COMPANIES TO HAVE TWO LAYERS OF SUBSIDIARIES, SAY NEW COMPANIES RULES AS NOTIFIED BY THE MINISTRY OF CORPORATE AFFAIRS

COMPANIES TO HAVE TWO LAYERS OF SUBSIDIARIES, SAY NEW COMPANIES
RULES AS NOTIFIED BY THE MINISTRY OF CORPORATE AFFAIRS.
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New Companies rules notified [G.S.R. 1176(E) F. No. 01/13/2013 CL-V (Vol.III) Dt.
20th September 2017] by Ministry of Corporate Affairs now require that corporates
can have only two layers of subsidiaries under the companies’ law, with the
government putting in place stricter norms as it continues with the clampdown on
illicit fund flows.
Banking companies, non-banking financial companies, insurance firms and
government companies have been exempted from the restrictions, according to
aforesaid notification issued by the corporate affairs ministry. “…for computing the
number of layers under this rule, one layer which consists of one or more whollyowned
subsidiary or subsidiaries shall not be taken into account,” it said.
Additionally, the restriction will not prohibit an Indian company from acquiring a
foreign company that has more than two layers of subsidiaries. Though existing
structures – where more than two layers of subsidiaries exist – have been
grandfathered, such companies are prohibited from creating additional layers and
have to disclose the number of layers beyond two to Registrar of Companies within
150 days.
The new rules paint all companies with the same brush. The assumption is that
anyone who has more than two-layers of subsidiaries is doing something wrong. The
exceptions to the rule may also defeat the purpose of the rule.
In case of violation of the norms, the company as well as every officer of that firm who
is in default would face penalties. The fine would be up to Rs 10,000 and in case of
repeated violation, the penalty “may extend to Rs 1,000 for every day after the first
during which such contravention continues”. Layering restriction on investment
subsidiaries were incorporated in the Companies Act, 2013 with a view to check
misuse of multiple layers of subsidiaries for diversion of funds/siphoning off funds as
a measure of minority investor protection.
The decision to impose a limit on number of investment subsidiaries was taken by the
Ministry of Corporate Affairs (“MCA”) in the wake of the Purti scam, which exposed
the lacunae existing in the Indian corporate regime. This restriction is set to
significantly affect a variety of corporate transactions in India, especially with respect
to companies that operate across multiple sectors with an investment company at the
top; a structure common in the real estate and infrastructure sectors. However, since
the Companies Act, 2013 seems to restrict investment through more than 2 layers of
investment companies, it may still be possible to structure investments through
companies other than investment companies.
2. COURTS CAN CLOSE CHEQUE BOUNCE CASES ON SATISFACTION OF LIABILITY
EVEN WITHOUT THE CONSENT OF THE COMPLAINANT
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A division bench of the Supreme Court of India comprising Justice AK Goel and Justice
UU Lalit has declared that courts are empowered to close cheque bounce cases with
or without the mutual consent of the parties if the accused is forthcoming with
payment of default amount.
In M/s Meters and Instruments Pvt. Ltd. v. Kanchan Mehta,1the accused was willing to
pay the amount on the cheque default but owing to Supreme Court judgements which
had made mutual consent necessary for compounding of offence under Section 138,
the High Court could not grant any relief to the accused.
The Supreme Court held as follows,
“Offence under Section 138 of the Act is primarily a civil wrong. Burden of proof is on
accused in view presumption under Section 139 but the standard of such proof is
“preponderance of probabilities”. The same has to be normally tried summarily as per
provisions of summary trial under the Cr.P.C. but with such variation as may be
appropriate to proceedings under Chapter XVII of the Act. Thus read, principle of
Section 258 Cr.P.C. will apply and the Court can close the proceedings and discharge the
accused on satisfaction that the cheque amount with assessed costs and interest is paid
and if there is no reason to proceed with the punitive aspect.”
1 Criminal Appeal No. 1731 OF 2017.
Though compounding requires consent of both parties, even in absence of such consent,
the Court, in the interests of justice, on being satisfied that the complainant has been
duly compensated, can in its discretion close the proceedings and discharge the accused.
In view of the above, we hold that where the cheque amount with interest and cost as
assessed by the Court is paid by a specified date, the Court is entitled to close the
proceedings in exercise of its powers under Section 143 of the Act read with Section 258
Cr.P.C. As already observed, normal rule for trial of cases under Chapter XVII of the Act is
to follow the summary procedure and summons trial procedure can be followed where
sentence exceeding one year may be necessary taking into account the fact that
compensation under Section 357(3) Cr.P.C. with sentence of less than one year will not
be adequate, having regard to the amount of cheque, conduct of the accused and other
circumstances.”
Supreme Court has also advised the High Courts to issue updated directions for
speedy disposal in accordance with the judgments already pronounced.
3. DELHI HIGH COURT RULES THAT OFFERING PRODUCTS THROUGH ACCESSIBLE
GOOGLE PLAY STORE AND E-COMMERCE PORTALS AMOUNTS TO “CARRYING ON
BUSINESS WITHIN TERRITORIAL JURISDICTION”
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In a trademark infringement suit filed by US based ICON Health and Fitness Inc in
relation to “iFit” brand of fitness devices the Delhi High Court2 passed an ex-parte
decree of injunction against UAE residents. The fact that defendants put up their
infringing products in Google Play Store and E-commerce portals which were
accessible from Delhi, was considered by the High Court as establishing its territorial
jurisdiction as it amounted to “carrying on business within territorial limits of the
court.”
