In this article, Amann Naqvi pursuing Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata discusses the need for stronger regulations in the automated and electronic trading market in India.

A critical review of the history of Tata group

Tata group was established in 1868, after more than half a century it has become one of the largest industrial empires of the world in various businesses:

• Hospitality
• Automobiles
• Steel
• Retail, and
• Jewellery etc.

Tata group is a huge conglomerate including hundreds of businesses, hence in the following article I have given a brief introduction of the Tata group:

• How it came into form, and
• Critically review the history of the Group through its recent acquisitions and the legal battles it has faced recently.

The Visionary

1. Founder of Tata is Jamshetji Tata in 1868, and latter on it gained international recognition throughout the world after it bought several multinational companies. Today Tata is one of the world’s biggest companies with a combined market capitalization of 12 billion dollars.
2. Father of Jamshetji owned a banking firm where Jamsetji gradually grew from apprentice to a skillful practitioner of the business arts under the tutelage of his father, and gain the knowledge about:
   1. Commodities
   2. Markets
   3. Trading
   4. Banking
      1. Before he started his own trading firm,
      2. He invested a capital of Rs21,000.

Cotton mill

In 1869 Tata moved into textiles, in Chinchpokli he acquired bankrupt oil mill in the industrial heart of Bombay, later on the property was converted into the cotton mill and renamed as Alexandra Mill. Two years later, he sold the mill for a significant profit to a local cotton merchant.

Weaving and Manufacturing Company

In 1874, a new venture was started by Jamsetji, the Central India Spinning which was a weaving and manufacturing company in Nagpur. He invested a capital of INR 1,50,000/- in Central India Spinning.

Express mills

1. After three years, the Empress Mills came to be established in Nagpur. This can be considered as the main foundation of the Tata group as after this there was no looking back for the company which would go on to be valued at billions of dollars.
2. The period following the foundation of Empress Mills witnessed a turn in Jamshetjis life, it came up to be one of his biggest and most bustling projects.
3. From around 1880 to his death in 1904, Jamsetji was devoured by his three extraordinary thoughts for India:
   1. Setting up an iron and steel organization,
   2. Producing hydroelectric power, and
   3. Making a world-class instructive establishment that would mentor Indians in the sciences.
4. All of them came to be true but only after his demise. One dream which came true for him was India to have a world-class hotel.
5. In 1898 Jamshetji Tata opened a Hotel Taj in Mumbai, it was the first hotel of such standard in India and laid a foundation of a multimillionaire venture known to be as Taj Group of hotels. The first of its kind, with German fans and English butlers.

Tata Steel

• Ratan Tata (son of Jamshetji) established Tata Iron and Steel Company on August 26, 1907, and fulfilled the dream of Jamshedji [1]. By 1939 it operated the largest steel plant in the British Empire.
• The program was upgraded to 2 million metric tonnes per annum (MTPA) project and after a decade, the company employed around 40,000 people at Jamshedpur, and 20,000 in the neighboring coal mines in 1958.
• In 1971 and 1979, there were unsuccessful attempts to nationalize the company.[2]
• In 1990, it started expansion plan and established its subsidiary Tata Inc. in New York.
• In 2005 the company changed its name from TISCO to Tata Steel. [3]

Acquisitions Made by Tata Steel

• Tata Steel was one of the biggest producers of steel in India after SAIL. Till the earlier 21st century it was not on the top positions in the world of steel in terms of production around the world.
• The year 2004 and 2005 saw some of the biggest acquisitions made by Tata steel in its history of 100 years.
• It acquired NATSTEEL of Singapore and Millennium Steel of Thailand, both of them are now subsidiaries of Tata.
• The biggest acquisition by Tata was made on 31 January 2007, it won their bid from CSN for Corus after offering 608 pence per share, valuing Corus at £6.7 billion ($12 billion).
• Corus was 4 times larger than Tata steel at the time of acquisition but after it acquired the steel giant, it came on 5th position from the 56th position in the world of steel in terms of production and hence making its mark on the world map of steel.
• As on 31 March 2013, Tata Group held 31.35% shares in Tata Steel.
• An announcement of a plane by ThyssenKrupp in Germany and Tata Steel, to combined their European steelmaking businesses which would further structure assets as Thyssenkrupp Tata Steel, an equal partnership joint venture. The announcement estimated that the company would be Europe’s second-largest steelmaker in September 2017.[4]

Tata-Docomo conflict

• In 2009 Japan telecom giant DOCOMO acquired the 26.5% stake in Tata Teleservices. This was the first time Tata was venturing into telecom services, it was a great collaboration for both the companies but the collaboration did not last.
• In mid-2009, finishing right around a year and half of transactions, DOCOMO put $2.7 billion in wireless business, Teleservices (TTSL) on the understanding that if certain targets weren’t met in the next five years, the Tata would either discover a purchaser for the Japanese organization’s 26.5% stake at equitable esteem, or pay 50% portion of the first venture, whichever was higher. Those targets were:
  • number of supporters and towers,
  • money related breakthroughs like
    • EBITDA, and
    • Benefits
• It came as a shock to both the companies when Tata fared badly in the next five years and could not even earn half of the profits expected.
• By then, RBI had framed new rules that banned the exit by a foreign equity investor at an assured price. But this time the RBI also wanted to make an exception as it was the question of honoring a contract by an Indian company
• When DOCOMO submitted an exit proposal in 2014 to end its collaboration with Tata TeleService, subsidiary of Tata Sons and hence started a legal battle between the two companies. Telecom went to arbitration in the UK where it got the award in its favor. On June 24, DOCOMO won the ruling that ordered Tata Sons to pay it $1.3 billion to buy its stake in the mobile phone joint venture, Tata Teleservices.
• Japan’s largest telecom operator said in a statement the award was for Tata Sons’ breach of their shareholder’s agreement after it was denied exit of the loss-making Tata Teleservices at a pre-agreed price of half the original $2.7 .billion investment.
• After Tata had faced serious financial issues because of its telecom venture it finally decided to exit from the telecom field hence selling it to Airtel at throw away price. DOCOMO approached the Delhi High Court for the enforcement of its award.
• If we review Tata’s performance in the telecom venture, we can see the biggest failures in the company’s long history of more than a century.
• Cyrus Mistry could have put strict allegations of handling the Tata-DOCOMO collaboration on his own or without the knowledge of Tata Sons board. Though Cyrus Mistry has continuously denied such allegations.

Tata v. Mistry (Conversion to a Private Limited Company)

Tata Sons were registered as a private limited company in 1917. After the Companies Act 1956 it was termed as a deemed public holding company with articles remaining unchanged.

Last year a general board meeting of Tata Sons was held where the majority has contended that now the conversion of Tata Sons should take place from being a public holding company to a private limited company.

The application has been filed at NCLAT. NCLAT may not give the ruling in its favor or it may not allow the conversion from a public company to a private limited company, if the conversion is not in the interest of the company.

Also, the Mistrys have written to the group against the conversion.

Conclusion

By the end of the review, the author feels Tata has had a rollercoaster ride throughout, from successful mergers, witnessing failed collaborations to losing bitter legal battles Tata has seen it all, with now the original chairman being back all we can do is hope for a better future for the Tata group. Also if the company now becomes Pvt Ltd. Again it would be in favor of the Tata’s but can go against the Mistry family as it would be allotted shared discriminately.

References

[1] Indian Steel Industry History, First Steel Plant in India. tatasteel100.com. Retrieved 30th January 2018

[2] History of Tata Iron & Steel Co. Ltd. FundingUniverse.com. Retrieved 28th January 2018

[3] TISCO to change its name to Tata Steel Ltd. Financial Express. 19 May 2005. Retrieved 31 August 2013.

[4] Turner, Zeke; Patterson, Scott (20 September 2017). Thyssenkrupp, Tata Seal Long-Awaited European Steel Deal”. The Wall Street Journal. New York City, New York, United States. Retrieved 21 September 2017.

Bollywood actress Kangana Ranaut openly called out Karan Johar for being the flag-bearer of “Nepotism” in an episode of his very own chat show, the infamous – Koffee with Karan. It brought out the unsaid tale of what goes on behind the closed doors of Bollywood. Who is going to talk about the rampant nepotism in the legal industry?

The glamorous legal field is no stranger to nepotism. You might have faced it. Let’s say you are trying very hard to get an internship at a law firm but come up with rejections every time. Your friend, who happens to be a famous lawyer’s son, easily bagged one although he applied at the last minute.

