptography for making and securing transactions and to manage new units. It has no legal sanction and is not backed by the government.
In the case of Tata Consultancy Services v. State of Andhra Pradesh, the Court stated that a commodity means a good of any kind which can be used or is an article of commerce. Hence, Cryptocurrency can be seen as a commodity. Allowing cryptocurrency in trading would mean to legalize commodity derivatives trading by mutual funds.
Advantages of using cryptocurrency for mutual funds
The use of cryptocurrency in trading has multiple benefits as all the transactions as it gets recorded in a public ledger.
It ensures secure legal transactions.
It requires fewer efforts and promotes instant settlements.
RBI’s stand on the use of cryptocurrency in mutual funds
At present, RBI does not consider cryptocurrencies good for investing in mutual funds.
It regards it as a violation of the country’s existing foreign exchange norms.
It comes with regulatory risks, hacking issues, scalability problems, etc.
The sale of cryptocurrency is anonymous and it may be used in illegal financial transactions.
Will it be helpful to allow transactions using cryptocurrency in India?
The use of cryptocurrency can be allowed only to some selected financial institutions such as mutual fund industry which have expertise in dealing with trades related to cryptocurrency.
In India, the majority do not have access to internet services, in order to be at the safer side, the transactions in cryptocurrency should be allowed only to such organizations which can maximise their profit using this method.
The RBI must set some strict KYC rules for this purpose.
The transactions done through cryptocurrency can be taxed whenever it gets mined or transferred.
After following all these steps the transactions in cryptocurrency can become safe in India.
Can NRIs Invest in Mutual Funds
In India, NRIs can invest in mutual funds and it can be done according to the preference of the investors. It can be made on a repatriable basis i.e. invested in units of domestic mutual funds or can be done on a non-repatriable basis i.e. in units of money market mutual funds and domestic mutual funds in India.
The RBI has granted permission to offer mutual funds schemes on repatriation basis but with the following terms & conditions:
It should be made in accordance with the regulations mentioned in the Securities and Exchange Board of India.
The NRI investor’s amount representing the investment should be received through banking channels or by debit to his FCNR/NRE account.
A dividend and maturity proceeds of units represented by the net amount should be through banking channels or the FCNR/NRE account of the investor and is subject to payment of the applicable taxes on the same.
The RBI has allowed making investments on a non-repatriable basis but with certain conditions. These funds should be given by debit to National Reconnaissance Officer (NRO).
An NRI does not require any approval for investing in India.
The UTIs/ Government securities can be sold or transferred to NRIs but it should be arranged through an authorized dealer.
Only UTI can repurchase.
If an NRO account is used in purchasing funds then it can be remitted abroad.
NRIs are allowed to acquire shares of the units of domestic funds or Indian companies by the portfolio investment scheme.
An overall of 5% paid-up share capital is there for each series of convertible stocks purchased by NRIs/OCBs.
There is no ceiling for investing in domestic mutual funds.
The approval from the RBI for units of Domestic mutual funds in India is value for 5 years from the date of issue and can be reviewed by a simple letter.
Conclusion
Mutual funds pave a way to maximize the earnings for future financial needs. The use of cryptocurrency should be allowed in mutual fund investments so that it becomes easier for investors to make instant transactions. The use of cryptocurrency, though, is illegal according to the Foreign norms of the country but it should be considered as it will help in developing the mutual fund industry in India.
This article is co-authored by Pooja Kapur, a 5th-year law student from Amity Law School, Noida and Yash Jain, a third-year student of Institute of Law, Nirma University. The article discusses the concept of cybercrime complaint and how to file a cyber crime complaint both offline and online.
What is Cyber Crime?
Any activity being unlawful in nature which involves the use of any network or networked device or computer as a means to commit such activity is known as cyber crime. It can be inferred from the definition that “computer” is the main element which is either used as a tool for directly committing a cyber crime or can be used to target other computers or devices. The former category which requires computer as a direct weapon involves the committing of crimes like cyber terrorism, pornography, Intellectual Property Rights Violations etc. Whereas in the latter category crimes like hacking, virus attacks etc are committed.
The misuse of advancement in technology is paving a way for more criminal activities to be committed and in particular criminal misuse of information technology such as-
Types of Cyber Crimes
Image source- http://bit.ly/2Ixc5KC
Hacking
Access is basically a means or an opportunity to approach or enter a place or a way etc. it further involves instructing or communicating with the resources of a computer device like logical resources, arithmetical resources, memory function resources etc. A person makes unauthorised use of or access to the computing device of the other person when he does that without taking the permission of the actual owner of the device.
Hacking, on the other hand, is an act of breaking into the network or computer of the other person. It also involves stealing the credit or debit card information or other bank details for making personal monetary gains.
Vladimir Levin a Russian programmer with a computer software firm in St. Petterburg managed to get access and stole millions of dollars in 1995 from citibank network.
Trojan attack
Trojan or a trojan horse is normally disguised as a legitimate software which is employed by the person committing cyber theft or by hackers as well to gain access to and extract information of the systems of other users. It enables the cyber criminal to have access to the sensitive information of the legitimate user, spy on them and have a backdoor access on their systems. It also includes deleting, modifying, blocking and copying data along with disrupting the performance of various computer systems. Trojans can attack a legitimate owner in various ways based on the action performs, thus, it is classified as follows-
Backdoor – it acts like a remote control and authorises the hacker to have a control in the infected network or computer. It can involve sending or deleting files and also rebooting the computer.
Trojan- banker- it is used for stealing the legitimate owner’s bank or account details, which includes the details of credit and debit cards as well.
Trojan downloader- it helps in installing and downloading a new version of malicious software in a particular computer.
Trojan spy- it helps in tracking data or getting a list of applications etc.
Example of Trojan
A trojan named as Zbot has infected more than 37,000 computers in the United Kingdom through a drive by download. Users visiting a compromised site would unknowingly receive the virus as a cookie and then it steals all the data of the users.
Virus and worm attack
Virus is the programme which has the capability of infecting the other programmes. It also has the capability to make copies of itself and spread it into other programmes. Worms are programmes which help in multiplying like viruses and spread it from device to device.
Example of Virus and worm attack
A virus named Melissa is considered to be the most damaging virus ever released. It was the fastest spreading email-based worm ever. Melissa lured people by claiming in an email that it contains the list of passwords for pornographic sites and when the message opened it created havoc on the computer systems.
Identity theft
Identity theft is one of the most common and prominent forms of cyber crime in which a person committing the crime steals the information of the other person by the use of the internet. There is a broad scope of criminal activities under the purview of cyber crime.
Internet acts as a great source of making things accessible easily without moving from one place. Though the internet at one point is proving to be a boon in today’s scientifically updated community but on the other hand, it is unfortunate that some people are indulging in unlawful activities by committing cyber crimes and making misuse of the technology.
Example of Identity Theft
Abraham Abdallah duped several credit score companies into providing them with information, and then steal millions of dollars from America’s richest people including Warren Buffet and Steven by using their identity.
Image Source – https://www.financialexpress.com
Email related crimes
Email spoofing
This is a fraud act which makes an email to appear originating from a particular person and from a particular place which in reality is not the original source. Thus, as the message appears to be from one source which is actually not an original source. With the help of a working Simple Mail Transfer Protocol, an email spoofing can easily be achieved. The recipient can inspect the email source code to check whether the email is spoofed or not. Also, the recipient can track the IP address of the email and trace it back to the original sender.
Email spamming
Spamming is a deliberate act of sending email to a large number of people in the similar to a chain letter and to use network resources. It can be combined with email spoofing.
Email booming
In this identical email messages are sent to a particular IP address by the abusers on repeatedly.
Phishing
It is a type of cyber crime in which the hacker sends the URLs and email attachments which are malicious in nature to the users. The purpose of the hacker in phishing is to gain access to systems of legitimate users. The users get trapped into the trick played by the hackers who send the emails claiming the user the need to change their password or update their account information which easily gives access to the criminals of their system.
The purpose is to extract personal information like passwords, credit and debit card numbers etc. Criminals have an objective of gaining access to the login credentials of the real owner of the system, network or device etc. through this kind of attack. By being cautious of these kinds of suspected email attachments the user can protect itself from the phishing attack and at the same time protect its personal information.
The scammers may try to trap a person in this scam by claiming fake information that unauthorised or suspicious activity is happening on a particular person’s account.
HDFC Bank guidelines on Cyber Crime
How to avoid phishing scams?
The guidelines to avoid phishing scams by HDFC Bank are followed as-
Identify signs of fraud
To know about phishing websites and email, you need to look carefully on the subject matter which is delivered by the websites or email as in phishing websites and email will often be riddled with grammatical errors and fake branding.
Inspect a website before interacting with it as look at the URL or website address closely. As you will never see a misspelling in the bank name and a genuine bank website address will always be prefixed with ‘https’. That is an indication that all communication between your browser and the bank’s website is encrypted.
Click cautiously
Another way to identify phishing websites or email is most phishing sites spread their reach on the internet by posting flashy and lucrative links on websites with high user traffic. It is advisable to inspect links before interacting with them because clicking on them can seriously compromise your security. If you find anything suspicious then do a quick web search to identify the bank’s official website address or URL.
Exercise caution
The best way to avoid phishing is to become more and more cautious by using only trusted and genuine software and services when banking online. Access websites only through official links and sources, and follow proper security procedures.
Also, check if the website is secure by inspecting its URL for the SSL certificate and also it is advisable to have two devices – one for work and one for personal use- so that the security of the work device is never compromised.
How to recover from a phishing attack?
The guidelines to recover from a phishing attack by HDFC Bank are followed as-
Change all your passwords
The first step you should take to keep the damage minimum from phishing is to change your login credentials and passwords. Since the scammer could have access to all your accounts so it is advisable to change your credentials and passwords as soon as possible and to keep them out of the system and prevent further damage.
Contact the officials
The next important step would be to call your bank and explain the situation to them. As by informing them they will then freeze your account so that no further transaction can be conducted. After informing your bank officials it is also advisable to inform the cybercrime division as most states have a cybercrime division.
Scan your system
The third important step to recover from a phishing attack is to scan your system to ensure the attacker did not install any malware or backdoor software on the device for future attacks.
Delete emails from unknown sources
It is also advisable to the customers to go through your inbox once a week and delete marketing mailers and emails from unknown sources.
If you ever find yourself at the receiving end of a phishing scam, don’t panic because even the most complicated attack can be resolved with the help of your bank and the police authorities. Above all, remember to exercise caution in all your online transactions.
The word itself indicates that it is an act of defaming the other person online in front of the whole world. The purpose of this is to tarnish the reputation or lower down the image of the innocent person. It disrupts the online communication.
Cyberbullying
when an unknown attacker uses the electronic form of media or internet to post photos, videos, texts, messages of such type which can be embarrassing in nature. It is a form of harassment which involves the use of some harsh terms to affect the victim fully.
The intention is to insult the victim publicly. Posting humiliating rumours, nasty comments, posting hate comments to trigger the political, religious and ethical beliefs or point of views of the people are some of the types of cyberbullying.
Steps to prevent Cyberbullying
Today’s generation has grown up using technology and is well versed with it. So it is essential to keep a check on them and it is the duty of the parents to keep a check on the activities of their children. Because the teenagers have less maturity and understanding to make a difference between what is right and what is wrong that is the reason why they are more vulnerable to cyberbullying and that is why it is crucial for parents to have a constant check on the activities of their children while they use the internet.
There are various warning signs to be looked upon to check whether the person at your place is bullied or might be bullying someone. These signs are as follows-
Time fluctuation in the use of phone or laptop by an adult or child,
The tendency to avoid healthy discussions online,
Hiding of profile from others,
Indifferent behaviour towards social activities.
Signs of becoming stressed or depressed etc.
After observing all the warning signals if there is a situation of the person facing cyber bullying then it is essential to report the case to the cyber crime cell as soon as possible.
The steps to prevent cyberbullying are followed by as-.
Step 1: Educate yourself
If you want to prevent cyber bullying then it is very important for you and for your children to understand what exactly it is.
Step 2: Protect your password
To prevent cyber bullying it is also very important for the netizen that you must safeguard your password and all private information from curious peers. Never ever give bullies the opportunity to post anything embarrassing about yourself.
Step 3: Raise awareness
It is the responsibility of all parents and individuals to bring awareness to cyber bullying whether it be through a movement, a club an event or campaign.
Step 4: Setup privacy controls
Change your privacy controls and restrict who can see your profiles to only trusted friends.
Step 5: Never open messages from people you don’t know
There is an old saying that ‘precaution is better than cure’ never open messages from people you don’t know, delete them without reading them as they could contain viruses and infect your computer. It is best to not engage and ignore them.
Step 6: Always log out of your accounts on public computers
Staying logged in public computers you run the risk of the bully changing your password and locking you out for a period of time. So, don’t give anyone the slightest chance to pose as you or to share false information.
Step 7: Don’t be a cyber bully
We cannot see the change in society until and unless we promised to change ourselves. It is your responsibility to treat others as you want to be treated. If you find someone getting cyber bullied then help him and don’t become a cyber bully.
Ransomware
It is a form of malware or malicious software which after taking control of the computer restricts the person to access his own system. To prevent the system from ransomware infection it is essential to defend one’s own system by keeping it updated and by installing the software only after knowing every detail about it. Such defensive steps shall be necessarily taken into consideration.
Installing anti-virus software is another defensive step which helps in detecting such malicious software. Keeping a back-up of documents and files is really important and automatic back up shall also be done.
Cyberstalking
The term stalking refers to keeping a check or surveillance on some particular person by an individual or a group of individuals. When it is done through the means of the internet or by following the other person constantly on his/her social media account then it is known as cyberstalking. It often takes a form of harassment and is overlapping with cyberbullying.
There were no specific laws dealing with cyberstalking prior to February 2013 amendment. But the scenario has changed after this year. Section 354D of Indian Penal Codedeals with providing punishment for cyberstalking. According to this provision any man who repeatedly follows or contacts a woman or tries to do so for the purpose of fostering personal interaction despite clear indication by a woman showing her disinterest or who monitors the internet, email or other forms of electronic communication used by a woman, then it amounts to the offence of stalking.
There is an exception to this section that stalking done for following purposes will not be liable to punished under section 354D –
If a man pursued it for the purpose of preventing or detecting crime and the man accused has been entrusted with the responsibility of preventing and detecting the crime by the State; or
It was pursued under any law or to comply with any condition or requirement imposed by any person under any law; or
In particular circumstances such conduct was reasonable and justified.
Steps to prevent yourself against cybercrime
The steps to prevent yourself against cybercrime are followed as-
Step 1: Use a good internet security suite
There are many good internet security suite available in the market. Just buy the premium version of any security suite which helps you to protect your financial information whenever you go online.
Step 2: Use strong passwords
It is advisable to change your passwords regularly and don’t repeat your passwords on different sites, always try to make them complex like using a combination of at least 12 letters, symbols and numbers.
Step 3: Keep your software updated
Whenever your system ask you to update your software always update it. As cybercriminals frequently use known exploits, or flaws, in your software to gain access to your system. When your system software is updated then there are less chances that you’ll become a cyber target.
Step 4: Manage your social media settings
It is advisable to keep your personal and private information locked down because cybercriminals can often get access to your personal information with just a few data points, so the less you share publicly, it better would for you.
Step 5: Strengthen your home network
It is advisable to use a strong encryption password as well as virtual private network. Use a VPN whenever you use a public wifi network, whether it is a cafe, hotel, airport or library.
Step 6: Know what to do if you become a victim
The first thing you can do is to identify what kind of cybercrime has been committed then, the next thing is you need to alert the cyber cell of your city in case, if you don’t have any cyber cell in your city then you need to alert the local police. It is important even if the crime seems minor because it may prevent such criminals from taking advantage of other people in the future.
In the past decades the advancement in technology and the number of internet users have grown at a great pace and upto a great extent. With the increase in use of internet it is obvious that there will be cons for the excessive use as well. In lieu of the excessive use certain crimes online are also committed and thus, for the protection of the victim it is necessary to have provisions for registering the complaint and intimating the officials about the commission of the crime for punishing the accused.
Step 1
One can submit the complaint for cyber crime both offline and online. Cyber Cell India is the department which deals with the online and offline cyber complaint and thus, the first step is to report the complaint to this department. One can also give a call on cyber crime helpline number. You can visit here to file an online cyber crime complaint.
Step 2
A written complaint has to be filed with the cyber crime cell by the victim in the city he or she is in. But since, cyber crime comes under the purview of the global jurisdiction thus, it is implied from this that one can file a cyber complaint in the cyber crime cell of any city irrespective of the fact that the person originates from some other cities in India.
Step 3
Following information is required to be given by the victim at the time of filing the complaint with the cyber cell-
Name of the victim/person filing the complaint,
His contact details,
Address for mailing.
The written complaint shall be addressed to the head to the department.
Step 4
In case of no access to the cyber cell India, one can report the matter to the local police station by filing a First Information Report. If the complaint due to any reason does not get accepted in the police station then in that case one can approach the judicial magistrate or the commissioner.
Step 5
One can also file a First Information Report under the provision of the Indian Penal Code if the offence falls under this Code. it is an obligation of every police officer to lodge the complaint as it has been made mandatory under section 154 of Code of Criminal Procedure.
Since most of the cyber crimes under the Indian Penal Code are classified under the category of cognizable offences, thus, there is no requirement of any warrant for arresting the accused because cognizable offences are those offences in which for the purpose of carrying out the investigation or for making an arrest there is no requirement of any warrant.
