Aadhar status: Post 2 months of Supreme Court 5 Judges bench Judgment

It has been around two months since a five-judge bench of the Supreme Court determined the fate of the Aadhaar project. The majority judgement did not receive much enthusiasm as it only limited Aadhaar’s use, rather than strike it down entirely. The two aspects that emerged from the judgement were that first, Aadhaar can be made mandatory only for subsidies, benefits or services, and Aadhaar authentication cannot be carried out by private entities.

Aadhaar’s Continued Existence

One of the biggest criticisms of the Aadhaar judgement is that not much notice was taken of the negative consequences of upholding section 7 of the Aadhaar Act. This provision allows Aadhaar to be used for availing subsidies, benefits and services, which citizens are entitled to. The reasoning provided is that it will cut-out ghost beneficiaries and fraud which will result in savings.

However, the petitioners had repeatedly argued against this provision since the technology is not free from issues and hence false negatives can result in exclusion from entitlements. In September 2017, 11-year-old Santoshi Kumari died of hunger in Jharkhand. The reason was due to her family not linking their ration card with Aadhaar, they did not receive the foodgrains they were entitled to. On November 11, 2018, Kaleshwar Soren died of starvation. Once again, the culprit was non-possession of Aadhaar card. He had managed to survive on his neighbours’ charity after his ration card was cancelled in 2016.

The Economic Times reported today that Aadhaar enrolments, as well as authentications, had fallen drastically. However, this does not reveal much information about Aadhaar’s continued use. First, the drop in enrolment could be explained as many people in the country have already been coerced into getting an Aadhaar card before the Supreme Court decided on the matter. On the other side, the drop in authentication requests can also be one explanation as the use of Aadhaar for authentication has been made optional, hence rather than having to play with biometrics, people may prefer to submit or use other documents.

Following the Supreme Court’s judgement, the Unique Identification Authority of India (UIDAI) has issued two press releases in connection to it. The first press release welcomed the Supreme Court’s decision to uphold Aadhaar’s constitutional validity, the other concerned the electronic-Know Your Customer (e-KYC) norms. In the second press release, the UIDAI along with the Department of Telecommunications (DoT) stated that SIM cards linked with Aadhaar would not be deleted, as some rumours suggested. The release also mentioned that one could de-link one’s Aadhaar card by submitting a request for de-linking accompanied by an alternative identity document for fulfilling the e-KYC requirements.

However, Aadhaar continues to be of value to banks and telecommunications operators since no opt-out procedure has been devised till date. In a letter to the National Payments Corporation of India (NPCI) on November 19, the State Bank of India (SBI), in the light of the Aadhaar judgement, had decided to suspend the Aadhaar enabled Payment System (AePS). However, the UIDAI – the agency overseeing Aadhaar and its implementation – on November 30, informed the banks through a circular to the Reserve Bank of India (RBI), that since it is not possible to distinguish between authentication requests for the purposes listed under section 7, suspending the AePS would have an adverse impact. This circular would certainly be music to the ears of those operating the AePS, Bhim App as well as Aadhaar Pay, not to mention the numerous other corporate beneficiaries of Aadhaar.

Protecting the Financial Technology Companies

Barely a day after the Supreme Court had delivered its decision, the Union Finance Minister, Arun Jaitley, and the Union Minister for Electronics and Information Technology as well as Law and Justice, Ravishankar Prasad, said that the Supreme Court’s reading down of section 57 related only to contracts. In this regard, the Ministers are correct. But this is the letter, not the spirit of the Supreme Court’s decision.

Section 57 states that: “Nothing contained in this Act shall prevent the use of Aadhaar number for establishing the identity of an individual for any purpose, whether by the State or any body corporate or person, pursuant to any law, for the time being in force, or any contract to this effect:

Provided that the use of Aadhaar number under this section shall be subject to the procedure and obligations under section 8 and Chapter VI.”

Due to the blank cheque nature of this provision wherein Aadhaar can be used for ‘any purpose’ and by ‘the State or any body corporate or person’, the Supreme Court held:

“We read down this provision to mean that such a purpose has to be backed by law. Further, whenever any such “law” is made, it would be subject to judicial scrutiny. (b) Such purpose is not limited pursuant to any law alone but can be done pursuant to ‘any contract to this effect’ as well. This is clearly impermissible as a contractual provision is not backed by a law and, therefore, first requirement of proportionality test is not met. (c) Apart from authorising the State, even ‘any body corporate or person’ is authorised to avail authentication services which can be on the basis of purported agreement between an individual and such body corporate or person. Even if we presume that legislature did not intend so, the impact of the aforesaid features would be to enable commercial exploitation of an individual biometric and demographic information by the private entities. Thus, this part of the provision which enables body corporate and individuals also to seek authentication, that too on the basis of a contract between the individual and such body corporate or person, would impinge upon the right to privacy of such individuals. This part of the section, thus, is declared unconstitutional.”

However, there appears to be a loophole in this part of the Supreme Court’s decision, i.e. that the use of Aadhar has to be backed by a law. Under clause 3 of Article 13 of the Constitution, law is defined as including; “any Ordinance, order, bye law, rule, regulation, notification, custom or usages having in the territory of India the force of law”. Therefore, a departmental notification requiring the use of Aadhaar for any purpose would still not fall foul of the Supreme Court’s decision on section 57. The only saving grace is that the law is subject to judicial review, hence any formal iteration making Aadhaar mandatory can be challenged before the Courts. However, this depends on whether the general public is vigilant enough.