This is the reference effect.

Would you make use of a reference your father has to get you an internship at a Tier 2 law firm? Is your answer a no? If the idealist inside you has already started rolling his eyes at me, give me a chance to present my case.

Using references to secure an internship or a job is not a recent phenomenon. A friend of mine got placed at a law firm without having to appear for an interview. She was practically driven to the firm and asked to join the very next day because her dad was an MLA. I, on the contrary, had to struggle to get an interview scheduled.

Did this bother me? Initially, yes. However, the faster I acknowledged the fact that references work, the lesser frustrated I was. In fact, I realised this was an option. I did not ask my parents or the IAS aunty to refer me to some place, in fact, I built my own network.

In spite of coming from a very influential family, I was determinant that I would never use my parents’ reference anywhere. I still maintain that about myself. However, I did use certain references.

You can build your own references on the basis of your hard work, intelligence and talent.

Imagine, you landed an internship with no references. Chances are that this internship is at a small law firm. However, if you happen to perform well at an internship and create an impression on the partner, chances are he would be willing to stay in touch with you. This is not because of the family background you come from, or because you have flattered him. This is primarily because he sees potential in you. In this case, if you ask him for a polite favour to recommend you at another firm, you are doing nothing wrong.

NETWORK!

A very close friend of mine was known for her networking skills. An extremely smart and meticulous student, she wanted to make it big in commercial arbitration. She worked very hard at her first internship at a leading arbitration centre in India. The director loved the work she produced. He went ahead and recommended her to International Singapore International Arbitration Centre. She worked her magic there too.

Her networking skills were so strong that she managed to start an arbitration club in our university, published a book and has conducted two major conferences in Singapore and London. Needless to say, it was, of course, her knowledge that brought her so far, but networking played a key role in the process.

When I first joined iPleaders, I heard about Sayli Petiwali, who took up a course on Entrepreneurship and Business Administration and became a member of the iPleaders Club. As a result, she was assigned a mentor and was introduced to several other industry experts in order to prepare for various interviews. She took guidance from him to apply for a judicial clerkship. However, she made a major mistake in her application which possibly offended the judge. It was solely because of her strong networking and the bond she created with her mentor, that he helped her in spite of the mistake on the application.

It is immensely insightful to hear such success stories and realize what wonders networking do to you.

Where can you network?

As a law student, you can practically network anywhere. Mohona, my colleague, tells me of a story where she was attending a 3-day certificate course conducted by Naik Naik and Company at her college. The initial two days, while senior associates and partners were conducting sessions, everyone meticulously made sure their doubts and queries were answered by the end of the day. However, there was one girl from the 2nd year who was oblivious.

The day Mr. Ameet Naik, the managing partner of the firm, showed up, she opened her pandora’s box. She had questions lined up; questions that she didn’t ask during the first two days. Even while Mr. Naik was leaving, she managed to speak to him and convinced him to give her an opportunity to write for Naik’s blog.

Right from such platforms to virtual platforms like FaceBook, LinkedIn, and even Tinder (trust me when I say this, lawyers network here too), lawyers are making contacts.

Here are some places where you can build your network:

1. Internships

Internships are perhaps the best platform to get exposure.

You are under a constant scrutiny and your hard work is constantly being evaluated. Most of the associates are friendly if you do good work for them. Keep one golden rule in mind while you are interning: Introduce yourself to the Partner without fail.

During internships, the interns believe that they will be directly assigned work from the partner. Some believe that they will get work when partner calls for them or, even better, the HR will introduce them to the partner. This is not true.

Wait for a day or two, if HR does not introduce you to the partner, do it yourself. Seek work from him and give your best possible input. If you manage to do good work, get recognised for it and thereby create a network, you should be good to go – at least for the next internship.

Moot Courts

Let’s say you are interested in media laws, and you go for a good media law moot court competition, you are likely to meet the big shots of the industry at one place. All it requires you to do is to muster some courage and speak to them once the moot court is over. In my post, 5 things to do while you are at law school, I have mentioned how moot court competitions like Vis Vienna, provide a social night specifically for networking purposes. Take your chance, if you manage to leave an impact, who knows where that may take you.

Conferences

In a conference, your research paper is your identity. Conferences are known as platforms for knowledge exchange. If you are able to showcase the knowledge you have, you will be able to build a network for yourself from the very same audience. When I first developed an interest in company laws, I attended a workshop on “Startups and Evolving Laws.” I based my entire research paper on what I had learnt in one of the modules of my online course. I did not just receive a special mention in the valedictory ceremony but was also given an opportunity to work further with one of the leading law firms as an intern.

Online Courses and Clubs

There a lot of online courses that provide external mentorship to students. These mentors are professionals and luminaries from various areas and actively help and support students out of their busy schedules. It is also perhaps one of the key indicators of how much the course providers are aiming to help the students.

For instance, iPleaders provides 24*7 support for students by the mentors. They have a forum, where continuous questions about laws are being posted and legal luminaries from all around actively participate in them. Sayli is one of the many examples of people who were benefited by this network.

Social Networking Platforms

If you know how to use LinkedIn and FaceBook correctly, you will be able to garner the required attention. You will keep coming across opportunities that companies and professionals are willing to offer. However, you need to keep certain things in mind. You cannot cling on to every opportunity you get. You need to wait for the ones that best suit your interests and profile. If you meet the prerequisite and have adequate knowledge, you will automatically build relationships.

Networking can be a great tool if used the right way. All you need is the right connection at the right place (and some luck).

Till then, happy networking.

In this article, Abhishek Bhaduri pursuing Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata discusses the need for stronger regulations in the automated and electronic trading market in India.

Automated and electronic trading refers to high-speed algorithm-based trading that is capable of performing a huge number of trades within a comparably short amount of time in contrast to human-based manual trading. It provides for a relatively efficient alternative to the historical time-consuming methods of trading. Softwares are programmed with predetermined algorithms to place and/or sell orders if and when a particular price is hit.

Electronic-based trading is rapidly replacing manual trading due to its pace and potential volume. As a result of its vast popularity, automated and electronic trading account for a high percentage of actual trading that takes place in the market at any point in a given trading day. Trading in this way has a huge potential for growth but at the same time can be open to misuse and abuse as well by some quarters. As a result, proper sanctions on the power of traders and brokers, and other members working in the field are required and the area needs regulation.

The Discussion paper on Strengthening of the Regulatory framework for Algorithmic Trading & Co-location, issued by SEBI in 2016, described the following:

Algo Trading

Algorithmic trading (for brevity, Algo), in simple words, is a step-by-step instruction for trading actions taken by computers (automated systems). Typically, trading algorithms enable the traders to automate the process of taking trading decisions based on the preset rules/strategies.

High-Frequency Trading

High-Frequency Trading (HFT) is a subset of algorithmic trading that comprises latency-sensitive trading strategies and deploys technology including high-speed networks, colocation, etc. to connect and trade on the trading platform. The growth and success of the high-frequency trading (latency sensitive version of algorithmic trading) are largely attributed to their ability to react to trading opportunities that may last only for a very small fraction of a second. Co-location (for brevity, Colo) has provided the vehicle to high-frequency traders to capture such trading opportunities.

According to data available on record, almost 80% orders are algorithm based and which result to around 40% of the total market trades. This in itself evinces the fact that automated trading is rapidly growing owing to its twin characteristics of being fast, being able to execute operations in milliseconds which formerly used to take several minutes; and the load-bearing capacity, which can undertake orders in huge quantities formerly deemed impossible by the traditional way of manual floor-based trading.

SEBI Regulations

The best way to monitor a technical field which involves intricate calculations and a deep knowledge of the computing system would be the one that hires professionals acquainted with the arena. Traditional law enforcement agencies would normally not satisfy the competence criteria when it comes to detecting and acting upon such violations. So rightfully the responsibility lies with the Securities and Exchange Board of India (SEBI) to keep a check. SEBI has issued guidelines. The SEBI derives its authority from the SEBI Act. Section 11(1) says:-

Section 11 (1) Subject to the provisions of this Act, it shall be the duty of the Board to protect the interests of investors in securities and to promote the development of, and to regulate the securities market, by such measures as it thinks fit.