The Ministry of Home Affairs is in lieu of establishing and launching a centralised online cyber crime registration portal. The purpose is to remove the requirement of moving to the police station for lodging any cyber crime complaint.
An online portal for registration of Cyber crime online has been launched by the Cyber crime cell of the Delhi police.
The purpose of filing cyber crime complaint is to punish the offender and at the same time to prevent the further commission of such kind of crimes.
Step 1
The foremost step is to lodge a complaint against cyber crime and the person who committed it with the cyber police or with the cyber cell India. Various departments for investigating crimes in various cities have been established by the cyber crime cells. These departments not only investigate the crime but they also take the charge of getting the crime reported in time. The victim can at anytime make a complaint to the cyber police or with the crime investigating department of the cyber cell both through online or offline method. One can also give a call at cyber crime helpline number.
Step 2
At the time of filing the complaint an application stating proper description of the complaint along with the details of the victim i.e name, address and a contact number, has to be addressed to the head of the cyber crime investigation cell.
Step 3
One requisite while registering the complaint is to attach or annex the documents which support the facts of the case fully. The type of documents required to be attached at the time of registering the cyber crime complaint depends on the nature of cyber crime committed.
Documents required to file a complaint
Documents required to be annexed while reporting a complaint about hacking
Server logs
if the website of the victim has been defaced, then both soft copy and hard copy of defaced web page.
a soft copy of original data and the compromised data, if the data has been hacked on either victim’s computer, server or any other equipment.
Details like, name of the accused/person who accessed the victim’s computer system or his email for accessing the victim’s computer or email.
There can be chances that a victim might find some person suspicious, then the list of people who he found to be suspect.
Other relevant information to answer the following questions –
Which data was compromised and who might be responsible for doing that?
At what time did the system compromise and what was the reason for system compromise?
Where is the impact of the attack-identifying the target system from the network?
How many systems did get compromised by the attack?
Documents required for filing complaint against vulgar emails
Headers of email which is offending.
Both soft and hard copy of offending email/emails.
Copy of offending email from your inbox and one from the hard drive.
Documents required for filing a complaint against social media based complaints
A copy clearly showing the alleged profile.
Copy showing the URL of the alleged content or profile.
Both hard and soft copy of the alleged content.
Soft copy to be provided in a CD-R.
Documents required for filing a complaint against Net banking/ATM Complaints
Copy of Bank statement from the concerned bank of last six months.
Copy of SMSs received related to the alleged transactions.
Both copy of your ID proof and address proof as shown in the bank records.
Documents required for filing a complaint against business emails
A brief clarifying the offense in written,
name and location of origin,
bank name and account number of origin,
name of the recipient as er his/her bank records.
bank account number of the recipient.
bank location of the recipient, this is optional.
Date of transaction.
Amount of transaction.
SWIFT number.
Documents required for filing data theft complaints
It is required that copy of the data which stolen has to be filed.
The certificate showing a copyright over the allegedly stolen data, i.e, copyright certificate of the stolen data.
Details of the employee/ employees who are suspected.
Letter of Appointment of the suspected employee
Non-disclosure Agreement of the above said employee.
Assigned list of duty.
List of clients handled by the suspects.
The proof that the copyrighted data has been breached.
Devices used by the accused during his/her term of service.
Cyber Crime Complaint Letter Format
There is no separate format for filing the complaint for a cyber crime. One has to write a normal letter specifying all the details about the crime and file it with the nearest police station. Documents necessarily required to prove the crime have to be annexed with the letter. List of documents required to be annexed depends from the type of cyber crime committed. It can be social media crime, or a mobile application crime, cyber bullying etc. thus, the list of these according to the type of crime committed have been mentioned in this article itself. Below the general format of cyber crime complaint has also been provided.
General format of cyber crime complaint
To,
The DCP/SP
Place: Room No. – 107, Ist Floor,
PS Saket, New Delhi – 110017
Date:
Sub: Complaint under Section 66C of the Information Technology Act, 2000
Sir,
(Facts and circumstances of the case)
Regards
Mr. X
Mobile No. 84********
How to file a complaint for cyber stalking
Register a written complaint to an immediate cyber-cell in the city.
Where cyber-cells in the city are not available then one can file a First Information Report in the local police station.
Refer the complaint to the commissioner or judicial magistrate of the city, in the case where the complaint has not been accepted by the police station.
If a woman is entitled to have a legal counsel to help her in filing a case wherein she approaches to the police station with an allegation of cyber-stalking. This is the form of Legal Assistance given to her.
The victim’s statement of the victim to be taken down in private, that is, maintaining his/her privacy.
How to file a complaint for cyber bullying
The Ministry of Women and Child Development on Thursday launched a separate helpline to file a complaint against abusive behaviour, harassment and hateful content on social media. Information Technology Act, 200 and some provisions of Indian Penal code as well deals with the prevention of cyberbullying. The complaint can either be filed online or in the nearest police station through submitting a written complaint.
How to file a complaint for cyber stalking
The procedure to file the complaint for this type of cyber crime is the same as that of other cyber crimes. Only difference is in the description of the crime committed in the letter and the documents annexed according to this crime.
How to file a complaint for cyber defaming
The procedure to file the complaint for this type of cyber crime is the same as that of other cyber crimes. Only difference is in the description of the crime committed in the letter and the documents annexed according to this crime.
Cyber Crime Complaint for facebook
Any crime committed on facebook, which is a social networking site can made online on cyber cell India. It can also be filed through an offline mode in the nearest police station by writing a letter and annex all the documents required to be given when a social media crime is committed. A link is attached where a cyber crime can be reported online and it is as follows-
Any crime committed on whatsapp, which is a social networking site can made online on cyber cell India. It can also be filed through an offline mode in the nearest police station by writing a letter and annex all the documents required to be given when a social media crime is committed. A link is attached where a cyber crime can be reported online and it is as follows-
I, introduce myself as Mr. X son of Mr. Y, resident of ABC colony Saket aged 21 currently studying at Lingya Academy School Saket. I am obliged to report you the criminal act of abusive comment on social media by the accused person named Mr. A son of Mr. B, resident of N Block Okhla Vihar Abul Fazal who has posted hostile remark on social media against me which is horribly hostile and has threatning character. The said individual very surely understands that such information is false and has posted the same to cause irritation, bother, peril, obstruction, affront, damage, criminal terrorizing, ill will, scorn and hostility. He is perseveringly doing such acts by utilizing computer resource and other gadgets (Mobile) for sending such message.
The said individual has flowed the said hostile and false material on the web which is visible at ( provide the details of the web portal or platform where the message has been posted). The hostile material is not only false but silly, defamatory, abusive and insinuative and has been done with the intention to affront and criticize me and cause an embarrassment by defaming and slurring my character. This adds up to causing defamatory comment on social media and several persons have already asked me about the same believing the same to be true. This has been done with the intention to stigmatize and harm my character and reputation and cause damage to my character. The aforesaid person is liable for prosecution for offensive comment on social media and other offenses.
I would request you to promptly investigate into the aforesaid offences, against the person and take strict action against him in law.
Copy of a snapshot along with the printout of the said offensive message and material is being enclosed herewith for your perusal and action.
Thanking you in advance for your efforts.
Regards,
Mr. X
Mobile No. +91 84********.
Cyber Crime Complaint for Identity Theft
The procedure to file the complaint for this type of cyber crime is the same as that of other cyber crimes. Only difference is in the description of the crime committed in the letter and the documents annexed according to this crime.
Identity Theft Complaint Format
To,
The DCP/SP
Place: Room No. – 107, Ist Floor,
PS Saket, New Delhi – 110017
Date: 3 July 2019
Sub: Complaint under Section 66C of the Information Technology Act, 2000
Sir,
I, introduce myself as Mr. X son of Mr. Y, resident of ABC colony Saket aged 24 currently employed at iPleader near Lingya Academy School.
Sir, someone has used my identity to engage in the following types of fraudulent manner:
Credit Cards
The following is a description of the identity theft incident: Two charges were made to my Axis Bank credit card within the last two weeks that i never authorized. One charge was for clothes purchased at H&M in Select CityWalk on June 23rd 2019 and the other charge was for two movie tickets purchased at DLF Place Saket Mall Theatre on June 27th 2019. The thief charged, in total, INR 6,000 to my credit card account.
I become aware of this theft when i received and read my monthly statement on June 30th, 2019.
I have also experienced the following problems as a result of the identity theft:
I have lost 5 hours of my time due to the identity theft and faced mental trauma. I don’t know if the identity thief used the internet to open accounts or purchased goods or services.
I would request you to promptly investigate into the aforesaid offences, against the thief and take strict action against him in law.
Copies of required documents has been attached with the complaint for your perusal and action.
Thanking you in advance for your efforts.
Regards,
Mr. X
Mobile No. +91 84********
What to do if cyber cell refuses to accept your complaint?
If cyber cell refuses to file or accept your cyber complaint one can directly approach the nearest judicial magistrate stating the fact that the complaint has not been accepted under any circumstances.
Sample complaint to magistrate (where police doesn’t register FIR) for directions to commence an investigation
IN THE COURT OF [JUDGE], [DESIGNATION],
[COURT], DELHI
Cr. Complaint No………/ 2015
IN THE MATTER OF:
[Name of the complainant]…. COMPLAINANT
[ADDRESS]
VERSUS
UNKNOWN …ACCUSED
[Comment: Since the Accused’s Details are not known]
I, [. ], am the Complainant as aforesaid. I am working at a private company [name] and reside at [address]. [Comment: Usually, you will have to furnish the residential address].
On the day of June 30th, 2019, the complainant was shocked when he received and read his monthly bank statement from his bank.
As someone has used complainant identity to engage in the following types of fraudulent manner:
Credit Cards
The following is a description of the identity theft incident: Two charges were made to complainant Axis Bank credit card within the last month that the complainant never authorized. One charge was for clothes purchased at H&M in Select CityWalk on June 23rd 2019 and the other charge was for two movie tickets purchased at DLF Place Saket Mall Theatre on June 27th 2019. The thief charged, in total, INR 6,000 to complainant credit card account.
The complainant has also experienced the following problems as a result of the identity theft:
He has lost 5 hours of daily time due to the identity theft and faced mental trauma. The complainant don’t know if the identity thief used the internet to open accounts or purchased goods or services.
The Complainant therefore submitted information in writing to the Police on 03.07.2019 seeking that an FIR be lodged against the caller under section 66C of the Information Technology Act, 2000 as well as other offences which may be made out. However, the information was accepted by the police but they stated that they would not be able to take action in such a case. Annexed herewith as Annexure A is a copy of the Information in writing along with the receiving of the Saket Police Station dated 03.07.2019.
That thereafter the Complainant has not been intimated of the steps taken in the investigation, nor has he been contacted by the Police in this regard.
[Comment: Section 156(3) has been invoked in this case, as the Complainant seeks the magistrate to direct investigation into the case. In other private complaints which come originally before the Magistrate, only section 200 requires to be invoked]
PRAYER
a) Direct the police to register the complaint and carry out investigation in the present case.
b) Provide remedy to the Complainant.
c) Pass any other order that this Hon’ble Court may deem fit in the facts and circumstances of the case.
Jurisdiction
Information technology Act, 2000 has been dealing with the computer and internet related crimes and according to this act cyber crimes are committed all over the country. Cyber Crime Investigation Cell has the jurisdiction all over the country as per section 1 and section 75 of the Information Technology Act, 2000 which deals in guiding principles concerning cyber jurisdiction and has the power to investigate all such crimes with the jurisdiction Police officer not below the rank of deputy superintendent of police can investigate any offense under this Act.
The central government shall appoint an officer, not below the rank of a Director to the Government of India or an equivalent officer of a state government to adjudicate and inquire the matter.
Those who do not have cyber cell in their districts can file an online complaint on the cyber cell of India.
Cyber policing in India
Crime and Criminal Tracking Network and Systems (CCTNS)
CCTNS is a project under the National e-Governance plan. It direct at creating a nationwide networking infrastructure for an IT-enabled criminal tracking and crime detection system. The project is approved by the cabinet committee on economic affairs in 2009, with an allocation of INR 2 billion.
Online complaints
In order to tackle cybercrime the central government recently announced that they would be setting up a ‘Centre Citizen Portal’. The advantage of this portal is that it will allow citizens to file complaints online with respect to cybercrimes including online financial fraud, cyber stalking and many more. Another feature of this portal is that any complaint on the portal will trigger an alert at the relevant police station and allow the police department to track and update its status. It also allows the complainant to view updates and escalate the complaint to higher officials.
Cyber police stations generally include appropriate equipment to analyze and track digital crimes as well trained personnel. If any person becomes a victim of cyber crime then he/she can file a complaint in a cyber police station and where there is no cyber police station available in the city then in such case complainant can file a complaint in the local police station.
Predictive Policing
It refers to the usage of the mathematical, predictive analysis, data mining and other analytical techniques in law enforcement to identify potential criminal activity. In India, Jharkhand police, Delhi police and Hyderabad city police working on the predictive policing in order to scan online records to study crime trends and in order to prevent crime.
To know more about the cyber crime complaints, please Click Here.
Where does it come from?
Contrary to popular belief, Lorem Ipsum is not simply random text. It has roots in a piece of classical Latin literature from 45 BC, making it over 2000 years old. Richard McClintock, a Latin professor at Hampden-Sydney College in Virginia, looked up one of the more obscure Latin words, consectetur, from a Lorem Ipsum passage, and going through the cites of the word in classical literature, discovered the undoubtable source. Lorem Ipsum comes from sections 1.10.32 and 1.10.33 of “de Finibus Bonorum et Malorum” (The Extremes of Good and Evil) by Cicero, written in 45 BC. This book is a treatise on the theory of ethics, very popular during the Renaissance. The first line of Lorem Ipsum, “Lorem ipsum dolor sit amet..”, comes from a line in section 1.10.32.
The standard chunk of Lorem Ipsum used since the 1500s is reproduced below for those interested. Sections 1.10.32 and 1.10.33 from “de Finibus Bonorum et Malorum” by Cicero are also reproduced in their exact original form, accompanied by English versions from the 1914 translation by H. Rackham.
This article is written by Richa Singh of Faculty of Law, Aligarh Muslim University. In this article, she has mentioned all the provisions of Directive Principles given under Part IV of the Indian Constitution and tried to compare the Fundamental Rights and DPSP and discussed the conflict between them with the help of some important cases decided by the apex court of the country.
Directive Principles of State Policy: Meaning
The Directive Principles of State Policy (DPSP) has been taken from the Irish constitution and enumerated in Part IV of the Indian Constitution.
The concept behind the DPSP is to create a ‘Welfare State’. In other words, the motive behind the inclusion of DPSP is not establishing political democracy rather, it’s about establishing social and economic democracy in the state. These are some basic principles or instructions or guidelines for the government while formulating laws/policies of the country and in executing them.
According to Dr B R Ambedkar, these principles are ‘novel features’ of the Constitution. DPSP acts as a guideline for the state and should be taken into consideration while coming up with some new policy or any law. But no one can compel the State to consider and follow all that which is mentioned in DPSP, as DPSP is not justiciable.
Image Courtesy: https://syskool.com
Part IV of the Indian Constitution
Part 4 of the Indian Constitution consists of all the DPSP (Directive Principles of State Policy).
It covers the Articles from 36 to 51.
Article 36 of Part IV defines the term “State” as the one, who has to keep in mind all the DPSP before formulating any policy or law for the country. The definition of “State” in the part IV will be the same as that of Part III, unless the context otherwise requires a change in it. In Article 37 the nature of DPSP has been defined. DPSPs are non-justiciable.
Article 38 to 51 contains all the different DPSP’s.
The source of the concept of DPSP is the Spanish Constitution from which it came in the Irish Constitution. The makers of the Indian Constitution were very much influenced by the Irish nationalist movement and borrowed this concept of DPSP from the Irish Constitution in 1937.
The Government of India Act also had some instructions related to this concept which became an important source of DPSP at that time.
The Directive Principles of the Constitution of India have been greatly influenced by the Directive Principles of Social Policy.
The Indians who were fighting for the independence of India from the British rule were greatly influenced by the movements and independence struggles of Ireland at that time, to free themselves from the British rule and move towards the development of their constitution.
DPSP become an inspiration for independent India’s government to tackle social, economic and various other challenges across a diverse nation like India.
DPSP and fundamental rights have a common origin. The Nehru Report of 1928 contained the Swaraj Constitution of India which contained some of the fundamental rights and some other rights such as the right to education which were not enforceable at that time.
Sapru Report of 1945 divided fundamental rights into justifiable and non-justifiable rights.
Justifiable rights, the one which was enforceable in a court of law and included in Part III of the Constitution. On the other hand, Non-justifiable rights were listed as directive principles, which are just there to guide the state to work on the lines for making India a welfare state. They were included in part IV of the Constitution of India as Directive Principles of State Policy.
The Constituent Assembly was given the task of making a constitution for India. The assembly composed of elected representatives and Dr. Rajendra Prasad was elected as its President.
Both the Fundamental Rights and the DPSP were enlisted in all the drafts of the constitution (I, II and III) prepared by the Drafting Committee whose chairman was Dr. B.R. Ambedkar.
Sources
The DPSP of the Indian Constitution was inspired by the Irish Constitution which took these details from Spain.
Some Instruments of Instructions, which also became the immediate source of DPSP, have been taken from the Government of India Act, 1935.
Another source was the Sapru Report, 1945 which gave us both Fundamental Rights (justiciable) and DPSP(s) (non-justiciable).
