In this article, Rishika Raghuwanshi, pursuing Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata discusses on public offering in India.

Introduction

Companies needs funds to sustain in a business. These funds can be required for  long term or short-term purposes. To suffice their long-term needs, companies issue shares.  Issue of shares can be done in three ways which are

(1) private placement of shares,

(2) public issue

(3) Issuing the share to existing shareholders

Section 23 of the Companies Act, 2013 mentions Public issue as a way of raising funds through public. It means the selling or marketing of share for subscription by the public by issue of prospectus. The importance of public issue is by issuing share to public and getting listed to a recognized stock exchanges in India.

ADVANTAGES

• Repayment of capital

No question of repayment of capital except when the company is in liquidation, therefore low risk.

• Rate of Interest

There is no rate of interest to be payed resulting in less financial burden.

• Enhancing shareholders, promoters and company’s product/ service value

Companies good performance results in enhancing shareholders, promoters and company’s products/ services value.

• Transferability

Transferability to a greater extent.

• Securities

Trading & Listing of securities at stock exchanges.

• Liquidation of securities

Securities can be liquidated better.

DISADVANTAGES

• Procedure is quite lengthy and requires a lot of time!

It consumes a lot of time.

• Expensive

It’s expensive as there is a higher dividend expectation which are not tax-deductible.

• Complexity

There are many complex legal rules and procedure.

• Dilution of control

There is dilution of control since capital base might be expanded and new shareholders/ public are involved.

• Less Privacy

Less privacy due to transparency requirement

• Scrutiny of performance

Constant scrutiny of performance by investors.

• Takeover of the company

May lead to takeover of the company

• Effect of speculative attacks

Securities of the Company may be made subjective to speculative attacks.

LAWS REGULATING PUBLIC OFFER

• Provisions of the Companies Act, 2013

Chapter 3, Part I is dedicated to public offer. Amid the new amendments of 2018 there has been drastic changes in Section 26. Matters related to prospectus will now be dealt with SEBI in consultation with the central government. Till the SEBI notifies matters related to prospectus the companies can refer to  the information and reports on financial information under the regulations made by the Securities and Exchange Board under the Securities and Exchange Board of India Act, 1992.

• SEBI rules & regulations

SEBI rules & regulations like The SEBI (Issue of Capitals and Disclosure Requirements) regulation 2009 and SEBI (Listing obligations and Disclosure Requirements), Regulations 2015 ( The Listing Regulations) are the two most important regulations when it comes to public issues.

• Other Regulations  

Compliance of Listing Agreement with the concerned stock exchanges after the listing of securities. Securities Contracts (Regulations) Act, 1956, RBI regulations in case of foreign/NRI equity participation.

TYPES OF PUBLIC OFFERS AND ENTRY NORMS

SEBI is responsible for the entry norms of a Public Issue, which it does through SEBI (Disclosure for Investor and Protection) Guidelines, 2000. SEBI, has to amend these norms to suffice the present requirement of time by upholding the principles of transparency and investors protection for the development of capital market.

For better understanding of entry norms, the following categorization is done:

1. Unlisted Companies: Initial Public Offerings (IPOs)
2. Listed Companies. Further Public Offerings (FPOs)
3. Offer of Sale

• UNLISTED COMPANIES: INITIAL PUBLIC OFFERING (IPOs)

These are public limited companies which are not present or listed in any stock exchanges and thus their shares are not traded in any stock exchanges. They can enter the public market by initial public offerings (IPOs).

It is the first time that a company offers its shares to public and goes public. Generally, an unlisted company offers IPO which is a but riskier than Further Public Offerings (FPOs). This is because an IPO is a turning point in a company’s life who just started to collects capital from public investment. Therefore, the investor is not aware of the future of this company.

There are two options which these companies can avail for public issues of shares:

• 1ST OPTION

• At least Rs. 3 crores of net tangible assets should be present in all the preceding 3 years individually, out of which monetary assets should amount to not more than fifty percent.

• There should be a record which shows that out of immediately 5 years at least 3 of them have profit which can be distributed.

• In all the previous 3 years there should be a pre-issue net worth of at least Rs. 1.00 crore.

The company should keep their issue size not more than 5 times its pre-issue net worth.

• 2nd OPTION

An unlisted Company not complying with any of the conditions specified above may make initial public offer if it meets both the following conditions:

• The book-building process should be utilized while issuing shares and at least fifty percent should be allotted to Qualified Institutional buyers, failing which the full subscription monies shall be refunded.

                                                                   OR

• The Financial Institutions participation of at least fifteen presents should be present in a project out of which at least 10% comes from appraiser. Also, QIBs should be allotted at least 10% of the issue size, failing to comply which will result in refunding the full subscription monies.

                                                                 AND

• Rs. 10 crores should be the minimum face value capital of the Company after issue.

                                                                 OR

• A compulsory market-making for at least 2 years.

• LISTED COMPANIES: FURTHER PUBLIC OFFER (FPO)

Listed companies are companies listed in stock exchange. They issue to public by further public offering (FPOs).

FPO is the issuance of shares to the public by a company that is already listed and has complied with the procedures of Initial Public offer. It is done for subsequent public investment. This is not as risky as an IPO as the investors are aware of the performance of this company and has a fair idea about its growth prospects.

• OFFER OF SALE

After consulting board of directors some members can offer whole or a part of their share holdings to the public. The offer document for this purpose should comply with the prospectus requirements as this document is deemed to be a prospectus.

Any expenditure incurred will be reimbursed to the company by the member. Further the dividends incurred on these offered shares shall be payable to the transferees.

ROLE OF SEBI-REGULATORY BODY

On 30th January 1992 the SEBI Act came into existence to govern all the public issues by its rules and regulation. The formation of SEBI was with the aim to protect the interests of both the investors and the issuers by ensuring fair dealings and proper functioning of capital market. This was done by promoting transparency.

Transparency helps in ensuring that the investors are not tricked and their rights are safeguarded so that the funds can be raised at a low cost by the promoters, thus, keeping the steady flow in the market. This steady flow, companies need to be professional and competitive. For this there should be a proper code of conduct and fair practice by intermediaries.

SEBI has become a watchdog because even though the issuing company can fix premiums provided proper disclosure is made in the offer documents, there is more focus on investor protection.

INTERMEDIARIES

Following are the intermediaries who are required to be registered with a valid certificate from SEBI.

• Merchant Bankers

They are the most vital intermediaries among all. From preparing prospectus to listing at the stock exchange, they assist all along. Merchant bankers check all the information provided in the prospectus. This is important as they are required to carry due diligence for all the information that the prospectus provide, after which they issue a certificate to SEBI.

• Underwriters

They come into play when there is undersubscription by subscribing to the unsubscribed amount to make the issue a success.

• Registrar & Transfer Agent

Allotting basis of share is analyzed by them on the basis of application received from the public. They handle dispatching of share certificates/refund orders.

• Bankers to the Issue

They accept all the applications on behalf of the company which are then given to the registrar and transfer agent to further process.

• Stock Brokers & Sub-brokers

They invite public to subscribe shares for which they receive commission.

• Depositories

They hold securities in dematerialized form for the shareholders.

PROSPECTUS

Prospectus is any document described to be one, which includes advertisement, circular or notice inviting offers from public to purchase or subscribe to shares or debenture of the company.

Prospectus is a document through which investors get to know about the company. This information helps the investors to decide whether to invest or not. It contains detailed information about the company, its directors, promoters, capital structure, details of the project, terms and particulars of the issues.

Therefore, any mis-statements in the prospectus can result in criminal or civil liability. If criminal, it will be a non-compoundable offence and who ever authorizes it will be liable under section 447 of Companies Act 2013. Under civil if it is proved that there was an intent to defraud then authorised persons can be held personally liable.

• Vetting by SEBI and Stock Exchanges

• • Filing prospectus with the SEBI is a must for a company to com out with public issue.
  • To file the prospectus, a company needs merchant banker who along with the due diligence certificate submits the prospectus to SEBI.
  • After receiving it SEBI scrutinizes it and suggest changes under 21 days of receiving it.
  • The company can go public within 365 days from the date of the letter from SEBI or in absence, within 365 days from the date of expiry of 21 days of submission of prospectus with SEBI.
  • If up to Rs. 20.00 crores are the size of issue, then merchant bankers file prospectus to the regional office of SEBI which falls under the jurisdiction where the registered office of the Company is situated. If it’s more than Rs. 20 crores then prospectus is filled at the Mumbai office.

• Prospectus is also required to be filed with the concerned stock exchanges along with the application for listing its securities.

• Date of Prospectus and ROC Card

The final Prospectus must be signed by all the Directors and filed with the Registrar of Companies (ROC). ROC may suggest change and reporte the same to SEBI. The date of the prospectus is when ROC Card is obtained.

PROMOTER’S CONTRIBUTION & LOCK-IN REQUIREMENT

After issue capital there should be a minimum of twenty percent contribution by the promoters. To calculate this twenty percent following share allotment to promoters from last three years shall not be included while filing prospectus with SEBI:

• Consideration base acquisition of shares which are not for cash and revaluation or capitalization of assets.
• Allotment of shares on the basis of bonus issue, out of revaluation of reserves.
• Shares allotted during the preceding one year at a lower price.
• Applications received for less than Rs. 25000 per applicant in case of each individual and Rs. 1 lakh from firms and companies.