The actions of the UIDAI, as well as statements from the government regarding section 57, appear to be geared towards ensuring the continued existence of fintech companies. While the ongoing Assembly elections along with the rhetoric around the Ram Mandir and the Citizenship Bill grab people’s attention, the Monsoon Session of Parliament could see the passage of a Bill to enable Aadhaar’s use for digital payments. It is not necessary to state who the true beneficiaries of such a law would be.

departmental as well as criminal proceedings against government servants to be conducted simultaneously

The departmental and criminal proceedings against the erring Government servants will now be conducted simultaneously and necessary instructions in this regard have been passed to all the Administrative Secretaries for prompt and strict compliance.
The Supreme Court in its judgement in case titled “State of Rajasthan Versus BK Meena and Others” dated September 27, 1996 had made it clear that the approach and the objective in the criminal proceedings and the disciplinary proceedings are altogether distinct and different.
Moreover, the Apex Court in its judgment delivered in a case titled “State Bank of India and Others Versus Neelam Nag” on September 16, 2016 had mentioned that there is no legal bar to the holding of the disciplinary proceedings and the criminal trial simultaneously.
However, despite these explicit judgments of the highest court of the country, there was lack of clarity in Jammu and Kashmir regarding initiation of departmental proceedings in cases where criminal proceedings have either been sanctioned or the proceedings in the criminal case have been stayed by a higher forum. Due to this, the authorities were preferring to await conclusion of the criminal proceedings before initiating departmental proceedings.
Recently, on the directions of the Chief Secretary BVR Subrahmanyam, the plethora of judgments of the Apex Court were minutely examined by a group of senior officers in consultation with the Department of Law, Justice and Parliamentary Affairs and finally the issue regarding conduct of departmental enquiry in general cases and in particular where prosecution stands sanctioned has been settled.
“The matter has been commented upon by the Apex Court in plethora of judicial pronouncements and the Apex Court has held that there is no legal bar in simultaneous conduct of departmental proceedings along with the criminal proceedings”, the Commissioner Secretary to Government, General Administration Department Hilal Ahmad said in a circular issued today.
“It is a settled legal position that the criminal proceedings and the departmental proceedings can be held simultaneously except in the cases where the court has specifically restrained the Government from undertaking departmental proceedings”, the circular said.
Accordingly, the General Administration Department has directed all the departments to initiate departmental proceedings in all such criminal cases where the criminal proceedings have been initiated and the alleged criminal act amounts to misconduct and attracts the provisions of Jammu and Kashmir Civil Services (Classification, Control and Appeal) Rules, 1956.
“The departments should accordingly take recourse and strictly adhere to the Rules of 1956 wherever departmental enquiry in such cases has to be initiated”, the circular said.
It is pertinent to mention here that in its judgment in the case titled “State of Rajasthan Versus BK Meena and Others”, the Apex Court had held: “In the disciplinary proceedings, the question is whether the respondent is guilty of such conduct as would merit his removal from service or a lesser punishment whereas in the criminal proceedings the question is whether offences registered against him under the Prevention of Corruption Act are established and if established what sentence should be imposed upon him”.
“The standard of proof, the mode of enquiry and the rules governing the enquiry and trial in both the cases are entirely distinct and different. Staying of disciplinary proceedings pending criminal proceedings should not be matter of course but a considered decision. Even if stayed at one stage, the decision may require reconsideration with the criminal case gets unduly delayed”, the judgment further reads.
Similarly, the Supreme Court judgment in the case titled “State Bank of India and Others Versus Neelam Nag” read: “Suffice it to say that while there is no legal bar to the holding of the disciplinary proceedings and the criminal trial simultaneously, stay of the disciplinary proceedings may be advisable course in cases where the criminal charge against the employee is grave and continuance of the disciplinary proceedings is likely to prejudice their defence before the criminal court”.
“Gravity of the charge is, however, not by itself enough to determine the question unless the charge involves complicated question of the law. The court examining the question must also keep in mind that criminal trials get prolonged indefinitely especially where the number of accused arraigned for trial is large. The court, therefore, has to draw a balance between the need for a fair trial to the accused on the one hand and the competing demand for an expeditious conclusion of the ongoing disciplinary proceedings on the other. Moreover, an early conclusion of the disciplinary proceeding has itself been seen to be in the interest of the employees”.

NCLAT: NCLT Cannot Decide Legality Of A Foreign Decree

The NCLAT has once again held that the NCLT, for the purpose of initiating insolvency, has no jurisdiction to decide whether a foreign decree is legal or illegal.

The judgment is in response to an appeal filed against the Principal Bench order which got into the merits of a foreign decree, in the case of Usha Holdings LLC vs. Francorp Advisors. The Principal Bench found that the foreign decree did not satisfy the requirements of Section13 and 44A of the Civil Procedure Code, and hence the debt was not enforceable.

The NCLAT, however, disagreed and held that NCLT has no authority to decide the legality of a foreign decree. While doing so, it relied on the NCLAT judgment in the case of Binani, and recorded that,

“we hold that the Adjudicating Authority not being a Court or ‘Tribunal’ and ‘Insolvency Resolution Process’ not being a litigation, it has no jurisdiction to decide whether a foreign decree is legal or illegal.”

The reliance on the Binani judgment may be misplaced. The text of the judgment (or at least the portion quoted) does not make any reference to or is in any way related to the power of the NCLT with respect to enforcement of foreign decrees.

However, a previous judgment of the NCLAT provides better reasoning as to why NCLT is not the competent court to decide on validity of a decree, in insolvency proceedings. In the case of V.R. Hemantraj vs. Stanbic Bank Ghana Ltd, the NCLAT found that an application under Section 7, 9 or 10 is not a recovery proceeding, or proceeding for determination of claim on merit.

It further held that the NCLT is not required to write a detailed decision as to which are the evidence relied upon for its satisfaction. The NCLT is only required to be satisfied that there is a ‘debt’ and default has occurred.

Both judgments make reference to the term ‘Adjudicating Authority’  and not ‘NCLT’, because the NCLT has the powers of a Civil Court under provisions of the Companies Act, but the Adjudicating Authority under the IBC does not.

Supreme Court historic Judgments of 2018

1.            Sabarimala open to women after 27 years

Considered one of the holiest Hindu temples in the country, Sabarimala is located at the Periyar Tiger Reserve in Kerala. For the last 27 years, the temple has not been open to menstruating women (between the ages of 10 and 50). On September 28, the Supreme Court lifted this ban imposed by the Kerala High Court. The five-judge bench led by former Chief Justice Dipak Misra said,

“The dualism that persists in religion by glorifying and venerating women as goddesses on one hand and by imposing rigorous sanctions on the other hand in matters of devotion has to be abandoned. Such a dualistic approach and an entrenched mindset results in indignity to women and the degradation of their status.”

2.            Husband no longer wife’s master; adultery not a crime

Just a day before the Sabarimala verdict, the apex court struck down the colonial-era law of adultery. Section 497 of the Indian Penal Code stated that a woman could be punished for adultery, as could a man who has consensual sexual intercourse with another man's wife without his consent.