Reflection of Preamble
The Preamble is a brief introduction to the constitution and it contains all the objectives which were there in the mind of the drafters of the Indian Constitution.
According to some scholars, DPSP is ‘the kernel of the Indian Constitution’.
The Directive Principles of the State Policy (DPSP) are the guidelines for the state which it must consider while formulating new laws and policies and it lay down all the objectives which the Constitution seeks to achieve.
The expression “Justice – Social, economic and political” that is mentioned in the preamble is the ultimate aim that has to be achieved through the formulation of the DPSP.
DPSP are enlisted to attain this ultimate aim as mentioned in the preamble i.e. Justice, Liberty, Equality and fraternity are also known as the four pillars of the Indian Constitution. It also enlists the idea of the welfare state which was absent under the colonial rule.
Features
DPSP are not enforceable in a court of law.
They were made non-justifiable considering that the State may not have enough resources to implement all of them or it may even come up with some better and progressive laws.
It consists of all the ideals which the State should follow and keep in mind while formulating policies and enacting laws for the country.
The DPSPs are like a collection of instructions and directions, which were issued under the Government of India Act, 1935, to the Governors of the colonies of India.
It constitutes a very comprehensive economic, social and political guidelines or principles and tips for a modern democratic State that aimed towards inculcating the ideals of justice, liberty, equality and fraternity as given in the preamble. The Preamble consists of all the objectives that needs to be achieved through the Constitution.
Adding DPSP was all about creating a “welfare state” which works for the individuals of the country which was absent during the colonial era.
List of Directive Principles of State Policy
Article
What it says
36
Defines the “state”.
37
Part IV of the Indian Constitution shall not be enforceable in any court of law.
38
Social, Political and Economic Justice.
39
Principles of Policy.
39A
Free Legal aid.
40
Organization of Panchayats.
41
Welfare Government.
42
Securing just and humane work and maternity relief.
43
Fair wages and a decent standard of life.
43-A
Workers’ participation in management.
43-B
Promotion of Cooperatives.
44
Uniform Civil Code.
45
Infant and Child Care.
46
Protection of SCs, STs and other weaker sections from exploitation.
47
Nutrition, Standard of living and public health.
48
Scientific agriculture and animal husbandry.
48-A
Environment and Wildlife Protection.
49
Protection of monuments and places and objects which have national importance.
50
Judiciary should be separate from the Executive.
51
The state shall promote international peace and security.
Article 36
Article 36 contains the definition of State.
Unless the context otherwise requires, the definition of “the State” is the same as it is given in Part III which covers Fundamental Rights.
The definition given in Article 12 shall apply in this part as well which says that the State includes:
The Government of India
The Parliament of India
The Government of each of the States
The Legislature of each of the States
All the authorities whether local or any other which are the part of Indian territory or under the control of the government.
Article 37
Article 37 mentions the two important characteristics of DPSP, and they are:
It is not enforceable in any court of Law.
And they are very basic and essential for the governance of the country.
The provisions mentioned in this part shall not be enforceable in any court and the principles laid down in this part are fundamental for the governance of the country. The State must make laws according to it because the ultimate aim of the State is the welfare of its citizens.
Socialist principles
These principles follow the ideology of “Socialism” and lay down the framework of India.
Its ultimate aim is to provide social and economic justice to all its citizens so that the state can fulfil the criteria required for a welfare state.
The articles in DPSP which follows the socialist principles are – Article 38, Article 39, Article 39 A, Article 41, Article 42, Article 43, Article 43 A and Article 47.
Article 38
Article 38 talks about Social, Political and Economic Justice.
It directs that the State should secure a social order which provides social, political and economic justice to all its citizens.
Article 38(2) says that state shall reduce the inequalities faced by the people on the grounds like income, status, facilities, opportunities, etc.
Article 39
Article 39 mentions all the Principles of policy which must be followed by the State.
The State shall make its policies towards securing the following objectives—
All the men, women and citizens should have the right to an adequate means of livelihood
The ownership and control of the people over any material resources under the community should be distributed as it is for the common good of the public;
The functioning of the economic system should be such that the concentration of wealth and the means of production don’t result in a loss common to all or which causes detriment to the citizens;
There shall be no gender discrimination, both men and women should get equal pay for equal work.
The health and strength possessed by any worker, men and women, and the tender age of children should not be abused and the citizens should not be forced to enter and indulge into any occupation or profession which is not suitable for their age or strength, not even out of any financial necessity or economic backwardness
Children must be given enough opportunities and facilities so that they develop in a healthy manner and in such conditions where their freedom and dignity, including the fact that their childhood and youth remain protected, against any form of exploitation and against any sort of moral and material abandonment.
It says that the State shall promote justice with the aim of administering Justice on the basis of equal opportunity, and shall provide free legal aid through any suitable legislation or schemes which State may think fit ,or, in any other way, so that it could ensure that the opportunities for securing justice are not denied to any citizen because of economic backwardness or any other kind of disabilities.
It says that state shall make some effective provisions for securing the right to work, etc. and in cases of unemployment, old age, disablement or any other cases acting in its economic capacity & development it shall provide public assistance. This article is employed as a tenet for numerous social sector schemes like social assistance program, right to food security, old-age pension scheme, MGNREGA, etc.
Article 42
Article 42 talks about Securing just and humane work and maternity relief.
It says that state shall create some provisions so that the citizens get easy, just and humane conditions for working. It shall also provide maternity relief for the women.
Article 43
Article 43 talks about Fair wages and a decent standard of life.
It says that the state can endeavor to secure by appropriate legislation or economic organization to all the workers employed in agricultural, industrial or otherwise, work, a living wage, conditions of work, ensuring a decent standard of life and enjoyment of leisure and social-cultural opportunities and promote cottage industries on an individual or cooperative basis in rural and remote areas of the country.
Article 47
Article 47 talks about Nutrition, Standard of living and public health.
It says that the State shall look into the matter of raising the level of nutrition and the standard of living of its people and it is the duty of the State to keep a check on the improvement of public health. The State shall also endeavor to prohibit the consumption of intoxicating drinks and drugs which are injurious for health, except for medicinal purposes. There are many social development programmes such as National Health Mission, Mid Day Meal Scheme, etc. which target the marginalized sections of the society i.e. women, children, weaker sections etc. are inspired by this DPSP.
Gandhian Principles
These principles reflect the programme of reconstruction ideology propagated by Gandhi throughout the national movement. In order to fulfil his dreams, some of his concepts have been included in the form of DPSP.
They direct the State through these articles – Article 40, Article 43, Article 43 B, Article 46, Article 47 and Article 48.
Article 40
Article 40 deals with the Organization of Panchayats.
It says that the state shall organize Panchayat system and should grant them such powers which would be necessary for the functioning as units of the self-government system.
The 73rd and 74th amendments of the constitution which are related to Panchayati Raj and Municipal Corporations respectively, later ended up as the constitutionally backed framework for the principle mentioned in Part IV.
Article 43
Article 43 talks aboutFair wages and a decent standard of life.
It says that the state can endeavor to secure, by appropriate legislation or economic organization, to all the workers employed in agricultural, industrial or otherwise, work, a living wage, conditions of work, a decent standard of life and enjoyment of leisure & social-cultural opportunities and promote cottage industries on an individual or cooperative basis in rural and remote areas of the country.
Article 43B
Article 43B deals with the promotion of cooperatives.
It was inserted by the 97th amendment act in 2011. It says that state shall endeavor to promote the management of the co-operative societies to help the people who are engaged in the same.
Article 46
Article 46 deals with the Protection of SCs, STs, weaker sections from exploitation.
The State shall promote with special care including the educational and economic interests of the weaker sections of the society i.e. the SCs and the STs and shall make provisions to protect them from all forms of exploitation which includes social injustice.
Article 47
Article 47 talks about Nutrition, Standard of living and public health.
It says that the State shall look into the matter of raising the level of nutrition and the standard of living of its people and it is the duty of the State to keep a check on the improvement of public health. The State shall endeavor to prohibit the consumption of intoxicating drinks and drugs which are injurious to health except for medicinal purposes.
There are many social development programmes such as National Health Mission, Mid Day Meal Scheme, etc. which target the marginalized sections of the society i.e women, children, weaker sections etc. are inspired by this DPSP.
Article 48
Article 48 talks about Scientific agriculture and animal husbandry.
It says that the State shall endeavor to organize agriculture and animal husbandry using modern methods and scientific techniques which make people more advanced and helps in earning their livelihood easily and State shall take some progressive steps for preserving and improving the existing breeds and prohibiting the slaughter of cows and other cattle.
Liberal-intellectual Principles
These principles follow the ‘Liberalism’ ideology.
The articles which follow this approach in DPSP are – Article 44, Article 45, Article 48, Article 48 A, Article 49, Article 50 and Article 51.
Article 44
Article 44 talks about the Uniform Civil Code.
There should be a provision for the citizens to secure a Uniform Civil Code throughout the territory of India in order to simplify things and reduce ambiguity in the laws which makes it more complex than it actually is.
Article 45
Article 45 contains the Provision for free and compulsory education for the children in the country.
The State shall make laws to provide free and compulsory education for the children until they are 14 years old within a period of 10 years from the date of commencement of this provision in the Constitution.
This provision was incorporated by the virtue of the 86th Amendment, 2002 in the Constitution of India.
Image Source: https://modernfarmer.com
Article 48
Article 48 talks about Organisation of agriculture and animal husbandry.
The State shall endeavour to organise agriculture and animal husbandry using modern and scientific technology which is prevalent in the present times and also take steps for preserving and improving the existing breeds and prohibiting the slaughter of cows and other cattle in the country for the development of agricultural related practices.
Image Source: Pixabay
Article 48A
Article 48A talks about the Environment and Wildlife Protection.
The State shall endeavour to protect and improve the environment and surroundings. And to safeguard the forests and wildlife of the country to make the environment sustainable.
Article 49
Article 49 talks about Protection of monuments and places and objects of national importance.
It shall be the duty of the State to protect every monument or place or any object of historic or artistic interest which has some national importance, from any form of disfigurement, destruction, etc.
Article 50
Article 50 talks about Separation of Judiciary from the Executive.
There should be a line between the judiciary and the executive body of the Government in the public services of the State as it makes it easier if both do not interfere in each other’s work and function independently.
Article 51
Article 51 talks about Promotion of international peace and security.
The State shall endeavour to —
Promote international peace and security;
maintain friendly and honourable relations between nations;
foster respect for international law and treaty obligations in the dealings of one person with another for maintaining harmony between the nations and
encourage settlement of international disputes by the method of arbitration.
42nd Amendment
Four Directive Principles which were added by the 42nd amendment are as follows:
Article 39 – To secure opportunities for healthy development of children.
Article 39A – It says that the State shall promote justice with the aim of administering it on the basis of equal opportunity, and shall provide free legal aid through any suitable legislation or the schemes which State may think fit or in any other way so that State can ensure that opportunities for securing justice are not denied to any citizen because of any economic or other disabilities.
Article 43A – The State shall take steps, by suitable legislation or in any other way, to secure the participation of workers in the management of undertakings, establishments or other organisations.
Article 48A – The State shall endeavour to protect and improve the environment and surroundings and to safeguard the forests and wildlife of the country to make its environment liveable.
image source- https://bit.ly/2XvpmfW
44th Amendment
The 44th Amendment Act of 1978 addedArticle 38(2) in the DPSP.
Article 38(2) says that the state shall work to minimize the inequalities in income, and endeavour to eliminate inequalities in status, opportunities etc. not only amongst individuals but also amongst all the groups of people residing in different areas or engaged in different fields.
Image source – http://bit.ly/2YQXK0k
86th Amendment
The 86th Amendment changed the subject of Article 45 in the DPSP and brought it within the ambit of the fundamental rights mentioned in Part III as Article 21-A has been made for the children between the age group of 6-14 years of age. The same article was previously a directive principle which says that the State should take care of the children who are below 6 years of age.
97th Amendment
The 97th Amendment act of 2011 inserted Article 43-B in the list of DPSP. It says that the State shall endeavour to promote voluntary formation, autonomous functioning, democratic control and professional management of the co-operative societies.
Enforceability of DPSP
DPSP were not made enforceable by the Constituent Assembly which was formed to draft the Indian Constitution. But the non-enforceability of the Principles does not mean that they are of no importance.
There are some arguments which are in favor of its enforceability and some are against the making of DPSP enforceable. Those who favor the enforcement of the Principles argue that enforceability of DPSPs will keep a check on the Government and would unite India. For instance, Article 44 of the Indian Constitution talks about the Uniform Civil Code which aims for uniform provisions of civil law for all the citizens of the country irrespective of their caste, creed, religion or beliefs.
People who are against the enforcement of the DPSPs are of the view that these principles need not be separately enforced as there are already many laws which indirectly implements the provisions mentioned in DPSP. For instance, Article 40 of the Constitution which deals with Panchayati Raj system was introduced through a constitutional amendment, and it is very evident that there are numerous panchayats exist in the country today.
Another argument against DPSP is that it imposes morals and values on the citizens of the country. It should not be clubbed with the law as it is really important to grasp that law and morals area unit various things. If we impose one on the opposite that will generally impede the expansion and development of the society.
Importance of DPSP
DPSP covers the Articles 36-51 in Part IV of the constitution.
It mentions protection of women of the country, environmental conservation, rural growth and development, decentralisation of power, uniform civil code, etc. which are considered some of the essentials in making laws for a “welfare state”.
Although non-justiciable, they provide a set of guidelines for the Government for its functioning in the country.
Significance of DPSP
Directive Principles are non-justiciable but these are backed by vox populi (voice of the people), which is the real sanction behind every law in reality.
DPSP gives the philosophical foundations of a welfare system. These principles makes it a responsibility of the State to secure it through welfare legislation.
Their nature is more of moral ideals. They constitute a moral code for the State but this does not reduce their value as moral principles are very important and the absence of it may hamper the growth of a society. A state is run by its people and the Government is always formed and managed by them, so it’s really important to have a set of standards for making laws in the country.
Directive Principles act as a guide for the government which helps them in making policies and laws for the purpose of securing justice and welfare in the State.
DPSP are like a source of continuity in the Governance of the country because in a democratic system, the Governments change after regular elections and every new government makes different policies and laws for the country. The presence of such guidelines is really important because it ensures that every Government will follow the set of principles in the form of DPSP while formulating its laws.
Directive Principles can be called as the positive directions for the State which helps in securing social and economical dimensions of democracy. DPSP are supplementary to Fundamental Rights which offers political rights and other freedoms. They both are nothing without each other as one provides social and economic democracy and the other, political rights.
Directive Principles of State Policy make it possible for people to measure the worth of a government and its working. A Government which doesn’t consider these principles can be rejected on this ground by the people in favour of a government which gives due importance to the task of securing these Directive Principles in the state.
The Directive Principles constitute a manifesto of a Nation. These reflect the ideas and views which were there in the mind of the drafters while drafting the constitution. These reflected the philosophy behind the making of the Constitution and hence provide useful information to the courts in interpreting the existing provisions in the Constitution and in coming up with better laws and policies.
The Directive Principles do not seem to be very rigid in their meanings and this helps the State in interpreting and applying these principles in accordance with the situation prevailing at a given time.
Thus, the inclusion of Part IV which contains the Directive Principles of State Policy proved to be very useful for the country. The Directive Principles provide good foundations for welfare state. The securing of Directive Principles helped in completing the requirements of a democratic system. It supplemented the Fundamental Rights of the people and built a State characterized by these four pillars – Justice, Liberty, Equality, and Fraternity.
Implementation of Directive Principles of State Policy
There are some acts and policies from 1950 onwards which had been implemented to give effect to these Directive Principles. They are as follows:
Fundamental Rights are described as the basic rights guaranteed to every citizen of the country under the constitution. They are present in Part III of the Constitution which ensures some rights to all its citizens so that they can live their lives peacefully. They help in checking the activities of the Government so that it cannot curtail any of the basic rights granted by the Constitution in the form of Fundamental rights.
Fundamental Rights apply to all the citizens without any form of discrimination on the basis of race, caste, creed, sex, place of birth, etc. Violation of the fundamental rights may lead to punishment and can initiate proceedings against the government if it tries to curtail them.
The Indian Constitution recognizes 7 fundamental rights, they are as follows:
Right to Equality
Right to freedom
Right to freedom of religion
Right against exploitation
Cultural and Educational Rights
Right to constitutional remedies
Right to privacy (recently added)
Directive Principles of State Policy are some important guidelines given to the government so that it can work accordingly and refer to them while formulating the laws and policies, and to build a just society.
These principles are mentioned in Part IV from Article 36 to 51 of the Constitution.
Directive Principles are non-justiciable. However, these are recognized as an important roleplayer in governing the State. These principles aim at creating such an environment, which can help the citizens to live a good life where peace and harmony prevails.
The directive principles conjointly gauge the performance of the state, in order to achieve the objectives stated in the preamble of the Indian Constitution.
Comparison between DPSP and Fundamental rights
BASIS FOR COMPARISON
FUNDAMENTAL RIGHTS
DIRECTIVE PRINCIPLES
Meaning
The essential or basic rights granted to all the citizens of the country.
The guidelines which are considered while formulating policies and laws.
Defined
In Part III of the Constitution.
In Part IV of the Constitution.
Nature
Negative
Positive
Enforceability
Legally enforceable.
Not enforceable.
Democracy
Political democracy.
Social and economic democracy.
Legislation
Not required.
Required.
Promotes
Individual welfare
Public welfare
The conflict between DPSP and fundamental rights
Fundamental Rights and the DPSP are supplementary to each other and are essential to meet the social and economic dimensions of a democratic government.