Pursuant to the above, SEBI issued a Circular dated 30/3/2012 laying down ‘Broad Guidelines on Algorithmic trading’. SEBI has delegated and empowered the Stock Exchanges with vast powers to ensure that algorithmic trading is not misused. The SEBI Circular issues Guidelines for the Stock Brokers as well. Some of the Guidelines issued directed to the Stock Exchanges are as follows:

The stock exchange shall ensure that all algorithmic orders are necessarily routed through broker servers located in India and the stock exchange has appropriate risk controls mechanism to address the risk emanating from algorithmic orders and trades. The minimum order-level risk controls shall include the following:

Price check

The price quoted by the order shall not violate the price bands defined by the exchange for the security. For securities that do not have price bands, dummy filters shall be brought into effective use to serve as an early warning system to detect a sudden surge in prices.

Quantity Limit check

The quantity quoted in the order shall not violate the maximum permissible quantity per order as defined by the exchange for the security.

Similarly, the Guidelines directed towards the Stock Brokers are as follows:

The stockbroker, desirous of placing orders generated using algos, shall satisfy the stock exchange with regard to the implementation of the following minimum levels of risk controls at its end –

(i) Price check

Algo orders shall not be released in breach of the price bands defined by the exchange for the security.

(ii) Quantity check

Algo orders shall not be released in breach of the quantity limit as defined by the exchange for the security.

(iii) Order Value check

Algo orders shall not be released in breach of the ‘value per order’ as defined by the stock exchanges.

(iv) Cumulative Open Order Value check

The individual client level cumulative open order value check may be prescribed by the broker for the clients. Cumulative Open Order Value for a client is the total value of its unexecuted orders released from the stockbroker system.

(v) Automated Execution check

An algo shall account for all executed, unexecuted and unconfirmed orders, placed by it before releasing further order(s). Further, the algo system shall have pre-defined parameters for an automatic stoppage in the event of algo execution leading to a loop or a runaway situation.

(vi) All algorithmic orders are tagged with a unique identifier provided by the stock exchange in order to establish an audit trail.

Regulation Tax

According to Associate Prof Venkatesh Panchapagesan (4), fairly recent crisis situations in USA and India related to complications arising out of Algorithmic and High-Frequency Trading have led to Regulators to contemplate taking measures to ensure that electronic trading is fairly streamlined and does not over exceed its purpose. Further, he states that the Securities and Exchanges Board of India has introduced a ‘Regulation Tax’ on increased use of High-frequency traders and to discourage misuse of the same.

However, he proceeds to further state that recent studies on the Italian Markets have shown that imposition of such taxes have actually resulted in an increase in trading cost and worsened market quality. In India, the initial reaction to the regulation tax led to an increase in High-frequency trading, according to him which was counter-intuitive to the original intention of slowing down the pace of such uncontrolled trading opportunities.

The author begs to differ in this aspect. On the contrary, the author would like to submit that levying a Regulation Tax would go counter to the proposed intention of ‘Regulation’. Apart from sending out the message that the Board is anti-progress; this would lead to a hindrance to regular market operators and discourage newcomers, none of which are conducive to a bubbling bursting developing economy like India, and would not be consistent with the recent government policies when it comes to trade and industry. The author strongly denounces an imposition of such Tax and in the same vein suggests that other regulatory approaches be explored.  

Conclusion

The author submits that during an era where automated and electronic trading is here to stay, we need stricter rules and regulations which can be enforced by way of the proper mechanism. Further, better dissemination of said sanctions should be facilitated by way of notification on the websites so that everyone can get easy information about the rules to follow.

Stringent actions should follow every flouting of the norms and masses should be able to repose their trust in the system that corporate honchos would not be able to get away using the money. However, a delicate balance needs to be maintained between encouragement and restraint.

Algorithmic Trading is something that holds tremendous potential and will boost the economy of the country if executed in the proper way. Traders, brokers, investors and masses at large will stand to benefit with the growth of fast-paced high-frequency trading mechanisms. Therefore, measures should be put in place that will significantly encourage the market players to continue to indulge in the activity. The need for hitting this tightrope-esque balance would mean that the regulators, SEBI and the concerned Stock Exchange officials have their work cut out in the near future.  

Reports [5] suggest that reactions from interested quarters to the on the above mentioned Discussion Paper have been unwelcoming at best. [6] Market Players have unanimously rejected suggestions or any attempt at regulating the electronic trading markets that may result in stemming the growth and development of the parties involved. [7] Human nature normally is very resistant to change and regulations.

Notwithstanding that fact, the author submits that regulations need to be well thought out, carried out and executed in such a manner that serves the two-fold of the purpose of regulating the markets on the one hand and also facilitating free trade and business growth on the other. In addition, it should also provide for necessary sanctions for flagrant use of the systems and delinquent traders and brokers should be punished for voluntary misdeeds. The regulations should be able to strike the desired effect of deterring future miscreant misuse of this wonderful system.

Recent talks [8] seem to suggest that SEBI, in consultation with the Ministry of Finance and after considering opinions from interested parties, will be coming up with new rules and measures to regulate the automated and electronic trading markets. (9) Some of the proposed rules are as follows:

Proposed Measures

• To have real-time surveillance of all orders and trades.
• To detect malfunctioning while putting algo trades.
• To mitigate chances of flash crash and fat-finger error.

   

• Standardisation of co-location facility to discourage preferential access.
• Exchanges to publish colo-based latency on their platforms to have equitable access.
• Formalise market-making scheme by capping order to trade ratio.
• Differentiated policies surrounding this ratio would reduce chances of squeezing liquidity.

  Lastly the Author submits, that even though not much regulation exists in the modern day system that could effectively keep the high-frequency trading in proper check, thereby effectively giving some of the big corporate houses a virtual free hand to act as they like with impunity, it is heartening to note that the status Quo is changing. Markets are evolving, and SEBI is rising up to meet the challenges expected of it.

It is worth mentioning here that according to the well-established maxim, it is said that ‘No matter how high you are, the law is above you’. The author submits that it is high time that the market players were made to realise the efficacy of the statement. SEBI needs to constantly monitor, evolve and amend the regulations in order to keep pace with the fast-changing nature of the shares markets.

Market Players also owe a duty towards their investors and masses in general to Not employ underhanded techniques to gain an advantage. So the author submits that it would be a combined effort on the part of the Regulators and the Regulated to form a system capable of keeping in check errant elements and also providing significant encouragement and boost to newer entrants. Together they will form the building blocks of the bright future of the Indian economy.

References :

1. https://en.wikipedia.org/wiki/Automated_trading_system, accessed on 31/1/2018
2. https://www.sebi.gov.in/sebi_data/attachdocs/1470393485587.pdf, accessed on 31/1/2018
3. http://www.business-standard.com/article/markets/sebi-may-issue-framework-for-algorithm-trading-soon-117112900431_1.html, accessed on 31/1/2018
4. https://www.youtube.com/watch?v=9i9mscvo3RQ accessed on 31/1/2018
5. http://www.livemint.com/Money/bNEE8YVmmogpDXAKNfQBvM/Sebi-paper-on-algo-trading-fuels-disquiet.html, accessed on 31/1/2018
6. https://www.sebi.gov.in/sebi_data/attachdocs/1470393485587.pdf, accessed on 31/1/2018
7. http://www.livemint.com/Money/bNEE8YVmmogpDXAKNfQBvM/Sebi-paper-on-algo-trading-fuels-disquiet.html, accessed on 31/1/2018
8. http://www.business-standard.com/article/markets/sebi-working-with-finmin-on-new-framework-on-algorithm-trading-118010201160_1.html, accessed 31/1/2018

This article is written by Aditya Shrivastava, content marketing executive at iPleaders.

It all started over tea time discussion. We were planning to watch the movie – Black Panther to celebrate our ranking as the 2nd best legal blog in the country by Feedpost. It was then, when our CEO, Ramanuj, started narrating the reason why Black Panther has become such a phenomenal success.

If you have watched Black Panther already or if you are still contemplating whether to watch it, this is a movie which explores the unexplored. Never in the history have African tribes been explored the way it has been done in this movie. In June 1992, William Snipes announced his intention to make Black Panther because he felt that the majesty of Africa in all its glory has not been properly portrayed in Hollywood. This idea developed in 1992 has now struck a chord with many and how. It has collected over $900M worldwide, as per a report by Forbes.

If you name anything that is famous or impactful, from successful advertising campaigns to technologies, they all began with an idea – I think it goes without saying. However, the difference between what is successful or not depends on whether it has been implemented the right way.

Do you know where did the idea of Facebook come from?

