The EU - Digital Markets Act and the Digital Services Act

To keep up with and regulate the #digitalrevolution, the EU Parliament on the 5th of July 2022 adopted the Digital Markets Act and the Digital Services Act, together forming the ‘Digital Services Package’. The political agreement on the new law was reached on 24 March 2022 by the European Parliament and the Council (representing the 27 EU Member States). (link)

This package is meant to regulate the digital space and includes other legislative proposals like

•  the Artificial Intelligence Act, 
• the Data Governance Act, and 
• the Digital Operational Resilience Act (DORA), and 
• more than 15 different Regulations and Directives in the coming years.

The DMA and DSA together establish an ex-ante system of regulation to address the anti-competitive behavior of major digital platforms. Such ex-ante regulation is unlike ordinary competition law, which normally allows only ex-post investigations and remedies.

DMA will impose a stringent regulatory regime on large online platforms (so-called “gatekeepers”) and give the European Commission new enforcement powers, including the power to impose severe fines (up to 10% of the total worldwide revenue) and remedies for non-compliance, both in the European Single Market and globally. (link)

Andreas Schwab (EPP, DE), the rapporteur from Parliament’s Internal Market and Consumer Protection Committee, speaking about the negotiations amongst the EU lawmakers said in a press release:

"The agreement ushers in a new era of tech regulation worldwide. The Digital Markets Act puts an end to the ever-increasing dominance of Big Tech companies. From now on, they must show that they also allow for fair competition on the internet. The new rules will help enforce that basic principle. Europe is thus ensuring more competition, more innovation, and more choice for users.

With the Digital Markets Act (DMA), Europe is setting standards for how the digital economy of the future will function. It will now be up to the European Commission to implement the new rules quickly.

As the European Parliament, we have made sure that the DMA will deliver tangible results immediately: consumers will get the choice to use the core services of Big Tech companies such as browsers, search engines or messaging, and all that without losing control over their data.

Above all, the law avoids any form of overregulation for small businesses. App developers will get completely new opportunities, small businesses will get more access to business-relevant data and the online advertising market will become fairer."

Expected to be effective as early as October 2022, the DMA mandates the gatekeepers to comply with the respective obligations and prohibitions by February 2024.

Once it comes into force, the DMA is set to revolutionize the way in which so-called Big Tech is regulated in the EU, shifting toward ex-ante rulemaking and away from traditional after-the-fact enforcement.

The DMA only places obligations on “gatekeepers,” which are companies that create bottlenecks between businesses and consumers and have an entrenched position in digital markets. The DMA’s threshold is very high: companies will only be hit by the rules if they have an annual turnover of €7.5 billion within the EU or a worldwide market valuation of €75 billion. Gatekeepers must also have at least 45 million monthly individual end-users and 100,000 business users. Finally, gatekeepers must control one or more “core platform services” such as “marketplaces and app stores, search engines, social networking, cloud services, advertising services, voice assistants and web browsers.” In practice, this will almost certainly include Meta (Facebook), Apple, Alphabet (Google), Amazon, and possibly a few others. (link)

While the DMA will hold online platforms "responsible for their actions" and "ensure fair competition online, more convenience for consumers and new opportunities for small businesses, the Digital Services Act applies to a wide range of online intermediaries, which include services such as internet service providers, cloud services, messaging, marketplaces, or social networks.

The Digital Services Act (DSA) aims to create a safer digital space in which users’ rights are protected, including rules to tackle illegal content online, enhance the accountability and transparency of algorithms, and deal with content moderation and targeted advertising.

On the other side of the Atlantic, the Big Tech bills lined up before Congress, are the Open App Markets Act, the American Innovation and Choice Online Act, and the ACCESS Act, which also seeks to impose a set of requirements and restrictions on Big Tech and to give space for competition. (link)

Penal provisions for fake posts in the times of the Corona Virus

Karnataka State Police in collaboration with Check4Spam to counter rumours amid the coronavirus outbreak has initiated a portal to verify any suspected news and also upload the content for its verification and clarification.  It is urged to the public not circulate any unverified news concerning coronavirus, which is likely to create panic and disturb social tranquillity. 

Source: https://factcheck.ksp.gov.in/about-us/ 

Penal provisions under Indian Laws:

Information Technology ACT, 2000

Section 66C- Punishment for identity theft. – Whoever, fraudulently or dishonestly make use of the electronic signature, password or any other unique identification feature of any other person, shall be punished with imprisonment of either description for a term which may extend to three years and shall also be liable to fine which may extend to rupees one lakh.

The Disaster Management ACT, 2005

Section 54. Punishment for false warning.

Whoever makes or circulates a false alarm or warning as to disaster  or its severity or magnitude, leading to panic, shall on conviction, be  punishable with imprisonment which may extend to one year or with  fine. —Whoever makes or circulates a false alarm or warning as to disaster or its severity or magnitude, leading to panic, shall on  conviction, be punishable with imprisonment which may extend to  one year or with fine.

Indian Penal Code

Section 153. Wantonly giving provocation with intent to cause  riot- if rioting be committed- if not committed.-

Whoever, malignantly, or wantonly by doing anything which is illegal, gives provocation to any person intending or knowing it to be likely that such provocation will cause the offence of rioting to be committed, shall, if the offence of rioting be committed in consequence of such provocation, be punished with imprisonment of either description for a term which may extend to one year, or with fine, or with both; and if the offence of rioting be not committed, with imprisonment of either description for a term which may extend to six months, or with fine, or with both.

Section 153A: Promoting enmity between different groups on grounds of religion, race, place of birth, residence, language, etc., and doing acts prejudicial to maintenance of harmony.—

Whoever—

(a) by words, either spoken or written, or by signs or by visible representations or otherwise, promotes or attempts to promote, on grounds of religion, race, place of birth, residence, language, caste or community or any other ground whatsoever, disharmony or feelings of enmity, hatred or ill-will between different reli­gious, racial, language or regional groups or castes or communi­ties, or

(b) commits any act which is prejudicial to the maintenance of harmony between different religious, racial, language or regional groups or castes or communities, and which disturbs or is likely to disturb the public tranquillity, ……………….

(2) Whoever commits an offence specified in sub-section (1) in any place of worship or in any assembly engaged in the performance of religious wor­ship or religious ceremonies, shall be punished with imprisonment which may extend to five years and shall also be liable to fine.]

Section 182. False information, with intent to cause public servant to use his lawful power to the injury of another person.—

Whoever gives to any public servant any information which he knows or believes to be false, intending thereby to cause, or knowing it to be likely that he will thereby cause, such public servant—

(a) to do or omit anything which such public servant ought not to do or omit if the true state of facts respecting which such information is given were known by him, or

(b) to use the lawful power of such public servant to the injury or annoyance of any person, shall be punished with imprisonment of either description for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both.

Section 188. Disobedience to order duly promulgated by public servant.