The conflict between Fundamental Rights and DPSP often arises as sometimes it has been seen, by various legislations, that DPSP have wider scope than the Fundamental Rights. The Fundamental Rights are the rights which are enforceable by the Courts and any law that is in contravention to the provisions mentioned in Part III are ultra vires.
On the other hand, the DPSP are not enforceable in any Court of Law and nothing can be declared as void merely because it is against the provisions given under the DPSP.
In the case of State of Madras v. Champakam, the Supreme Court held the Fundamental rights are superior to the DPSP saying that the Fundamental Rights under Part III prevails over DPSP in case of any conflict between them.
In the landmark judgment given by the Supreme Court in the Golak Nath case, it was held that the provisions mentioned under Part III as Fundamental Rights cannot be undermined just to implement the provisions given under Part IV which enlists some important guidelines for the State in the form of the DPSP.
The Constitution was amended in the year 1971 and through this amendment, Article 31C was incorporated in the Constitution. It confers wider importance on the DPSP.
In the Minerva Millscase, the Supreme Court restricted this wide scope which was conferred on the DPSP underArticle 31C by making the following changes:
It restored Article 31C to its pre-1976 position. A law would be protected by Article 31C only in the case if it has been made to implement the Article 39 (b) and Article39 (c) of the DPSP and not any of the other directive included in Part IV.
There is a fine balance in the Constitution between the DPSP and the Fundamental Rights, which should be adhered by the Courts without placing any of them as superior.
Criticism of Directive Principles of State Policy
Some of its critics hold that these principles don’t carry any importance as their violation can’t be challenged in the courts.
The Directive Principles are a mere declaration of the instructions which are to be observed and secured by the State at will. but the Constitution neither makes them justiciable nor it mentions any limit to what extent it can be secured.
These are neither consistently explicit nor properly classified. These appear to be a collection of instructions which are only based on morals and a State can’t rely merely on morals for its working.
Several Directives lack clarity and they have been repeated at different places.
The Directive to push international peace and friendly relations among all the nations is just a declaration but the real issue is the securing part of it for which nothing has been given.
Part IV includes some directives which are not complete in actual observation. The ideal is to introduce prohibition but this ideal cannot be really and effectively realised. The states which introduced prohibition had to scrap it later on.
Most of the Directive Principles are based on old and foreign philosophy which have lost its relevance now.
Many critics hold that the Preamble should also enlists all these goals which are given under DPSP and their description in Part IV has made things more complicated and complex than it was before.
Directive principles just create an impression about the usage of the legitimate power by the State and the motive is to gain support through promise-making and not through inaction .
Case study on Directive Principles of State Policy
The question that arises is whether Fundamental Rights precedes DPSPs or latter takes a higher position than the former, it has been a subject of argument for years.
There are some important judicial pronouncements which tried to give an answer to this question, they are as follows:
The court said that if a conflict arises between Fundamental Right and DPSPs, the harmony between the two should not be disturbed, but if, even after applying the doctrines of interpretation the conflict doesn’t resolves then the former should be upheld and given more importance over the other i.e. DPSP.
If any law is in contravention to the provisions mentioned under Part III of the Indian Constitution, it would be held void but this is not applicable in case of DPSPs. This shows that Fundamental rights are on a higher pedestal than DPSPs as far as this case is concerned.
The Court held that the Parliament cannot curtail the Fundamental rights in making any law or policy for the country. It also mentioned that if a law has been made to give effect to Article 39 (b) and Article 39 (c) of Part IV of the Constitution and in doing so if Article 14, Article 19 or Article 31 gets violated, then it cannot be declared as void merely on the ground of such contravention.
The Apex Court placed DPSPs on a higher position than Fundamental Rights.
After that, in the case of Minerva Mills vs Union of India [6], the Court while deciding the case held that the harmony between the two should be maintained because neither of the two has any precedence over each other. Both are complementary to each other and they should be balanced anyhow for the proper functioning of the State.
The Court was of the view that Fundamental Rights and Directive Principles are not exclusive but complementary to each other. The Court said that the Fundamental Rights are the ways through which the goals given in Part IV can be achieved.
Conclusion
The significance of DPSPs cannot be looked down upon just because it is not enforceable in any court of law. These principles were added to facilitate the governance and smooth functioning of the country. It was added to meet the main objectives and the ultimate goal of a country i.e to work for the welfare of its citizens. There are some important Acts in the above-mentioned information, so we can’t say that DPSPs are not implemented and have no importance at all.ube
It is like a structure given for the government and it should work and formulate new laws revolving around that structure only so that the welfare of the people be ensured. Every policy and law formulated by the state has to meet the standards which are mentioned in Part IV of the Constitution.
Thus, even after being non-justiciable they are implemented in some important Acts and they hold equal relevance and importance as Fundamental rights mentioned in Part III of the Constitution of India.
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The concept of Crimes being committed on a ship has long been exploited by various mediums, the reality of such situations, however, is that what happens out on international waters or high seas is a legally complicated jurisdiction.
What are International waters though and who actually controls them
High seas or mare liberum (Latin for Free sea) can be simply put as waters or bodies of water that fall outside the territorial waters which extend to 12 nautical miles from a nation’s coast. This has been explained by Article 3 of the United Nations Convention on the Law of the Sea. This convention was signed in 1958 by 63 countries who all agreed to a certain set of rules.
They have also been explained in Article 1 of the Geneva Convention of the High Seas,1958 as all parts of the sea that were not included in the territorial sea or in the internal waters of a state.
This reflected customary international law, although as a result of developments, the definition in article 86 of the 1982 convention includes; all parts of the sea that are not included exclusive economic zone, in the territorial sea or in the internal waters of a state, or in the archipelagic waters of an archipelagic state.1`
What does the law of the sea state
A country has total and absolute sovereignty within these territorial waters, this extends to both below and above the water.
Domestic laws apply within these waters and the country is free to perform activities like fishing, drilling or military exercises.
There is also an Exclusive Economic Zone which extends up to 200 nautical miles from the shore, but the EEZ only applies sovereign rights to what lies below the surface i.e. oil and minerals.
After 12 nautical miles, anyone can sail through the exclusive economic zone, but cannot drill for oil or fish. The freedom to navigate international waters is one of the primary rights that the UN convention grants to various countries.[1]
They are free to fly over, lay cables, fish and perform a scientific experiment.
However, there are limitations in place to make sure that countries do not exploit these freedoms.
Who possess the jurisdiction
First and foremost, any crime or illegal act that a person commits on a ship falls under the jurisdiction of the country that the ship is registered in.
Under UNCLOS, “every State shall effectively exercise its jurisdiction and control in administrative, technical and social matters over ships flying its flag.”
So, a fugitive in a ship is still subject to the laws and regulations of whatever country the vessel is registered to.
In spite of the law stating this extremely clear, there have been cases where the country refuses to prosecute or take the crime committed seriously, for scenarios like this the concept of universal jurisdiction was brought into place.
The concept allows for any country to prosecute a criminal regardless of their nationality or where the crime was committed. This concept is used for crimes against humanity like genocide, it is useful in high seas as otherwise, no one can claim jurisdiction.
International law also generally recognizes a country’s assertion to a jurisdiction outside its territory if
the offense occurs in one country but has effects on another.
the offender is a citizen of the prosecuting state.
the offense threatens the interests of the prosecuting state.
the victim is a citizen of the prosecuting state.
the offense is universally condemned by the international community (piracy, slave trafficking or terrorism, for examples)
What are the Crimes that are commonly Committed
International waters have long been subjected to crimes be it theft or more serious charges like murder and piracy.
Murder
In recent times an extremely disturbing video of a ship captain shooting innocent workers for sport while they swam about frantically in the ocean surfaced, and according to researchers and crew, it’s quite common for workers to face various kinds of exploitation at the hands of their so-called “masters”.
Various researches and close observation will make it clear that the only reason murder is so rampant in the high seas is due to the lack of punishment. Most countries choose to ignore the crime as it is mostly carried out on poor workers who lack the resources and knowledge to fight back. The punishment for murder as stated above differs and depends on the country that the ship is registered to.
Piracy, any robbery or other violent action, for private ends and without authorization by public authority, committed on the seas or in the air outside the normal jurisdiction of any state. Because piracy has been regarded as an offense against the law of nations, the public vessels of any state have been permitted to seize a pirate ship, to bring it into port, to try the crew (regardless of their nationality or domicile), and, if they are found guilty, to punish them and to confiscate the ship. The punishment for committing piracy may differ however considering the seriousness of the crime the punishment has always remained serious.
This crime originally was closely related to maritime commerce however, in recent times has proven to be one of grave brutality.
Smuggling
Various laws and conventions have strictly prevented smuggling in exotic animals/plants, drugs. Despite clear forbiddance, smugglers continue to enter domestic land and consistently remain a problem to maritime security.
Human Trafficking
This to date remains the most deplorable crime committed in the mare liberum, human trafficking in general has been explained by Article 3, paragraph (a) of the Protocol to Prevent, Suppress and Punish Trafficking in Persons defines Trafficking in Persons as the recruitment, transportation, transfer, harbouring or receipt of persons, by means of the threat or use of force or other forms of coercion, of abduction, of fraud, of deception, of the abuse of power or of a position of vulnerability or of the giving or receiving of payments or benefits to achieve the consent of a person having control over another person, for the purpose of exploitation.
Exploitation in recent times has come to majorly include sexual exploitation and bonded labour. It is a grave crime to be committed against humanity and has been gravely condemned by law across the globe. The high seas area often used to transport the people captured and similar to piracy falls under the concept of universal jurisdiction. Any nation can prosecute and take serious action against the perpetrators.
Other than these crimes there are various others like Discharging waste (which considering the quick deterioration of natural resources is a major concern), sailing and fishing in unauthorised areas, carrying illegal weapons and many more.
These crimes are often overlooked and the guilty mostly get away with it due to the lack of a proper responsible governing body.
The Reality
The reality of the situation in the high seas or international waters in present times is extremely saddening for various reasons. Crimes are rampant and the law is too weak and hazy to actually maintain law and order.
One of the main reasons for it turning into a lawless frontier is the fact that as times progress the relations between various countries have deteriorated due to reasons like want of power, trade disagreements etc. This crack in relationships has affected the concept of universal jurisdiction as it brings in jurisdiction disputes.
One of the major recent disputes is the one that persists in the South China Sea. The dispute is largely about the claim on various islands and parts of water bodies. It includes countries like Brunei, Philippines Malaysia, Indonesia and many more. Jurisdiction of various coral reefs, islands, and natural resources like crude oil. China, however, has taken up an aggressive method to prove what it claims is it’s right. A Chinese nine-dash map published 70 years ago is the root of this dispute. China has since taken up various steps like building military bases on artificial islands. The ICJ case filed by the Philippines against China and involves the legality of the nine-dash line. China, however, refused to participate and Cooperate with the arbitration tribunal appointed. It took the matter further by ignoring the tribunal’s decision which favoured the Philippines.
Therefore, when a crime is being committed in disputed waters, it is extremely confusing to determine which country has jurisdiction.
Another commonly misused but widely accepted provision is that of Innocent passage when discussing this provision mentioning Article 14 of the Convention of Territorial Sea is a must. The article states:
1. Subject to the provisions of these articles, ships of all States, whether coastal or not, shall enjoy the right of innocent passage through the territorial sea.
It also explains in sub-clause 4 this clause can be used as a defence only if the vessel passing through has in no way be prejudicial to the peace, good order or security of the nation in question.
However, in recent times the provision has been misused widely and hence brings in the harsh reality that crimes committed in the Mare liberum(High Seas) have been grossly violating Human rights but also been going unchecked at an alarming rate.
References
“The High Seas.” International Law, by Malcom N. Shaw, Cambridge University Press, 2017, pp. 441.
Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skill.
Central Government of India is constantly striving to energies security and benefits to old citizens of India after their retirement. National Pension Scheme (NPS) is one such initiative made by the government of India in the year 2004. National Pension Scheme is a government-sponsored pension scheme as well as an investment scheme which is launched in order to provide old age security to all citizens of India. The registered owner of this scheme is the National Pension System Trust (NPST) which is established by the Pension Fund Regulatory and Development Authority (PFRDA).
Next question arises, who all are covered in this scheme or who are eligible to opt for NPS. Government of India has gorgeously classified it in two categories; Government Sector and Private sector, wherein Government sector includes, Central government and State Government, similarly, private sector includes Corporate sector and All citizens of India. Below mentioned are the snapshots of the categories:
Central Government
The Central Government had announced the National Pension System (NPS) with effect from January 1, 2004. All the employees of Central Autonomous Bodies who have joined on or after the above-mentioned date are also mandatorily covered under Government sector of NPS. In this sector employer and employee, both contribute the same amount in NPS. This is not eligible for armed forces.
State Government
Various State Governments implemented this architecture and executed NPS with effect from different dates. A State Autonomous Body (SAB) can also adopt NPS if the concerned State Government/UT have adopted the NPS architecture and initiated implementation of the same. In this sector employer and employee, both contribute the same amount in NPS.
Corporate
Corporate Sector Model is the made-to-order version of NPS to ensemble various organizations and their employees to adopt NPS as an organized entity. This was done with the thought of improving the employee-employer relationship.
All Citizens of India
All those citizens who are not covered in any of the above categories are free to invest in NPS for all citizens of India sector from May 01, 2009.
In nutshell, all citizens of India between the age of 18 – 60 years can opt for this scheme. Even the NRIs can invest in this scheme unless there is no change in their citizenship. Also, there can be only one NPS account for each individual and it doesn’t provide any joint NPS account option.
As we have got the basic understanding of NPS, now let’s understand the changes that are proposed in the new pension scheme.
New National Pension Scheme
Currently, those who had joined central government service on or after 1 January 2004 are covered under the NPS. This will increase the eventual accumulated corpus of all central government employees covered under NPS.
The new pension scheme offers tier 1 and tier 2 as investment options:
Tier 1
This is also called a retirement account which is the mandatory account. All NPS models (Central Government, State Government, Corporate and All citizen) have few differences in rules but general rules state that there should be a minimum of 1000 INR per annum investment to keep the account active. This is locked till the age of 60 years of the holder and can be extended till the age of 70 years. One can make only three partial withdrawals from the tier 1 account during your lifetime that too on grounds such as marriage of children, home purchase, health issues, etc. This overall withdrawal (tax-free) cannot exceed 25 % of your contributions and that too can be availed after 3 years of opening account. There can be an unlimited time you invest in a year but the minimum amount at a time must be 500 INR. There is no fixed returns or interest but over a decade it has been an observer that there is 8-10% of interest paid.
Once the NPS account is mature the new scheme offers 60% withdrawal tax-free and the remaining 40% needs to be invested in Annuity for regular monthly pensions. Though in the previous plan out of the 60% withdrawal amount 20 % was taxable.
In the new scheme, the government is offering 14 % contribution from the employer’s part which was 10 % in the previous plan. The employee is still free to invest 10% of their basic+da.
Tier 2
This is a voluntary account but can be opened only after getting the Tier 1 account. Tier 2 account is a non-retirement account. There is no minimum account balance to maintain in Tier 2 account but to open it a minimum of INR 1000 is required. For Government employees, NPS Tier 2 Account will be eligible for tax deduction under Section 80C up to Rs 1.5 lakh per annum with a locking period of three years. But currently, there is no such benefit in Tier 2 for private employees. NPS Tier 2 does not have a fixed rate of interest. It gives returns by investing your money in the 4 NPS asset classes – equities, corporate bonds, government bonds and alternative assets. The withdrawal from tier 2 can be done as and when required.
Benefits for Corporate
By opting for Corporate NPS both employee and employer get the following benefits:
The employee contribution up to 10% of basic plus DA is deductible under Section 80 CCD within the limit of Rs 1 lakh.
The employer’s contribution up to 10% basic plus DA is allowed as deduction under Section 80CCE over the Rs 1 lakh limit.
The employer can claim tax benefits by showing the amount contributed to the pension of employees as ‘business expense’.
The tax benefit on employer’s contribution has been offered since December 2011.
The contribution towards NPS will be over and above the mandatory contribution towards the Employee Provident Fund.
NPS Tax advantages for all
There is a deduction of up to Rs. 1.5 lakhs to be claimed for NPS – for your contribution as well as for the contribution of the employer.
– 80CCD(1) covers the self-contribution, which is a part of Section 80C. The maximum deduction one can claim under 80CCD(1) is 10% of the salary, but no more than the said limit. For the self-employed taxpayer, this limit is 20% of the gross income.
– 80CCD(2) covers the employer’s NPS contribution, which will not form a part of Section 80C. This benefit is not available for self-employed taxpayers. The maximum amount eligible for deduction will be the lowest of the below: a. Actual NPS contribution by employer b. 10% of Basic + DA c. gross total income.
– You can claim any additional self-contribution (up to Rs 50,000) under section 80CCD(1B) as NPS tax benefit hence overall it allows a tax deduction of up to Rs 2 lakh in total.
National Pension Scheme is very portable and would provide a hassle-free arrangement for the individual subscribers. There are various options for investment provided by NPS. Central government employees covered under NPS will get more flexibility in terms of choice of pension fund managers. Also, they will be offered more choice in patterns of investment (debt and a combination of equities and debt).
Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skill.
In India, the films are not looked upon just as entertainment. They’re a way of life.
