In this article, Shant Kumar Kurbur pursuing Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, discusses the Impact of GST on the Energy Sector.

GST and its Objective

GST (Goods and Service Tax) was introduced in India on 1^st July 2017, to substitute different central and state taxes imposed and to yield a better consistency in the comprehensive indirect tax structure. It will probably smoothen the way business is done in India. The realization of GST aims to enhance the intensity of Indian goods and services in the global market and aids the expansion of exports.

With effective from 1^st of July 2017, GST is said to be the important tax reform in the historical backdrop of autonomous India and has taken just about eighteen years to be passed after it was first proposed in 1999 by the Vajpayee government. The new law is relied upon to enable the general financial development as it will strongly lessen the cost of transactions while significantly expanding tax compliance. Good and Services Tax Network (GSTN), A Non-Profit Organization has been created where returns and payment of taxes must be filed. The entire development of all tax or duty related data and payments will significantly expand the administration’s or government’s capacity to take action against tax avoidance. The general population of India are endeavouring to acclimate to the new situation with challenges in consistence and execution, however, wish for more clarity with the progression of time.

One of the principle goals of Goods and Service Tax (GST) banishes the falling impacts of duties on manufacturing and distribution cost of goods and services. The barring of falling impacts i.e. tax on tax will essentially enhance the competitiveness of genuine products and services in the market which prompts valuable effect to the GDP development of the nation. It is felt that GST would serve a better reason than accomplishing the target of streamlining indirect tax system in India which can evacuate falling impacts in inventory network till the level of end customers. The primary objective of GST is One Nation – One Tax, Utilization based duty as opposed to Manufacturing, Uniform GST Registration, instalment and Input charge Credit, Subsume all circuitous duties at Centre and State Level under, Diminish tax avoidance and debasement and decreasing monetary mutilations

Influence of GST on Energy Sector

The energy sector is a principal driver for the financial development, however, remains tormented by strategy and administrative bottlenecks. The absence of go through of indirect taxes adds to the wasteful aspects that have crawled into this industry. Sadly, this heritage issue is set to proceed under the Goods and Service Tax (GST) administration, with era and offer of power being kept outside the domain of GST yet capital products and ventures utilized as a part of the vitality segment being brought into the GST net.

As of now tax concessions and exclusions, both at the Central and State level are accessible on determined merchandise and enterprises which are utilized as a part of the energy industry. Be that as it may, with the GST administration by and large set to trim such exceptions and concessions, the impact on the energy industry might be noteworthy.

GST tariff on Renewable Energy

GST has been levied consistently on varies goods and services notwithstanding a couple of that are exempted. The rate of duty additionally fluctuates in the middle of four tax slabs. The GST slabs are as follows:

• 5%,
• 12%,
• 18%
• 28%.

It is in this way its obvious that the roaring power sectors in India likewise comes under the extent of GST. Nonetheless, to keep up the engaging quality of the segment and to energize promote establishments, the government has astutely put the solar and wind power in the bracket of 5%. This is a practical move as renewable power source should be effectively advanced by the legislature with a specific end goal to meet its environmental change responsibilities under the Paris agreement. Other than helping battle contamination, renewable power source likewise has a key part in lessening enormous petroleum derivative imports and enhancing India’s general energy circumstance.

Taxes on utilization or sale of power will not attract GST. Thus, power produced from renewable power sources would keep on being burdened by the related State government. Be that as it may, taxes on different capital goods and input services (capital cost and operation and support costs) utilized for production of the sustainable power source will fall under the GST administration. GST paid on the information side (e.g. on acquirements) would frame some portion of the cost which can’t be counterbalanced against power duty.

Various other renewable projects or ventures and equipment together with wind mills to power plants, tidal power plants and biogas plants and even solar power based gadgets or creating systems have been ordered under the 5% rate slab.

Renewable power source producers had before expected complete exception from GST, yet given the falling duties and enhancing elements of the division; the legislature anticipates that the segment will act naturally maintainable all alone soon. Consequently, it picked the most minimal tax bracket for different solar and wind parts or spares.

Be that as it may, for little establishments in the private segment of 100 kW in an estimate, solar oriented inverters will draw in 28% GST. Thus, services rendered by wind equipment producers (designing administrations) to set up ventures for developers will fall in the 18% tax section (up from 12% prior). Likewise, solar based ventures including common and works contracts will be burdened at 18%.

Impact of GST on the Energy Sector

(a) Soaring cost of energy projects

Status of exceptions and concessions: While goods and services required for setting up vitality ventures will be liable to GST, they won’t be noteworthy for the creating entity prompting a falling of indirect taxes. Under the indirect tax rules, several concessions and exceptions are given for setting up energy or power projects or ventures, particularly in the renewable power industry to counter such falling impact. Despite that, there is no lucidity on whether these concessions/exclusions will proceed under the GST administration.

Dismissal of a concessional rate for inter-State procurement for EPC contracts

To exploit the concessional 2% rate given for purchases by the industries involved in the production or dispersion of power, Promoters of the projects as of now ready to structure their purchases as between State deals to reduce the cost of the tax. This ‘in-transit deals’ exclusion on between State sales is additionally accessible on second (and resulting) deals attempted amid the immediate development from a maker to the primary (with the title going through contractual workers and sub-temporary workers). Nevertheless, the Model GST regimen renders no such privileges for planning the tax. In nonexistence of such tax exclusions and concessions, there is a possibility of a significant hike in the costs of the power projects.

(b) Impact of GST on renewable or sustainable energy

Attributable to the higher setup expenses of renewable power source ventures, levy rates for clean vitality are for the most part not aggressive versus traditional energy. With a view to supporting clean energy, various expense concessions and exceptions have been reached out to the sustainable power sector industry. Therefore, environmentally friendly power energy is for the most part accessible at decreased levy rates. Be that as it may, there is no clearness on whether such advantages would be reached out under the GST administration. It is essential that the government keeps on offering tax reductions to the renewable power source division, for it to remain an aggressive choice to regular fuel based vitality. One conceivable choice could be to zero rate supplies to renewable projects. This would expel GST occurrence at the terminal stage, and furthermore empower providers to acquire charge discounts of their own information costs.

The renewable power source is an area which has so far been profiting from various duty exceptions. Previously solar power industries were liable to the concessions on value added tax (5% VAT which was waived off in many states) and also excluded from excise duties in many states. The new tax rule applies a 5% GST on solar power spare parts.

The Wind and solar based equipment were liable to a VAT of 5% and service tax on erection and commissioning works were 15%. After the applicability of GST, equipment would pull in a 5% GST, while services would be liable to 18%.

Therefore, capital expenses and rates of different renewable power projects are relied upon to increment.

As opposed to solar power and wind power going up from 0 to 5%, the taxes on coal have descended from 11.69% to 5%. The government’s expectation to put coal at standard with solar based demonstrates that the nation is moving towards grid parity.

Who will bear the Extra Cost?

The organizations would need to return to their purchase methodologies to limit the loss of tax credits. It is normal that any hike in cost would be gone through to the purchaser. A purchaser can demand input credit of GST, once a similar duty/tax has been paid by the provider. In any case, given the complexities of energy buy understandings, DISCOMs will be hesitant to raise charges given that sales are now occurring at record-low levels and many states are confronting a circumstance of energy excess. Because of the implementation of GST, taxes will raise yet this will fluctuate from state to state. For instance, sunlight based equipment was before was not liable for VAT an entry tax in Rajasthan and Haryana yet would be assessable at this point.

Solar based bids have achieved levels as low as Rs. 2.44 for one unit while wind power is at Rs.3.46 for one unit; however this has brought about single-digit returns. A higher rate because of GST may additionally disintegrate edges for the time being. In any case, falling info costs are required to end the impact of GST on costs over the long haul.

(c) What are the drawbacks under existing power purchase agreements?

Power Purchase Agreements (PPAs) prevalently meet the predominant circuitous assessments by strategy for joining the costs thereof into the cost of the contract. In any case, PPAs, for the most part, meet the contract costs to be balanced because of any hike in taxes or introduction of new taxes or amendments in taxes (these are secured as ‘Change in Law’ or ‘Drive Majeure’ provisions under the PPAs).

For the most part, commencement of GST would be viewed as ‘Change in Law’ or ‘Constrain Majeure’ occasion under generally PPAs. Nonetheless, for those PPAs that don’t give an acclimation to cover increment or introduction of charges, the presentation of GST would bring about a rapid increase in agreement costs.

 (d) Minimizing legacy issues

Power ventures, particularly at the EPC level, are tormented with issues based on the roundabout the indirect tax treatment of works contracts, which is confounded because of various parts of such contracts being liable to Service Tax and VAT. Even bifurcation of services and supplies into different contracts does not really help to address the issue as it frequently prompts legal action with the authorities of indirect taxes. This is on the grounds that despite everything they look to regard such contracts as composite works contract (including the supply of the both goods as well as services), particularly if there is a ‘wrap contract’ or ‘cross-fault breach proviso’ (a condition giving basic reimbursement over the agreements). EPC organizations likewise confront challenges on the valuation of such contracts as experts regularly assert that estimation of one kind of supply has been misleadingly collapsed for the other, to exploit any rate arbitrage.

The Model of GST Law particularly considers a ‘works contract’ as a “service” and the complete value is probably going to be liable to a steady tax or assessment rate. This is probably going to address the uncertainty and decrease debates or any arguments.

Besides, central sales tax (CST), on Inter-State purchase deals, is as of now a non-creditable tax or duty. In this design, where purchases are entered by contractual workers from merchants or providers outside the State, contractors presently hope to structure these as ‘in-travel bargains’, where the second arrangement or exchange among the temporary worker and the wander or venture proprietor is not subjected to assessment or obligation. The pre-imperative of an ‘in-travel deal’ exclusion is that the conveyance of the merchandise should happen straightforwardly from the seller to the important (project proprietor or owner) without ownership being taken by the contractor or sub-contractor. In any case, the experts have constantly tested in-movement deal exceptions if there should arise an occurrence of EPC contracts on the premise that the exchange of property amid execution of works is predicated on the rule of accumulation, that is, responsibility for merchandise goes from temporary worker to central endless supply of the products amid the execution of the works.

Under GST, both State deals and intra-State deals would be liable to a noteworthy GST framework. The GST paid by the contractor at the time of purchasing the material or item from an interstate vendor or merchant can be set-off against the GST payable for venturing into the EPC contract. Henceforth this inheritance issue is additionally liable to fall away.

Influence of Goods and Service Tax (GST) on Costs of Solar Spare Parts

The GST is anticipated upon to affect more than 10 gigawatts of solar power projects. Venture costs are anticipated upon to go up by 4%-5%, which appears to be sensible given the radical rate fall in the Indian solar power cost (solar power rates have dropped to as low as INR 2.44 for every unit, getting to be plainly less expensive than the warm levies). It is, in this way, expected the expense structure won’t have a critical antagonistic impact on the Indian sunlight based industry. In any case, if just modules are exhausted at 5% and other capital products are levied at rates between 18%-28%, the normal increment altogether EPC cost would be around 6%.

A hike in operations and maintenance costs (O&M), spare part costs and civil work costs is normal, because of the applicability of GST. There might likewise be some issue around debt funding, refunding and monetary conclusion because of GST. The greatest negative effect of the value acceleration might be on loan specialists unwilling to support additional expenses and undertakings getting scratched off thereof.

