India’s No.1 Magazine on Business & Legal World LEGAL MEDIA GROUP ` 70 | US $7 | £5 BY THE PEOPLE. FOR THE PEOPLE. OF THE PEOPLE. www.legaleraonline.com | March 2018 Vol. VIII | Issue XII RIGHT IS MIGHT 92 P. T. K. VIswanaThan Chairman, Bankruptcy Law Reforms Commit tee Legal Era In Conversation with Stakeholders: Moving To N-Dimensional Space Is It Game Over For The Singh Bros Data (Privacy and Protection) Bill, 2017: What To Expect SLP Filed In SC, Evidence Suppressed Absolves Tarun Tejpal Claims Defence
Transcript
India’s No.1 Magazine on Business & Legal World
LEGAL MEDIA GROUP ` 70 | US $7 | £5
BY THE PEOPLE. FOR THE PEOPLE. OF THE PEOPLE.www.legaleraonline.com | March 2018 Vol. VIII | Issue XII
RIGH
T IS M
IGHT
92P.
T. K. VIswanaThanChairman, Bankruptcy Law Reforms Committee
Legal Era In Conversation with
Stakeholders: Moving To N-Dimensional Space
Is It Game Over For The Singh Bros
Data (Privacy and Protection) Bill, 2017: What To Expect
In a first, New York-based International Business Machines (IBM) Corp. has sued in a New York federal court its former VP Human Resources and Chief Diversity Officer,
Lindsay-Rae McIntyre, for alleged violation of a one-year non-competitive agreement. According to the suit, McIntyre, who left IBM for a similar job at Microsoft Corporation, is in the know of “highly confidential, proprietary, and competitively sensitive information” which will allow Microsoft to compete for the same talent and business from customers that value diversity. IBM claims that McIntyre knows of its plans to hire 50 diverse candidates in executive positions and also of its development of artificial intelligence (AI)-based tools to track development of careers of women and minorities in the company. According to IBM, if McIntyre uses and/or discloses such information intentionally or otherwise, it would place the company at a competitive disadvantage. As such, IBM has sought to enforce McIntyre’s non-competition agreement for 12 months and recover from her the equity compensation that she has forfeited by “violating her contractual duties” to IBM.
The lawsuit is unusual in that IBM has elevated its diversity data and strategy to the level of an economically valuable “trade secret”, a term more commonly reserved for closely guarded formulae (Coca-Cola) and technical know-how. In doing so, however, the company has shone a light on how diversity is gaining currency in corporate America. McIntyre’s attorneys have countered saying that Washington-based Microsoft has no use for IBM’s diversity-related trade secrets and that McIntyre will not be able to use them in her new role. They have expressed surprise that IBM is seeking a draconian temporary restraining order and preliminary injunction to prevent McIntyre from working for a whole year, in any position, anywhere in the world, and for any company IBM deems to be a “competitor”. Notwithstanding, Judge Vincent L. Briccetti has temporarily barred McIntyre from moving to Microsoft.
Meanwhile, experts have said that while IBM has an edge over its rivals when it comes to diversity, IBM’s tools for reaching its diversity goals can qualify as trade secrets if and only if they are valuable to IBM’s competitors as well. Others have criticized the company for its unwillingness to share knowledge for the benefit of the industry and the society as a whole.
This special edition of Legal Era is peppered with such and other interesting reads. Remember, knowledge is power, and that’s true as much for the legal profession as it is for any other line of work. Aside of the magazine, Legal Era is organizing the annual GENNEXT Business Congress on 23rd & 24th March 2018, at Hotel Taj Lands End, Mumbai. The Congress will see the who’s who of the legal fraternity discussing policy regulations and their impact, global developments and future strategies. So, mark your diaries in advance and be there to help us help you surge ahead in the face of challenges.
Open Bar
Aakriti Raizada SharmaFounder & Managing Editor
Legal Era Magazine, Legal Media Group
DiversityAt Stake
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March 2018 | Volume VIII | Issue XII
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StakeholderSMoving To N-Dimensional SpaceAnglo Saxon vs. European Model of Corporate Governance
Human Resource Development and customer-centric behavior have become modern managements’ article of faith. It is for the corporate governance theory to change
itself to keep pace with the practice. In short, it is moving from the linear thinking of about shareholder value to the n-dimensional space that includes everyone
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March 2018contents
03 Open Bar
10 Readers’ Notes
12 Top Stories
16 World @ Glance
22 Nation @ Glance
26 Within the Circle
78 Highlights
80 Policy Update
84 Legal Precepts
88 Fun 'n' Frolic
90 Mind-Boggling
Zoom IN54
If a lawyer receives unsatisfactory instructions from a client or information which is incomplete, then the
lawyer should cease to act if he or she believes that the client may be seeking to act illegally
50 Let’s UphoLd
Zoom IN36
To ParadisePanama
regulation and role of Lawyers in Cross-Border Commercial Transactions
From
PRIVATE TRUSTS
IMPLICATIONSINCOME TAXFORMATION AND
While we understand that the taxation of a private trust majorly depends on what structure is being followed while forming and operating a trust, it is advisable that the real intention of the settlor be explicitly set out in the trust deed along with details regarding beneficiaries
is iTFor THe sinGH Bros
Game oVer
From putting RANBAXY on the global pharmaceutical map to selling their stake in it to DAIICHI SANKYO to their subsequent downfall, LEGAL ERA chronicles the saga of the company’s former Promoters, MALVINDER and SHIVINDER SINGH
is exTreme eVenTPrediCTaBLe?
Historically speaking, economic crises or disasters natural or man-made have never occurred in isolation.
There have always been warning signals which, many a times, were not heeded
oUtLook58
regulars
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42 LeAder speAk
66 IN FocUs
With the role of an IP under constant evolution and everyone still trying to figure out how the IBC operates on the ground, various issues need to be studied and stakeholders need to work in unison to ensure long-term success
With due government intent falling into place and the Indian education market projected to grow to USD 180 billion in a few years’ time, the need for capital, technology, and best practices from a private player
will be invaluable to the sector
70 Let’s UphoLd
INsIghts74
We sHouLd GeT aLL ourBriLLianT LaWyers
indiaaBroadBaCk To
Chairman, Bankruptcy Law Reforms Committee
T. K. ViswanathanLegal Era in conversation with
Data (Privacy and Protection) Bill, 2017: What to ExPEctAs digitization increases, large volumes of data are generated and there are no measures to safeguard the privacy of this data nor regulate data retention by the platforms collecting it. Hence, we are in need of a strong data protection law
The article takes a close look at the highlights of Union Budget 2018 in terms of direct and indirect taxes
analyzing Tax Proposals2018
PriVaTe inVesTmenT in THe
eduCaTionseCTor
In a twist to the case where the Former Editor-in-Chief of Tehelka Magazine is facing charges of having sexually assaulted a junior colleague in 2013, the petition filed in the Apex Court is
claimed to challenge Tejpal’s very prosecution
62 tAke oN BoArd
SLP FILED IN SC, EVIDENCE SUPPRESSED ABSOLVES
CLAIMS DEFENCETARUN TEJPAL
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New roster system adopted, all pIls to be heard by CJI
eleCtroNIC reCords CaN be used as evIdeNCe wIthout CertIfICate
Friday, February 02, 2018
Wednesday, February 07, 2018
With the age of digitization taking over, and electronic records playing primary importance as evidence, the Supreme Court has held that courts can rely on electronic records as permissible evidence and it is not compulsory for a person in a responsible position to certify them if “interest of justice so justifies”.
A bench of Justices A.K. Goel and U.U. Lalit noted that the provision should be made only when such electronic evidence is submitted by a person who is in a position to produce such certificate and if this were not allowed then it would “be denial of justice to the person who is in possession of authentic evidence/witness”.
“Thus, requirement of a certificate under Section 65B(4) is not always mandatory,” the bench said, interpreting a provision of the Indian Evidence Act.
The top court’s explanation on Section 65B of the Indian Evidence Act, dealing with applicability of electronic evidence in court proceedings, is bound to have an impression on criminal trials, where an increasing number of call detail records, CCTV footage, mobile video recordings and CDs are being reckoned upon.
The whole matter came up before the court while it was addressing the issue of video-recording used as proof.
The Apex Court considered the views of four Senior Advocates Arun Mohan, JayantBhushan, YashankAdhyaru and Meenakshi Arora, nominated as Amicus Curiae to guide in interpreting the provision of 65B, to enable admissibility of electronic records.
Stating the Section 65B of Evidence Act as a procedural provision; the bench concluded that if the electronic evidence is “authentic and relevant” it can certainly be permitted, subject to the satisfaction of the court and may vary as per cases as “whether the person producing such evidence is in a position to furnish certificate under Section 65B(4)”.
new system of allocation which includes a Judges’ roster has been facilitated.Under this, it is noted that the CJI has kept all matters related to public interest, social justice, elections, arbitration, and criminal matters, among others and the Special Leave Petitions (SLPs), for hearing, with himself. These are the matters that are of high importance heard by the Supreme Court.None of the four seniormost and Collegium Judges –Justices Chelameswar, Ranjan Gogoi, Madan B. Lokur and Kurian Joseph – have PILs assigned in their rosters. Matters related to labor disputes; taxation matters, compensation matters, consumer protection matters, maritime law matters, mortgage matters, personal law matters, family law matters, land acquisition matters, service matters, company matters etc. will be heard by the other Judges.In an unprecedented move, the top four Judges had not only circulated a letter to the media but also held a Press Conference on how the CJI has been allocating cases of “far-reaching consequences for the nation and the institution” to “preferred Benches”.
Owing to the issue of selection of Judges raised in the 4 Judge Press Conference, Chief Justice of India (CJI) Dipak Misra has called in a new system for allocation of cases, shunning all those who question his leadership. An official website of the Supreme Court stated that as per the new system effective from February 5, 2018, based on the subject matter they imply upon, cases will be assigned. It is a first in the history of the Supreme Court that such a
Top STorieS 13
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plea to baN legIslators from legal praCtICe moved IN sCThursday, February 08, 2018
Three days after a sub-committee of the Bar Council of India concluded in their report that lawmakers cannot practice being lawyers; the petitioner had moved the Supreme Court now with a plea highlighting the conflict of interest in MPs and MLAs practising law.On February 16, the Supreme Court decided to examine a plea to ban Members of Parliament and State Legislative Assemblies from practising law. A Bench led by Chief Justice Dipak Misra asked Attorney-General K.K. Venugopal for assistance.Referring to Rule 49 of the BCI and Article 14 (Equality) of the Constitution, Applicant Ashwini Upadhyay has
approached the Supreme Court. Mr. Upadhyay, a Supreme Court lawyer and Delhi BJP leader has said in his petition that “the writ petition is being filed under Article 32 seeking ban on legislators from practicing as an Advocate (for the period they are Member of Parliament or State Assembly) in spirit of the BCI Rule 49 and Article 14 of the Constitution.”“The legal profession is a noble and demanding one and the apex court has repeatedly frowned upon its practitioners attempting to ride two horses or more at a time,” said the applicant, who has also given examples of how the court “frowned upon” a doctor wanting to practise as an advocate. A bench of Chief Justice Dipak Misra and Justice A M Khanwilkar sought the assistance of AG K.K. Venugopal on a plea which alleged that parliamentarians and legislators practising as lawyers pose a “conflict of interest” and violation of provisions of the Advocates Act and the Bar Council of India Rules.The petition also pointed out that the MPs have the power of voting on the impeachment of judges of the Supreme Court and high courts.
petItIoN ChalleNgINg ‘mIsCellaNeous days’ eNtry baN oN law INterNs to be heardMonday, February 12, 2018
A law student filed a petition challenging the ban (since August 2013) on entry of law interns into the Supreme Court courtrooms/premises on ‘miscellaneous days’ - Monday and Friday - of every week when several public interest litigations are heard.
The petition, filed by SwapnilTripathi, a fourth year law student pursuing BBA.LLB (Hons.) at National Law University, Jodhpur mentioned, “Prohibition of law interns on miscellaneous days hampers the scope of learning expected out of litigation internships as most of the important arguments and leading cases are listed and heard on these two days only, therefore denying interns entry on those specific days, defeats the very objective of a legal internship and the provision. Further, such a denial vide the notification also violates the fundamental rights of the law interns.”
As a large number of PIL litigants and related parties that present themselves at the court on those particular days, the Supreme Court Registry implemented the ban.
The “vide notice dated 21.08.2013 which prohibited law interns from entering the Court premises on Miscellaneous Days i.e. Monday and Friday” was challenged by Tripathi. The help of Attorney General K.K. Venugopal was sought
by the Justices A M Khanwilkar and D Y Chandrachud in the issue.
Tripathi told the bench that his main point was the entry ban on law interns on miscellaneous days which was a violation of Article 14 of the constitution. His plea was “Issue a writ of mandamus, or any other writ or direction to the Respondent to construct live streaming rooms within other writ or direction to the Respondent to construct live streaming rooms within the Supreme Court premises granting access to legal interns”.
owNershIp reCords of vehICles to be ChaNged after sale or mIshapsThursday, February 08, 2018
another person, an accident took place on May 27, 2009, in which one person was killed and another injured. Following this, the tribunal had awarded a `3.85 lakh compensation and ordered Vijay Kumar to be jointly liable with the driver of the car as the registration records still had his name.
Vijay Kumar challenged this order before the Punjab and Haryana High Court, who allowed the appeal on the grounds that there was clear evidence of sale of the vehicle.
One of the successive owners, through advocate Rishi Malhotra, challenged the high court judgment in the SC and said the court could not render a decision contrary to law.
Malhotra said Section 2(30) of the Motor Vehicles Act, 1988, provides that the person in whose name a motor vehicle is registered is the owner and, hence, he alone is liable for payment of compensation.
In its judgment, a three-judge SC bench said, “In a situation such as the present where the registered owner has purported to have transferred the vehicle but continues to be reflected in the records of the registering authority as the owner of the vehicle, he would not stand absolved of liability.”
In a strict verdict, the Supreme Court, on February 6, held that the person who owns the car on the registration papers, would be liable to pay the compensation claims arising from accidents involving the vehicle even if another person owned and drove the car, thereby, propagating the rule of changing the ownership in registration records if you have sold the car to another person.
Vijay Kumar, who had sold his car to another person on July 12, 2007, faced this plight. That person further sold the car on September 18, 2008. This third owner then sold the car to one Naveen Kumar, who claimed before the Motor Accidents Claims Tribunal that he had sold it to one Meer Singh. Being owned essentially by Meer Singh but driven by
former sC Judge s. ratNavel paNdIaN passes awayFriday, February 09, 2018
On February 28, Former Supreme Court Judge S Ratnavel Pandian passed away at the age of 89 in Chennai. According to sources, he was briefly ill before his death. His last rites were held on March 2, 2018 at Anna Nagar.
Pandian was born on February 13, 1929, at Thiruppudaimarudhur village in Tirunelveli district and graduated from St. Xavier’s College in Palayamkottai. In 1954, he acquired his law degree from the Madras Law College.
He took apprenticeship under K. Narayanaswamy Mudaliar. For as close as two decades; he practiced in both, trial and appellate side in the court. In August 1971, he was appointed as State Public Prosecutor in the High Court of Madras which post he held until he was elevated as Judge in February, 1974.
In December 1988, he was the appointed as the Acting Chief Justice of the Madras High Court for a very brief span. On December 14, 1988, he was elevated as Judge of the Supreme Court where he gave many important judgements like upholding the central government’s decision to provide
27 percent reservation in jobs for backward communities and many more.
Pandian retired on March 12, 1994. After his retirement, in the year 2006, he was appointed as Chairperson of the National Commission for Backward Classes.
He is survived by five sons and a daughter. His first son Justice R. Subbiah is a Sitting Judge of the Madras High Court.
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establIsh ChIld frIeNdly Courts IN every dIstrICt: sC urges hCsMonday, February 12, 2018
On February 9, the Supreme Court articulated a judgement that child friendly courts should be established in every district, saying inquiry and trials against adolescents as well as children as victims have to be conducted with a high level of sensitivity, care and compassion. The court asserted that the children too have fundamental rights and those have to be enforced strongly. A bench comprising Justices Madan B Lokur and Deepak Gupta expressed their dismay at the poor implementation of the laws meant for well-being of voiceless children.
“We need to have some compassion towards them - even juveniles in conflict with law, since they are entitled to the presumption of innocence - and establishing child-friendly courts and vulnerable witness courts is perhaps one manner in which the justice delivery system can respond to ease their pain and suffering,” the bench said. Apart from this, a Committee had also been set up by the CJI to address the issues of effective implementation of the JJ Act of 2000. “Only cosmetic changes have been introduced at the ground level with the result that voiceless children continue to be subjects of official apathy while the real picture relating to the recognition of the rights of children & their realization is far from satisfactory & remains gloomy as we continue to trudge along the long and winding road,” it added.
The court further said that another advantage of such child-friendly courts and vulnerable witness courts is that they can
be used for trials in which adult women are victims of sexual offences since they too are often traumatized by the not-so-friendly setting and environment in our courts.
While expressing their dismay on the extreme poor implementation and actions on the JJ Act, the court said, “More than sufficient time has already elapsed since the Act of 2000 was enacted by Parliament & certainly, the children of our country deserve much better & can’t wait for another 15-16 years for effective implementation of the JJ Act. Most of the children who were born when the Act of 2000 was enacted are nearing adulthood & many of them haven’t had the benefit of the provisions of the Act of 2000.
INterIm order oN appoINtmeNts to trIbuNals passedFriday, February 09, 2018
power of the appointment of tribunal members and their tenure in the government was decided upon.The recommendation to constitute an interim selection committee with the Chief Justice of India or his nominee as Chairman was passed by the Apex Court and it was also asserted that the appointment to the post shall be made through nomination by the Chief Justice. The petitioners have questioned whether such a provision vesting in the government the powers to merge the tribunals and appoint their members thereby taking away the say of the Chief Justice of India could be brought by way of the Finance Bill.The petitioners have also contended that the provision the government has brought through the 2017 Finance Act was violative of the doctrine of the separation of powers and the principles of independence of judiciary.After the government got power to appoint members of the tribunals and their mergers, it merged eight tribunals which now stand at 19. Earlier, the number of tribunals was 26. The Court also passed interim directions with respect to the condition of service of members so selected.
On February 9, the Supreme Court said that appointments to all the tribunals, for now, would be made as per the earlier rules with its distinct say in such appointments which are essentially judicial in nature, thereby putting on hold new rules that gave the government greater powers in appointing and fixing the service conditions of members of various tribunals. A bench of Chief Justice Dipak Misra, Justice A M Khanwilkar and Justice D Y Chandrachud said, in an interim order that the current arrangement would remain in force temporarily until the plea challenging the provision of the Finance Act, 2017-2018, that vested the
On February 13, Oregon’s Legislature took a step toward enshrining the right to healthcare in the State Constitution, by making access to healthcare a fundamental right.
The current bill would be amended to add a section to the state’s constitution that reads, “It is the obligation of the state to ensure that every resident of Oregon has access to cost-effective, medically appropriate and affordable healthcare as a fundamental right.” Cedric Hayden, R-Fall Creek, House member and dentist said access to quality health care is a basic need, like food and water, but not a right.
“I believe healthcare is very important. It needs to be stable. But I also believe that our foster care system is important,
On February 6, a new bill was hailed by the US House of Representatives to finish and terminate the non-defense aid to Pakistan as it “provides military aid and intelligence” to terrorists. The amount invested was proposed to be now redirected to infrastructure projects in the US.
The bill was introduced by Congressmen Mark Sanford from South Carolina and Thomas Massie from Kentucky, and the bill was said to prohibit the US State Department and the US Agency for International Development (USAID) from sending American taxpayer money to Pakistan.
The lawmakers alleged that Pakistan “knowingly” provides resources to terrorists and US must not be aiding funds to a country which provides military aid and intelligence to terrorists”.
Sanford stated, “When the American people support other nations, our generosity shouldn’t be used to reward terrorists with US taxpayer dollars. Couple this with the fact that the Highway Trust Fund will be $111 billion short by 2026, and it simply makes financial sense to repurpose
our education system is important, our environment is important, and the jobs that we create for Oregonians are important,” Hayden said.
“Clearly, we all want Oregonians to have access to basic health care services, but to advance a constitutional amendment that has the potential to radically change our state in ways we do not yet understand strikes me as incredibly risky,” he further added. The Senate will be receiving the amendment and if so approved and cleared by them, will go before voters at the next general election.
On February 13, all who spoke in favor of the Oregon bill said no Oregonian should lack access to medical care, but the opposition claimed that no plan to fund making healthcare access a right was there and warned that doing so would make the state vulnerable to lawsuits.
Rep. Mitch Greenlick described how he was diagnosed with lymphoma in 2005, and relied on insurance to pay huge treatment costs.
“If I didn’t have insurance, I wouldn’t be here,” the Democrat from Portland said. “I would be dead.”
He goaded lawmakers to pass the bill as “a moral decision.”
these funds for our infrastructure.”
The bill was introduced in January 2018, where Republican Rand Paul had said, “Let’s bring that money home and use it to help rebuild our infrastructure instead of giving it to a nation that persecutes Christians and imprisons people such as the doctor that helped us get Osama bin Laden.”
The US has supported Pakistan with an amount of nearly $34 billion post the 9/11 attacks, including $526 million in 2017 alone.
OregOn State LawmakerS VOte tO make HeaLtHcare a rigHt
US HOUSe intrOdUceS biLL tO cUt nOn-deFenSe aid tO Pak
InternatIonal 17
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OxycOntin maker PUrdUe PHarma SUed OVer OPiOid ePidemic: aLabamaFriday, February 09, 2018
On February 5, Alabama became the latest state to file a case accusing OxyContin maker Purdue Pharma LP of fueling the opioid epidemic by deceptively marketing prescription painkillers to generate billions of dollars in sales.
Alabama Attorney General Steve Marshall alleged in a lawsuit filed in a federal court that Purdue misrepresented the risks and benefits of opioids, enabling the widespread prescribing of drugs for chronic pain conditions.
As per him, the state leads the nation in the number of painkiller prescriptions per capita. He says that the lawsuit states Purdue purposely gave doctors misinformation about prescription opioids in order to generate billions of dollars in sales.
“Our average lifespan has reduced in the last two years, and this being the principal reason why,” Marshall says ”We’ve got to be able to make a difference in this issue nationally.”
Stamford, Connecticut-based Purdue in a statement said it denied the allegations. It noted its drugs are approved by the U.S. Food and Drug Administration and account for only 2 percent of all opioid prescriptions.
“As a company grounded in science, we must balance patient access to FDA-approved medicines, while working collaboratively to solve this public health challenge,” Purdue said.
The lawsuit alleges that marketers persuaded doctors that prescription painkillers weren’t addictive, Marshall says.