Whoever, knowing that, by an order promulgated by a public serv­ant lawfully empowered to promulgate such order, he is directed to abstain from a certain act, or to take certain order with certain property in his possession or under his management, disobeys such direction, shall, if such disobedience causes or tends to cause obstruction, annoyance or injury, or risk of obstruction, annoyance or injury, to any person lawfully employed, be punished with simple impris­onment for a term which may extend to one month or with fine which may extend to two hundred rupees, or with both; and if such disobedience causes or trends to cause danger to human life, health or safety, or causes or tends to cause a riot or affray, shall be punished with imprisonment of either description for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both. 

Section 269. Negligent act likely to spread infection of disease danger­ous to life.

Whoever unlawfully or negligently does any act which is, and which he knows or has reason to believe to be, likely to spread the infection of any disease dangerous to life, shall be punished with imprisonment of either description for a term which may extend to six months, or with fine, or with both.

Section 270. Malignant act likely to spread infection of disease danger­ous to life.

Whoever malignantly does any act which is, and which he knows or has reason to believe to be, likely to spread the infection of any disease dangerous to life, shall be punished with imprisonment of either description for a term which may extend to two years, or with fine, or with both.

Section 336. Act endangering life or personal safety of others.

Whoever does any act so rashly or negligently as to endanger human life or the personal safety of others, shall be punished with impris­onment of either description for a term which may extend to three months, or with fine which may extend to two hundred and fifty rupees, or with both.

Section 465. Punishment for forgery.

Whoever commits forgery shall be punished with imprisonment of either description for a term which may extend to two years, or with fine, or with both.

Section 505. Statements conducing to public mischief.

(1) Whoever makes, publishes or circulates any statement, rumour or report,—

(a) with intent to cause, or which is likely to cause, any offi­cer, soldier, 3[sailor or airman] in the Army, 4[Navy or Air Force] 5[of India] to mutiny or otherwise disregard or fail in his duty as such; or

(b) with intent to cause, or which is likely to cause, fear or alarm to the public, or to any section of the public whereby any person may be induced to commit an offence against the State or against the public tranquillity; or

(c) with intent to incite, or which is likely to incite, any class or community of persons to commit any offence against any other class or community, shall be punished with imprisonment which may extend to 6[three years], or with fine, or with both. 7[(2) Statements creating or promoting enmity, hatred or ill-will between classes.—Whoever makes, publishes or circulates any statement or report containing rumour or alarming news with intent to create or promote, or which is likely to create or promote, on grounds of religion, race, place of birth, residence, language, caste or community or any other ground whatsoever, feelings of enmity, hatred or ill-will between different reli­gious, racial, language or regional groups or castes or communi­ties, shall be punished with imprisonment which may extend to three years, or with fine, or with both.

(3) Offence under sub-section (2) committed in place of worship, etc.—Whoever commits an offence specified in sub-section (2) in any place of worship or in an assembly engaged in the performance of religious worship or religious ceremonies, shall be punished with imprisonment which may extend to five years and shall also be liable to fine.]

Arrest of a Social Media Page Admin, set aside

The police had arrested Jaikanth, an engineer by profession, in the second complaint on the same set of facts as are mentioned in the first complaint registered in May.

The bench said "Allegations in both the FIR's are more or less identical. Actions of the police lead to an inference that a deliberate attempt was made by the police to ensure that petitioner was somehow arrested and detained in custody."

Observing that this is a classic case of blatant violation of Fundamental rights by the police, the Karnataka High Court quashed the First Information Reports registered against admin of a Facebook page TrollMaga.

The court also directed the government to pay a cost of RS 1 lakh to the petitioner S Jayakant, within one month and ordered departmental action against the Magistrate who remanded the accused in violate of Supreme Court guidelines in Arnesh Kumar case.

Source:
https://www.livelaw.in/amp/news-updates/karnataka-hc-quashes-fir-against-facebook-group-admin-148933?__twitter_impression=truee

India's Drone Regulations 1.0 announced

Flying of Remotely Piloted Aircraft System (RPAS) or in common parlance, drones, will be legal across India from December 1, 2018. The Rules announced are the first in the series and thus titled Regulations 1.0. 

The Ministry of Civil Aviation has finalised a national drone policy, and has fixed parameters - including height - for drone flights. From the outset the policy outlines a No Drone Zones. The regulation defines "No Drone Zones" as areas around airports, near international border, Vijay Chowk in Delhi, State Secretariat Complex in state capitals, strategic locations, vital military installations and such.

Owners and pilots will have to be registered, and permission will be required for each flight. Users will need to apply for permission on an app and digital permits will be given instantly through an automated process.

During daytime flights, drones can be flown to a height of up to 400 ft. The use of drones by civilians is governed by the Directorate General of Civilian Aviation.

The new drone policy has a huge digital root. Instead of simply digitizing a paper-based process for registering and operating drones, India has formulated an all-digital process. The Digital Sky Platform is the first-of-its-kind national unmanned traffic management (UTM) platform that implements "no permission, no takeoff" (NPNT).

As per this rule, users will be required to do a one-time registration of their drones, pilots and owners. For every flight (apart for the nano category), users will be required to ask for permission on a mobile app. Once a request is filed on the app an automated process would permit or deny the request instantly.

For flying in controlled Airspace, filing of flight plan and obtaining Air Defence Clearance (ADC) /Flight Information Centre (FIC) number shall be necessary.

Source: https://m.businesstoday.in/story/flying-drones-to-be-legal-in-india-from-december-1/1/281690.html

Amendments to Negotiable Instruments Act - July 2018

The Lok Sabha has passed Negotiable Instruments(Amendment) Act on July 23, 2018,

“with a view to address the issue of undue delay in final resolution of cheque dishonour cases so as to provide relief to payees of dishonoured cheques and to discourage frivolous and unnecessary litigation which would save time and money”. 

As per the Amended Section 143A, interim compensation not exceeding 20% of the cheque amount can be ordered to be paid in cases where the accused does not plead guilty in a summary trial or summons case. 

The interim compensation has to paid within 60 days from order. It can be recovered in the manner of recovery of fine as per Section 421 CrPC. 

Further in the event of an acquittal, the interim compensation will have to be returned by the Complainant, alongwith interest prescribed by the RBI.

The amendment also introduces Section 148 in the Act, empowering the appellate court to direct deposit of a minimum of 20% of the cheque amount in appeal by the drawer against conviction, within a period of sixty days. 

This amount can be released to the complainant and has to be returned to the accused if the appeal is allowed.

Source: LiveLaw

A Chief Justice - Proud moment for SDM Law College Mangalore

Its indeed a very proud moment for the SDM Law College Mangalore as one of  its students is now appointed a Chief Justice.

Justice Antony Dominic; (born 30 May 1956) is the Chief Justice at the High Court of Kerala since February 2018.

The High Court, headquartered at Ernakulam, is the highest court in the Indian state of Kerala and in the Union Territory of Lakshadweep.

Dominic obtained his degree in law from S.D.M Law College, Mangalore.

Career

He started practice in Munsiff’s Court and JFCM, Kanjirappally in 1981. Later, Dominic shifted to Kerala High Court at Ernakulam in 1986.