-Shah Rukh Khan
Indian media and entertainment (M&E) industry is expected to grow at a CAGR of 13.10 per cent to touch Rs 2,660.20 billion (US$ 39.68 billion) by the financial year 2022-23, from Rs 1,436.00 billion (US$ 22.28 billion) in financial year 2017-18.
Progressive liberalization of Foreign Direct Investment (FDI) norms and the large size of the Indian market has led to significant investment in various kinds of content-based technology apps.
As an indicator, FDI inflows in the sector were USD 8 billion in financial year 2017-2018.
Domestic companies are scaling up by raising foreign capital or by entering into joint venture arrangements with leading global players.
In the past few years, the introduction of digital content apps on the internet further altered the face of the entertainment industry. Subscription based entertainment and media apps have added a new dimension to the industry.
Media companies have realized that licensing content from the large production houses and studios is not enough – they need to create original content.
It led to the race for owning and streaming the greatest volume of original and exclusive content.
In 2018 Netflix put out nearly 90,000 minutes (close to 1,500 hours) of original series, movies, and other productions in 2018 (see Quartz story here), and more than 850 exclusive titles (see list here).
It would have taken more than 4 hours of streaming per day, every day of 2018, to watch all of it.
Netflix is not the only player in the market – it has many other competitors, which means there is more original content being created globally. This content is in addition to all the content that was already being created by production houses for satellite television and cinema, prior to the global spread of digital music and video.
Media and entertainment work is not the same as it was in the era of cable TV, or at the time of the internet, when Napster and other P2P sites and torrents were ruining the market owing to piracy.
Separately, a new game is being played out for dominance in the regional content space. The market dynamics in this space are very different from the Hindi and English markets in which global players such as Netflix or Amazon Prime are currently operating.
Apart from its high population, what makes India an attractive market for global players is that its media consumption is nine times that of US and twice that of China.
These developments have led to the creation of an enormous amount of contracts and licensing work.
India is also one of the highest spending and fastest growing advertising markets. India’s advertising revenue is projected to reach Rs 1,232.70 billion (US$ 18.39 billion) in FY23 from Rs 608.30 billion (US$ 9.44 billion) in FY18.
Celebrity endorsements form an important component of advertising. This space is heating up. Talent management agencies are flourishing in this environment, managing different kinds of rights of celebrities with brands.
India’s online gaming industry is also expected to grow at a CAGR of 22 per cent between FY18-23 to reach Rs 11,900 crore (US$ 1.68 billion) in FY23.
The entire industry is dependent on content, and acquisition and production of content today requires execution of various kinds of contracts, so there is a lot of legal work being generated by the industry, which is primarily related to drafting contracts around licensing and for different kinds of services.
Apart from contract drafting work, from time to time there is regulatory work around compliance as well. For example, release of a print newspaper or print journal, movie release in a cinema theatres or airing of a TV programme needs to be compliant with specific regulations applicable in this industry.
These compliance activities may involve filing certain forms with statutory authorities, but prior to that, there are multiple stages of internal review within the organization itself. In-house media and entertainment lawyers (and sometimes, external lawyers) are involved in these stages of review.
Occasionally, disputes-related work around intellectual property infringement, breach of a license contract, defamation or comparative advertisement issues or challenge of a regulatory action also arise.
Unlike an M&A or capital markets practice of a law firm, the dimensions of a media law practice are still evolving in India. As the industry grows, young lawyers who start out early in this area will stand to benefit.
Do you want to work for the media companies, production houses, large distributors, digital media businesses?
Remember that to build a career in this area, lawyers need to learn about the type of work that is performed for clients in these practice areas and how to do such work.
For example, which are the contracts that Netflix or Disney would be entering into on a day-to-day basis?
Which contracts were required to be executed before Game of Thrones or Sacred Games could be filmed and then aired?
How did J.K. Rowling or George R. R. Martin assign rights in Harry Potter and Game of Thrones?
How do digital music companies such as Spotify, Wynk and JioSaavn acquire music to expand their collection? How are royalties to the record labels structured?
To what degree can a digital app compare competitor’s products in advertisements to demonstrate the superiority of its app?
What role do copyright societies play in adding revenue to performers and composers for public usage of music created by them?
What should be done if the CBFC refuses to grant a specific kind of certificate to a movie, drastically reducing the audience that can watch it in movie theatres and thus eroding box office revenue predictions?
How does Byju’s engage Shahrukh Khan for endorsing its products? How are these contracts structured, negotiated and drafted?
How are the contracts and IP rights for toys based on Marvel characters (or Chhota Bheem-related merchandize) structured? How does the legal drafting reflect the economic understanding and flow of IP rights?
Those who work in this area execute about anywhere between 5 – 15 contracts everyday around these areas. This is their bread and butter.
Law school syllabi do not focus on in-depth on these aspects of copyright and its application to contracts in the media and entertainment contracts and licensing.
Even leading textbooks on media law which are available in the market are also based on a pre-2012 era. They primarily focus on the applicable statutes for print media, cable television, defamation and constitutional law around free speech alone, without coverage of daily work performed by lawyers in this area.
The largest segment of media-related legal work is performed by in-house counsels who are working at technology companies, production companies or media houses, and also at law firms which have a media and entertainment laws or a technology, media and telecom (TMT) practice.
Daily work in the industry primarily involves drafting, vetting and negotiation of various kinds of media contracts. Specialized applications of copyright law are involved too.
Excellence in this work requires a lawyer to have sector-specific understanding of the commercial intent for different kinds of deals in the media and entertainment sector.
General contract drafting skills alone are not sufficient.
For example, music licensing contracts are different from agreements to create a movie based on a bestseller or the rights release contract of a model. These agreements are in turn different from movie distribution agreements.
Without understanding these subtle differences and practising how to apply these aspects to real contracts, one cannot demonstrate that one has the skill-sets necessary to work in this area to potential clients and recruiters.
If you are a young lawyer looking to identify emerging areas which would be extremely lucrative in the coming years, working on media and entertainment contracts and licensing could be one of them.
This course covers unique laws regulating different forms of media, intellectual property and other legal issues pertaining to media and entertainment industry.
After pursuing the course, you will be able to work as an in-house counsel in a company working in this sector, an intellectual property law firm, a boutique media and entertainment law firm or in the technology, media and telecom laws practice of a law firm.
As you understand the contracts intricately, you will have a distinct advantage while performing litigation work as well.
What is the career potential after doing this course?
Media and entertainment companies are building up their in-house teams continuously to handle a large volume of legal work as they expand their content repertoire through original content creation and licensing of existing content. This is the largest opportunity.
Established TV channels and production houses are setting up their proprietary digital apps to stream existing video and new kinds of audio and video content. They require a legal team to lead, manage and execute contracts for this work on a daily basis.
Technology companies which are in the business of content production and acquisition, such as Netflix, JioSaavn, Hotstar, etc. are expanding their in-house legal teams. As their businesses are content-based, significant contractual documentation work in respect of intellectual property rights creation and exploitation exists.
New businesses which intend to create video apps for regional content are also entering the space as they identify a vacuum in this market and a scope for growth, and they have similar legal needs as the established players. This is a great career opportunity to tap for young lawyers.
Boutique media and entertainment law firms (especially in Mumbai) and mid-sized IP law firms (ranging between 50-200 lawyers) want to hire people who are trained in this work.
In addition, there are also opportunities for doing freelance work for artists, individual creative professionals and talent management agencies.
If you want to pick up some expertise and knowledge on media and entertainment laws, this is a great time. The market is not saturated and very few lawyers have comprehensive knowledge of these laws. It will definitely go a long way to make your CV stand out, impress the interviewer, get the next promotion, or even help you to find a break to start your own practice.
Relevant industries:
Media and entertainment,
Radio,
Music,
Broadcasting,
Sports,
Fashion and Art,
Digital Media,
Technology,
FMCG (advertising)
Potential employers:
Media and entertainment law firms,
Boutique practices of TMT firms
Media and entertainment companies,
TV channels, newspapers,
Social media companies,
Entities focussing on digital media content,
Media-related technology companies,
Production houses,
Music companies,
Advertising agencies,
Heavy advertisers (e.g. FMCG),
Independent litigators
Who should take this course?
Young lawyers who want to work as in-house counsels for companies working in the media and entertainment space, such as movie production houses, record labels, technology apps, FMCG, etc.
Lawyers who want to work in the Technology, Media and Telecom (TMT)practice of a law firm or a boutique media and entertainment firm
Independent practitioners who want to perform contract drafting work in the media and entertainment industry
Litigators who want to work on media and entertainment transactions, or who want to understand media and entertainment contracts to handle disputes work more effectively
Law students who intend to work as in-house counsels in media and entertainment companies
Law students who want to work in law firms which have a TMT practice
Decision-makers and officers in media and entertainment companies
Music and movie directors and artists can benefit from this knowledge
Training methodology
Access to basic study material through online learning management system, android and iOS app
Hard copy study material modules to be couriered to your address
2 practical exercises every week, followed by written feedback
Access to templates of different kinds of media transactions
based on the exercises, there will be a live video based online class. You can ask questions, share your screen, get personal feedback in this class.
Classes are held after regular work hours. Typically classes are kept on Sunday afternoon or 8-9 pm on other days.
You can ask questions and get your doubts cleared in live classes as well as through online forums
What will you learn?
Get exposure to end-to-end contract drafting and licensing work in connection with the creation and distribution of movies, music over different kinds of media
Learn about product-placement related work, character merchandising and personality exploitation rights
Learn how to customize copyright license clauses in different contracts to optimize monetization of intellectual property depending on the goals of your organization or your client
Learn how to impose limitations on exploitation through restricting territorial exploitation, language or the mediums of delivery of the film or music
Learn about the commercial interests of all parties and how the financial and commercial understanding gets factored into contracts
Learn how to represent a client’s interests if you are acting for a record label or large production house, or for a director, actor, musician, author or other independent artist
Develop comprehensive familiarity with the regulatory framework and compliance requirements in respect of print media, digital media, News, FM Radio and advertisements
Learn about the most common types of media-related disputes and remedies sought in such situations
Specific Learning Objectives
Learn how to execute legal documentation on behalf of the producers and the actor to involve the actor in a film /show
Structure contracts for product placement of a brand’s products/ services within a film/ TV-series
Facilitate monetization of intellectual property in fictitious work through character merchandising agreements
Work with music labels and film producers to legally manage distribution of music rights
Work on film distribution arrangements for release of a movie in cinemas
Perform licensing work necessary to stream movies and TV shows on over-the-top (OTT) platforms
Work on movie distribution agreements for satellite broadcast of movies on TV channels
Perform contractual and IP work required for promotions and digital marketing for various kinds of production houses, ad agencies and platforms
Enable authors and production houses to optimize monetization by creation of movies based on bestseller books
Fine-tune commercial clauses and royalties in transactions with music labels, music composers, singers etc
Work in the celebrity advertising and endorsement space by mastering the documentation executed between a celebrity, talent management agency and brands
Perform end-to-end legal work for organization of live concerts and major events
Work on acquisition of content by one production house from another
Draft work for hire agreements to engage music composers, arrangers, script writers and other parties for creation of music or movie/ TV show scripts
Facilitate recording of changes in commercial understanding or renegotiation of transactions through execution of addendums and novation agreements
Perform compliance and diligence-related work for apps which intend to launch web series
Draft agreements for commercial advertisements and sponsorship with ease
Strategize compliance-related disputes with respect to film content
Perform compliance and diligence-related work for TV programmes and strategize disputes
Industry contributors
Abhyuday Agarwal,COO and Co-Founder, iPleaders and LawSikho, Former Associate at Trilegal
Ramanuj Mukherjee, CEO and Co-Founder, iPleaders and LawSikho, Former Associate at Trilegal
Preeti Gandhi,Media and Entertainment Lawyer, SVF Entertainment
If you take this course, follow it diligently for a month, do all the exercises but still do not find value in it, or not able to understand or follow it or not find it good for any reason, we will refund the entire course fee to you. It is a 100% money back guarantee with only one condition, you must pursue it properly for a month. If you don’t find it valuable after that, get your entire money back. How to get a refund? Read the detailed money back guarantee policy here.
Job and internship support
We are the only organization in India which teach this kind of comprehensive arbitration law course. Many employers, lawyers, companies and law firms are happy to recruit our high performing students. If you do well in your exercises and classes, we can help you to get jobs, internships and assessment internships in good law firms, with renowned lawyers as well as in various companies.
List of Weekly Exercises
Draft an Artist Agreement between the producer and an artist engaging the artist for his services for a film/ show
Draft a Celebrity Endorsement Agreement between a brand and a celebrity’s Talent Management Agency engaging the celebrity in endorsing certain product/s of the brand such as Deepika Padukone endorsing TISSOT
In-film/show integration/ Co-branding Agreement between the producer of a film/show and a brand entitling the producer to place the brand in scene/s as a means to co-branding the product in the film/ show such as Aston Martin cars in Bond movies
Draft copyright assignment agreements or agreements on character rights licensed by the producers/ creators
Distribution of music rights/ Music synchronization licensing agreement
Draft an agreement between producer and an acquirer entitling the acquirer (e.g. a TV channel) to acquire and exploit commercial rights in films
Draft a theatrical distribution agreement for distribution of a movie in movie theatres
Draft an Online Subscribed Video on Demand (SVoD) distribution agreement between the producer and OTT platform such as Netflix, Hotstar or Amazon Prime entitling the OTT platform to stream the film/show
Draft a Satellite Distribution Agreement between the producer and a satellite channel such as Sony, Zee Cinema etc. entitling the satellite channel to distribute the film/ show through satellite television or web channels
Draft a Digital Marketing Agreement between the producer/ creator and an agency/ other for the purpose of designing, development and hosting of the official website, pay-per-click advertisement management, social media campaign (such as Facebook, Instagram, LinkedIN etc.)
Draft a writer’s agreement to create a story or a script-writer’s agreement to create a script for a movie
Draft a music composer’s agreement with producer or music label with a musician
Draft, review and negotiate an agreement between an Artist and a Talent Management Agency
Celebrity Event Management Agreement between the celebrities and agencies to organise, conduct and host shows/ live-in concerts/ premiers/ launching events etc.
Draft an agreement for buying back licensed rights by a production house from another producer or in other appropriate situations
Draft a book-option agreement for granting rights to create a movie based on a book
Draft a work for hire agreement to engage a music composers, arrangers, script writers and other parties for creation of music or movie/ TV show scripts
Draft an Addendum and Novation Agreement to modify any of the above agreements in case of a modification in commercial understanding or to replace a party
Draft an agreement for the exploitation of rights in future works
Prepare a checklist/ due-diligence report regarding compliances for web-series
Plan a strategy to address compliance-related disputes for a film
Prepare a checklist/ due- diligence report with respect to regulatory compliance for TV programmes and relevant dispute related strategies
Is there a practice area where you can quickly learn court craft in a not so intimidating environment, get clients quickly despite being young, earn enough to pay for basics while you are working on getting your long term litigation career off the ground?
Is there a practice area where you can get top companies as your client despite being young and novice in litigation?
Is there a practice area that will help you to cultivate a first set of very grateful and very impressed clients who will send you may referrals over the next few years even as you progress to more complicated and niche areas of law?
The way people treat consumer litigation in law school or even in most law firms, you may mistakenly think that consumer litigation is small matters, and there is no scope to make much money or name in it.
That’s absolutely wrong. This is an area of law that you can practice to earn a lot of money, create a roster of grateful clients who send all kinds of referral work, and make an initial impression on the bar and corporate clients, all while you learn and upgrade your litigation skills.
It is much better to start your career with consumer law rather than starting with civil or criminal law practice right away.
For any young lawyer, having an in-depth knowledge of consumer litigation can be a huge asset. Do you know why?
Any consumer facing company is saddled with a host of consumer litigation and needs an army of lawyers to defend it in different consumer forums. Examples of consumer facing companies are those operating in e-commerce, real estate, retail, automobiles, banking, finance, insurance, telecom, etc.
In other words, any company which has a business-to-consumer or B2C business model (you will know that a lot of businesses work on this model) is a consumer facing company.
Such consumer facing companies need to have a team of lawyers who are specialized in handling consumer disputes. These teams comprise of in-house lawyers who collaborate with local lawyers for handling disputes in different locations.
The in-house lawyers also strategize appellate work and consumer-related work before other sectoral regulators.
In addition, the external local lawyers who work with such companies often enter into retainer arrangements, which provide them a volume of work, income and face-time before consumer forums.
Even if amounts in a particular dispute are not huge, a brand/ company needs to defend its case because an adverse judgment can exponentially increase financial implications from angry customers in similar cases, who may also file similar cases to obtain a similar relief.
Further, every sector has a unique set of sectoral laws and specialized issues which need to be dealt with in a consumer case. For example, medical negligence has a specialized range of evidentiary and documentation issues. Telecom, insurance-related and online payments-related disputes are dealt with by sectoral regulators as well.
What kind of skills are needed to succeed in consumer litigation?
You might think that having generalized litigation experience of trial court work is sufficient to enable you to succeed in consumer litigation as well. Although trial litigation experience helps, it is not a substitute for acquiring specialized insights and skills in the area.
Also, when you start your career, remember to choose the shortest path. It is unwise to first learn trial litigation and then use that as a reference point to learn consumer litigation. That is a much longer route. The law is relatively easier to get a grip over, in comparison to mainstream civil and criminal laws and trial procedures.
Consumer litigation and defense strategies themselves differ across different sectors, depending on the intricacies of the sector and whether there is a sectoral regulator for that sector or not.