The Delhi High Court held as follows:
“The issue which arises for consideration is whether this Court has territorial
jurisdiction to try the suit since the defendants are residing in United Arab Emirates and
whether there is material to establish that the defendants are carrying on business from
Delhi. Though the defendants are not residing in Delhi, however, the defendants are
offering their fitness apps and bands through App Store, Google Play Store and e-
2Icon Health and Fitness Inc. v. Sheriff Usman, CS (COMM) 216/2016 (Date 12.09.2017).
commerce portals like www.amazon.in which can be accessed and operated from all
over the country, including from Delhi. Thus, it can be said that the defendants are
carrying on business or working for gain at Delhi and this Court has territorial
jurisdiction to try and decide the present suit.
The law on trans-border reputation was discussed by the Division Bench of this Court in
the decision reported as (2017) 236 DLT 343 Prius Auto Industries Ltd. & Ors. v.
ToyotaJidosha Kabushiki Kaisha wherein it was held that to prove trans-border
reputation plaintiff is required to establish two facts. The first is reputation in foreign
jurisdictions of the trade mark and the second is knowledge of the trade mark due to its
reputation abroad in a domestic jurisdiction. If its reputation spills over beyond the
territories of its operation, the benefit thereof can be claimed in an action of passing off.
Plaintiff owns and operates the website www.ifit.com which provides information
regarding the plaintiff’s IFIT branded devices and software since the year 1999.
Plaintiff’s IFIT branded apps are available on mobile stores such as the App Store and
Google Play. Plaintiff’s software under the trademark IFIT was made available in India
at least as far back as the year 18th October, 2011. Since November, 2011 IFIT branded
mobile apps has had hundreds of thousands of logins and thousands of downloads by
users with IP addresses in India. The plaintiff’s IFIT branded fitness devices are also
available on popular e-commerce portals such as www.amazon.in thereby making these
products instantly available to millions of users who visit such e-commerce portals.”
4. DELHI HIGH COURT SEEKS REPLY FROM CENTRE IN PIL ALLEGING ANTI-MEN
BIAS AGAINST SECTION 375 OF THE INDIAN PENAL CODE
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In a PIL by Sanjiv Kumar3 alleging that anti-rape law in India is biased against men, a
bench of Chief Justice Gita Mittal and Justice C Hari Shankar sought reply from Central
government on the matter. The PIL alleges that anti-rape law in India violates
fundamental rights under Arts. 14, 15 and 21 of the Constitution because it only
punishes rapes against women. The lack of protection to adult males in cases of
sexual violence against them was tantamount to “robbing of their rights” as per the
PIL.
The PIL also seeks to rely on the right to privacy judgement in Justice KS Puttaswamy
v. Union of India to support its contention that bodily integrity is now a fundamental
right of both men and women after the aforesaid judgement.
3 W.P.(C) 8745/2017.
The petitioner thus submits,
“That, it becomes very difficult to accept that there is a single reality in rape; that is,
men rape women and men can never be victimized, or if they are, this act has a
meaning so different for men that it cannot be labelled as rape. Another aspect of the
backlash argument is the suggestion that gender neutrality undermines feminist
conceptions of patriarchy. As such, it is submitted that the recognition of male
victimization does not undermine the notion of patriarchy; it merely acknowledges
that sexual coercion can also, in a minority of cases, exist in other contexts. To deny
this reality creates the danger of theoretical objections to gender neutrality in rape,
overriding the reality of rape and sexual assault outside the male-on-female
paradigm… What is clear, however, is that while females are the main victims of
sexual violence and males the main perpetrators, one still has to consider how sexual
assaults beyond the male-on-female paradigm are to be labelled by the criminal law.
That, the Law Commission of India in its 172nd report recommended that the rape
law must be gender neutral and replaced the term with “Sexual Assault”. The Criminal
Law Amendment Ordinance 2013 made the offence of rape gender neutral. However,
due to the pressure from certain vested groups, a step in the right direction was held
back and gender specificity was retained in the Amendment Act 2013.
As right to privacy, having bodily integrity and consent, is protected as an intrinsic
part of the right to life and personal liberty under Article 21 and as a part of the
freedoms guaranteed by Part III of the Constitution, and currently there are no
provisions in IPC or any special laws to implement the same for children, who have
just turned 18 and deemed as adult male, using the doctrine of parimateria, Gender
Neutral Section 8 of “The Criminal law(amendment) Ordinance 2013 dated 3rd
February 2013, No 3 of 2013, published in The Gazette of India (Extraordinary)”
pertaining to IPC 375, 376, 376A, 376B, 376C, 376D, which was law of the land from
3rd February to 1st April 2013, may now be declared law of the land, for all man 18
years and above, so that to protect and enforce their Fundamental Rights.”