• Promoters Contribution to be brought in before the issue

The contribution from the promoter should be brought at least one day before the opening public issue and should be kept in an escrow account with a scheduled bank. The amount contributed should be released after the finalization of the basis of allotment with the proceeds of public issue.

However, if the contribution brought by the promoters which came before the public issue is utilized by the Company, then it should disclose the same by a cash flow statement in the prospectus.

If promoter’s minimum contribution is more than Rs.100 crores, then they can bring Rs. 100 crores before the opening and the balance can be bought in advance on pro rata.

• Lock in Requirements

• The eligible contribution is for 3 years.
• All the capital collected before issue of shares shall be locked-in-for a one-year period.
• All the securities that are issued shall be locked-in for a period of one year.
• The lock-in date should be calculated from initiation of commercial production date or the public issue allotment date, whichever comes later.
• Shares with the promoters or locked-in can be pledged with financial institutions provided it is mentioned as a term while the loan is sanctioned.
• Locked-in shares being held by the promoters can be transferred among them provided its shown as promoters in the prospectus with the period of lock-in being the same.

PROCEDURE FOR THE PUBLIC ISSUE

In brevity the companies approached the merchant banker with whom they executed the Memorandum of understanding (MOU). They will carry due diligence and submit the reports to SEBI which shall also include other information provided in the prospectus. The obligations are divided into pre-issue and post-issue which are as follows:-

• Pre-Issue Obligations

• Approval of draft prospectus from the Board Resolution
• Passing of special resolution for issuing shares by filing form 23 with ROC.
• Entering in MOUs with the intermediaries
• Merchant bankers performing due diligence
• Merchant bankers being submitted with all the documents they need
• Draft prospectus with merchant banker’s consultations and submitting it to SEBI and stock exchanges as per guidelines.
• Making changes if any required by the SEBI and stock exchange in prospectus.
• Notify SEBI and Stock exchanges with the changes.
• Obtaining approval.
• File final prospectus with SEBI/Stock Exchanges/ ROC
• Statutory Advertisements
• 1% security deposit to be submitted to the Regional Stock Exchanges.
• Promoters contribution to be deposited in the bank.

• Post-Issue Obligations

• Collecting and processing Application forms with Merchant Bankers consultation
• Separate Account be opened for the applications received from Public.
• Merchant Bankers submitting to SEBI a post issue third day monitoring report.
• Consultation with stock exchange for the basis of allotment.
• Post issue advertisement
• Refund orders and share certificate being dispatched
• File form 2 with ROC for returning allotment.
• Entering into a listing agreement.
• Obtaining approval for listing securities.
• Commence trade of securities.
• Merchant Bankers submitting to SEBI the seventy eight post issue monitoring report.
• Grievances of investors to be redressed.
• Application to be submitted for refund of security deposit from SEBI and stock exchanges.

CONCLUSION

Public Offering is one of the most acceptable ways the companies consider to raise funds. This is because of the low risks it comes with compared to borrowing money from financial institution. SEBI plays a major role in this whole process. It ensures equal balance between the interests of investors and the company offering. This research has discussed the basic fundamentals of public offerings. It analysis the advantages and disadvantages of public offer and highlights the important aspects which regulations require a company to do for opting this option.

                                                                                                                         By: Rishika Raghuwanshi

Most law students, prior to joining the legal profession have only seen courtrooms in movies and courtroom dramas like Suits, Boston Legal, Law & Order, The Good Wife, etc. Their first full-blown experience of a courtroom in real life is usually in the moot or mock court in their law colleges. From knowing nothing about courtrooms to being thrown into this mooting arena is unnerving for them, to say the least.

So now, we will try to understand the what’s, why’s and the how’s of a moot court, mooting and everything in between!

What is mooting?

Moot refers to an unsettled issue that remains open to argument. It also refers to an undetermined legal question which is yet to be decided by any court. In present-day context, mooting is the submission of oral and written legal arguments, against an opposing counsel, based on a given unsettled legal problem, before a judge or a bench. The students are assigned sides: plaintiffs/appellants or defendants/respondents, and then they analyse the legal problem, research, prepare memorials and make submissions before the judge(s).

The exercise of mooting spans over 500 years starting from the inns of the court to the present day moot courts that we know of. The concept remains the same – young lawyers training in the art of pleading their case, before much-experienced lawyers who are acting as judges. Present day moot court competitions are being performed at internal, national and international levels to inculcate the art of practising in courtrooms.

What is a moot court?

A moot court is a mock court hearing usually in an appeal stage, where the participants make oral submissions before the judges after analysing a legal problem. The participants have to research the relevant laws, draft written memorials and plead their case before the panel of judges. The moot problem is usually in unsettled areas of law or laws which have had recent changes or development. They have few grounds of appeal which is argued by each side.

What is the difference between a moot court and a mock court?

A moot court and a mock court are not the same. While both have a simulation of a courtroom and its mannerisms and practice, they differ from each other.

In a mock courtroom, the trial of the case is done. So the participants may conduct examination-in-chief, cross-examination of the evidence and then it is admitted upon satisfactory arguments. The participants are to frame their arguments in a conversant manner before the judges. Usually, there is no interruption in opening or closing statements during a mock court trial.

Whereas, in a moot court the evidence is already admitted. The participants submit their arguments based on facts, supported by precedents, legal provisions and case laws. The judges may interrupt the submission to seek clarifications.

What are the different types of moot?

Essentially, there are two types of moot court competitions – national and international. But, based on procedures and nature of moot problem there can be different types of moot. Like, an arbitration moot which revolves around an arbitration problem and follows its procedure, or a trial advocacy moot, or a civil moot or criminal moot. There are also moots based on the area of laws like intellectual property law moot, commercial arbitration moot, anti-trust moot, human rights moot, space law moot, etc.

What are the essentials components in a mooting competition?

1. Fact Sheet

The holy grail for the moot court competitors is the fact sheet or the problem sheet. You cannot argue if you don’t know your facts. The facts are essential for the moot court competition as their analysis is what will win the competition. You may know the law, but if it doesn’t support your facts properly, then you are in for trouble.

The fact sheet is the legal problem along with the details like circumstances, background, the dispute and even your legal grounds! Everything you need to know about the case is in there. It is the first step from where you start to build your case.

A sample of moot court problems can be downloaded here.

2. Research

 A good lawyer can argue for any side! The research should initially be based on what the fact sheet mentions. For instance, if X has a dispute with Y who has launched a product with a similar appearance, you immediately know it is related to intellectual property law. Then you can find out whether the design or the logo or the name or all of it has been infringed and how!

Then there are the applicable procedural laws, related laws, relevant case laws, bylaws, constitutional provisions, executive rules supporting your side of the arguments. There is no way around good research. It is the entire basis of your case!

3. Written Submission/Memorials   

The next thing is writing the memorials or written submissions. Usually, the rules of the moot court competition give some specification regarding the standard formatting of the memorials like font size, spacing, margins, etc. which has to be adhered to.

The standard components of a memorial are cover page, table of contents, index of authorities, list of abbreviations, statement of jurisdiction, statement of facts, statement of issues, the summary of arguments, arguments advanced and prayer. The detailed components of a memorial are available here.

The presentation is of utmost importance in a competition. A judge who has to go through several memorials is likely to favour a memorial which makes his work easier, i.e., a memorial which is well formatted, paginated, clearly demarcated, arguments and case laws which has a logical flow and is easier to comprehend.

A sample of moot court memorials can be downloaded here.

4. Oral Arguments

The quintessential aspect of mooting is presenting the arguments to the opposing counsel and the panel of judges. It is not the same as debating or public speaking. It is an art of linking the facts and the research to convince the judges of your side of the argument. The mannerisms are essential to the court decorum and they must be maintained while submitting the oral arguments.

The oral arguments are based on one’s memorial and one cannot deviate from it, except probably with the judges’ permission. The oral submission has to capture the judges’ attention and has to be paced accordingly. As the competition has time constraints, participants should give a brief outline of their facts and arguments at the onset. There should be a logical connection in one’s arguments and the speakers should slowly build up to the main contention.

Sometimes, if the time permits, the judges’ may give time for a rebuttal to the participants, so while the other side is making their submissions, it is pertinent to note the points for rebuttal. This can be possible only if the research is extensive and from an overall perspective.

5. Rules of the Moot Court Competition

Although the rules of moot court competitions are overall standard, every participant receives these guidelines and must adhere to it. The rules may vary sometimes regarding time allotments, formatting, etc. Afterall, it is a competition and the one scoring higher on the different components of the competition wins!

6. Soft Skills

In the moot courtroom, the decorum and mannerisms imitate the real courtrooms as much as possible and no participant should be held in contempt of court in any event. So participants bow to judge as they enter, clerks announce the matter and keep time, mooters give their oral submissions, judges ask them few questions and the court is adjourned for brief judgment and feedback on participants’ performance.