If you have watched The Social Network, you might know that Facebook was originally the idea of the Winklevoss Twins. They wanted to create a portal for Harvard students. For the same, they approached Mark Zuckerberg. Zuckerberg took up the idea, implemented it, and worked on it for it to become, what it is today. Even when the Winklevoss Twins tried to open ConnectU, a similar platform, they failed at it and could not compete with Facebook.

Facebook is one such success story. Started as a photo sharing portal for Harvard students, it went on to become a popular social networking website and is now the biggest media portal ever witnessed. People are making money through creating Facebook pages – it has changed the face of advertising. Imagine. Companies have dedicated teams working on Facebook marketing. Such is the brand value and impact of what started merely as an idea.

So what is it that made Facebook successful?

What made Mark Zuckerberg different from the Winklevoss Twins?

What can you do to make your idea successful?

I certainly don’t consider myself successful to give you any insights. I believe I have a long way to go. But I will try my best to give an excerpt of what I think has led to many others being successful. Here are few pointers :

#1 An idea is never bad. Believe in it!

We all have our doubts about the things we do. However, what sets a successful idea apart from a mere idea is how much we believe in it. Feminism is a worldwide phenomenon right now. Frances McDormand’s winning ‘Inclusion Rider’ speech at the Oscars this year gained tremendous popularity within 48 hours! Here is her speech: https://www.youtube.com/watch?v=-86vgvZGMs4. It’s a must watch!  Feminism has become stronger than ever in the last decade. However, when the first wave of feminism started in the 16th century, it was only subjected to ridicule, debates, and mockery.

In the 16th century when proto-feminist and philosopher Plato argued for equal political and sexual rights for women, he faced vehement opposition. However, the collective efforts of all the feminism activists and their strong belief in the idea have made feminism what it is today.

When our co-founders Ramanuj and Abhyuday left their high-end jobs at a tier 1 law firm and started iPleaders, they were criticized and demotivated by people surrounding them. We are talking about 7 years ago when people in India were still getting used to the internet, wi-fi’s were a luxury, and mobile data packages were limited to 500 MB. However, when asked how they’ve survived and flourished so far, they say it’s their belief in the idea and determination that has made iPleaders and LawSikho, India’s biggest legal online course platform.

#2 Have a vision!

My job requires me to speak and network with a lot of people – people with brilliant ideas, thoughts, and mindsets. What I figure while speaking to them is that most of them are frustrated. Some of them chucked the idea that they were once extremely excited about because of the struggle – mentally and financially. Did they lose the vision? Or, as many often call it, did life happen?

We all go to good colleges with an aim to become someone, right? I went to a law school with a vision to become a journalist. But, I lost that vision halfway into law school when the whole exercise seemed more rewarding if I followed the traditional path – a career in law. This loss of vision led me to join an MNC, which I quit after a frustrating period of 5 months. All thanks to this course in college, I could continue with legal writing (and effectively at that) because it enhanced my practical knowledge. This very course gladly landed me at iPleaders, otherwise, god knows where would I be!

Most successful individuals have a vision – an end goal. This doesn’t just apply to individuals but all the leading companies know exactly what they want to achieve. There are elaborate meetings and conferences about strategy. This vision is what sets them apart. What’s more important? Do not lose the grip on your vision and keep striving towards your goal each day!

#3 Work hard to make your idea work – DO NOT GIVE UP!

I may sound rude but extremely honest when I say – most of us have this habit of giving up. Don’t we all? When I first took up this job and started writing, I thought I was doing a terrible job. One month down the line – my work just couldn’t meet the benchmark. I was on the verge of giving up and running to the same old sluggish MNC life.

Have you been in such a situation where you were too scared to continue or your efforts were not paying off?

Have you ever been in a situation where you thought you can’t work hard enough to make it work? Trust me, I have.

In 2014, a friend and I started a scrolling website. We took off with pretty good content. Two months down the line due to my college and my friend’s job, we just couldn’t give our 100% to the website. Eventually, it shut down. The amount of regret I wake up with each day when I see terrible content online cannot be expressed in words. I always go back and think, what if we had not quit? What if we found a way? What if.

Abraham Lincoln lost 8 elections, failed in business twice and suffered a nervous breakdown before becoming the President of United States of America. Did he quit? No. You can read more about his failures here: “Abraham Lincoln Didn’t Quit”.  

What does this tell us? Failure is inevitable. Hard work is what will make the difference.

I’ve read stories of Shivam Dubey, who walked an extra mile by taking up a course with us, worked extremely hard and is now working as an Associate at Cyril Amarchand and Mangaldas. In fact, Ramanuj was approached by a friend of his, who was struggling hard to get a job. He gave him the idea to write 2 well-researched articles each day. He worked hard on those articles every day, and by the end of 7 days (and 13 articles), he had a job! This prompted Ramanuj to start Dream Job Boot Camp. Today, it is helping many students get the job of their dream. Such is the power of hard work. Question is how much are you willing to make it work?

#4 Be patient, it will work out!

So far, I’ve given you various examples of Black Panther, Facebook, the Oscars and Abraham Lincoln. What do you think was common to all of them? They all took their own sweet time to be where they are. Black Panther was conceptualized in 1992, Facebook was launched in 2004, and the Feminist Movement has been there since centuries and still struggling to gain acceptance in many parts of the world.

Do you think we would have been able to witness such marvels of society, technology, entertainment, and arts had the people behind it dissed the idea in the first place or given up after facing hardships?

Ramanuj could have opened a legal news portal and earned more, or a law firm and done way better than he is doing right now. He says, “When I first started iPleaders Blog, I knew this will take time. With just one college student working on it from his hostel room and publishing 12 articles a week, it took us 7 years to reach this position. We’ve taken time but we are heading towards the right goal. This, for me, is success.”

7 years, a lot of hard work, patience, perseverance. With a vision to provide access to legal education to all, iPleaders stands tall with its head held high. It took Ramanuj and Abhyuday one idea to make it work.

Now, can you make your idea work?

In this article, Aditi Sen pursuing Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata discusses Interim Dividend and its Benefits.

What is Income Tax?

Income tax is a tax levied by the governments on the financial income of all entities within their jurisdiction. Basically, everyone who earns or gets a remuneration is subject to Income Tax.

There are two types of Income Tax – Direct tax and GST which includes all other indirect taxes like service tax, VAT, etc.

The Income Tax is classified into five categories, namely:

1. Income from Salary
2. Income from other sources
3. Income from capital gains
4. Income from House property
5. Income from business and profession

The rate of tax differs for different kinds of income. There could be certain deductions from income or the entire income may be taxed at a flat rate. Income tax is collected by the government department which is the Income Tax Department. Income Tax imposed on the range of income falling under different tax slabs ranges from 5% to 28%

What is Income Tax Refund?

An Income Tax Refund is a type of refund that is issued to the taxpayer by Income Tax authorities when the amount of tax paid by him is more than what he is actually liable to pay, which he is accountable for, and which is less than the actual taxes that he paid. This means that a when a person pays more money than he is supposed to, he will be credited back the amount of money that he paid extra as a refund.

How to check the status of your Income Tax Refund?

If you have paid more tax to the government than you should have, in the previous financial year, then it is recommended that you file an Income Tax Return (ITR) to claim the refund. The following steps are followed:

1. After processing your ITR, if the tax department ascertains, that a refund is payable to you, a notification is sent to you via e-mail and an SMS.
2. The e-mail and the SMS would contain the notification which would reveal the amount of refund that will be refunded back to you and will be credited to your bank account along with a refund sequence number.
3. In case the department wants to know more information or your case is picked up for critical observation then a notice under a different section may be sent to you in place of section 143(1).
4. Section 143(1) of the Income Tax Act indicates the discrepancies.The income tax department cross checks each tax return that you have declared in your ITR with its own record and this notice usually only points out apparent mistakes found out by the system.
5. You can go through each of these amounts and find out where the mismatch is.

In case refund due to you is accepted, the notification also asserts amount of refund that is to be paid. The department provides the reference number for the refund. You can track the status of your refund by logging in at the income tax e-filing website and when you click on the Refund/Demand Status under the ‘My Account’ tab, you would be able to see the status of your refund.

What is E-Filing?

The process in which income tax return is filed electronically is known as e-filing.

You can either take help from a professional such as a Chartered Accountant or you can file your returns yourself from home by registering on the Income Tax Department website or other websites.