5. INDIA BEGINS TAKING DELIVERY OF FIRST US OIL SHIPMENTS
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India received its first ever shipment of US crude oil with state-owned Indian Oil
Corporation (IOC) importing a 1.6 million barrels parcel at Paradip in Odisha.MT New
Prosperity, a very large crude carrier (VLCC), with a capacity to haul two million
barrels of crude, left the US Gulf Coast on 19 August and arrived at Paradip port.
State-owned Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum
Corporation Ltd (HPCL) have also placed orders for about 2.95 million barrels and 1
million barrels of US crude, respectively for their Kochi and Vizag refineries. While in
the first purchase IOC is importing 1.6 million barrels of high sulphur crude Mars
from the US and 400,000 barrels of Western Canadian Select oil, in the second it has
bought 1.9 million barrels of US crude, half of it being shale oil.
The second shipment is expected in a month’s time. India, the world’s third-largest oil
importer, joins Asian countries like South Korea, Japan and China to buy US crude
after production cuts by oil cartel OPEC drove up prices of Middle East heavy-sour
crude, or grades with a high sulphur content.
“US crude oil shipments to India have the potential to boost bilateral trade by up to
USD 2 billion,” the embassy statement said. Indian companies, both public and
private, have invested about $5 billion in US shale assets.
They have also contracted 5.8 million tonnes per annum of liquefied natural gas
(LNG) from the US and the first shipment is expected to be delivered to India in
January 2018. The Indian government has encouraged state-controlled refiners to
buy US and Canadian crude from the US Gulf coast as it looks at cheaper alternatives
that have emerged due to global supply glut.
While in the first purchase IOC is importing 1.6 million barrels of high sulphur crude
Mars from the US and 400,000 barrels of Western Canadian Select oil, in the second it
has bought 1.9 million barrels of US crude, half of it being shale oil.
The second shipment is expected in a month’s time. India, the world’s third-largest oil
importer, joins Asian countries like South Korea, Japan and China to buy US crude
after production cuts by oil cartel OPEC drove up prices of Middle East heavy-sour
crude, or grades with a high sulphur content.
Buying US crude has become attractive for Indian refiners after the differential
between Brent (the benchmark crude or marker crude that serves as a reference
price for buyers in western world) and Dubai (which serves as a benchmark for
countries in the east) has narrowed.
Even after including the shipping cost, buying US crude is cost competitive to Indian
refiners, an industry official said. The IOC deal came within weeks of Prime Minister
Narendra Modi’s June-end visit to the US when President Donald Trump talked of his
country looking to export more energy products to India.
6. NCLAT HOLDS POWER OF ATTORNEY HOLDERS “NOT AUTHORISED” TO
PRESENT INSOLVENCY APPLICATION
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In Palogix Infrastructure Pvt. Ltd. v. ICICI Bank Ltd the National Company Law
Appellate Tribunal (“NCLAT”) held that a power of attorney holder is not authorised
to present an insolvency application under sections 7, 9 and 10 of the Insolvency and
Bankruptcy Code, 2016. Thus mere presence of power of attorney held by a person
for proceedings in certain tribunals is not sufficient to present an insolvency
application. There must be a specific authorization in favour of the person presenting
the application.
Section 7 of the Code states as follows:
“A financial creditor either by itself or jointly with other financial creditors may file an
application for initiating corporate insolvency resolution process against a corporate
debtor before the Adjudicating Authority when a default has occurred.
Explanation.– For the purposes of this sub-section, a default includes a default in respect
of a financial debt owed not only to the applicant financial creditor but to any other
financial creditor of the corporate debtor.”
Section 9 of the Code states as follows:
“After the expiry of the period of ten days from the date of delivery of the notice or
invoice demanding payment under sub-section (1) of section 8, if the operational
creditor does not receive payment from the corporate debtor or notice of the dispute
under sub-section (2) of section 8, the operational creditor may file an application
before the Adjudicating Authority for initiating a corporate insolvency resolution
process.”
Section 10 of the Code states as follows:
“Where a corporate debtor has committed a default, a corporate applicant thereof may
file an application for initiating corporate insolvency resolution process with the
Adjudicating Authority.”
ICICI Bank Ltd. filed an application under section 7 of the IBC for initiation of the
corporate insolvency resolution process (“IRP”) against corporate debtor Palogix
Infrastructure Pvt. Ltd.
The case was first heard by a two-member bench of the National Company Law
Tribunal (NCLT). Having noticed that the financial creditor preferred the application
through a power of attorney holder, the NCLT passed two separate orders: one held
that the application through power of attorney is not maintainable (Judicial Member),
and the other that the application was maintainable (Technical Member). The
Technical Member found that the power of attorney was given in favour of the Legal
Manager to initiate proceedings before the NCLT.
The case was then referred to the President, NCLT, exercising power under section
419(5) of the Companies Act, 2013 (the “Companies Act”) for constituting a larger
bench for decision, wherein by majority judgment, the NCLT held that there should be
specific authorization to the power of attorney holder to initiate the IRP. Since the
financial creditor had not filed such specific authorization, it was directed to rectify
the defects.
The Financial Creditor challenged the said order on appeal before the NCLAT on the
ground that no specific authorization is required for initiation of the CIRP.