The participants are expected to be well-groomed and in proper court attire for a courtroom. No lackadaisical, rude and unruly behaviour would be appreciated by the judges. Make eye contact with the judge and listen to both the judges and opposing counsel carefully. You can only rebut what you have heard in the first place. Never interrupt judges when they are speaking. Speak simply and confidently.

There are tips and techniques which aid a mooter and work in the background during the competition. They are things which seem too obvious but are often forgotten. You can read more about this here.

Why should you moot?

Mooting helps law students to think deeply about legal problems and its possible approaches. It improves their overall advocacy skills i.e., legal research, writing skills and oral submissions. It offers the experience in a mock court setting and an opportunity to network, aside from prizes and internships (some international moots offer that as a prize). It adds value to the law students interested in court practice as a career.

Which are some of the popular moot court competitions?

Following are some of the popular national and international moot court competitions:

Mooting is a compulsory part of education in many law schools and there are moot court societies and clubs in almost all law schools. These moot court societies help organise and conduct the intra-school competition and train students for inter-law school competitions as well. There are online courses which offer technical expertise and guidance for moot court competitions, as well. The mooters have all the help they need available at their fingertips!

So, to the all the prospective mooters, enjoy the enriching experience and ace your moot court competitions!

In this article, Pallav Gupta, pursuing Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata discusses the process for lending money to Indian citizens by a foreign national.

For the purpose of promoting external finance and foreign trade, Foreign Exchange Management Act, 1999 and Foreign Exchange Regulations, 2000 were brought to control the negative effect of the liberalisation. It extended up to defining the limits of the foreign exchange and explaining the diverse role of the apex bank of India in it. It also brought the concept of lending by non-resident Indians or Foreigners to Indian citizens.

Introduction

The international financial markets are a very lucrative source of debt finance, especially for businesses in India, on account of the low-interest rates prevalent globally when compared to the Indian financial markets. Financial markets outside are considered to be as the most lucrative option of borrowing/financing due to the cheaper interest rates as compared to the Indian financial markets.

Reserve Bank of India (“RBI”) has been a little conservative with the help of the tools of law that is Foreign Exchange Management Act, 2000(“FEMA”) and Foreign Exchange Regulations, 2000. Lately, with respect to the aspect of overseas borrowing, be it commercial or private, policies of the RBI has been under long debates. The laws have made external borrowing to be completely legal but there have been so much of compliances and requirements to be met in order to suffice those transactions. With comparison to Foreign Lending and Borrowing, relatively lesser conditions are imposed by the RBI in Foreign Investment which still creates a fear inside the mind of the general public when they think of private lending through a foreigner or a non-resident Indian.

As discussed above RBI has allowed the channel of borrowing and lending between Indian and foreign individuals but has put up certain requisites and processes so that the Indian financial structure is not affected by any means.

Definitions

Just like every piece of enactment or law, it is certainly important to understand the definitions of certain general terms as explained in the laws enacted in India.

‘Person’

To start with, as per the FEMA, 2000, a person can be an individual, a firm, a company or a Hindu Undivided Family, a body of individuals or associations of persons, any branch, office or agency which is owned by such person and every artificial juridical person. It is now very important to understand as to what FEMA defines a person who is a resident of India. A person will be considered as residing in India if during the course of preceding financial year that person has been residing in India for more than one hundred and eighty two days but will not include a person who has gone out of India for the purpose of his employment, carrying his business outside of Indian neither when a person who comes to stay in India for the purpose of his employment or carrying his business.

It shall be considered as a person if that body, agency or branch which is in India but is controlled by someone who is not a resident of India or even when that branch, agency or body has been based out of India but is controlled by a person resident in India. A person who is not a resident of India has been clearly defined under FEMA in simple words as a person who is not a resident of India. Another important term is the authorised person which includes any offshore banking unit or an authorised dealer or a money changer authorised under Section 10 of FEMA who can deal in foreign exchange and foreign securities.

Foreign Borrowing

Various provisions from FEMA and other Regulations and Notifications cover various kinds of transactions such as borrowing, investing, lending which would require the watch of the RBI. Foreign Exchange Management (Borrowing and Lending in Rupees) Regulations, 2000 (“FEMBLRR”) contains certain provisions regarding the borrowing by an Indian person or a company from a foreign source in the Indian currency. Whereas the Foreign Exchange Management (Borrowing and Lending in Foreign Exchange) Regulations, 2000 (“FEMBLFER”) contains provisions regarding borrowing by an Indian person or a Company in foreign exchange.

As far as FEMBLFER is concerned, it gives permission generally to the Authorised Dealers and its branches and also others to lend and borrow in foreign exchange.  An Authorised Dealer is given permission to borrow in foreign currency subject to certain conditions such as:-

• It can be borrowed from any of its branch or correspondent or head office which is situated outside India up to the limit of 100% of its unimpaired Tier I capital or USD 10 million, whichever is higher
• It can also be borrowed from Indian bank whose branch is situated outside India for the purpose of its normal course banking business outside India only.
• It can also be borrowed from a financial institution or any bank which is situated outside of India, for granting pre-shipment or post-shipment foreign currency credit to its exported constituent.

The RBI has introduced a Liberalised Remittance Scheme(LRS) wherein the ADs allow resident individuals to make remittance payments with a value of up to USD 250,000 per financial year. This applies for any permitted current or capital account transactions or a combination of the two.

As far as persons other than Authorised Persons are concerned, conditions are a little different as compared to that of Authorised Persons when borrowing from outside situated bank is concerned. It can be taken by an Indian resident from an outside situated bank, for the purpose of executing a civil construction contractor turnkey project or for exports on deferred payment basis outside India.

Lending By a Foreigner/ Non-Resident Indian to an Indian Person

A requirement of funds for private use can come at any point in time in a person’s life. Sometimes the need can be such that a person may not have that much time to arrange for the funds from the banks and financial institutions. Thereafter he turns to his relatives or friends’ asking for an arrangement of funds and it is not necessary that those relatives or friends would be living in India only. So now we will see under what conditions can a person borrow money from his friends living abroad.

FEMBLRR contains various conditions regarding borrowing by an Indian citizen from a non-resident Indian or an Indian living outside India which are:

• It has to be done on a non-repatriation basis which is a very first requisite.
• The borrow can receive the loan amount only by way of inward remittance from outside India or from an NRE, NRO, FCNR, NRNR, NRSR. NRE stands for Non-resident External Account which is a kind of account where an exchange of Indian currency and foreign currency is possible both within India and outside India. NRE is more or less the same type of bank account which can be maintained by NRIs. Similarly, FCNR (Foreign Currency Non-Resident) is a type of fixed deposit account wherein deposits can be made in major currencies like US Dollar, UK Pound, Canadian Dollar etc. It is pertinent to mention that these accounts which are maintained by the lender has to be with an authorised bank of India or with an Authorised Dealer.
• The period of loan for which it is provided to the lender cannot exceed the period of three years.
• The rate of interest charged at that shall not be exceeded by two percentage points over the rate by a bank at the time of availing of a loan.

There is another way of borrowing from foreign residents which can be done on a repatriable basis. The permission is to borrow up to US$ 250,000 or its equivalent in foreign exchange on a repatriable basis by an individual Resident from his close relatives (as defined in Section 6 of the Companies Act) resident outside India subject to –

• The loan has to be interest-free
• The minimum maturity period of the loan has to be 1 year.
• The amount of loan is received by inward remittance in free foreign exchange through normal banking channels or by debit to the NRE/FCNR account of the non-resident lender.

Conclusion

The RBI has adopted an approach which is considered very backward towards debt investment as compared to other countries. The regulations, however, go through time to time of amendments on the basis of the needs of the economy. But there is still a bigger need to get these reforms to get under necessary changes. However, violations of regulations pertaining to borrowing and lending are still viewed stringently by RBI, inviting serious action. This makes it necessary to remain abreast of all the changes in this arena.

In this article, Asmita Topdar pursuing Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata discusses on penalties under banking regulations.

Introduction

The Banking Regulation Act, 1949 was passed by the parliament in the year 1949 with the aim to regulate all banks along with consolidating and amending the banking laws in India. It regulates and supervises the functioning of the commercial banks in India. Before 1965, the Act only took into cognisance the banking firms but in the year 1965, the Act was amended making provision for the inclusion of cooperative banks. Primary Agricultural Credit Society and cooperative land mortgage banks are excluded from the Act. The Act confers powers on Reserve Bank Of India (RBI) to regulate and control voting rights of shareholders, to provide the license to the bank, to supervise over the appointment of management and board, to regulate bank operation along with mergers and liquidation along with issuing directives and imposing penalties.  

Objectives behind the passing of this Act

The Banking Act was enacted in February 1949 with the following objectives:

1. It was becoming difficult to regulate the functioning of the banking sector in India due to the insufficient and inadequate provisions of the Indian Companies Act 1913. Hence, there was an urgent need for a proper legislation to regulate the same and therefore this was one of the main objectives behind passing the Act.
2. Due to inadequacy of capital many banks failed and hence prescribing a minimum capital requirement was felt necessary. The banking regulation act brought in certain minimum capital requirements for banks.
3. In order to avoid cut-throat competition in the banking sector.
4. Certain provisions were incorporated so as to ensure the protection of shareholders and the public at large. 
5. In order to ensure smooth functioning, the Act was introduced which conferred power on Reserve Bank of India (RBI) to appoint, re-appoint and removal of chairman, director and officers of the banks.
6. The Act introduced licensing which helped in regulating the indiscriminate opening of new branches and at the same time promoting a balanced development in the said sector. 
7. Provide quick and easy liquidation of banks when they are unable to continue further or amalgamate with other banks.
8. In order to restrict investments outside India by Indian investors, certain specific regulations were introduced.
9. Provide necessary and mandatory merger of weaker banks with established ones thereby strengthening the banking system in India.   