“The lies that they were told and trained in over the years whether it be that there was no dosage too high of an opioid ... or even this concept of a pseudo-addiction that if somebody appeared in an office demonstrating signs of addiction that just meant that they needed more pain medication,” he says.
Opioids were involved in more than 42,000 overdose deaths in 2016, according to the U.S. Centers for Disease Control and Prevention.
Some attorneys general have decided to file lawsuits outside of the probe against the companies under scrutiny. Purdue alone faces 14 lawsuits by states including Alabama.
A federal Judge in Ohio overseeing more than 200 lawsuits by cities, counties and others over the opioid epidemic recently reached out to some state attorneys general about meeting as he pushes for a quick settlement of the litigation.
Marshall was among the attorney generals who attended the first court-ordered settlement conference overseen U.S. District Judge Dan Polster in Cleveland.
Marshall said he now expects his lawsuit, filed in a federal court in Alabama, will be transferred to Ohio to be overseen by Polster.
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FaULty airbag cLaimS SettLed by takata cOrP, cLearS way OUt OF bankrUPtcyMonday, February 12, 2018
According to court papers, Takata Corp’s U.S. unit reached a settlement with its creditors, lawyers with two groups representing victims of its faulty airbags and automakers that smoothens the way to end its bankruptcy and sell its feasible operations. Filed in a Delaware bankruptcy court, the documents highlighted the agreement between the Japanese auto parts suppliers, injured drivers and creditors. Two committees for people suing over the airbags have agreed to support a bankruptcy-exit plan that would resolve lawsuits by channeling them into a trust funded in part by the sale of Takata assets. Under the settlement, lawsuits will be resolved through a trust fund.
Attorney Joe Rice of Motley Rice, who represents dozens of personal injury plaintiffs in the bankruptcy, said the deal,
which was disclosed in court papers, was aimed at keeping Takata operations afloat so it could make replacement inflator kits. Takata was bound into bankruptcy amid lawsuits, multimillion-dollar fines and crushing recall costs involving the airbags. Key to the restructuring plan is the planned sale of most of its assets to a Chinese-owned rival for $1.6 billion. At least 16 people have died and more than 180 have been injured due to the problem, which has sparked off the largest series of automotive recalls in U.S. history. At least 42 million vehicles and as many as 69 million inflators have been recalled in the U.S. More than 100 million inflators have been recalled worldwide.
Honda has faced the greatest number of airbag-related claims of the automakers, and 20 of the deaths have occurred in Honda vehicles, most of which were in the United States. Twelve other automakers that joined the agreement, including General Motors and Ford Motor Co. and Toyota Motor Corp, have 18 months to opt into the trust, if they agree to compensate drivers in full.
The manufacturers, which are both Takata’s largest customers and biggest creditors, are indemnified in their agreements with Takata from losses and liabilities related to the airbag inflators. Takata will file an amended version of the reorganization plan in court, according to the documents.
On February 6, the House voted to prohibit sexual relationships between lawmakers and their employees, a remarkable rule change that brings the institution in line with the military and the private sector after a rash of sexual harassment and misconduct complaints arose at Capitol Hill. The bill that was propelled by Rep. Barbara Comstock was put into immediate effect as the move toward changing the system for reporting and adjudicating
employees’ claims of sexual harassment was highlighted. A separate bill requiring members involved in the disputes to personally reimburse the taxpayers. This bill must also pass the Senate. “Thanks to the #MeToo movement, the American public has made it clear that they have had enough,” said Rep. Jackie Speier (D-Calif.). “They expect Congress to lead, and for once we are.”
The bill is the first significant step toward changing the system that has faced numerous sexual misconduct scandals against lawmakers in recent months amid the nationwide. The new rules which are similar to the ones enacted by the military and other private sector entities prohibit the lawmakers from being sexually involved with any employee or their staff, but do not ban relationships with congressional aides that they don’t supervise.
US HOUSe PrOHibitS SexUaL reLatiOnSHiPS between LawmakerS and StaFF
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biLL PrOHibitS bLaming POLand FOr HOLOcaUSt crimeSThursday, February 08, 2018
On February 6, Polish President Andrzej Duda signed an anti-defamation bill that prohibits blaming Poland for assisting in Holocaust crimes, use of the historically inaccurate term “Polish death camps”.
However, the verification of the law still by the Constitutional Court is required, to confirm its compatibility with the constitution. “I think that this is a solution that on one hand secures Polish interests (...), our dignity, historical truth, that we should be judged in a fair way in the world and that we as a state and a nation should not be slandered, but on the other hand, also takes into account the sensitivity of those for whom the issue of historical memory and the memory of the Holocaust is extremely important, above all for those
who survived and who should tell the world, while they still can, how they remember those times and about what they have gone through,” Duda said.
Duda also referred to some concerns that have occurred in Israel and in the United States recently, saying these concerns suggest that the new bill may lead to deny or to distort the historical truth. But the Polish president said there is no such risk.
Post President Duda’s proclamation on Twitter, Israeli foreign ministry has responded saying that Israel continues to get across with Polish authorities and has expressed about its reservations towards the amendment. The ministry said it expected changes in the bill. The bill first was proposed about two years ago, soon after Law and Justice took power in 2015, but hadn’t been an issue of public debate recently. It took many people by surprise when lawmakers abruptly approved it on January 26, a day before International Holocaust Remembrance Day.
The anti-defamation bill has been being discussed since January 26, 2018 when Sejm (lower house of Polish parliament) passed the bill. The law is supposed to take effect 14 days after it is published.
ddoS cyberattackS Hit LargeSt dUtcH bankS, tax OFFiceThursday, February 1, 2018
As per media reports, three Dutch banks and the Dutch tax authorities were hit by cyberattacks on January 29, 2018. The culprit behind the so-called distributed denial of service (DDoS) attacks is not yet known. Rabobank, the Netherlands’ second largest lender, had a lapse for nearly three hours. Customers had no access to mobile and Internet banking due to the disruption, sources revealed.
The tax authority said it faced DDoS attacks that caused its website and online services to go down for five to ten minutes. “The attack is under investigation,” said spokesperson André Karels. On the same day, the website of the Dutch tax authorities was also hit by a DDoS attack.
Moreover, a few days earlier, ING, the country’s largest bank, and ABN Amro, were also hit by DDoS attacks. The services are restored now and the banks said clients’ info was not compromised or leaked.
In general, when a website is hit by a DDoS attack, servers from multiple locations are bombarded simultaneously with requests that make them overloaded. Due to this, the website and online services become inaccessible. As per Dutch cyber expert Rickey Gevers, it is too early to conclude
who is behind the recent DDoS attacks and whether they are related to the reports that Dutch intelligence compromised the Russian hacker group.
“Timing is the only thing that links the two so far,” he said. “If an individual is behind these [DDoS] attacks, we’ll probably figure it out soon. If a country is behind the attacks, we won’t ever know for sure which country it is.”
According to the Dutch Payments Association, banks are constantly being confronted with this type of attack. Usually, the reason for the DDoS attacks is not clear.
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AsiaSingaPOre ParLiament PaSSeS new Law granting POwerS tO cyberSecUrity czarThursday, February 08, 2018
On February 5, a bill stating that Singapore will have a cybersecurity czar who is authorized to receive confidential information from local organizations to investigate suspected cyber attacks was passed in the Parliament.
The Cybersecurity Bill was supported by a majority of the MPs in a 3-hour debate at the Parliament. Some of them expressed their concerns about the enormous powers given to the Commissioner of Cybersecurity - Mr David Koh, Chief Executive of the Cyber Security Agency of Singapore.
Under the Cybersecurity Bill, owners of computer systems directly involved in the provision of essential services for national security, defense, foreign relations, economy, public health, public safety or public order will have to report cybersecurity incidents related to these systems, and comply with other statutory obligations.
Workers’ Party MP Pritam Singh (Aljunied GRC) questioned as to what would be the outset for investigating incidents. He also confirmed if the broad powers would be used on dissenters. Mr Zaqy Mohamad (Chua Chu Kang GRC), Mr Darryl David (Ang Mo Kio GRC) and Ms Sun Xueling (PasirRis-Punggol GRC) asked what safeguards will be in place to protect consumers’ privacy, especially when computers contain sensitive health records from insurance companies or investment portfolios from banks.
Mr David said, “Potential ethical dilemmas could arise when cybersecurity officers, in the course of their work, gain access to personal data that contains identifiers, when the providers of that information did not give explicit consent for the information to be used or accessed.”
Noting that any needed information will be technical in nature, Mr. David also asserted that the commissioner’s powers are calculated and strictly meant to keep the lights on for essential services like network and system audit logs and network configuration.
FOrmer Pm mUSt SteP dOwn aS Party Head, rULeS PakiStan ScTuesday, February 27, 2018
On February 21, Pakistan’s Supreme Court ruled that Former Prime Minister Nawaz Sharif cannot head the country’s ruling party, six months after the court removed him as premier. The decision was made through analysis of Articles 62, 63, and 63-A of the Constitution of
Pakistan. Articles 62 and 63 enumerate the qualifications and disqualifications for being a Member of Parliament (Majlis-e-Shoora). Sharif was forced to step down as Prime Minister after being disqualified by the Supreme Court over corruption allegations. Sharif was subsequently indicted on the corruption charges in October 2017.
“The Election Commission is directed to remove name of Nawaz Sharif as president of PML-N from all official records,” Chief Justice Saqib Nisar said from the bench.
“The PML-N government through parliament tends to bulldoze the court decisions, which is unacceptable,” said PPP Chairman.
Political analysts said the decision raises serious questions about political stability in Pakistan. The court ruling means that the coming senate election, scheduled for March 3, is likely to be delayed.
DISCLAIMER: It may be noted that the Legal Era edition publishes select news pieces collated from various sources, based not necessarily on their timeliness and topicality but their interest to you.
GlobalUS, Uk bankS ban bitcOin PUrcHaSe Via credit cardThursday, February 08, 2018
On February 5, UK-based Lloyds Banking Group joined major US banks in banning purchases of bitcoin and other cryptocurrencies via credit card amid debt and security concerns. An LBG spokesman said that the ban was across its Lloyd Bank, Bank of Scotland, Halifax and Lloyds, which have banned customers from buying bitcoins with their credit cards. “We do not accept credit card transactions involving the purchase of cryptocurrencies,” a Lloyds
Banking Group spokesperson in a statement. Recently, US lenders Bank of American, Citigroup and JPMorgan each introduced the same ban. Moreover, another rising concern is that the customers who bought bitcoin in the late 2017; owing to the jump in the value of the bitcoin, are now left with big losses following massive declines in the current times.
Merely 60 days after breaking through the $20,000 mark, the price of bitcoin, as of February 5, fell to $7,950. British Prime Minister Theresa May stated that Britain should take a serious look at digital currencies such as Bitcoin because of the way they can be used by criminals. Concerns about the use of Bitcoin and other such currencies extend beyond the use of credit cards for borrowing. As per reports; China too plans to stamp out all remaining cryptocurrency trading in the country by banning access to overseas-based websites and deleting all related applications from app stores.
ScOtLand PaSSeS wOrLd Leading dOmeStic abUSe LawMonday, February 12, 2018
On February 1, a law setting a “gold standard” for domestic abuse legislation by incorporating both emotional and physical violence into the same offense has been passed by the Scottish Parliament. The legislation creates a specific offense of domestic abuse, previously dealt with under various existing laws. The measures are set to make Scotland a world leader in fighting domestic abuse, as victims of the crime will not be required to prove in court that they have been harmed.
“This is a momentous day. Our laws will be changed so they reflect the experience all too many women have suffered,” Justice Secretary Michael Matheson. “It will enable the court to consider both behavior which would be criminal under the existing law, like assault and threats, and psychological abuse and coercive and controlling behavior that can be difficult to prosecute using the existing law,” he added.
Calling it a “fundamentally innovative” legislation, Dr Marsha Scott, Chief Executive of Scottish Women’s Aid, said, “Women have been telling us for years that it is emotional abuse that is most harmful. One of the unique things about this bill is that it privileges the experiences of women and children. That’s why Scotland’s approach to domestic abuse is so radical.” The Domestic Abuse (Scotland) Bill covers psychological
and emotional maltreatment and coercive and controlling behavior as well as physical attacks. Examples of coercive and controlling behavior include isolating a partner from their friends and relatives or controlling their finances. The bill acknowledges that prosecutions may not be able to rely on evidence from the victim, meaning that police may have to gather testimony from friends, family and the abuser’s financial and telephone records. The Scottish Government has given Scottish Women’s Aid an extra £165,000 to train staff at the charity to promote understanding coercive control. The vote was 118 to one and the Tories confirmed the single vote was a mistake by Margaret Mitchell, who spoke in support of the Bill.
Europe
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HigH Court & tribunal news around tHe nation
Bombay High Court
High Court
Cannot shut meat shop on suspiCion of selling beefThursday, February 08, 2018
The bench was hearing a petition filed by about 20 meat sellers from Palghar’s Nallasopara area, challenging a notice issued to them on December 16, 2017 by the Vasai-Virar Municipal Corporation (VVMC).With shops shut since December 2017, owners and workers in shops are demanding compensation from VVMC. While the police denies this, local residents claim four customers who came to purchase carabeef were also booked on January 26, 2018.The civic body suspended their licenses and also wrote to the local police to ensure that they did not keep their shops open. As per the VVMC, on December 15 & 16, 2017, it seized around 550 kg of beef from the area of meat selling shops. In reply, the petitioners said, “We are licensed meat sellers and sell only the meat that is permitted by the state. We purchase such meat from a licensed slaughter house in Thane.”They also submitted receipts for the meat that they purchased from the adjoining Thane district.Acting on the petition, the bench has also restrained the municipal corporation from taking any coercive action against the petitioners. “First of all, there is no allegation in the notice that the petitioners have committed any breach of license terms,” the high court said. “Secondly, there is no proof that they were found to be selling beef. The notice (issued by the corporation suspending the licenses) is ex-facie illegal,” it added.
On February 6, the Chief Justices of five High Courts — Manipur, Meghalaya, Tripura, Karnataka and Kerala, were notified of their appointment as so, by the Centre after recommendations were made by the Supreme Court Collegium on January 10, 2018.Justice Abhilasha Kumari of the Gujarat High Court will be the new Chief Justice of Manipur High Court, while Justice Tarun Agarwala of Allahabad High Court will lead the Meghalaya High Court.Current Meghalaya Chief Justice Dinesh Maheswari has been transferred as Chief Justice of Karnataka High Court. And Kerala High Court Judge Antony Dominic will now take charge as the Chief Justice of the state High Court
new Chief JustiCes welComed by fiVe high CourtsWednesday, February 07, 2018
and Justice Ajay Rastogi of Rajasthan High Court has been transferred to Tripura as Chief Justice of Tripura High Court.
On February 6, the Bombay High Court, giving relief to meat sellers in Palghar district, stayed the Vasai-Virar Municipal Corporation’s action to suspend licenses of 20 meat sellers from Nallasopara on the suspicion that they were selling beef. “It will take days before business resumes. Nobody wants to get booked on mere suspicion of buying beef,” said Subhan Poji, one of the shop-owners who petitioned before the High Court against suspension of licenses.A bench of Justices Abhay Oka and P N Deshmukh questioned whether or not on the grounds of mere suspicion, it was right and valid to suspend licenses of meat sellers despite no apparent breach of any terms and conditions of the licenses. “On what basis has the corporation suspended the licenses, on mere suspicion?” the bench asked the corporation’s lawyer. “Is it common practice to go about suspending licenses even if there is no apparent breach of terms and conditions?”
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Karnataka High Court
On February 9, the President of India, after Advocates of the Karnataka High Court called off a relay hunger strike, appointed five candidates to the post of Additional Judges at the High Court for two years. The strike, which saw widespread support from all major political parties as well as former Judges, was called for as only 24 Judges were hearing cases as against the sanctioned strength of 62, developing a huge backlog of cases.The five names had been cleared by the Supreme Court Collegium as part of a list of 19 Advocates to be elevated as
Centre notifies appointment of fiVe new Judges, post hunger-strikeMonday, February 12, 2018
Judges of the Madras, Karnataka and Calcutta High Courts back in December, 2017. On February 14, the swearing ceremony of Dixit Krishna Shripad, Shankar Ganapathi Pandit, Ramakrishna Devdas, Bhotanhosur Mallikarjuna Shyam Prasad and Siddappa Sunil Dutt Yadav as Additional Judges took place at the Raj Bhavan in the same order of seniority.Dixit Krishna Prasad is presently at the post of Assistant Solicitor General of India-Karnataka, while Ramakrishna Devdas is the Principal Government Advocate for the state. Sunil Dutt has appeared as a Special Counsel for cases related to the Nandi Infrastructure Corridor Enterprises (NICE) and Pandit has appeared on behalf of public authorities in matters related to education earlier. Shyam Prasad is a designated Senior Counsel. However, the appointment of these Judges still leaves the Karnataka High Court with a sizeable vacancy of 32 judges. According to a letter penned by the Chief Minister to Prime Minister Narendra Modi, around 2,50,000 cases were pending before the High Court in Bengaluru, Dharwad and Kalaburagi benches.
Madras High Court
The Madras High Court, noting that not only assets but also liabilities of parents get passed on to the children, has thereby commanded a litigant to pay compensation of `5 lakh to the family of a person who had died while cleaning a septic tank about 16 years ago when the litigant was a child and the house was owned by his father in Chennai.Filed at the Madras High Court, the petition, by A. Ravichandran, was against an order of Chennai Corporation Zonal Officer by which he was asked to pay 10 lakh rupees as liability to one Adhilakshmi. Adhilakshmi is the legal heir of Mr. Narasimhan, a sanitary worker hired for cleaning drains on August 26, 2001. Mr Narasimhan died in the course of his employment when he was washing a septic tank in the house owned by the petitioner’s father.Justice S. Vaidyanathan did not accept the petitioner’s contention and disposed of the writ petition filed by petitioner saying that “When a father’s assets are passed on to his sons after his death, so are his liabilities.” He directed the Corporation also to pay `2.5 lakh to the victim’s family
assets and liabilities to be inherited by ChildrenFriday, February 09, 2018
within two months for having failed in its duty to prohibit manual scavenging.The judge reduced the total amount to be paid from `10 lakhs to ̀ 7.5 lakhs and directed that the amount will be paid through online bank transfer to refrain from the complaints of government officials asking commission before giving away cheques to the beneficiaries.
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On February 13, Justice Umesh Dattatraya Salvi, retired after completing his five-year tenure as the Acting Chairperson of the National Green Tribunal (NGT). On the occasion, a full bench reference was organized. Since quite long now, the NGT has been facing a severe staff shortage. The panel has a sanctioned strength of a maximum 20 judicial members and minimum 20 expert members in addition to a full time Chairperson. But currently, there is no Chairperson in the NGT. In March 1977, Justice Salvi was enrolled as an Advocate and worked as an Additional Public Prosecutor in Thane. He has been a Member Secretary, District Legal Aid and Advice Committee. Later, he got appointed as the City Civil and Additional Sessions Judge, Mumbai in August 1993. He earned a lot of respect for his judgments as a Judge of the Bombay High Court since 2009 and moreover, was appointed as a Judicial Member of the National Green Tribunal on February 14, 2013.
aCting Chairperson of ngt, JustiCe u d salVi retiresTuesday, February 20, 2018
During his tenure, he was part of the bench along with former NGT Chairperson Justice Swatanter Kumar (retired) which passed several landmark orders and judgments. These include the ban on 10-year-old diesel and 15-year-old petrol vehicles and slew of directions for rejuvenation of the Ganga and Yamuna.
Jharkhand High Court
On February 6, asserting its concerns on the trafficking of foreign nationals to other countries through India, the Jharkhand High Court has asked the Union Ministry of Home Affairs to file an affidavit stating as to what action the Ministry is taking or is contemplating to take to prevent trafficking of humans from the neighboring country. Mr. Amir Hussain, the petitioner, alleged that two Bangladeshi girls were being trafficked to Dubai via Mumbai, of whom; one was merely 17 years old. These girls were, however, rescued during a train journey from West Bengal and their statements have been recorded under section 164 of Code of Criminal Procedure.
Justice Ananda Sen, after thorough analysis of their statement noted that their proclamations proved the seriousness of their situation. He asserted, “After going through the statement of victim girls recorded under Section 164 Cr. P.C, it gives an impression that a well organized racket is functioning internationally to traffic girls from Bangladesh to other countries through India. This is a matter of grave
ministry to list steps taken to Curb human traffiCkingFriday, February 09, 2018
concern where Indian territory is being used for trafficking foreign nationals (minor girls) to different countries, in this case, UAE. The girls were made to cross the border, definitely, illegally where the authorities failed to stop this trafficking.” The court stated that those handling the girls’ travel took them to Howrah, from where they were being taken to Mumbai. “The girls approached the police on the train at Howrah, but it yielded no results. They then approached two passengers, who reported the matter to railway police,” D K Karmakar, counsel of the petitioner said. It was during a halt at Jamshedpur that the girls were rescued from the train by railway police officials.
Justice Sen further noted that the police personnel at West Bengal allegedly did not take any action despite being approached by the two girls and intervened only after the passengers of the train intervened. He then directed, “This is a very serious issue, which needs immediate attention of the Ministry of Home Affairs, Government of India. Thus, I direct the Assistant Solicitor General of India, Mr. Rajiv Sinha, who is in Court, to file an appropriate affidavit stating as to what action the Ministry of Home Affairs is taking or is contemplating to take, so that this type of trafficking of humans from neighboring countries is prevented.”
The court also directed the Union home ministry, Jharkhand State Legal Services Authority (JHALSA), to file a report within six weeks and to ensure that proper legal aid is provided to the two girls. The matter will now be heard after six weeks in March 2018.
Tribunal
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Delhi High Court
Kerala High Court
On February 19, the Delhi High Court directed the Indian Railway to refrain from giving contaminated water to its passengers. Highlighting that getting clean and potable water is the Fundamental Right of an individual, the importance of the right to clean water. As per Article 21 of the Constitution, Justice Gita Mittal and Justice C. Hari Shankar said, “We want you to give people at least drinkable water”.
On February 21, the High Court of Kerala asserted that the state government is duty-bound to take action when farmers are attacked by wild animals and their crops are damaged. The court added that human life is precious and crops raised by farmers are very dear and valuable to them, as it is their bread and butter.
The order stated that it is a compulsion on the state government to aid the people and also prevent them from such mishaps that are damaging their farms and also posing a threat to life. It also asked the government to compensate the farmers appropriately for any damage caused and take steps to prevent such straying of animals.