The key issue before the NCLAT was whether the constituted attorney authorised to
file suits or proceedings against the company for recovery of the amount and also to
affirm plaints and affidavits and other pleadings in any court of India, including NCLT,
can file an application for initiation of corporate insolvency process under section 7 of
the IBC.
The National Company Law Appellate Tribunal held as follows:
“As per Section 7 of the ‘I&B Code’ an application for initiation of ‘Corporate Insolvency
Resolution Process’ requires to be filed by ‘Financial Creditor’ itself. The form and
manner in which an application under section 7 of the ‘I&B Code’ is to be filed by a
‘Financial Creditor’ is provided in ‘Form-l’ of the Adjudicating Authority Rules. Upon
perusal of the Adjudicating Authority Rules and Form-1, it may be duly noted that the
‘I&B Code’ and the Adjudicating Authority Rules recognize that a ‘Financial Creditor’
being a juristic person can only act through an “Authorised Representative”. Entry 5 & 6
(Part I) of Form No.1 mandates the ‘Financial Creditor’ to submit “name and address of
the person authorised to submit application on its behalf. The authorization letter is to
be enclosed. The signature block of the aforementioned Form 1 also provides for the
authorised person’s detail is to be inserted and also includes inter alia the position of the
authorised person in relation to the ‘Financial Creditor’. Thus, it is clear that only an
“authorised person” as distinct from “Power of Attorney Holder” can make an
application under section 7 and required to state his position in relation to “Financial
Creditor”.”
7. MERU CABS LAUNCHES FRESH CCI CASE AGAINST OLA AND UBER.
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Softbank’s major $10 billion investment in Uber along with its plans to invest billions
in additional funds for Ola, have impelled a fresh CCI complaint against Ola and Uber
by Meru Cabs. Ola has raised $1.1 billion in a new round of funding from Tencent
Holdings and Softbank Group. Ola raised about $36 Mn (INR 231 Cr) funding round
from New York-based hedge fund Tekne Private Ventures. The funding was raised
through an issue of preference shares.Since November 2016, Ola has raised close to
$404 Mn, as per disclosures made with the RoC. The funding round of $350 Mn raised
in February 2017 took its valuation to about $3.5 Bn. Later in June, the cab booking
platform reportedly picked up about $50 Mn funding from hedge fund Tekne Capital
Management, as an extension of its ongoing round.
Meru Cabs alleges that Uber and Ola are abusing their dominance in four different
cities by burning vast sums of investor funds to distort the market. In an earlier CCI
ruling in July this year, Meru’s case against Ola and Uber had failed as it could not
prove abuse of dominance by the two rivals. But the fresh infusion of massive funds
into Ola and Uber is likely to change that scenario, Meru feels.
The key contention of Meru is that due to the foreign capital backing, Ola and Uber
sell below cost, add more cars on the platform. When they add more cars, customers
get the benefit of less waiting time. Consequently Ola and Uber attract more drivers
who flock to them for more trips. Entities without similarly high foreign funding
would have to raise prices, do with less profits, offer more waiting time and
ultimately decline in the number of customers. Competitors like Meru cannot offer
huge subsidies to drivers, impractical discounts to consumers which Ola and Uber are
giving away with far greater ease due to the high foreign capital infusion.
Ola emerged in 2012 and Uber debuted in India in 2014. Before Ola and Uber arrived
Meru was the leading fleet taxi operator in India. However, as Ola expanded its
network of cabs to 110 cities, Meru’s fleet services only 24 cities. Uber boasts of high
presence in more than 30 cities. Ola is also planning to start operations in foreign
countries. Quite clearly, Meru is unsettled by the rise of its rivals in the domestic taxi
market. Lack of venture funds and poor rider-traction has propelled Meru to cry foul.
Fresh round of antitrust litigation will intensify the showdown between ride-hailing
firms and local players in India’s $12 billion taxi market. Ola incurred a consolidated
loss before tax of $360 Mn (INR 2,313.66 Cr) in FY16, as per regulatory filings with
the Ministry of Corporate Affairs. A year earlier, the company’s losses were about
$123.9 Mn (INR 796 Cr).
As per regulatory filings, the consolidated revenue for ANI Technologies Pvt. Ltd
(Ola’s parent company) was about $117.9 Mn (INR 758 Cr) for the year ended March
2016. The revenue is inclusive of subsidiaries such as Ola Fleet Technologies and Taxi
For Sure parent Serendipity Infolabs. In the previous year, this number was about
$16.1 Mn (INR 103.8 Cr).
While Ola has been dealing with increasing losses to compete with Uber, the US-based
company is crumbling at the edges too. Uber’s CEO Travis Kalanick resigned under
pressure from investors. Later in July, Uber called it quits in the Russian market. The
cab aggregator announced a $3.7 Bn merger deal with Russian rival Yandex. Taxi,
which is owned and operated by Baltic search engine giant Yandex. Last year in
August, Uber decided to sell its China arm to rival DidiChuxing. In India too, the
company was plagued by driver protests over reduced incentives. Another setback
was the Delhi government’s proposed ban on ride-sharing services like Ola Share and
Uber POOL under the Motor Vehicles Act, 1988.