Developers additionally expect that with costs winding up marginally higher, rivalry from the Chinese partners will additionally heighten. The costs of solar based panels have solidified in the current months with Chinese demand staying solid and also pull in from an interest in the USA. Designers are loading up on solar based panels as higher sun powered import obligations might be forced in September due to the Suniva request. This may, thusly, influence the productivity of the Indian solar power industries that are as of now enduring the worst part of falling solar rates.

In any case, given the ascent in costs to be exceptionally unimportant over the long haul and the enhancing progression of the renewable power source in India, all these antagonistic impacts ought to be short lived. There is no hazard that India won’t meet its 40% renewable power source limit focus by 2030. Truth be told, given that solar power costs are required to continue falling because of enhancing innovation, the nation may impressively surpass that objective.

The impact of GST on Wind Power from project perspective and Vendor perspective

The prompt effect of GST on Wind power sector would be as far as an expansion in success rates of tax. Directly, we have Excise duty applicable at 12.5%, Service charge at 15% and Customs duty on imports which wind up noticeably appropriate on the acquirement of goods and services for the segment. Nonetheless, there is part of exceptions which are accessible on goods and services required for the Wind power ventures. It is normal that the vast majority of those exclusions may fade away under GST.

Imports under GST would be liable to Basic Customs duty and IGST while any nearby supplies will be subjected to GST. Services regardless will turn out to be more costly in light of the hike in the duty rates. It is normal that most the services required for the segment might be burdened at 18% rather than 15% as applied at a current rate that will hike the venture cost from the venture viewpoint straightaway. Further, it is felt that a portion of the current exclusions for the division might be discarded.

In spite of the fact that presentations have been recorded by the segment for proceeding with the particular assessment treatment, it stays to be viewed in the matter of how GST board chooses the rates to be connected on the merchandise provided to the segment.

From a contractual worker’s point of view, very few of the transactions attempted by them, for example, stock-exchange or warehousing of merchandise could be subjected to GST.

Purchases against C-Forms will be subjected to the full rate of GST with doing endlessly of such statutory Form.

Contractors in such situations may require to re-adjust the logistics of the project and the Supply chain network and decrease the time-slack between import or purchases of the goods and supply to the venture which will be a major change and move in the way extends are organized today.

Other problems as far as local purchases should be with respect to the ideas like a sale in transit and so forth. Which is accessible under the present administration, may not be profit capable under GST administration, in this way implying a “Bill-to-Ship-to” exchange may not be feasible.

On a general premise, from a venture and in addition contractual worker’s point of view, the compelling expense costs will undoubtedly increment.

The problem is additionally exaggerated as the power duty is not going to get subsumed inside the GST. So any expense which is getting charged to the venture will wind up as a cost to the venture without any yield assesses obligation and without accessibility of info credits.

CONCLUSION

Energy is one of the primary industries in any economy since power is a key prerequisite for each and every business activity. Any tax bending perversion by this sector by virtue of power being outside the range of GST will have a falling impact on the remaining economy, discrediting a portion of the very advantages looked to be achieved by the introduction of GST. Likewise, it is felt that the Government has missed a chance by not linking power generation and power distribution with different supplies which associate with it, under the purview of GST. In this way, the practicality of the energy segment, under the current GST norms, would rely on the exclusions and concessionary impose which might be set up to counter the effect of various tax regimes on the information and yield side. Exclusions in renewable should be grandfathered for this sub-segment to stay practical

In the long haul, the GST’s effect is probably going to be levelled out by falling expenses. “We needn’t bother with help of lower taxes to empower sustainable power source. The Renewable Energy industry in India will likewise profit by a speedier development in the Indian economy which will build the general interest for the Renewable vitality environment. The solar power industry in India will confront some transient agony yet will pick up over the long haul.

Bibliography:

OBJECTIVES OF GST

http://www.mondaq.com/india/x/531272/Renewables/GST+Impact+Energy+Sector

http://ww.greenworldinvestor.com/2017/08/07/impact-of-gst-on-renewable-energy-sector-in-india/

http://indianpowersector.com/2016/08/how-will-gst-impact-indias-energy-sector/

http://www.livelaw.in/impact-of-gst-on-the-power-sector/

http://www.thestatesman.com/opinion/gst-impact-on-energy-sector-159870.html

http://carajput.com/learn/post.php?page=gst-impact-on-energy-sector

http://xattax.in/blog/impact-of-gst-on-the-energy-sector-of-india/

http://www.bridgetoindia.com/gst-cause-significant-disruption-solar-sector/

http://www.gstreadyindia.com/impact-of-the-proposed-goods-and-services-tax-in-india-on-the-renewable-energy-sector/

https://www.quora.com/What-impact-would-GST-have-on-the-Indian-power-sector-GENCOS-TransCos-and-DISCOMS

https://barandbench.com/india-law-connect/legal-briefing/73956/

http://www.trilegal.com/index.php/publications/analysis/gst-impact-energy-sector

In this article, Varun Varma elaborates on the best business structure to choose between One Person Company and Sole Proprietorship. The article discusses at length the advantages and disadvantages of the two business structures over one another.

The concept of one person company is new to this era of the Corporate world. The term one person company is introduced in new companies act i.e The Companies Act 2013 (No.18 of 2003). It provides a platform which opens up a way for the sole-proprietor form of business to enter into a corporate framework. One person company is a thing made by combining two different elements of business i.e Sole Proprietorship and Corporate the Framework.[1] And whereas a sole proprietorship has been defined as a business which is attached to his owner solely and the income and losses are solely taxed from the income of the owner. Sole Proprietorship is one of the simplest forms of business setup because this form of business does not have the legal entity. And it is run by a single person so an owner can do the business under his name.[2]

Main Functions of One Person Company

There are many benefits which are awarded to One Person Company when it is compared to Sole Proprietorship. The benefits awarded to One Person Company (herein referred as OPC) in comparison to Sole Proprietorship are as follows.

Business Registration Certificate

OPC can form a company and it can also get a registered certificate from the registrar of the companies and can form a separate legal entity. In case of sole proprietorship, not all the Sole Proprietor businesses are not all registered under the government except few under Sales Tax or Service Tax depending on the type of business.

Business Can be transferred to Nominee Holder

The very inception of OPC defines the concept of Nominee Shareholder. In this nominee of a person is required to be mentioned by which shares of the company will be transferred by nominee shareholder in case of the demise of the sole owner of the OPC.

Limited liability of the owner

In OPC, the liability of sole owner will be limited up to extent of the amount of money invested by the owner. In case of recovery of company loan, personal assets will not be touched unless personal guarantee has been provided by the directors.[3]

Main Function of Sole Proprietorship

Sole Proprietorship is the most common and most useful form of business for those who want to be the sole entrepreneur. So, the main function of sole-proprietorship are as follows:

Hiring and Firing

As Sole Proprietorship is solely based on his owner there are several sole proprietorships where employees are hired and they are also fired on the poor performance of the work.

Charting the Course

Since Sole Proprietorship is a firm headed by the owner only. So for expanding the business, he needs to set some goals and he even needs to make some plans to achieve it.

Monitoring and Controlling

As Sole Proprietor is the only source of planning the production of the units he produced. For that, he is required to keep the check and balance on the activities done by him. He has to strategize this function in the most efficacious manner.[4]

Legal Compliance of Sole Proprietorship and One Person Company

A sole proprietorship is known as the best business formation for doing business in India. This kind of business requires few compliances to be followed for the purpose of its registration. There is no such protocol to be followed for registering a sole proprietorship. A person can start a sole proprietorship only by opening a bank account in the name of the business and the person can obtain various licenses. For opening up a Bank Account, a person needs to follow all the KYC norms which are provided by the bank and whereas for obtaining the license the proprietor needs to have Proprietor Pan Card, Business involved in Manufacturing or Trading, Business providing services[5].

The other various registration required to open up a Sole Proprietorship is as follows:

GST Registration, MSME Registration, Chartered Accountant Certification, Gumasta License or Shop Act license and much more so as per government of India rules. There is no proper business registration for sole proprietorship firm in India.

Since one person company is incorporated in the New Companies Act 2013. More than 1400 OPC have established. The procedure for opening an OPC is to have a minimum 1 Director, 1 member, minimum paid up capital of Rs. 100,000 and to obtain Director Identification Number (DIN) and Digital Signature Certificate (DSC). The liability of the member is limited[6].

For the name reservation, a form INC-1 must be filed with registrar of companies. After there is an availability of the name and an approval is received from ROC then a form INC-2 shall be filed for the purpose of incorporating an OPC within 60 Days of filing form INC-1. Form DIR-12 shall need to be filed in connection to INC-2 except when the promoter is the sole director of the company. The company is required to file form INC-22 within 30 days after the INC-2 form is approved and registered in case the address of correspondence and registered office address is not same.[7]

Difference between Sole Proprietorship and One-Person Company[8]

Conclusion

The war between the sole proprietorship and the one-person company is somehow related to two sides of the same coin. The sole proprietorship form of business has its own perks and disadvantages whereas OPC has got it’s pros and cons. OPC is more of corporation headed by a single individual as compared to Sole Proprietorship. In terms of registration process there is no definite way to register a Sole Proprietorship and on the contrary, there are few compliances which are supposed to be followed for registering a One Person Company.

References

[1] What is one person company? , One Person Company, www.onepersoncompany.com.

[2] Sole Proprietorship, Entrepreneur India, www.entrepreneur,com/encyclopedia/sole-proprietorship.

[3] Sole Proprietorship or One Person Company- Which One Is Better?, Team HP, December 13, 2014, thehindustanpost.com/sole-proprietorship-or-one-person-company/

[4] Managerial Function of Sole Proprietorship, by Chris Joseph, EHow, www.ehow.com/info_8292109_managerial-functions-sole-proprietrships.html

[5] Sole Proprietorship Registration, India Filings, November 23,2014, www.indiafilings.com/learn/sole-proprietorship-registration/

[6] ABHYANKAR, Procedure of OPC (One Person Company) Formation, In India:CS Meenal Abhyankar, (05.04.2015), blog.abhyankarcs.com/company-formation-in-india/procedure-of-one- person- company-formation-in-India/

[7] Ministry of Corporate Affairs, FAQ On One Person Company, http://www.mca.gov.in/MinistryV2/onepersoncompany.html

[8] ARJIT NARENDRA SRIVASTAVA, SOLE PROPRIETORSHIP, Law Far (July 29^th, 2016), http://lawfarm.in/blogs/difference-between-one-person-company-and-sole-proprietorship

In this article, Varun Varma discusses How Intellectual Property relates to E-Commerce.

Introduction

Intellectual Property (IP) is a legal term that has been associated with industrial property with copyrights and other rights in the similar field. It is a process where someone creates anything from their mind like inventions, literary, artistic works, designs, symbols, names and images which are used in commerce.[1]. The essence of IP in India is well established at all levels i.e Statutory, Administrative and Judicial. India in its meeting with World Trade Organization had ratified an agreement which is in relation to Trade Aspects of Intellectual Property Rights (TRIPS) which was enforced on 1^st January 1995. As per the agreement, there shall be minimum standards for the protection and enforcement of intellectual property rights in member countries which are required to promote the effective and adequate protection of intellectual property rights with a view to reducing distortions and impediments to international trade.[2] The main pillars of Intellectual Property law are copyrights, patents and trademarks and these three pillars are governed and described fully under the respective statutes which are Indian Copyrights Act 1957, The Patents Act 1970 and The Trademarks Act 1999.