The petitioners M.T. Thomas and five other farmers from Kasaragod said that they owned lands in close proximity to reserve forests and that many a times, due to this, the crops were damaged. Sometimes, the wild animals are a threat to human life too. In its judgment, the high court clearly stated, “Having considered the issue, while we appreciate the stand taken by the state, we must only remind the state that human life is precious and crops raised by farmers are also dear and valuable to them. When the farmers are attacked and crops are damaged by wild animals straying into their farms, it is incumbent on the state to take
refrain from serVing Contaminated water: delhi hC to railway
wild animals attaCk farms; goVt bound to aCt
Monday, February 19, 2018
Wednesday, February 21, 2018
The bench further added that people would not be reading the Railway’s affidavits filed in the court on the steps they propose to take to provide clean water and advised that the officials and the counsel for the Railways should start the work from any one station as a pilot project. “People of this country are entitled under the law to get clean water,” the bench said and asked the authorities to file their action plan positively by April 12.
The court was hearing a PIL by NGO Centre for Public Interest Litigation, which has sought “an independent and preferably court-monitored probe into the neglect in supply of quality drinking water and the manipulation in the award of contracts for supply of chlorination plants for the past several years”. Asserting that since the past many years, the Indian Railways has been disregarding the quality of the water provided to the passengers and hence it is high time that the railways serve fresh and clean water to the passengers.
remedial action, as is necessary, to prevent such straying of wild animals and also to suitably compensate the farmers when damage is caused. This, the state shall do.”
According to what the government claimed in the court, during the hearing, a committee was formed to get into the issue of man-animal conflict and only on the basis of the suggestions of the committee, farmers were permitted to hunt/shoot crop-raiding wild boar but with some conditions.
The court ordered the government to consider the non-payment complaints in a span of 3 months.
DISCLAIMER: It may be noted that the Legal Era edition publishes select news pieces collated from various sources, based not necessarily on their timeliness and topicality but their interest to its readers.
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On February 12, FinTech company Lendingkart Technologies raised over ̀ 565 crore ($87 million) of equity funding in its Series C. The round was led by Singapore’s Fullerton Financial Holdings Pte Ltd, and had participation from existing investors Sistema Asia Fund, Bertelsmann India Investment, Mayfield India, India Quotient, and Saama Capital too.
Lendingkart raises `565 crore from fuLLerton financiaL HoLdings
“We are excited to have Fullerton Financial Holdings join us on our growth journey. We are pleased to collaborate with Fullerton as they bring deep domain experience in the rapidly growing financial services space in India and globally,” said Harshvardhan Lunia, Co-Founder and CEO of Lendingkart Technologies. Lendingkart Technologies has raised over $87 million (`565 crore) in equity funding, led by Singapore’s Fullerton Financial Holdings (FFH).
Shardul Amarchand Mangaldas with team led by Bangalore Partner Siddharth Nair along with Senior Associate Kaushalya Venkataraman advised Lendingkart.
Fullerton Financial Holdings was acted upon by AZB & Partners and the team was led by Partners Ashwath Rau and Anu Tiwari along with Senior Associate Nirmal Mahtani and Associate Rachana Rautray.
Moreover, a Memorandum of Understanding has also been signed between the two companies concerning possible opportunities and initiatives to support their respective businesses.
Fundraising
BigBasket raises $300 miLLion from aLiBaBa, otHers
BigBasket, a company managed by Supermarket Grocery Supplies Pvt. Ltd, said that it has raised $300 million in a Series E funding round led by Alibaba Group Holding Ltd. International Finance Corp., Sands Capital, and Dubai-based private equity investor Abraaj Capital participated in the round. “The funds will be directed towards bettering our technological, analytical, and infrastructural prowess, all of which will enable the company to move up the curve. BigBasket is currently partnering with about 1,800 farmers throughout the country and aims to become the ‘most preferred partner’ for up to 3,000 of them,” said BigBasket Co-Founder and Chief Executive Hari Menon, in a public statement.
Fundraising
BigBasket was advised by Cyril Amarchand Mangaldas with a team led by Partners Reeba Chacko and Akshay Bhat. Trilegal acted for Alibaba and the Trilegal team was led by Partner Rohan Ghosh Roy along with Senior Associates Jeet Chaudhuri and Anurag Shrivastav and Associates Tanay Shah, Pujitha Gullapalli, Vinit Patwari and Divyajyot Verma.
Also included were Partner Nisha Kaur Uberoi along with Counsel Soumya Hariharan, Senior Associate Gautam Chawla and Associates Ankita Gulati and Mathew George, who advised on competition law aspects. Khaitan & Co with a team led by Partner Aakash Choubey along with Principal Associate Kunal Mehta and Associate Shreya Dua acted upon Abraaj Capital.
Partner Avaantika Kakkar and Senior Associate Kirthi Srinivas advised on competition issues.
BigBasket is currently operating in numerous Indian cities such as Bengaluru, Hyderabad, Pune, Mumbai, Chennai, Delhi-NCR, Ahmedabad, Patna, Kolkata, Jaipur, Vijayawada, Indore, Punjab and Lucknow and the deal is expected to give the online grocery firm the resources to hold on to its lead in the market.
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Business
LatHam & Watkins acts for aster dm HeaLtHcare Limited on us $153mn iPo of sHaresOn February 26, market debutant Aster DM Healthcare was listed on the National Stock Exchange of India (NSE) and the Bombay Stock Exchange (BSE). The healthcare services provider’s issue was oversubscribed 1.3 times on February 25, as per data available on the NSE website.
Latham & Watkins acted for the underwriters in the US $153million Initial Public Offering of shares of Aster DM Healthcare Limited.
With the Initial Public Offering of Aster DM Healthcare Limited marks another outstanding year for Latham’s India Practice, following on from a successful 2017 where the team acted on transactions with an aggregate value of over US $12billion.
Latham, with a team led by Singapore Partner and India Practice Head Rajiv Gupta along with Singapore Associates Scott Calver, David Lee and Su Yuen Yang advised the Global Co-ordinators and Book Running Lead Managers Kotak Mahindra Capital Company Limited, Axis Capital Limited and Goldman Sachs (India) Securities Private Limited, and Book Running Lead Managers ICICI Securities Limited, JM Financing Limited and YES Securities (India) Limited as international legal counsel.
Advice was also provided on US tax matters by Latham’s New York Partners Jiyeon Lee-Lim and Gregory Hannibal with Associates Lauren Bewley and Amy Robertson.
Aster DM Healthcare Ltd is a private healthcare service provider, which operates in GCC (Cooperation Council for the Arab States of the Gulf) states comprising United Arab Emirates, Oman, Saudi Arabia, Qatar, Kuwait and Bahrain, Jordan (which classifies as a GCC state as part of its GCC operations), India and the Philippines. It provides healthcare services to patients across economic segments through brands ‘Aster’, ‘Medcare’ and ‘Access’.
DSK Legal assisted in (i) drafting/reviewing, negotiating and revising the transaction documents viz. share subscription agreement, share purchase agreements, shareholders agreement etc.; (ii) reviewing closing documents; and (iii) assisting in execution and review of closing documents for the transaction.
LegaLogic Consulting acted for Tork.
dsk LegaL adVises BHarat forge on 45% stake acQuisition in tork motorsAuto components major Bharat Forge said it will make a strategic investment of up to `30 crore to acquire 45 per cent stake in Pune-based electric vehicle (EV) startup TORK Motors. “The investment committee of the company has approved the acquisition of 4,736 equity shares of `10 each at a premium of `21,103 each and 2,841 preference shares of `100 each at a premium of `21,013 as an initial subscription,” Bharat Forge said in a BSE filing.
DSK Legal with a team led by Partner Mr. Narendra Dingankar and Senior Associate, Mr. Varun Shah advised Bharat Forge Limited (“BFL”) with respect to its acquisition of 45% stake in Tork Motors Private Limited (“Tork”) by way of primary as well as secondary purchase of shares. The respective agreements were signed in the first week of February 2018.
acquisition
Within the CirCle28
March 2018 | LegaL era | www.LegaLeraonLine.coM
Zomato raises $150m, acQuires additionaL $50m from existing sHareHoLder infoedgeA $150mn has been raised by Zomato from the payment affiliate Ant Small and Micro Financial Services Group (Ant Financial), along with acquiring a sum of $50mn from existing shareholder InfoEdge, as per sources. AZB & Partners Delhi Partner Vinati Kastia is advising Zomato and its founders. Rohan Ghosh Roy, Partner at Trilegal is acting for Ant Financial.
Also, J Sagar Associates (JSA) team led by Partners Rohitashwa Prasad and Swetha Prashant, and Associate Anshu Bansal advised InfoEdge, which is selling a 6.66% stake in Zomato to Ant Financial for $50mn. By reducing its stake from 44.74% to 30.91%, InfoEdge, along with its subsidiary Naukri Internet Services, will still retain the
spot of the biggest single shareholder. The transaction is expected to close on 15 April 2018.
On January 22, India’s first sovereign wealth fund, the National Investment and Infrastructure Fund (NIIF) and Dubai-based ports operator DP World Pvt. Ltd, declared the creation of an investment platform to invest up to $3 billion in ports, terminals, transportation and logistics businesses in India. AZB & Partners with a team led by Partners Vinati Kastia and Abhishek Shinde along with Senior Associate Anant Dang advised DP World. Shardul Amarchand Mangaldas (SAM) acted for NIIF and the SAM team was led by Partner Raghubir Menon.
Moreover, an India-UK Green Growth Equity Fund is also being set up under the funds vertical of NIIF, and will have anchor commitments of £120 million each from the Government of India (through NIIF) and the Government of UK. It will look to collaborate over extended opportunities such as river ports and transportation, freight corridors, port-led special economic zones, inland container terminals and logistics infrastructure, including cold storage too.
S i n g a p o r e - b a s e d property developer the Ascendas-S ingbr idgeGroup has bought six warehouses in Panvel near Mumbai from the Mumbai-based logistics company Arshiya for `534 crore. Arshiya has monetized its six warehouses by selling
and leasing them back. The six warehouses that Ascendas will acquire would have a total space of 832,000 sq ft. These are located at the Free Trade and Warehousing Zone at Panvel, near Mumbai.
“This transaction will put Arshiya Group in a unique position to participate in scalable world-class warehouse construction and subsequent sale on a pan-India basis while retaining the 3PL (third-party logistics) management, thus implementing a solid Asset-light model,” said Ajay Mittal, Chairman at Arshiya Ltd. AZB & Partners with a team led by Partners Sai Krishna Bharathan and Ananya Sharma; and Associates Urmika Tripathi and Khushboo Sukhwani acted for Ascendas Property Fund Trustee Pte. Ltd (“Ascendas”).
For the core purpose of repaying its debt, Arshiya will use the proceeds from the deal which will also help it achieve an asset-light model. Ascendas will then prospectively be getting a portfolio of income-yielding warehouses.
$3-billion platform set up by niif, Dp WorlD
ascenDas buys 6 Warehouses for `534cr from arshiya
Fundraising
investment acquisition
Within the CirCle 29
www.legaleraonline.com | legal era | march 2018
aViom india Housing finance raises `15 crore in series-a funding
Aviom India Housing Finance, the Delhi-based company has raised `15 crore through a primary infusion from Insitor Impact Asia Fund in its Series-A round of funding. “Affordable housing is a critical need for the low-income population in India who don’t have access to much-needed capital due to lack of formal documentation, financial literacy and presence of mid-level players. This is the segment we intend to assist by improving financial accessibility. Also, since the first loan applicant is a woman, we think that this will create financial independence and raise a woman’s status at home and society,” said Kajal Ilmi, Founder, Aviom. Aviom India Housing Finance was advised by Jerome Merchant Partners with a team led by Partner Sameer Sibal along with Associates Ravishankar M and Rishabh Gupta.
LexStart with a team led by Ashutosh Sharma and Associate Aasim Syed acted for Insitor. Insitor Management is an impact-focused venture capital firm based in Cambodia which invests across India, Myanmar, Cambodia and Pakistan. Investment advisory firm Unitus Capital was the exclusive financial advisor to Aviom India Housing Finance for this transaction.
AZB & Partners team led by Partners Darshika Kothari and VaidhyanadhanIyer, Senior Associate MedhaMarathe and Associates Nayan Banerjee and KopalSharraf acted for Standard Chartered Bank. Sterlite Power is a global developer of power transmission infrastructure with projects of over 10,000 circuit kms and 15,000 MVA in India and Brazil.
sterLite PoWer acQuires 28.5% stake for `10.1 Bn from scPeSterlite Power Transmission Limited has acquired 28.5% stake in Sterlite Power Grid Ventures Limited (SPGVL) by Standard Chartered Bank, through three FVCI entities, i.e., Standard Chartered Financial Holdings (“SCFH”), Standard Chartered Private Equity Korea III Holdings Limited and Marina Hari (IV) Pte Limited collectively for about `10.1 billion. The deal was completed on January 22, 2018. “With this acquisition, Sterlite Power holds 100% stake in the business. Sterlite Power had attracted an investment of `500 crore in 2014 from SCPE, which was the first private foreign investment in the Indian transmission sector,” Sterlite Power said in a statement. “With this acquisition, we reiterate our excitement about the unprecedented growth opportunity in the power transmission sector. Our track record and superior execution capabilities position us well to capitalize on this opportunity,” said Pratik Agarwal - Group CEO, Sterlite Power.
acquisition
Fundraising
Br Life acQuires kaLinga HosPitaL for `200 cr
BR Life, a Bengaluru-based leading healthcare services firm, has acquired about 96% of Odisha’s first super-speciality corporate healthcare centre Kalinga Hospital in Bhubaneswar for about `200 crore. The hospital is built by 54 NRI Odias under the name of Hospital Corporation of Orissa; a US-based and registered company. It is a 10-acre land leased by Odisha government. DSK Legal with their team led by Partner Satish Kishanchandani, Principal Associate Mayank Mehta and Associate Sameer Raina acted for Hospital Corporation of Orissa in the structuring, execution and closing of the transaction. Desai & Diwanji assisted BR Life in the deal.
Hospital Corporation of Orissa sought advice from a Chicago-based firm Gould & Ratner on the US law aspects of the transaction. Subhransu Biswal, the Managing Partner of Zuesn Jove Consultants, performed as the investment banker in the deal. BR Life, which is owned by Padma Shri Dr BR Shetty, has vision to expand the provision of healthcare services by building many hospitals. With this acquisition, Kalinga Hospital seeks to regain its glory that they have sustained in the past two decades wherein the people of the state will be provided super speciality treatment at affordable costs by building new hospital building and other services.
acquisition
Human Resource Development and customer-centric behavior have become modern managements’ article of faith. It is for the corporate governance theory to change itself to keep pace with the practice. In short, it is moving from the linear thinking of about shareholder value to the n-dimensional space that includes everyone
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StakeholderSMoving To N-Dimensional SpaceAnglo Saxon vs. European Model of Corporate Governance
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1. The Anglo-Saxon system is typical for countries such as UK, USA and Australia and is also known as the shareholder system. Large and liquid stock markets, low concentration of ownership, one-tier board of directors, and relatively high level of protection for minority shareholders and dominant role of institutional investors are basic characteristics of the Anglo-Saxon corporate governance system. Management is not controlled nor supervised by any of the corporation’s stakeholder groups except the shareholders. The stock market and investors through the Board exert control over the management.1 The Anglo-American model of the firm emphasizes shareholder value as the only or last purpose of the firm to which the other (stakeholder) purposes are instrumental or, at least, functional. The European model of the firm emphasizes that the firm is a multi-purpose institution in which shareholder value plays the central but not the only role. Labor as the most important stakeholder group besides the shareholders should be represented and have a right to participate in
the decision-making on the level of the second board, i.e. the advisory board in the two-tier-board system.2
2. Hampel Committee was categorical in upholding the primacy of shareholders’ interests on grounds of expediency. It goes on to say that the directors as a board are responsible for relations with stakeholders; but they are accountable to the shareholders. This is not simply a technical point. From a practical point of view to redefine the directors’ responsibilities in terms of the stakeholders would mean identifying all the various stakeholder groups; and deciding the
Former Whole Time MemberSEBI
Prashant Saran
1 Comparative Analysis of Corporate Governance System – BECIC, D(aliborka) Dhttp://www.daaam.info/Downloads/Pdfs/proceedings/proceedings_2011/1361_Becic.pdf. 2 https://www.ukessays.com/essays/commerce/anglo-american-and-european-model-of-corporate-governance-commerce-essay.php.
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nature and extent of the directors’ responsibility to each. The result would be that the directors would not be effectively accountable to anyone since there would be no clear yardstick for judging their performance. This is a recipe neither for good governance nor for corporate success.3
Supremacy of Shareowners’ interest?3. Another argument for maximizing shareholders’ value
is premised on the notion that the owners risk their investment capital and are the sole residual claimants, while other parties (e.g. employees) are compensated on the basis of their marginal products (i.e. paid wages by competitive labor markets).4 Similarly, debtholders are compensated by way of interest and suppliers get paid for what they deliver. If they are not happy with the way a corporation is run, they can simply shift to any other corporation. Many writers do concede that it is wise to cater to the interests of the stakeholders such as employees in enlightened self-interest but they don’t concede their legitimate claim on the way a company is run. When Robert Owen raised the demand for a ten-hour day in 1810, and instituted it in his socialist enterprise at New Lanark and when he had formulated the goal of the eight-hour day and coined the slogan: “Eight hours labor, Eight hours recreation, Eight hours rest”5, he was only acting from higher moral and religious principles and there was no reference of employees’ fundamental right to have a say in the way a company is run. The incredulity of Robert Owen’s contemporaries on seeing him successful instead of being ruined has not ceased even today. The notion that shareowner interest should dominate those of all other corporate constituents is inconsistent with observed behavior of successful firms.6
4. The debate started with employee representation on the Board but it is no longer limited to employees. The primary focus of regulators is still on employees when they talk of stakeholders. G20-OECD Principles of Corporate Governance have introduced a separate principle to accommodate the role of stakeholders in corporate governance. The modern thinking on the subject has expanded the ambit to include all the stakeholders i.e. not only employees but also debt providers, suppliers, customers, community, and governments. Inclusion of stakeholders in corporate governance theory is still not mainstream, yet paradoxically much of the focus among professional managers is on Customer Relationship Management (CRM), Intangible Assets, Supply Chain Management, Balanced Scorecards and so on rest explicitly on the proposition that corporation is a network of interdependent people, organizations and interests7. The new management thinking gives
much importance to Human Resource Development, collaboration with the suppliers and their development. Corporations go great length in investing in technical capabilities of their employees and suppliers as their performance directly affects the corporation. From the point of view of employees and the suppliers, the relationship ceases to be purely transactional and contractual. Their investment of time and money in firm specific skills ties them down with the corporation for years. It is not correct to say that if they don’t like the way the corporation is run they can simply walk away and enter into new contracts. If they had no assurance that their interests and viewpoint will be taken into account they would not agree for any investment for long term up gradation. In the modern times even customers are tied down to the corporations for a much longer time. An obvious example is buying a computer operating system. It is not easy to simply change the operating system as all the downstream applications are built on the original operating system. Any customer who feels that the corporation is not likely to take their interests into consideration while taking decisions will not buy that company’s operating system.
5. Another argument put forward by those who advocate supremacy of shareowners’ interest is about an overall alignment of interests. It is argued that if the company does well, the employees will also get more compensation and their jobs will be secure. The suppliers will have an assured business, community will have jobs, debt providers will have assurance of their debts being repaid and as the marginal costs come down, the customers will have long-term supplies at a lower cost. Let us begin by examining the case of debtholders. Their case seems to be simplest as no complex socio-psychological factors are involved. Are the interests of debtholders and equity holders really aligned perfectly? The perception of risk for the two sets is completely different. Debtholders are satisfied with a level of risk that just turns in some profit, as they will receive assured returns at least possible risk. On the other hand, the equity holders might prefer a much higher level of risk, as they will like to take the company to an exponential growth path even at some risk of failure. Similarly, a company’s policy of outsourcing or recruiting outside the local community might put the interests of the shareowners and the community at considerable variance. Communities may like the company to spend considerable sums on CSR whereas shareowners might like to minimize it to the bare minimum. An anecdote narrated by a senior consultant is worth recounting. In the early nineties, Tata Steel appeared
3 www.ecgi.org/codes/documents/hampel_index.htm. 4 Responsible Corporate Governance: towards a Stakeholder Board of Directors? IESE Business School, University of Navarra WP No. 701, July 2007. 5 https://en.wikipedia.org/wiki/Robert_Owen. 6 Redefining the Corporation: Stakeholder Management and Corporate Wealth- James E. Post; Lee E. Presto Stanford University Press 2002. 7 idbt(?). 8 http://fortune.com/2012/10/01/the-greatest-business-decisions-of-all-time/
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to be in terminal decline. Consultants were called. They found that the company was spending way too much on maintaining hospitals and the Jamshedpur township when the need was to conserve capital. JJ Irani, instead of cutting down the costs on community, fired the consultants and motivated employees to turn around the ailing company. A better-documented story relates to a meeting that JJ Irani was to attend on downsizing the workforce. Instead of downsizing, he gave lifetime guarantee for employment not only to workers but to their children too. The decision was overall financially beneficial and the workforce reduced within ten years from 78000 to 47000 due to natural attrition. In 1914, Henry Ford’s decision to double the wages while reducing the shift timings appeared to be crazy but was enormously successful not only in retaining workers but creating demand for cars in the working classes.8 A narrower view taken strictly in the interest of maximizing shareholder value would have been disastrous for these companies. We can conclude that mindless pursuit of narrowly defined shareholders’ interests is neither in the interest of the company nor does it embrace the interests of stakeholders.
G20 OECD Principles of Corporate Governance – Principle IV - The Role of Stakeholders6. The G20 OECD Principles look at the role of stakeholders
from various perspectives:
a. Employee Union Perspective
The rights of stakeholders that are established by law or through mutual agreements are to be respected and they should have opportunity to obtain effective redress for violation of their rights. On the face of it, it might be doubted as to what value the principle is adding when some rights have already been established by law or mutual agreement. It is an issue of the mindset of the Boards and the senior managers. Even where law establishes rights, there can be a tendency to deny and litigate to the bitter end even at a financial loss as not yielding to ‘unreasonable’ demands of employees might appear as a matter of principle. This kind of false principle can be met only with the strength of an internationally acceptable principle.