He acquired extensive experience in Company, Labour and Constitutional laws.

Dominic was appointed as Additional Judge of the Kerala High Court in January 2007 and promoted to be a Permanent Judge in December 2008.

Source: https://en.m.wikipedia.org/wiki/Antony_Dominic

Sebi bans PwC entities from auditing listed firms for two years

*Sebi bans PwC entities from auditing listed firms for two years Sebi also orders disgorgement of over Rs13 crore of wrongful gains from PwC and two erstwhile partners*

The order comes nine years after the scam at Satyam Computer Services came to light and after two failed attempts by PwC to settle the case through the consent mechanism.

Finding PwC guilty in the Satyam scam, India’s capital markets regulator on Wednesday barred its network entities from issuing audit certificates to any listed company in India for two years.

The Securities and Exchange Board of India (Sebi) also ordered the disgorgement of over Rs13 crore of wrongful gains from the auditing firm and its two erstwhile partners who worked on the IT company’s accounts. The order comes nine years after the scam at Satyam Computer Services came to light and after two failed attempts by PwC to settle the case through the consent mechanism.

This is also one of the most stringent orders passed by any regulator against a Big Four auditor.

In a 108-page order, Sebi has imposed a two-year ban on entities/ firms practicing as chartered accountants in India under the brand and banner of PwC from directly or indirectly issuing any certificate of audit of listed companies, compliance of obligations of listed companies and intermediaries registered with the regulator.

Sebi noted that the order would not impact audit assignments relating to the fiscal year 2017-18 undertaken by the firms forming part of the PwC network. Besides, Price Waterhouse Bangalore and its two erstwhile partners—S. Gopalakrishnan and Srinivas Talluri—have been directed to jointly and severally disgorge the wrongful gains of “Rs13,09,01,664 with interest calculated at the rate of 12 per cent per annum from January 7, 2009 till the date of payment”. They have to pay the amount within 45 days.

Further, Gopalakrishnan and Talluri have been restrained from directly or indirectly issuing any certificate of audit of listed companies, compliance of obligations of listed companies and intermediaries registered with Sebi for three years.

After consent pleas were rejected, PwC had approached the Supreme Court challenging Sebi’s jurisdiction over auditors. The apex court had asked the regulator to expeditiously pass the order in the matter after giving due opportunity, including access to documents, to the parties concerned.

Sebi said the objective of insulating the securities market from such fraudulent accounting practices perpetrated by an international firm of repute will be ineffective if the directions do not bring within its sweep the brand name PwC. The network structure of operations adopted by the international accounting firm should not be used as a shield to avoid legal implications arising out of the certifications issued under the brand name of the network, the order said.

“As we have said since 2009, there has been no intentional wrong doing by PW firms in the unprecedented management perpetrated fraud at Satyam, nor have we seen any material evidence to the contrary. We believe that the order is also not in line with the directions of the Bombay High Court order of 2011 and so we are confident of getting a stay before this order becomes effective,” PwC said in the statement.

It also noted that the order relates to a fraud that took place nearly a decade ago in which it played no part and had no knowledge of. Further, the statement said that Price Waterhouse Network firms in India has learnt the lessons of Satyam and invested heavily over the last nine years in building a robust and high quality audit practice.

First Published: Thu, Jan 11 2018. 12 38 AM IST
Source - http://www.livemint.com/Companies/KlbBm6VhxhQQswdgT9bycK/Satyam-case-Sebi-bans-PwC-entities-from-auditing-listed-fir.html

Call for Papers for the One Day Workshop On Real Estate Regulatory Authority And Benami Law

Chair on Urban Poor and The Law along with the Environmental Law Clinic Of National Law School Of India University are organizing a One Day Workshop On Real Estate Regulatory Authority And Benami Law.

Who can attend?

Advocates, CREDAI, Management/ representatives of real estate organization, consultants working in real estate sector, contractors, builders, Architects, Academicians, Research scholar, law students, any others interested in the workshop.

Registration Details

The Registration fee for the Seminar is Rs. 1000/- for delegates and paper presenters, both author and co-author should pay. Registration will be confirmed only on receipt of payment.

Last Date For Registration is  5th June, 2017.

Both author and co-author to pay the registration fees.

Sub-themes

Economic Reforms and Real Estate Sector

Real estate and Urbanization

Pre and post impact of RERA

RERA and Benami transactions

Consumers/customers and RERA

Real Estate Agents

Unethical practices in the Real Estate Sector.

Submission Deadline

Last Date For Sending Abstracts : 5th June, 2017.

Submission Procedure

Abstracts of maximum 500 words to be sent in soft copy to baba@nls.ac.in

Contact

Dr. Sairam Bhat, Associate Professor of Law National Law School of India University, Bangalore

Email: bhatsairam@nls.ac.in

Source: NLSIU website

A silent Regular Blood donor .... Guess who?

40 ವರ್ಷಗಳಿಂದ ಪ್ರತಿ ಮೂರು ತಿಂಗಳಿಗೊಮ್ಮೆ ರಕ್ತದಾನ ಮಾಡುತ್ತಿರುವ ಸುಪ್ರೀಂಕೋರ್ಟ್ ಮುಖ್ಯನ್ಯಾಯಾಧೀಶರು..!

Since 40 years, every three months the Hon'ble Chief Justice of India has been donating blood.

ನಮ್ಮ ಸಮಾಜದಲ್ಲಿ ರಕ್ತದಾನ ಮಾಡುವವರ ಸಂಖ್ಯೆ ತುಂಬಾ ಕಡಿಮೆ ಎಂದು ಹೇಳಬಹುದು. ಯಾರಾದರೂ ತಮ್ಮ ಕುಟುಂಬ ಸದಸ್ಯರು, ಬಂಧುಗಳು, ಸ್ನೇಹಿತರಿಗೆ ಅವಶ್ಯಕತೆ ಇದ್ದರೆ ಮಾತ್ರ ರಕ್ತದಾನ ಮಾಡುತ್ತಾರೆ. ಯಾರೋ ಕೆಲವರು ಇದಕ್ಕೆ ಭಿನ್ನವಾಗಿ ಯೋಚಿಸುತ್ತಾರೆ. ಅಂತಹ ಕೆಲವರಲ್ಲಿ ಅವರು ಒಬ್ಬರು. ಆದರೆ ಅವರು ಸಾಧಾರಣ ವ್ಯಕ್ತಿಯಲ್ಲ. ಭಾರತದ ಸರ್ವೋಚ್ಚ ನ್ಯಾಯಾಲಯದ ಮುಖ್ಯ ನ್ಯಾಯಾಧೀಶ. ಅಂತಹ ಅತ್ಯುನ್ನತ ಪದವಿಯಲ್ಲಿದ್ದು ಸಹ ರಕ್ತದಾನ ಮಾಡುವುದನ್ನು ನಿಲ್ಲಿಸಿಲ್ಲ.