According to Merriam Webster, E-Commerce refers to that activity that are related to buying and selling of goods and services over the internet.[3] Intellectual Property in E-Commerce is perhaps the most neglected, yet the most essential and value bearing component of E-Commerce.[4]

According to Michael Dertouzos foreword in Tim Berners- Lee’s book, Weaving the Web, “Technology is an inseparable child of humanity and that for true progress to occur, the two must walk hand in hand, with neither one acting as servant to the other”

Importance of Intellectual Property in E-Commerce

Intellectual property law protects against disclosure of trade secrets which further signifies protection against unfair competition. This makes the intellectual property an asset which is more valuable than owning a tangible asset. This is most clearly visible in the field of technology and the digital economy.[5] If there was no intellectual property practices and statutes governing the functioning of IP laws, there would have been no new creation of works and hard work of someone could be stolen and it would have spread around the world without paying any cost to its creator for his labor on the invention.[6]

The two primary areas which are in relation with Intellectual Property which must be taken care of are

1. Safeguarding your own intellectual property

One of the common mistake committed by the owner of the intellectual property owner is to reveal the intellectual property prior to filing for protection of that property. Similarly, in many countries making trade secrets public automatically dissolves any protection[7].

2. Violating someone else’s intellectual property

As E-commerce websites who are in the business of buying and selling of products often infringes the intellectual property laws by portraying the description of products and showing their images. There are several essentials which must be followed for not infringing the IP laws are as follows:

• It must be your own creation
• Permission granted by the creator to use.
• It must be under the ambit of public domain
• It is covered under fair use.[8]

Kinds of E-Commerce

E-Commerce or Electronic commerce refers to the business done online. So a company’s website can be a great tool the business online and for the purpose of generating sales[9]. E-Commerce is classified into four main categories:

1. B2B(Business to Business)

Companies doing business with each other like manufacturer selling to distributors and wholesalers selling to retailers. Pricing of these products are negotiable on a number of products ordered.[10]

2. B2C (Business to Consumer)

Business to consumer (B2C) is a business transaction between a company and a consumer or consumers who are the end users of its product or services. B2C is different from B2B model as B2B refers to the business between 2 business entities. All the business companies who directly sell to the consumers can be put in the category of B2C companies. This term became immensely popular during the dotcom boom of the late 1990s, when it was mainly used to refer to online retailers[11].

3. C2C (Consumer to consumer)

A consumer to consumer is that kind of a business model which is connected between two consumers and the mode of doing business is online. There are two modes of implementation of C2C markets i.e actions and classifieds. C2C marketing has gained a major boost over the internet through the companies like Ebay and Craigslist[12].

4. Consumer to Business (C2B)

Consumer to business is an exceptionally authentic and plan of action where a shopper creates an item or administration that an association uses to finish a business procedure or with the end goal of picking up an upper hand. This technique transposes the conventional business to buyer (B2C) model.[13]

Elements granted protection in Intellectual Property

There are several parts of websites which are vested with the protection of different kinds of Intellectual Property.

• E-Commerce systems, search engines or other technical Internet tools is granted protection under Patents or utility models.
• Software includes the text-based HTML code which are used in websites and it is vested with a shield under Copyrights Act or patents law, depending upon national law.
• Website design is protected under copyright.
• All the website content in the form of written material, photographs, graphics, music and videos are protected under Copyrights.
• Databases can be protected by copyright or by sui generis database laws.
• Business Names, Logos, Product names, domain names and other signs posted on the website are covered under Trademarks.
• Computer generated Graphic Symbols, displays, graphic user interfaces (GUIs) & even webpages are protected under Industrial Design Law.
• Hidden Aspect of a website like (confidential graphics, source code, object code, algorithms, algorithms, programs or other technical descriptions, data flow charts, logic flow charts, user manuals, data structures and database contents) are protected under Trade Law Secrets.[14]

Ways to protect a website under Intellectual Property Rights

There are essential measures which are mentioned in IP Laws which protect a website from abusive use. These are as follows:

1. Protecting Intellectual Property Rights

2. To let people know that the content is protected under IP Laws.

3. To make sure people know what all content can be used by them.

4. Controlling access and use of your website content.[15]

Conclusion

As E-Commerce is an industry which is growing at a rapid rate. And there can be various instances where creation and invention of someone can be accessible without even giving the person enough credit, labor and money is not given to the inventor. So for this purpose Intellectual Property plays a very vital role. It gives protection to almost all the content which is available over the internet. There are several E-Commerce businesses which are performed between the businessman or company and consumers whereas for the purpose of making these transactions more safer, intellectual property plays vital role.

 References

[1] Wipo, What is intellectual property?, WIPO, available at www.wipo.int/about-ip/en/.

[2]India in Business Ministry of External Affairs Govt. of India Economic Diplomacy Division, Investment: Intellectual Property Rights, available at indiainbusiness.nic.in/newdesign/index.php?param=investment_landing/267/3.

[3] Merriam Webster, Definition of E-Commerce For English Language Learners, available at www.merriam-webster.com/dictionary/e-commerce.

[4] Ajeet Khurana, Intellectual Property in Ecommrce: Your Greatest Asset, THE BALANCE (28.02.2017), www.balance.com/intellectual-property-in-ecommerce-your-greatest-asset-1141708

[5] Ibid.

[6] Ibid.

[7] Ibid.

[8] Ibid.

[9] Wipo, Intellectual Property and E-Commerce: How to Take Care of your Business Website, www.wipo.int/export/sites/www/sme/en/documents/pdf/business_website.pdf

[10] DigitSmith, Ecommerce definition and types of ecommerce, www.digitsmith.com/ecommerce-definition.html.

[11] Investopedia, Business to Consumer-B TO C: What is ‘Business to Consumer- B TO C’, www.investopedia.com/terms/b/btoc.asp.

[12]Investopedia, Customer to Customer (C2C): What does ‘Customer To Customer (C2C)’ mean, www.investopedia.com/terms/c/ctoc.asp.

[13] Techopedia, Consumer-To-Business(C2B), www.techopedia.com/definition/23258/consumer-to-business-c2b

[14] WIPO, Intellectual Property and E-Commerce: How to Take Care of Your Business’Website, www.wipo.int/export/sites/www/sme/en/documents/pdf/business_website.pdf

[15] Ibid.

In this article, Debabrata Rakshit pursuing Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, discusses step by step guide to incorporate a One Person Company.

As per the Companies Act,1956, a Public Ltd Company requires at least 7 members or shareholders wherein a Pvt Ltd Co requires to have at least 2 members. Hence, a One Person Company was never allowed to be formed in our country earlier. However, under the provisions of the Companies Act 2013, Sec 2(62), One Person Company (OPC) is being allowed to form.

One Person Company means a company which has only one member. It is important to note that Section 3 classifies OPC as a Private Company for all the legal purposes with only one member. All the provisions related to the private company are applicable to an OPC, unless otherwise expressly excluded. In case of OPC, though it is true that the One Person appears to be like sole proprietor his liability to the debtors of the Company is limited to the shareholding of the company and his personal assets are never attached for payment of the company’s liability, which in case of Proprietorship never happens.

Prerequisites of forming an OPC

If we go by the pre-requisites of forming an OPC, we should know that as per Rule 3 of the Companies (Incorporation) Rules 2014, the member of OPC must be a NATURAL PERSON & a resident of India. He or She must not be a Minor and must be an Indian Citizen. A resident of India for the purpose of the provisions governing OPC is a person who has stayed in India for a period of not less than 182 days during the last calendar year.

What does this Natural Person mean? Natural Person means a Human Being not any entity like any Proprietorship or Partnership Firm or a Corporate Body or HUF. A Non Resident Indian or a Foreign Citizen cannot form an OPC in India. OPC should have one Promoter and minimum one Director. Promoter and Director may be the same person. Generally, in most of the cases, the Promoter and the Director happens to be the same person. However, No Individual is eligible to incorporate more than one OPC. This is as per Rule 3 (2) of the Companies ( Incorporation ) Rules,2014.

It is mandatory to select a NOMINEE of the single member of the company. Nominee must give his consent in writing and in case of the only member’s death or incapacity to contract, the Nominee will step in and will become the member of the company. Nominee’s name should also be mentioned in the Memorandum of Association. No person can be the Nominee of more than one OPC. As per Rule 3(2) of the Companies (Incorporation) Rules 2014, no person shall be eligible to become a nominee in more than one OPC.

Persons who are desirous of forming a company must adhere to the step by step procedure as discussed below:—

Step 1

Firstly, they should apply for DIN ie Directors Identification Number and obtain Digital

Step 2

Secondly selection of the name of the proposed company. The Promoter should apply for the name of the company to ROC where the Company is to be incorporated in E Form INC 1 by payment of Rs 1000/- through net banking or Card. The Promoter should sign digitally and upload the form on the MCA 21 Portal. In INC1, the promoter should indicate the capital of the company, Main objectives of the formation of Company, the State where he wishes to incorporate the OPC. The promoter should registered his name within 60 days of allotment of the name of the company, otherwise the name will not be available to him. After the name approval process from ROC is over, the name of the Nominee is to be

Step 3

The Consent of the Nominee is to be obtained in form INC-3. Now the Drafting of Memorandum and Articles of Association should be done. Drafting of Memorandum of Association and Article of Association are generally a step subsequent to the availability of name made by the registrar. It should be noted that the main objects should match with the objects shown in e-Form INC-1 and must reflect in the name of Name should be such that a layman can estimate the objects of company by Name.

These two documents are basically the charter and internal rules and regulations of the company. Therefore, it must be drafted with utmost care and with the advice of the professional. AOA should be followed by the tables F, G, H, I & J as prescribed in SCHEDULE- I to be signed by subscribers.The names of First Director are mandatory to be given in AOA.

MOA should be followed by the tables marked as A, B, C, D & E as prescribed in Schedule- I to be signed by subscribers. There are 5 clauses mainly

• Name Clause;
• Registered Office Clause,
• Object Clause (Furtherance of Object)
• Liability clause
• Capital Clause.

Subscribers Clause will have to take into consideration and mention following in handwriting of subscribers

• Name
• Fathers name
• Occupation
• Resident Address
• Share subscribed
• Affix one Passport Size Photograph
• Signed in given column.

For the purpose of Sub-section (2) of Section 4, an application shall be filed, with the Registrar within whose jurisdiction the registered office of the company is proposed to be situated in FORM NO. INC-2 along with the fee as provided in the Companies (Registration Offices and Fees) Rules, 2014 for registration of company.

Nominee Clause

One person who will act as a witness and will sign in the witness column and mention:

“I hereby witnessed that subscribers signed in my presence on Date,  at                                  further   I   have  verified  their identity details (Through ID) for their identification satisfy myself of their identification particular as filled in.”

Below this witness must mention Name, Address, Description, Signature.

Subscriber sheet must be mentioned Date & Place at the end. The word subscribers here used is because of the reason that these subscribers will subscribe for the shares in the company at time of incorporation and will invest the minimum capital i.e. Rs.100000/-. They will contribute the amount by way of cash or cheque when the company gets incorporated and shares will be allotted to them followed by the share certificates.

Now it is required to take a Declaration from Professionals Like company secretary/Chartered accountant/ Cost Accountant, giving the declaration that, all the requirements of Companies Act, 2013 and the rules made thereunder relating to registration of the company and matters precedent or incidental thereto have been complied with.