Mechanisms for employee participation should be permitted to develop. The import of this is not immediately clear unless one looks at OECD Methodology for Assessment. It means that stock ownership plans and other profit sharing mechanisms. It also concerns the Pension Plans where the fund is run by employer-controlled trusts. The principles require that the trust should not be required to obtain consent of the company to vote.
b. Creditors’ Perspective
The corporate governance framework should be complemented by an effective, efficient insolvency framework and by effective enforcement of creditor rights. This principle is something that is primarily for the governments to implement. A good insolvency framework where the residual value in a defaulted bond can be quickly realized goes a long way in reducing the cost and increasing the availability of capital.
c. Information Perspective
Where stakeholders participate in the corporate governance process, they should have access to relevant, sufficient and reliable information on a timely and regular basis. This principle is in tune with the disclosure-based regime that is followed by almost all modern securities market regulators. On the face of it, given the easy availability of electronic dissemination, this should be easiest to follow. However, perverse action is possible by way of flooding the stakeholders with so much unwanted and unnecessary information that the very purpose is lost. An obvious example is the prospectuses for IPOs that have bloated to hundreds of finely printed pages in which a crucial piece of information might lie buried. Regulatory efforts of reducing the information overload by asking for abridged prospectuses were thwarted by expanding those too to touch a hundred pages and the regulator was forced to limit it to ten pages by providing a rigid structure. There are issues about the cost of information and the infrastructure needed to access information. There are no easy solutions.
d. Ethical Perspective
Stakeholders including individual employees and their representative bodies should be able to freely communicate their concerns about illegal or unethical practices to the board and to the competent public authorities and their rights should not be compromised for doing this. Almost all countries, by now realize the importance of promoting trust in societies. Trust is the backbone of all business and one common characteristic of all economically undeveloped societies is their trust deficit. Providing protection to the whistleblowers is a necessary condition for developing trust in a society, though it is not of course, sufficient. The provision of legal framework for whistleblower protection is not enough unless there is change of mindset within the companies. Sometime, the company insiders think of whistleblowers as traitors. The Boards are still to learn not think of whistleblowers as trouble makers or nuisance but an ally.
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Disclaimer – The views expressed in this article are the personal views of the author and are purely informative in nature.
as a commodity. Labor was surplus and was unskilled. One pair of hands was as good as another. If one laborer fell sick or died, another quickly replaced him. Learning at the job took a couple of hours at the most. These days, it takes months or even years to train a newcomer. It is the finance that has become a commodity. You can get it from anywhere in the world at the click of a mouse. At the very worst, you might have to pay a few basis points more. On the other hand, it is often impossible to fully replace a creative and knowledgeable employee. Companies like Google are entirely dependent on the skill and creativity of their employees. Human capital, therefore, needs to be recognized and accounted for.
9. No company can exist in a vacuum. It is a part of the society and uses inputs put in by the society. For example, software companies often employ engineers trained by the local engineering colleges. If they neglect to help these colleges to upgrade themselves, they will lose out on the quality of future recruits. On a broader scale, a company can operate only till such time as the society gives it the license to operate. The day, the company loses that goodwill, its days are numbered. Therefore, it is necessary to also account for Social Relationships, like we do for other types of capital.
10. Last, but absolutely not the least, is the natural capital that a company uses. Every business uses air and water though it might not always be obvious. It is not only the power plants that use enormous quantities of water. Integrated chip manufacturing involves unbelievably large quantities of water. There was a time it was considered kosher to abuse the environment thinking that only the future generations will pay for it. It is no longer true. The environmental balance has reached such a delicate stage that the environmental debts are to be paid here and now.
11. Integrated Reporting is a comprehensive and also a compact way to look at all the stakeholder interests in a corporation.
ConclusionIt is a situation where the reporting practices and management practices have clearly overtaken the theory of corporate governance. No practical manager ever questions the importance of Customer Relationship Management or Supply Chain Management. Human Resources Development and customer-centric behavior has become modern managements’ article of faith. It is for the corporate governance theory to change itself to keep pace with the practice. In short, it is moving from the linear thinking of about shareholder value to the n-dimensional space that includes everyone.
Integrated Reporting as a Paradigm of Stakeholders’ Importance7. A new kid on the block is Integrated Reporting
(IR) which is promoted by International Integrated Reporting Council (IIRC). The main premise of IR is that financial capital is not the only capital that is used by the companies. Reporting is one-sided and incomplete if it is confined to recounting how a company utilizes equity and debt. When the investors invest in the capital of a company, it is expected that the management will run the company in such a way that the invested capital will be enhanced and will also yield dividends. Regeneration of and accretion to capital is the hallmark of a successful business. A business uses many capitals other than financial capital. For example, a company uses buildings and plants in carrying out its activities. A company that takes good care of its buildings and plants and keeps on adding to their value and functionality will be more successful in the long run than one which does not take care. The neglect or the abuse might not immediately reflect in their financial statements. Bankers know this fact instinctively. That is why they always make it a point to visit the plants of a company before taking a final decision to lend. They know that financial statements are not enough. This kind of capital is called Manufactured Capital (MC) in the IR parlance. The Manufactured Capital might belong to the company or it might belong to society. For example, roads and ports are publicly owned Manufactured Capital. A company may enhance the MC during a year or it might destroy it. A mining company might think that it is being smart in overloading its trucks and showing a little better financial profit. Yet in the long run, it will be damaging the roads it uses and the costs will escalate exponentially in future. It must be now obvious why Manufactured Capital should be accounted for.
8. Most of the companies now do account for their Intellectual Capital in the sense of patents. There is a little more to intellectual capital than simply patents. It is the sum total of processes and procedures that are embedded into the business model of a company that marks an outstanding company from its mediocre counterparts. These processes and procedures are what give confidence to the suppliers and customers about the consistency and reliability of the company. Even this type of intellectual capital is to be recognized and attempts need to be made that it is enhanced over a period of time rather than letting it deteriorate. Closely linked to it is Human Capital. There was a time in the beginning of Industrial Revolution when financial capital was most important for a company because other factors of production viz. land and labor were considered
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Awards 2017-18“Recognition of Legal Finesse, Innovation & Accomplishments”
Tata Technologies Limited
Dr. Reddy’s Laboratories Ltd.
Bajaj Allianz General Insurance Company Limited
Ambuja Cements Limited
Hindustan Coca-Cola Beverages Pvt Ltd
Accenture
Bharti AXA Life Insurance Company Ltd.
ICICI Bank Ltd.Google LLCMahindra & Mahindra Limited
Godrej Industries Ltd
ITC LimitedGlaxoSmithKline Pharmaceuticals Ltd
Microsoft Corporation India Private Limited
Bharti Airtel Limited
TATA AIA Life Insurance Company Ltd.Sun Pharmaceutical Industries Ltd. Tata Sons Limited
Schindler India Pvt. LtdSistema Shyam TeleServices Ltd
Aditya Birla Group Life Insurance CorporationGlenmark Pharmaceuticals Ltd.
HDFC Life
Idea Cellular Ltd.Kotak Mahindra Bank Ltd.
Hindustan Unilever Ltd
Bharti AXA General Insurance Company Ltd.Citibank IndiaAxis Bank Ltd. Biocon Ltd. CiscoPepsiCo, Inc IDBI Bank Ltd.Cipla Ltd.
SBI Life InsuranceBharti Airtel Ltd.IDFC Bank Ltd.Boeing India
Google India Pvt. Ltd.
Zee Entertainment EnterprisesPfizer India LimitedViacom18 Media Pvt. Ltd. Amazon
Edelweiss Group Tata Motor Finance Ltd.LinkedInWipro Ltd.
State Bank of India eBayAsian Paints Limited
Flipkart
Infosys Limited
“Be a part of this legal extravaganza that is one of its kind. Enjoy the thrill of the awards and gain from liaising with the eminent attendees. The awards promise to be a spectacular night of law and lustre.”
In-House NOMINEES 2018 Declared
In Association with
Gala Awards Night 24th March 2018 | Hotel Taj Lands End, Mumbai, India
7th annual Legal Era Awards Nominees 2017-18
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If a lawyer receives unsatisfactory instructions from a client or information which is incomplete, then the lawyer should cease to act
if he or she believes that the client may be seeking to act illegally
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To Paradise
From
Panamaregulation and role of Lawyers in
Cross-Border Commercial Transactions
In April 2016, the world learned about a rather obscure law firm in Panama, Mossack Fonseca, that had been attending to the offshore needs of clients (large and small companies, trusts, politicians, socialites and just the plain old-fashioned wealthy) for many years.
In late 2017, Panama moved to Paradise where a rich history of client dealings of a well-known Bermuda law firm, Appleby, was published, along with client information, for all to see.
Both firms appeared to have suffered from cyber security failings as their confidential information was removed, downloaded by persons unknown (at least publicly) and presented to the International Consortium of Investigative Journalists, then to be published worldwide in a coordinated manner. From Panama to Paradise – what does it all mean for lawyers in India, in Australia and elsewhere and where are governments going?
The immediate consequences for Mossack Fonseca and Appleby are serious. Mossack Fonseca shut numerous offices and its principals are under arrest and subjected to investigation over their conduct1. Appleby is engaged in litigation before the English High Court against the BBC and The Guardian seeking damages, the return of all documents and a permanent injunction for
Partner Johnson Winter & Slattery
Sydney Australia
Robert R Wyld
1 “Mossack Fonseca: Panama Papers law firm bosses refused bail”, The Guardian, 11 February 2017 at https://www.theguardian.com/world/2017/feb/11/panama-papers-mossack-fonseca-fonders-refused-bail.
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breach of confidence2. The litigation is in its early days and is likely to be hard fought by all sides. There has been a variety of reactions to the Panama Papers – a mix of investigations, fines, high-profile resignations (Iceland’s Prime Minister), police raids, arrests, national legal reforms and international conclaves3. Media revelations are driving politicians and citizens alike to bring light to a shadow financial system that, for decades, has resisted reform. Yet most experienced commentators say the structures are legal, it is just the use that is made of them.
We hear much from politicians and tax officials saying that companies should pay their “fair” or “right” tax. Indeed, in an interview with the Commissioner of the Australian Taxation Office, Chris Jordan, the current Head of the OECD’s Joint International Taskforce on Shared Intelligence and Collaboration, (focused on anti-tax avoidance practices), Mr Jordan told The Australian newspaper (on 30 November, 2017) the following:
If the right tax is not collected from multinationals, it “deprives Australians of the funds needed for vital infrastructure and services” he says. “If you come here as a foreign company and you use our infrastructure, we’re a good marketplace for you – you should pay tax on the value you create here.
The difficulty in all of this discussion is that the tax laws are created by politicians and governments and they have encouraged, condoned or otherwise permitted complex offshore structures to be used by business for entirely legitimate business reasons in reducing the amount of tax payable in one country or another. Taxpayers are required to pay what tax they are legally required to pay. It is governments that create the environment for business to engage in offshore commercial structures, often part and parcel of an increasingly global economy. While lawyers and accountants are often called upon to advise upon, create and structure offshore commercial activities, it is likely the vast majority of transactions are entirely legal. Whether it (the structure) is then used by the client for other, potentially illegal purposes, does not of itself make the conduct establishing the structures unlawful. It is worth remembering the sage words of Lord Tomlin in the Duke of Westminster’s case, highlighted so forcefully by Martin Kenny:4
The intersection between law and morality is traditionally reserved for the most heinous of crimes. Lawful tax avoidance is neither immoral nor unlawful. It does not come close to that intersection. In Duke of Westminster v Commissioners of Inland Revenue [1936] AC 1 (House of Lords), Lord Tomlin held that:
Every man is entitled if he can to order his affairs so that the tax attaching under the appropriate Acts is less than it otherwise would be. If he succeeds in ordering them so as to secure this result, then, however unappreciative the Commissioners of Inland Revenue or his fellow tax-payers may be of his ingenuity, he cannot be compelled to pay an increased tax.
In late 2017, the European Parliament published its Recommendation following the inquiry on money laundering, tax avoidance and tax evasion5. While noting the apparent lack of political will amongst its Member States to adequately address these issues, the European Parliament made several important statements set out below:
• Itcalledforasimplificationoftaxsystemsinorderto“prevent and combat tax avoidance and aggressive tax planning, which may be legal, but contrary to the spirit of the law”6.
• Itrecognizedtheneedforguidanceonacleardistinctionbetween what is illegal and what is legal, even if it runs counter to the spirit of the law, to ensure legal certainty for all concerned7.
• WhiletheParliamentrecognizedthatalawyer’sdutyofconfidentiality needed to be balanced with appropriate reporting of suspicious transactions, it should be without prejudice to, for example, the rights guaranteed by the Charter of Fundamental Rights of the European Union and the general principles of criminal law8.
• Inrelationtolawyers(underliningadded)9:
o Professional secrecy cannot be used for the purposes of protection or the covering up of illegal practices or violating the spirit of the law;
o Legal professional privilege should not impede adequate reporting of suspicious transactions, which may be required by relevant national laws (to the extent they exist);
o There should be a clear demarcation line “between traditional judicial (legal) advice and lawyers acting as financial operators”;
o Where lawyers fall outside their specific duties of defence, legal representation or legal advice, they should be required, for the protection of public order, to inform the authorities of certain information that they are aware of; and
o Lawyers should be held legally co-responsible when “designing tax evasion and aggressive tax plans punishable by law; and money laundering schemes…when they take part in fraud, they must
2 Appleby Global Group LLC v British Broadcasting Corporation and Guardian News and Media Ltd[2018] EWHC 104 (Ch), judgment delivered on 26 January 2018 ruling the case should remain before the Business List in the Chancery Division and not be transferred to the Media & Communications List of the Queens Bench Division. 3 “Panama Papers have had historic global effect”, The Centre for Public Integrity, at https://www.publicintegrity.org/2016/12/01/20500/panama-papers-have-had-historic-global-effects-and-impacts-keep-coming. 4 FCPA Blog, 17 November 2017, at http://www.fcpablog.com/blog/2017/11/17/martin-kenney. 5 European Parliament P8_TA-PROV (2017) 0491. 6 Ibid at clause 3. 7 Ibid at clause 64. 8 Ibid at clause 125. 9 Ibid at clauses 138, 139 and 140. 10 At https://www.oecd.org/tax/beps/Discussion-draft-mandatory-disclosure-rules-for-CRS-avoidance-arrangements-offshore-structures.pdf. 11 Guidance for Legal Professionals, 2008 and Money Laundering and Terrorist Financing Vulnerabilities of Legal Professionals, June 2013.
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systematically be liable for both penal sanctions and disciplinary measures”.
In December 2017, the OECD published a Discussion Draft, Mandatory Disclosure Rules for Addressing CRS Avoidance Arrangements and Offshore Structures (the OECD Disclosure Draft)10. A consultation period was open between 11 December, 2017 and 15 January, 2018. The OECD Disclosure Draft states that information published in the Panama and Paradise Papers “demonstrates that certain professional advisers continue to design, market or assist in the implementation of offshore structure and arrangements than can be used by non-compliant taxpayers to circumvent the correct reporting of relevant information to the tax administration of their jurisdiction of residence.”
A number of features emerge from the OECD Disclosure Draft, as set out below:
• TheOECDproposefor consideration a set of mandatory reporting rules to apply to certain arrangements with a view to ensuring that ultimate beneficial owners and financial information is properly disclosed concerning an “offshore structure” that has or operates with an “opaque ownership structure” for the purposes of implementing a “CRS Avoidance Arrangement”.
• An obligation to disclose is to be placed upon an“intermediary”, being a person responsible for the design or marketing of the relevant arrangement and offshore structure (called a promoter) and those with a sufficient level of involvement in the design, marketing, implementation or management of such schemes (called a service provider providing “relevant services”) to be aware that the scheme is likely to be used to circumvent common reporting standards (CRS) or to obscure or disguise the identity of the underlying beneficial owner.
• Thedefinitionofanintermediaryshouldnotbelimitedto those involved in “tax aspects” of an arrangement. A restrictive definition would potentially exclude a range of intermediaries such as investment advisers and lawyers who do not provide tax advice or tax services. The definition ought not to capture persons who only provide limited assistance in the implementation or organization of an arrangement and could not reasonably be expected to be aware of the elements of an arrangement that have the effect of circumventing the CRS.
• Reportingobligationsare imposedonan intermediaryand a “reportable taxpayer”. The following conditions arise under the OECD’s proposed disclosure model rules, relevant to the role of a lawyer:
o An intermediary must disclose all the steps and transactions that form part of or constitute the CRS Avoidance Arrangement or offshore structure including key details of the underlying investment, organization and persons involved and the relevant tax details of the client, the reportable taxpayer and any other intermediaries.
o An intermediary is not required to disclose information concerning a CRS Avoidance Arrangement if it would reveal confidential communications between a client and a lawyer where such communications are produced for the purposes of seeking or providing legal advice or used in connection with existing or contemplated legal proceedings and protected from disclosure under domestic law.
o An intermediary must give written notice to its domestic tax authority, and the reportable taxpayer, that the intermediary (relevantly, a lawyer) has information of a CRA Avoidance Arrangement or offshore structure that is not required to be disclosed.
o The liability to report attaches automatically to every person that is an intermediary, but to the extent only to disclose information within that intermediary’s knowledge, possession or control.
• The model rules of disclosure propose a penalty onan intermediary and on a reportable taxpayer. As the primary intention of the disclosure rules is to target intermediaries, the penalty on an intermediary is suggested as a fixed rate or a percentage of the fees paid to the intermediary for the services to be provided. The percentage rate should be set at a rate to remove any economic incentive to avoid disclosure.
From time to time, the Financial Action Task Force (FATF) has issued guidance and commentary to lawyers concerning how to manage and respond to money laundering and terrorism financing risks11. In 2013, FATF considered that criminals seek out the involvement of legal professionals in their criminal activities, sometimes because a legal professional is required to complete certain transactions, and sometimes to access specialized legal and notarial skills and services which could assist the laundering of the proceeds of crime and the funding of terrorism. FATF identified a number of money laundering and terrorism financing methods that are commonly employed or, in some countries, require the services of a legal professional. Inherently these activities pose significant risk and when clients seek to misuse the legal professionals’ services in these areas, even law abiding legal professionals may be vulnerable. The methods are:
(a) Misuse of client accounts;
(b) Purchase of real property;
(c) Creation of trusts and companies;
(d) Management of trusts and companies;
(e) Managing client affairs and making introductions;
(f) Undertaking certain litigation; and
(g) Setting up and managing charities.
While lawyers want to maintain their ability to give fearless confidential advice, and clients no doubt the ability to pay only the tax they are legally obliged to pay, the power of social media and the public push for “fair” tax means
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Disclaimer – The views expressed in this article are the personal views of the author and are purely informative in nature.
(despite what the European Parliament may seek), no doubt due to the inherent difficulty of defining the necessary “spirit” to be violated. A lawyer’s responsibility, in many countries, involves making certain inquiries and to, in general terms, know the client’s business and the persons who might be the ultimate beneficiary of a transaction. If the lawyer receives unsatisfactory instructions from a client or information which is incomplete, then the lawyer should cease to act if he or she believes the client may be seeking to act illegally. If the lawyer transgresses these responsibilities, he or she can be sanctioned. The right of any client to receive frank legal advice without fear of its disclosure and the duty of a lawyer to keep his client’s information confidential is a cornerstone of the role of the legal profession, the rule of law and the administration of justice. Yet these long-standing rules and obligations are increasingly under attack from various governments and have triggered serious reviews of the responsibilities of lawyers and the extent to which the duty of client-lawyer secrecy and confidentiality should be pierced. The legal profession needs to be aware of these developments and to promote integrity and ethical conduct by all lawyers. If the profession does not recognize this as a serious issue, then governments are increasingly likely to consider enhanced reporting or disclosure obligations on lawyers in a manner that cuts through the secrecy and confidential relationship traditionally enjoyed between a lawyer and a client, to the potential detriment of the rule of law and the due and fair administration of justice.
disclosures about the tax affairs of the rich and famous (and infamous) will continue. Cyber security breaches will inevitably occur and information once considered safe is now less safe than ever. Lawyers and business need to appreciate that the risks of disclosure are greater now than ever before. The international regulatory landscape for business, for tax liabilities and the cause célèbre of “punishing” multinationals for legally minimizing their tax is not going away. Nor are the challenges faced by lawyers in how to give advice on transactions and structures that on one view are perfectly legal, yet on the other hand, offend against increasingly popular “ethics” of how business should behave.
Lawyers invariably play a role in offshore structures designed and/or created by or on behalf of taxpayers in order that the taxpayer can structure its tax affairs in an appropriate (perhaps aggressive) manner, yet consistent with its legal obligations and the prevailing laws applicable to the taxpayer. What that role is or may be for a lawyer in fact is not always clear. If however, that structure involves tax evasion, then the taxpayer should be held accountable. Any reporting or disclosure obligations should however, be primarily imposed on the relevant taxpayer. Any reporting obligations on a lawyer should continue to be subject to pre-existing professional and legal responsibilities, including domestic rules of secrecy or confidence and legal professional privilege. This point was made in a number of submissions to the OCED on its disclosure model rules. There is generally no offence in any country for “violating the spirit of the law”
FATF concluded that the involvement of lawyers in the money laundering of their clients is not usually stark as complicit or unwitting; rather, it involved as a continuum, illustrated in the diagram below:
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LEADER SPEAK
Chairman, Bankruptcy Law Reforms Committee
Legal Erain conversation with
T. K. Viswanathan
43
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LEADER SPEAK
We Should Get All ourBrilliAnt lAWyerS
indiAABroAdBAck to
LE: If the bankruptcy code is sanctioned as a law, do you foresee a massive change in the legal infrastructure of the country?Yes, of course. This is a landmark legislation of the century because we have consolidated all the laws relating to the resolution of firms and corporates and limited liability partnership. It is a very ambitious legislation which we have undertaken and it is a great tribute to the Parliament which has enacted the Insolvency and Bankruptcy Code, 2016. It is going to be a landmark legislation because the credit market is going to flourish and most of the problems that we are facing now on the NPA will vanish as the Code starts functioning in full speed. Difficulties experienced in the working of the IBC are transitory problems. Legacy problems are bound to arise when we move from one legal order to another legal order. Till now, we have been using a net worth erosion test to find out whether a company is sick or can be revived or not. So, 51 percent net worth erosion test is not an ideal test to facilitate a revival scheme to revive a sick company. And till now, the legal system favored those who can delay the repayment of their debts, but now, we have changed the whole legal landscape. This also enables the entrepreneurs to shift their focus from bank-based finance to market-based finance; when credit markets will flourish, bond markets will flourish, and entrepreneurs need not depend upon banks and financial institutions for raising money. At present, there is an undue emphasis upon secured credit which is posing great risk for promoters and that is not really good for our economy. So, we tried to change the whole legal scenario and this is going to change the entire economy of the country in this century.
LE: As per the IBC Ordinance, scheduled banks, asset reconstruction companies, and alternate investment funds have been excluded from the definition of “connected person”. Kindly outline your views on the same.We have tried an ambitious law reform. So, when we start working on it, it’s very difficult to foresee what sort of problems we might envisage. These are all transitory problems which work out in the long run, and we expect the adjudicating authorities, the National Company Law Tribunal, the Appellate Tribunal, and the Judiciary, to come out with a robust jurisprudence and this should be sorted out sooner or later, but you should not expect the law to do micromanagement; we never envisaged that. But since there were initial problems, we tried to make some amendments, but I don’t think that these are all really major hurdles in the implementation of the Code.