The apex court declared the law unconstitutional as it treated the husband as the master of his wife.

Chief Justice Dipak Misra read, "Any provision of law affecting individual dignity and equality of women invites the wrath of the constitution. Legal sovereignty of one sex over other sex is wrong."

3.            Link your Aadhaar? No more.

On September 26, a five-judge bench of the Supreme Court scrapped Section 77 of the Aadhaar Act. After 31 petitions challenged the validity of Aadhaar and said that it violated a citizen’s privacy, the court declared that while Aadhaar was constitutional it was, however, unconstitutional to make it mandatory for availing government services.

The verdict barred several private entities from asking customers to verify themselves using Aadhaar to avail their services.

4.            See court proceedings live

On September 26, a bench led by CJI Dipak Misra stated, “sunlight is the best disinfectant”, and said that all future proceedings of national and constitutional importance will be streamed live.

But, to ensure protection and privacy, it also added that cases related to matrimonial and where a child is involved like Protection of Children from Sexual Offences cases will be excluded.

5.            No more 377 - Same-sex love is not a crime

CJI Dipak Misra also led the bench that scrapped Section 377. The bench stated it to be ‘irrational, indefensible and manifestly arbitrary'.

The historic ruling stated,

“The natural identity of an individual should be treated to be essential to his being. What nature gives is natural. That is called nature within. Thus, that part of the personality of a person must be respected and not despised or looked down upon.”

6.            ‘Love Jihad’

In 2016, Hindu woman Hadiya Jahan converted to Islam and married Shafin Jahan, sparking a controversy when her father claimed that her daughter was brainwashed by extremist groups.

The issue escalated to Kerala High Court on January 19, 2016, that declared the marriage to be “only a sham”, and “a charade to force the hands of the court”. Hadiya’s custody was given to her father as the HC stated that she was incapable of taking her own decisions. But, things changed this year.

On March 8 this year, the case was heard by the Supreme Court and the final judgment came in Hadiya’s favour as the bench concluded that it was her choice to choose to live with whoever she wishes to.

7.            The fundamental right to die

On March 9, a five-judge bench led by CJI Dipak Mishra held the right to life includes the right to die with dignity. The apex court decided passive euthanasia should be allowed for withdrawal of life support for terminally ill patients or patients in a permanent vegetative state.

In doing so, the court ensured that an individual’s right to die with dignity is more important than the state’s interest in ‘preserving the sanctity of life’.

NGT orders closure of 8 industrial units in Uttarakhand's Sitarganj industrial area

 The National Green Tribunal has ordered closure of eight industrial units in Uttarakhand's Sitarganj area after the Central Pollution Control Board found them violating pollution norms.

A bench headed by Justice Raghuvendra S Rathore asked the authorities to shut down Gujarat Ambuja Exports Limited, Fleetguard Filters Pvt Ltd, Speciality Industrial Polymers & Coatings Pvt Ltd, Henken Chembond Surface Ace Tech Ltd, Western Consolidated Pvt Ltd, Balaji Action Buildwell Pvt Ltd, Reckitt and Benkiser Unit 1, and Reckitt and Benkiser Unit 2.

"We order that all these industries shall be shut down immediately. The Collector, Uddam Singh Nagar and Superintendent of Police as well as Member Secretary state pollution control board shall ensure that all these industries are shut down forthwith," the bench said.

The tribunal also directed the CPCB to submit a report with respect to the remaining industries which they have already inspected and submit the analysis report by June 18.

It had earlier directed the CPCB to inspect and take samples from industries located in the vicinity of Uttarakhand village of Siddh Garbyang so that the polluting units can be shut.

The tribunal had earlier appointed senior advocate Raj Panjwani and advocate Meera Gopal to assist it on a complaint of the residents of the Uttarakhand village, alleging discharge of untreated chemical effluents in drains by industries located in the vicinity.

The villagers had contended that there was complete violation of environmental laws and pollution norms by a large number of industries at the SIDCUL industrial park, located in the vicinity of Siddh Garbyang.

Terming the situation as alarming, the bench had directed its registry to register the villagers' letter as a petition and asked the Uttarakhand state pollution control board to inspect the industrial units around the village.

The NGT had issued notices to the Uttarakhand government, District Magistrate of Udham Singh Nagar, state pollution control board, and Managing Director of SIDCUL, and sought their responses.

The state pollution board was directed to identify the industries which were discharging untreated effluent and causing air and ground water pollution. It had also been asked to inform the tribunal on whether the industries were complying with the conditions of environment clearance.

The complainants had said the industrial units were spewing black soot which deposited black dust on the village houses, especially in the morning and evening hours due to which it was difficult for the residents to sit outside their houses or do any work.

"During rainy season, the effluent spread over the agriculture fields and even the tube wells of the village are having coloured water which is not fit for human or animal consumption,"

NCLT admits SBI’s plea against Videocon Telecommunications

The National Company Law Tribunal (NCLT) has admitted the insolvency petition filed by State Bank of India (SBI) against Videocon Telecommunications Ltd. This is the second firm promoted by Venugopal Dhoot to be admitted to the insolvency resolution process after the flagship company Videocon Industries.

On Friday, the division bench of NCLT Mumbai, presided over by B.S.V. Prakash Kumar and Ravikumar Duraisamy, admitted the petition by the country’s largest lender and also approved Anuj Jain as the interim resolution professional (IRP).

Animesh Bisht, counsel for the bank, argued that the company had defaulted in the payment of ₹234 crore to SBI and three of its associate banks (now merged with SBI). Of this, Videocon Telecommunications owes ₹193 crore to SBI alone in principal and interest.

A consortium of 18 banks has an exposure of ₹1,700 crore to Videocon Telecommunications, which defaulted on loans and bank guarantees in January 2018.

Zal Andhyarujina, counsel for Videocon Telecommunications, argued that the bank’s petition is defective, as it has not furnished the record of default by the company and that it should be dismissed on technical grounds. “The debt that is claimed by the bank is not the debt at all,” he said. “No notice was given to the company regarding the default and there was no crystallization of the dues by the bank.”