It has been reported that Silicon Valley VC firm Benchmark Capital, one of the earliest
investors in Uber, has filed a suit against ex-CEO Travis Kalanick accusing him of
fraud, breach of contract and breach of fiduciary duty.
In the Indian market, the Government of India is also looking to enter the online cab
aggregator market. With its sights set on entering the neighboring markets of
Bangladesh and Sri Lanka, Ola will automatically be pitted against Uber. Currently,
Uber is already facing significant anti-monopoly concerns in neighboring China,
where the commerce ministry last year began investigating its deal with DidiChuxing
that created a roughly $35 billion giant dominating the China car-hailing market. In
India Ola’s reach is far more than Uber. Ola is present in 110 cities and claims to offer
over 700K vehicles. As of now, Ola is eyeing expansion in neighboring countries like
Sri Lanka and Bangladesh.
8. SEEKING BANK EMPLOYEES’ PERSONAL INFORMATION HAS BEEN EXEMPTED
UNDER RTI BY THE SUPREME COURT.
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The Supreme Court has held that seeking information about individual bank
employees which were personal in nature and devoid of any public interest, was
exempted under the Right To Information Act.
The court made the observation while allowing an appeal filed by Canara Bank
challenging an order of the Kerala High Court directing it to provide information
under the Right to Information (RTI) Act about transfers and postings of its entire
clerical staff from January 2002 to July 2006.
Relying on a 2013 apex court verdict, a bench comprising Justices R K Agrawal and A
M Sapre said the information sought by a man, who was working as a clerical staff in
the bank, was “personal in nature” and exempted from being disclosed under section
8(j) of the RTI Act.
It said neither the man had “disclosed any public interest much less larger public
interest involved in seeking such information of the individual employee” nor any
finding was recorded by Central Information Commission (CIC) and the high court
regarding any public interest in supplying such information to him.
He had in August 2006 made an application to the public information officer (PIO) of
the bank under the RTI Act and sought information regarding transfers and postings
of the entire clerical staff from January 2002 to July 2006 in all the branches. He had
also asked for information regarding personal details of individual employees like
date of joining, designation and promotion earned.
The banks PIO had expressed his inability to furnish details sought by him on the
ground that it was protected from being disclosed under the provisions of the Act and
had no nexus with any public interest.
The man had thereafter filed an appeal before the chief public information officer
who also dismissed it. Later, he moved the CIC which in February 2007 asked the
bank to furnish the information sought by him. Aggrieved by the order, the bank
approached the high court which dismissed its plea while affirming the order of the
CIC.
The top court allowed the appeal filed by the bank while setting aside the orders of
the high court and the CIC.
9. SUPREME COURT RULES OUT VIDEO CONFERENCING IN MARITAL DISPUTES
EXCEPT IF SETTLEMENT FAILS
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In far-reaching judgment the Hon’ble Supreme Court of India in Santhini v. Vijaya
Venkatesh4 held that under Section 11 of the Family Courts Act, 1984 Video
Conferencing is impermissible in marital disputes including divorce cases. The
judgment was based on the finding that video conferencing may harm the settlement
process. This was because in video conferencing it was not possible for parties to
communicate details which they could communicate in a private face-to-face
conversation. The judgment ruled that it is very doubtful whether the emotional bond
can be established in a virtual meeting during videoconferencing. The judgment held
4 Petition (Civil) No. 1278 of 2016. (Judgement Dated 09.08.2017)
that compliance with section 11 of the Family Courts Act, 1984 necessitated that all
matrimonial disputes have to be conducted in camera. Videoconferencing may be
allowed by the Court for a just cause only if there is a failure to reach a settlement. It
was affirmed that it was impermissible to direct parties to videoconferencing in a
transfer petition.
Section 11 of the Family Courts Act, 1984 reads as under:
“In every suit or proceedings to which this Act applies, the proceedings may be held in
camera if the Family Court so desires and shall be so held if either party so desires.”
Thus, the aforesaid section grants a valuable right to either of the matrimonial
dispute parties to keep submissions of parties in matrimonial proceedings
confidential. Arguably this provision could also be contended to be a facet of right to
privacy which was recently held by the Hon’ble Supreme Court to form a part of
Article 21 of the Constitution of India.
In the light of the above the significant observations of Learned Chief Justice Dipak
Misra in his majority opinion wrote as follows:
“The statutory right of a woman cannot be nullified by taking route to technological
advancement and destroying her right under a law, more so, when it relates to family
matters.”
10. THE COMMISSION HAS ISSUED ADVISORY UNDER SECTION 25(5) OF THE RTI
ACT TO THE GENERAL MANAGER, NORTHERN RAILWAY TO SENSITIZE ITS
OFFICERS TO THE NEED FOR REPLYING TO AN RTI APPLICATION WITHIN THE
STIPULATED TIME PERIOD AS PER THE PROVISION OF THE ACT
Complainant-appellant in a recent case before Commission had sought clarification
in respect of the difference in his last basic salary drawn from the CPIO and Sr. DPO,
Office of the Division Railway Manager, Northern Railway. During the hearing the
representative of the respondent PIO submitted that the requisite reply was given to
the appellant after more than a month of filing of the RTI application and was
neither able to provide a reasonable explanation for the said delay in filing
providing the requisite reply to the complainant and also for not complying with the
First Appellate Authority (FAA)’s order directing the CPIO and nodal authority to
provide the requisite information to the applicant within a stipulated time.