Then, we should take affidavit from Subscribers and First Directors of Company. They will declare on a Non-Judicial Stamp Paper that :

1. I have not been convicted of any offence in connection with the promotion, formation or management of any company during the preceding five years
2. I have not been found guilty of any fraud or misfeasance or of any breach of duty to any company under this Act or any previous company law during the preceding five years;
3. All the documents filed with the Registrar for registration of the company contain information that is correct and complete and true to the best of my knowledge and

Next Step is- Stamping, digitally signing and e-filing of various documents with the Registrar. Latest Photographs and the Specimen Signatures should be duly verified by the Banker or Notary in Form

Section 12(1) and rule 25 of Chapter II-stipulates that Company shall have a place as its registered office in the State stated in the Memorandum on and from the 15th Day of its Incorporation.

The last Step of Pre-Incorporation is after submission of the filled in e- form as given above, ROC will process the Form by checking the particulars and Attachments of e-from. If ROC found everything is as per requirement of Act and the Rules in respect of registration, all the documents and information as given will be duly registered in the Register and ROC will issue Certificate of Incorporation after payment of requisite fees.

Step 4

Last step is Obtaining Certificate of Incorporation. It may be noted that One Person Company need not hold any Annual General Meeting ie AGM in each year. Within 180 days from the closure of the Financial Year, One Person Company should file the copy of the Financial Statements with Registrar of Companies.One Person Company should inform to the Registrar about every contract entered and also should record in the minutes of the meeting within 15days from the date of approval by the BOD (Board of Directors).

The concept of OPC is a good initiative from the Government. But there are some limitations in its functioning. An OPC can have maximum 15 Directors. It may also be noted that if the Paid up Share Capital of the OPC crosses 50 Lakhs or it annual average turnover crosses Rs 2 Crores, then the OPC will cease to function as an OPC. Moreover, OPC cannot attract investment and has to continue in a low scale.

One of the biggest disadvantages of OPC is that an OPC is Taxed at the Corporate Income Tax Rate, at present @ 30 % wherein a Proprietorship Firm is taxed at personal income tax slab which is @ 10 % initially. When an OPC is required to conduct an Audit of Accounts , in case of Proprietorship Firm which is not mandatory. Hence the OPC has not been able to create much steer in the Business community.

Debabrata Rakshit /September,2016 Batch/

In this article, Brinda Dubey pursuing Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, discusses the legal actions which can be taken up by the insurance companies against fraudulent insurance claims.

What is an Insurance Fraud?

The Indian Insurance Act does not contain definition for ‘insurance fraud’. Neither have any specific laws connected to insurance fraud been spelled out in the Indian Penal Code,1860(IPC). The Indian Contract Act,1872 (ICA) also doesn’t have any specific laws pertaining to insurance fraud. Even though sections related to forgery or fraudulent acts can be applied in the IPC, it does not succeed to deter the commission of the fraud. Insurance fraud occurs when people deceive an insurance company in order to collect money to which they are not entitled.

The Insurance Regulatory and Development Authority (IRDA) has on several occasions taken up the  International Association of Insurance Supervisors’ (IAIS) definition, “an act or omission intended to gain dishonest or unlawful advantage for a party committing the fraud or for other related parties.”

The Federation of Indian Chambers of Commerce & Industry define insurance fraud as, “The act of making a statement known to be false and used to induce another party to issue a contract or pay a claim.This act must be wilful and deliberate, involve financial gain, done under false pretenses and is illegal.”

Insurance fraud refers to any duplicitous act performed with the intent to obtain an improper payment from an insurer. Insurance fraud is committed by individuals from all walks of life. Law enforcement officials have prosecuted doctors, lawyers, chiropractors, car salesmen, insurance agents and people in positions of trust. Anyone who seeks to benefit from insurance through making inflated or false claims of loss or injury can be prosecuted.’’

Types of Insurance Fraud

The Insurance Regulatory and Development Authority of India which is the apex body and overseeing the business of Insurance in Inda sets out these 3 broad categories of fraud –

1. Policyholder Fraud and/or Claims Fraud – Fraud against the company in the purchase and/or execution of an insurance product, including fraud at the time of making a claim.
2. Intermediary Fraud – Fraud perpetuated by an insurance agent/Corporate Agent/intermediary/Third Party Administrators (TPAs) against the company and/or policyholders.
3. Internal Fraud – Fraud/ misappropriation against the company by its Director, Manager and/or any other officer or staff member (by whatever name called).

Claims Related Fraud

Policy holders may generally commit these kind of frauds :

• Hiding a pre-existing condition: most individual health policies give a definite waiting period for a pre-existing condition/disease. The policyholder by falsifying the report of a pre-policy health check up, conceal this fact.
• Fabricated documents to meet terms and conditions of the Insurance: Youthful and Healthy people are an obvious choice for insurance by the companies.Any person with a different attribute, for example, a person aged, may not necessarily face rejection of his application but may be charged more premium. In this case people try to conceal age or chronic diseases.Faking disability also comes under this.
• Duplicate bills of exchange: Submission of forged or inflated bills is also fraud, especially when no expenses have been undertaken.The objective of health insurance, to cover the medical expenses incurred when one has diseases or requires surgery, is defeated then.An insurance policy is not supposed to be profitable.
• Withholding information of multiple policies: It is the responsibility of the insured to inform all the other insurers of the existing policies whether group, individual to prevent the making of multiple claims on an issue and make a profit out of it
• Participating in fraud rings: A person might collude with another like an agent or doctor or providers to make a false claim, for example, alter information at their bequest to make a claim.
• Orchestrated accident: A person might stage an accident so that they can call for compensation for their medical and hospital expenses.

As the social health insurance takes a steady upward come, the victims of health insurance might be more in nature.

Current Action against fraud

• No fraud Management policy has been properly documented or implemented till date by the various insurance regulatory authorities or the government.
• These are the various actions which can be taken when it comes to insurance fraud and the actions are limited to :

1. Rejection of claims of serious fraud – in all cases brought out in the court if the guilt is found out, the claim is outright rejected
2. Fraud can also lead to cancellation of policy in serious fraud cases, however, this does not generally happen in abuse or misdeclaration.
3. There are only limited actions which can be taken against the agents due to lack of a comprehensive legal framework to punish the same.
4. Most of the insurance companies do not have an underwriting as a part of their disclosures or documents, about what action will be taken against the consumers in case of misdeclaration or non declaration of material information.

Setbacks

Due to the mounting backlog of pending cases in the judicial machinery of our state, taking legal action against fraud is not a common occurrence and fraud of amounts not big enough are let go off as opposed to the heavy investment of time and energy in pursuing the same.

Even if legal remedies are taken or help of the court is availed due to various reasons and the design and process of the law sometimes make the recovery of the money lost by fraud are a rare occurrence.

Legal Provisions under Indian Penal Code,1860

The provisions which can be applicable in such cases are –

1. Section 205. False personation for purpose of act or proceeding in suit or prosecution.—Whoever falsely personates another, and in such assumed character makes any admission or statement, or confesses judgment, or causes any process to be issued or becomes bail or security, or does any other act in any suit or criminal prosecu­tion, shall be punished with imprisonment of either description for a term which may extend to three years, or with fine, or with both.
2. Section 420. Cheating and dishonestly inducing delivery of property.—Whoever cheats and thereby dishonestly induces the person de­ceived to deliver any property to any person, or to make, alter or destroy the whole or any part of a valuable security, or anything which is signed or sealed, and which is capable of being converted into a valuable security, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine.
3. Section 464 Making a false document. —³⁴¹ [A person is said to make a false document or false electronic record— First —Who dishonestly or fradulently—

(a) makes, signs, seals or executes a document or part of a document;

(b) makes or transmits any electronic record or part of any electronic record;

(c) affixes any ³⁴² [electronic signature] on any electronic record;

(d) makes any mark denoting the execution of a document or the authenticity of the³⁴² [electronic signature],with the intention of causing it to be believed that such document or part of document, electronic record or ³⁴² [electronic signature] was made, signed, sealed, executed, transmitted or affixed by or by the authority of a person by whom or by whose authority he knows that it was not made, signed, sealed, executed or affixed;

• Or Secondly — Who, without lawful authority, dishonestly or fraudu­lently, by cancellation or otherwise, alters a document or an electronic record in any material part thereof, after it has been made, executed or affixed with ³⁴² [electronic signature] either by himself or by any other person, whether such person be living or dead at the time of such alteration; or
• Thirdly — Who dishonestly or fraudulently causes any person to sign, seal, execute or alter a document or an electronic record or to affix his ³⁴² [electronic signature] on any electronic record knowing that such person by reason of unsoundness of mind or intoxication cannot, or that by reason of deception practised upon him, he does not know the contents of the document or electronic record or the nature of the alteration.]

4. Section 405. Criminal breach of trust.— Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of such trust, or wilfully suffers any other person so to do, commits “criminal breach of trust’’.

As seen above from the comprehensive and elaborate explanations/definitions all these sections under this law can be used to persecute in case of insurance fraud however due to the time and cost involved, parties generally refrain.

Legal Remedies under The Indian Contract Act, 1872

1. Misrepresentation within the meaning of Section 18of the ICA
2. The contract of insurance is also void in as per Section 10 read with Section 14(4) and Section 18 of the ICA generally in cases of fraud.
3. As per Section 20of the Indian Contract Act, 1872, the agreement is void where both parties are under mistake as to matter of fact. Some factors are essential for insurance cover.

Other measures which can be taken

Steps such as having a comprehensive fraud and abuse management policy which covers types of fraud and abuse alongside with policies, procedures, and controls, company action being documented and implementing a review mechanism should be taken by insurance companies also so that they are also in a position to take legal action.

Sharing of knowledge and data should be more prevalent with the victims of fraudulent insurance claims, this data should include fraud patterns and case studies, fraud customer list and intermediaries, fraudulent providers and investigators etc.

Most importantly awareness should be brought about the due legal process to be followed before reporting a case.Reporting to external bodies such as Medical Council of India, IRDA, and corporate Human Resources can also be tried.

Conclusion

There has been a growing instance of fraudulent insurance claims and the Supreme Court also in January 2017 has stressed on the need for framing guidelines with the suggestions of the states and the insurance companies to rule out such cases. In some cases claims are also filed wrongly under different acts.It is important to evolve an efficient legal framework and take recourse to the existing one as well to prevent such plunder of the money of the public.

Sources

1. https://www.indiafirstlife.com/downloadPDF/Anti-Fraud-Policy/Anti-Fraud-Policy_22-01-2014.pdf
2. com
3. Cases on State Consumer Disputes Redressal Commission
4. Insurance institute of India

In this article, B Shiva Ram Sharma pursuing Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, discusses Legal obligations of Insurance Companies towards its customers.

Introduction

Insurance has a vast history going back to ancient times. It finds its relevance in the scripts written by Manu, Yagnavalkya, and Kautilya. The scripts envisage of pooling of capitals that could be rationalised in terms of calamities such as fire, floods, epidemics and famine and all sorts of uncertainties.

“Insurance in India have evolved over time taking inspiration from other countries like England.[1]The modern form of Life Insurance came to India from England in the year 1818 and from thereon it evolved. Oriental Life Insurance Company was the first life insurance company in India and branch office is located in Calcutta which was started by the Europeans.”

The insurance companies formed during that period were brought up with the idea of looking after the needs of the European community.

WHAT DO WE UNDERSTAND FROM THE TERM INSURANCE?

In the words of Justice Tindal, “Insurance is a contract in which a sum of money is paid to the assured as consideration of insurer’s incurring the risk of paying a large sum upon a given contingency.”[2]

It is a contract represented by a policy in which an individual or legal entity receives financial assistance or reimbursement against losses or at the time of accident from an insurance company.