In regulated sectors, there are a number of strategic decisions to be taken which involve selection of the optimal forum for a client – should one approach a consumer forum or a specialized regulatory body such as TRAI for telecom sector complaints, IRDA for insurance-related complaints, RBI’s digital ombudsman for online transactions?
An effective lawyer will be able to advise a consumer on the optimal forum depending on the nature of the matter and proceed forward with the litigation, and be equipped to take it to its end result. He or she will not have piecemeal skill-sets.
Consumer litigation is not always as simple as the average lawyer expects it to be!
Are consumer disputes too small to be profitable? Is it possible to build a lucrative practice?
Some lawyers who represent a consumer’s interest in consumer disputes mistakenly believe that consumer matters are not of high enough value for lawyers to build a financially sustainable practice. However, that notion is not entirely true. It depends on whom you select as a client and the level of skills you have.
There are clients who do not want to pay lawyers for their services, but there are enough number of high value matters around. Consumer forums are also awarding significant compensation in disputes.
For example, recently a Mohali court ordered INR 1 lakh to be paid as compensation by Snapdeal to a customer who purchased an iPhone but was delivered a brick.
Also, consumer disputes need not be small at all. Consumer disputes may arise over a flat that costs crores, or an expensive car. Compensations can run into crores. Such matters can be quite lucrative.
Similarly, the amounts ordered as compensation in medical negligence cases are sizeable. In 2014 the Supreme Court had ordered INR 11 crores as compensation for the death of a patient in a medical negligence case.
Do you think working on these matters would not enable the lawyers to generate a viable fee from their clients?
Many lawyers underestimate the level of insights required in this area and are therefore they are unable to secure such work. Due to fragmented knowledge, their skills and insights are on limited aspects of the litigation process, and they are therefore unable to add enough value to clients. You do not need to be in that position.
If you have adequate skill-sets, you will also have the confidence to be selective with clients and take up work which also moves your practice forward, apart from contributing to consumer interest.
Where a matter is important but not remunerative financially for an individual consumer, you can also file claims on behalf of a class of consumers to alter the economics of the situation entirely.
For example, if a consumer is only willing to pay you an INR 2000 lump-sum for a particular matter, you may not be able to take it up. However, if he or she is able to get 10 or 20 consumers facing the same issue and everyone agrees to pay you INR 2000, then you may be able to take up the case, as it becomes financially viable for you.
Recent amendments on pecuniary limit is a game changer
There is another piece of information that will change the face of consumer litigation in India. The Consumer Protection Act restricted the pecuniary jurisdiction of district forums to up to INR 20 lakhs.
Many well-paying clients would inflate the amount of compensation claimed so that they could file their case at the state commission or the national commission.
As a result, the matters at district forums were of relatively lesser economic value.
For a young lawyer, especially one who does not practice in Delhi or a state capital, representing a client at the state commission or national commission is more difficult owing to numerous factors. He or she may be unfamiliar with the bench as his or her daily practice is not in that city or in that forum. Further, competition is at its highest as the most experienced litigators at the state and national level are engaged. In addition, the young lawyer needs to take up the matter at the cost of his or her local practice for a matter.
Lawyers who work as juniors in a senior lawyer’s chamber will find it extremely difficult to take this work up as they will need to be in the local courts assisting their seniors everyday and cannot leave their home city or town to take up a matter in the state forums.
Therefore, for a young lawyer to appear in these matters, it would mean travelling out of familiar territory, competing with such litigators and also foregoing matters in their local jurisdiction on the day of a hearing.
However, the new Consumer Protection Bill proposes to enhance the jurisdiction of district forums to up to INR 1 crore, which will bring a lot of high value consumer litigation from the state forums to the district level, and the national commission to the state level.
Basically, it brings the action to your home turf.
This will create an incredible opportunity for young lawyers to participate in high-value litigation consumer litigation on the consumer’s side as well. Consumer litigation in India is set for a boom!
You may or may not exclusively specialize in this area, but ignoring it might lead to missing out on some interesting career opportunities.
What is the career potential after doing this course
Consumer litigation can complement an existing litigation practice really well. If you are working for a senior, you can take up consumer cases and start building your own clients.
Consumer cases are also a great opportunity to develop your ‘court craft’ and get a sense of how to argue before different judges. There is less competition in consumer courts, you are likely to get more time to argue and judges are more encouraging towards younger lawyers.
You can act for a class of affected consumers in case of consumer malpractices and increase pressure on large companies, and ensure that your practice is sustainable.
Independent practitioners can also secure retainership arrangements with large companies to handle consumer litigation.
Large consumer-facing companies across different sectors want in-house counsels with exclusive and in-depth experience in consumer litigation. They will need to collaborate with local lawyers across multiple locations, different consumer forums, at appellate stages and at specialized forums to defend the company.
Relevant Industries
Fashion and Apparel
Automakers
FMCG and Retail
E-Commerce
Food & Beverages
Telecom
Insurance
Restaurants
Hospitality
Banking and Finance
Fintech
Education
Entertainment
Potential Employers
In-house legal team in B2C companies
Litigation firms
Independent Litigators
. Who Should Take This Course
Young litigators who want to become independent as early as possible in their career
In-house counsels in large B2C companies who want to set up a team of lawyers for defense against consumer cases across India
Independent practitioners who want to specialize in high-value consumer litigation
Litigators who want to secure retainership arrangements from large B2C companies to represent them in consumer cases (especially in non-metro cities and towns)
Corporate lawyers who wish to shift to pursue a career in litigation
Law students interested in pursuing a career in litigation
Training Methodology
Access to basic study material through online learning management system, Android and iOS app
Hard copy study materials to be couriered to your address
2 practical exercises every week, followed by written feedback
based on the exercises, there will be a live video based online class. You can ask questions, share your screen, get personal feedback in this class.
Classes are held after regular work hours. Typically classes are kept on Sunday afternoon or 8-9 pm on other days.
You can ask questions, get your doubt cleared live as well as through online forums
What Will You Learn
Understand consumer proceedings in a practical and step-by-step manner
Develop in-depth understanding of the work performed by lawyers at each stage of consumer litigation
Optimally select whether to approach a sectoral regulator or a consumer forum depending on the sector, the nature of the dispute and the client’s objectives
Draft the documents at each stage with access to templates
Develop expertise in representing both categories of clients – individual consumers and a company in defense
Learn how to ensure that your client’s case is persuasive and identify and address weaknesses beforehand
Get insights to evidentiary and procedural aspects
Learn how to manage a pan-India team of local lawyers effectively
Learn how to act for a class of consumers to get more attention from companies and consumer forums
Handle appellate work effectively, all the way up to the Supreme Court
Principal Learning Objectives
Identify which consumer forum to approach for the remedy your client needs
Learn the pros and cons of selecting reliefs for consumers under specialized laws such as RERA, insurance or banking regulations
Develop expertise in work at district forums, state commissions, national commission and Supreme Court
Learn to draft effective legal opinions and advisory notes that add value to a client’s legal strategy
Implement strategies which increase the likelihood of settlement prior to initiation of a consumer matter
Prepare your client’s case in a way that ensures that consumer forums do not delay adjudication
Maximise chances of success by following detailed evidence collection processes
Strategies followed for selecting the appropriate consumer forum in which to file your case
Win your client’s trust through immediate interim reliefs from consumer forums
Learn the important points which must be included in a complaint or a response which can tilt the tide in your client’s favour
Get acquainted with the filing process and all the documents and formalities while filing a consumer complaint
Implement a pan-India defense strategy for a company to defend itself
Maintain exhaustive documentation strategies for companies for defense in consumer cases
Identify when to defend your client or proceed in appeal vs. when to settle proceedings
Understand how and when to use transfer proceedings to transfer the case to a more appropriate forum
Learn how to win the legal battle by taking advantage of the statements of opposite parties in their draftings
Deal with last minute complications while leading evidence in complex consumer matters
Get insights about examination and cross examination of the witnesses
Represent a class of consumers to increase pressure on a large corporate and make your practice viable
Master appeals and revision work and strategy to benefit your client’s interest
Deal effectively deal with different kinds of clients – large companies, individuals and consumer groups
Lead and defend litigation effectively across a wide range of consumer matters irrespective of the sector, such as manufacturing, doctors, banks, insurance companies, service sector and much more
Industry Contributors
Akanksha Sisodia, Independent Practitioner, Delhi High Court and Consumer Courts
Abraham Mathews, Advocate, Supreme Court and Chartered Accountant
If you take this course, follow it diligently for a month, do all the exercises but do not find value in it, we will refund the entire course fee to you. It is a 100% money back guarantee with only one condition, you must do it properly for a month. If you don’t find it valuable after that, get your entire money back. How to get the refund? Read the detailed money back guarantee policy here.
List of Weekly Exercises
Draft a notice for initiation of consumer proceedings
Draft a response to notice for initiation of consumer proceedings
Prepare a consumer litigation monitoring dashboard for a company
Prepare a pan-India report on consumer litigation
Draft a consumer complaint for a defective product at the district forum
Draft an interim application along with a consumer complaint
Draft a consumer complaint for deficiency in service at the state commission
Draft a response to a consumer complaint
Draft an opposition to the interim application
Draft a complaint against an unfair trade practice
How to submit evidence, cross-examination
Draft a consumer complaint for representation of a class of consumers
Draft an execution petition
Draft an opposition to the execution petition
Draft a memorandum of appeal before the state/ national commission
Draft an application for a stay of order and for condonation of delay
Draft a response to a memorandum of appeal
Draft and file an appeal before the National Consumer Disputes Redressal Commission (NCDRC)
Draft a revision petition
Draft a Special Leave Petition before the Supreme Court under Article 136
Draft a writ before the High Court under Article 226/ Supreme Court under Article 32
Draft a statutory appeal before the Supreme Court
Prepare an advisory note on pros and cons of using consumer protection machinery vs. other statutes (e.g. against a builder or a luxury car seller or against a negligent doctor)
Prepare a legal opinion or advisory note on action to be initiated under consumer protection law for medical negligence
Prepare a legal opinion or an advisory note on insurance or mutual fund fraud
Prepare a legal opinion or advisory note on banking fraud
Tribunal litigation is exciting. Unlike the courts, which can deal with matters related to multiple legislations, tribunals provide an opportunity to specialise in a specific area. Securities law is an immensely interesting area of practice for those interested in commercial litigation work.
It also provides young lawyers an opportunity to specialise and make a name early in their career. Unlike the High Courts and Supreme Court thronged by tens of thousands of lawyers, SAT litigation attracts fewer but high quality lawyers.
SAT matters are high stakes. If someone delves into this area with any seriousness, it can be very rewarding. Since these matters require an in depth understanding of securities laws, many lawyers do not possess such expertise and therefore avoid this work. You are therefore likely to meet with lesser competition.
Another misconception lawyers have is that they believe securities laws to be very complex, and that they require elaborate quantitative skills to understand such laws.
However, it takes no more than a 10th grader’s quantitative skills to be able to handle securities matter efficiently.
If you take a look at which lawyers represent clients before the Securities Appellate Tribunal, you will find that they are not necessarily from top tier law firms such as Shardul or Cyril Amarchand Mangaldas, Trilegal or AZB.
Most of them are from second and third tier law firms. Some are independent litigators too. Lawyers who are experts at securities laws can advise clients on how to achieve the desired objectives without landing into a breach or generating suspicion which would invite regulatory action. If you are able to plan transactions in such a way, you are going to be in great demand.
What does that imply? Securities litigation is not a domain which is saturated or monopolized by a few firms, and there are huge opportunities for independent litigators and smaller law firms as well.
As an independent litigator or someone who runs his own law firm, this is an excellent practice area to delve into, especially if you are interested in financial and securities laws or commercial litigation.
Factors such as a slowdown in the economy will impact the volume and size of transactional work. Similarly, the implementation of artificial intelligence in the legal industry will automate many aspects of it.
However, disputes work increases in volume when there is an economic slowdown. It is also more immune to technological developments such as artificial intelligence.
Securities litigation work involves significant sums of money which are at stake because of a regulatory dispute. It is possible for a lawyer to very clearly demonstrate beneficial results to a client, and charge a premium for excellence.
In most cases before the Securities Appellate Tribunal the respondent is either SEBI or a stock exchange. Sometimes, the actions by the regulator can be arbitrary. If you are able to contest against such actions before the tribunal and win, this can not only be an incredible boost to your confidence, it can result in winning you more clients.
I witnessed a SAT hearing recently where a penalty levied by the regulator was reduced by INR 10 lakhs in a matter of less than 30 minutes. The client was elated!
Imagine how grateful he would be to the lawyer. Also imagine how such amazing results will enable a lawyer to charge a premium to a client.
Another peculiar aspect of the Securities Appellate Tribunal is that as on the date of writing this in July 2019, there is only one bench of SAT and that is in Mumbai. Hence, it isn’t like the National Company Law Tribunal, for instance, which has quite a few regional benches. There is less accessibility and lesser competition with respect to SAT in comparison with other tribunals such as the NCLT. If you specialise and create a name for yourself, even if you’re based outside Mumbai, your client will be willing to fly you and put you up in a nice hotel. Also, listed companies with corporate headquarters in other cities are happy to keep lawyers with this expertise on their panel or payroll, if such experts are at all available in their own city, which is rare.
You need to understand the provisions and intention behind the SEBI Act, its regulations and processes, the prevailing mechanism for protecting the ‘market’ from abuse, how various players are always trying to game the system given huge stakes involved, investor’s interest and so on. You need to develop the ability to apply litigation skills in conjunction with such specialised knowledge.
Many aspects of securities litigation are unique. You will need to understand various concepts behind SEBI’s regulations for IPOs and listing of debt securities and other instruments, Listing Obligations and Disclosure Requirements Regulations, Delisting Guidelines, Insider Trading Regulations, Unfair Trade Practices regulations and Takeover Code.
If you are working in the legal and compliance team or as a compliance officer, you have a thousand and one reasons why you should be aware of how to deal with SEBI and SAT, especially about the most contentious issues that lead to litigation. As the in-house counsel in such a company, you are in the best position to respond to show-cause notices, device policies or define strategy for defence and to lead any escalations on part of your organization. Whenever your company will get caught in some SAT litigation, you do not want to be blindsided, nor would you want to be at the mercy of outside counsel.
If you are working as an in-house counsel in a company which is growing fast and is on the way to an IPO, start preparing for this. You do not want to be caught off-guard. There are a host of securities legislations which start to become applicable to you as you move from the unlisted to the listed domain. You do not want to have the fear of waking up as a violator practically every day.
Further, SEBI can become active without prior warning and you may end up receiving a slew of show cause notices in connection with a securities acquisition or a trading practice.
The number and economic relevance of these cases increases for lawyers and compliance teams working with market intermediaries such as merchant bankers, portfolio managers, brokers, etc. Anyone working with corporate stock brokers or portfolio managers such as Motilal Oswal, Anand Rathi, Sharekhan, IIFL Securities will tell you about the extent to which the securities market intermediaries are regulated. Every move is required to be documented with precision.
There are frequent regulatory interactions which need to be adequately documented and corroborated with supporting evidence, else they will form the basis for an adverse legal action.
It needs a great degree of planning and preparation to install systems which ensure this compliance. Compliance officers of listed entities need to be on their toes to keep track of the applicable regulations, given that the amount of penalties that can be imposed by SEBI are far higher than say, penalties under the Companies Act, 2013.
As someone who will be advising your employer or your client, you will need to learn the skills not only to expertly deal with the litigation matters, but also to develop and install systems which can help to avoid litigation in the first place.
That is what we aim to deliver through this course, to lawyers who want to argue security law cases at the SAT as well as those who manage compliances and decide legal strategy from in-house legal teams or work in these areas at law firms.
What is the career potential after doing this course
In all cases where dealing in marketable securities is involved, there is movement of money. Often, a significant amount of money. Its fascinating to learn the many ways in which securities can exchange hands and how it can impact the market.
If you know how the transaction should be structured without ending up in litigation or regulatory obstacles, or if you know how to overcome such obstacles when they arise, there will be a lot of market participants willing to avail of your skills.
If you specialise in securities laws and SAT litigation, you would want to secure intermediaries of various natures in the securities market as your clients. When you consider the different kinds of intermediaries that operate in the securities market, this is not a small market at all. Wherever there is a move against a client by SEBI or the stock exchanges, you want to become the go-to person for them.
Listed entities would vie to get you into their legal teams, provided you have desirable skills in securities law and SAT litigation, since they need people who know the inside out of dealing with SEBI. You will be involved in all acquisitions, pledging and disposals of securities to advice on how SEBI regulations would impact or restrict such transactions.
As a SAT litigator, you can expect to get a holistic understanding of regulatory issues related to listed companies. Handling the briefs/matters of intermediaries, listed companies, SEBI etc will give you an in-depth understanding of the Securities market.
This is also why former SEBI legal officers are always in very high demand in the private sector.
Relevant Industries
Regulators and bourses
Banking
NBFCs
Legal
Stock brokers
Portfolio management companies
Merchant bankers
Insurance
Other securities market intermediaries
Potential Employers
In-house legal teams in listed entities
Large conglomerates
Law firms
Corporate brokers
Investment banks
Portfolio managers
Merchant bankers
Other market intermediaries
Compliance teams in corporations
SEBI
Stock exchanges
What is unique about this course
The course focuses on a specific aspect – SAT litigation. The focus is not on learning sections and case laws practical concepts and their application to real-life litigation.
The course covers a hands on ‘how to’ element in every module – from the side of the participants in the securities market who are in interaction with SEBI and stock exchanges.