On Wednesday, NCLT admitted Videocon Industries’ case, also approving Jain as IRP. In February, Videocon had filed a writ petition in the Bombay high court asking for a stay on bankruptcy proceedings initiated by SBI in NCLT. It had moved the high court against the Reserve Bank of India’s decision not to extend the timeline as requested by SBI and the Joint Lenders’ Forum to rerate Videocon’s restructuring proposal following changes in cash flows after subsequent changes in the import duty policy.

As per Videocon’s FY17 annual report, it is liable to repay the liability of other group firms to the extent of ₹5,082 crore as of 31 March 2017. Its total debt was ₹19,506 crore as of March last year.

https://www.livemint.com/Companies/19avCLGjeDeidnyFL7IucO/NCLT-admits-SBIs-plea-against-Videocon-Telecommunications.html

Govt to launch fresh drive against shell companies

Over 225,000 companies and 7,000 limited liability partnerships (LLPs) face the threat of being struck off official records, with the government launching a fresh drive against companies defaulting on filing statutory returns.

The identified companies include entities with no economic activity, called defunct companies, as well as those used for financial irregularities, or shell companies.

A total of 225,910 companies and 7,191 LLPs have been identified for regulatory action due to non-filing of financial statements for the two years starting FY16, the corporate affairs ministry said in a statement. The fresh crackdown will be launched this financial year.

The identified entities will be given an opportunity to be heard and action will be taken after considering their response, said the statement.

In an earlier drive launched in the last financial year, the Registrar of Companies (RoCs) had struck off a total of 226,000 companies for having failed to file their financial statements or annual returns for a period of two or more successive financial years.

More than 300,000 directors were also disqualified for non-filing of annual returns by the companies for three years. Disqualified directors will not be in a position to sit on the boards of other companies.

About 14,000 companies got relief under the ‘condonation of delay scheme, 2018’ which was in force for four months from 1 January for regularization of returns.

The removal of the large number of defaulting entities from the records will clean up the system. However, only a small part of the entities struck off from records may have actually been involved in financial fraud.

A task force set up in 2017 to identify shell companies listed 16,537 entities as “confirmed shell companies”. It also listed 16,739 other entities having common directorships with the confirmed shell companies. The task force has also zeroed in on more than 80,000 suspected shell companies. The agencies use certain parameters to identify shell firms, including identifying persons of no means sitting on the board of directors and finding discrepancies between the volume of transactions done by a company and the profits reported.

Regulatory agencies will pursue cases against officers who are in default of statutory obligations even if the company is no longer in existence.

The crackdown highlights the importance of closing down a company as per law as many defaulting firms may actually be cases of entrepreneurs abandoning their venture and not bothering to close down the company as per law, which makes them defaulters for not filing returns in subsequent years. Also, many entrepreneurs open new companies just to hold their intellectual property rights such as trade marks but miss filing the annual returns as such companies have no operations.

“The government expects that its efforts to clean up the registry will create a transparent and compliant corporate ecosystem in India, promote the cause of ‘ease of doing business’ and enhance the trust of the public,” the official statement explained.

Pavan Kumar Vijay, founder of consulting firm Corporate Professionals, said that entities that are in default should be granted the opportunity to rectify the omissions through a simple procedure. This would ensure that struck off entities will not approach company law tribunals which are already overburdened, Vijay added.

The exercise of combing through records to find defaulters as well as those resorting to suspicious transactions has been a key part of the authorities’ strategy to identify instances of black money generation and money laundering.

According to industry observers, businesses often under-report their income or inflate expenses through bogus transactions involving companies that exist only on paper.

Over the last few years, successive governments have taken steps to curb tax evasion as well as funds that are moved out of the country coming back in the form of foreign direct investment. One key step in this regard is the renegotiation of India’s tax treaty with Mauritius.

China vs China: Coolpad may take Xiaomi to court in India

Chinese smartphone maker Coolpad is open to moving Indian courts against IPO-bound rival Xiaomi over patent infringement, after the company filed seven such cases in China in two different courts since January this year.

Coolpad’s chief intellectual property officer told ET that Indian laws protected patent holders’ interest, which made the South Asian nation’s courts a strong option for litigation, citing the example of Ericsson suing Xiaomi in a local court which lead to an interim bar on sales of specific Xiaomi phones.

“India is one of the key markets, and India has the reputation for protecting intellectual property rights, has better laws and systems to protect patent holders.

As we saw in the Ericsson-Xiaomi case, we feel that India is a good ground for protecting patents,” Zhang said when asked whether the company would file a lawsuit here.

“Because our products are sold in India and we’re a company focused on protecting our IP assets, we will file a case in any country where we have a good chance to get good remedies,” she added.

Coolpad Group’s subsidiary, Yulong Computer Telecommunication Scientific, has filed six cases in Shenzen Intermediate People’s Court, Guangdong province, in January, and one in Nanjing Intermediate People’s Court, Jiangsu province, in May, against Xiaomi Telecom, Xiaomi Technology and Mi Home Business, citing patent infringement and has sought immediate bar on production and sale of certain mobile phone models.

Yulong claims that models including Xiaomi Mi Max 2, Xiaomi Note 3, Xiaomi Mi 5X, Xiaomi Redmi Note 4X and Mi Mix 2, use three patents on interface, applications, icon configuration and dual-SIM card and dual-stand-by technologies, which enable basic communication, display and interaction functions that belong to the company. The first hearings are expected in September.

Xiaomi, which has maintained its No 1 position in the Indian smartphone market since December 2017, said that it was aware of the motion filed by Coolpad’s subsidiary in China, but has sought that the patent rights be declared invalid.

“Xiaomi understands that the filing has yet to be accepted by the court. Xiaomi has requested the Patent Reexamination Board of SIPO to declare the invalidation of the three patent rights regarding the above-mentioned patent infringement law suit,” it said in response to ET’s queries.

With the strong growth in smartphone sales, India has become a battleground for lawsuits alleging patent infringement.

A key player in this field is Sweden’s Ericsson which has taken several mobile phone companies including Xiaomi, Micromax, Gionee and iBall to court seeking royalties for using its standard essential patents (SEPs) on 2G and 3G technologies, since 2015.