On the e-filing website

For checking the status of your tax refund, the following steps should be taken:

1. Go to website: www.incometaxindiaefiling.gov.in
2. Login to your account. You will then be asked to enter these details: date of birth, PAN, password.
3. Then you need to click on View Returns or Forms
4. You need to select ‘Income Tax Returns’ from the menu that drops down and select the pertinent assessment year of which you want to check the income tax refund
5. Click on your acknowledgement number
6. A pop-up appears on the screen that shows the timeline of when your returns were filed such as date of issue of refund when your ITR was filed and verified, date of completion of processing, etc.
7. It will also show details like, status, assessment year, the reason for failure if any, and mode of payment along with that

The State Bank of India has been appointed by the department for payment of refunds either through direct credit or direct cheque into the taxpayer’s account.To get payments on time from the ITR Department, it is essential that you specify the correct details of your bank account.

On the TIN NSDL website

Another way you can check the status of the income tax refund is on the TIn NSDL website as well. The status of the refund that has been sent by the department to the bank, will be available on the website after 10 days.

You can check the process of checking the status of your income tax in the following ways:

1. Go to website: https://tin.tin.nsdl.com/oltas/refundstatuslogin.html
2. Fill in the details of your PAN
3. Choose the pertinent assessment year for which you want to check the refund status of.
4. Enter the captcha code that is provided, and click on submit. A message will be displayed on your screen, depending on the status of your refund,

What is meant by status message?

As stated above, a message will be sent to you, depending on your refund status. The messages that will be displayed in case with the income tax e-filing and the TIN-NSDL websites are as follows:

Refund Status – Refund Returned: This takes place because of two reasons. If the income tax refund is sent to you by ECS (electronic clearing service), you will not get the refund if you have given the wrong bank account details.

A cheque or demand draft can be sent back because you have given the wrong address or your house was locked.

Refund Status – Expired: This means that the refund cheque that you received was not deposited in the bank within the stipulated time. The deadline given to the taxpayer to deposit the cheque to the bank is 90 days.But when the expiry message is received by him, he is required to submit ‘refund re-issue request’ on the e-filing portal.

Refund Status – Failure of processing through direct credit: It means that SBI had initiated to directly credit the refund amount but failed due to any of the following possible reasons:

• Operations in the account had been restricted, stopped or on Hold;
• It is an account for fixed deposit, loan, or Public Provident Fund (PPF) account;
• Account had been closed;
• It is an account for a non-resident Indian (NRI);

Refund Status – The amount is adjusted against the outstanding demand of previous year: This means that refund for the current year had been adjusted against the outstanding demand of the previous assessment year either partly or wholly. Under section 245, the tax department has full authority to do this. Nonetheless, this can be done only after giving a notification in writing to the taxpayer concerning the action proposed to be taken.

Refund Status – Failure when processed through direct credit: This implies that SBI had initially started to directly credit the refund amount but failed because of any of the following possible reasons:

• It is an account of a non-resident Indian (NRI) account;
• Operations in the account had been restricted, stopped or on hold;
• Account had been closed;
• It an account for, Public Provident Fund account, fixed deposit loan

ECS refund advice received but does not reflect in your bank account: It might also occur that you may have received an email from SBI with details of the refund amount credited to your account. The ECS advice will show, account number, beneficiary name, NEFT UTR Number or NECS sequence number IFSC/MICR code, etc. as displayed on the TIN website. In case the same amount does not reflect in your bank account then please check with your bank whether the amount has been credited to the bank

Request for re-issue of refund

In case you need to submit a refund re-issue request because of any of the errors mentioned above, you can do it in the following process:

1. Go to the income tax e-filing website: www.incometaxindiaefiling.gov.in
2. You need to click on ‘My Account’ tab and select the ‘Service Request’ option.
3. Choose the request type as ‘New Request’ and request category as ‘Refund Reissue’.
4. A new screen should appear displaying details such as return type,PAN, acknowledgement, assessment year, response and communication reference number
5. Click on ‘Submit’
6. Your bank and address details need to be submitted.
7. You will be subjected to a verification process using an electronic verification code (EVC) or digital signature certificate (DSC) to complete the process.

The people who have sent ITR-V physically should make sure that they get an e-mail from Central Processing Centre Income Tax confirming receipt.

In this article, Abhirup Raha pursuing Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata discusses Interim Dividend and its Benefits.

Introduction

Interim dividend refers to the dividend which is to be paid and announced before the company has issued its annual financial statements. The Board of Directors are responsible for making this declaration. The pronounced dividend usually contains the company’s interim financial statements. The interim dividends are actually paid out of undistributed profits brought forward from previous periods. There are companies who might follow the policy of paying dividends more than once in a year i.e. either quarterly or half-yearly, which is possible only when the company has adequate undistributed profits brought forward from previous periods. Therefore, the dividends which are announced in between two annual general meetings are termed as interim dividends.

The interim dividend is basically the smaller of the two payments paid to the shareholders. It refers to all the activities of the business which are less than a year old. Interim dividends are basically paid either quarterly or semi-annually. They are always accompanied interim statement which are published by the company. It is the Board of Directors who generally announce the interim dividend only when the company has retained enough earnings and is observing earnings which are higher than expected.

Breaking Down Interim Dividend

The two common ways by which an investor can invest in a company are either by bonds or stocks.

• Bonds, pay a set rate of interest and stocks do not pay any interest.
• Dividends allow the shareholders to benefit from the earnings of interim and final dividends. A normal or final dividend is voted on and approved at the annual general meeting once the earnings are disclosed. Hence both the interim and final dividend can be paid out in cash or stock.
• Final dividend is the dividend which is paid once the company has published the annual financial statements for the fiscal year.The rate of the interim dividend is generally lower than the rate of the final dividend.
• The Board of Directors must be conservative in disclosing the interim dividend of the company so that the company’s ability to pay the final dividend is not weakened. Some basic factors like growth prospects of the economy, sale orders in hand, seasonal factors and economic outlook affect the future profitability of the company. Hence, the Board of Directors should take considerable precautions while making decisions regarding the interim and final dividend.

Difference between Interim Dividend and Final Dividend

There are six differences between Interim Dividend and Final Dividend:

• The Board of Directors are responsible for declaring the interim dividend and the shareholders disclose the final dividend at the annual general meeting.
• An interim dividend is generally disclosed before the preparation of the final accounts on the other hand final dividend is disclosed only after the accounts are prepared and the profits are known.
• An interim dividend generally relates to any part of the year i.e. six months or three months, whereas final dividend relates to an entire year.
• The Board of directors can declare the Interim dividend only when expressly permitted by the AOA.
• An interim dividend never becomes a debt on the shareholders from the company once declared, whereas a final dividend becomes a debt once declared.
• The directors of the company have the power to cancel the declaration of the interim dividend once it is declared, whereas the shareholders do not.

Benefits of paying the Dividends

Payment of the dividends to the investors have an advantageous effect both on the investors and the company, namely:

• Preference of investors for dividends: Investors prefer a company which pays stable dividends. This ensures the investors have a reliable source of income even at times when the market price of the share falls. Hence, the investors have a special preference over companies who provide for dividends.
• Bird in hand fallacy: This theory suggests that the shareholders prefers stable dividends over the possibility of having any higher capital gains in the very future. Thus dividends play a significant role in luring the investors and shareholders out of their den.
• Stability: Investors prefer companies who have a good track record in paying dividends.Hence stability acts as an important factor for a proper evaluation of investment over the companies.
• Benefits without selling: The investors enjoy the monetary benefits without selling those stocks.
• Temporary excess cash: Investors choose that the company distributes the excess cash among the investors so that the investors can reinvest the money for further higher returns.
• Information signalling: When a company announces its dividend payments, it gives a strong signal about the future prospects of the company. During this time the companies can take advantage of the additional publicity they get during this time period.

Disadvantages of paying dividends

Paying dividends can also have certain demerits:

• Clientele effect: In a situation where a company is not able to pay dividends to its investors for a considerable amount of time, the company may lose their clients. The investors may even sell off their stocks over a short term.
• Decreased retained earnings: When a company pays dividends to its investors and shareholders, it decreases its retained earnings. If at this time the company falls short on cash, it may have adverse effects.
• Limits company’s growth: When a company pays dividends over a stable period of time, it results in  limited growth of the company.
• Logistics: For a company to pay dividends, it requires a lot of record keeping on the company’s end.

Salient Points

Dividends, interim and final, need not be paid in cash. There are the non-cash dividends which are normally called by various names like the SCRIP Dividend Scheme or the dividend REINVESTMENT Plan. The main objective of these schemes is the issuance of new ordinary shares in lieu of the cash dividends.