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LE: In terms of the current cyber law, what major steps could be implemented for protecting people, especially women, from online abuse?I have chaired a committee on cyber law and we had made certain recommendations under the Indian Penal Code (IPC). We have given very good suggestions and the government is examining the various proposals. I’m very sure that if they are implemented, that will take care of all concerns, and we also made sure that individuals using social media are not unduly harassed. At the same time, it’s also not possible to abuse the social media to the detriment of women and also to create law and order situations or anti-national activities. And, we have also suggested safeguards to protect the innocent users when they exercise their free speech.
The Committee felt that to prevent the abuse of powers by the investigation agencies and to safeguard innocent users of social media, it will be worth emulating the practice of the U.K. Crown Prosecution Service, which follows certain Guidelines viz. the Code for Crown Prosecutors which is issued by the Director of Public Prosecutions (DPP)1 under Section 10 of the Prosecution of Offences Act 1985. It has been noted that law enforcement agencies face several challenges during investigation and prosecution of harmful online conduct due to the dearth of technically trained police personnel, lack of access to expert advice, procedural hurdles in conducting cross-jurisdictional investigations, absence of comprehensive data on the crimes reported, and the lack of a quick and streamlined procedure for takedown of malicious online content. In an attempt to address some of these issues, the Committee has proposed the insertion of two new provisions, namely, Sections 25B and 25C in the Code of Criminal Procedure 1973, thereby creating the post of a State Cyber Crime Coordinator and establishing a District Cyber Crime Cell, respectively. The details pertaining to the State Cyber Crime Coordinator vis-à-vis his qualifications, appointment, and functions along with the role, composition,
1 The DPP is the head of the Crown Prosecution Service (CPS), which is the principal public prosecution service for England and Wales. The DPP operates independently, under the superintendence of the Attorney General who is accountable to Parliament for the work of the CPS; See supra n.43
It must be considered that there is nothing more difficult to carry out, nor
more doubtful of success, nor more dangerous to handle, than to initiate a
new order of things; for the reformer has enemies in all those who profit by the old order, and only lukewarm defenders in all those who would profit by the new order;
this lukewarmness arising partly from the incredulity of mankind who does not
truly believe in anything new until they actually have experience of it
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LEADER SPEAK 45
and conditions of service of the members of the District Cyber Crime Cell, respectively, have been mentioned in these sections. The goal of these provisions is to create a cadre of trained cyber experts, both from within the police force and experts in the fields of information technology, digital forensics, cyber law, etc. to ensure the effective investigation and management of cyber offences.
These recommendations are based on the UK model and we also suggested that all state governments should set up centers where there will be higher level of scrutiny before cases initiated under the Information Technology Act, 2000 and also to go in for more capacity building for the law enforcement agencies for capturing evidence and prosecuting effectively the wrongdoers in cyberspace.
Kindly provide your views on cross-border insolvency.In fact, provisions to deal with cross-border insolvency could not be included in the Code for the simple reason that cross-border insolvency pre-supposes the existence of an ecosystem, the insolvency resolution professionals and dedicated bankruptcy courts and also the cooperation between courts of different countries dealing with concurrent insolvency proceedings and expertise for leading evidence; since we didn’t have the required ecosystem when we drafted the Code, the Code did not deal with cross-border insolvency. Right now, with the IBC in position, the necessary ecosystem is counterpace. Ideally, the UNCITRAL Model Law on cross-border insolvency is the ideal model law because that is accepted by many countries and it is easy to have cooperation with other countries. But this will require the adjudicating authorities in one country to have a dialogue with the adjudicating authorities of another country where cross-border issues are involved. And, we have suggested that we should adopt the UNCITRAL Model Law, which the government is considering. Hopefully, it will be completed within the current session. Not only our companies will be benefited, we also need
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LE: Recently, the Supreme Court reserved its verdict in the case related to entry of Foreign Law Firms into India. What are your thoughts on the liberalization of legal services?With globalization and with the breaking up of borders, knowledge knows no borders, and professionals move from one country to another country. In the UK and US, Indian lawyers are doing exceedingly well. Our 5-year law students are everywhere; in the UK, many of them are waiting for the Indian legal sector to open up so that they can return. Indian Bar is diffident about allowing foreign law firms, and I’m very sure that this threat is something which we can manage. I agree that foreign law firms should not be allowed to practice in the Indian Courts; they are not aiming for that sector, but their interest is in legal advice on issues involving multinational jurisdictions. But in India, we don’t have a regulatory authority to govern law firms. The Bar Council is not effectively regulating the law firms as such; they are regulating only the lawyers in their individual capacity, unlike the UK where there is a society of law firms which regulates and hears complaints against law firms. In the UK and in other jurisdictions, the law firms have to subject themselves to rigorous regulatory oversight; w e don’t have that type of oversight in India.
I think we should have that kind of regulatory oversight over law firms
in position. We should have a regulatory infrastructure to govern law firms for then, it becomes easy for regulating the foreign law firms. Even
now, we have surrogate firms operating in India; many
foreign law firms are operating in India. So, that should be brought out in the open, and then, it should be made legalized
licence. Moreover, the Bar Council
will also earn a lot of revenue
to get information about our companies which have assets abroad. So, that will be hampered if you don’t have or can’t have cooperation agreements with an individual country or bilateral agreements which will be cumbersome and it will be very difficult to manage. So, the UNCITRAL Model Law is readily available, and where other countries have agreed to, we should also adopt that. And, we are also exploring how to implement the UNCITRAL Model Law.
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LEADER SPEAK 47
if it charges fees for regulating them. So, I think that this is a step which should be taken, and I think that the Bar will open up. It’s not the question of lawyers being deprived of their right to livelihood; in fact, it will open up new avenues for our lawyers. So, it should not be projected like that.
LE: You started off as a Lawyer, then you moved on to become a Professor of Law, and subsequently you became Secretary to Government of India in the Ministry of Law & Justice and Secretary General of Lok Sabha. What is your advice to young lawyers of today who will be the litigators of tomorrow?Law is a knowledge-intensive profession and the obsolescence of law knowledge is rapid. Overnight your knowledge becomes out-of-date and you have to always keep pace with new developments. I started my career as an Advocate, then I moved on as a full-time Law Professor (I was dealing with Law and Books), for 12 years I taught, and subsequently, I shifted to the Government in the Legislative Department where drafting of laws takes place. From Law and Books, I moved into Law in the Making, where you draft laws. Thereafter, I became Member-Secretary in the Law Commission of India, and then, I became Secretary of the Legislative Department in-charge of drafting. Following that, I moved out as Law Secretary of the Government of India, where I saw Law in Action. Then, I was in the Ministry of Law & Justice for more than 8-9 years dealing with the most complicated problems. I handled many sensitive legislations as a draftsman, including The Information Technology Act, 2000, which laid the basis for cyberlaw in India, and then, the Right to Information Act, 2005; there are a lot of acts and enactments that I have drafted. Then, I moved on as Secretary General of Lok Sabha, where Parliament enacts a law. As Secretary General, I was there at the heart of Parliament where laws were made and enacted, etc. Ultimately, I became Advisor to then President Pranab Mukherjee. There also, before the President granting his assent to Bills and Ordinances, my views were sought by the President. So, my life has been revolving 360 degrees around law. As Law Secretary, what I felt was that overnight, my knowledge was out-of-date and I had to be always on the tenterhooks because I had to answer questions on the phone. When your political masters ask you legal doubts on the phone, you can’t tell them that “I’ll get back to you with the answer”. You have to answer instantly because your credibility is lost if you say that you will have to consult some authority; if you drag your feet, then you are finished. So, it was a great challenge at that point of time to continuously update my knowledge. The current youngsters are doing very well, but they have to explore more avenues and concentrate more on litigation
because that is where the real growth of law lies in. I found it extremely difficult to get competent lawyers in criminal cases because we had to service the Central Bureau of Investigation and most of the enforcement agencies. We had many important criminal cases and we had difficulty because the best legal brains were on the other side. So, the government had a difficult time prosecuting criminal cases. Therefore, we need to have competence among young lawyers. Criminal law is one area which is being neglected by lawyers. Today, younger lawyers are always going in for law firms. I think that more and more of them should opt to go into litigation because conduct of trial, proficiency in the Evidence Act, and the Code of Criminal Procedure are essential for becoming a successful lawyer; these are all the most important things in the field of law and these are the areas which are neglected. The real worth of a lawyer lies in conducting cross-examination, examination, and how to bring facts, and how to link the facts of a case and the legal material; this is where the challenge lies. When I started teaching law, we only had a 3-year law course, but later, the 5-year law course was introduced. And the 5-year law course was one of the best things that happened for the legal education in India. The youngsters passing under the 5-year law course are brilliant and are really up to the global standards and are continuously winning laurels all over the world. I have travelled all over the world and I have seen them, especially in the UK, and I was greatly impressed by their confidence and competence. We should all get them back here and that will be a really great event for India.
LE: You were also Member of the Committee to Frame Guidelines on Government Advertising Campaigns constituted by the Supreme Court. Kindly share your views on the same.I think the Guidelines have already been implemented; there is an ombudsman for that. I think it is working well.
LE: When it comes to the quality of insolvency professionals in India, how will the recommendations ensure that there is no oversight on the part of these professionals? Are there any provisions for individual insolvency? How will it be resolved?The Bankruptcy Board is capable of doing that. Dr. MS Sahoo, Chairperson of the Insolvency and Bankruptcy Board of India, is a very competent person. He has very wide exposure in different financial sectors. He has been in SEBI and then in the Competition Commission. He is doing exceedingly well. When the Code was being examined by the Joint Committee, I was the first person to give evidence before the Joint Committee. The Committee asked the same
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question, “You are thinking of a new profession; where are you going to get the people from? Are you going to get them from the sky?” I said, “No sir, we already have people and the profession has evolved; it has evolved very rapidly. And it is fine.” You see, the quality will improve with the course of time. The Bankruptcy Board is doing exceedingly well within a short time, with limited resources. This is a very complex subject. It has no well-defined borders because it is not confined to any single profession or expertise. A resolution professional can be a chartered accountant or a lawyer or an engineer or a banker, and so on. So, the borders are too broad and the Board is doing exceedingly well, given the limitations under which it is functioning. I’m very sure that within another 6-7 months, you will see a rapid rise in the quality of resolution professionals.
LE: How do you maintain a work-life balance?In the initial stages of my career, it was difficult to maintain this balance because Law is knowledge-intensive and is extremely stressful, demanding your attention 24/7, 365 days. With the advent of information revolution, obsolescence of knowledge occurs at a phenomenal speed, and if a legal expert would like to remain relevant in his expertise, he has to update his knowledge on a daily basis. So, there was very little time for me to pursue meta-legal interests till I demitted full-time assignments in my career in 2013. Thereafter, I have had more freedom to choose between work and other passions in life which I could not pursue due to the pressure of work.
But Music, Prayers, and Exercise have helped me to attain this delicate balance.
MusicI am fond of Western music. I belong to the age of The Beatles, Elvis, The Shadows, and The Ventures. Music elevated my soul and always kept me in high spirits.
PrayersI am a deeply religious person. I strongly believe that the Almighty has reasons which we do not readily understand, but whatever happens is always better than what we aspired for.
Exercise
Though I was exercising in my younger days, due to career building, I gave up. But I revived and started exercising rigorously later in life, and I am now addicted to it because 60 minutes daily at the gym rejuvenates and recharges my mood and sense of well-being.
LE: Could you briefly share with us any peculiar case that you have witnessed throughout your journey in law?Judicial Impact AssessmentLike Banquo’s ghost haunting Macbeth, the problem of
judicial arrears engages the Government continuously and remains one of the problems which needs to be addressed. The Supreme Court in the Salem Bar Advocates Association case directed the Government to implement Judicial Impact Assessment to facilitate earmarking of funds to the courts which are likely to be burdened with additional workload due to the enactment of new legislations at the time of passing of the legislations itself. There is no progress on this front. This has to be taken forward.
Electoral Reforms Long OverdueNot much progress has been made on this front. As a result of the freezing of the allocation of seats on the basis of the 1971 population figures, the allocation of seats done on the basis of the 1971 census continues to hold good for the present population figures. According to the 2010 census, the present population of our country stands at 121 crores, with a registered electorate of 83.41 crores. Basing the 1971 census figure of 54.81 crores to represent today’s population of 121 crores presents a distorted version of our democratic polity and is contrary to what is mandated under Article 81 of the Constitution. So, when the first census figure will be available after 2026, which will be in 2031, a fresh delimitation will have to be done which will dramatically alter the present arrangement of seat allocation to the states in Parliament. We are fast approaching 2026 when the constitutional freeze on Article 81 will be lifted. This will require a fresh delimitation when the population figures of the 2031 census are made available. This is bound to increase the number of seats in Parliament and legislatures, and concerns expressed by the states in 1976 which necessitated the freezing of seat allocation on the basis of 1971 population figures would appear to hold good even today and have to be addressed to the satisfaction of all stakeholders.
Repeal Of Obsolete Laws - Need For “Law In Action” StudiesRepealing obsolete laws is only the first step towards law reform. What is more important is to undertake the impact analysis of laws in action. There is no systematic exercise undertaken by the Ministries to undertake the impact analysis of Acts administered by them. In other words, there is no systematic law reform in place. Attempts to reform laws are triggered by public outcry on individual cases or due to difficulties experienced in the implementation of law caused by judicial interpretation. What is required is an exercise undertaken by every department of the Government to review the Acts administered by them to find out how relevant or effective they are in their operation. These types of “law in action” studies will require field studies in which the law students of National Law Universities can play a vital role.
Reform Of The Indian Penal Code Long OverdueThough the IPC has been the mainstay of our Criminal Justice System, it requires to be reviewed. When the IPC
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LEADER SPEAK 49
Jurimetrics as a separate discipline in law. Lee Loevinger, the founder of Jurimetrics, called upon lawyers to develop new skills. He stressed the importance of scientific and therefore statistical methods for lawyers. He saw a number of possibilities for using these applications in the law. He maintained that:
“The next step forward in the path of man’s progress must be from jurisprudence, which is mere speculation about law to Jurimetrics, which is scientific investigation of legal problems”.
Jurimetrics bears the same relationship with Jurisprudence just as economics and econometrics stand to each other. Jurimetrics research employs scientific methods to investigate legal problems. We have to shift the focus of legal research from dry legal doctrines to law in action studies with emphasis on empirical research in law, which is the crying need of the hour.
was enacted, it was based on the morals and behavior patterns of people who lived at that point of time. The Code provided for 4 types of punishments, starting with death penalty to life imprisonment. Now, only imprisonment, and in rare cases, death penalty remain. With the Constitution coming into force, the IPC requires to be reviewed according to the changing social mores and conditions. There is a need to explore newer forms of punishments which will deter deviant behavior. Since every law is an infraction of liberty, resort to criminal sanction for technical violations must be avoided.
Data Analytics In JudiciaryLastly, the Judiciary should extensively use data analytics to prioritize the allocation of manpower and judicial time, which will lead to more efficient judicial resources. With the National Judicial Data Grid in place, it will be easy to apply data analytics to the Judiciary.
Need to shift focus from Doctrinal Research towards Empirical ResearchThe quest for scientific methods of study led to the birth of
T. K. Viswanathan with his family
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PRIVATE TRUSTS
IMPLICATIONSWhile we understand that the taxation of a private trust majorly depends on what structure is being followed while forming and operating a trust, it is advisable that the real intention of the settlor be explicitly set out in the trust deed along with details regarding beneficiaries
INCOME TAXFORMATION AND
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Associate PartnerDSK Legal
AssociateDSK Legal
DSK Legal
Vikrant Singh Negi
Chirag Jain
Yojit Pareek
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In India, the creation, affairs of the trust, rights, obligations, removal, duties and legal remedies to seek redressal of grievances by the settlors, trustees and beneficiaries are governed by the archaic legislation, Indian Trust Act, 1882 (“Trust Act”).
Settlement of property in private trusts for better estate management and succession planning offers several advantages, one of which is that private trusts qualify as bankruptcy remote structures, since the property settled by the author of the trust (after complying with the prescribed time period) no longer vests in the settlor, and hence the same cannot be attached in bankruptcy proceeding. It has always remained as an effective tool for inheritance planning since it allows flexibility in transfer of assets amongst the legal heir. Such settlement of family property helps in protecting and preserving the assets and safeguarding the interest of incapacitated or dependent family members/minors or senior citizens with assured income being set aside.
Declaration Of Private TrustsA private trust can be declared either by execution of a non-testamentary instrument (if the trust is created during the lifetime of the settlor) or through a testamentary instrument (if the trust is to be created after the death of the settlor). For declaring a private trust during the lifetime of the settlor, a ‘trust deed’ or an ‘indenture of trust’ often referred to as the governing document of the trust is executed amongst the settlors and the trustees of the trust. It is advisable to have an odd number of trustees for better decision-making and distribution of power and also to appoint a corporate trustee as a professional and neutral party. This enables the longevity of the trust management and makes sure that the wishes of the founder or settlor as per the trust deed are fulfilled.
Types Of Private TrustsDepending on the purpose of declaration, a trust (under the Trusts Act) can either be:
I. Revocable: The settlor has the power to cancel/revoke the trust during his life; or
II. Irrevocable: The dissolution of the trust is dependent on the fulfillment of the purpose or attainment of certain events as stated in the trust deed/indenture of trust;
Further, a revocable or an irrevocable trust can either be:
I. Discretionary: An arrangement where the trustees of the trust retain the power to decide upon the share of the beneficiaries in the trust property and time of distribution of income and/or benefits derived from the trust property; or
II. Determinate/non-discretionary: An arrangement where the entitlement of the beneficiaries is clearly defined by the settlor in the trust deed. By virtue of such an arrangement, trustees are not entitled to exercise any discretion in deciding upon the proportion in which
the income or the corpus is to be distributed among the beneficiaries.
With an overall increase in the creation of complex private trusts in India, the noticeable change in trust law can only be witnessed under the regulations issued by the Securities and Exchange Board of India (SEBI), income-tax law and on certain occasions in the court pronouncements. We have witnessed questions regarding the nature of a trust, the transactions of settlement/management/distribution by trustees and the status of beneficiaries in the trust structure being a moot issue in applications made to the SEBI and/ or in the matters before the Securities Appellate Tribunal. Herein through this article, we further intend to discuss the income-tax implications on private trusts, settlor, trustees and beneficiaries.
Income Tax Implications On A Private TrustUnder India’s current tax laws, the income of a private trust is taxed in the hands of the trustee, or directly taxed in the hands of the beneficiary or the settlor, on a case to case basis and subject to the provisions laid down under the Income-tax Act, 1961 (“Income Tax Act”).
Events Of TaxationThere are primarily two occasions when a taxation event occurs or arises for a private trust i.e.
i. At the time of settlement of trust; and
ii. At the time of earning an income or addition to the trust corpus and distribution of income or trust corpus.
At The Time Of SettlementIn India, private trusts are structured and surmount around three parties i.e. settlors, trustees and beneficiaries. Settlor as we understand is a person who settles his property in a trust for the benefit of his family and offspring. At the time of settling property in a trust, primary implication, which
Settlement of property in private
trusts for better estate management
and succession planning offers several
advantages
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Disclaimer – The views expressed in this article are the personal views of the author and are purely informative in nature.
arises, is of capital gains arising out of such transfer. Capital gains tax is applicable on the transfer of a capital asset. One needs to determine whether such settlement amounts to a transfer or not. As per the Income Tax Act, any transfer of a capital asset by way of gift or will or by an irrevocable trust is not regarded as a transfer for the purposes of capital gains tax.1 However, this exemption does not apply on any capital asset transferred to a trust as a part of an employee stock option plan or any other scheme related to the same or any transfers made to a revocable trust.
Hence, transfer of a capital asset to a private trust for the benefit of the family members is exempted to be a transfer and there will not be any capital gains liability on the transfer of capital assets if a trust is irrevocable in nature.
Implication Of Section 56(2)(X) - Income From Other SourcesAs per the Income Tax Act, any transfer, which is without any adequate consideration, becomes a taxable event in the hands of the receiver as income from other sources. In case of settlement of property in a trust, the trust receives an asset without any consideration. Hence, such settlement becomes a taxable event. However, section 56(2)(x) of the Income Tax Act gives an exemption to the monies or properties received by a trust from an individual for the benefit of his/her relatives resulting in such settlement becoming free from tax liability arising under section 56 (2)(x) of the Income Tax Act.
Hence, there would not be any tax liability at the time of settlement of trust by a settlor as the transaction of settlement is protected by a set of exemption given under the Income Tax Act.
At The Time Of Earning And Distribution Of The IncomeThe tax liability at this stage largely depends on the type of trust declared by the settlor.
In case of an irrevocable non-discretionary trust, the tax authorities may tax the trustee directly as a representative assessee of the trust to the extent he is representing the shares of a beneficiary, or they have a power to follow a fiscally transparent way and tax the beneficiary directly
i.e. on pass-through basis. In either case, the tax liability cannot be imposed twice. Hence, it is possible to tax either the trustee or the beneficiary but both of them cannot be taxed for the same income twice.
In case of an irrevocable discretionary trust, the beneficial interest of the beneficiaries are not determined and the power to determine the same is left with the trustee and in such scenario, the taxation will happen directly in the hands of the trustee on a Maximum Marginal Rate (MMR) i.e. the highest rate of tax applicable. Hence, there is a direct liability on the trustee to pay the income tax.
In case of a revocable trust, as explained above, a settlement is revocable in either of the scenarios; firstly, when in any transfer, the settlor retains any direct or indirect powers for the re-transfer of the assets back to him, which is settled by him in the trust, or secondly, when the trust deed or settlement in any way, gives the settlor a right to re-assume power directly or indirectly over the whole or any part of the income or assets. Since, in these cases, the settlor retains a power over the trust property, the income from the property of such a revocable trust continues to accrue to the settlor. Such income becomes chargeable as the income of the settlor and is included in his total income.
ConclusionWhile we understand that, the taxation of a private trust majorly depends on what structure is being followed while forming and operating a trust. In order to avoid any ambiguity and with a view to providing proper safeguards, it is suggested that the real intention of the settlor should be explicitly set out in the trust deed. Along with that, the details regarding the beneficiaries should be explicitly set out in the trust deed to avoid any interpretational doubts in future. The trust deed is also required to set out the rights and obligations of a trustee in connection with the administration of the trust and apply it for the benefit of the beneficiaries. Private trusts are slowly becoming a preferred choice of estate management among high net worth individuals. However, careful observation should be given to the structure of a trust to avoid any unnecessary round of litigation among the family members and with the income tax department.