In the specific case of Xiaomi, the Swedish gear maker got an interim injunction against sale of models using Chinese chipmaker Mediatek’s chipsets in India, which forced Xiaomi to sell only those with chipsets from Qualcomm.

Xiaomi eventually entered into an agreement with the US-based chipmaker, but its lawsuit with Ericsson remains pending in the Delhi High Court.

But not all have been as successful. Indian brands like iBall and Micromax have settled with Ericsson, with Micromax taking a global patent license from Ericsson, under which it will pay royalties on every phone sold in India and overseas which uses 2G or 3G technology.

Supreme Court refuses to stay CLAT counselling process

THE SUPREME Court gave a go-ahead for counselling for students who have cleared the Common Law Entrance Admission Test (CLAT), 2018, for admissions to the country’s top law universities. A bench of Justices Adarsh Kumar Goel and Ashok Bhushan refused to stay the counselling but clarified that “any further steps in the matter would be subject to further orders” of the court. “We cannot stop it,” the bench said.

Meanwhile, the report of the Grievance Redressal Committee, set up by National University of Advanced Legal Studies (NUALS), Kochi, to look into complaints about technical glitches during the exam held on May 13, was placed before the court Wednesday.

The bench directed that copies of the same be supplied to the parties. “In the meanwhile, the registry may furnish copies of the report of the Grievance Redressal Committee, appointed vide order dated May 25, to the counsel appearing for the parties,” it said.

The court had directed formation of the committee after some students approached it complaining about glitches in the test held on May 13 causing loss of crucial time.

whether the NCLAT can dismiss a statutory appeal?

 On 18 May 2018, in M/s B Himmatlal Agrawal (Appellant) v Competition Commission of India (CCI) and Anr. [Civil Appeal No. 5029 of 2018], the Supreme Court of India (Supreme Court) distinguished the decision of the National Company Law Appellate Tribunal (NCLAT) while disposing of a statutory appeal under the Competition Act, 2002 (Competition Act).

The issue before the Supreme Court was whether the NCLAT can dismiss a statutory appeal for non-compliance of its interlocutory direction to deposit a portion of the penalty as a condition for grant of interim relief. In this instant case, the Supreme Court set aside part of the NCLAT's order and restored the appeal that had been dismissed by the NCLAT. 

Background

The CCI found the Appellant guilty of rigging the bids for tenders floated by Western Coalfields Limited and correspondingly imposed a penalty of INR 3,61,00,000, which was ordered to be deposited within 60 days (CCI Order). The Appellant filed an appeal before the NCLAT against the CCI Order, seeking inter alia a stay of the penalty deposit. In response, the NCLAT granted a stay against the CCI Order (NCLAT Stay Order), with a condition that the Appellant was to deposit a sum equal to 10% of the total penalty (Deposit). However, the Appellant was unable to execute the Deposit due to financial distress. Consequently, the NCLAT dismissed the appeal on the ground of non-compliance with the NCLAT Stay Order. Being aggrieved, the Appellant filed an appeal against the NCLAT's decision before the Supreme Court.

Decision of the Supreme Court

The Supreme Court recognised that the right to appeal is provided under Section 53B of the Competition Act and that the said provision does not require any pre-deposit of penalty for entertaining an appeal. The Supreme Court held that the right to appeal granted by a statute cannot be curtailed by imposing a condition of pre-deposit of penalty, which can result in the dismissal of the appeal, if such deposit is not satisfied.

The Supreme Court declared that non-compliance of the NCLAT Stay Order will not impact the substantive appeal. As the condition of deposit was attached to the NCLAT Stay Order, any non-compliance would result in the NCLAT Stay Order ceasing to operate, as the pre-condition is not fulfilled. However, the substantive appeal would have to be decided on merits after giving the involved parties an opportunity to be heard.

As a result, the Supreme Court set aside part of the NCLAT Stay Order and directed that the appeal be restored and decided on merits. The stay order remained vacated on ground of the non-compliance.

http://www.mondaq.com/india/x/707524/Antitrust+Competition/Supreme+Court+Clarifies+NCLATs+Powers+In+Appeal

Intellectual Property Markets

Patents, trademarks, and copyrights are hardly new. Trademarks came first, in the 1200s in England. Patents were next, in the 1400s in Italy. Copyrights emerged in the early 1700s in England. For the United States, laws passed in the 1790s protected patents and copyrights. Trademark laws arrived in the 1870s following legislative activity throughout Europe. These are the three primary types of intellectual property (IP) that can be “registered” with governments for protection. Each are made public, and available statistics for all countries make it possible to track global activity.

Registered IP Boom: What is happening is not a surprise. There are several factors, besides globalization and competitiveness, that fuel the growth. First is the ability to monetize IP. IP used to be part of the price of a product. It still is, but it can also be sold or licensed or bartered in an increasingly liquid marketplace. Transactable IP, which began in the early 2000s, increased the size of the available market. Providers of software and services could now create many more capabilities than simply IP inventory management systems for companies.

Open innovation came of age a few years later, spurred by giants such as Procter & Gamble that set a goal to in-source 50% of their innovations from other companies. As the internet increasingly enabled global connectivity, big data and algorithmic analytics came of age. All the pieces were now in place to take a company’s IP portfolio and compare it to any company or set of global statistics.

Finally, coming full circle, this easily comparative global information spurred further growth as analysts warned companies about not keeping up with the Joneses. Geometric growth has been going on for the past five to seven years.

IP Networks: Another important growth driver are IP organizations that are not the actual governmental registration bodies. Western economic zones have assembled neighboring countries into consortiums and/or empowered agencies that oversee activities and influence country policies and legislation, such as Europe, Eurasia, the Arab States, and Africa. Asian countries appear to be taking a more solo approach.

On a larger scale, the World Intellectual Property Organization has become an increasingly important player. It was established in 1967 by the United Nations as a self-funding agency. It is located in Geneva, Switzerland, and represents 191 of 195 countries. WIPO, as it is known, is the global forum for IP services, policy, information, and cooperation. It is a great source of information on all registered IP. Get on their e-mail list and you will have your finger on the pulse.

Patents & Trademarks: There will always be regional, vertical, and other types of segment competitors, but a look at several WIPO’s global services likely portends the future of IP. WIPO offers three global registration platforms: for utility patents (PCT), design patents (Hague), and trademarks (Madrid). Users file a single “international application” directly with WIPO, which then handles the various country filings. This is a great assist for emergent countries and regions, and is also increasingly used by industrialized nations which already have plenty of infrastructure for registration and enforcement.