In the ordinary course of a transaction, when we buy shares of any public listed companies we ought to understand the two terms used for any dividend declaration:

1. EX-DIVIDEND: which means that the shares you are buying do not include any dividends.
2. CUM-DIVIDEND: which means that the shares you are buying include the dividends which are going to be paid out on the due payment date.

For the ordinary shareholders, there is no fixed rate of dividend compared the others like the preference shareholders. For the preference shareholders both the interim dividend and the final dividend, both added together should not exceed the predetermined rate of dividends.

Conclusion

Hence, we can say that an Interim Dividend is a distribution that has been paid and declared by a company before determining its full-year earnings, to its shareholders. Such dividends are frequently distributed to the holders of a company’s common stock on either a quarterly or semi-annual basis.

In this article, Akanksha Singh of Meerut College discusses the Concept of Adaptation and How it is different from copying.

Introduction

Under the Indian law, Adaptation is basically a change of copyrighted work converted from one format to another. TRIP incorporates Article 12 of the Berne Convention which provides that the exclusive rights of authorizing adaptation, arrangements and other alteration shall be enjoyed by the author of artistic or literary work. It is copyrighted if it meets the requirement of its originality i.e. author has created it by his or her own proficiency.[1]

Adaptation

• The absolute of the author of a scholarly project to publish, sell and reproduce his or her work, which is granted by statute in the law of copyright. Derivative work is a creative work which is referred by an adaptation which also involves a recasting or translation process that incorporates preexisting material capable of protection by copyright.
• If it meets the requirement of originality then it is copyrighted, in the say way that the author has created it by the way of his or her own proficiency, and labor without directly copying or subtly imitating the preexisting material. The mere minor alteration will not suffice.

The Copyright Act defines the following acts as adaptation:

• Conversion of a dramatic work into a non dramatic work.
• • When a literary or artistic work is converted into a dramatic work.
  • Re-arrangement of a literary or dramatic work.
  • Depiction in a comic form or through pictures of a literary or dramatic work.
  • Transaction of a musical work or any act involving rearrangement or alteration of an existing work.
  • The making of the cinematograph film of a literary or dramatic or musical work is also an adaptation.
• An adaptation is a work which is essentially the same as the original work although there may be a change in the format.[2]

Adaptation of movie

Remaking or re-releasing of movies with slight manipulation is also adaptation.

Bollywood Movies

Section 2(f) of Copyright Act defines cinematograph film and the rights are held with the author. If any person wants to remake the movie which has not entered the public domain, for doing so the person has to enter into a license with the author under section 14. The author has given an exclusive rights for adaptation of the motor picture under section 14. Due to the diversion of religion market, the adaptation in India are very common. For instance:

• Aag (2007), and Ghajini (2008) were a remake of Sholey (1975).
• The plot in Dhoom 3 (2013) was suspected to be similar to the Prestige (2006).
• Krishh 3 (2013) was inspired by the X-Men (ongoing series)
• Partner (2007) was an adaptation of hollywood originals like Hitch (2005)
• Raaz (2002) was inspired by What lies beneath.
• Karz (1980) was inspired by the Reincarnation of Peter Proud (1975)

Such adaptation is done through valid license agreement in India but such license are not very common when Hollywood movies scripts are adapted by Bollywood movies.

The case of adaptation, R.G. Anand v. Delux Films the court held that one of the most reliable test to determine whether the violation of copyright is done or not, is to see whether the viewer or reader, seen or read and get an impression that a subsequent work appears to be a copy of the original. [9]

Hollywood producers

Due to the negligible overlapping audience the hollywood producers never sought to enforce their copyright. In the recent years this concept has changed with hollywood, as now they see India as a profitable market for their product. In Warner Bros. Entertainment v. Harinder Kohli the bollywood has been accused of trademark infringement, apart from copyright infringement, without licensing from the owner of the most renowned trademark “Harry Potter”.

Copyright

• Copyright is the legal protection given to the creator of an original literary or artistic work. It is the exclusive right granted by the law to the creator of such original work, to do, authorize, or prohibit certain acts relating to such work.
• Cardinal importance for author, music production companies and producer, films production companies, computer programming, artists, architects, composers, and designers are assumed by Copyright.
• Before the signing and the subsequent introduction of the 1957 Act, the Copyright laws of India were governed by the Copyright Act of 1914. This act was linked to the British Copyright of 1911 to India.
• Most of the laws contained in the Copyright Act of 1957 are based on the copyright law of the United Kingdom-specifically the Copyright Act of 1956. India’s Copyright laws comply with copyright protection. The country is a member of the Berne Convention of 1886, the Universal Copyright Convention of 1951 and the Agreement on Trade-Related Aspects of Intellectual Property Rights Agreement of 955.[3]

How Adaptation is Different from copying

Sometimes, the term “adaptation” and “copying” are used interchangeably. This has led to a lot of confusion. Comparing and constricting characteristics in one way to understand their similarities and differences. The difference between two are given below.

Classes of Works for which Copyright Protection is Available in India

• Original literary, dramatic, musical and artistic work.
• Cinematograph films
• Sound recording
• Artistic work
• Musical work
• Sound recording
• Coverage for Government work
• Author [4]

Derivative

1. Derivative work is a work based upon one or more presiding work which includes motion picture version, sound recording, art reproduction and many others in any other form in which a work may be recast, transformed, or adapted. Adjustment and conversion which as a whole, represent an original work, is a derivative work U.S. 101 is consist of Derivative work. The one is also known as new versions.
2. A derivative work is a work which refers to the work as a whole it is not just about the modifications. Then the other principle provides that the copyright in a derivative work is independent of, and does not affect or augment the scope, subsistence, duration or ownership of, any copyright protection in the material.
3. Derivative work includes the material in the original work, although the copyright in the derivative work extends only to the material contributed by the author of the derivative work, employed in the work under section 103(2). The material employed in the derivative work is part of the copyright derivative work as a whole, but the copyright owner of the derivative-work copyright does not obtain exclusive copyright rights in the material.
4. Under section 106(2) of the Copyright Act, the copyright owner has the right to prepare and authorize others to prepare derivative works based on a copyrighted work. A new copyright into the derivative work bounces into existence upon creation and fixation of the derivative work when the right is given to the other party by the copyright owner.[5]

Conclusion

• Adaptation and Copying are the two different sides of the same coin and have a blurred line of difference between them.
• Adaptation, Derivative and Copying are all the part of the copyright act.
• Adaptation is a practice which results are sustained also it involves a huge planning.
• Adaptation cannot take place with a mere change or with the addition of some matter.
• Copyright is a wider term and Adaptation and Copying are the part of the Copyright.
• Derivative work is based on one or more preexisting work, as musical arrangement, artistic work, picture version, and many other forms in which a work may be recast and transformed.

References:-

[1]copyright.lawmatters.in/2010/10/adaptations-derivations-and.html (Date of visit is 06/02/18 and the time of visit the site is 10:05 AM)

[2]copyright.lawmatters.in/2010/10/adaptations-derivations-and.html (Date of visit is 06/02/18 and the time of visit the site is 10:05 AM)

[3]www.copyright.gov.in/Documents/Copyrightrules1957.pdf (Date of visit is 06/02/18 and the time of visit the site is 10:05 AM)

[4]https://en.wikipedia.org/wiki/Copyright_law_of_India (Date of visit is 06/02/18 and the time of visit the site is 10:05 AM)

[5]https://www.law.cornell.edu/wex/derivative_work(Date of visit is 06/02/18 and the time of visit the site is 10:05 AM)

[6] Indian Copyright Act 1957

[7] Section 14 of Indian Copyright Act 1957 -Indian Kanoon

[8] section 102 [17USC102] includes Derivative Work.

[9] https://indiankanoon.org/doc/1734007/

In this article, Sudarshna Thapa of Law College Dehradun, Uttaranchal University discusses the Law governing comparative advertisements in India.

Introduction

Every Company wants to promote their products, services, and brands in different styles. Advertising is the most crucial step in determining product’s future prospects. It is the most advantageous way to catch the attention of the consumers in the market. Speaking legally, there are multiple players in the market focusing on increasing their advertisements and many times in order to gain attention and pecuniary gain they use some tactics which land them in trouble. Comparative advertisements is one such unfair trade practice.