1 Section 47(iii) of the Income-tax Act, 1961
IS IT
From putting Ranbaxy on the global pharmaceutical map to selling their stake in it to daiichi sankyo to their subsequent downfall, Legal Era chronicles the saga of the company’s former Promoters, Malvinder and Shivinder Singh
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FOR THE SINGH BROS
GAME OVER
Back in 1937, when cousins Ranjit and Gurbax started a drug distribution firm in Amritsar, Punjab, little did they imagine that Ranbaxy would go on to become the face of India’s booming pharmaceuticals industry. After defaulting on a loan however, the duo was forced to sell the
company to one Bhai Mohan Singh, a man who had left Rawalpindi, Pakistan, for Delhi, following the Partition. Under Bhai Mohan Singh, the firm launched its first bestselling drug, Calmpose, in 1961. Over
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the years, the baton passed from Bhai Mohan Singh to his son Parvinder Singh and finally to his grandsons Malvinder and Shivinder Singh who became Promoters of Ranbaxy Pharmaceuticals. In 2008, when Ranbaxy was at the peak of its glory, particularly in the generics’ space, Malvinder and Shivinder Singh decided to sell their stake in it to Japanese drug manufacturer Daiichi Sankyo for a jaw-dropping $4.6 billion.
A marriage gone wrongThe Ranbaxy deal could not have come at a more opportune time for Daiichi Sankyo which was looking to enter the generics’ space. However, days into the deal, the US Food and Drug Administration (FDA) decided to ban nearly 30 drugs manufactured by Ranbaxy at two of its factories, on grounds of poor quality of drugs. A shocked Daiichi posted a net loss of $3.45 billion in the year through March 2009. In 2013, it sued Ranbaxy promoters Malvinder and Shivinder Singh for fraudulent misrepresentation and active concealment of material facts and information related to Ranbaxy Laboratories Limited at the time of the Daiichi-Ranbaxy deal. A year later in 2014-15, Daiichi sold Ranbaxy to Sun Pharmaceuticals but by then, the Japanese drug maker had reportedly already lost INR `6,000 crore.
International Arbitration Award favors DAIICHIOn 29 April, 2016, the Singapore Arbitral Tribunal comprising Ms. Karyl Nairn, Justice A.m. Ahmadi (Retd.), And Professor Lawrence G.S. Boo issued an international arbitration award favoring Daiichi Sankyo, which had purchased a majority stake in Ranbaxy in 2008. The Arbitral Tribunal concluded that Malvinder Singh and his affiliates were aware of an incriminating internal document called the Self-Assessment Report (SAR), which chronicled in great detail the fabricated regulatory filings in over 40 countries in relation to over 200 products manufactured by Ranbaxy and sale of adulterated drugs by the company; and yet, they misled, actively concealed, and fraudulently misrepresented to Daiichi about the SAR, its genesis and severity, and its possession by the US authorities. Accordingly, the Arbitral Tribunal granted Daiichi Sankyo `2500 Crore plus interest in damages. In May 2016, Daiichi Sankyo approached the Delhi High Court to collect its dues; however, the Singh Brothers had challenged the petition saying that “substantive objections” existed under India’s arbitration law to make the award unenforceable. That’s not all. Late in January this year, there were media reports about a New York investor having dragged the Singh brothers to the Delhi High Court for allegedly siphoning nearly $300
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million to their privately-held firms. The brothers had also allegedly siphoned out $78 million from the hospital chain, Fortis Healthcare, of which they are Founder-Promoters.
Delhi HC upholds foreign awardOn 31 January, 2018, the Daiichi Sankyo Vs Malvinder and Shivinder Singh battle took yet another interesting turn, with the Delhi High Court dismissing objections raised by the Singh Brothers and passing a landmark judgment which paved the way for enforcement of the international arbitration award in favor of Daiichi Sankyo. The Delhi High Court, in its 115-page order, found the foreign award to be enforceable under Indian law. The HC said that it was clearly within the Arbitration Tribunal’s domain to assess the damages. On the subject of Daiichi having sold Ranbaxy to Sun Pharmaceuticals, the HC said that Daiichi did not suffer any monetary loss thereafter but the negative effects of Daiichi’s acquisition far outweighed the positives. With the Delhi High Court verdict, Daiichi was free to recover `3500 crore from the assets of the Singh Brothers towards satisfaction of the award amount.
Soon after the Delhi HC order, on 8 February, 2018, the Singh Brothers resigned from the Board of the country’s second-largest hospital chain, Fortis Healthcare. In a stock-exchange statement, the brothers reportedly said, “In light of the recent High Court judgment upholding the plea of Daiichi to enforce the international arbitration award, we believe this is in the interest of propriety and good governance.” They added that the Fortis Board would be “better enabled and empowered to guide the organization without being hampered by the judgment and our (their) association at the Board.” Within a week of resigning from the Board of Fortis Healthcare, on 14 February, the Singh Brothers also quit the Board of financial services firm Religare Enterprises, of which too, they were Promoters.
SC rejects appeal against Delhi HC orderWhile the Singh Brothers moved the Supreme Court against the Delhi High Court’s order allowing Daiichi Sankyo to recover ̀ 3500 crore from them, the highest court of the land, too, rejected the brothers’ appeal. The apex court bench said, “Heard the counsels for the petitioners and perused the relevant material. We are not inclined to interfere. Special Leave Petitions are accordingly dismissed. Consequently, all applications are also disposed of.” Justice Ranjan Gogoi said, “We can only say: Wish you all the best for Singapore.” Reacting to the SC verdict, the Singh Brothers in an official statement said, “We respect the ruling by the Hon’ble Supreme Court of India. However, we are disappointed by the decision. The court decided not to go into the merits of the majority arbitration award. We maintain that there was no misrepresentation in the Ranbaxy deal to Daiichi Sankyo and these are false accusations against us made four years after Daiichi bought Ranbaxy” The brothers also said that they were now evaluating the option to challenge the majority arbitration award in Singapore courts. Amit Misra of P&A Law Office, which represented Daiichi Sankyo, issued a statement reading, “Meanwhile, the Apex Court’s ruling ‘clears the way’ for the award to be executed and for Daiichi to recover the money.”
Rocky road Even as the Singh Brothers consider challenging the majority arbitration award in Singapore courts, the Delhi HC has barred them from selling or mortgaging their assets. The court order will be effective till 26 February, which is the next date of hearing for a plea for execution of the `3,500 crore international arbitration award passed by the Singapore Tribunal. It is disheartening that the Singh Brothers, who at one time were credited with putting India on the global pharmaceutical map, are today the subject of much scrutiny and litigation. That the Securities and Exchange Board of India (SEBI) has initiated an investigation into their alleged siphoning of funds only adds to their cup of woes.
Disclaimer – Statements and opinions expressed in this article are those from the editorial and are well researched from various sources. The content in the article is purely informative in nature.
24th & 25th May 2018 | new york, UsaTheme: West Heading East: Understand The Market, Ground Realities, Opportunities, & Path Ahead
INDIA AS AN INVESTMENT DESTINATIONIf there is one mandate that the ruling BJP government has seriously adhered to ever since being voted to power, it is that of making India a business-friendly destination. In keeping with this vision, the government has kick-started ambitious initiatives such as Make in India, Invest in India, Start-up India, and so on. Coupled with enabling government policies and a bustling private sector, these programs have started yielding benefits in the form of increased investor confidence, increased FDI and FII, and a situation where overseas investors are no longer wary of investing in India as they once were. While a lot needs to be done not only in terms of encouraging more foreign investment into India but also in terms of hand-holding and nurturing foreign investors who have already invested here, there is no denying that the tide is changing in favor of India as a global investment destination.
Legal Era Magazine, a frontrunner in the legal sector in India and abroad, has in the past partnered with the Government of India and continues to do so to espouse the cause of “Invest in India”. As part of this larger objective, the magazine will organize Legal Era Conclave 2018 on May 24 and 25 in the world’s financial capital, New York. For all those desirous of investing in India, the two-day Conclave will discuss in depth topics such as the Indian market, growth drivers, regulatory regime, tax network, challenges and opportunities when heading from West to East, partnering Indian lawyers to help make the right decisions, net neutrality, artificial intelligence, compliance, data privacy regime, and so on.
The Conclave will provide a platform for investors, lawyers, and corporate counsel from both countries to come together and discuss opportunities on both sides of the fence. At a time when the world is eyeing India, the Conclave will provide a sneak peek into the dynamics of India, its culture, what investing here entails, laws, ground realities, the government’s progressive vision, pain points, and so on.
amy hariani , Vice President & Legal Policy Counsel , U.S.-India Business Council , U.S. Chamber of Commerce
anand Desai, Managing Partner, DSK Legal
anand Pathak, Partner, P & A Law Offices
Charlie Kaplan, Member, Sills Cummis & Gross P.C.
Debolina Partap, Associate Vice President and Head Legal, Wockhardt Ltd.
Deepak Jacob, EVP & General Counsel - Legal & Regulatory Affairs, Star TV India
Dev bajpai, Executive Director, Legal and Company Secretary, Hindustan Unilever Ltd.
erik wulff, Partner, DLA Piper LLP (US)
fernando garcia, General Counsel, Nissan Canada Inc.
fernando Victoria Pena, Legal & Compliance Director, Teleperformance Colombia Group
Historically speaking, economic crises or disasters natural or man-made have never occurred in isolation. There have always
been warning signals which, many a times, were not heeded
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Predictable?
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Extreme events do not come out all of a sudden; their trend and information are always available through data points. However, those data points are often ignored and it is believed that nothing will happen, but that ignorance
has been proven to be costly in the past. If any of those past extreme events are analyzed, it could be found that the vital signs were available but ignored, resulting in a disaster/crisis.
In the sinking of the Titanic in 1912, it was “overconfidence” about the ability of the ship not to sink keeping few lifeboats and that too for other sinking ships.
The Chernobyl disaster in 1986 in USSR was a combination of a design fault, safety system intentionally turning off, and safety negligence.
In the Bhopal gas tragedy in India in 1984 where thousands of people died and health of millions got affected due to the emission of a poisonous gas in the atmosphere, the prime cause was a reduction in maintenance expenses by the management, leading to poor upkeep of the plant. The Indian government and local activists argued that slack management and deferred maintenance created a situation where routine pipe maintenance caused a backflow of water into a tank, triggering the disaster. Union Carbide Corporation contended that water entered the tank through an act of sabotage.
The Wall Street crash in 1929 in the US leading to the beginning of 12 years of the great depression was not without warning signals. Prior to this crash, the world was recovering from the First World War, the American
Vice President (Business Risk), Aviva India Life Insurance, & India
Ambassador of Institute of Risk Management, London
Sonjai Kumar, CMIRM
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economy showed ominous signs of trouble with declining steel production, construction was sluggish, automobile sales were down, and consumers were building up high debts because of easy credit available. Despite all these economic troubles, the stock market was showing signs of high and the gains continued almost unabated until early September 1929. The market had been on a nine-year run that saw the Dow Jones Industrial Average increase in value tenfold, peaking at 381.17 on September 3, 1929, shortly before the crash.
The dot-com bubble had a similar story during 1999-2002 when the Internet and World Wide Web (www) was getting popular. At that time, investors were eager to invest in any venture that had Internet or “.com”, and venture capitalists, eager to profit on this investment demand, moved to raise and invest capital faster and with less caution than usual. A combination of rapidly increasing stock prices, market confidence that the companies would turn future profits, individual speculation in stocks, and widely available venture capital created an environment in which many investors were willing to overlook traditional metrics, such as P/E ratio, in favor of basing confidence on technological advancements.
A very recent 2008 economic crisis is still fresh in the memories of people on the back of skyrocketing home prices in the US, cheap credit which made it too easy for people to buy houses or make other investments based on pure speculation lending loan without collaterals, private equity firms leveraged billions of dollars of debt to purchase companies and created hundreds of billions of dollars in wealth by simply shuffling paper but not creating anything of value.
In all abovementioned examples of economic crisis over a short history of last 100 years, there were clear signals of extreme optimism or a sudden rise in a particular phenomenon (dot-com) prior to the debacle. The public just followed the general public sentiment and kept investing in any market that gave them return (stock market or housing) in a hope to book quick profit. Even for other disasters, there were good reasons that were not well read by the people/management. There are many other examples in the history proving that extreme events do not occur in isolation without warning signals. The warning signals may come from many sources. In today’s world, global warming is impacting the weather conditions worldwide, which is a signal of a possible debacle that may be sitting in store, and should not be taken as an extreme event, if it occurs.
The information available in the world at a point of time if analyzed properly may give an indication of tomorrow’s debacle. The efficient market hypothesis developed in the 1960s in financial economics states that asset prices fully reflect all available information. A direct implication is that it is impossible to “beat the market” consistently on a risk-adjusted basis since market prices should only react to new information.
Similar to the stock price, all data available in the world till today carries all information about possible tomorrow’s
debacle. Such information is in an advanced stage of development and may be observed in the five fundamental building blocks of our existence. These five building blocks are Earth (Birth), Air (Life), Water (Growth), Space (Purpose), and Fire (Death).
These five building blocks of existence are the key, and information about these may act as a key indicator of any untoward incident that may happen tomorrow. The “Earth” is related to agriculture, useful and precious mineral deposits, petroleum output, water deposits essential for life, etc. It is also related to destruction through an earthquake and volcanic eruption, etc.
The second component, “Air”, is related to life for breathing as a key component for the survival of humans and plants for photosynthesis; extreme pollution is linked to the destruction of mankind, and extreme wind is related to destruction through tornado-type events.
The third component is “Water”, again one of the key survival components for mankind that is useful for drinking, agriculture, etc. Excess or shortage of water is a threat through flood or excess rain or drought impacting the ability to drink as well as produce foodgrains.
These three fundamental components form the basis of any economy and demography in the world. The other two components, “Space” and “Fire”, are enablers/facilitators for survival in conjunction with the first three elements. The entire economic and demographic developments are therefore a combination of the five essential components of which humans and the world are made up of. It is impossible that impacts on the building blocks are not made before any major disaster.
The other ways of destruction could be from manmade creations. In the current context, this could be due to the use of a weapon of mass destruction or terror attack or extreme climate conditions, human behavior such as too much optimism, overconfidence, part of the masses, greed, etc.
So any ominous sign of a future disaster will always be available either individually from any one of the five fundamental elements or in one or more combinations of these five fundamental elements. All examples of the stated debacles have shown the involvement of human behavior. The Titanic incidence was due to overconfidence; the 1929 stock market crash where people followed the masses without looking at the actual economic reality, and similarly, the burst of the dot-com bubble was a combination of greed and quick profit; while the 2008 economic crisis was due to many factors of human behavior. The tragedies that resulted in the loss of lives are attributed to either negligence, not following the process, or management responsibilities.
None of the abovementioned debacles over the last 100 years impacted any of the individual five fundamental elements directly, but rather, the impact was in a form of a combination as “economy”. However, this is changing now, and the current signs are more ominous than ever before, coming from “Air”, pollution, change in environment
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Disclaimer – The views expressed in this article are the personal views of the author and are purely informative in nature.
leading to extreme weather conditions; “Water”, in a form of water shortage, excess rain or drought, increase in the acidic nature of sea impacting the coral reefs slated to be the lifeline of the aqua world, rise in sea temperature, etc.; “Earth” urbanization, reduction of forests, rise in temperature, etc. These will fundamentally impact the ability to grow food as well as have safe drinking and places to live.
The World Economic Forum (WEF) every year since 2008 comes out with a list of risks impacting the world on both likelihood and impact scale. These risks fall into five broad categories of Economic, Environmental, Geopolitical, Societal, and Technological fronts. These risks may be compared with the fundamental building blocks of “five elements” and “manmade” creations. Economic and Environmental fall under the five fundamental elements, Technological falls under manmade, and Geopolitical and Societal are a combination of the two.
From 2008 to 2010, top five risks reported by WEF in terms of both likelihood and impact came from Economic, Geopolitical, and Societal risk categories, of which, the top two risks were from the Economic category. From 2011 onwards, risks from the Environmental category started figuring out till the latest report in 2018. Also, from 2012 onwards, a cyberattack on the Technology category started figuring out till 2018. Economic risk was not figuring out in the last three years. From 2015 to 2018, the key risks coming are from the environment, geopolitical, and cyberattacks.
Based on this observed global trend over the last 11 years since 2008, there have been drastic changes in the top five global risks which are clearly evident in the five key elements of the building blocks. The air quality is getting poor, resulting in diseases; there is a sudden eruption of air purification market indicating the nature of pollution. At the global level, there have been changes in the climate with extreme cold/heat, rain, flood, etc. Similarly, information technology and digitalization have taken over the entire world exposing the risk of total collapse due to cyber and similar attacks.
The way stock price carries all information, similarly, all information available in this world carries an out likely tomorrow, and any event that may dismantle the world impact should not be taken as an extreme event because signals were coming. It is a different matter that no device is prepared to interpret such information and decipher the conclusion. Though the mathematical, econometrics, environmental, and seismic models, etc. are available, neither a combination of all models nor incorporating any human behavior is available. At times, models are more complicated compared to using common sense that can read an obvious writing on a wall. The need is being unbiased.
In a twist to the case where the Former Editor-in-Chief of Tehelka Magazine is facing charges of having sexually assaulted a junior
colleague in 2013, the petition filed in the Apex Court is claimed to challenge Tejpal’s very prosecution
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SLP FILED IN SC, EVIDENCE SUPPRESSED ABSOLVES
CLAIMS DEFENCETARUN TEJPAL
Back in November 2013, a junior colleague of journalist and then Editor-in-Chief of Tehelka Magazine, Tarun Tejpal, alleged that he sexually assaulted her in the elevator of the Grand Hyatt Hotel, Goa, on two occasions
i.e. 7 November and 8 November, 2013, during the time Tehelka Magazine was hosting its annual international event, the THiNK Festival, in Goa. The allegations rocked the nation even as Tejpal stepped down as Editor-in-Chief of the magazine before being arrested in November 2013 on charges of rape and outraging the modesty of a woman. He remained in police and judicial custody for six months before being granted bail by the Supreme Court in July 2014. In December 2017, the Bombay High Court,
by its order dismissed Tejpal’s plea for quashing of rape and other charges against him. Tejpal has challenged the Bombay High Court’s order in the Supreme Court.
According to reliable sources, Tejpal’s Special Leave Petition (SLP) filed in the Supreme Court – the focus of which is the CCTV footage and an independent witness’s version – brings to the fore disconcerting details pertaining to the case. According to these sources, the SLP obliterates all of the Prosecutrix’s allegations, and may prove each and every part of her statement given on oath to the Ld. Magistrate as untrue. This in turn may raise question marks about the practice of recording statements before the Magistrate under Section 164 of the Code of Criminal Procedure, 1973.
— Madhavi Gokhlay
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To reiterate, a case was registered against Tejpal on 22 November, 2013, claiming that he sexually assaulted a junior colleague in an elevator of the Grand Hyatt Hotel, Goa, on 7 November and 8 November, 2013, during the Think Festival being hosted by Tehelka Magazine. However, these sources who have seen the CCTV footage filed in the Apex Court as part of the SLP say that it lays bare several fallacies and incongruities in the Prosecutrix’s statements, and invalidates what the public has come to believe as the facts of the case. It is learned that Tejpal has submitted a chart along with the SLP to demonstrate how the Prosecutrix lied to her colleagues, the Investigating Officer, and the Magistrate.
The CCTV footage exhibits no signs of any untoward incident having taken place, as against the Prosecutrix’s claims that Tejpal dragged and physically manhandled her on both days of the alleged occurrence. Rather, at one point of the November 8 footage, the Prosecutrix is seen running into the elevator behind Tejpal around the same time she claims that he dragged and physically manhandled her. According to Tejpal’s lawyers, the footage supports his version of the facts and absolves him, showing the case against him to be fabricated. They are accordingly demanding that Tejpal be completely discharged on the basis of this footage and other important details exposed by the SLP.
According to informed sources, back in November 2013 when the availability of CCTV footage in the case was announced, Tejpal issued a press statement the very same day demanding public release of the footage before he had seen it.
Also according to them, the SLP stresses that the footage covering both days of the alleged incident is actually evidence produced by the Prosecution (Goa Police), and puts a question mark on the entire investigation. The SLP reveals that though the Goa police got the CCTV footage from the Grand Hyatt Hotel, Goa, in November 2013 itself, the same was released to the media, public and Tejpal’s lawyers only about a year-and-a-half later. It wasn’t until Tejpal’s lawyers approached the SC, demanding that this critical evidence be handed over to them that the footage was actually provided to them. The SLP positions the CCTV footage as the only primary and non-biased evidence in the case.
There are other disconcerting facts as well like excluding a couple of key witnesses; and lapses with regard to the Prosecutrix’s conduct which is quite the opposite of what is claimed.
Staggeringly, the SLP bears proof of claim by the Prosecutrix that she had a purported concurrent sexual liaison with an iconic Hollywood actor present at the festival as a Speaker. According to sources, the WhatsApp messages in the Prosecutrix’s own words sent to her friends topple her claims of being in a state of shock and anxiety during and after the days Tejpal allegedly sexually assaulted her.
Moreover, the SLP questions aspects of the investigation such as withholding proof and the fact that defence had to wait for more than three years to get access to all the evidence being used against Tejpal. The SLP draws attention to the fact that even after petitioning the highest court of the land, the defendant got only two of the three proofs i.e. the CCTV footage and the Prosecutrix’s phone data. The contents of her laptop were not provided.
According to the sources, the SLP raises the question whether the investigation into the Tejpal case was just and uncorrupted, or was driven by vested interests where important evidence was ignored by the Investigating Officer, who incidentally is also the complainant in the case. The sources disclose that the Prosecutrix never filed a criminal complaint; it was filed by the Investigating Officer to herself in her capacity as officer-in-charge of the police station, and later assigned to herself for the investigation.
Disclaimer – The views expressed here are solely those of the author. The content in the article is purely informative in nature.
The Special Leave Petition (SLP) filed in the Supreme Court – the focus of which
is the CCTV footage and an independent witness’s
version – brings to the fore disconcerting details
pertaining to the case. The Prosecutrix never filed a
criminal complaint; it was filed by the investigating
officer to herself
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The Rising Star Awards will once again identify and honor young, up-and-coming talent under the age of 40 years that exemplifies vision, leadership, innovation, and accomplishment in the legal fraternity. The
Award ceremony will be followed by a grand meet-and-greet (accompanied by cocktails and dinner) with the movers and shakers of the legal-business fraternity.
Young lawyers and in-house counsel who have made continuous, exceptional contribution to the profession over the preceding financial year are eligible to send their nominations for the Awards.