Insurance policies main objective is to escape against the risk of financial losses, either big or small, to the insured or property, or from liability for damage or injury caused to anyone.

In simple terms, Insurance is a financial risk in which the insured transfers or relieves himself of a risk of potential financial loss to the insurance company thereby paying insurance company a thing as premium, wherein the insured pays a monthly or yearly a certain amount to the insurance company to relive of the future loss if and when it occurs.

ROLE OF AN INSURANCE COMPANY AND AIMS

Insurance companies are a special type of financial institution that deals in the business of managing or mitigating or avoiding risk to Individual. Individuals and corporations often invest money and in return they promise to pay for the losses they incur if some unfortunate event occurs.

Insurance can be defined as safeguarding the interest of people from loss and uncertainty. It may at times described as a social device or social object to reduce or eliminate risk of loss to life and property.

Insurance in a way contributes and indirectly serves in increasing the economic growth of the society by provides stability by erasing the constant fear of loss or damage due to unforeseen circumstances.

The functions of insurance can be classified into two parts, they are

1. Primary Functions
2. Secondary Functions.

ROLE AND FUNCTION OF INSURANCE COMPANIES

1. The fundamental mission or aim of insurance is to allow safety against unforeseen future risk, accidents and uncertainty. Insurance cannot stop the risk from taking place but its function is for sure reduce the losses arising with the risk. Insurance is a safeguard against uncertain economic loss, by calculating the risk with others. Insurance is a tool to share the financial loss with that of insured. It is a medium through which losses are divided among larger number of people who have insured themselves. All the insured add the pay certain money called as premiums towards a fund and out of which the persons facing a specific risk is paid.
2. Evaluating risk – Insurance calculates the risk involved by assessing diverse factors that give rise to risk hence, so therefore risk becomes the basis for ascertaining the premium rate asked by such insurance companies as well.
3. Insurance Generates financial resources: Insurance accumulate funds by collecting premium from the insured. These funds on the other hand are invested in government securities and stock and other large scale projects. These funds are also further invested in industrial development of a country for generating more funds and utilised for the economic development of the country benefitting not only the insured but also country at large. Employment opportunities are increased or generated by big investments leading to capital formation in return.
4. Promotes economic growth: Insurance makes a significant impact on the economy by distributing domestic savings. Insurance premium capital converts productive investments. Insurance provides for not only to mitigate loss brings but also bring in financial stability, promotes trade commerce activities which automatically results into economic growth and development.
5. For development of economy investment are necessary and investments are made out of savings of people. Life Insurance Company is a way for mobilization of savings of people mostly from the middle and lower income groups but not restricted to whole of public at large at times. These savings are then invested for economic growth. The insurance act has strict provisions in the act to ensure that insurance funds are invested in safe areas for example like government bonds and companies.
6. Contributes in the development of larger industries – Insurance provides an opportunity to develop those large industries which face more risks in their setting up. Entry of private players in the insurance business has added value to the business of insurance industry. The involvement of private players has turned the market very competitive and have given immense competition to the on time monopoly of the market LIC. This in turn has improved the service quality of the insurance.[3]
7. Preventing or safeguard against losses – Insurance advices individuals, businessmen, institutions and corporate entities to embrace appropriate device to prevent unfortunate aftermaths of risk by observing safety instructions by installation of automatic sparkler or alarm systems, etc.

One of insurance’s key roles is safeguarding the financial health of small and medium-sized enterprises.

8. Investment of small capital – investment of small capital over a period of time leads to insuring oneself against bigger financial risk. So a monthly premium of small amount can insure oneself against losses to the tune of millions depending on the policies which one might opt for.
9. Life insurance means savings: Insurance protect against risks and uncertainties also provides an investment channel too. Life insurance provides for savings in a systematic manner because of payment of regular premium to the insurance company.
10. Medical support for sick person: A medical insurance quintessential in modern era due to highly expensive medical care which is generally beyond capacity of middle class society which exist in India. Anyone can be subject to illness or critical life threatening disease very unexpectedly and in the event of such serious illness medical insurance provides for financial security and plays major role in safeguarding against financial instability which one might face in event of hospitalization.
11. Provides Information: Insurance plays an additional role in the economy by providing information to various institutions including government and individual against risks of various kinds which arise due to modernization and globalization, due to which various insurance have come up in the recent past and also there is surge information of insurance companies looking at the market and profits of these companies have been the guiding factor to come up with various policies which benefit the general public. These companies, in turn, do research as to in which area there lies an underlying risk and there being potential customers and in turn tries to leverage the maximum out of it and so, therefore, it can be said that insurance companies can be source of information.

Conclusion

Insurance companies main function is to provide for payment in happening or not happening of an uncertain event and this is called a contingent contract as per contract act. Better planning and administration can reduce the risk in a business but cannot eliminate it completely so that’s where the insurance companies role and functions fill the gap wherein they relieve the person from minimal financial losses which he or she might incur.

It is always uncertain has to when a person or company will facing the risk or whether or not that will risk occurring or not can also not be predicted by anyone and how much loss will be one facing is also a matter of speculation so it can be said that there is no definite time or amount of loss be predicted. So this is where the insurance company assures the insured that all the losses will be covered and payment will be given to him when he is paying premium as per the policy and role of the insurance company starts where the time when loss is incurred by the insured and thereon insurance company pays up for the losses depending on the facts and circumstances of each case.

So insurance companies role is also to improve the efficiency of a person indirectly wherein if a person is insured against losses which one might incur he or she will be able to perform without a worrying about the consequence of the act if done diligently and thereby he or she can devote his whole time to achieve his aim or objective in life and so insurance companies functions to benefit the public finances and also give security to the person insured and his family.

So therefore Insurance companies role and functions in today’s era is a important component in economy of a country and also Individual can benefit in all ways when he or she is insured against any risk of be it of property or body, the surge of insurance companies can be attributed to the fact of advancement of technology which by itself though beneficial but also exposes us to various risks in life so henceforth the role of the insurance companies is increasing rapidly.

[1] History of insurance in India, IRDA/GEN/06/2007, https://www.irdai.gov.in/ADMINCMS/cms/NormalData_Layout.aspx?page=PageNo4&mid=2.
[3] MONALISA GHOSAL, ROLE OF INSURANCE IN ECONOMIC DEVELOPMENT OF INDIA, ZENITH International Journal of Business Economics & Management Research Vol.2 Issue 7, July 2012, ISSN 2249 8826.[2] https://www.coursehero.com/file/p6pltu5/In-the-words-of-DS-Hansell-Insurance-may-be-defined-as-a-social-device/

In this article, Arunava Chakraborty pursuing Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, discusses Role of an independent Director in a takeover transaction.

A takeover occurs when an acquiring company makes a bid in an effort to assume control of a target company, often by purchasing a majority stake. If the takeover goes through, the acquiring company becomes responsible for all of the target company’s operations, holdings and debt. When the target is a publicly traded company, the acquiring company makes an offer for all of the target’s outstanding shares.

A takeover is virtually the same as an acquisition, except the term “takeover” has a negative connotation, indicating the target does not wish to be purchased. A company may act as a bidder by seeking to increase its market share or achieve economies of scale that help it reduce its costs and thereby increase its profits. Companies that make attractive takeover targets include those that have a unique niche in a particular product or service; small companies with viable products or services but insufficient financing; a similar company in close geographic proximity where combining forces could improve efficiency; and otherwise viable companies that are paying too much for debt that could be refinanced at a lower cost if a larger company with better credit took over.

What are general duties as a director?

The Companies Act 2013 sets out the seven general statutory duties of a director. These are listed below with some additional commentary.

1. To act within powers (regulation 16). This requires a director to comply with the company’s constitution and decisions made under the constitution and to exercise the powers only for the reasons for which they were given.
2. To act in a way the director considers (in good faith) is most likely to promote the success of the company for the benefit of its members as a whole (or, if relevant, other purposes specified in the constitution). (Regulation 20-24). In performing this duty, a director must have regard to all relevant matters, but the following are specifically identified in legislation:
   1. the likely consequences of any decision in the long term;
   2. the interests of the company’s employees;
   3. the need to foster the company’s business relationships with suppliers, customers and others; the impact of the company’s operations on the community and the environment;
   4. the desirability of the company maintaining a reputation for high standard business conduct; and the need to act fairly as between members of the company.
3. To exercise independent judgment, that is, not to subordinate the director’s power to the will of others. This does not prevent directors from relying on advice, so long as they exercise their own judgement on whether or not to follow it.
4. To exercise reasonable care, skill and diligence (regulation 25). This requires a director to be diligent, careful and well informed about the company’s affairs. If a director has particular knowledge, skill or experience relevant to his function (for instance, is a qualified accountant and acting as a finance director), expectations regarding what is ‘reasonable’ will be judged accordingly (regulation 25).
5. To avoid conflicts (or possible conflicts) between the interests of the director and those of the company (regulation 30-36). The prohibition will not apply if the company consents (and consent meets the necessary formal requirements).
6. Not to accept benefits from third parties (i.e. a person other than the company) by reason of being a director or doing anything as director (regulation 31). The company may authorise acceptance (subject to its constitution), for instance to enable a director to benefit from reasonable corporate hospitality; and
7. To declare any interest in a proposed transaction or arrangement (regulation 32-36). The declaration must be made before the transaction is entered into and the prohibition applies to indirect interests as well as direct interests.

In addition to these duties, a director has duties:

• to consider or act in the interests of creditors (particularly in times of threatened insolvency) (regulation 26)
• to maintain confidentiality of the company’s affairs (a duty which to a large extent follows from the general duties outlined above)

INDEPENDENT DIRECTOR

An Independent director (also sometimes known as an outside director) is a director (member) of a board of directors who does not have a material or pecuniary relationship with company or related persons, except sitting fees. In the US, independent outsiders make up 66% of all boards and 72% of S&P 500 company boards, according to The Wall Street Journal.

In India as of 2017, a majority of the minimum two directors of public companies having share capital in excess of Rs. 100 million (Rs 100,000,000) should be independent. Clause 49 of the listing agreements defines independent directors as follows:

“For the purpose of this clause the expression ‘independent directors’ means directors who apart from receiving director’s remuneration, do not have any other material pecuniary relationship or transactions with the company, its promoters, its management or its subsidiaries, which in judgment of the board may affect independence of judgment of the directors.”

The Companies Act, 2013, most sections of which got implemented from 1 April 2014, has mandated all listed public companies to have at least one-third of the total Directors to be independent. Whereas in the case of unlisted public companies, the following class of companies shall have at least two directors as independent directors:

• Public Companies having paid up share capital of Ten Crore rupees or more; or
• Public Companies having turnover of One Hundred Crore rupees or more; or
• Public Companies which have, in aggregate, outstanding loans, debentures and deposits exceeding 50 Crore rupees or more.

The Companies Act, 2013 is drafted taking into consideration the noteworthy inputs and contribution that an Independent Director can bring in to the business. Section 149(6) of the act stipulates the criteria for a candidate that ensures highest standards of integrity, while also preventing any conflict of interest. The provisions seek to ensure the autonomy of the appointee to facilitate effective discharge of duties such as upholding shareholders’ interest, upholding corporate governance standards, among others.^[6] The compensation offered to such Independent Directors in the form of “sitting fee” has also been increased from Rs. 20,000 (prescribed by Companies Act, 1956) to a maximum of Rs. 1, 00,000/- per meeting.