Comparative Advertisements

Comparative Advertisements means such practice where one goods or services is compared with another belonging to one of the same field , speaking legally through an advertisement. The comparison is made on the basis of price, quality by referring the alternative brand’s name, visual illustrations, and other distinctive attributes. This type of advertisements is mostly more attention-grabbing and have high rate than non-comparative advertisements. Such type of advertisements creates confusion in the mind of consumers. It mainly affects the goodwill and reputation of the competitors whose products are comparing in such a manner.

Reckitt & Colman v. Kiwi TTK[1]

The Delhi High Court stated that an advertiser can compare his goods by stating it better than the goods of the competitor but he cannot state the competitor’s goods as bad, this would amounts to defamation. Court has the power to grant an injunction in this regard.

Conditions

Comparative Advertising shall be permitted when the following conditions are met

1. It should not misleading.
2. There is a comparison between the goods and services which is for same needs and the same purpose.
3. It compares those goods and services where there are relevant features, which may include price.
4. It does not create any confusion in the market between the advertiser and a competitor or between the advertiser’s trademarks, trade names, other distinguishing marks, goods or services and those of a competitor.
5. In the reputation of trademarks of a competitor, there is no unfair advantage.

Classification of Comparative Advertisements

• Direct Comparative Advertising: This type of advertisement deals with the competing products either are explicitly named or can be precisely identified (by photos, images or trademark).
• Indirect Comparative Advertising:It does not directly refer to competing brand names.

Objectives of Comparative Advertisements

There are some objectives behind the comparative advertisements:

• Evaluation of brand performance,
• To degrade the competitor’s brand on the basis of value proposition the competitive brand is offering,
• To increase consumer’s information about alternative brands.
• To convince the users of competing brands to switch to the sponsored brand.

Categories

There are following categories of Comparative Advertisements:

1. These types of advertisements are done to declare that they are better than others in the market with or without referring to any other particular competing products.
2. Advertising confers that they are better than other particular class or categories of products.
3. Advertisement asserting the measurable features of the products or services to make an objective comparison.
4. Advertisements referring to the competitor’s product with a blurred trademark.
5. It directs claims that they are better than any single products/ competitor.

Role of Communication in advertising

To increase the strategy of advertising, communication plays a vital role. With the help of print media (newspapers, articles, journals, etc.), audio-visual media (television, internet, movies, etc.), or audio (FM/AM radio), an advertisement can reach to a customer.

Statutory Provisions in India

MRTP Act

The Monopolies and Restrictive Trade Practices Act was enacted to prevent monopolies and restrictive trade practices in the economy. Under the MRTP Act, any representation which gives false information or disparages the goods and services of other person is considered as unfair practices in comparative advertisements. Matters relating to untrue and misleading advertisements were adjudicated upon by the MRTP Commission, constituted under the Monopolies and Restrictive Trade Practices Act, 1969. Section 36A of MRTP Act, 1969 listed with ‘Unfair Trade Practices’.

MRTP Act deals with only three aspects of the market:

1. Monopolistic
2. Restrictive
3. Unfair Trade Practices

Unfair Trade Practices: This practice adopts an unfair method, unfair or deceptive practices for promoting the sales of goods and services. Following are the practices which make it unfair:

1. Provide false information or facts about goods and services.
2. Unfair practices of making any statement, whether orally or in writing or by visible representation.

However, MRTP Act was repealed by section 66 of the Competition Act, 2002. The provision on unfair trade practices had a life for two years under the MRTP Act. A consumer needs protection not only from defective goods and deficient services but also from unfair trade practices. The provisions on unfair trade practices were copied from the MRTP Act into the Consumer Protection Act.The definition of ‘Unfair trade practices’ was incorporated under section 2(1)(r) of the Consumer Protection Act, 1986.

1. Balasundaram v. Jyothi Laboratories[2]

An advertisement of Ujala blue showed that 2-3 drops were sufficient to bring striking whiteness of clothes while several spoons of other brands were required but no label of any brand was shown. In the advertisement, a lady holding a bottle of Ujala was looking down on other bottle and exclaiming, chi, chi, chi! in a disgusting manner. The manufacturer of Regaul, a competing brand, approached the MRTP Commission that the advertisement was disparaging its goods. The Commission was of the view that mere claim to superiority in the quality of one’s product by itself is not sufficient to attract section 36(1)(x) of the MRTP Act. The Commission was of the opinion that it could not be a case of disparagement of goods.

New Pepsodent v. Colgate

Hindustan lever ltd. advertised it’s toothpaste, ‘New Pepsodent’ claiming that it’s toothpaste i.e., ‘New Pepsodent’ is better than the leading toothpaste. The Commission was of the view that the word toothpaste has become synonymous with Colgate over the years. In addition, the Commission noted that the jingle in the background was a familiar one. Thus, it was a case of comparative advertisement where a claim could be made of disparagement of Colgate’s product.

Use of Trademark in Comparative Advertisements

Trademark Act, 1999 is enacted to guarantee protection to national and international brand owners, in conformity with the TRIPS Agreement. It regulates Unfair Trade Practices in comparative advertising and prevents trademark infringement in India.

To identify the products and services, the holder of a trademark has the exclusive rights. Sometimes these exclusive rights can be used in comparative advertisements. A registered trademark is infringed by a person if he exploits such registered trademark, as his trade name or part of his trade name, or the name of his business concern dealing in goods or services in respect of which trademark is registered. Trademark Act has made the grounds for such infringement. Section 29(8) and 30(1) deals with comparative advertisements.

Section 29(8) of the Act outlines the situations in which there is the use of another’s trademark in advertising which amounts to infringement. It is considered to be the unification of laws of unfair competition and unfair trade practices that have set considerations for the use of trademarks in comparative advertisements.[3] According to this section, a registered trademark is infringed where an advertisement:

1. Is harmful to the trademark’s reputation,
2. Is destructive to the trademark’s distinctive character,
3. Takes unfair advantage or considered to be contrary to honest practice.

Section 30(1) provides with an exception when such use of marks is done according to the “Honest Practices” in industrial and commercial matters. When there are comparative advertisements then it might lead to dilution, tarnishment of the trademark of the competitors

The Act permits Comparative Advertisements in three ways:

1. If there is a bonafide use of Trademark,
2. If in accordance with the honest practices,
3. If it does not take an unfair advantage of the reputation of the mark.

Pepsico. Inc. and Ors. v. Hindustan Coca-Cola Ltd. and Anr.[4]

The concept of disparagement was explained by Delhi High Court where it was stated that ‘a manufacturer can make a statement for making his goods at best level and he also makes statement for puffing of his goods and the same will not give a cause of action to the other traders or manufacturers of similar goods to institute proceedings. In doing so, there is no disparagement of the manufacturer’s goods. A manufacturer is not entitled to say the competitor’s goods are bad as to puff and promote his goods. Thus, it was concluded that comparative advertising cannot be permitted which denigrates the trade name or trademark of the competitor.

Reckitt Benckiser (India) Ltd. v. Hindustan Unilever Ltd.[5]

The court held that the advertisement showed between the defendant’s product “Lifebuoy” and the petitioner’s product “Dettol” was a violation of Section 30(1) of the Trademarks Act, 1999. The Court stated that a trader is allowed to declare his goods as the best but the defendant showed the comparison between the two products in his ad and crossed the thin line between puffery and disparagement.

Tata Press Ltd. v. Mahanagar Telephone Nigam Ltd.[6]

According to the Supreme Court, the information available through the advertising must be for the benefit of the public. The law relating to trademarks is also for the protection of public interests only.

Advertising Standards Council of India (ASCI) and Comparative Advertisements

It is a self-regulating voluntary organization of the Indian advertising industry. It was established for protecting the interests of the consumers while observing and guiding the commercial communications.

ASCI has adopted a Code for Self-Regulation (ASCI Code) which applies to all involved in the commissioning, creation, placement, or publishing of advertisements to scrutinize advertising in India. Chapter IV of the code deals with the form and manner of comparative advertising. Advertisements containing comparisons with competing manufacturers and sellers are permissible in the interests of vigorous competition and free dissemination of information. There are following requirements being to be satisfied are:

1. Advertiser’s product is being compared with the aspects of competitor’s product.
2. The comparison should not take place in a way which confers an artificial advantage upon the advertiser and should not suggest falsely that advertiser’s product is better.
3. A Consumer should not mislead due to the comparison.
4. The advertising does not unfairly denigrate attack or discredit other products, advertisers or advertisements directly or by implication.

The above mentioned principles ensure the advertising activities are conducted in a fair manner, with the interests of all associated groups being secured. These guidelines do not have the force of law there are merely recommendatory in nature.