201840 Under 40 rising star awardsA Step Towards Industry-Wide Recognition Of Professional Excellence
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As digitization increases, large volumes of data are generated and there are no measures to safeguard the privacy of this data nor regulate data retention by the platforms collecting it. Hence, we are in need of a strong data protection law
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Data (Privacy and Protection) Bill, 2017: What to ExPEct
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In the new media age, privacy has become a fiercely debated topic. In India, we observe that with the ongoing Aadhaar case in the Supreme Court, a new common discussion has started around the issue of digital privacy and where the law currently stands on
this subject.
The debate on privacy and data protection has become a burning issue as the constitutional bench of nine judges, headed by the Chief Justice of India, is set to decide whether the right to privacy is a fundamental right, and a committee headed by Justice B. N. Srikrishna, former judge of the Supreme Court, has been constituted to suggest a draft Bill on data protection. It must be noted that it is this series of important events that may contribute to India’s focus on data protection and the Data (Privacy and Protection) Bill, 2017.
What is Data Privacy and Data ProtectionA privilege to ensure one’s information online constitutes information security. Such information could either be about an individual, undertaking, or even a government. Following the definition of personal data laid down by the European Union’s data protection guidelines, “Information concerning an identified and identifiable natural person” covers the scope of personal data. Hence, if we follow this definition, the personal information provided by individuals during biometrics would be included. But data put out through biometrics or for economic purposes remains at risk in India since no legislation has been chalked out to protect such personal data.
Where It All StartedRecently, in the Lok Sabha, Member of Parliament Baijayant “Jay” Panda tabled the Data (Privacy and Protection) Bill, 2017, proposing the right to privacy as a fundamental right for Indian citizens.
This is not the first time a Bill proposing such a right has been laid down in Parliament. As a matter of fact, Panda himself had presented a Bill in 2009 titled “The Prevention of Unsolicited Telephonic Calls and Protection of Privacy Bill”, which aimed at prohibiting unsolicited telephone calls by business promoters or individuals to persons who didn’t want to receive such calls. It stated that every person shall have the right to privacy and freedom to lead and enjoy his/her life without any unwarranted infringement. Apart from Panda, Rajeev Chandrasekhar (2010), Vivek Gupta (2016), and Om Prakash Yadav (2016) have in the past introduced Bills pertaining to citizens’ data privacy.
What The Data (Privacy And Protection Bill 2017) PortendsData protection is a daily part of our lives. We come across data protection issues at work, when browsing the Internet,
while dealing with public authorities, when shopping, when booking online tickets, etc. As digitization increases, more and more data is being captured. How this data is used and held is becoming increasingly important.
The Data (Privacy and Protection Bill, 2017)1. Proposes Right to Privacy as Fundamental Right of
citizens
2. Follows a right-based approach and demands the consent of individuals for collection and processing of personal data
3. Gives final right to modify or remove personal data from any database, whether private or personal, solely to an individual
4. Includes data collectors and data processors (defined) who ensure that they collect and process data in a lawful and transparent manner
5. Creates obligation on data intermediaries to implement security measures to ensure the security of the data collected
6. Lays down that in case of data breach, data intermediaries are mandated to inform individuals in a fixed time period
7. Promotes creation of an end user-facing position of data protection officer for grievance redressal, with a provision for appeal to the Data Privacy and Protection Authority (DPPA)
8. Allows lawful interception and surveillance by the state for the purpose of National Security
9. Authorizes DPPA to penalize, imprison, and order compensation for losses suffered by private individuals against the government or any other private institution
10. May also engage in impact assessment, consultation, and inspection by the DPPA
Recent DevelopmentsThe Ministry of Electronics and Information Technology released a white paper by a “committee of experts” led by former Supreme Court judge, Justice B. N. Srikrishna, on a data protection framework for India.
The government had sought public comments till December 31, 2017 on the white paper, which is aimed at securing digital transactions and addressing customer and privacy protection issues.
Public discourse around data privacy is probably at its zenith in India today. As digitization increases, large volumes of data are generated and there are no measures that safeguard the privacy of this data nor regulate data retention by the platforms collecting it. Hence, we are in need of a strong data protection law.
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Advocate Prashant Mali is a Bombay High Court Lawyer. His
area of practice is Cyber Law & Privacy. He is the Founder-President of Law Firm Cyber Law Consulting (Advocates & Attorneys)
LEGAL ERA MAGAZINE speaks to Advocate PRASHANT MALI, BOMBAY HIGH COURT, about data privacy, data security and everything in between
Data Privacy Law Has To Be In Tandem With The Aadhaar Act
LE: According to you, what is the basic meaning and purpose of the Data Protection Bill, 2017?This Bill grants a statutory Right to Privacy under Section 4. However, this Right to Privacy is only pursuant to Articles 19 and 21. While a statutory recognition of the Right to Privacy may be applauded for being a baby step in the right direction, it will have to pass the test of reasonable restrictions when it is codified. The Bill aims to define and protect the right to digital privacy and to constitute a Data Privacy Authority to protect
personal data. This Bill is an attempt at empowering citizens with this right.
LE: Do you feel that the Privacy Bill is in favor of the masses or do you think it is a political and industrial gimmick? What is the territorial scope of the Privacy Bill, 2017? What about extra-territorial application of data
protection laws in India as far as the Bill is concerned? What categories of exemption can be incorporated into the data protection law?The law must have extra-territorial effect with respect to data of Indian residents, and must provide appropriate redress mechanisms for privacy violations outside India if the infringer has a business presence in India. The applicability of the law
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LE: Do you think that the law will break the impasse among legislators this time?I am personally optimistic but the experience of legislators legislating and the history of the same bill since 2006 is disheartening. Even though PM Modi and the Law minister have taken all the right steps towards formulation of public opinion for the bill, I feel the intelligence agencies and opposition political parties find no grounds for the Law being made. I also feel defining Privacy would be a herculean task for parliamentarians, moreover adding reasonable restrictions to the same would be another issue. I wish the Hon. SC could have defined “Privacy” in its last Right to Privacy Judgment then things could have been easy. I personally feel Privacy would be like an obscenity which gets defined differently in different decades.
LE: With Section 33(2) of the Aadhaar Act, the state can cite 'national security' and access identity information and authentication records of citizens. Isn’t this a blurring of lines between 'data security' and 'privacy'? Yes! it is. Data Privacy law has to be in tandem with Aadhaar Act and the state would take this stand. If you look today as well, all states invade citizen’s privacy under the garb of National Security. Section 33(2) of the Aadhaar Act is no different. I feel, as India is drafting a brand new Law, it can take precautions to balance between Privacy, National Security & Criminality.
LE: What according to you should be the safety guidelines for privacy and people? With advancing technology and easy availability of the data, how strict should be a privacy law in the country to control disruption. Your opinion please.I strongly feel the last section of the Bill should have mentioned about the state’s role in providing “Privacy literacy” related awareness and education to Indian citizens. I feel until any state doesn’t inculcate Privacy culture among data users and make them aware about safeguards, they will remain vulnerable. India is seriously late to protect its data. We may be serious and may bring a law but are deficient and yet not ready with technology to implement the same. The architecture must address the following questions: how people give consent, how their data is released, how it is stored and encrypted? When that data is given to another party for use, what is the criteria for usage? Implementation of the said law cannot be overnight, it would need timelines and meticulous planning in the Indian context.
should be extra-territorial as it is as of now in the penalties and liabilities prescribed under Section 43A and 72A of the IT Act, have also been given extra-territorial applicability and would apply to contraventions committed by non-Indian companies, irrespective of the nationality of the data subject whose information is collected, processed or transferred. While the practical enforcement of penalties against a company is unlikely where such company has no presence in India, authorities may resort to other means, including blocking access to servers or networks located in India in the event of repeated and significant contraventions or failures by a company to comply with obligations under the Privacy Rules. Data already in the public domain, anonymous data, data on deceased persons, journalistic data, research data, historical data, data related to investigation, data related to national security etc. should be exempt.
LE: What are your views on cross-border transfer of data?I feel that transfer can only be to countries with a similar or comparative level of data protection laws or having explicit treaties with India. The bill is silent on the issue of data sovereignty, which has become a persistent issue in the wake of technology enabling seamless moving of data across international borders. Covering this lacuna along with addressing the collateral issue of data storage only can make it a comprehensive privacy bill. Well defined provisions against the contractual determination of governing law, jurisdiction and dispute resolution may be considered to ensure that foreign entities comply with Indian law, and do not find ways of working around it by way of contracts or by other means.
LE: Currently, there are a variety of laws in India which deal with processing of data, including personal data and sensitive personal data. These laws operate in various sectors, such as the financial sector, health sector and the information technology sector. Should these laws be inspected and suitably amended before passage of the Data Protection Law, 2017?All regulators currently have mandate for Privacy, in fact I have written a whole research paper around it in the current issue of NUJS, International Journal of Law & Privacy. I feel This Data Protection Law, 2017 or 2018 or 2019 whenever it is incarnated should supersede The IT Rules, The Telecom Act & all other Regulatory Privacy rules of all sectors. I feel the Aadhaar Act has more privacy provisions than any other laws, how will they complement the new law is also to be seen.
Disclaimer – Statements and opinions expressed in this article are those from the editorial and are well researched from various sources. The content in the article is purely informative in nature.
The article takes a close look at the highlights of Union Budget 2018 in terms of direct and indirect taxes
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Analyzing Tax Proposals2018
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While Budget proposals of 2018 were in all aspects people-friendly with announcements on major reforms in healthcare, agriculture, air pollution, job creation, roads and railways and other
common problems of the common man, the direct tax and indirect tax proposals were also landmarks on their own account. 2018 being the first budget after introduction of GST, a few changes are proposed on Indirect taxes front. The nomenclature of central indirect tax regulatory body has been proposed to be changed to demonstrate the subsuming of excise duty on major goods within GST ambit.
Accordingly, existing name is proposed to be changed from Central Board of Excise & Customs (‘CBEC’) to Central Board of Indirect Tax & Customs (‘CBIC’). Education cess and Secondary and Higher Education cess has been proposed to be abolished on imported goods. A new cess namely ‘social welfare surcharge’ shall be introduced (not to be included while computing Integrated GST). Other significant proposal is the levy of ‘road and infrastructure cess’ of INR 8 per litre (from existing INR 6 per litre) on petrol and diesel, as an additional excise duty on imported goods. This is coupled with reduction of basic excise duty on both fuels by INR 2 per litre. Accordingly, the combined effect on consumers is nullified. The rationale behind this change seems to provide for the shortfall in
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government coffers post GST roll-out since a cess is entirely governed by Central government while basic excise duty is a shared subject between State and Centre with States entitled to more than 40 per cent of tax collections. Besides this, Basic customs duty has been enhanced to almost in an array of imported products making branded and luxury commodities expensive. A surprising entry to this list is the food processing category wherein BCD has been increased on import of fruit juices and other food preparations from 30 per cent to 50 per cent. This seems to create tariff barriers for imported goods in order to promote in-house domestic manufacturing of processed food in India.
From direct tax perspective, Income Computation Disclosure Standards (‘ICDS’) were given a fresh lease of life, after the recent taxpayer favorable Delhi High Court decision1 that rendered those ICDS unconstitutional, which overruled binding judicial precedents. Finally, budget proposals were introduced to render constitutional validity to ICDS through the introduction of six out of ten ICDS as part of the Income Tax Act, namely ICDS II (Inventory valuation), III (Construction contracts), IV (revenue recognition), VI (Forex fluctuations), VII (Government grants) and VIII (securities).
The change in section 36 (1) and 40A allows for market to market losses arising from monetary items. This change is in line with the Supreme Court ruling in case of CIT vs Woodward Governor (312 ITR 254). On the other hand, many landmark Apex Court decisions stand overruled due to the specific introduction of guidance provided in ICDS as part of Income tax statute. For instance: losses arising on forward exchange contracts in case of currency derivatives held for trading or speculation purposes or hedging foreign currency risk shall not be allowed while computing taxable income. This tax position is diametrically opposite to the ratio decided by Supreme Court in case of Sutlej Cotton Mills vs CIT2 which held that foreign exchange loss incurred on account of trading liability would be a deductible expenditure.
Besides the above, there are certain differences between the proposed sections (based on ICDS) in Income tax Act in comparison to the ICDS notified in September 2016. Such anomalies should be creased out in the final section at the time of approval of the Finance Bill. One of such differences is the contrast that emerges out of proposed definition of ‘securities’ as defined in section 145A (iii) in comparison with para 3(1)(b) of ICDS VIII. Whereas the tax standard defines securities as defined under Securities Contracts (Regulations) Act, 1956, the definition used in the proposed section states that securities listed but not regularly quoted on a recognized stock exchange shall be covered. Accordingly, one may infer that the bucket approach of valuation shall
not apply on regularly traded listed securities.
No horizontal corporate tax rate change was announced except for small and medium sized companies as defined in the Budget proposal. The corporate tax rate was reduced to 25 per cent for companies having aggregate turnover/ gross receipts not exceeding INR 250 crore. This was an extension of benefit bestowed on small and medium sized companies in last budget, wherein a reduced corporate tax rate benefit of 25 percent was passed to companies having less than INR 50 crore of business turnover. Further, with no change in surcharge rate, the existing Education Cess at 2 percent and Secondary and Higher Education Cess at 1 percent is proposed to be abolished. In its place, a new ‘Health and Education Cess’ is proposed to be introduced at the rate of 4 percent on Income Tax
plus surcharge (as applicable).
Another landmark budget proposal was the re-introduction of long term capital gains tax in the taxing statute. The current exemption from long term capital gains (LTCG) tax was introduced in 2004 with introduction of Securities Transaction Tax (STT). After 14 years, exemption from LTCG is proposed to be removed with proposal for removal of section 10(38) and insertion of a new section 112A to tax such LTCG.
1 Chamber of Income-tax Consultant vs. UOI dated 8 November 2017. 2 Sutlej Cotton Mills vs. CIT (1979) 116 ITR 1 (SC). 3 CBDT Circular F. No. 370149/20/2018-TPL dated February 04, 2018.
Income Computation Disclosure Standards (‘ICDS’) were given a
fresh lease of life, after the recent taxpayer
favorable Delhi High Court decision that
rendered those ICDS unconstitutional, which overruled binding judicial
precedents
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Disclaimer – The views expressed in this article are the personal views of the author and are purely informative in nature.
Concessional LTCG tax of 10 per cent has been proposed, arising from transfer of an equity share, or a unit of an equity-oriented fund or a unit of a business trust where STT is paid both at the time of purchase and sale. In certain cases, STT is not paid initially at the time of purchase of shares viz. in case of bonus shares, sweat equity shares etc. There is no clarity yet as to the rate of LTCG that shall apply to such situations where STT is not paid at the time of purchase. Further, STT on capital gains was introduced with a view to simplify taxing such through imposing tax on securities turnover. Whilst the proposal for imposing LTCG tax at 10 per cent is made, no indication of removal of STT is yet made. Imposing both taxes on a share transaction is burdensome for taxpayers. Also, suitable amendments are not made in section 48 resulting in indexation benefit being still available for computing LTCG. Accordingly, does the taxpayer need to compute LTCG in accordance with both section 112A (without indexation) and section 48 (with indexation) and should derive at the beneficial result for the purpose of imposing the LTCG rate of tax, is still to be clarified.
Such long term capital gains tax shall be levied on gains in excess of INR one lac. It needs to be clarified whether the exemption of 1 lac rupees is available as a standard deduction or whether the entire long term capital gains shall be taxable if the total long term gain exceeds one lac. No indexation benefit shall be provided. The proposals shall take effect from April 01, 2018 with grandfathering provisions being available for shares purchased prior to January 31, 2018 and sold after March 31, 2018. CBDT has provided clarity on various aspects of the proposed provisions including clarity on long term capital gains computation, applicability of grandfathering provisions on Foreign Institutional investors (FIIs) and withholding tax implications in hands of residents, non-residents including FIIs3. Transfers made between February 01, 2018 and March 31, 2018 will be eligible for capital gains tax exemption under section 10(38) since the new tax regime shall be applicable to transfers made on or after April 01, 2018. Further, no withholding tax provisions shall be applicable on payments of long term capital gains made to FIIs in view of section 196D of the Act. Accordingly, FIIs need to deposit advance tax on their own assessment of long-term capital gains taxes and file tax return in India.
Another vexed issue touched upon in the Budget pertained to regulating cryptocurrency in India. It has been clarified by Finance Minister that Cryptocurrency is not legal tender and government shall discourage its use. In the same breath, a mention was made by FM that government shall look into
the aspect of utilization of blockchain technology. Similar announcements were made earlier also by government stating that cryptocurrencies were not legal tenders and several red flags were raised to abstain investors from investing in the aforesaid currencies. Alongside, there were reports around no registrations being granted to companies intending to act as exchange portals for blockchain currencies. With little clarity yet available on the actual classification of cryptocurrencies, the announcement from government to study its utilization and efficacy is a welcome move.
On international tax front, few amendments are proposed viz. amendments to section 9 and changes in Country by Country Reporting (CbCR) provisions.
No significant changes proposed on transfer pricing law except for a few clarifications on CbCR. There has been a proposal of extension of time allowed for furnishing CbCR to twelve months from the end of the reporting accounting year. This announcement aims at aligning Indian transfer pricing regulations with the Organization for Economic Cooperation and Development (OECD).
Further, the due date for furnishing of the CbCR by the Constituent Entity in India that has an overseas parent entity, is proposed to be aligned with the stipulated reporting year of the parent company for accounting purposes. The due date for furnishing the CbCR by Alternate Reporting Entity (ARE) is also proposed to be aligned with its local jurisdiction timelines in a similar manner.
In yet another blow at countering digital economy and cross border e-commerce activity, after equalization levy, India has made another important landmark announcement in the international tax domain by introducing concept of ‘significant economic presence’ in the tax statute through linking it with the definition of business connection under section 9 of the Income Tax Act. Once business connection is established, the income earned in India by a foreign company is subject to corporate tax in India on net basis. The newly proposed concept of significant economic presence includes within its domain all types of transactions, whether pertaining to goods, services, systematic and continuous soliciting of business activities or engaging in interaction with a prescribed number of users in India through digital means. The essential word here is ‘digital means’, irrespective of a physical presence or place of business in India. However, the budget proposal aims at providing a threshold for attracting significant economic presence, which is yet to be prescribed.
With due government intent falling into place and the Indian education market projected to grow to USD 180 billion in a few years’ time, the need for capital, technology, and best practices from a private player will be invaluable to the sector
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PRIVATE INVESTMENT IN THE
EDUCATIONSECTOR
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BackgroundIn two of the earlier pieces in a three-part series on the education sector, we had discussed the setting up of K-12 schools and higher education institutions. In the concluding piece, we focus on the investment climate in the sector and key considerations in this regard.
The above shall be looked at through two broad lenses, namely:
(i) Regulatory regime
(ii) Regulatory climate
Regulatory RegimeHereunder, we look at some of the key factors that may come up in the context of investment in the education sector:
(i) Which sub-sector to invest in?Unlike many other sectors which have harmonious sectoral regulators, the education sector has certain distinctive sub-sectors. Chief among these are:
(d) Ed-tech (education provided through technology, media, and innovation)
Each of these sectors is sizeable, with some statistics indicating that the K-12 segment is the largest by revenue. It contributes about 52% of a total education sector market that is estimated at a value of USD 100 billion. Therefore, it is a large canvas for an investor to explore.
(ii) Not-for-Profit?The education sector is a social sector that has a direct impact on public sentiment and on policy-making. Keeping this consideration, there are sub-sectors that are governed by the rules of non-profiteering and requirements of surplus investments being utilized for the improvement of the educational institution itself. However, all sub-sectors are not under this umbrella. For instance, while K-12 schools and higher education institutions are largely governed by this philosophy, pre-schools and ed-tech do not have such stringent regulation. Deployment of funds in both these
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Saurya Bhattacharya
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Disclaimer – The views expressed in this article are the personal views of the author and are purely informative in nature.
categories is possible, subject to compliance with regulatory requirements.
(iii) Is foreign investment in education permitted?A question that used to historically arise is whether the deployment of funds into the education sector is investment in the first place. This question arose more from the regulated and non-dividend sub-sector and was compounded by the fact that the education sector was not specifically stated as permitted in the various Foreign Direct Investment Policies (FDI Policy) of the time. Would it at all count as an investment, was the question.
It may be noted, though, that foreign investment in the sector is under the automatic route up to 100% (governed by the FDI Policy).
(iv) Foreign ContributionAs a corollary to the above, there were questions over “if foreign capital deployment was not considered investment and not governed by the FDI Policy, would it be considered as a donation/foreign contribution?” The Foreign Contribution (Regulation) Act, 2010 (FCRA), for obvious reasons, is a far more stringent legislation.
While dependent eventually on specific transaction structures, foreign capital deployment would largely fall within the purview of the FDI Policy rather than the FCRA.
(v) Multiplicity of Laws and Regulators The sector itself has overlapping laws and regulations, not to mention its vastness. These operate at various levels, namely sub-sectoral regulations, legislations applicable depending on structures, and distinct state-level laws. Illustratively:
(a) K-12 schools may come under fundamental union legislations like Right of Children to Free and Compulsory Education, 2009, alongside state legislations like the Gujarat Self-Financed Schools (Regulation of Fees) Act, 2017. This is in addition to affiliation regulators like state boards (e.g., Karnataka Secondary Education Examination Board, West Bengal Board of Secondary Education) or national boards (e.g., Central Board of Secondary Education, Council for the Indian School Certificate Examinations).
(b) Similarly, an institution of higher education may be governed by the University Grants Commission (University Grants Commission Act, 1956, and its various regulations) alongside the All India Council for Technical Education (All India Council for Technical Education Act, 1987).
(c) For not-for-profit education institutions, the core vehicle is typically a public trust, society, or a not-for-profit
company. Each of these vehicles has its own regulations (e.g., a public trust in Maharashtra being governed by a strict Charity Commissioner under the Maharashtra Public Trusts Act, 1950; a society in Bihar under the Societies Registration Act, 1860, with the Inspector-General Registration; and a not-for-profit company under the Companies Act, 2013, and the Registrar of Companies).
(vi) However, there is no denying that education is a sector that requires private investments and is a viable sector for players who have a long-term view of it. The regulatory climate, discussed below, will make a further case for such viability.
Regulatory ClimateThe last few years, now culminating in the recent Union Budget, show that the government is cognizant of the need for increased expenditure in the education sector to improve both quality and outreach. There is a bid to simplify as well as consolidate, thereby making governance and private party involvement more meaningful. Some key indicators are as follows:
(i) The Union BudgetThe Union Budget allocates over `85,000 crore to the sector and plans to integrate the governance of the pre-school to twelfth standard schooling.
(ii) Consolidated Regulator The Ministry of Human Resource Development has been contemplating establishing a new regulator for higher education in India (Higher Education Empowerment Regulation Agency), which is proposed to replace not just the University Grants Commission but also the All India Council for Technical Education. This may also allow for more efficient clampdown on non-compliant operators, thereby improving the overall quality of the sector.