Penalties Provided

Penalties provided under Section 46 of the Banking Regulation Act, 1949 for any irregularity are as follows:

• A person who willfully misrepresents facts or omits material facts in the balance sheet or while filing any return or while furnishing any other document, or presents such facts which is known to be false by the concerned person, is liable for imprisonment of up to three years along with fine.
• If a person fails to furnish documents, books, accounts or any statement which he is liable to produce under Section 35 or if he fails to answer any question which he was asked to by any inspection officer, he shall be punished with fine extending up to Rs. 2000 per offence and if he refuses to follow the procedure fine may extend to Rs. 100 per day during which the offence continues.
• If a banking company receives any deposit which is in contravention of any order under Section 35(4)(a), all officers and directors will be deemed guilty and shall be punishable with a fine which may extend to twice the amount of the deposits so received unless the person proves that he was unaware of the contravention or that he exercised all due diligence to prevent the occurrence of the contravention. Further, a person will be punishable with fine which may extend to Rs. 50,000 or double the amount of default or contravention along with an additional charge of Rs. 2500 per day will continue until the contravention or default ends, if
  • the person does not comply with the orders, direction or any rule made or imposed
  • any default has been made in carrying out the terms or obligations given under Section 45(7).

• Where a company has defaulted any terms or order, every person employed by the company or responsible to the company or was in charge of the company at the time of occurrence of the contravention shall be punished.
• Notwithstanding anything mentioned under sub-section 5 of Section 46, where a company has committed a default or contravention and if it is proved that the default took place with the consent of or due to any gross negligence on part of any director, secretary or another officer, such officers or directors shall be punishable.

Power of RBI to impose penalties

The Banking Regulation Act, 1949 confers power on Reserve Bank of India under Section 47(A) to impose penalties if there has been any default or contravention. Such powers are explained in details hereunder.

• If there is any contravention or default of the same nature as discussed above and given under Section 46(3) and Section 46(4) on part of the banking company, RBI has the power to impose a penalty not exceeding twice the amount of the deposits in respect of which such contravention was made [where the contravention is in line with the default specified under Section 46 (3)] and  a penalty not exceeding Rs. 5,00,000 or twice the amount involved in such contravention or default where such amount is quantifiable, whichever is more, and where such the contravention or default is a continuing one, a further penalty which may extend to Rs. 25,000 until the default comes to an end.
• One cannot file a complaint in any court of law against any banking firm with respect to any contravention or default against which the RBI has imposed a penalty.
• The banking firm, against which the RBI has imposed a penalty, is liable to proceed with the payment within 14 days of issuance of notice by the RBI for making the said payment. In case of any failure in making such payment a principal court having jurisdiction over the area where the registered office of such banking company is situated or in the case where the firm is incorporated in foreign lands, that court will have jurisdiction where the principal business of the company is situated, in order to levy the defaulted payment.
• A certificate shall be issued by the court making such direction under Section 47(A)(5) specifying the amount payable by the banking company which shall be enforceable in the manner same as an order from a civil court.
• No proceedings can be initiated against the imposition of any penalties on the banking company if any complaint has been filed against any contravention.

Case Examples

In a recent case we found that the Reserve Bank of India (RBI) has imposed on State Bank of Bikaner and Jaipur a penalty of Rs. 20 million under the scope and power conferred by Section 47(A)(1)(c) and Section 46(4)(i) of the Banking Regulation Act, 1949 for irregularity with regards to advance import remittance.

In another case, RBI had filed a complaint against Gandevi peoples’ cooperative Bank Ltd. for various breaches in the functioning and running the bank, maintenance of accounts etc.  provided under Section 20, 21, 35(A), 46 and 47 of the said act. In order to revoke the same complaint, the bank filed a petition in Gujarat High Court [Gandevi peoples’ Cooperative Bank Ltd. v/s State of Gujarat] who later dismissed the same and ordered for the continuation of the original trial.

Conclusion

Before the passing of the Banking Regulation Act, there were many discrepancies prevalent in the banking sector. With the introduction of this Act, the functioning of the banking firms has been regulated. It has ensured a developed and balanced growth of the concerned sector. The major breakthrough was the conference of power on RBI to regulate along with the appointment and dismissal of the directors of the banking firms. In nutshell, this Act has brought all the banking firms under one umbrella with RBI being the governing body.  Besides, the Act also provides for penalties for any irregularity in the functioning of any banking company thereby ensuring a smooth functioning of the same. Therefore, we can conclude that the introduction of the said Act has helped in strengthening the root level of the banking structure within India.

Introduction

Payday loan is a borrowing which is to be paid back at a high rate of interest, credited to the borrower on the basis of his/her income and credit profile for a short-period of time.

Indian Scenario

Indian market in the previous couple of years has seen a rise in startups in the payday space. According to a report, such rise was seen in the year 2016 when around 30 of them mushroomed. Currently there are 84 startups in the payday loan services sector. These startups come under the definition of Non-banking Finance Companies (NBFC). NBFCs are the companies which indulge in the business of banking finance but without meeting the legal definition of  a bank.

Growth factor

The sudden growth in this sector is due to the change in the borrowing habits of the young earning people of the country. We have manier times heard people saying it’s the end of the month I don’t have money. This is mainly a problem with the young people who have several expenses lined up before the salary is credited to their bank account. Seeing this as an opportunity these startups are aimed to provide loan for short period of time which can be paid by the lendee when he receives his next paycheck. People have started using these service in order to deal with so called “month end” money problem. The demonetisation also helped these service grow in the Indian market.

There is another reason why these loans are preferred by the young members of the society as they are meeting the fast and metro life requirements, the instant requirement of money may be due to some short term emergency which can not be fulfilled by the banks due to the lengthy loan approval process. These startups which are wholly digitised, provide loan within minutes to the applicant. The other plus point of the payday loan is that the amount can be less as INR 10,000 for which the banks do not provide loans but these startups do.

In order to fulfill the fast money requirements of the customers the loan approval process is fully automated which is based on an algorithm which assess the applicant’s credit worthiness and grants loan within not more than 8 minutes.

How to apply for a payday loan in India

For applying for payday loan in India the applicant has to furnish the following

1. Age Proof
2. Proof of active bank account
3. Proof of income
4. A valid phone number
5. Pan card number

Online service are available for applying for payday loan. The principal amount is a percentage of his salary or the next paycheck which the applicant will be receiving according to the  proof of income furnished by the applicant. This is to make sure that the applicant is able to pay the amount as there is no other collateral that the lender requires the applicant to submit. Once the application is approved it only takes few minutes for the amount to be transferred to the account of the applicant registered with the service provider.

Laws in United Kingdom

Pre 2014 there were no laws in the UK for payday loans due to which the country saw a huge growth in this sector as the lenders charged the borrowers with high rate of interest. In the year 2014 the English parliament gave the power to the  Financial Conduct Authority (FCA) to regularise the payday lending in the country. In regard of the same in the year the FCA cut down the high rate of interest which the lenders charged on short term loans. This was done to make sure that the money is lended to the person who is eligible to pay it back so that it does not trap them in a debt spiral.

8 things to consider before taking a payday loan

Consider institutions which grants instant loan 365 days a year, 24 hours a day, seven days a week. Throughout the day, in the middle of the night, and also on bank holidays. The finances you need will be in your bank account, within an hour after your application approval. Listed below are few key points borrowers must consider before taking payday loan.

• Instant decision and approval online
• No hidden fees or costs
• Low-interest rates and APR*
• Flexible funding and repayment terms
• Cash deposited in an hour
• Strict data protection
• FCA registered
• High acceptance rates

The borrower can borrow from an instant payday loan provider the amount between GBP 200 to 1100. Again in the year 2015 new laws came into force which

1. Lowered the interest rate as it caped rate at 0.8% per day.
2. Imposed fee on delay payment, this was done to secure the creditors from defaulted payers.

Laws in United States

Payday loan is a popular concept in the U.S. where this service was mainly for the blue collared workers or the daily wage workers who are in need of money during the time gap between the previous paycheck and the coming up paycheck. States in the U.S. have their own legislations on payday lending, some of the states have completely banned high rated interest on payday lending and some of them have capped the rate of interest which the lender can charge from the borrower.

India’s next step

Payday loans are described as loan sharks in the UK and US as they seem payable but with time it becomes a threat. In the year 2017 the payday loan market in India was estimated to be at USD 10.7 billion but what is to be worried is that if these loans turn out unpaid. The rate of interest which is 1% per day could become a burden on the borrower if the loan remain unpaid for more than 30 to 40 days. The startups are meeting the aspirational needs of the young generation but there is requirement of proper laws that this sector does not turn itself into a NPA.