The Commission has issued strict warning to the Sr. DPO and the DPO, O/o DRM,
New Delhi to ensure that in future in every case reply to an RTI application is
invariably provided within 30 days of receipt of the said RTI application.
The Commission has also further issued advisory under Section 25(5) of the RTI Act
to the General Manager, Northern Railway to sensitize its officers to the need for
replying to an RTI application within the stipulated time period as per the provision
of the Act. It has instructed it further to evolve a procedure by which the CPIOs shall
submit compliance report to the First Appellate Authorities regarding
implementation of the FAA’s order in a time bound manner to realize the objective
of the Act in its letter and spirit. [Ved Prakash v. CPIO and Sr. DPO, Northern
Railway, CIC/NRAIL/C/2017/116075, decided on 20.10.2017]
11. SWEDEN’S PATENT AND MARKET COURT IMPOSES 11 MILLION IN DAMAGES
AGAINST NESTLE FOR INFRINGING ORKLA’S TRADEMARK
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In the Patent and Market Court, Sweden a trademark infringement action by Orkla
against Nestlé, has become the most expensive trademark dispute in Swedish history
[Nestlé v Orkla (Case T17771-13 and B 12549-15)]. The dispute pertains to the use of
the name “Felix” for its cat food products in the Nordic countries. Nestle therefore
used other marks such as PUSSI, LANTZ and PURINA.
In the between Nestlé’s use of “Felix” and final judgment in Okla.’s trademark
infringement suit, there was an arbitral award which had ruled against Nestlé’s use of
the aforesaid mark due to the existence of a prior agreement between the two
companies. The suit for trademark infringement was filed after the arbitral award. To
defend itself, Nestle relied on the fact that the mark was used for cat food products
while Orkla was marketing food items meant for human consumption. So as per
Nestle there was no question of any confusion regarding the source of the respective
products which were in entirely separate markets. Thus there was no question of any
trademark infringement.
In an assessment of the use of the mark by Nestle the court found that Nestle had
infringed the trademark of Orkla. Due to the high risk of confusion for an average
consumer in believing there was connection between the goods. Nestlé’s use of the
mark harmed the distinguishing nature of the reputation enjoyed by the Felix
trademark. The most significant aspect of the entire trial was that evidence from
comprehensive market research presented to the court which showed that many
consumers genuinely believed that the goods came from the same company. The
court has awarded Orkla 11 million Swedish Krona in damages against Nestle, a
Swedish record in a trademark dispute.
Now, the case is being considered for appeal by the appeals court which is yet to issue
a leave to appeal in Nestlé’s favour.
12. KERALA CONVERSION CONTROVERSY- SUPREME COURT DIRECT PRODUCTION
OF HADIYA IN COURT
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The Hon’ble Supreme Court in State of Kerala v. Asokan KM5has directed that Hadiya
be produced before the apex court to give her an opportunity to express her opinion
as to her marriage and conversion. In the initial hearings with respect to the Hon’ble
Kerala High Court’s judgment in the case the Hon’ble Supreme Court had expressed
its displeasure at the annulment of a marriage by a High Court exercising writ
jurisdiction under Art. 226 of the Constitution.
Further, three applications have been filed before the Supreme Court demanding the
Applicants’ impleadment as respondents in the Hadiya case and seeking an
investigation by the National Investigation Agency into incidents of alleged ‘Love
Jihad’.
One of the applications has been filed by Ms. Bindu Sampath, whose daughter
Nimisha had allegedly converted to Islam, married a Muslim and went missing in
2016 to join the ISIS.
Another application has been filed by one Ms. Sumati Arya from Maharashtra, who
was allegedly forced to be converted to Islam by her father and her husband. She
claims to have “first-hand knowledge and experience of the techniques” used for such
conversions and submits, “All of these need to be properly investigated as they are all
following a common pattern and modus operandi – where a heartless strategy of
luring vulnerable girls to convert to Islam by feigned love and promises of marriage.”
A third application has been filed by three Advocates — Ms. Sheela Devi, Ms. Keerthi
Solomon and Mr. Vishnu Jayapalan — intending to bring to the notice of the Court
“the circumstances in which the impugned Judgment was passed and also what
happened after passing of the impugned Judgment”.
The application, thereafter, submits, “There is a concerted effort to threaten and
dissuade Judiciary in the State from giving justice to persons like the 1st Respondent.
Lawyers who are involved in such cases feel insecure. The state police has failed to
properly investigate the matter. This is a fit case for an investigation by the National
Investigation Agency.”.
5 WP(Crl.).No. 25 of 2016. (Order Dated 30.10.2017)
During the last hearing the Hadiya case took an altogether new twist with the
Supreme making it clear that a 24 year old girl, an adult, cannot be held hostage by
her father against her wishes and the Learned CJI Dipak Misra led bench categorically
stating examine if a High Court under Article 226 can quash a marriage.