Copyrights: Copyrights are also increasingly being monetized. After the “free thinking” period when the internet boom began, the realization that content has value started to return. Giant companies and organizations around the globe now compete to gather and charge for access to their content. The list is long. Copyrights have a couple interesting twists. First is the ability to digitally identify every single publication, a systems capability that has been evolving since 1998.

Does it sound to you like the future of registered IP is headed to be a transactable commodity?

With IBC norms changed, Jaypee homebuyers to rerun case

Hopeful of getting a fair treatment after reclassification as financial creditors, the homebuyers of Jaypee Infratech are planning to approach the court to rerun the ongoing resolution process under the amended Insolvency and Bankruptcy Code (IBC).

The government on Wednesday approved changes in the IBC through an ordinance that gives homebuyers the status of financial creditors at par with banks in the insolvency resolution process. "Once the ordinance is promulgated upon getting President's assent, we will approach the National Company Law Tribunal (NCLT) to rerun the resolution process,".

Jaypee has failed to deliver 25,000 flats to the buyers citing lack of funds. The realtor had raised around Rs 12,000 crore from the buyers for its Wishtown housing project in Noida in the National Capital Region.

Rerunning the case would mean starting the process from the stage of invitation of fresh bids and reconstitution of the Committee of Creditors (CoC). So, even if the changes are prospective, it would not matter in this case, Rai said.

Currently, the resolution process is heavily tilted in favour of banks, whereas homebuyers have little say in it, homebuyers and lawyers feel.

Even as their contribution in most real estate projects is more than that of banks, homebuyers are unable to participate equitably, leave aside preferential treatment, rue lawyers and homebuyers.

Jaypee raised about Rs 12,000 crore from homebuyers in instalments and booking amount which was much higher than Rs 8,276 crore raised by it from the banks. However, homebuyers were offered only 30% as compared to banks which were offered 70% of the bid price of around Rs 10,000 crore earlier quoted by a company during the resolution process.

With better representation on the CoC, homebuyers hope to get this order reversed.

"This is likely to get reversed if the new bids are invited. Given that Rs 3,500 crore is required to complete the remaining 60% construction in the project, the homebuyers are likely to get 4-5% of the principal amount as delay compensation," Rai said.

However, even in this scenario, the homebuyers are looking at 20% haircut on an average instead of 42% expected earlier, experts point out.

Classification as financial creditors will allow homebuyers to have a greater say in the resolution process and protect their rights. Homebuyers will have voting rights and can now participate in the CoC meetings. Till now, they had no voting rights and were sitting outside the CoC.

A total of 66% members of the CoC can decide on a resolution process. This will allow homebuyers to insist the bidders to include delay compensation in the resolution plan.

However, "placing thousands of homebuyers on CoC could be tricky. Some of them may not come to vote, while others may have a different opinion,", one of Jaypee homebuyers.

Homebuyers will be treated at par with banks during the insolvency resolution process. However, if the resolution process fails and the company is forced into liquidation, homebuyers will be placed after the banks as realtor has given land assets as collateral.

http://www.dnaindia.com/business/report-with-ibc-norms-changed-jaypee-homebuyers-to-rerun-case-2618540

NCLAT admits banks’ petition over Jaypee Infratech land

The National Company Law Appellate Tribunal on Thursday admitted a petition filed by banks against the NCLT order which had directed Jaiprakash Associates to return nearly 760 acres of land to its subsidiary Jaypee Infratech.

A two-member bench headed by Chairman Justice S J Mukhopadhaya also issued notices to the resolution professional (RP) of the company over the petition filed by three lenders -- Axis Bank, Standard Chartered Bank and ICICI Bank. The bench fixed July 13 as the next date of hearing.

During the proceedings, the appellate tribunal observed that the adjudicating authority (NCLT) does not have jurisdiction to declare any instrument illegal.

NCLAT was hearing the appeal over the order of the Allahabad bench of the National Company Law Tribunal (NCLT), which had asked debt-ridden Jaiprakash Associates Ltd to return nearly 760 acres of land to its subsidiary Jaypee Infratech, declaring the transfer of the land as “fraudulent” and “undervalued”.

NCLT had directed JP Group’s flagship firm Jaiprakash Associates Ltd (JAL) to release and discharge interest created over the land to lenders including ICICI Bank.

The order had come on a petition filed by Jaypee Infratech’s resolution professional (RP) Anuj Jain in the NCLT seeking direction over transactions entered into by the company’s promoters creating mortgage on 858 acres of land to secure debt for JAL.

CLAT 2018- SC Suggests To Form Nodal Agency To Examine The Grievances Of Candidates, Asks NUALS To Reply

The Supreme Court today asked Common Law Admission Test (CLAT) 2018 convenor Nuals Kochi to appoint an expert committee at the earliest to individually look into at least 251 CLAT 2018 candidates’ grievances with the conduct of the entrance exam this year.

Justices AM Khanwilkar and Navin Sinha heard senior advocate Salman Khurshid for CLAT 2018 candidate Disha Panchal and five other petitioners who had challenged the exam and asked for a stay on the results and for a fresh exam, on the ground that they suffered from precious time lost in answering the paper due to technical glitches in the conduct of the exam.

Senior advocate V Giri appeared for Nuals today and placed on record the computer “log reports” of the petitioners claiming that each of the six petitioners was compensated with extra time for the exact time lost on account of technical glitches.

Nuals also submitted that out of over 59,300 candidates who appeared for the CLAT 2018 LLB and LLM entrance exams, it has received 251 representations so far from aggrieved candidates claiming that they had suffered on account of errors and glitches in the exam, the petitioners’ counsel Anand Shankar Jha told us.

This leaves out possibly up to 2,120 other potentially aggrieved candidates, according to a Google form that had been opened up to responses by a free CLAT tutorial service.

Jha said that the court was of the prima facie view that there were indeed many glitches in the conduct of the exam and that Nuals should appoint a mechanism or constitute a committee to look into each individual grievance.