In this Article, Brihan Madhav, pursuing Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata discusses the famous Oracle v. Google case in respect to copyright law.

Introduction

Background

The case was filed in 2010 and it is safe to say that it has been a roller coaster ride for both the companies. The case has gone to various courts and hence for the benefit of the readers here is a basic flowchart of the case history. For the purpose of this paper, we will consider only the Copyright aspect and not the patent part.

District Court of Northern District of California

Ruled that Google had committed infringement however they were not able to determine if this infringement fell within the definition of ‘fair usage’ exception.

Appeal in the United States Court of Appeals for federal circuit

It overturned the decision of the District Court and held that APIs are indeed copyrightable. But it sent the matter to the District Court for a second trial. The reason for asking for a second trial was that in the first trial there were facts relating to ‘fair use’ that had not been brought up. Hence it was not possible for the Appeals Court to decide on that issue.

Second District Court trial

The Court ruled in favour of Google and held that its use of APIs was within the fair use. Because of this exception, Oracle was not entitled to damages.

Appeal in the United States Court of Appeals for federal circuit

This Court is the latest and has come as a win for Oracle. The Court ruled that Google’s use of the API’s was actually commercial and not governed by the fair use doctrine.

The case will now go to the District Court for the determination of damages that Google would be paying to the Oracle for violation of Copyright.

Facts

The case between Oracle and Google relates to two aspects. The first aspect is with regards violation of Patent and the second aspect is related to the Copyright. The subject of copyright is Java Application Programming Interfaces. Application programming interface(API) is to a computer program what a cell is to the human body. The APIs are also a source of communication. Google was the developer of Android software system and while developing the Android they had used Java APIs. This was the basis of the claim of Copyright violation by Oracle against Google in the year 2010.

What is a Copyright? What is the law of copyright?

Copyright is an intellectual property right. It is an incorporeal and intangible right. It is a right that is given to the author/creator or innovator of the subject matter. For example, if a person writes a book, the author has the copyright. Essentially copyright consists of two types of rights:

1. Moral rights: it is the right of the author to not have his work morally distorted or changed
2. Economic rights: it is the right of the author to receive remuneration for the authorized usage of his work.

Copyright and software

Copyright definitely exists for literary work and music etc, after the Berne Convention the same was provided for computer software also. Any unlawful reproduction of software would come under the ambit of the Copyright. This means that nobody can use the software without the permission of the original author of the software. Hence in this case, if the Java API belongs to Oracle and Google conducts unauthorized use of the same, they will be liable for copyright infringement.

Fair Use

Fair use is an exception to the right of copyright. The doctrine of fair use is contained in Section 107 of the US Copyright Law. In order to assess whether there has been a fair usage the Court must consider essentially four factors:

1. What is the purpose of the usage?
2. What is the nature of the copyrighted work?
3. What is the portion of work that has been used?
4. What is the effect of the fair use on the potential market?

The significance of this doctrine is that it can be used as a valid defence by Google against Oracle. The Second Trial has already held that Google has infringed the copyright of Oracle. If the defence of fair use is established by Google then they will not be liable for copyright infringement

Judgment by the District Court in the Second trial

The Court has put to test the usage of the API’s by Google by comparing it to the 4 factors of fair usage.

1. Purpose of usage: The Court has held that the purpose of the use of Java API was not for research purposes but was in reality completely commercial. It must also be kept in mind that Google was earning a lot of revenue through advertising. It was also shown that the Google had used the APIs for the very same purpose that they were written by Oracle. This factor went against Google.
2. Nature of work: The Court has held that the APIs were functional in nature. In addition to this, it was also seen that the APIs were to be created in a particular manner in order that they must be used. This factor went in favour of Google. However, the Court did note that this was not a very important factor.
3. Amount of Copy: The Court stated that Google’s use of 11500 lines of code was a substantial amount. Not only that the Court observed that this was more than the necessary amount. Google did not require this much reproduction for the objective of writing Java. It was decided that this factor went against the fair use.
4. Effect on potential market: The Court observed that the infringement has caused a lot of damage to Oracle who were launching their own smartphone operating system. In addition to this, the Court noted that unauthorized infringement was never a good precedent to set. This factor went against the fair usage.

Hence the Second District Court held that the factors against fair usage were more than the factors in favour of fair usage. This is the reason the Second District Court held that Google’s use of API’s was not to be considered as fair usage but was, in reality, a copyright infringement. The Court gave a decision in favour of Oracle.

What are the potential implications of the decision?

The decision will not kill Android as it has become a market leader in the field of Operating System. In addition to this Google released Nougat in the year 2016. This is their own special type of Java software that was released to the world.

However, it cannot be said that the decision will have no implications at all. The judgment forces all the software developers to either rewrite the programs or include changes. This is a difficult and time-consuming process in addition to being expensive. It must also be kept in mind that API’s that were used are the basic ones on the basis of which other more advanced software’s are made. Basically, if the judgment remains as it is, software is likely to become more expensive.

One of the most important aspects of the Judgments that was given by Justice William Alsup in the first trial in District Court was that they recognized that API’s were not subject to copyright. They noted that granting Oracle this right would put all innovations and collaboration that were made on the basis of this API’s are not safe.

We also find that after this decision many other competitors are making their own new programs. For example, Microsoft has introduced ‘.Net’. However, not everyone has the power to do this.

Another implication of the case is that reproducing a minimal amount of code in a much larger project will not eliminate the fear of an infringement suit. In the future what the Courts will focus on is not the amount of copy but merely the importance of the work in the context of the whole project.

Another possible implication is that the decision might lead to a lot of frivolous litigation in the future. Giving copyright to API’s means that every new software maker will have to consult legal supervisors before making new software in order to ensure that there are no impending lawsuits in the future.

Another implication is that this judgment might cost Google a lot of money. Oracle has claimed damages amounting to nearly 9 billion. The case has gone for a third trial for the awarding of damages. If the Court decides to pay 9 billion it would be a huge loss to Google in addition to setting a bad precedent for the future.

Conclusion

The case of Oracle and Google might well be the landmark case relating copyright law in relation to software and API’s. The case has gone on for a very long time and is now going in for its third trial at the District Court. The most recent judgment of the Court has granted copyright to API’s and this has a huge impact. The decision means that there may be a lot of frivolous litigation in the future. In addition to this, it might lead to a lack of creativity. Further, it means bad news for Google as they may be looking at damages in the billions. Hence the author does not personally agree with the most recent judgment and feels that the decision given in the First trial by the District Court should be upheld.

In this article, Ratnamala Hegde pursuing Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata discusses business structures that an entrepreneur should know before starting his own startup.  

Introduction

The Prime Minister of India, Shri Narendra Modi had launched Start-up India Action Plan on 16th January 2016. It is a flagship initiative of the Government of India, intended to build a strong eco-system for nurturing innovation and start-ups in the country that will drive sustainable economic growth and generate large scale employment opportunities. The Government through this initiative aims to empower start-ups to grow through innovation and design.

As per the latest news in the media, India is the third biggest country for the technology-driven startups after US and UK in terms of the Assocham report. Bengaluru is the home for 26% of domestic tech start-ups, followed by Delhi (23%) and Mumbai (17%).

There are many entrepreneurs who have various business ideas. But they are not sure about the legal structure which they need to select for their business. Following are some typical questions that need to be answered before choosing an appropriate business structure for a startup. They are:

• What is the business?
• How many are involved in the business?
• How many will be involved in the business on a full-time basis?
• If anybody is still working in any company, whether employment agreement allows for doing any business?
• What will be the revenue generation period?
• What is the funding requirement of the business and how it will be done?
• Will the business require any outside funding from VC/PE/Angel investment etc. in near future?

Based on the above information, analysing pros and cons of each structure, one should decide which will be the best suited legal structure for their startup.

Alternate Forms of Business Structure

There are various forms of business structures available in India. Broadly they can be classified into the following:

• Sole Proprietorship
• One Person Company
• Partnership
• Limited Liability Partnership
• Private / Public Limited Company

Each kind of structure has its own merits and demerits. To choose a suitable business structure finally depends on the type and need of the business.

Sole Proprietorship Concern

This is the oldest and most common form of business structure. A single person owns, manages and controls the entire business. There is no separate legal entity here. All the profit belongs to the sole proprietor. Similarly, entire losses shall be borne by him. Liability of the owner is unlimited in this form of business.

This form of structure is suitable for the business which is simple in nature, where there is less risk, low capital requirement, which needs more personal attention, the market is limited and localised. Example Kirana shops, small home-based ventures. This is also suitable for the business which involves manual skills such as handicrafts, tailoring, jewellery making etc.

Legal compliances

• Opening of bank account
• Permanent Account Number (PAN) of the proprietor. No separate PAN required for the business. PAN of the owner is treated as PAN of the business.
• Registration under Shops and Commercial Establishment Act
• Professional Tax registration
• Various other government registrations like Service Tax, Value Added Tax (VAT), Excise, Importer Exporter Code (IEC) etc. to be obtained on need basis.
• Trademark Registration, if required.