13. NEW GST RELIEF ANNOUNCED BY CENTRAL GOVERNMENT
READ MORE
As per 22nd GST Council meeting of 6th October 2017 the Government of India has
made major announcements to the relief of business in India. As per Press Release of
the Central Board for Customs and Excise dated 6th October 2017, the following
reliefs have been finalised under the GST framework. The summary of the new reliefs
is as follows:
Lesser burden of compliance for small businesses
 The government has recognized hardship faced by small businesses with turnover
of within Rs 1.5cr, by delaying their return filing compliance to once a quarter from
once a month. Taxes will be paid quarterly.
 Small businesses will also have to file monthly returns for three months – July,
August, and September – and the switchover to quarterly filing will happen from the
cycle starting October 1.
Relief for Service Providers
 Exemption from Registration for a service provider if the aggregate turnover is less
than Rs. 20Lacs (10 Lacs in special category state except for J&K) even if they are
making inter-state supplies of services.
 Services provided by a GTA to an Unregistered person shall be exempted from GST.
 TDS/TCS provisions shall be postponed till 31.03.2018.
 Small businesses will also have to file monthly returns for three months – July,
August, and September – and the switchover to quarterly filing will happen from the
cycle starting October 1.
Relief for Exporters
 Refund cheques for July exports will be processed by Oct 10 and refund cheques for
August exports will be processed by Oct 18.
 Every exporter will now get an e-wallet. In the e-wallet, there would be a notional
amount for credit. The refund they will eventually get will be offset from that amount.
The e-wallet will be introduced from April next year.
 Merchant exporters will pay a nominal 0.1% GST applicable on exports to enable
their suppliers to claim ITC.
Composition Scheme changes
 Person otherwise eligible for availing the composition scheme and are providing
any exempt services shall now be eligible for the composition scheme.
 Eligibility of composition scheme raised to Rs 1 crore.
 Traders will pay 1%, manufacturers 2% and restaurants 5% under the composition
scheme.
 Due date of FORM GSTR-4 for the quarter July-September, 2017 is extended to 15th
November 2017
RCM postponed
Reverse Charge Mechanism applicable for the purchases from the unregistered dealer
shall be suspended till 31.03.2018.
No GST on advance receipts for businesses with turnover under Rs 1.5cr
Taxpayers having annual turnover upto 1.5 Crore shall not be required to pay GST at
the time of receipt of advances on account of supply of goods.
Significant rate changes
 GST on unbranded Ayurvedic medicines has been reduced from 12% to 5%.
 Tax rate for man-made yarn has been reduced to 12% from 18%. The decision will
have an effect on textiles.
 GST rate on many job work items reduced from 12% to 5%. GST rate on some
stationery items, diesel engine parts also reduced to 18% from the earlier 28%.
 GST on khakra and unbranded namkeen has been reduced from 12% to 5%. Tax on
zari work has been reduced from 12% to 5%.
 35% abatement on old leasing contract of vehicle
 Printing Job work rate revised from 12% to 5%
14. BOMBAY HIGH COURT REFUSES STAY ON TRAI’S IUC RATE CUT
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Bombay High Court has refused to stay the Telecom Regulatory Authority of India’s
(TRAI) September 19 decision to reduce interconnection usage charge (IUC) from 14
to six Paise with effect from October 1, and to abolish it altogether for local calls from
January 1, 2020.
The IUC is the amount paid by one telecom operator to another when a call from its
network is made into the other operator’s network. It is believed that the TRAI
decision will likely benefit newcomers such as Reliance JIO in the telecom sector. The
rival operators have sought to challenge the order for violation of Article 14 of the
Constitution owing to its arbitrariness.
The division bench of Justice Naresh Patil and Justice ZA Haq said that in financial and
policy matters, courts should not pass interim orders as a matter of routine. “It is a
settled principle of law that in such cases, the court should be extremely cautious in
passing any interim order,” the bench said, refusing to stay the TRAI’s decision.
Earlier, heated debates had raged between major cellular telecom companies on the
issue of IUC. Reliance JIO has consistently pushed for a Bill and Keep model of IUC.
However, opposing any new change in the current IUC framework and in a tangential
reference to Reliance JIO, Vodafone CEO had gone on record to assert that rules
pertaining to IUC must not be favourably tweaked to help new players in the market.
So, it was not surprising that rival cellular telecom operators sought reversal of the
TRAI’s decision to cut the IUC rate drastically, a decision which the Petitioning
cellular operators believe would only benefit certain new operators. The IUC rate cut
order has come at a time when there has been high volatility in the cellular telecom
market since the entry of JIO and owing to dwindling profits of dominant cellular
telecom operators. The decision of TRAI to reduce IUC would likely have the effect of
depriving JIO’s rivals of a major source of revenue for their optimum operations.
15. TRAI RELEASES CONSULTATION PAPER ON IN-FLIGHT WI-FI AND CALLS
READ MORE
Telecom Regulatory Authority of India has released a consultation paper
(Consultation Paper No. 14/2017) on in-flight Wi-Fi and calling, seeking views from
citizens about whether or not in-flight connectivity should be allowed in India, and
the government licensing framework for this. Answers may be sent to Syed Tausfic
Abbas, Advisor (Networks, Spectrum and Licensing) at TRAI, at advmn@trai.gov.in by
October 27th 2017, and counter comments by 3rd November 2017.