You will not learn the text of the regulations cover to cover – that is easily available on the SEBI website. What you will learn is how to use those concepts in SAT litigation matters, in your favour, whether you are an in-house counsel or a practitioner.
You will be asked to draft the actual documents which you would have to draft in a SAT litigation matter.
You will learn how to argue in SAT as an independent practitioner.
You will also be able to lead SEBI and SAT litigation for a company or a market intermediary if you are working in-house). This includes formulation of strategy, preparation of arguments, briefing arguing counsels or representing the organization yourself.
The course is tough and intensive, you will not be awarded the certificate unless you complete all the exercises. You have to spend 8-10 hours per week on this course.
You will get personal attention and coaching from the trainers, and get individual feedback on the quality of work you produce
Our trainers are highly experienced individuals with many years of industry experience
You will be writing an article every month and with our guidance publish the same either on iPleaders blog or various other industry publications
We will provide you a free course on professional networking, CV writing and interview skills so that you can easily find jobs
Those who perform well in class will be recommended to top law firms for internships and jobs. If you do not need such help, let us know in what other way we can help you.
You will find knowledge acquired in this course very valuable with respect to most teams at law firms, as an in-house counsel or even if you pursue corporate litigation.
Who should take this course
Commercial litigators
Independent practitioners looking to build a tribunal litigation practice
In-house counsels working in listed companies or with market intermediaries
Corporate lawyers who are also handling commercial disputes work
Compliance officers of listed entities
Chartered Accountants and Company Secretaries who intend to represent clients and argue before SEBI and SAT
Law students and lawyers looking to work in corporate law firms in commercial litigation team or in-house legal teams in entities regulated by SEBI
Training Methodology
Access to basic study material through online learning management system, android and iOS app
Hard copy study material modules to be couriered to your address
2 practical exercises every week, followed by written feedback
Based on the exercises, there will be a live video based online class. You can ask questions, share your screen, get personal feedback in this class.
Classes are held after regular work hours. Typically classes are kept on Sunday afternoons or 8-9 pm on other days.
You can ask questions, get your doubts cleared live as well as through online forums.
What will you learn
After completing this course, you will be able to advise your client on obligations under the takeover code, insider trading regulations, delisting regulations, unfair trade practices regulations and intermediaries regulations and how to install mechanisms for such compliance.
You will be able to confidently draft all responses to the communications from SEBI including show cause notices. You will know exactly how to structure these. You will get a thorough grasp of what kind of documents are required in the proceedings before the SEBI and and you will know how to draft these. You will know what goes on in a hearing before the Adjudicating Officer and be able to represent a client before the Adjudicating Officer.
You will also learn exactly how to draft appeals before the SAT in specific cases, how to present before the SAT and what are the practical aspects you should take care of, during a hearing. Someone who is appearing before the tribunal must be very thorough with the contents of the appeal which has been filed, since the judges can ask directly for where a specific aspect is referred to in the appeal or the application and you would normally be expected to answer within a matter of seconds. Someone who understands the case thoroughly can also frame summary or table of events for a quick reference of the judges so that the proceedings can progress fast.
Many sample documents have been provided in the course, which you can download and use for your day-to-day work.
Principal Learning Objectives
Learn about how the interplay between SEBI, stock exchanges and the market participants works and how to use the interplay to your advantage in litigation;
Learn what regulations will become applicable to you when you transition from an unlisted to a listed company and how to instal mechanisms to comply with these;
Learn what goes on inside an acquirer entity and the legal department of the acquirer entity in the run up to the acquisition;
Learn step by step how to deal with the compliance involved in the takeover of a listed entity;
Learn how to draft a public announcement for an open offer, a detailed public statement and a letter of offer;
Learn how to advise directors of acquiring or target entities about their liabilities under the takeover code;
Learn how to identify an indirect or creeping acquisition;
Learn how to secure an exemption from making a public announcement from SEBI;
Learn how to plan the takeover actions in such a manner so to avoid any action from the regulators;
Learn how to identify who can be considered insiders and what kind of information can be considered to be price sensitive information under the insider trading regulations;
Learn how to comply with the requirements of pre clearance of trades, submission of trading plan and disclosures under the insider trading regulations;
Learn how to draft a code for fair disclosures and a code of conduct under the insider trading regulations;
Learn how to avoid the pitfalls such as social media posts which can result in a show cause notice from SEBI under the insider trading regulations;
Learn what to do if you become aware of insider trading in your company;
Learn what the unfair trade practices relating to the securities market are, how the market participants benefit from these and what are the consequences of engaging in unfair trade practices;
Learn what to do if you become a victim to any unfair trade practice in the securities market;
Learn what you should do if you are an intermediary and an investigation has been ordered against you by SEBI under the unfair trade practices regulations;
Learn what compliance is required from you as an intermediary under the SEBI (Intermediaries) Regulations, 2008;
Learn what to do if SEBI orders suspension or cancellation of your registration certificate as an intermediary;
Learn how to delist your company from the stock exchanges;
Learn what to do if your minimum public shareholding falls below the required level;
Learn what to do if a stock exchange orders compulsory delisting of your securities;
Learn how to draft and file a response against a show cause notice issued by SEBI;
Learn how to appear in a hearing before the Adjudicating Officer / SEBI;
Learn how to identify matters for which you can or cannot avail of a settlement with SEBI and matters for which it is not advisable to avail of a settlement;
Learn how to arrive at a settlement and the procedure for completing a settlement;
Learn the matters for which the Securities Appellate Tribunal does and does not have jurisdiction and how to use this knowledge to your advantage in litigation;
Learn how to file a memorandum of appeal before the Securities Appellate Tribunal;
Learn how to present in hearings before the Securities Appellate Tribunal;
Learn how to file a rejoinder;
Learn how to get yourself empanelled as a lawyer with SEBI / stock exchanges;
Learn how to file a special leave petition to the Supreme Court against the orders of SEBI;
Learn how to file a writ petition before the High Court under Article 226 of the Constitution of India.
How to identify the regulations which become applicable to you when you transition from an unlisted to listed company;
How to identify whether a person is an acquirer and if the action constitutes an acquisition under SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011;
How to draft clauses of letter of offer under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011;
How to advise clients on making voluntary and competing offers under the takeover code;
How to identify eligibility to make a delisting offer and how to make the delisting offer;
How to identify whether an exemption can be sought under takeover code and how to seek exemption;
How to identify whether a person is an insider and whether the information is unpublished price sensitive information under the SEBI (Prohibition of Insider Trading) Regulations, 2015;
How to draft a code for fair disclosures and a code of conduct under the SEBI (Prohibition of Insider Trading) Regulations, 2015
How to identify whether an action constitutes a fraudulent or unfair trade practice under the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003;
How to identify, based on a given situation, whether an action can be initiated by SEBI against an intermediary under the SEBI (Intermediaries) Regulations, 2008 against a stock broker/sub broker/portfolio manager;
How to identify whether a company is eligible to delist its securities;
Draft a board resolution/shareholder resolution / public announcement to delist;
Draft a delisting application to a stock exchange;
How to draft a reply to a Show Cause Notice issued by SEBI for a front running matter;
How to draft a reply for a Show Cause Notice issued by SEBI for alleged insider trading violation;
How to identify whether settlement can be availed of in a particular case and how to complete a consent form for settlement before SEBI;
How to identify whether the Securities Appellate Tribunal has jurisdiction in respect of a specific matter;
How to draft an appeal to be filed before the Securities Appellate Tribunal in respect of a matter relating to the unfair trade practices regulations;
How to draft an appeal to be filed before the Securities Appellate Tribunal in respect of a matter relating to insider trading regulations;
How to draft an appeal to be filed before the Securities Appellate Tribunal in respect of a matter under Takeover Code;
How to draft an appeal to be filed before the Securities Appellate Tribunal against Stock Exchange decisions of delisting or refusal to list;
How to draft an appeal to be filed before the Securities Appellate Tribunal against a debarment, suspension, cancellation or surrender order under the SEBI (Intermediaries) Regulations, 2008
How to draft an appeal to be filed before the Securities Appellate Tribunal against the orders of the Insurance Regulatory and Development Authority;
How to file an intervention application for hearings before the Securities Appellate Tribunal;
How to file a Special Leave Petition before the Supreme Court under Article 136 of the constitution against orders of SAT;
How to file a writ petition before the High Court under Article 226 / Article 32 of the Constitution of India.
“It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.” – Warren Buffett
Brand is the reputation of a business. It is what people remember. It is not always just a word or an image, but what people think or the feelings they experience when they think of a product, service or business.
For instance, over many decades, Coke has tried to associate its cola with happiness, and spent billions of dollars in advertising to make that happen.
Now imagine how it would be if I could take a bottle, pour some black water into it, and put up a label calling it Coke, and started selling on a street corner. It would be a pandemonium, right?
This is where trademark law steps in to make brands and significant investments that go into building a brand viable and protected from infringement and misuse.Trademark, therefore, is a basic foundational concept of capitalism – without it, our economic system would collapse!
Also, trademark was not important in the local economy. When everyone lived in a village or a small town, and all produces were local and sold through trusted traders, there was no need for trademarks. However, as the economy grows, and products are sold throughout a country or even the world, trademark becomes more important. And this is why, protection of trademark has been a key feature of globalization through the WTO and other bodies.
Internet and global economy has only continued to increase the value oftrademarks as we deal with strangers more and more in terms of commerce and trade. We cannot trust a human being or business as easily as we trust in brands because brands are valuable and take time to build!
If you had to travel to Africa or Australia, and needed to buy a laptop or phone, you may go for an Apple product rather than a brand you have not seen before, because you have trust in the quality of Apple products. And this is what allows Apple to charge a premium for its products. You may go to any corner of the world and expect a certain kind of service from Uber or a Hilton hotel. That is the magic of branding, which is only possible thanks for trademark protection.
Trademarks are more widely used than other forms of IP. Business organisations in almost every sector of the economy employ trademarks to protect their brands. Businesses that fail to build a brand are often wiped out by the ones that manage to build a strong brand in any market. Also, businesses that focus on building a brand are usually far more successful and profitable than the ones that do not focus on building brands.
However, while trademarks are becoming increasingly valuable and critical to businesses, it is also now most vulnerable to infringement. Apart from infringement, there are many types of disputes that frequently arise over these extremely valuable assets.
One major area of work for lawyers in trademark law is filing, licensing and drafting various kinds of agreements that relate to trademark. Here are the most important ones you must learn to draft:
Trademark registration and filings
Licensing Agreement
Franchising Agreement
Assignment Agreement
Merchandising Agreement
Trademark and licenses portfolio management
Here are the major areas of work with respect to trademark prosecution and litigation:
Opposition and objections during registration of trademark
Domain name and squatting disputes
Infringement and passing off
Disputes over licensing, merchandising and franchising
Review, rectification and cancellation of trade marks
Monitoring and preventive measures
The most lucrative areas of work for IP lawyers related to trademark happen to be in the industries that cater to mass market as well as luxury. Bigger the business, the more it is sensitive about its trademark protection, which translates into substantial legal budgets. We have provided a comprehensive list of industries which spend big bucks on trademark.
Trademark licensing, prosecution and litigation consists of the vast majority of work that IP lawyers do in India. Despite that, there are absolutely no courses that teach the practical aspects of this work. All courses currently available in the market are restricted to teaching merely sections from statutes and a few case laws. This does not help the learners to accomplish the actual tasks that clients bring to their table.
In this context, in order to teach the most relevant and specific skills one needs to thrive in this profession doing trademark law, we have launched this course onTrademark Licensing, Prosecution and Litigation. This is meant for serious practitioners of IP law, those looking to make an inroad as an IP lawyer or litigator, or get a job in an IP law firm.
This is the most detailed trademark course in India which focuses on providing important skills based on industry needs and application. This course provides a detailed understanding of strategy, creation, registration, monetization, prosecution and handling of trademark disputes in India and offshore, with multiple practical examples and case studies.
Trademarks are frequently monetized through a variety of contracts in different industries. Some of them have their own set of commercial jargon based on the commercial intent behind the transaction. Knowing what the jargon means and then learning how to draft such contracts are effectively crucial to build a career in this area. Plenty of sample contracts and drafting exercises are included.
And of course, there is a massive need for an army of talented lawyers who create contracts, register intellectual property, enforce agreements and IP rights, resolve disputes, handle investment agreements, JV contracts, licensing of various IP rights, protecting legal interests of the media companies, ensure compliance to myriad laws and keep the industry in shape.
This is what we want to accomplish in this course.
What is the career potential after doing this course?
Trademark litigation has been a major area of interest for many lawyers because it is the biggest area of IP practice and litigation related to trademarks are always very well paid work as stakes are big.
There are mid sized IP law firms (appointing between 50-200 lawyers) which engage in registration of trademark, managing trademark portfolios, enforcement of trademark, disputes and litigation over trademark, licensing and assignment oftrademark and such other work. These law firms provide a great opportunity to have a rewarding career in trademark law to young lawyers.
Other than registration, trademark law practitioners have to deal with licensing, assignments, objections, oppositions etc. Trademark litigation has massively increased in volume over the years, turning trademark practice a very lucrative profession.
Apart from the top tier law firms, there are plenty of boutique law firms and many independent lawyers catering to startups and SMEs with respect to theirtrademark law needs. These lawyers also need these same skills and make very good money.
There is a lot to be done in the next 3 years. Also, the space has become highly litigious given tons of complaints, objections to misuse of marks etc having become routine. As a result, lawyers who can handle trademark litigation are in very high demand.
If you want to pick up some expertise and knowledge in trademark litigation, this is a great time. The market is not saturated and very few lawyers have comprehensive knowledge of these laws. It will definitely go a long way to make your CV stand out, impress the interviewer, get the next promotion, or even start your own practice.
You cannot learn these things by studying any particular statute, regulations or rules, and there are no substantive books or online sources that can help you here. Success in trademark law practice requires skills which are more varied than merely knowing the provisions of various stat
Relevant industries
Manufacturing
E-commerce
Media
Fintech
FMCG and retail
Food and beverages
Hospitality
Pharmaceuticals
Finance
Advertising
Sports and entertainment
Automobile
Services
Fashion and apparel
Export – import
Who should take this course
Decision makers and officers in brand-based companies, media and entertainment companies
Lawyers looking to specialize in trademark litigation, the most prominent practice in the area of Intellectual Property Laws
Lawyers looking to build a pra
Practice in trademark disputes or licensing
Law students looking to work in IP law firms or IP or TMT teams in big law firms
Law students looking to work with product based MNCs
Lawyers working for technology, e-commerce, media houses, FMCG companies that engage in a lot of advertising activities
Entrepreneurs and directors who want to master legal aspects oftrademark
Training methodology
Access to basic study material through online learning management system, Android and iOS app
Hard copy study material modules to be couriered to your address
2 practical exercises every week, followed by feedback
Based on the exercises, there will be live online video classes. You can ask questions, share your screen, get personal feedback in these classes.
Classes are held after regular work hours. Typically classes are kept on Sunday afternoons or 8-9 pm on other days.
You can ask questions, get your doubts cleared live or later through other online fora.
What will you learn?
Learn all the strategic work involved in trademark selection and creation of a trademark portfolio
Assignments and licensing agreements
Trademark disputes over unauthorised use, comparative advertising, infringement, passing off etc
Learn how to handle the entire process of trademark registration fromtrademark search, classification, application including handling objections and opposition
Learn how to create or assess trademark strategy for a business
Learn how to calculate damages for trademark infringement
Understand the commercial aspects of trademark transactions
Learn how to act on behalf of large brand/ label
Learn how to enforce trademark
Apart from statutory knowledge, develop strategic thinking
Draft various documents, petitions, applications until you are conversant with each
Contracts for monetization of trademarks such as assignment, franchising, licensing and character merchandising.
Principal Learning Objectives
Optimally select trademark classes so as to minimize objections from registrar, competitors and third parties
Accurately draft and file trademark applications to minimize defects and maximise the scope of protection of the brand
Effectively draft and file pre-publication objections to prevent registration of marks that can impact your brand
Respond to examination reports from the Trade Marks Registry to aggressively pursue registration
Procedure to draft and file submission in a show-cause hearing before theTrademarks Registry
Draft an effective User Affidavit
Prevent competitors from exploiting your brand unfairly through effectivetrademark watch and initiation of opposition proceedings
Combat frivolous oppositions through filing a counter statement in response to Notice of Opposition
Learn how to draft different kinds of affidavits for submission of evidence in opposition proceedings
Initiate proceedings for trademark infringement and passing off
Calculate damages for infringement correctly
Draft effective cease and desist notices that lead to faster settlement and avoid prolonged litigation
Take strategic calls on matters such as review of decisions of the Trade Marks Registry
Procedure of rectification before the Trade Marks Registry
Learn how to draft and file a cancellation petition before IPAB
Effectively drafting and filing an appeal before IPAB in connection with an impugned decision
Deal with disputes regarding trademark infringement on the internet and cybersquatting
How to prevent import or export of infringing goods by giving notice to Customs Commissioner
Register non-conventional trademarks to protect and enforce mark
Create a trademark monetization strategy for brand owners
Structure and draft a contract for a franchising deal
Strategise and draft a merchandising agreement
Create a monitoring system for a portfolio of intellectual property
Successfully draft various kinds of licensing and assignment agreements
Prevent misuse of trademark by competitors in comparative advertisements etc.