Not everyone in India willingly or of his own accord consents for blood donation, unless the life of a friend or relative is at stake.
But the Chief Justice of Supreme Court o India, has set an example for all of us.

ಎಷ್ಟೇ ಉನ್ನತ ಸ್ಥಾನದಲ್ಲಿದ್ದರೂ ಪ್ರತಿಯೊಬ‌್ಬರು ತಮ್ಮ ಕನಿಷ್ಠ ಸಾಮಾಜಿಕ ಜವಾಬ್ದಾರಿಯನ್ನು ಮರೆಯಬಾರದೆಂದು  Chief Justice ಜಗದೀಶ್ ಸಿಂಗ್ ಹೇಳುತ್ತಾರೆ.
He says everyone should have a Basic or Minimum sense of Social Responsibility irrespective of his position  or status in life.

ಇವರಿಗೆ ವಯಸ್ಸಾದರೂ ಸಹ ರಕ್ತದಾನ ಮಾಡುವುದನ್ನು ನಿಲ್ಲಿಸಿಲ್ಲ.  ಇವರನ್ನು ಎಲ್ಲರೂ ಆದರ್ಶವಾಗಿ ತೆಗೆದುಕೊಂಡರೆ ಎಷ್ಟೋ ಜನರ ಬದುಕಿನಲ್ಲಿ ಬೆಳಕು ತಂದವರಾಗುತ್ತವೆ.

Despite his age and attaining the highest Constitutional Position CJ Jagadish Singh Kehar has not stopped Blood Donation. He is a role model for everyone.

ಇನ್ನೊಂದು ವಿಷಯ… CJ ಜಗದೀಶ್ ಸಿಂಗ್ ಹಾಗೆ ರಕ್ತದಾನ ಮಾಡುವುದನ್ನು ಯಾರಿಗೂ ತಿಳಿಸಿರಲಿಲ್ಲ.

This fact came to light just recently when the CJ had been to AIIMS Delhi to donate blood as usual, and was not known in thepublic realm all these years.

Source - https://kannada.ap2tg.com/supreme-court-chief-justice-participating-in-blood-donations-from-40-years/

India's Business set-up Bottlenecks

Building a factory in India is not for the faint hearted. 

Even if a company is fortunate and manages to buy land - which, by the way, is becoming more and more difficult, expensive and time-consuming due to complex laws, people's rising expectations and local politics - that is just a start. 

A manufacturing company in India, on average, has to comply with nearly 70 laws and regulations. Apart from the multiple inspections, it has to file around 100 returns in a year, according to a 2013 report by consultancy firm Deloitte. 

Then there is the double maze of tax and labour laws that can be a big pain even in the best of times. Poor infrastructure does not help either. 

Will the NDA government, whose economic programme hinges on boosting the manufacturing sector, be able to bring about the required change? 

Will it be able to debottleneck the process of setting up and running a factory in the country so that its plan to create millions of new jobs in manufacturing sees the light of day? 

Problems in acquisition of land, delays in environmental and other clearances and infrastructure bottlenecks have taken a toll. 

In the past five years (2011 to 2015), new projects have seen a marked reduction of 44 per cent from the period between 2006 and 2010. The value of stalled projects more than tripled during the period. 

Worse, straddled with huge distressed assets, core sector companies are more concerned about avoiding default rather than making fresh investments. 

As a result, India's investment-to-gross domestic product ratio has fallen for five straight financial years now. 

The NDA government has tried to correct this through a massive increase in investments to build infrastructure. It is likely to follow this policy in the coming Budget, too.

Source -http://www.businesstoday.in/magazine/features/indias-manufacturing-hub-plan-is-in-a-host-of-problems/story/229415.html 

Draft Rights of Transgender Persons Bill, 2015 released - PRSIndia

Ministry of Social Justice and
Empowerment released the draft Rights of
Transgender Persons Bill, 2015 in January
2016.

 The draft Bill seeks to ensure overall
development and welfare of transgender persons.
A transgender person is defined as a person whose gender does not match with the gender assigned to them at birth, irrespective of whether they have undergone sex reassignment surgery or hormone therapy, etc.

Key provisions of the draft Bill include:
 Certificate of identity: A certificate
indicating that a person is a transgender
person will be issued by a state level
authority, on the recommendation of a
district screening committee (comprising
District Magistrate, psychologist,
psychiatrist, representatives of the
transgender community, etc.). The
certificate may be used to indicate gender on official documents, like ration card and
Aadhaar card. Transgender persons will
have the option to identify as ‘man’,
‘woman’ or ‘transgender’ in all such cases.
 Rights of transgenders and duties of
government: The central and state
governments must take steps to ensure that
transgender persons enjoy right to equality,
Land protection from discrimination. The
government must also ensure that
transgender persons have accommodation,
protection from torture, etc.
 Health: The central and state governments must take steps to provide health facilities to transgender persons including separate HIV  surveillance centres, free of cost sex
reassignment surgeries, etc.
 Education: Educational institutions funded or recognised by the government will have to admit transgender students without discrimination, provide accommodation and necessary support.
 Employment: Public or private
establishments (including companies,
unions, factories, etc.) will be prohibited
from discriminating against transgender
persons in matters related to employment
including recruitment and promotion.
Further, transgender persons may be
declared a Backward Class so that they can
be entitled to reservation under the ‘Other
Backward Class’ category.
A private member Bill related to rights of
transgender persons was passed by Rajya Sabha in April 2015, and is currently pending in Parliament.

The murky details of the Essar diaries.... - MoneyLife

The Essar diaries, which are part of an affidavit filed by the Centre for Public Interest Litigation (CPIL) in the Supreme Court of India provides a rare peek into the way influence-peddling by crony capitalists actually works in India. The leak of internal emails by a whistleblower reveals that the top secret Union Budget details were available to Essar in 2012. And why not? The group has enormous funds earmarked to buy these favours. For instance, the emails reveal that Gulfstream jet was sent to Trinamool Congress leaders, including chief minister Mamata Banerjee and a few journalists, at the behest of president Pranab Mukherjee for his swearing-in ceremony.

They indicate that Essar was able to influence the pricing and tax policies of the petroleum & national gas ministry under Veerappa Moily. This is corroborated by a separate investigation and arrests in the ‘corporate espionage’ scandal about purchase of stolen classified documents from the petroleum ministry.

By now it is widely known that the Essar group runs a large public relations (PR) operation to keep key journalists-cum-fixers happy. It generously opened its purse strings to fund a global ‘think-fest’ by Tehelka allegedly as a quid-pro-quo for killing a story against it.

Yet, when successive Reserve Bank of India (RBI) governors express concern at the mountain of bad loans in the system, there is rarely any attempt to plug the brazen manipulation of the system for personal aggrandisement. At the height of Essar’s problems in 1999, the chairman of Bank of India (BOI) sanctioned a fat bailout to a group company on the eve of his retirement. Two months later, he joined the group as an advisor at a fee that was a multiple of his last salary. RBI chose to look the other way and asked no questions.

Soon, every other institution fell in line and wrote off several thousand crores of rupees worth of loans and overdue interest to several group companies.