(iii) Less Stringent LawsAbout six months ago, the NITI Aayog also took up the matter of amending restrictive laws that discourage private participation in the education sector. These include amendments to the Companies Act, 2013; the AICTE Act, 1987; and the UGC Regulations.
Looking Ahead With due government intent falling into place and the Indian education market projected to grow to USD 180 billion in a few years’ time, the need for capital, technology, and best practices from a private player will be invaluable to the sector. If the regulations are further relaxed, it could well be the impetus that this virtually recession-proof sector needs for enhanced private participation.
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IT panel refused To sTay The `110 Cr demand on flIpkarTAn income tax panel refused to stay a demand of `110 crore on Flipkart, India’s largest online retailing platform, after it was asked to reclassify discounts and marketing spend as capital expenditure. There maybe adverse effects for rival Amazon, which faces a similar liability, and others.
The tax assessing authority has not accepted the practice of treating discounts and marketing spends as revenue expenditure and to show losses in the operations.
The department wants these expenses to be reclassified as capital expenditure and amortized over a few years. The e-commerce player has been asked to deposit `55 crore as tax and `55 crore as a bank guarantee by February 28. While the tax assessed is for 2015-16, similar demands may be made for subsequent years.
At present, the latest development may have serious implications on rival Amazon, which faces a similar liability, and others.
In 2017, the I-T department had asked e-commerce firms to restructure their marketing expenses under capital expenditure and it elucidated that money spent on marketing is not a cost but capital expenditure because it creates intangibles and potentially generates revenue.
If the department and the government does not yield then it would be interesting to watch how these companies will
go about structuring their businesses and what will happen to the discounts being offered to the customers.
According to reports, Flipkart asked the stay on tax demand “because it would cause financial hardships for the company”. However, ITAT refused Flipkart’s plea on the ground that “prima facie, there was no financial hardship.”
Some experts said ecommerce companies including Flipkart and Amazon are online marketplaces and brand loyalty is not a factor. The discounts offered on products that vendors sell online on Flipkart and Amazon are typically reimbursed by ecommerce companies.
The court will continue hearing the matter in March 2018.
BIll To TaCkle TraffICkIng of persons approved By The CaBIneTtrafficking of a woman or child for the purpose of marriage or under the pretense of marriage or after marriage, trafficking by administering chemical substance or hormones on a person for the purpose of early sexual maturity, etc.Not only this; for the first time, a rehabilitation fund has been created to be utilised for the physical, psychological and social well-being of the victim including education, skill development, health care/psychological support, legal aid, safe accommodation, etc.“A National Anti-Trafficking Bureau will perform the functions of international coordination with authorities in foreign countries and international organisations,” the bill says.In addition to these, there are many other key features of the bill, one if it being punishment ranging from rigorous minimum 10 years to life and fine not less than Rs. 1 lakh. Moreover, dedicated institutional mechanisms at District, State and Central Level would be created; responsible for prevention, protection, investigation and rehabilitation work related to trafficking. National Investigation Agency (NIA) will undertake the Anti-Trafficking Bureau at the national level present under the MHA.
On February 28, the Union Cabinet chaired by Prime Minister Narendra Modi approved the Trafficking of Persons (Prevention, Protection and Rehabilitation) Bill, 2018 for introduction in the Parliament in the Budget Session, which starts on March 5, 2018.The government said that with this law it aims to “make India a leader among South Asian countries to combat trafficking” by addressing the problem “from the point of view of prevention, rescue and rehabilitation”.It takes into consideration aggravated forms of trafficking. It includes trafficking for purpose of forced labour, begging,
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WIpro To pICk mInorITy sTake In harTe hanks for $9.9 mIllIon
On January 24, IT firm Wipro proclaimed that its subsidiary, Wipro LLC will invest $9.9mn in the US-based Harte Hanks. With the aim to widen their existing partnership to offer end-to-end marketing technology services to customers, both companies will collaborate.
Wipro and Harte Hanks will jointly market Opera Solutions’ Signal Hub, an advanced big data analytics and machine learning platform that enables large enterprises deliver a personalized customer experience, as a part of this deal.
Harte Hanks was founded in the year 1923 and is a global marketing services company distinguishing itself from the others in the market with its omni-channel marketing solutions including consulting, strategic assessment, data, analytics, digital, social, mobile, print, direct mail and contact centre. With a manpower of 5,000 employees in North America, Asia-Pacific and Europe; its revenues were a little over $404 million in 2016.
Wipro’s investment in Harte Hanks is expected to be completed in the January-March quarter.
The filing said that “by bundling marketing and technology
solutions in the value proposition, Harte Hanks and Wipro offer an integrated solution, which addresses the needs of chief marketing and digital officers in a holistic manner.”
“This investment strengthens our existing partnership with Harte Hanks and enables us to address a key industry challenge by offering ‘Marketing as a Service’,” Wipro President Consumer Business Unit SriniPallia said.
google sued over defeCTIve pIXel mICrophones In usathe camera’s viewfinder, loose Wi-Fi connectivity, and battery charging and overheating problems. But, the biggest complaint was that the device had a faulty microphone that made it impossible for many owners to use the device for its original purpose of calling; a basic phone.Google’s support agents acknowledged the defects with the microphone, stating that the issues affected less than 1% of the units sold at the time and that, according to the firm’s vice president of product management Brian Rakowski, a “hairline crack in the solder connection on the audio codec” was to blame. The issue created are current fault.Weeks claimed that Google declined to refund her money or replace it even after acknowledging the defect.“Dr. Weeks did not know that the Pixel phones have defective microphones when she bought her phone. Had Google disclosed the defect to her, she would not have bought a Pixel or would have paid substantially less for it,” the complaint states.“Instead of fixing the defective Pixel phones, providing refunds, or replacing the devices with non-defective phones, Google has replaced defective phones with other defective phones, resulting in many consumers repeatedly experiencing the microphone defect,” the plaintiffs claim.
Some of the Google Pixel smartphone buying had buyers’ remorse, so much so that they’ve filed a lawsuit against Google. On the grounds of having found defects in their devices, the plaintiffs filed the class action suit in a federal court in San Jose, California.Moreover, the way the customer service was handled by the company was not pleasant, stated Patricia Weeks and Waleed Anbar, the two pixel smartphone owners.The original Google Pixel phones were launched in 2016. However, some of those early phones shipped were found to be with a number of issues including purple lines across
Policy UPdate80
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Licensing & tax reforms proposed: traiThe Telecom Regulatory Authority of India (TRAI) has made some recommendations to elucidate licensing and regulatory frameworks besides rationalization of high taxes and levies by 2019 in order to attract $100 billion of investment by 2022, as much as $60 billion of this in the next two years itself.
Telecom operators are responsible to pay nearly 3-5% and 8% of the AGR as Spectrum Usage Charges and license fees, respectively, to the telecom department. Because of the increased competition in the market after Reliance Jio Infocomm Ltd. took over massively, Operators have pitched for a cut in these levies.
On February 2, the regulator stated in the recommendations of the NTP 2018 that “there is a need to review the rates of such levies keeping in view that access spectrum is now being assigned through the auction process and telecom networks have become an underlying infrastructure for growth of the digital economy,” which it feels need rebranding as “Information & Communications Technologies Technology Policy - 2018”.
To provide a suitable environment for the Internet of Things (IoT), TRAI has suggested that DoT recognize and make available new spectrum bands for timely deployment and growth of 5G network, and earmark suitable licensed and unlicensed spectrum for IoT.
Factually, TRAI has also suggested a 2019 target for simplification of licensing/regulatory frameworks and rationalization of telecom taxes, levies and related compliance.
“We... strongly support its recommendations on simplifying the licensing and regulatory frameworks and rationalizing taxes, levies and related compliance by 2019 and we expect
that the same would be done at the earliest, in this year itself,” said Rajan Mathews, Director General of the Cellular Operators Association of India (COAI), the apex industry grouping representing Bharti Airtel, Vodafone India, Idea Cellular and Reliance Jio among others.
Mathews said the industry desires “such simplification of compliance” would incorporate reduction in multiple audits, saving cost and efforts of the operators.”While we support these objectives and strategies outlined in TRAI’s recommendations, we hope the level playing field and regulatory equality would be maintained amongst various players,” stated Mathews.
TRAI has also reinforced a review of the definition of Gross Revenue (GR) and Adjusted Gross Revenue (AGR) -- revenue stemming from commissioned telecommunication services - to get rid of paradoxes on the license fee structure.
The sector regulator has also favored “simplification of One Nation - One License concept” of telecom services, and rummaging a potential separation of licenses/permissions for telecom infrastructure, network, services and application providers.
Key poLicy rate unchanged at 6%: rBiKeeping in mind the rising inflation, the Reserve Bank of India kept the key policy rate - at which the RBI infuses liquidity in the banking system, unchanged at 6 percent for the third consecutive time.The lending rate was deducted by 0.25 percent point in August 2017 by Urjit Patel, the Monetary Policy Committee (MPC). So also, when the Consumer Price Index (CPI) gauged the inflation, it was noted that it has been on a rise and topped at 4%, which was the target for 2 months for the central bank’s medium-term.The retail inflation, based on Consumer Price Index (CPI), was 4.88 per cent in November. The recent data shows CPI inflation accelerated to 5.21% in December, the fastest pace in 17 months, from 4.88%. The rise was due to the statistical impact of a low base.
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googLe guiLty of anti-competitive conduct: cciOn February 9, the Competition Commission of India (CCI) published a decision dated 31 January 2018 finding Google LLC, Google Ireland Limited and Google India Private Limited (Google) to have abused their dominant position in violation of Section 4 of the Competition Act, and imposed a penalty of `135.86 crores (USD 21.15 million) on Google for “search bias” and abuse of its dominant position. In addition, the CCI has ordered Google to add a disclaimer to its Commercial Flights unit box and not enforce restrictive and abusive clauses in its search intermediation agreements.
The CCI held that Google enjoys a dominant position in ‘Online General Web Search’ and ‘Web Search Advertising services’. Further, the CCI held Google liable for abusing its dominance in three ways – first, placement of Universal Results before 2010 were pre-determined by Google and not based on relevance, which was unfair to the users; second, prominent display and placement of Commercial Flight Unit with link to Google’s specialized Flight search service is unfair imposition and deprives users of additional choices, and third, prohibitions imposed on publishers under the negotiated search intermediation agreements are unfair as this restricts their choice of partners.
The complainants had submitted to the CCI that Google is dominant in both online general web search services and online search advertising services market in India. During
the course of investigation, Facebook, Flipkart, Make-my-Trip.com and several other entities submitted that Google is abusing its dominant position in India.
This keenly awaited decision concludes six-year-old proceedings against Google. In this David vs. Goliath contest, the complaint to the CCI was made by a customer of Google’s services - Matrimony.com Limited (Matrimony.com). A second complaint against Google was filed by a consumer body – Consumer Unity and Trust Society.
Beware of faKe weBsite, warns rBiOn February 8, the Reserve Bank of India cautioned the citizens against a fake website which is fraudulently taking personal and confidential banking details of bank customers posing as the central bank. The fake website with the URL www.indiareserveban.org is created by some unknown person(s) with a layout corresponding to the original RBI website and comprising a provision for ‘Bank verification with online account-holders’.The RBI warned that replying to such online websites could result in compromising crucial personal information that may be misused.According to a RBI statement, the ‘‘Bank verification with online account-holders” provision on the fake website appears to have been created with a fraudulent intent to obtain personal and confidential details of customers of banks. “The Reserve Bank of India clarifies that as India’s central bank; it does not hold any accounts for individuals and never asks for personal information such as bank account details, passwords, etc...“The Reserve Bank cautions members of public that responding online on such websites could result in compromising crucial personal information that may be misused to cause financial and other loss to them,” the banking regulator clarified.
Further, the RBI said members of public are also cautioned about existence of websites such as www.rbi.org, www.rbi.in, etc. “These URLs (uniform resource locators) may appear similar to the website of the RBI. However, these websites have no affiliation with the Reserve Bank of India,” the central bank said.Thereby clarifying the official website of the RBI – India’s central bank – it said that https://www.rbi.org.in is the website and it holds no other website. The Reserve Bank has been consistently alerting customers about the fake websites, emails asking to transfer funds or for bank account details in the name of a lottery, fictitious job offers, etc. fraudulently luring and cheating customers.
rBi’s new norms on Bad Loans considered as ‘waKe-up caLL’ for defauLters
The RBI has stiffened the rules to make banks recognize and tackle any non-payment of loans swiftly; a move the government said should act as a “wake-up call” for defaulters with a view to speed up the resolution of bad loans. It abolished half a dozen existing loan-restructuring mechanisms granted a strict 180-day timeline for banks to agree on a resolution plan, in case of a loan default or else, refer the account for bankruptcy.
Following this notification, financial services Secretary Rajiv Kumar, said the new rules are a ‘wake-up call’ for defaulters. “The government is determined to clean up things in one go and not defer it. It is a more transparent system for resolution,” he said.
According to the new rules, in case of a loan of `2,000 crore or more, insolvency proceedings would have to be introduced, if a resolution plan is not implemented within 180 days of the default. Not keeping up with the rules will lead to penalties to the banks, RBI asserted. To this, the Financial Services Secretary said that the RBI’s decision would not affect the provisioning norms for banks as much.
It warned that any failure on the part of banks to meet the prescribed timelines, or any actions they take to conceal the actual status of accounts or evergreen stressed accounts, will expose banks to potential monetary penalties and other actions. The earlier schemes including the Corporate Debt Restructuring Scheme, Strategic Debt Restructuring Scheme (SDR) and Scheme for Sustainable Structuring of Stressed Assets (S4A) will be withdrawn from the list.
“All accounts, including such accounts where any of the schemes have been invoked but not yet implemented, shall be governed by the revised framework,” RBI said adding that the Joint Lenders’ Forum (JLF) as an institutional mechanism for resolution of stressed accounts also stands discontinued. The new guidelines have specified framework for early identification and reporting of stressed assets. “If in default after the reference date, then, 180 days from the date of first such default,” the notification said.
frameworK to ensure smooth transition in mfs set: seBi
To enable a smooth conversion at mutual fund houses, SEBI has assured that its new framework pertaining to tenure of independent trustees as well as directors will be complied with in a phased manner, within a period of two years.Under the norms, an independent trustee, an independent director and an auditor will hold office for a maximum of two terms, with each term not exceeding a period of five consecutive years.For those auditors who have been conducting Mutual Fund audits for more than 9 years, may do so till 2018-2019.
In November 2017, SEBI stated norms, wherein existing independent trustees and independent directors, who have held office for over 9 years (as on November 30, 2017), will continue in their respective positions for a maximum of one additional year.Under the norms, an independent trustee, an independent director and an auditor will hold office for a maximum of two terms, with each term not exceeding a period of five consecutive years.Such entities will not hold office for more than two consecutive terms. However, they would be eligible for re-appointment after a cooling-off period of three years in the case of independent trustee as well as independent director and five years for auditors.“During the cooling-off period, such individuals should not be associated with the concerned mutual fund, asset management company and its subsidiaries and/or sponsor of AMC in any manner whatsoever,” SEBI had said.The new auditors, SEBI says, will need to be completely independent of the previous auditor and should have no association in terms of common brand name and control during the cooling-off period.These frameworks were a part of SEBI’s efforts to strengthen the governance structure of mutual funds.
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penaLty for predatory tariffs fixed: trai
Significant Market Power (SMP) definition being amended. “Transparency in tariff is and has always been an issue of prime concern for the authority. To protect the interests of the consumers, several directions and guidelines to ensure transparency in tariff offers have been issued,” said TRAI while issuing the amendment. Reliance Jio Infocomm had filed a complaint with TRAI against BhartiAirtel in April saying the telecom major violated tariff rules by issuing misleading offers and arbitrarily discriminating among its own customers subscribing to the same plan.
On February 16, regulations on predatory pricing, imposing a penalty of up to `50 lakh per circle on mobile operators if they are found to indulge in such practices, were imposed by Telecom Regulatory Authority of India (TRAI). With a view to prevent a recurrence of a bitter war between India’s older telcos, who are alleging the new entrant Reliance Jio Infocomm of offering predatory pricing; the new regulations have been imposed. TRAI said, “In case of tariffs being found predatory, the service provider shall, without prejudice to the terms and conditions of its license or directions issued, thereunder, be liable to pay by way of financial disincentive an amount not exceeding `50 lakh per tariff plan for each service area as the Authority may by order direct.”
It said that on the basis of average variable cost, predatory pricing will be determined and also on if specific intention on the carrier’s part to reduce or kill competition is there. However, as per the case and the complaint received, it will be up to the telco to show that the tariff is not predatory.
If a telecom operator with over 30 percent market share offers services at a price which is below the average “variable cost”, with a view to reduce or eliminate the competitors in the market, the tariff will be considered predatory, as per
white paper on measurement of wireLess data speeds reLeased: trai
On February 5, the Telecom Regulatory Authority of India (TRAI), in a White Paper on Wireless Data Speed Measurement stated that measuring broadband speed is a complex process and the outcome depends upon both the test methodology and test conditions. The paper states that proper documentation of speed testing methodologies by all app providers should be there as measurements of quality of broadband with different methodologies and in different contexts may give different results.
The ‘white paper’ also spells out the methodology, approach and evaluation criteria for its own ‘MySpeed app’ that measures mobile data speeds of various operators through crowd sourcing method. “Since its launch, stakeholders have sought more details about the working methodology
of the TRAI MySpeed app. Some of them have also raised queries relating to the test results of the mobile app and network level values being reported on the analytical portal of TRAI,” it said in a statement.
It noted that wide variations during the individual test of speed measurement may sometimes be observed because of network state and short time window of measurement.
“Individual user results in conjunction of results of network performance in area of concern with tests conducted at the moment may provide better picture about expected performance of broadband network,” the statement said.
“Speed measurement at an all India level may need to be presented with spatial and temporal distributions across districts and across different times of the day instead of presenting by a single value,” it said.
Detailed analysis of the data, comparison with other apps and exploration of possibilities to present data in variety of ways provides leads to few initiatives which can be taken to make the wireless data speed measurement exercise more useful for mobile users and other stakeholders. It has been noted that speed measurement at an all-India level might need to be presented with smaller distributions across districts or geographical bins and across different times of the day instead of being represented with a single value.
Predatory Lendingabusive lending practices that include a mortgage loan to someone who does not have the ability to repay. It also pertains to repeated refinancing of a loan charging high interest and fees each time.
Predatory Pricingthe practice of pricing goods below cost and incurring a loss in order to reduce or eliminate competition NOTE: Predatory pricing constitutes an antitrust violation.
Predeceaseceased-ceasing: to die before (another person) [when the childs the parent]
Predecessor In Interesta party with whom another is in privity; specif: a party in a previously related civil case who was in a similar position and dealt with similar issues and facts as a party in the current case...
Predial[Medieval Latin praedialis, from Latin praedium landed property, from praed- praes bondsman, from prae- before + vad- vas surety] in the civil law of Louisiana: of, consisting of, or relating to...
Predicatecated-cating: to set or ground on something: find a basis for usually used with on [if Mary's claim is predicated simply on John's duty of support "W. M. McGovern, Jr. et al."]
Predictive VariablesThe variables that are part of the formula comprising elements of a credit-scoring model. These variables are used to predict a borrower's future credit performance.
Predisposeposed-posing: to dispose or incline in advance; specif: to make ready and willing to commit a crime [have been predisposed to engage in criminal behavior "W. R. LaFave and J. H. Israel"]...
Preempt1 a: to acquire (land) by preemption b: to seize upon to the exclusion of others: take for oneself [a senior user of a trademark could not use of the mark in remote geographical markets "Mesa...
Preemption[Medieval Latin praeemption- praeemptio previous purchase, from praeemere to buy before] 1 a: the right of purchasing before others: preemptive right b: a right to purchase a tract of public...
Preemptiveof or relating to preemption
Preemptive Right1: right of first refusal 2: the right of a shareholder to buy shares of newly issued stock in proportion to existing holdings before a public offering is made in order to prevent dilution of...
Preexisting Duty Rulea common-law rule of contracts: a party's offer of a performance already required under an existing contract is insufficient consideration for modification of the contract NOTE: This rule is not...
Preferpreferred preferring to give (a creditor or debt) priority or preference [any preferred charges such as child support or alimony "In re Smiley, 427 P.2d 179 (1967)"]
Preference1: the right to prior payment of a debt [with over the creditors of the heirs or legatees "Louisiana Civil Code"] 2: the transfer of an insolvent debtor's interest in property to a creditor for an...
Preference ImmigrationA system for determining which and when people can immigrate to the United States within the limits of immigration set by Congress. In family immigration preference is based on the status of the...
Preference Or Preferential Debt PaymentA debt payment made to a creditor in the 90
Preference SystemThe nine categories since fiscal year 1992 among which the family-sponsored and employment-based immigrant preference visas are distributed. The family-sponsored preferences are: 1) unmarried sons and...
Preferential1: of or constituting a preference [a transfer] 2: giving preference to union members esp. in hiring [a shop] 3: showing preference [these creditors may obtain treatment]
Preferment1: advancement or promotion in office or station 2 : the act of preferring (as charges) [without of allegations]
Preferred Riskan insured that an insurer deems has a lower than average chance of loss and that usually may pay a lower premium [because of the past accidents, he was not a preferred risk]
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SudokuNitaa Jaggi
ACROSS1. Resolve (6)
4. Replaces to former state (10)
9. ‘Knife’ under section 326 IPC (9,6)
10. Risked (2,5)
12. Nominee endorsers in Britain (9)
14. Family business abbr. (4)
16. Deception (4)
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22. Conventional rules (8)
23. Mr. Shastri-3rd PM of India (3)
24. In addition (3)
25. Smaller amount (4)
26. Vociferate (4)
29. Take— - loan-borrow money (3,1)
30. Prefix for legal (4)
32. Burglar (7)
35. IPC (6,5,4)
37. Covenant (10)
38. Bits of evidence (6)
DOWN2. Spy org. (3)
3. Doctrine (5)
4. Communal violence (4)
5. Acapulco agreements (5)
6. Not gracefully (11)
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8. Acquittal (10)
9. Court----- (4)
11. Hellion (6)
13. Mallets for judges (6)
15. Writer of ‘The Merchant of Venice’ - play based on Venetian justice (11)
16. Goods recovered by the police (6)
18. Denouement (10)
20. Track a case (6)
27. Family court in Mumbai (6)
28. Give away (4)
31. Indian currency mark used on stamp paper (5)
33. Transpire (5)
34. Tie-up as in marriage (4)
36. Medico (3)
1 7 3 4 42 2 5 9
9 2 3 65 9 1
4 85 7 9
9 1 28 6 72 5 7 4
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