In India, the gravity of Independent Directors (referred as “ID’s”) was recognized with the introduction of corporate governance. The Companies Act, 1956 (referred as “the Act, 1956”) do not directly talks about ID’s, as no such provision exists regarding the compulsory appointment of ID’s on the Board. However, Clause 49of the listing agreement which is applicable on all listed companies mandates the appointment of ID’s on the Board. A need has been felt to update the Act and make it globally compliant and more meaningful in the context of investor protection and customer interest.

The Companies Act, 2013 (referred as “the Act, 2013”) came into force as Act no. 18 of 2013 after obtaining the assent of the President on August 29, 2013. The Ministry of Company Affairs (referred as “MCA”) enforced the 98 sections of the Act through the notification dated September 12, 2013.

INDEPENDENT DIRECTORS – AN OVERVIEW

The need for the ID’s aroused due to the need of a strong framework of corporate governance in the functioning of the company. There is a “growing importance” of their role and responsibility. The Act, 2013 makes the role of ID’s very different from that of executive directors. An ID is vested with a variety of roles, duties and liabilities for good corporate governance. He helps a company to protect the interest of minority shareholders and ensure that the board does not favour any particular set of shareholders or stakeholders.

The role they play in a company broadly includes improving corporate credibility, governance standards, and the risk management of the company. The whole and sole purpose behind.

ROLE OF INDEPENDENT DIRECTOR

State corporate law generally provides that the business and affairs of a corporation shall be managed under the direction of its board of directors which encompasses the independent directors.  The independent directors have a fiduciary relationship to the corporation, which requires that they act in the best interest of the corporation, as opposed to their own.  Generally a court will not second-guess directors’ decisions as long as the board has conducted an appropriate process in reaching its decisions. This is referred to as the “business judgment rule.” The business judgment rule creates a rebuttable presumption that “in making a business decision the independent directors of a corporation acted on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the company” (as quoted in multiple Delaware cases including Smith vs. Van Gorkom, 488 A.2d 858 (Del. 1985)).

However, in certain instances, such as in a merger and acquisition transaction, where a board may have a conflict of interest (i.e., get the most money for the corporation and its shareholders vs. getting the most for themselves via either cash or job security), the independent directors’ actions face a higher level of scrutiny. This is referred to as the “enhanced scrutiny business judgment rule” and stems from the Unocal and Revlon cases discussed below, both of which involved hostile takeovers.

A third standard, referred to as the “entire fairness standard,” is only triggered where there is a conflict of interest involving directors and/or shareholders such as where directors are on both sides of the transaction. Under the entire fairness standard, the directors must establish that the entire transaction is fair to the shareholders, including both the process and dealings and price and terms.

In all matters, directors’ fiduciary duties to a corporation include honesty and good faith as well as the duty of care, duty of loyalty and a duty of disclosure.  In short, the duty of care requires the director to perform their duty with the same care a reasonable person would use, to further the best interest of the corporation and to exercise good faith, under the facts and circumstances of that particular corporation. The duty of loyalty requires that there be no conflict between duty and self-interest.  The duty of disclosure requires the director to provide complete and materially accurate information to a corporation.

As with many aspects of securities law, and the law in general, a director’s responsibilities and obligations in the face of a merger or acquisition transaction depend on the facts and circumstances. From a high level, if a transaction is not material or only marginally material to the company, the level of involvement and scrutiny facing the board of directors is reduced and only the basic business judgment rule will apply.  For instance, in instances where a company’s growth strategy is acquisition-based, the independent directors may set out the strategy and parameters for potential target acquisitions but leave the completion of the acquisitions largely with the c-suite executives and officers.

Moreover, the director’s responsibilities must take into account whether they are on the buy or sell side of a transaction.  When on the buy side, the considerations include getting the best price deal for the company and integration of products, services, staff, and processes.  On the other hand, when on the sell side, the primary objective of maximizing the return to shareholders through social interests and considerations (such as the loss of jobs) may also be considered in the process.

The law focuses on the process, steps and considerations made by the independent directors, as opposed to the actual final decision.  The greater the diligence and effort put into the process, the better, both for the company and its shareholders, and the protection of the directors in the face of scrutiny.  Courts will consider facts such as attendance at meetings; the number and frequency of meetings; knowledge of the subject matter; time spent deliberating; advice and counsel sought by third-party experts; requests for information from management; and requests for and review of documents and contracts.

In the performance of their obligations and fiduciary responsibilities, an independent director may, and should, seek the advice and counsel of third parties, such as attorneys, investment bankers, and valuation experts.  Moreover, it is generally good practice to obtain a third-party fairness opinion on a transaction.  Most investment banking houses that do M&A work also provide fairness opinions on transactions.  Furthermore, most firms will prepare a fairness opinion even if they are not otherwise engaged or involved in the transaction.  In addition to adding a layer of protection to the independent directors, the fairness opinion is utilized by the accountant and auditor in determining or supporting valuations in a transaction, especially where a related party is involved.  This firm has relationships with many firms that provide such opinions and encourage our clients to utilize these services.

In this article, Akriti Shikha pursuing Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, discusses the general principles of Corporate Governance.

Corporate Governance

Corporate governance is a trendy expression in the corporate world. The idea of corporate governance increased further force after the sudden crash of Enron, Xerox, Lehman Brothers and the emergency of Satyam. Absence of straightforwardness and poor revelations in the yearly reports are hindering the stakeholders from finding out the prosperity of the corporate houses. As a result, financial specialist group encouraged for upgrades in administration hones which prompt the execution of corporate administration codes. In this day and age of globalization, the idea of corporate administration has assumed a critical position. Today, organizations are working in the universal field. For drawing in remote financial specialists and worldwide raising money, the corporate houses need to show great administration. The key rule for progress is to guarantee the development which is manageable and comprehensive.

Today, associations are working in the all inclusive field. For attracting remote budgetary authorities and overall fund-raising, the corporate houses need to indicate awesome organization. The key control for advance is to ensure the improvement which is sensible and complete.

Corporate Governance is a moral code of business of organizations. It is a framework by which organizations are coordinated and controlled. The Board of Directors is in charge of the administration of their organizations and to guarantee that fitting governance structure is set up. Henceforth, corporate governance is enveloping particular issues emerging from communications among shareholders, Board of Directors, different constituents and the general public.

Corporate governance idea has increased open consideration in mid 90’s in India. The multi-stakeholder origination has been under expanding assault in the course of the most recent couple of years with various stakeholder looking to ensure their interests. The Supreme Court of India while conceding endorsement to a proposed merger has held that the expression “organization” given the statutory system would take into its crease not only the investors and workers but rather the general population enthusiasm also. In the Cadbury Report[1], the partners of the organization are principally comprehended to be the investors of the organization.

Initial trends in Corporate Governance in India

To start with extraordinary activity on corporate administration was taken by Confederation of Indian Industry (CII) in 1996 by presenting willful corporate governance code. The goal was to create and advance a code of corporate governance to be embraced and taken after by Indian organizations. CII concocted the suggestions to be trailed by Indian industry.

In 1999, Kumar Mangalam Birla committee was selected to advance the measures of corporate governance. It accompanied some compulsory and non compulsory suggestions. The panel made suggestions for a few issues including board of directors, review advisory group, compensation board, administration, investors and so forth.

In 2000, SEBI presented compulsory corporate governance code set up of intentional code through Clause 49 of listing agreement. The expression “Clause 49” alludes to Clause number 49 of the Listing Agreement between an organization and the stock exchanges on which it is recorded. It is required for recorded Indian organizations to take after the arrangements of Clause 49. What might as well be called Clause 49 is US Sarbanes-Oxley Act of 2002, which was presented by Securities and Exchange Commission for the organizations recorded in U.S stock exchanges.

In 2002, Naresh Chandra committee was designated by the branch of company affairs. This panel took forward the suggestions of Kumar Manglam Birla advisory group. This advisory group set down strict rules characterizing the connection amongst auditors and clients.

In 2003, Narayan Murthy committee was setup by SEBI. This committee turned out with the proposals concentrating on fortifying the duty of review council, nature of budgetary revelation, continues from initial pubic offerings and numerous other essential angles.

On 29th October 2004, SEBI finally announced revised Clause 49.

The OECD i.e Organization for economic cooperation and development is a non-governmental association which offers a worldwide arrangement of standards of corporate governance. OECD principles were created in the result of the Asian emergency in 1997. They were embraced by OECD serves in 1999 and have from that point forward turn into a universal benchmark for arrangement producers, financial specialists, organizations and different stakeholders around the world. The standards being progressive have been altogether looked into by OECD steering group on corporate governance under an order from OECD serves in 2002 to consider evolving improvements.

The revised OECD standards are assembled under six headings. These are:

1. Ensuring the reason for a viable corporate governance framework

The corporate governance framework ought to advance straightforward and proficient markets. It must be predictable with the run of law and unmistakably explain the division of duties among various supervisory, administrative and implementation specialists.

2. The privileges of stakeholders and key proprietorship functions

The corporate governance framework ought to secure and encourage the activity of stakeholders rights. They have a privilege to partake in, and be sufficiently educated on choices concerning key corporate changes. They ought to have a chance to take an interest adequately and vote in general meetings and ought to be educated of the standards, including voting procedures. Markets for corporate control ought to be permitted to work in a productive way. Stakeholders ought to consider expenses and advantages of practicing their voting rights.

3. The fair treatment of stakeholders

The corporate governance framework ought to guarantee the evenhanded treatment of all stakeholders, including minority and remote investors. All stakeholders ought to have the chance to acquire compelling review for infringement of their rights. Insider exchanging and harsh self-managing ought to be restricted. Individuals from the board and administrators ought to be required to reveal any material interests in exchanges influencing the partnership.

4. The role of stakeholders in corporate governance

The corporate governance framework should recognise the rights of stakeholders established by law or through mutual agreements and encourage active co-operation between corporations and stakeholders in creating wealth, jobs, and the sustainability of financially sound enterprises. Corporate governance framework must permit performance enhancement mechanisms for stakeholder participation. Where stakeholders participate in the corporate governance process, they should have access to relevant information.

5. The part of partners in corporate organization

The corporate organization framework should see the benefits of partners set up by law or through shared understandings and bolster dynamic co-operation among organizations and partners in making wealth, businesses, and the supportability of fiscally strong attempts. Corporate organization framework must permit execution overhaul instruments for partner interests. Where partners appreciate the corporate organization process, they should approach critical information.

6. Disclosure and transparency

The corporate governance framework ought to guarantee that auspicious and precise exposure is made on every material issue with respect to the partnership, including the money related situation, execution, proprietorship, and administration of the organization. Information must be prepared, audited and revealed as per high quality standards of accounting and financial disclosures. Yearly audit ought to be led to give external and internal assurance.

7. The duties of the board

The corporate governance framework ought to guarantee the vital direction of the organization, the powerful checking of administration by the board, and the board’s responsibility to the organization and the stakeholders. Where board decisions may influence diverse stakeholder groups in an unexpected way, the board should treat all stakeholders decently. Board must satisfy certain key capacities like auditing and directing corporate procedure, hazard approach, yearly spending plan, strategy for success and so on. Board individuals must approach exact and applicable information to satisfy their obligations. The board should likewise have the capacity to practice objective judgment on corporate affairs independent from administration.

Case Study

Rata Tata-Cyrus Mistry case[2], where Mistry raised various corporate governance issues in the Tata Group since his expulsion, not only talks about breach of corporate governance norms but also raises questions about corporate governance practices in India.