Again, when Essar Steel defaulted on $250 million floating rate notes it had issued in 1994, it tried hard to force the government to bail it out as though it were a quasi-sovereign default. This was in 1999. Eventually, bondholders received only 24% of the face value of their investment.

One of Essar’s strategies to minimise the public impact of its financial problems is to de-list companies at a low buyback price when there is no more scope to raise funds. In 2010, Essar Energy Plc was listed on the London Stock Exchange at 420p a share.

In 2014, the group bought back the 22% public shareholding at 70p a share, unfazed by the angry backlash. It attempted to de-list Essar Oil and even sent notices to the Indian stock exchanges. Essar Shipping and Essar Ports had also informed stock exchanges that they had the required board approvals to de-list their shares. The group’s shareholders know that Essar Steel was controversially de-listed in 2007 at a low Rs48 per share. Today, when it owes Rs30,000 crore, lenders cannot even hope for an upside by converting loans to equity if commodity prices revive.

The Essar diaries, and leaks, pertain only to a small recent phase, but provide an insight into how this well-oiled system of influence has worked for the past 30 years.  Essar had struck gold with its investment in telecom and had a real chance of cleaning up its act. Instead, it only used it to start borrowing heavily again and run up even bigger debts from Indian banks and institutions.

In fact, telecom and the 2G scandal is the first time that group chairman Ravi Ruia and his nephew Anshuman Ruia are personally facing trial along with several top employees and their three telecom firms—Loop Telecom, Loop Mobile India and Essar Tele Holding. Ravi Ruia, now needs court permission to travel abroad and, on 24th May, an irritated judge asked him not to waste the court’s time with repeated and causal requests for permission.

At the end of April this year, a consortium of 24 banks has a massive exposure of Rs30,000 crore to Essar Steel alone. In May, HDFC Bank decided to take a hit and sold Rs550  crore of its outstanding debt to Edelweiss Asset Reconstruction at a 40% discount. This is a loss of Rs200 crore.

Bank of India’s auditors have asked it to classify its Rs500-crore exposure to Essar Steel as a bad loan. Among its major lenders, State Bank of India (SBI) has an exposure of Rs8,000 crore to Essar Steel and ICICI Bank has an exposure of another Rs6,000 crore.

 Essar Steel’s outstanding of Rs30,000 crore is after it was made to raise Rs4,850 crore through a sale of assets and the promoters were made to pump in Rs1,300 crore under pressure from lenders. It is interesting to note that the money that was allegedly brought in by the promoters is twice its meagre net profit of Rs648 crore in the past financial year.

When the group’s strategy itself is to live off public funding, its financial problems are not limited to Essar Steel. Essar Shipping is also making losses and has reported a consolidated net loss of Rs159.69 crore for the quarter ending 31 March 2015. Essar Ports is also out there seeking relaxed loan terms from its bankers on its existing Rs6,000 crore outstanding to banks and wants money for a fresh investment of Rs3,000 crore.

This does not include the undue benefits running into hundreds of crores of rupees that ‘friendly’ officials gave the group over the years. Here is only one instance. A 2013 report of the CAG (comptroller and auditor general of India) on public sector undertakings lists multiple counts on which Gujarat Petronet officials favoured the group and passed on undue benefits running into hundreds of crores of rupees collectively to Essar group companies—Essar Steel, Essar Power Gujarat Ltd. The amount was over Rs650 crore.

For over a year now, Care Ratings has had a ‘default’ rating on Essar Steel but do you hear the government ordering a forensic audit into how the funds were used or diverted? Any such order can only be an outcome of the Supreme Court litigation filed by CPIL. That Essar’s outstandings can wreck the profits of major banks ensures that they are again working at ‘restructuring’ its loans with tacit support from the government. This is a sordid story of crony capitalism, first leeching off public shareholders and then public sector banks.

The Modi government claims to be keeping businessmen at arm’s length. Prime minister Narendra Modi told a newspaper a few months ago that “my government will make policies, if you fit into it, come on board, or stay where you are. My job is not to spoon-feed anyone.” It is ironic that public sector banks, owned by the government, are continuing with impunity to work at bailing out businesses houses like Essar.

Author- Sucheta Dalal is the managing editor of Moneylife. She was awarded the Padma Shri in 2006 for her outstanding contribution to journalism.
Source- http://www.moneylife.in/article/what-the-essar-diaries-mean/42144.html

PIL-WP questioning the Logic of Petroleum Pricing - Hon'ble Karnataka HC issues Notices

The Public Interest litigation (PIL) - writ petition filed in the Hon'ble Karnataka High Court  by NP Amrutesh, and presented by Senior Advocate SP Shankar, has questioned the unreasonable profits made by the government from sale of petroleum products.

And argues in favour of a sharp drop in retail price of diesel, petrol and LPG to benefit the common man. It argues that the cost for such a drop in retail prices could be easily covered by the humongous sale of 166 by-products of crude oil, and has gone on to say that the actual retail price of diesel in Bengaluru comes to Rs 13.35 per litre. 

Acting on the petition, the High Court issued notices to the Union government and its oil marketing companies and agencies.
The petition, says, "Under RTI Act, specific information is obtained in regard to the actual cost of acquisition, cost of cracking, blending and refining as well as cost of transportation from the refineries to the outlets and that the comprehensive cost of 1 litre of diesel at Bangalore is Rs 13.35 paise. Respondents have not furnished the cost of petrol and kerosene in like terms."

Besides the Union government, the high court issued notices to Indian Oil Corporation (IOC), Hindustan Petroleum (HP), Bharat Petroleum (BP) and oil & Natural Gas Commission (ONGC).

The petition alleged that the government was making profits by selling petroleum products like petrol, diesel, kerosene and LPG at a much higher retail price than what they should actually have.

The petition says the government and oil companies are hiding facts about the actual profits. Around 166 by-products are produced from crude petroleum and all of them are sold. The petition says, "When crude is cracked, refined and blended the products that are generated are 166 in number. The number of by-products has now reached 183. Some of these by-products are used as base material in manufacturing of aspirin and brufane. Entire gamut of base for cosmetics is built on petroleum by-products. Automobile and chemicals and fertiliser industries have roots in petroleum products like naphtha. So the government is never a loser in the matter of refining crude and (is) recovering the entire cost from sale of at least 166 by-products. The GOI through its petroleum ministry has a legal duty to make these aspects transparent and to be accountable to the people."

The petition says that instead of making profit out of the common man, the government can keep the prices low. It says, "The fact that sale of 26 by-products meant for industrial use will alone take care of the entire cost of acquisition of crude, its transportation to refineries at various places in India, for cracking the crude and refinement would show that there is no loss occasioned to the oil industry. Further, rest of the by-products are in constant demand in the market. Their sale is sufficient to make profit."

The petition alleges that the Union government was allowing concentration of wealth and material resources in the hands of the oil companies to the detriment and prejudice of the common good.