Following are the merits and de-merits of Sole Proprietorship structure:

One Person Company (OPC)

This is a new form of business structure introduced in India through the Companies Act, 2013.  Earlier, whenever a person wanted to start a private limited company, he had to look for a co-founder just for the sake of compliance. With the OPC structure, this problem has been resolved. Following are the key features of OPC structure:

Though the OPC has many advantages in relation to compliances under the Companies Act, 2013, it has the following disadvantages as well:

• Investment – Fund Raising through equity issue is not possible since an OPC should have only one member. If an OPC requires any investment from outside party, it has to convert itself into either Private Limited Company or Public Limited Company. Unless it reaches the prescribed threshold limit, voluntary conversion before 2 years from the incorporation date is also not possible.
• ESOP – Many companies attract good talent by offering equity shares through Employee Stock Option Plans (ESOP). It is an effective way of incentivising the employees. Since an OPC cannot have more than one member, it is not possible to issue shares through ESOP.
• Tax Liability – An OPC does not have any tax advantage. It is taxed in the same way as any other companies. There is both Income Tax and Dividend Distribution Tax for OPC.

Partnership Firm

The partnership is governed by the Partnership Act, 1932. A partnership is defined as a relation between two or more persons who have agreed to share the profits of a business carried on by them or any of them acting for all. Two or more persons can form a Partnership subject to a maximum of 20 partners.  There is no separate legal entity here. The owners of a partnership business are individually known as partners and collectively as a firm. Partnership Deed (verbal or written) will be entered into between the partners which detail the terms and conditions of the Partnership, including partners’ contribution, profit and loss sharing ratio etc. Registration of partnership is optional. However, registration gives legal protection to partners.

This model is suitable for the business like retail trading, professional services, small manufacturing units etc.

A partnership has the following merits and demerits:

Limited Liability Partnership (LLP)

Limited Liability Partnership is one more form of business structure governed by Limited Liability Partnership Act, 2008 and respective Rules. It is a hybrid of partnership and company, which has a separate legal entity. It has the operational flexibility of a partnership with limited liability. The liability of each partner in an LLP is limited to the extent of his/her investment in the firm. Compliance requirement is higher for an LLP as compared to a partnership but lesser than the limited company.

This structure has become quite popular for SMEs, professional services etc.

Like all other forms of business, LLP also has its own merits and demerits:

Private / Public Limited Company

It is the most popular form of business structure in India. It is governed by the Companies Act, 2013 with various Rules made thereunder. It is a separate legal entity having perpetual succession. The minimum number of members is 2 and maximum is 200 in case of Private Limited Company. For Public Limited Company, the minimum is 7 and there is no maximum limit. Shares of Public Limited Company are freely transferable whereas it is not so in a Private Limited Company. It is a highly regulated form of business structure and more transparent as there is a requirement of compliance and disclosures in various stages.  It is a form of structure which is most preferred by all the investors.

Company form of structure also has its own merits and demerits:

Conclusion

After analysing the pros and cons of each form of business structure as mentioned above, an entrepreneur can decide the structure which is most suitable for his/her start-up. 

In this article, Goutam Bibhuprasad Sahu, of KiiT School of Law, Bhubaneswar has discussed the procedure that is to be followed by a lawyer to get a chamber in Supreme Court of India.

Value of Supreme Court Chambers

Getting a chamber in the Supreme Court is a matter of prestige, credibility, and luck. These chambers are extremely valuable and limited in nature. Thousands of advocates practising in this apex court apply for the few hundred chambers that available. These few chambers are located in posh locations in the vicinity of the supreme court which lends instant credibility to these advocates in the eyes of their clients. This is what that makes these chambers a prized possession for the advocates practising in the supreme court, and necessitated the SC Chamber Rules laying down clear criteria for the allocation of these chambers among advocates.

Supreme Court’s invitation for applications

Online Applications are invited from Senior Advocates, Advocates-on-Record and Non-Advocates-on-Record who are the members of the Supreme Court Bar Association. They are required to fulfil the required eligibility criteria to get allotted with the chambers.

For invitation notice of the Supreme Court (See here).

Read the notice below:

SENIOR ADVOCATE

1. Who are mainly and regularly practising in the Supreme Court
2. Who must have the minimum number of 50 appearances (Admission and regular hearing matters excluding I.As/Cr.M.Ps) each year for any two consecutive years between 01.06.2011 and 30.06.2016 (Registrar’s Court Appearance shall not be taken into account).
3. Subject to the above two requirements being complied with, the allotment shall be made according to the date of seniority I.e the date of registration as AOR.

ADVOCATES-ON-RECORD

1. Who must have filed (or entered appearances on behalf of respondents) on an average 20 cases per annum (i.e admission/regular matter and not I.As/Cr.M.Ps. And Government Filing) in the course of any two consecutive years between 01.06.2011 and 30.06.2016 (a batch of cases shall be treated as a single case).
2. Subject to the above requirements being complied with, the allotment shall be made according to the date of seniority i.e the date of registration as AOR.

JUNIOR ADVOCATE (NON-ADVOCATE-ON-RECORD)

1. Who are mainly and regularly practising in Supreme Court.
2. Who must have put in not less than 50 appearances (Admission and regular hearing matters excluding I.As/Cr.M.Ps) each year for any two consecutive years between 01.06.2011 and 30.06.2016.
3. Subject to the above two requited being compiled with, the seniority of such persons shall be based on the date of their present admission to the active membership of the Supreme Court Bar Association.

Allotment of lawyers’ chambers rule (As amended up to 14th May 2018)

1. These rules shall be called Lawyers’ Chambers Rule.
2. The Allotment of chambers is to be made by a committee set up by the chief justice of India and all such allotments shall be subject to the approval of the chief justice of India.
3. The Allotment shall be made to the advocated of the Supreme Court as is a member of the Supreme Court Bar association who regularly practice in the Supreme Court.
4. Allotment of the chambers to the applicants who are members of Supreme Court Bar Association shall be made in the following manner;
5. i) Advocates-on-Record who are regularly practising in this court;
6. ii) Non-Advocates-on-record who are resident in Delhi/New Delhi and who are mainly and regularly practising in this court;

iii) Senior Advocates resident in Delhi/New Delhi and who are mainly and regularly practising in this court

Provided that the allotment shall be made in the sequence maintained in the following order:

The first four vacancies shall be allotted to the Advocates-on-Record, the fifth vacancy to the Non-Advocates-on-Record, sixth, seventh and eighth vacancy to the Advocates-on-Record, the ninth vacancy to the No- Advocates-on-Record and the tenth vacancy to the Senior Advocates. This cycle shall continue in a repeated manner until all the vacancies are filled.

5. At the time of allotment of chamber/cabin, the allottee shall have to deposit a sum of Rs.4,000/- as security amount or such amount as may be fixed from time to time. The amount shall be paid in cash or by pay order/DD drawn on a local bank in favour of Deputy Registrar(Admin.) Supreme Court of India. When allotment is made the said amount shall be credited to Government account as a security deposit.
6. Two advocates shall be allotted a single chamber in the old lawyers’ chambers block and also the bigger size chambers in the new lawyers’ chambers building and on such allotment being made each allottee are individually responsible to pay the licence fee according to his share, electricity charges and water charges time to time. If there are 2 advocates in a single chamber then they have to share all the expenses jointly.

Provided that if the allotment of a joint allottee is cancelled then another advocate on the basis of seniority shall be allotted the chamber.

7. If an advocate is allotted a chamber in the old building then he may choose another advocate out of the approved panel of advocates.

Provided that if the allotment of a joint allottee is cancelled then another advocate on the basis of seniority shall be allotted the chamber.

7A. The advocates whose spouse are in occupation of a chamber in the old lawyers’ chamber or in the High Court will get a cabin measuring 6.21sq.meters instead of a full chamber. If the advocate is an allottee of a chamber in Delhi High Court then he may get a chamber in Supreme Court in a condition that he will surrender the chamber in Delhi High Court and if one of the spouses is an existing allottee of a full chamber then no fresh allotment shall be made.

7B. In case of death of an allottee of a chamber his son/daughter/spouse if an advocate will be allotted one of the chambers, only if the allotment committee is satisfied that such person is practising at Supreme Court.

In case of death of an allottee of a chamber, to whom the chamber is allotted?

As per the last amendment in 2007, in the event of the death of an allottee of a chamber, his son/daughter/spouse, if an advocate may be allotted a portion of that chamber if the allotment committee is satisfied that he/she is practising in the Supreme Court.

But ordinarily, chambers are allotted on the basis of the criteria mentioned above and the number of appearances.

Analysis of rule 7B of Supreme Court Chamber Allocation Rules

It is very apparent that the Supreme Court Lawyers’ Chambers is owned by the Supreme Court of India. In that regards the chambers are a public property. When a chamber is allotted to an advocate it is not the ownership that is passed but only a licence is given to using it for a definite period. The question that arises is whether a licence to use a public good is inheritable or not?

It is true that a person can live behind his wealth and property for the benefit of his/her child or spouse. However, in this case, the allottee does not get a permanent ownership but get only a licence to use it for a temporary period of time. Since the chamber is not owned by the allottee the question of passing its ownership does not come it at all.