The Satyam Computer Services Limited[3] (now Mahindra) fraud, in 2009, was one of the biggest corporate frauds in India. The managing director and other high-level officials were involved in inflating the cash flows and falsifying accounts for several years. This scandal witnesses breach of several corporate governance norms like protection of shareholder’s and stakeholder’s interests, director’s liability and his fiduciary duty towards the company, duty of case, good faith and transparency.

In Sahara India Real Estate Corporation Limited v SEBI[4], sahara’s dispute with the SEBI triggered in 2009 was the fallout of another corporate fraud. On reviewing the initial public offering (IPO) prospectus filed by the group’s Sahara Prime City Ltd, the SEBI discovered that two affiliated companies the Sahara group had been selling convertible debentures to about 30 million investors in the guise of a “private placement” without complying with the requirements applicable to the public offerings of securities. The Supreme court observed that if the offer is made to 50 persons or more, then it will have to be treated as public issue and not a private placement and directed the company to refund monies to investors.Q

In 2009, Subhiksha’s nationwide multibrand network of retail stores[5] collapsed owing to financial mismanagement and severe cash crunch. The company has been probed for fraud and misrepresenting the actual financial condition of the company following a series of litigations, mostly filed by lenders and investors. The Madras High Court has, in 2012, ordered the winding up of the company after a winding up petition was filed by Kotak Mahindra Bank, lender to Subhiksha.

The basic standards of corporate administration are the qualities, morals and sense of duty regarding take after best business rehearses. Along these lines, it rests upon the establishments of straightforwardness, exposures and decency in managing its partners. The business strategy and plans ought to be reliable with the welfare of all partners and ought to be in accordance with the financial approaches received by the country. In this manner, the corporates ought to consistently attempt to take forward the prescribed procedures to upgrade partner’s esteem. Without corporate administration, the business sectors, financial specialists and society will lose trust in corporates. The nature of the Indian corporate administration framework is normal when contrasted with the other creating nations in Asia. Indian exposure laws are more grounded than those of other creating nations and even those of some created countries. Be that as it may, their requirement is not upto the check. A great deal is expected to bed one towards the soul of rehearsing corporate administration benchmarks. There is an uplifting news that some Indian organizations are looking at well against worldwide blue chip organizations in regard of their corporate administration rehearses. Full meeting with global bookkeeping and review measures, better security of minority financial specialist’s rights and more grounded authorization of existing laws and controls are a portion of the regions that require sufficient consideration soon.

Exact proof and research led as of late backings the suggestion that it pays to have great Corporate Governance. It was discovered that over 84% of the worldwide institutional speculators will pay a premium for the offers of a very much administered organization more than one considered ineffectively represented yet with a similar money related record. Along these lines, the reception of Corporate Governance standards has just appeared in different markets where it can likewise assume a part in expanding the corporate estimation of organizations.

[1] Cadbury Report, Financial Aspects of Corporate Governance, London, (December 1992)

[2] Shrimi Choudhary, Tata vs Mistry: Independent directors queue up for legal opinion , http://www.business-standard.com/article/companies/tata-vs-mistry-independent-directors-queue-up-for-legal-opinion-116121300020_1.html (Last visited on 8.1.2017 at 3:30 pm)

[3] (2008) 4 SCC 190

[4] (2012) 174 Comp Cas 154 (SC)

[5] Mahopatra Sanjay, Case studies in Business Ethics and Corporate Governance, Pearson,  Pg. 135-140 (2013)

In this article, Pradipta Nath pursuing M.A, in Business Law from NUJS, Kolkata discusses Regulatory and Legal framework governing Mines & Minerals in India.

Mineral in any country plays an important role in upgrading the economy for any Sovereign estate and especially for a developing country like India. The energy sector does need special attention so that the minerals are utilized to the greatest good to the greatest numbers and not exploited for personal selfish needs and desire.

At first, there was no law in India for governing the mineral sector and the natural resources were often get exploited without any Control, conditions and rules which results in accumulation of money into few hands and often the growth of mafias. Thereafter the new laws came were drafted to govern the Minerals of India.

Legal Framework on Minerals mining in India

The Mines and Minerals (Development & Regulation) Act (MMDR), 1957 is the principal legislation that governs the mineral and mining sector in India. The Act is a central legislation in force for regulation of mining operations in India. Under the act, minerals are taken under two broad heads, major minerals and minor minerals. The list is lucid.

The power to frame policy and legislation on the minor minerals are entirely the subjected and delegated to the State Governments while policy and legislation relating to the major minerals are dealt by the Ministry of Mines under Union /Central Government of India. The central government has the power to notify “minor minerals” under section 3 (e) of the MMDR Act, 1957. On the other hand, as per Section 15 of the MMDR Act, 1957 State Governments have complete powers for making Rules for grant of concessions in respect of extraction of minor minerals and levy and collection of royalty on minor minerals.

Whereas in case of offshore areas (territorial Waters, Continental Shelf, Exclusive Economic zone and other Maritime zones of India), the ownership of minerals vests exclusively with the Central Government. In order to regulate the mining and development of minerals in the offshore area, the Parliament has enacted the “Offshore Areas Minerals (Development and Regulation Act, 2002”. The Act empowers the Central Government to grant mineral concessions for offshore areas and collect royalty. The Indian Bureau of Mines has been notified as the administrative authority for concession management of offshore areas.

Developments under The Mines and Minerals (Development and Regulation) Act, 1957

Where there is inadequate evidence to show the existence of mineral contents of any notified mineral in respect of any area, a State Government has to obtain previous approval from the Central Government for granting a prospect licence-cum-mining lease for the said notified mineral in areas in accordance with the procedure laid down in section 11.

A holder of a mining lease or a prospecting licence-cum-mining lease granted in accordance with the procedure laid down in section 10B or section 11 may, with the previous approval of the State Government, transfer his mining lease or prospecting licence-cum-mining lease, as the case may be, in such manner as may be prescribed by the Central Government, to any person eligible to hold such mining lease or prospecting licence-cum- mining lease in accordance with the provisions of this Act and the rules made thereunder.

Constitution of Special Courts

U/s 30B (1) The State Government may, for the purposes of providing speedy trial of offences for contravention of the provisions of sub-section (1) or sub-section (1A) of section 4, constitute, by notification, as many Special Court.

U/s 30B (2) A Special Court shall consist of a Judge who shall be appointed by the State Government with the concurrence of the High Court of the State.

U/s 30B (3) A person shall not be qualified for appointment as a judge of a Special Court unless he is or has been a District and Sessions Judge.

1. U/s 30B (4) Any person aggrieved by the order of the Special Court may prefer an appeal to the High Court within a period of sixty days from the date of such order.
2. Special Courts to have powers of Court of Session: – U/s 30C. The Code of Criminal Procedure, 1973, applies in the proceedings before the Special Court and for the purpose of the provisions of this Act, the Special Court is deemed as a Court of Session and contain all the powers like of a Court of Session and the person conducting a prosecution before the Special Court is a public prosecutor for the purpose of this Act.
3. The Central Government prescribe the terms and conditions, and procedure, for the auction which is conducted, including the bidding parameters for the selection, which include a share in the production of the mineral, or any payment linked to the royalty payable, or any other relevant parameter, or any combination or modification of them.
4. The Central Government also framed the following rules for implementing the provisions of the MMDR Act under the Amendment made in the year 2015.
5. Minerals (Evidence of Mineral Contents) Rules, 2015:- This provides the set of rules that set the procedures to be followed for conducting any exploration to determine the mineral content and to take up the mineral blocks for auction and mineral concessions.
6. Mineral (Non-exclusive Reconnaissance Permits) Rules, 2015:- It laid down the process to be followed for grant of Non-exclusive Reconnaissance Permit.
7. Mineral (Auction) Rules, 2015:- It contains the rules for auction with respect to grant of concessions over the minerals in India.
8. National Mineral Exploration Trust Rules, 2015:- it laid down the objectives, functions and operations of the National Mineral Exploration Trust.

National Mineral Exploration Trust

Under Section 9C (1), The Central Government established a Trust, called as the National Mineral Exploration Trust which is a Non Profit Organization. The object of the Trust is to use the funds accrued to the Trust for the purposes of regional and detailed exploration in such manner as may be prescribed by the Central Government.

Functions of MET

• MET carries out regional (inter-state) and detailed exploration for minerals including those activities deemed necessary by the Governing Body of MET. Some such sanctioned activities include:
• Funding special studies and projects designed to identify, explore, extract, beneficiate and refine deep-seated or concealed mineral deposits; Priority is given to strategic and critical minerals.
• Undertaking studies for mineral development, sustainable mining, adoption of advanced scientific and technological practices and mineral extraction metallurgy;
• Facilitating completion of brown-field regional exploration projects in obvious geological potential areas (G3) including conducting high-risk exploration for deep-seated mineral deposits through modern technologies;
• Promoting completion of detailed exploration (G2 or Gl) across India in the areas where G3 stage exploration has been completed;
• Deciding the priorities for exploration after consulting Central Geological Programming Board facilitating geophysical, ground and aerial survey and geochemical survey of obvious geological potential areas and rest of India; Facilitating a national core repository for encouraging research in earth sciences and for evaluation of the mineral prospects;
• Organizing capacity building programmes to raise technical capability of personnel engaged in or to be engaged in exploration

District Mineral Foundation

• Setting up of District Mineral Foundations (DMFs) in all districts in the country affected by mining related operations was mandated through the Mines and Minerals (Development & Regulation) Amendment Act, (MMDRA) 2015.
• Every holder of a mining lease or a prospecting licence-cum-mining lease shall, in addition to the royalty, pay to the District Mineral Foundation of the respective concerned districts in which their mining operations are carried on.
• If the mining area is spread across and operated at several districts, the fund is shared on a pro-rata basis by these districts. DMF contribution do not be exceed one-third of royalty and the Central Government retains the power to prescribe the rates of contribution, though DMF’s operation is under state governments. The contributions made to DMFs are collected by the State Governments.
• Under the above mentioned MMRD Amendment Act of 2015, a provision was made also to create a National Mineral Exploration Trust under the jurisdiction of central government, with 2% of royalty levied, for boosting detailed exploration of minerals in India.

Period of granting mining lease for minerals other than coal, lignite and atomic minerals

• U/s 8A (2) on and from the date of the commencement of the Mines and Minerals (Development and Regulation) Amendment Act, 2015, all mining leases shall be granted for the period of fifty years.
• U/s 8A (1) The provisions of this section shall apply to minerals other than those specified in Part A and Part B of the First Schedule.
• All mining leases granted before the commencement of the Mines and Minerals (Development and Regulation) Amendment Act, 2015 will also be deemed to have granted lease for a period of fifty years too.
• On the expiry of the lease period, the lease shall be put up for auction as per the procedure specified in this Act.
• Any holder of a lease where mineral is used for captive purpose will have the right of first refusal at the time of auction held for such lease after the expiry of the lease period.