"The interest of the public at large is ignored in de-controlling and de-licensing sale of petroleum products by oil marketing companies. (The oil companies) cannot be treated as a trading wing or a commercial enterprise but only a service instrument of the Union of India. People of India do not exist and strive for promoting the interest of oil marketing PSUs or political bosses," it says.

Oil companies exposed

The petition cites the Comptroller and Auditor General (CAG) reports and also from the reports of the oil companies to show that the companies never suffered losses. "CAG of India has castigated the State owned fuel retailers namely Indian Oil Corporation Limited (IOCL), Hindustan Petroleum Chemicals Limited and Bharat Petroleum Chemicals Ltd who have overcharged customers from the years 2007-08 to 2011-12 by rupees 26,626 crore, by way of calculating the desired retail price in a manner as if the product was imported by adding customs duty, freight, insurance, ocean loss and wharf-age charges to the prevailing international price of petroleum products," the petition says. "Thus an expenditure never incurred under the headings of L.C Charges, insurance charges, freight, wharfage charges, custom duty and ocean loss, amounting to Rs 50,513/- crores is added to the cost of petroleum products and is passed on to the consumers," it says.

The petition seeks a transparent regulatory mechanism in the matter of sale of petroleum products; a simple cost accounting method of arriving at the selling price namely cost plus margin of profit. The petition says "how the 166 by-products are marketed is not disclosed. There is no transparency or accountability in fixing the price."

The petition, among other things, has sought pricing of petroleum products be as per Constitutional guidelines of a welfare state. It seeks a transparent manner of pricing the products and a court direction to the Union government to commit oil companies to be non-profit-making units. This can be done by considering petroleum a material resource in which earning profit is forbidden, the petition said.

Source - Bangalore Mirror

Now a Social Media Linked Bank Account - Kotak Jifi

Kotak Mahindra Bank has launched Jifi, a fully-integrated social bank account with youth as the target segment. Jifi transcends digital banking by seamlessly incorporating social networking platforms such as Twitter and Facebook with mainstream banking, the bank said.

Jifi is a zero-interest current account with no minimum balance conditions, and can be opened with an initial payment of Rs 5,000. All balances over Rs 25,000 automatically move into term deposits at applicable interest rates. Opening a Jifi account is triggered by a self-invite by signing up through Facebook or email.

K V S Manian, president (consumer banking) at Kotak Mahindra Bank Limited, said: “Jifi is a unique digital account that integrates social media platforms like Twitter and Facebook for secure and seamless on-the-go information. With Jifi, the first-of-its-kind digital account, Kotak takes banking to the next orbit by providing a hassle-free proposition to tech-savvy persons who prefer to stay online at all times.”

Jifi also has a loyalty point programme encourages high level of interactivity among account holders. In addition to transacting on social media platforms, customers can transact through net banking and the Kotak Mobile Banking app.

Jifi customers have access to all conventional bank offerings as well, which include pan-India branch and ATM network, ‘platinum’ debit card, all-India toll-free number, net card and net banking access, etc. 

The bank believes that in the next three to five years, 30-50 per cent of account openings will happen through this initiative.

“As far as the security features are concerned, if the Facebook or Twitter account of the customer is hacked, then the hacker will be at the most able to see the reward points of the customers and use those points. But they will not be able to do any transactions or check the bank balance of the customer. The customer's banking details are fully secure and cannot be seen by the hacker. For transactions, the customer has to log in to net banking,” said Deepak Sharma, executive vice-president and head-digital initiatives, at Kotak Mahindra Bank.

Jifi is currently available for resident Indians in select locations including Mumbai, Delhi, Chennai, Kolkata, Bangalore, Hyderabad, Pune, Coimbatore, Jaipur and Lucknow. The account can be accessed from anywhere in the world.

Source - Business Standard

For more info Visit - http://www.kotakjifi.com

No sanction needed to try public servant under IPC

No sanction is required to prosecute a public servant under the Indian Penal Code (IPC), even if mandatory approval under the anti-corruption law has been refused, the Bombay high court has held.

Dismissing the plea of two senior Small Industries Development Bank of India (Sidbi) officers to discharge them in a case lodged by the CBI, Justice Sadhna Jadhav ruled that they will have to face trial on charges of cheating and criminal breach of trust for the loss caused to the bank. But the judge allowed the prayer of the officers and transferred the case from the special CBI court to the magistrate's court.

"It is clear that refusal to accord sanction for prosecution under the provisions of the Prevention of Corruption Act can't be held to be relevant to try an accused for the offence punishable under the IPC," said Justice Jadhav, while rejecting the plea of the officers, A S Tewari and S V Karade.

The officers' claim that they had been exonerated in a departmental inquiry and the central vigilance commission had agreed with it, failed to impress the HC. "The onus to prove that they had a guilty intention...when the fraudulent transaction had taken place lies on the prosecution, and only because the department has exonerated them on unwarranted grounds, the prosecution can't be denied an opportunity to lead evidence to prove that the accused had the guilty mind and therefore, there was wrongful loss to Sidbi."

The case concerns Sidbi's agreement with Tata Motors, under which the latter's vendors would be paid by the bank, and Tata Motors would then pay the bank. Sidbi would pay Ranflex, a vendor, through cheques. In August 2008, Sidbi lodged a complaint with the CBI after Ranflex said it had not got payments. A probe revealed that Sidbi had made online transfers of over Rs 1.64 crore to a bank account in Thiruppur, which was a fictitious account in Ranflex's name. Tata Motors said it had never instructed Sidbi to make online transfers.

Tewari, Karade and a bank official, who is absconding, along with 10 others were named as accused. The bank refused sanction to prosecute Tewari and Karade on the grounds that the third official was responsible for the alleged fraud. The trial court discharged the duo under the anti-corruption law but framed charges under the IPC. They then moved HC saying they had approved the transactions "in good faith".

The high court said, "Connivance between the officers/accused who made said payments is writ large on the face of the record. Special CBI court had rightly observed that...criminal conspiracy to cheat the bank... can't be treated as an act done in good faith."

Source - TOI

Powers of Law Commissions - The Hindu

The Law Commission of India



As we get closer to the great grand election, there is much talk about the enforcement of the moral code of conduct across the country. It is a sad reality that in a country with a rich history and heritage, the politicians and leaders need to be reminded about the etiquettes of public speaking. The seat of judiciary in New Delhi, the Supreme Court on Thursday asked the Law Commission to look into the issue of hate speeches made by leaders of political, social and religious outfits and consider framing guidelines to regulate provocative statements. This week, freewheeling will focus on the Law Commission. 

Law Commission of India is an executive body consisting of legal experts established by the Central Government whose major function is to work for legal reform. More than a dozen research personnel work for this organisation. The administrative side is taken care of by the secretarial staff.

From the 1830s , Law Commissions have been constituted from time to time to recommend reforms to clarify on particular branches of law. The first law commission was established in 1834 under Lord Macaulay. The second, third, fourth Law commissions were constituted in 1853, 1861 and 1879 respectively. These Law commissions have played a great role in enriching the Indian Statute Book. The Indian Code of Civil Procedure and the Transfer of Property Act are products of the labour of the first four Law Commissions.