It is also true that the Supreme Court Chambers are very limited in nature in comparison to its demand. It is unjust to pass on this scarce resource on the basis of succession. Rather it should be appreciable if they are allotted on the basis of eligibility, hence ensuring equal opportunity and justice.

This rule needs an amendment soon or else there will be a time where all the Supreme Court Chambers will be occupied by their successor (son/daughter/spouse) and no chambers will be vacant for allocation to the eligible candidates.

Frequently Asked Questions (FAQs)

What is the fee for each chamber?

During the allotment of the chamber, the allottee has to pay a security deposit of Rs.4,000/- or any amount as may be fixed from time to time by the allotment committee.  

What are the other charges accrued relating to the chambers apart from the normal chamber fee?

Charges other than the license fee:

1. Electricity Charges (Depending upon the consumption)
2. Water Charges (Fixed Charge)
3. Wi-Fi Charges (Fixed Charge)
4. Service and maintenance charges (As decided by the Chief Justice of India)
5. Other charges (Depending upon the services availed by the allottee)      

Can an advocate have more than one chamber?

No, an advocate cannot have more than one chamber. An advocate whose spouse is in the occupation of a chamber in the old lawyers’ chamber or in the High Court will get a cabin measuring 6.21sq.meters instead of a full chamber  

Can the chamber be transferred, assigned or sub-let by the allottee?                    

No allottee or allottees can transfer, assign or sub-let in favour of any other person; nor such an allottee or allottees can share the chamber with any other advocate.

How to renovate the chamber?

No allottee or allottees at any time during the continuance of allotment shall carry out any renovation, construction, addition or alteration to the chamber without the approval of the Chief Justice of India.                           

On what grounds the allotment of chambers can be terminated?

Following are the grounds for termination of allotment:

1. Cancellation by the Chief Justice of India, or
2. Surrender by the allottee, or
3. When the allottee fails to pay the licence fee and other charges for two successive months, or
4. The allottee ceasing to be a member of Supreme Court Bar Association, or
5. The allottees’ name being removed from the roll of a State Bar Council, or
6. When the allottee doesn’t comply with the orders of the Allotment Committee, or
7. On the death of an allottee, or
8. On the allottee being elevated to the bench of a High Court or Supreme Court.         

Conclusion

Getting a chamber in the Supreme Court premises is as precious as getting a pearl from the bottom of the sea. With all the procedure and application done online, now the process has got much easier. Doing all these online have made the process very transparent and leaves very little or no scope for corruption and malpractices. To avoid the termination of allotment the allottees have to follow the guidelines laid down by the Allotment Committee and on arising of any dispute the decision of Chief Justice of India shall be final.

This article is written by Ramanuj Mukherjee, Co-Founder and CEO at LawSikho.

I was a 3rd year law student. I had taken up the sports law optional and that required me to go to the NUJS library to get some articles from HeinOnline, a database of international legal journals. As I was grudgingly looking for the material we were asked to read for the next class, a gentleman came and occupied the computer next to mine. For some reason, he was looking at his own screen far less and a lot more at mine. I felt a little weird and looked at him eye to eye. He was perhaps waiting for this moment. He asked me out of the blue: you must be a student here, right? Can you show me how to use Manupatra to find cases?

I was taken aback. Firstly, we rarely see people above 20 in the library except for a couple of strange faculty members who actually visit the library. Who is this guy? And why does he want to learn how to use Manupatra of all things?

We were not allowed to talk much in the library, but curiosity got the better of me. Soon, I found out that I am conversing with an executive officer from L&T. L&T, at that time, entered into an arrangement with NUJS to train about 30 of its employees about basic commercial laws like contract drafting, companies act, etc. My neighbour in the library was flown down to NUJS for a few days to get a crash course in business laws, and get a certificate at the end of it.

He was an extremely persuasive, well spoken and suave person. He got me to spend some time showing him how to use Manupatra which some law teacher had mentioned in the class. He asked for my number in case he needs any help later on. I gave him my business card, which I used to carry with me (due to efforts at business development). He gave me his card too: Arvind Bhargava, Project Manager at L&T EBG division.

After a couple of months, the L&T crew was back in campus. Soon, I got an invitation from Arvind to come and have dinner at a posh hotel which was close by. Again, curiosity got the best of me. When I turned up, Arvind explained that he needs a crash course on contracts law as he has an exam the next day! All the law is not making much sense to him. I saw the book he was supposed to read – the ever scary Avtar Singh that runs into over 1000 pages. For the next two hours, standing in a small hotel room, I explained the most important tenets of contract law. At that time, I was highly practiced at this – having designed several modules for IMS law entrance courses, plus hundreds of hours of classroom teaching.

While I was at this, I said something that shocked Arvind. I was talking about what is liquidated damages and why it doesn’t work in India. We have a law that prevents penalty clauses from being given effect. Arvind said that they have penalty clauses in every contract and they usually end up paying the penalty also!

Anyway, after our rigorous learning session, I enjoyed the fantastic buffet and got back to college. Arvind finished his certificate course and went back to Mumbai. I thought this was the end of the story. Apparently not!

Towards the fag end of the semester, as winter set into Kolkata, and we were dealing with the exams, I got a call from Arvind. He needed help, again. He had to make a presentation about this penalty clause issue to his bosses. He wanted me to make the presentation. I didn’t feel like saying no to him, though I was buried under work. I paid off a classmate to make the powerpoint presentation and sent it to Arvind. I got a call some days later thanking for the presentation. Seemed like it went really well. That was good.

That winter, I needed to apply for and bag a summer internship. Somehow, despite having a nice rank in my class, my internship applications did not get confirmed. It was really strange! I was so confident that I will get an internship, thanks to my class rank, in a good law firm through the placement committee of NUJS, that I had not tried to apply anywhere on my own. I started to panic when I didn’t get a call from a single one of those law firms of my choice. Later, I found out the reason though – I had some horrible typos in my CV! What a rookie mistake.

Anyway, when I got none of the top internships of my choice, and was wondering what are my options, and if finally I needed to pull in some favours to land a tier 2 law firm internship – I got a call from Arvind. He was looking for a lawyer for a project he was working on. It was a huge 700 crore project in Maharashtra. He explained to me that he had spoken to several lawyers but didn’t like a single one. He was calling me because he trusted me to help him with that work.

What work was this? He sent me an email. I was looking at a 300 page government contract. I didn’t know where to begin reading it and where to end. He wanted me to draft some downstream agreements for vendors based on this contract. I grabbed the opportunity with both hands. I knew I will learn a lot from this one assignment compared to 10 internships put together. This was going to be my project for the summer.

Later on, I got a call from Arvind again. This time to inform that I was not going to be paid for the work as we are not qualified lawyers. I said no worries – can I still do the work and get a certificate for the work done? The answer was positive.

Over the next one month, I enlisted help of Abhyuday, my best friend from NUJS and Prateek Mohapatra, who was one batch junior to us, studying at RMLNLU, Lucknow. Three of us did the work, made a presentation on how L&T can reduce legal risks arising out of that contract and sent it across. The PPY ran into some 80 slides, at least, from what I remember.

We were just hoping for a certificate. Instead, we got a call to come and present this PPT before all the project managers and contract managers. L&T paid for train tickets. Abhyuday, Prateek and I turned up at a Vashi plant of L&T, and put up our presentation in a big conference room. It went on for at least 3 hours. The room was eventually overcrowded as we made progress with the presentation. In my memory, it was a spectacle. There was great enthusiasm. We were asked a hundred questions about everything. We loved it. At the end, Arvind and his boss, a Contract Manager, took us to get some lunch. When we stepped out of that L&T complex, we were on top of the world! Wow, what was that? We had just gotten a taste of how people love the law and want to know more about it when they can relate to it and understand it.

Why else do we get over 60 lakh individuals reading our iPleaders blog every year? When all the top legal blogs were writing on complex legal issues, we chose to focus on simple language, demystifying jargons and frequently asked questions. Then we allowed the readers to ask questions and the experts to answer them! And that’s how iPleaders Forum was born.

But let’s not digress. Let me tell you the rest of the story. We got a train from Mumbai, headed back to Kolkata. In the train, Abhyuday and I discussed a few things. The L&T episode taught us some very important lessons:

1. If you teach, people respect you. We can build our practice faster if we teach law to business people. At that time, we wanted to build a legal risk management practice more than anything, so that was very important to us. Potential clients often rejected us because we were too young. However, with teaching, comes heft and respect. That’s how two 4th year law students and one 3rd year law student ended up giving a 3 hour long presentation to director level officers at L&T, a blue chip company! That’s why I got the opportunity in the first place, because I had taught contract law to someone, isn’t it?
2. Business people want to learn the law. They respect the power of law. They want to be empowered with it themselves but there is no easy or reasonable way for them to learn the law.
3. L&T sent its employees to learn the law to NUJS, so there must be more such companies. There seems to be a validated market for teaching law to non-lawyers.

What if we start an online course for entrepreneurs and business managers? And that is how we got the idea of starting our Diploma in Entrepreneurship Administration and Business Laws course. Sitting in a long distance train. Boredom encourages creativity. Take lots of long train rides to get the best ideas of your life.