Consumer Complaints Council (CCC)

The CCC is constituted by ASCI where a person can complain to the ASCI if there is an objectionable advertising. The CCC consists of eminent persons from the industry and well-known persons from the civil society. CCC hears the facts of the complaint and if it finds that the advertisement in question violates ASCI Code or any other law, then it can suggest that the advertisement is voluntarily either withdrawn or modified.

How to Lodge Complaint against Comparative Advertisements

There are three types of Complaints:

Complaints from General Public which includes Government regulators and consumer groups.

1. Intra Industry Complaints (When an advertiser lodges a complaint against another advertiser)
2. Suo Moto

Procedure for Complaint

The Complaint may be submitted by letters at the postal address which is provided on the website, visit https://ascionline.org/index.php/how-to-complaint.html

1. The Complaint can be submitted through the online form, visitwww.ascionline.org and you can also contact through the telephone in 1-800–22-2724 (toll-free) and also through Whatsapp in +91-7710012345.
2. No fee required for complaints except in case of Intra Industry complaint which is lodged under the Fast Track Complaint Redressal Scheme where the decision is delivered within 7 days and a fee of INR 75,000 is charged for complaint.
3. If the complaint is complete, the decision will be taken by ASCI’s Consumer Complaints Council (CCC) within a period of one month (approximately).
4. On receipt of a complaint, the Secretariat acknowledges the complaint and requests the advertiser or agency to provide comments in respect of the complaint.
5. Within the period of 4 to 6 weeks, the CCC decides upon the complaints.
6. If the complaint is upheld, then the advertiser and its agency are informed of the CCC decision within 5 working days.
7. To comply with the CCC decision, the advertiser is given the time of 2 weeks.

For further more information of procedure of Complaint visit. https://ascionline.org/images/pdf/ccc_procedure.pdf

Freedom of Speech and Expression and Comparative Advertisements

The Constitutional guarantee has been provided under Article 19(1)(a) to regulate the advertising as the right to advertise is implicitly provided. In the case Hamdard Dawakhana v. Union of India[6], according to the Supreme Court advertisements were not constitutive of the concept of ‘free speech’. In order to promote trade and commerce, there should be the object of commercial gain. In the market, the process of economic liberalization has brought certain changes for the consumer goods. The development of many products and services increases the competition with advertising which plays a vital role in the consumer’s demand. The media was too dependent on advertising revenues. The Supreme Court held that advertising is essential for ‘commercial speech’ and can be brought within the extent of constitutional provision conferred by Article 19(1)(a). Advertisements for non-prohibited products would be protected as free speech.

Conclusion

When we consider the competition in the market, it becomes very necessary to have an edge over the competitors. Comparative Advertisements is the one which enables an advertiser to build his brand in the market stating the supremacy of his brand over the other brands. But there must have been regulations to check the abuses. It should be kept in mind of the advertisers that they not only promote their products but also educate the consumer. An ideal comparative advertisement is that which ensures the protection of consumer interests.

References

[1] https://indiankanoon.org/doc/956353/ (Date and Time of visit the site: 25/02/2018 at 12:35 PM IST)

[2] AIR 1995 (82) CC 830

[3] Ashwini Kr. Bansal, “Law of Trademarks in India”, (2009), New Delhi, Institute of Constitutional and Parliamentary Studies and CLIPTRADE, pg 507

[4] https://indiankanoon.org/doc/924003/ (Date and Time of visit the site: 26/02/2018 at 11:40 AM IST)

[5] https://indiankanoon.org/doc/60787994/ (Date and Time of visit the site: 26/02/2018 at 2:05 PM IST)

[6] https://indiankanoon.org/doc/752455/ (Date and Time of visit the site: 28/02/2018 at 01:05 PM IST)

This article is written by Aditya Shrivastava, marketing executive at iPleaders.

Do you know that your favorite Starbucks is a joint venture with Tata Global Beverages?

Did you know McDonald’s was running a joint venture between Connaught Plaza Restaurants Ltd? Have you ever wondered what went wrong between these two companies that it had to shut its shop at nearly 170 outlets? What could have been done to avoid it?

Do you know Tata Sons Ltd. and Singapore Airlines (SIA) are parents to the joint venture Vistara?

Do you know in the last decade joint ventures have grown twice the rate of M&A deals?

Do you know entering a joint venture is the most preferred way for a foreign company to enter Indian market?

If you don’t know the above facts or what a joint venture is, you need to read further.

Joint Ventures can be an interesting area for the law students, budding lawyers and in-house counsels to explore. A joint venture is a business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task. An interesting fact about joint ventures is they are less complicated than corporate restructuring, or partnership arrangements, however, have roughly the same benefits.

Water Street Partner’s research on joint ventures has consistently shown that at least half of the Joint Ventures fail among other sobering statistics.  Apart from the regular market challenges, most of the joint ventures fail because of their unique ownership structure or because of a vague or incompetent agreement. It continues to remain one lesser explored area by lawyers and thus the need for expertise in this area is at an all-time high.

Despite all the odds, a report by Forbes is indicative of the fact that since 1995-2015 the overall value of joint ventures grew 20% annually which is twice the rate of M&A deals. In a global survey of 253 companies who use joint ventures to spur growth or optimize the product mix, 80% of the participants confessed that the venture met its targets or exceeded the expectations.

So, what is it that these 80% entities are doing right?

If the experts are to be believed, there needs to be a right foundation in place even before the deal is signed. If the agreement is extensive and well drafted, more than half of the risks are mitigated. The rest depends on strategy, ways of working out a joint venture and ending deal at the right time in the right way.

Keeping in mind the commercial goals that a joint venture can accomplish and the critical role a joint venture deal plays in the process, LawSikho presents a one-day immersive “Workshop on Joint Venture Contracts” on the March 17th, 2018. This workshop is aimed at helping the law students, practicing advocates and in-house counsels alike to understand the various complexities involved in joint venture structures and contribute this knowledge to real life transactions.

About The Workshop

This workshop is aimed at enabling the participants with a vision to effectuate any joint venture deals and provide a detailed overview of the joint venture contracts.  The workshop is designed to take you through the deal structures, documentation, decision-making and dispute resolution phases in a joint venture deal. After participation, you will be comfortably able to understand the different joint venture structures and use it effectively in a real-life opportunity.

Workshop Overview

The workshop is designed in a way to cover every crucial aspect related to any joint venture contract. The course of this workshop is largely spread over the following topics :

• Types of joint venture structures
• How to express obligations and benefits for parties
• Clause by clause analysis of a joint venture agreement
• Legal framework to consider when you conceptualize a joint venture (e.g. FDI, competition law, etc.)
• Most heavily negotiated clauses
• Where do disputes most commonly arise?

Practical Exercises

Apart from these, we at LawSikho believe that no knowledge is complete unless it can be used in the practical situations. Keeping this fundamental mission in mind, following exercises are designed :

1. Review and mark-up a joint venture agreement/ identify missing clauses, with live coaching
2. Prepare a requisition list for capturing commercials for a joint venture agreement from your client

Workshop Mentor

We are committed to providing you with the best in the industry and this workshop is no exception. The sessions will be led by Mr. Bhumesh Verma, Founder & Managing Partner at Corp. Comm Legal. Earlier, he was a partner at corporate and regulatory practice team of Link Legal India Law Services, New Delhi. He began his career at Ajay Bahl & Co. (now part of AZB & Partners) and went on to become a partner at Khaitan & Co and PKA Advocates before joining Link Legal. Mr. Verma has 22 years of experience in domestic as well as international corporate and commercial matters. Apart from all his medals and accolades, he is also the author of the renowned book – Drafting of Commercial Agreements.

Important Details (FAQs)

When is it happening?

17th March 2018 (Saturday)

What are the timings?

11 : 00 am – 06 : 00 pm

Where can I come to be a part of this opportunity?

iPleaders Delhi Office

33A, Mehrauli Badarpur Road,

Saidulajab, (Around 100m walk from Saket Metro Station (Saidulajab Exit) on the main road)

New Delhi – 110030.

Landmarks: Next to Lingaya’s Building / Red Onion Restaurant Near Saket

Is there any cap on the number of participants?

Yes, we just have 30 seats available. The sooner you register, the better.

What is the last date for registration?

The last day for registration is 15th March 2018.

Is there any fee for the workshop?

We are charging you a nominal fee of INR 1800 for this intense experience.

Where can I register?

To register click here.

In case you have any questions, feel free to call us at 011-33138901 or write to [email protected].