The first Law commission of independent India was established in 1955 with Setalvad as Chairman. As of today, there have been 20 Law Commissions, each with a term of three years. The present Law Commission (the twentieth) came into effect from September 1, 2012 and its term ends on August 31, 2015.

Areas of work 

The Law Commissions identify laws which are no longer relevant, not in harmony with the existing climate, and laws which require change. It also suggests suitable measures for quick redressal of citizens’ grievances, in the field of law. Law Commission takes all necessary steps to make the poor benefit out of the legal process. These are just a few of the many things that the law commission does. Apart from examining the laws for promoting gender equality and suggesting amendments, it also recommends revision in the central acts.

The Ministry of Law in consultation with the concerned administrative ministries considers the reports of the law commissions and submits it to the Parliament. Subsequently, they are acted upon by government departments concerned.

From - Powers of Law Commissions - The Hindu

Facts about 0% EMI Finance Schemes | InvestmentYogiInvestmentYogi

Facts about 0% EMI Finance Schemes | InvestmentYogiInvestmentYogi:


This festival season you might have decided to upgrade your television set from LCD Flat Screen to LED Smart Television or purchase Samsung Note Book / Apple Iphone / Nokia Lumia replacing your old Android Mobile Handset, etc. Attractive promotional schemes from manufacturing companies and retail stores will roll out in the market from this week as Navratri – the first festival of the season is commencing from 5th Oct, 2013 followed by Dussehra, Diwali and Christmas. When we look at the statistics of last few years, purchase of consumer goods through 0% finance schemes has attracted many customers and sales through this scheme has contributed 20-30% to top-line for retailers in the market. However, before you take a decision to purchase consumer goods and get trapped in some promotional offers we recommend avoid 0% emi finance schemes offered by banks or credit cards because there are some hidden costs and disadvantages attached to it, which we will discuss in this article. Now, RBI has also stepped in from 24th Sep, 2013 to halt 0% finance schemes offered by banks to purchase consumer goods.

Disadvantages of purchasing consumer goods on 0% finance schemes are as follows:

1) Processing and documentation fees

Banks charge one time processing and documentation fees from customers, while purchase on 0% finance schemes. The fees vary from bank to bank, but will be in the range of Rs 500 to Rs 1,000. So, this will be additional cost on products you have purchased.

Take an example, Mr Abhishek opts to purchase 42 inch LED Smart Television Set which costs Rs 60,000 from store. Now, he applies for 0% finance scheme to pay monthly EMI on his purchase. To apply for the EMI schemes, he shells out additional cost of Rs 1,000 against processing and documentation charges. Now, his LED set would cost him for Rs. 61,000 (inclusive of processing charges).

2) Pay interest rates on your purchase

As per information gathered from various retail stores, it can be said that banks are charging hefty interest rates from customers while purchase on these finance schemes with 0% EMI. Interest rates vary for six months and nine months tenor among banks. These interest rates are as follows:

Banks                         6 months tenor     9 months tenor

State Bank of India  4.25%                     6.35%

HDFC Bank               5.2%                        7.25%

ICICI Bank               4%                            6-6.15%

Now, after RBI intervention in the 0 interest finance schemes to purchase consumer goods, banks such as SBI, Axis bank, Kotak Mahindra, etc have already withdrew zero percent facilities.

Taking forward Mr. Abhishek’s example, the cost price of Rs 60,000 for LED will have additional cost of interest expense over it. So, consider if he had opted to purchase LED with 6 months tenor (EMI instalments) from ICICI bank. The interest rate applicable will be 4% on his purchase. Now, EMI for 6 months will be Rs 10,117. So, at the end of 6 EMIs, total amount he pays off is Rs 60,702. So, purchase of RS 60,000 has now led him to pay additional cost Rs 1,702 (Rs 1,000 processing fee + Rs 702 interest cost).

3) Losing out on discount while shopping

Retail stores and shop dealers on roadside offer discount when you opt to purchase through cash or debit card. This discount varies on your negotiation skills and brand of the product you opt to purchase. I did a survey in few retail stores and dealer shops to understand cash discount they are ready to offer if shown interest to book the order immediately and pay full amount by debit card. Retail stores offered me cash discount in the range of 3-5% on purchase of LG, Panasonic, Toshiba, Onida, etc LED sets. On the other hand, dealer shops on roadside offer cash discounts between 5-10% while purchasing similar brands and models from them. But, getting a discount on Sony and Samsung LED’s is a difficult task as they are market leaders and have marginal operating price across all retail / dealer stores in India. However, it’s possible to get a price break or complementary gifts of Rs 2000 to Rs 2,500 on Sony and Samsung LEDs, but require smart negotiation skills to deal with the Store manager / Associates.

Next time, before stepping into a retail store to purchase any consumer good, get a best price for the same product from a nearby dealer store. Then, take a decision to purchase from a store which saves money from your pocket and gives better sales service.

Here, we can say Mr. Abhishek missed an opportunity to save Rs 3,000, assuming 5% cash discount on purchase of Rs 60,000 LED set. Instead, he paid Rs 61,702 for LED costing Rs 60,000 in the market.

Set your preferences before stepping out for shopping consumer goods

There are few questions which you require an answer to, before stepping out to purchase any consumer products in the market. There is a high probability you will be confused with various brands and features in the market. So, take an example of Mr. Abhishek, who decides to purchase LED television set. The points he would discuss with his family / wife will be:
Size of the LED set required to be installed in drawing room
Should we give preference to brand or additional features at best price?
Whether we want to buy from retail store or nearby dealer shop?
Payment option i.e. 0% emi finance scheme or cash (debit card)?
Set a budget price for consumer product you intend to purchase.

Based on a survey at few retail and dealer stores, I would like to share some insights as follows:
Associates at these stores tried to push products which have attractive features and gives them better commission (profit) on sales if you have not decided your preference before stepping out for shopping.
Associate gives demo of branded LEDs like Samsung and Sony on request but makes them inferior in features while compare to other brands like LG, Panasonic, Toshiba, etc. Also, prices of Samsung and Sony are much higher compared to other brands, so consumer easily gets diverted to other known brands while purchasing to get additional features at discounted price compared to branded market leaders. So, here if you have set your preference clearly, you will not fall in the trap of seller while shopping.

Conclusion

Let us calculate in table the total savings Mr. Abhishek will have from purchase of LED on cash with discount.

Particulars      Purchase on 0% finance schemes         Purchase on cash with discount
Cost price of LED (Rs)                 60,000                                             60,000
Add: Processing Fee (Rs)                  1,000                                             0
Add: Interest Payable (Rs)                 702                                                 0
Less: Cash Discount (@5%)                  0                                               3,000
Total Cost (Rs)                   61,702                                                         - 3,000
Total Savings (Rs)                4,702
Additional Expense Incurred (%) 8% (approx.) by opting for 6 months financing scheme


With purchase on cash, Mr. Abhishek has saved Rs 4,702 as computed above. This saving can be utilised for other expenses (shopping) or invest in short term FD to earn cumulative interest. So, for consumer benefit, RBI has also intervened and is now against 0% finance schemes on emi offered by banks at retail / dealer stores. They want shoppers (consumers) to do shopping on debit card/cash and get additional benefit of discount from stores. So, improve your negotiation skills to get the best price for consumer goods of your preference and enjoy your shopping in this festival season….!!!!!