We just didn’t think of good ideas. We drew up a syllabus, a proposal and went to work with that. That course was launched by NUJS about 2 years later, and has been so far taken by at least 3000 individuals, out of which at least one third have been business managers, entrepreneurs, scions of family businesses, CEOs and MDs of listed companies, and even foreign investors with interest in India. Here are a bunch of success stories. Eventually, we launched an even more kick ass version of this course without NUJS, over here.

After starting the course, we started by marketing it to entrepreneurs and managers, but lawyers and law students were buying it very quickly. After all, even law students don’t really like to read the dry law books and want to learn the law without all the jargons and mysticism.

Of course, we have grown to over 40 courses now over the last 7 years. We are India’s largest and most respected legal courses platform. However, the seed of all of this was hidden in a chance interaction that happened in the NUJS library 10 years ago.

I never understood why I took that punishing sports law optional. I can now look back and see how useful it was, albeit indirectly. It changed the course of my life.

You must follow the unfolding threads of your destiny with passion and eagerness. What is happening in your life? What steps are you taking today to make your destiny come true?

There were so many unreasonable things that I did along the way. Deciding to teach a stranger contract law when my own exams were impending. Paying off a friend to make a PPT – for what reason? I had no foreseeable benefit. It was an investment into a relationship. Taking up a scary project that you don’t even understand yet. Saying yes first and then figuring out what to do and how to do. Then slogging the entire summer, creating a team to crack that work. Going off to Mumbai to make one single presentation. After making that presentation, seeing the opportunity and committing to work on that path. There were tons and tons of wise but tough choices we made. Even now, sometimes it feels too damn difficult to carry on the burden of entrepreneurship. But we get back at the wheel and keep focussing on the work.

I am writing this at 2 am in the morning. My work day is not done till I tell this story to you.

Are you making those choices? What could you do today to invest in a future that will bloom 10 years down the line?

In this article, Asim Ansari, pursuing Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata discusses the business structure of Amazon in India

Introduction

Amazon is an American international e-commerce company. It was Jeffrey Bezos, who started the company in the year 1994 in the United States as an online bookstore, later expanded into other categories. It was launched in India in June 2013. Four years back, Amazon had no infrastructure in India, but now it dominates the e-commerce market as a whole. It was started with a perception that in India the company will not stay for long like China and other European countries. After getting dominated by its e-commerce competitor in China, Alibaba.com, Bezos decided to capture the Indian market.

The reason behind Bezos formation in India was its billion-plus headcounts which were four times as big as the United States as and more than double in Europe. As per the research, the yearly growth rate of internet users is highest in India with around six million users joining every month. Amazon has consumer market in the United States but it is growing the e-commerce consumer market in India. Amazon in India works on complex business challenges to innovate and create most efficient solutions.

The Business Model of Amazon in India

The e-commerce industry generally consists of eight key components i.e. market opportunity, value proposition, competitive market, revenue model, competitive advantage, market strategy, management team and organizational development.

Value proposition

Value prepositions specify how the products and services are put together in order to fulfil the customer’s need by the company. In small villages and remote areas where the internet access for the customers was challenging, Amazon India enlisted mom & pops as their delivery partners. Now, residents can go to their stores and use their internet connection to select and place orders from the online store. The store owner is responsible to record the orders and alert the customers when the order is delivered to the store. The store owner collects the money and sends the money to Amazon minus the handling fees. This initiative reported increased sales of their own store products.

Market Opportunity

Amazon mainly targets to the middle and upper-class people who have a bit experience in the field of technology but they don’t have much time to go out shopping. Taking this into consideration Amazon has successfully created a giant in the e-commerce industry, where one can browse and can buy anything getting it delivered at remote locations. The Amazon got a grip on the Indian market as it kept in mind with a catchphrase like ‘Aur dikhao’ which helped them carve a distinct space in the consumer’s mind.

Competitive Market

Amazon acquired many other IT & e-commerce startups like jungle.com, pets.com, audible.com, IMDB.com, Woot etc for providing high value to their customers using existing technology of the acquired partners at low cost. The company CRM records the buying behaviour of the customer which enable them to offer individual items, either they bundle them or combine it with some offer, based on the behaviour demonstrated through items visited or purchased.

Revenue model

Every e-commerce revenue model includes campaigning, advertisement, promotion, subscription, sales fee, and affiliate revenue model. The basic aim of revenue model defines how a firm generates a higher return on low investment and profits.

Market Strategy

Amazon strategy involves selling a wide range of products at low prices, discounts via direct selling or marketplace. The Indian Government plans to allow foreign companies to start manufacturing their products in India and start selling to the customers directly over the internet. Amazon faced the challenge as the business model differs slightly from the model in the U.S. In US Amazon sells their own inventory of toys, books etc. But the due change in the Indian laws, Amazon would have to start making their own products to take the advantage of making business in India. Because of this rule, Amazon in India acts as a middleman between buyers and sellers and doesn’t sell its own inventory.

Organizational Development

To maintain a balance between all the functions and skills necessary in order to carry out each process in the company requires suitable candidates for the job to perform the role effectively and efficiently.

Challenges Faced while Structuring in India

Amazon initial business model was fairly simple which source the product from the wholesalers and sell it directly to the ultimate consumer as when order received over the internet. As later company expanded its product line, it created an ecosystem in the roots of wholesale purchase of goods, huge warehouse for storage likely known as fulfilment centres, and made contracts with the national and regional carriers who shipped the products throughout the country.

Bezos vision and user-friendly made the company to be the first online retailer to have over one million customers. While stepping to India, with its billion-plus headcounts and largely unused online marketing the company faced with a situation of good news along with the negative one. The good news included that more than 65% of the population was under age 35 has risen in cell phone ownership. On the other hand, the bad news comprises that 67% of the population lives in the rural areas featured with undeveloped infrastructure. Only 35% of the total population has access to the internet.

Cash on Delivery

Amazon business model in the U.S. had a major portion of its process through an online transaction which was not the case in India. In India, less than 12% of the population uses a credit card and plastic cards so Amazon has to adopt the ‘Cash on delivery’ model as the payment option, which isn’t available in all parts of the region. Cash on delivery is the most preferred payment method in India. The reason behind is low trust in online transaction and low credit card holders.

Government Policy

The Indian Government enacted rigid FDI rule restricting all the foreign companies from selling their inventories directly to the Indian customers over the internet. Amazon faced the huge hurdle to figure out innovative business model, beginning with finding products to sell. There is a huge number of vendors in producing goods in the country but are small. In 2013, Amazon launched its website to facilitate the more online transaction. To respond these challenges, the company came up with the army of suppliers and vendors and convinces them that they are trusted partners that could help them increase their sale of goods in the market.

Chai Cart & Amazon Tatkal

For the purpose, Amazon started out a program called ‘chai cart’. The team of the program was responsible to navigate city streets, serve refreshments to the vendors and teach them the insights of e-commerce trade. The Chai Cart team travelled to more than 10000 doorsteps of the sellers. To help these sellers getting convinced Amazon launched tatkal service as ‘studio on wheels’ that provides on spot services such as taking images of the article, registration, making catalogues, and sales training and end process.

Fulfilment services

Further, Amazon has to adopt delivery and fulfilment service commonly known as FBA i.e. Fulfillment by Amazon in the U.S. In U.S. sellers sends the product to the Amazon fulfilment centres and they then store, pick, pack and dispatch the orders accordingly. To overcome the need, Amazon now has almost a dozen of fulfilment centre to store and distribute the products it sells.

Delivery services

Amazon made tie-ups with the courier services in the country including blue dart, India Post etc. It has introduced a subsidiary, Amazon Transport Services Pvt. Ltd. to boost delivery channel in Urban and rural areas through bicycle and motorbike couriers for last mile deliveries.

Easy Ship and Seller Flex

The company also introduced fulfilment platform as Easy Ship and Seller Flex in India. Previously, Amazon courier pickups packed goods from the seller’s place and deliver directly to the consumer. But now the seller has designated a portion of his warehouse for products to sell on Amazon, and Amazon manages the delivery logistics. This approach made convenient to sellers and the delivery process boosted of some products.

Mom & Pops store

India is liberally scattered with small shops, so-called as mom and pops store. The Government restrictions over FDI were basically designed to benefits these small shops. These small stores sell at higher prices with limited inventories which likely hold the rural market. When Amazon came initially in the Indian market, many of the owners got feared with the online marketing module thinking that it can put them out of the business. Instead of this, Amazon made the entire mom and pops store as partners in its delivery platform. In remote areas where internet access is in few hands, people can use the owner’s internet connection and can place an order. Store owner records all the orders and alerts the customers when their products are delivered to the store. The owner collects the cash and passes the money – minus the handling fee.   

Conclusion

Amazon in India works on very complex business challenges to innovate and create an effective solution for enabling various businesses, including transportation, website and payment support, digital products like Kindle tablets for e-readers. Apart from the challenges it offers great services to the customers which according to the customer’s behaviour. Amazon faced the legal hassle in India, as the state tax collectors are arguing with the e-tailer dealers to pay extra tax in spite of sales tax. Now, it’s India the most emerging e-commerce market with making more business than any other countries like China and Europe.