In the said consultation paper, TRAI is asking the following:
 Whether Internet or calling should be allowed on Indian flights, or both.
 Should international airlines flying over multiple jurisdictions be allowed to provide
in-flight connectivity over Indian airspace?
 What restrictions and regulations should be applicable to in-flight connectivity
providers?
 Should the standards for offering these services be the same as global standards?
How do you ensure that in-flight connectivity doesn’t interfere with terrestrial
connectivity? Should it be technology neutral, or restricted to the same frequency
bands as in the EU? Should it only be allowed via INSAT?
 Should connectivity be in-flight only or can it be gate-to-gate?
 Should any Unified License holder (Category A) be allowed to provide In-Flight
connectivity, or should there be a separate category of license?
 Can an In-flight connectivity provider tie-up with an existing licensee with
authorization provide services on airlines registered in India? Should this require a
separate permission?
 How should IFC providers be charged in case of foreign registered airlines and Indian
registered airlines?
The TRAI has stated in the consultation paper that it has already decided that security
agencies should be able to monitor traffic to and from user terminal in Indian
airspace. It has placed the following four options for deciding how interception may
be possible, and you have to pick one:
a. The use of Indian Satellite System while travelling over Indian airspace can be
mandated, but there are two challenges here: firstly that the domestic satellite
capacity may be limited, and secondly, foreign airlines may not switch to the Indian
Satellite System
b. Permit the use of Indian or foreign satellites through the department of space. Under
this, “airborne IFC equipment should get connected to Ground Earth Stations located
in India.”
c. Traffic to and from user terminals in Indian airspace may be sent to a node owned
and operated by an Indian entity to address the requirement of lawful interception
directly or in mirror mode.
d. Not put any such restriction on international flights.
16. SEBI APPOINTED UDAY KOTAK COMMITTEE ON CORPORATE GOVERNANCE
SUBMITS REPORT
READ MORE
The Uday Kotak Committee has submitted its report to the SEBI regarding proposals
for reforms in the regime for corporate governance. The committee is wide ranging
and has covered issues pertaining to independent directors, auditors, and information
flow to improve governance in listed companies. In the current scenario, the
information was flowing through informal channels and in a regulatory vacuum. The
committee has proposed formal information channels under regulatory purview.
In a major change recommended by the said report, the committee has recommended
that the number of independent directors on a company board be increased from
33% to 50%. The number of annual Board meetings has also been suggested to be
increased to five meetings instead of the current statutory requirement.
In the past the problem of auditor misconduct had plagued India Inc. as witnessed in
the Satyam scandal. The report of the committee seems to have attempted to address
the problem by recommending the SEBI must have powers to penalize errant
auditors under the SEBI Act.
Another major recommendation is to tweak the definition of a “material” subsidiary
to one whose net worth or income exceeds 10% (currently 20%) of the consolidated
income, or net worth of the listed entity. This has been done to improve disclosure,
since only the activities of material subsidiaries are disclosed to shareholders.
A far-reaching recommendation is that the Chairman of the Board of Directors be
barred from being the Managing Director or the Chief Executive Office of the
Company. The report recommends that public sector companies must be regulated by
listing regulations instead of current regulation by nodal Ministries.
Whistleblower protection is also another major recommendation in the Uday Kotak
Committee’s report. This report is likely to have a significant role in future changes
for the corporate governance regime in India.
17. TATA MOTORS WINS GOVERNMENT CONTRACT TO SUPPLY 10,000 ELECTRIC
SEDANS
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In a major push toward Eco-friendly vehicles, Tata Motors Ltd. won a bid from stateowned
Energy Efficiency Services Ltd. to supply 10,000 electric sedans under the
government’s plan to end reliance on fossil fuels for passenger transport by 2030.
The automaker will supply the first 500 cars by November 2017 and the remaining
9,500 in the second phase, said a statement issued by the Ministry of Power on
Friday.
Tata Motors will be providing the electric version of the Tigor, which is produced at
its plant in Sanand, Gujarat, a company executive told Bloomberg Quint requesting
anonymity.
Tata Motors as of now does not have any electric car in its portfolio. The company has
been collaboratively working to develop electric power train technology for its
selected products, a company statement said quoting Guenter Butschek, its managing
director and chief executive officer. EESL tender provided the company an
opportunity to accelerate efforts to offer full range of electric vehicles to the Indian
consumer, he said.
India has a target to turn all cars electric by 2030, by when it plans to cut carbon
emissions by 37 percent and reduce oil imports. EESL had invited global bids in
August for 10,000 electric sedans that will run up to 150 km on a single charge for use
by government departments. It also floated a tender for charging stations.
Tata Motors beat Mahindra & Mahindra Ltd. and Nissan to emerge a successful
bidder. It quoted the lowest price of Rs 10.16 lakh (excluding GST). EESL will get each
car for Rs 11.2 lakh including taxes and with a five-year warranty. That’s 25 percent
below the current retail price of a similar electric car with three-year warranty, the
ministry’s statement said.
The vehicles will be used by government departments and agencies for three to four
years. The total number of such vehicles can go up to 5 lakh, according to the
statement.

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