Get infringing content quickly removed from the internet by using a Takedown Notice
Safeguard a brand’s reputation by preventing misuse of trademark
Get quick injunctions to protect trademark and prevent loss of business
Obtain international registration and enforcement of trademark
Research and map trademark strategy of competitors
Mortgage or pledge trademark to raise finance
Draft effective trademark protection and assignment agreements in employment and consultancy agreements
Defend your client or organization in trademark litigation
Provide advice to brands and celebrities on how to deal with cybersquatters
Use the UDRP process, .in registry process and Indian legal system effectively in domain name disputes and cybersquatting
Advise parties on domain name sale transactions and draft contracts for them
Mathews V.C., Managing Associate, Inttl Advocare, Former Associate Partner, Sujata Chaudhri IP Attorneys
Hiren Kamod, Counsel, Bombay High Court (Former Senior Associate with Kane & Company)
Anupam Pandey, Independent Legal Practitioner and IP Law Expert (Former Partner at Obhan and Associates, Senior Commercial Specialist, USPTO and Senior Associate, AZB & Partners)
Nayan Rawal, IP Attorney, Founder, Nayan Rawal and Associates
If you take this course, follow it diligently for a month, do all the exercises but do not find value in it, we will refund the entire course fee to you. It is a 100% money back guarantee with only one condition, you must do it properly for a month. If you don’t find it valuable after that, get your entire money back. How to get the refund? Read the detailed money back guarantee policy here.
Recruitment and internship support
We are the only organization in India which teach this kind of comprehensive IP, media and entertainment law course. Many employers, law firms and companies are happy to recruit our high performing students. If you do well in your exercises and classes, we can help you to get jobs, internships and assessment internships in good law firms, with renowned lawyers as well as in various companies.
List of Weekly Exercises
Conduct a trademark search, select appropriate classification for registration of marks and create a dashboard (tracker)
Draft and file a trademark application
Draft and file a pre-publication objection to a trademark registration application
Drafting a response to Examination Report
Submission in support of Show-cause hearing
Drafting and filing a User Affidavit
Draft a Notice of Opposition
Draft and file a counter statement in response to Notice of Opposition
Draft an Affidavit under Rule 45/ 46 to submit evidence in support of opposition and evidence in support of the application
Draft an Affidavit under Rule 47 to submit evidence in reply to the opposition
Draft a petition for infringement and passing off
Draft a reply to a plaint for infringement and passing off
Draft a Cease and Desist Notice with respect to trademark infringement/ passing off
Draft a Response to Cease and Desist Notice
Draft a UDRP complaint in respect of cybersquatting
Draft a Review Petition before the Trade Marks Registry
Draft a Rectification Petition before the Trade Marks Registry
Draft a Cancellation Petition before IPAB
Draft and file Appeal before IPAB
Draft a letter to Trade Marks Registry for non-service of hearing notice resulting in abandonment of the application
Draft a trademark licensing agreement
Draft an assignment agreement or include an assignment clause in a business transfer agreement
Yesterday someone asked me why LawSikho’s contract drafting course costs almost Rs. 30,000 while others charge as low as Rs. 2000. Enigma, isn’t it?
What is an enigma to me though, is how can people offer an effective course for such a low price.
Of course, if I just create a bunch of text material to read and some videos to watch, it is indeed possible to keep prices really low, because the marginal cost of a new student studying the same material is 0, or very close to 0. Such a course can be offered dirt cheap.
However, what if I offer live classes, top teachers with great credentials, personal feedback on assignments, career coaching, article writing and publishing, content which is updated on a monthly basis, hard copy material, recruitment support and such other services and not just some canned reading material along with a few videos you can watch in a couple of hours? My marginal cost of taking every new student will be substantial.
So the choice is clear. I think, if all you want is a certificate, you will find lots of courses that are cheaper, and in fact far easier to complete as opposed to LawSikho courses.
Recently, I was taking a mock interview of one of my students who was going to appear in a big law firm interview. I was pretending to be an interviewer and was asking her questions from her CV, so that she could prepare for her real interview well. One thing on her CV that she mentioned was a cyber law diploma she did from an organization in Mumbai when she was in her 3rd year of law college.
So I began to ask her some basic questions about cyber law. She could not answer. Before long, she decided to delete that diploma from her CV. Why? Because it is worse when you claim that you have a qualification but cannot answer questions in an interview or internship that you should be able to answer.
What happens when you said you can draft contracts in your application, citing a certificate course you have done from somewhere, but then it becomes evident during that internship that you do not know how to actually do the work? Does that reflect well on you? Does that make a potential employer want to hire you?
This lesson is more important for law students than lawyers. Lawyers already have experienced such problems and need not be convinced about this. They know the value of real skills and what happens when you have a certificate but no skills to back that.
Don’t put yourself into difficult situations because you need to make your CV bulkier.
Learn the real skills, rather than collecting a bunch of certificates. Our contract drafting course is geared towards teaching actual skills that clients pay for.
We recently updated our contract drafting course, and below are the new learning objectives.
It is fine if you cannot buy our course, because of problems of time, money or permission. You now have the entire list at your disposal, and you can always try and learn these things on your own. Print out this list, and use it as a checklist. Learn one skill at a time, from wherever you can.
Every skill from the list below that you learn will take you closer to success as a lawyer, because contract drafting is a foundational skill that every lawyer can benefit from.
Broad learning objectives
Gain exposure of strategic drafting and negotiation of high value commercial contracts
Get hands on experience of drafting 100 types of most common commercial contracts
Understand the technical and commercial aspects involved in advanced contract-specific negotiations
Learn the art of drafting clauses to avoid ambiguous clauses and uncertain interpretations
Review contracts with an objective of minimizing future disputes
Develop the skills for negotiation of government contracts
Learn the tricks of the trade for paying stamp duty, registration and execution of contracts
Learn how to create or assess a negotiation strategy
How can you prepare before walking into a high-value contract negotiation
Learn how to quickly grasp the most important business aspects that dictate terms of any given contract
Learn to perform a risk-analysis of any contract
Get trained in understanding your client’s expectations, commercial objectives and ensuring your draft reflects the concerns of your clients
Learn how to avoid mistakes that even seasoned lawyers end up making in the process of contract drafting and negotiation
Learn skills for representing big corporations in contract negotiation and how it is different from working with smaller businesses and individuals
Get access to hundreds of templates drafted by experts that you can learn from and actually use while doing client work
Learn how to enforce contracts in case a term is violated, and how to decide if filing a breach of contract suit is worth it
Learn to calculate damages for contractual breach
Learn how to create standard format of contracts and use them successfully in any organization
How AI softwares are changing contract drafting and what you need to learn
Specific Learning Objectives
Learn how to draft contracts effectively by understanding the operative clauses, boilerplate clauses and drafting clauses to mitigate risk that ensures maximum enforceability
Identify commercial intent of the contracts across multiple industries like manufacturing, services, M&A, banking and finance, media and intellectual property, technology, public procurement etc.
Understand the basic elements and the structure of typical contracts
Learn how to appreciate your client’s needs and expectations and get specific instructions in writing that clients do not go back on
Develop the skills for usage of words in your contract that give it a better clarity and precision and structurize the tone of the contract depending on your client’s needs
Understand the expectations of law firms and companies from lawyers with respect to drafting and review of contracts
Understand how you as a lawyer can add maximum value to a contract and provide clients what they need on a case by case basis
Get introduced to common drafting errors and implement the tips on avoiding them that shall be taught throughout the course
Get skilled in identifying and articulating major loopholes when you read a client’s existing contract or a previous draft for the first time
Understand the formatting techniques necessary for efficacious and powerful drafting
Learn to use a checklist while drafting contracts that would ensure you never miss a clause
Learn about signing (execution), stamping, registration of contracts, attestation, notarization and apostillation of contracts and how it impacts their legal validity and enforceability
Learn about the validity of old stamp papers and stamp papers from other states
Learn about counterparts and their validity
Understand how and when to create conditions precedent and conditions subsequent in a contract and allocate responsibility for their fulfilment
Learn about the ‘closing’ of a contract and how to draft a closing/completion clause
Learn how to specify obligations and allocate risks to the parties to avoid confusion later
Learn how to make payment clauses watertight
Identify when and how to create annexures for the contracts you draft
Learn to skillfully draft various clauses like the term, termination and renewal clause
Learn how to insert and customize boilerplate clauses
Get a conceptual understanding about security documentation relating to the mortgage deed, hypothecation agreement and pledge agreement in negotiations relevant to the banking and finance sectors
Learn how to draft an indemnity clause in a contract
Get skilled in making amendments and variations in contracts
Learn how to deal with situations where there may be an unenforceable part in a contract and draft the contractual provision of a severability clause to counter it
Learn how to draft shareholders’ agreements
Learn how to draft loan agreements
Learn how to safeguard intellectual property of the parties to a contract
Identify ways to mitigate your liability in case of Force Majeure, and clearly specify who will be responsible to which extent in cases when no one can be held responsible
Learn how to keep information of the parties to the contract confidential and draft an effective confidentiality clause for that purpose
Understand how to insert an effective non-compete clause and its variations
How to specify territory and governing law on the parties to the contract to prevent future inconvenience and disputes between the parties
Learn how to draft breach of terms clause and how to effectively identify breach
Understand how to clearly mention consequences in the event of breach
Understand when a party can rescind from a contract and when he gets discharged
Learn how to claim specific enforcement of contracts
How to obtain permanent, temporary and mandatory injunctions
Gain expertise for the defences available in case of breach of a contract
Get guidance from the experts to expand the deal to create win-win strategies
Learn how to negotiate with an institution and multiple stakeholders
Learn how to draft an effective dispute resolution and arbitration clause
Learn how to resolve disputes through arbitration – how to initiate arbitration proceedings, how to appoint arbitrators, how to challenge their appointment, and how to challenge the validity of an arbitration agreement
Learn about the powers and limitations of arbitral tribunals, and stages where court intervention can be sought
Learn how to effectively draft a notice of commencement of arbitration, statement of claims and defence
Learn how to get interim relief in an arbitration
Learn about the pros and cons of institutional arbitration and how to select an arbitration institution for your client
Learn how to get arbitration awards enforced and challenge the arbitration awards
Learn how to deal with infringements of the rights of the third-parties who are not a party to the contract
The present case deals with the petition filed by Mylan Labs asking for a stay on the order passed by Deputy Controller of Patents and Design against the Petitioner. The petitioner, in this case, had to approach the High of Delhi as there has been lying vacant the seats of appropriate officers at the Intellectual Property Appellate Board or IPAB and hence the challenge filed by the Petitioner against the order of the Deputy Controller of Patents and Design cannot be heard.
Facts
The Petitioner has challenged the order passed by the Dy. Controller of Patents and Designs, granting a patent on “Methods of Evaluating Peptide Mixtures” to Respondent No.3. (Order dated 14th March 2019)
The petitioner filed an appeal with the IPAB (Intellectual Property Appellate Board) along with stay application. (Appeal filed on 17th May 2019)
The petitioner approached this court for urgent hearing of his stay application as the IPAB was not functioning due to non-availability of Technical Member (Patents) since 4th May 2016.
High Court directed Deputy Registrar to file a status report regarding the vacancies at IPAB. (Order dated 21st May 2019)
Dy. Registrar submitted his report on 24th May 2019. Highlights of his report are as follows:
Section 84(2)[2] requires the IPAB bench to have one judicial member and one technical member.
As per the report, a post of the technical member for Patent is vacant since 4th May 2016; post of a technical member for Trademark is vacant since 5th December 2018; no technical member for Copyright has been appointed till date and there is only one technical member for Plant Varieties Protection.
At present, there are no current Technical Members for Trademark, Copyright and Patent and Hon’ble Chairman is conducting sittings without them, passing only administrative orders.
2626 Trademark cases, 617 Patent cases, 691 Copyright cases and 1 GI case are lying pending with the IPAB. Hence, a total of 3935 cases are pending before the IPAB due to various vacancies.
Issue
Can the Chairman of IPAB hear matters in the absence of Technical member?
Relevant Law
Section 84 of the Trade Marks Act, 1999 deals with the composition of the Appellate Board. The sub-clause 2 of the said section mandates that there “shall” be one judicial member and one technical member consisting the bench. Hence, without the said composition, orders cannot be passed by such a bench.
Section 115 of the Patents Act, 1970 deals with the appointment of an independent scientific advisor so as to help or assist the court regarding a question of fact or question of opinion.
Section 116 of the Patents Act, 1970 deals with the requirement of the technical member as well as the qualification prerequisites for his appointment.
Analysis
Submissions by Petitioner
Technical Member of Plant Varieties Protection Dr. Onkar Nath Singh should hear pending patent matters along with Chairman, IPAB
Chairman, IPAB along with scientific advisor appointed under section 115 should adjudicate pending disputes.
Chairman be directed to hold the office till his successor is appointed by the government as per the provisions of section 89.
An order passed by such Tribunal shall not be declared invalid by invoking the doctrine of necessity.
Submission by Respondents
Chairman alone is not empowered to hear appeals alone, with technical member who is qualified as per section 116(2) of Patents Act.
Appointment of Technical member has been initiated hence, there is no need for interim measures.
Submission by Amicus Curiae
Along with filling up of vacancies on a fast track basis, the Trade Marks Act should be amended to allow single-member benches along with two member benches as are currently allowed under the act.
Provisions for appointing Ad-hoc members till full-time Technical members are appointed shall be made.
The court considered the decision of Hon’ble Supreme Court in Anita Kushwaha v. Pushap Sudan, where the Hon’ble Court had held that access to justice, which is part of Right to Life, includes effective adjudicatory mechanism. The Court also held that if a citizen is unable to access courts or other adjudicatory bodies, it is a violation of his rights guaranteed under Article 14.
Court considered the decision of Hon’ble Supreme Court in Election Commission of India v Dr. Subramaniam Swamy[3], where the court has invoked the doctrine of necessity and held that if the choice is between choosing a biased person to act or to stifle the action, the court will always be against the option of stifling the action in order to promote decision making.
The court considered the decision in M/s Kwality Restaurant and Ice Cream Co. v. The Commissioner of VAT, Trade and Tax Department,[4] where again the underlined that the intent of legislature behind the act was not logjam but a continuity of the proceedings.
The court considered the decision in Talluri Srinivas vs Union of India, Ministry of Corporate Affairs,[5] where the court held that the litigation cannot be non sequitur, i.e. there cannot be litigation system in which it is impossible to litigate a given case.
The court considered the decision in Bharat Bijlee Limited v. Commissioner of Trade and Taxes,[6]where the court ordered the hearing to be conducted by two members of Appellate Tribunal instead of three. The court held that the Act nowhere mentions that till the time the vacancy is not filled, the Appellate tribunal cannot work in the absence of any prohibition.
The court considered the decision in Radio Next Webcastion Pvt. Ltd v. Union of India,[7] where the court held that the absence of Technical Member (Copyright) does not impinge upon the jurisdiction of the Appellate Board itself as Appellate Board constituted under section 83 also has jurisdiction to perform functions under the Copyright Act as well.
The court considered the decision in Natco Pharma Limited v. Union of India,[8] wherein the court directed the Dy. Controller of Patents and Designs to hear a particular patent appeal as there was no Technical Member in the IPAB.
The court considered the case of Kudrat Sandhu v. Union of India,[9] where the court-ordered extension of the term of President and other members of NCDRC till fresh appointments are made by the government.
The court considered the case of Rojer Mathew v. South Indian Bank Ltd,[10] where the court-ordered extension of the term of Judicial member of NCDRC by one year or till fresh appointment is made.
Conclusion
Guidelines by Court
The statute is silent on the procedure to be followed where the position for Technical Member is vacant or they cannot participate.
The doctrine of Necessity has to be invoked as the legislative intent is continuity of IPAB and not its cessation.
IPAB can hear urgent matters even when there is no Technical Member and such orders will not suffer on the ground of lack of Coram.
Considering the authorities presented, the Chairman, IPAB along with Technical Member (Plant Varieties Protection) can hear urgent matters relating to Patents, Trade Marks and Copyright till the vacancies are filled.
The Chairman, IPAB is at liberty to proceed with hearing an urgent matter, even in the absence of a Technical Member or he can take the opinion of a scientific expert as has been notified under section 115 of the Patents Act.
Decision of Court
The Court ordered the Chairman, IPAB and Technical Member (Plant Varieties Protection) to hear the stay application filed by the Petitioner and disposed it within six weeks.
The Chairman, IPAB and Technical Member (Plant Varieties Protection) are at liberty to hear urgent matters pertaining to Trade Marks, Patents and Copyright.
This is a surprising decision given by the High Court on several grounds. Firstly, allowing the Chairman to hear the matters without the statutorily mandated coram puts the decision in a bad light as the courts are not the legislating authorities under the Indian constitution but are only supposed to interpret what the legislation implies.
Secondly, allowing the Technical Member of the Plants Varieties Protection to hear the cases pertaining to Patents, Trademarks and Copyright defeats the very purpose of having a specialised body for the adjudication of these very matters that are extremely technical in nature.
Thirdly, allowing the Chairman to keep occupying his office until it is filled by someone in the future allows the government to continue with the lethargic behaviour that has been adopted by it in filling up vacancies at the Intellectual Property Appellate Tribunal. The court should have condemned such lax and lethargic practice of the government is very strong words and should have directed the appropriate authorities to fill up the vacant positions and should have set a deadline for the same.
References
Trade Marks Act, 1999
(1996) 4 SCC 104
(2012) 194 DLT 195 (DB)
(2018) SCC OnLine Del 7765
(2016) 231 DLT (CN) 2 (DB)
(2018) 254 DLT 660
S.L.P (C) Nos 1323-1337/2008
W.P. (C) No. 279/2017
S.L.P (C) 15804/2017
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