The judges asked Nuals to propose before the court tomorrow as to how soon it can constitute such a committee and what procedure the committee would follow to address candidates’ grievances.

The court also ordered a stay on the writ proceedings on before five other benches of various high courts by several CLAT 2018 candidates, i.e. before Rajasthan - Jodhpur and Jaipur, Punjab & Haryana, Madhya Pradesh and Delhi, making their outcome subject to the decision of the Supreme Court.

Additional solicitor general appeared for the ministry of human resource development (MHRD), which was also made a respondent in the case.

Jha said that the hearings in the matter will now proceed on a day to day basis and the next hearing is tomorrow.

https://www.legallyindia.com/pre-law-student/clatinsc-nuals-to-propose-mechanism-to-look-into-251-candidates-complaints-as-2000-other-unrepresentated-sc-stays-clat-2018-proceedings-in-all-hcs-20180524-9366

Supreme Court: No relief to LLB Student Short Of Attendance Due To Pregnancy.

The Supreme Court on Wednesday refused to grant attendance relaxation to a second-year student of the LL.B course of Faculty of Law, University of Delhi (DU) who had missed college due to her pregnancy.

The Petitioner, Ms. Ankita Meena had sought a direction to DU to permit her to appear in the IV semester LL.B Examination. She could not meet the requisite 70% attendance criteria, having missed almost 2 months of the semester due to her pregnancy.

The Supreme Court vacation bench of Justices A. M. Khanwilkar and Navin Sinha declined interim relief of being permitted to sit for her fourth semester examination scheduled at 2 PM on Wednesday.

The bench was hearing the SLP preferred by Ms. Meena against the May 15 judgment of the Delhi High Court, wherein the Single Judge had placed reliance on University of Delhi v. Vandana Katari and Sukriti Upadhyay v. University of Delhi, besides Rule 12 of the BCI Rules of Legal Education, in refusing to grant her attendance relaxation.

Dismissing the SLP, the bench on Wednesday noted, “even maternity leave was not applied for… the objective of stipulating rules is to secure a sense of discipline…we cannot direct at 1 PM that a candidate may be allowed to take the examination at 2 PM...”

The bench, however, granted liberty to the petitioner to approach the Division Bench of the Delhi High Court. At an earlier stage, the bench had signified its consent to an arrangement that may be effected in this behalf with the acquiescence of the Respondent University.

In her petition, Ms. Meena had claimed a contravention of Rule 2(9)(d) of Ordinance VII of Chapter III of Delhi University Act of 1922, of her Fundamental Rights under Articles 19(1)(g), 14 and 21, her DPSP under Article 42 and the State’s Fundamental Duty under Article 51(c) [in the light of India being a signatory to the Convention on the Elimination of All Forms of Discrimination against Women], besides the provisions of the Maternity Benefit Act.

She also referred to the landmark judgment in Air India v. Nargesh Meerza. The relevant extract of the said Rule 2(9)(d) reads as follows:

“In the case of a married woman student who is granted maternity leave, in calculating the total number of lectures delivered in the College or in the University, as the case may be, for her course of study in each academic year, the number of lectures in each subject delivered during the period of her maternity leave shall not be taken into account:”

The High Court had, however, noted that the position had been settled by a decision by the Division Bench of the Court in the case of University of Delhi & Anr. v. Vandana Kandari & Anr., wherein the Court had held that maternity leave cannot be put in a different compartment for the purposes of relaxation of attendance. The Court had further highlighted the fact that LL.B. is a “a special professional course where no relaxation can be granted contrary to the Bar Council of India Rules, which specifically governs the field.” It had then dismissed the Petition, observing, “In my considered view, once Rule 12 of Rules of Legal Education of the Bar Council of India prescribes a mandatory attendance of 70% in each semester of LLB, no reliance can be placed on Rule 2 (9) (d) of Ordinance VII of Chapter III of Delhi University, which is a general provision that does not deal with a professional course like LLB.”

Understanding Intellectual Property Rights

Anyone involved in software development today must have a keen understanding of the ins and outs of intellectual property rights, including copyright laws and patent development. But the area is so vast that it can be difficult to narrow down the most important points to start with.

Here we’ll outline five key areas that developers and others in the software industry should have a clear understanding of. This list may be especially useful for independent entrepreneurs who are focused on developing their own products or who are newcomers to the tech industry in general.

1. Trademarks

Trademarks protect your name, domain, images, and everything related to product design. You must register your trademark to ensure full and complete legal protection of your brand.

Quite simply, anyone who develops a piece of software should put in place the protection mechanisms that will solidly protect your brand name even before they go into the development process and especially before they partner with anyone else.

It’s important that software developers have a contemporary understanding of how trademarks work— not only to protect themselves but also to be aware of the rights and responsibilities of others that you may end up working with.

2. Open Source Agreements

One of the areas that can get particularly sticky when it comes to intellectual property is in the realm of purposefully shareable intellectual property like open source code. The main thing to know is that this type of software is actually copyrighted and developers are required to use it in accordance with specific licensing.

If a developer releases the finished work as open-source, there are different types of open source licenses, which the developer should be familiar with ahead of time. Depending on the license, there will be different permissions granted to the users of the software. However, developers that are creating software programs with the intention of having it end up as a part of an open source platform don’t need to abide by licensing rules.

3. Author Versus Owner

Ownership determination can be complex and especially in the case of open source software. However, in terms of employee-employer relationships, so long as someone is an employee, anything that they develop is not their own – the employer will always have the copyright, and this is the case no matter what role the developer plays in the development process.

If the developer is an independent contractor, they may be considered the owner unless there is a legally binding contract outlining other terms.

4. Trade Secrets

It may seem unethical to some who are focused on knowledge-sharing for the benefit of innovation to keep things a secret but sometimes it’s necessary since other forms of copyright will be both public and have certain limitations.

If a developer finds themselves with a highly original and valuable idea, it may be that they want to keep it a secret in order to maintain full control over the source code without risk of anyone copying it. A protection program will include confidentiality agreements, password protection and the like.

Trade secrets can be kept in perpetuity, but they do require that extensive steps be taken to ensure privacy – which of course gets more complicated depending on the size of a team.

5. Patents

A patent typically is in place for 20 years. Developers can get patents on software, but only if the invention is extremely original – in the software space this will pertain to the software itself (e.g., applications) and/or the algorithm incorporated in the design. Patents also require that you make the details of your invention public.