The author has presented his personal views in this article through knowledge and interaction with people at few retail/dealer stores in Mumbai.

About the Author:

Hiral Thanawala is a PGDM (Finance) graduate and Certified Financial Planner with an experience of over 5 years in equity market and personal finance domain. He can be reached at expert@investmentyogi.com
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Lexis Nexis at the New Delhi World Book Fair 4-2-2013

Lexis Nexis at HALL NO. HA1, STALL NO. B101-112 during the New Delhi World Book Fair at Pragati Maidan,New Delhi from 4th Feb 2013 to 10th Feb 2013.



LexisNexis India Team

Justice Sreedhar Rao felicitated by Karwar District Bar Association

The members led by the President Adv S P Gaonkar, felicitated Justice Sreehdar Rao, High Court of Karnataka, during his visit to Karwar.
The news report that appeared in Karavali Munjavu is reproduced here.

Vodafone tax case: Implications of the SC judgment on pending cases - Moneylife Personal Finance site and magazine

Vodafone tax case: Implications of the SC judgment on pending cases - Moneylife Personal Finance site and magazine:

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The Vodafone tax case was conceded as a ‘test’ case, but diverse issues raised by the I-T department, who seek to render exigible to tax similar cross-border transactions, remain to be adjudicated on a case-by-case basis, including ‘treaty shopping’, which did not arise in the Vodafone case

The Supreme Court verdict in the Vodafone tax case has far-reaching ramifications on diverse cross-border transactions sought to be brought within the tax dragnet, including Sanofi Aventis-Shanta Biotech, Sabmiller-Fosters, Idea Cellular-AT&T, whose challenges to demands by the Indianrevenue department are pending before courts of law in India. The verdict of 20 January 2012 marks a closure to the tax demand of Rs11,218 crore in the form of withholding taxes and interest, plus Rs7,900 crore (towards penalties) from Vodafone following the international cross-border transaction by which it acquired the Indian telecommunication interests of Hutchison for $11.076 billion.

The Supreme Court, in its resounding validation of the settled legal principle that tax planning per se is neither illegal nor impermissible andrejected the stand of the Income Tax (I-T) department that the overseastransaction relating to the acquisition by a Netherlands-based subsidiary of Vodafone of share capital of an upstream company that wasincorporated by Hutchison in the Cayman Islands and ensconced within the corporate structure evolved in the course of effectuating telecommunications investments into India from 1992 onwards, was sham, fictitious and a means to evade tax exigible in India upon such transfer, entailing concomitant withholding tax obligations qua Vodafone inrelation to capital gains in the hands of Hutchison, since downstream companies held underlying assets situated in India, founded inter alia on a purposive interpretation of certain provisions of the Indian Income-tax Act, 1961.

As the final appellate court in the land, the Supreme Court has, through the majority judgment delivered by the Chief Justice SH Kapadia and Justice Swatanter Kumar, on the basis of Article 141of the Constitution of India which stipulates that “the law declared by the Supreme Court shall be binding on all courts within the territory of India” andon the enshrined doctrine of stare decisis, constitutes mandatory precedent, evolved key principles relevant to international tax jurisprudence, with courts of concurrent jurisdiction and/or inferior courts being thus bound.

The ratio decidendi or legal principles evolved and established in the Vodafone case, and thus capable of reliance advantageously by entities that have, in cross-border transactions, similarly acquired stakes in companies situated overseas with downstream assets in India, and faced with a tax demand on similar premise to that applied by I-T department to Vodafone, subject to individual fact matrices permitting them to fall squarely within its purview, broadly include:

I. In an offshore transfer of shares between two non-residents, no liability to capital gains tax arises in India, and correspondingly no obligation to deduct tax at source can arise in India;

II. Transfer of a capital asset situated in India does not occur indirectly in consequence of a transfer of capital asset overseas, so as to render income derived overseas to become taxable in India;

III. ‘Look at’ is the test vis-à-vis cross border transactions, rather than ‘look through’: ‘single consolidated bargain’, rather than resort to dissecting and challenges to commercial substance, particularly in circumstances where regulatory permissions have been secured from statutory authorities in India as a prelude to or in the course of infusing strategic foreign direct investment to participate in India;

IV. Surrounding circumstances of a transaction are key to evaluating whether it is a colorable device for distribution of earnings, profits and gains, and are thus liable to be viewed holistically;

V. An investment vehicle, which in addition to holding shares in a subsidiary company(ies), performs the function of facilitating smooth transition of business, does not per se lack business or commercial purpose;

VI. The mere exercise by a parent company of shareholder influence over its subsidiaries will not render subsidiaries as deemed resident of the State in which the parent company is incorporated and/or has its seat of business;

VII. ‘Controlling interest’ is an incident of ownership of shares in an entity, but not a distinct capital asset, capable of segregation from shares held;

VIII. ‘Situs’ of shares is located where the company is incorporated and its shares can be transferred, where its register of members is maintained, thus shareholding in companies incorporated outside India shall constitute property located outside India;

IX. Burden is on the tax department to establish tax avoidance, and ‘dominant purpose’ to be viewed in the context that foreign investmentsare oft routed through holding company structures, relating to which the duration for which it is in place, business operations have been conducted in India with corresponding revenue generation in India, as also the timing of an exit by an investor and continuity of such business, to be key in discerning whether it isa fictitious or sham scheme preordained with the purpose of tax evasion;

X. A non-resident, unless the place of accrual of income is within India, is not liable to be subjected to tax in India;

XI. Basis of taxation is profits or income or receipt, but not valuation of an enterprise;

XII. Absent transfer of a capital asset in India, an overseas buyer of shares cannot be held as “representative assessee” of an overseasseller;

XIII. A ‘look through’ in a statute or treaty has to be expressly stipulated and cannot be read in through resort to rules of purposive interpretation.

While the I-T department’s endeavors to re-visit the settled legal position in relation to the sacrosanct status accorded to Tax Residency Certificates pertaining to Mauritian entities through which foreign direct investment is legitimately routed into India (in the 2003 Azadi Bachao Andolan case), were squarely rejected in the Vodafone tax case, ‘round-tripping’ has been specifically carved out of the ambit of ‘foreign direct investment’.

The Vodafone tax case was conceded as a ‘test’ case, but diverse issues raised by the I-T department, who seek to render exigible to tax similar cross-border transactions, remain to be adjudicated on a case-by-case basis, including ‘treaty shopping’, which did not arise in the Vodafone case, but is due for adjudication by Supreme Court, in the AT&T case, shortly.