In Conclusion

All developers need to have a clear understanding of their rights in relation to any partnership employment scenario before they actually enter into a work agreement or even start developing their own unique product line.

https://www.lianapress.hk/releases/biotech/5-things-every-developer-must-know-about-intellectual-property-rights.html

Trademark Law - No confusion between words ‘Blacksmith’ and ‘Goldsmith’

Finding no case of infringement and passing off of mark ‘Blacksmith’ by mark ‘Goldsmith’, Delhi High Court has dismissed the suit for permanent injunction. It noted that dictionary meanings of words were different and they were unlikely to be remembered by breaking into two parts, i.e. Black and Smith or Gold and Smith.

The Court in the case of Jaideep Mohan v. Hub International Industries it was held that a consumer of the products of the plaintiff and the defendants was likely to remember the said products by the meaning thereof, i.e. of the composite word – ‘Blacksmith’ and ‘Goldsmith’, which translate in Hindi language to ‘Lohar’ and ‘Sunar’, respectively.

Distinguishing a number of judgments, it held that it was highly unlikely that a consumer of alcoholic beverage in Hindi speaking belt would get confused. Court in this regard also noted that there was no confusion on account of packaging or shape of bottle/container.

Dismissing the suit, the Court was of the opinion that the suit was not required to be put through the rigmarole of trial, when no case of infringement or passing off was found even at that stage.

Jaypee Group Offers 2,000 Shares For Free To Each Homebuyer

Jaypee group has offered 2,000 equity shares of Jaypee Infratech Ltd. for free to each homebuyer as part of its Rs 10,000 crore proposal to revive the bankruptcy-hit real estate firm, sources said.

Earlier this week, Jaypee group promoter Manoj Gaur made an offer of over Rs 10,000 crore before the lenders of Jaypee Infratech to protect the interest of all stakeholders including financial creditors, homebuyers and minority shareholders.

Jaypee Infratech, a subsidiary of Jaypee group’s flagship firm Jaiprakash Associates, had in 2007 started development of about 32,000 flats in Noida, of which it has delivered 9,500. It has applied for occupancy certificates to hand over 4,500 flats more.

According to sources, Jaypee group in its fresh proposal has offered 2,000 shares each to every homebuyer on first registration. About 4.5 crore shares are estimated to be offered at nil consideration. That apart, the group proposed to bear 50 percent of stamp duty on behalf of the home buyers on first registration, they said adding the company plans to deliver all apartments in the next 42 months.

Jaypee Infratech will also pay penalty to homebuyers as per the agreement and India’s new real estate law RERA, sources said.

Jaiprakash Associates has already deposited Rs 750 crore with the Registry of the Supreme Court and the amount would be utilised for refund to home buyers.

Yesterday, lenders of Jaypee Infratech rejected a Rs 7,350 crore bid by Lakshadweep, the highest bidder for the company, as they found it inadequate. The decision was taken at a meeting of the committee of creditors that was called to decide on the bid received from Lakshadweep, whose offer was ranked higher than the one presented by Adani Group.

Last year, the National Company Law Tribunal had admitted the application by an IDBI Bank-led consortium, seeking resolution for Jaypee Infratech under the Insolvency and Bankruptcy Code.

The tribunal had appointed Anuj Jain as Interim Resolution Professional to manage the company’s business.

Later, Jain invited bids from investors interested in acquiring Jaypee Infratech and completing the stuck real estate projects in Noida and Greater Noida. 

Consequently, Lakshadweep emerged as a front runner to acquire Jaypee Infratech with Rs 7,350 crore bid.

NCLT suggests IBBI review insolvency code regulations

The National Company Law Tribunal (NCLT) has suggested to IBBI that there is a need to review the insolvency code regulations to ensure that they are not "misused or misinterpreted". 

It also said that the resolution professional (RP) should be competent and independent so that there are no interruptions in the process which lead to delays in disposal of insolvency cases. 

Besides, it has said the claims of operational creditors are neglected or ignored as the Committee of Creditors (CoC) has supremacy of the financial creditors (banks and financial institutions) who have control over the entire process. 

Nobody is taking care of operational creditors' claim, said the NCLT Kolkata Bench in its order passed last week on the Binani Cement.

"It is time to recognise their voice also in the committee of creditors," it said, suggesting changes to the Insolvency and Bankruptcy Board of India (IBBI). 

In the 60-page order, the tribunal has also raised concern about the functioning of RPs, saying it has been receiving several pleas from stakeholders on issues such as transparency, arbitrariness and delays in the process. 

"The adjudicating authority (NCLT) is facing too much interruption from various stakeholders. Till date we have never come across any frivolous application. All come with a genuine grievance. All challenge the independence of the resolution professional and lack of transparency, competency and arbitrariness in the matter of resolution process," said NCLT. 

While citing Binani Cement case, the tribunal said: "In the case in hand, 12 applicants came forward ...for not following the process mandated under the code by the resolution process. The arbitrary way of dealing with the cases has always led to interruptions and also caused delay in disposal of cases." 

According to NCLT, while there is a need for reforming the regulations of the insolvency code to ensure that it is not misused or misinterpreted, there can not be any question that independence and competency of RPs are essential for preserving the objective of the code in a transparent manner leaving no room for interruption from any corner. 

The NCLT Bench of Member-Judicial Madan B Gosavi and Jinan K R said: "Hopefully, we believe that IBBI take note of all the above observations and do the needful review of the code and regulation." 

Referring to the Binani Cement case, NCLT said here the RP is a CA by profession and he failed to take business decisions to run the corporate debtor on his own. He managed to run the company by appointing about 22 representatives, who are from his own partnership. 

A resolution professional, like the RP in a case of this nature, needs some basic training for handling the resolution independently, efficiently and tackle the multiple questions from different stakeholders, said NCLT order, passed on May 2. 

"Whenever a question arises, even if answerable by the RP independently or with advice from his advisors, he comes to adjudicating authority... He shifts that burden too to the adjudicating authority," the bench said. 

https://economictimes.indiatimes.com/news/economy/policy/nclt-suggests-ibbi-review-insolvency-code-regulations/articleshow/64052545.cms