The gist of Offshore Areas Minerals (Development & Regulation) Act, 2002

• The Act is applicable to all minerals in offshore areas including minerals prescribed under Atomic Energy Act, 1962, but excludes oils and related hydrocarbons as there is separate legislation for them in force. The Act came into effect from 15.1.2010 vide S.O.338(E), dated 11.2.2010 notified by the Central Government.
• Indian Bureau of Mines has been notified as the ”administering authority” and ”authorised officer” under Section 4 and Clause (i) of Section 22 of the Act vide S.O.339 (E) and 340(E) dated 11.2.2010. The Secretary, Ministry of Mines has been notified as ”authorised officer” to hear and decide cases relating to Clauses (a) and (b) of Section 28(1) vide S.O.341 (E) dated 11.2.2010.
• The Act empowers the Central Government to make rules for the purpose of the Act including terms and conditions under the reconnaissance permit, exploration licence, production lease, etc.
• The Government of India had announced the New Exploration Licensing Policy (NELP) in 2000 under which blocks for exploration of oil and gas were on offer for bidding. The NELP provides an international class fiscal and contract framework for exploration and production of hydrocarbons.

The Indian Bureau of Mines (IBM)

• The Indian Bureau of Mines (IBM) established in 1948, is a multi-disciplinary governmental organisation under the Department of Mines, Ministry of Mines, engaged in promotion of conservation, scientific development of mineral resources and protection of environment in mines other than coal, petroleum & natural gas, atomic minerals and minor minerals.
• The primary mission of Indian Bureau of Mines is to promote systematic and scientific development of mineral resources of the country (both onshore and offshore), through regulatory inspections of the mines, approval of mining plans and environmental management plans to ensure minimal adverse impact on environment.
• It carries out inspection in mines, provides approvals of mining plans and mine closure plans. It also conducts environmental studies to minimise environmental impact due to mining.

Offshore Areas Mineral Concession Rules, 2006

1. The Offshore Areas Mineral Concession Rules, 2006, lay down the process for grant and renewal of reconnaissance permits, exploration licenses and production leases as per provisions of Section 35 of the Offshore Areas Mineral (Development and Regulation) Act, 2002.
2. The rules prescribe for measures for protecting the marine environment and safety measures to be followed in the leased area.
3. The rules also define the operational guidelines for each concession granted under the act.

Mines Act, 1952

The preamble of the Act laid down that it “an Act to amend and consolidate the law relating to the regulation of labour and safety in mines”.

The Act consists of 88 sections in 10 chapters. The Mines Act, 1952 is a sort of welfare legislation which prescribes the laws relating to the regulation of labour and their safety in mines. The act also regu­lates for carrying out mining operations and management of mines. It lays down the basic provisions for health and safety of people em­ployed in mines and regulates their working conditions. It also has provisions relating to in­spection of mines and procedure of reporting to be followed.

Sec.8 – powers of special officers to enter, measure etc.

Sec.9 – facilities to be afforded to Inspectors

Sec.19 – Provisions for drinking water

Sec.28 – Weekly day of Rest

Sec. 29 – Compensatory day of Rest

Sec. 30 – Hours of work above the ground

Sec.31 – Hours of work below the ground

Sec.40 – employment of persons below 18 years of age

Sec.45 – prohibition of presence of persons below 18 years of age in a mine

Section 2(JJ) of the Mines Act of 1952 defines the term ‘minerals’ as meaning ‘all substances which can be obtained from the earth by mining, digging, drilling, dredging, hydraulic, quarrying or by any other operation and includes mineral oils (which in turn include natural gas and petroleum)’.

The Supreme Court of India in Ichchapur Industrial Co-operative Society Limited v. The Competent Authority, Oil and Natural Gas Corporation and Another (1997(1) SC.130, Judgement Today) has held that the term ‘mineral’ as defined in the Mines Act of 1952, includes water as well. (Link: https://indiankanoon.org/doc/1921600/)

Mines Rules, 1955

1. The Mines Rules, 1955 provides the provision for engaging a medical officer for examination the persons employed at mines.
2. The rules also provided the basic health and sanitation provisions and welfare amenities for the miners and their families.
3. The clearances required for exploring or mining an area under a grant depends on the type of concession.

A list of indicative clearances, approvals and permits may be included as a part of the Tender Document at the time of auction by a State Government.

Some of the mandatory clearances/ approvals, inter alia, required for commencement of exploration or mining operations include:

• Environment and Forest Clearance
• Wildlife Clearance (sanctuary/ reserve/ special zone clearances)
• Land Owner’s Consent
• Explosive License
• Permission for Mine Opening
• Transmission line from State Transmission / Distribution Companies

The Forest (Conservation) Act, 1980

As stated in the preamble of the Act that, “An Act to provide for the conservation of forests and for matters connected therewith or ancillary or incidental thereto”.

1. The Act put mandate over the State Government to have consultation and approval before declaring any forest as ‘Non-Forest’ zone which has been specifically reserved as ‘Forest Zone’.
2. The power to make rules under the Act has been delegated to the Central Government.

Types of Concessions

As per the MMDR Act 2015 (Amendment), the following two types of License which are granted to the bidders: –

There are two types of licence/lease –

1. Mining Lease
2. Composite License

These are electronically obtained after applying on the auction process under the Mines and Minerals (Development and Regulation) Amendment, Act 2015. This is also at par with the Mineral (Auction) Rules, 2015 notified by the Centre. The rules made it clear that auctioning will be done on a forward auction basis where the highest bid above the reserve price will win. The winner will have to undertake exploration in the area. If the winner fails to find mineral content, the licence will lapse and the mining lease shall be cancelled.

Role of Government: The Government will initiate an auction process for grant of a mining lease with respect to an area within the State. It will issue a notice inviting tender (NIT) with respect to mineral auction, identify and demarcate the area where a mining lease is proposed to be granted through auction by using total station and differential global positioning system. It is also required to classify the area so demarcated into forests land, land owned by the State Government and land not owned by the State Government.

The tender document will also include estimated mineral resources and brief particulars regarding evidence of mineral contents and list of all clearances and permissions obtained with respect to such area in order to commence mining operation.

1. Minerals are classified into minor minerals and major minerals.
2. Mines and Minerals (Development and Regulation) Act 1957 (MMDR Act) is the main Act to govern the Minerals in India.
3. The Offshore Areas Mineral (Development and Regulation) Act 2002 regulates the development of mineral resources in territorial waters, continental shelf, exclusive economic zone and other maritime zones of India.
4. The following licences are issued by the state government under the Mines and Minerals (Development and Regulation) Act 1957 (MMDR Act):
5. Reconnaissance permit (RP):an RP is for the purpose of undertaking reconnaissance operations and is a right to perform any operations undertaken for preliminary prospecting of a mineral.
6. Prospecting licence (PL):a PL is for the purpose of undertaking operations with respect to exploring, locating or proving mineral deposits.
7. Mining lease (ML):an ML is a lease, which also includes a sub-lease, for the purpose of undertaking mining operations with respect to extracting minerals from the relevant mine.
8. Where there is a breach of any condition imposed on the holder, the RP, ML or PL can be cancelled by the relevant state government and/or the amount deposited as security deposit (as applicable) may be forfeited in whole or in part.
9. The central government can, after consultation with the relevant state government, cancel an ML or a PL if it is in the public interest to do so (MMDR Act).

References

https://uk.practicallaw.thomsonreuters.com/0-562-4168?transitionType=Default&contextData=(sc.Default)&firstPage=true&bhcp=1

1. http://ibm.nic.in/writereaddata/files/07102014115602MMDR%20Act%201957_10052012.pdf
2. http://www.mines.nic.in/writereaddata/UploadFile/Offshore_Areas_Mineral_Development_Regulation_Act_2002.pdf
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In this article, Nikhil Mukund Borkar pursuing M.A, in Business Law from NUJS, Kolkata discusses FSSAI new guidelines on import of Food.

Every country requires an effective food control regulatory body to safeguard and promote a trustworthy and honest food presentation and supply culture. An honest food supply chain ecosystem ensures that consumers are protected from adulterated, spoiled and contaminated foods. It is generally observed that the food law is divided in two parts: Regulations and the basic food act. The regulations pertain with detailed provisions and the Act lays down a wide array of principles.

The food law that is based on the principles that primarily deals with, but isn’t restricted to: laying down the scope and purpose, defining all the terms and concepts contained herewith, maintaining updating and communicating list of chemical and biological contaminants, protocol for inspecting samples, guidelines for labeling and packaging, protocol for amending the regulations, scope of implementation of the law. Scientific analysis and study is the core foundation on which Food Law bases itself. From the advent of the late twentieth century, a phenomenon of global harmonization and standardization of food law is being observed.

The legal frameworks of a country are rightly considered as a crucial pillar that aids effective food control system.  Most country’s food is under a regime of myriad laws and regulations, that are set out by the government and needs to be met by the local and international food supply chain operators to ensure that the food is consumable and safe. Ideally, the food law of a country should entail requirements for the total supply chain; right from provisions for animal fodder, on-farm conditions and restrictions; food processing lifecycle through to last mile distribution and consumption by the user.

As countries continue to experience population and consumption growth, there is increased pressure placed on agriculturists and farmers to increase production and yields. This increased pressure for higher yields has led to increased use of chemicals and pesticides. The storage and transport of food could also involve usage of chemicals.

The chances of contamination increases significantly as large quantities of food continue to get centrally processed. In today’s fast-paced world, there has been a huge spike in demand, mostly contributed by busy professionals, for foods that can be quickly served and consumed. However, this convenience comes at a cost; there’s heightened risk of contamination. These convenience foods also contain food preservative and additives, hence a guideline for precautions and hygiene is needed.

As the consumption increased with time, so did the trade of foods, among countries and within countries; thus, the necessity of food law arose not only nationally but internationally.  Since the Industrial revolution, the world has started getting more interconnected and food trade increased. There was little to no government intervention, and there was an implicit understanding that the producers of the food would determine their own standards and quality control measures for the food that their consumers would buy. Honorable, accountable and responsible businesses took great precautions to ensure that their consumers are protected. However, a few dishonest traders, in greed of earning a quick buck, misused the unregulated food markets and sold low quality, adulterated foods. Continued instances of such market abuse over time, prompted the governments to intervene and enact food regulations and law. The combination of food control authorities and food regulations ensure that the food that is being domestically produced, exported and imported are safe for consumption.

Constituents of the Food Law

More often than not, the food law is made up of two core ingredients;

1. Regulations
2. The Food Act

Guidelines and provisions, explained with a fair degree of granularity, that governs various types of food products. In contrast, the Food Act lays down a broad range of principles.  Many proactive and vigilant countries also regularly update the levels of chemical tolerances, food standard, provisions for hygiene, list of acceptable food additives; and include them in the food law.

In order to establish a robust food security system and ensure that there are mechanisms for enforcement, there needs to be descriptive and detailed provisions laid out. In many countries, the responsibilities of the government are mainly split into that of the executive and that of the legislative branches. While executive branch formulates and elaborates regulation that is proposed by the law administering agencies, the legislative branch enacts the basic law.

Nations that include a detailed explanation of specifications of food standards, food additives, food processing, labeling and packaging, hygiene standards and pesticides in the law may face some difficulties. As food technology advances, new scientific insights come to light, or emergencies that warrant a quick action could prompt swift revisions of regulations. These revisions can be expedited by the executive branch rather than the legislative branch.

There have been instances where countries have made their food standards as a part of the regulations; however some countries have maintained separate enactments for the same. Inevitably, these standards get included in the enforcement mechanism, with the intention of implementing basic food law.

Ideally, a country’s basic food law should consist and focus on the principles stated below:

• The scope and the intention of the law
• Basic concept definitions
• Capacity for legal implementation.
• Labeling and packaging
• Enforcement procedure and polices, magnitude of penalty
• Procedures to be followed to prepare and amend the regulation
• Inspection facilities and analytical processes
• Guidelines and regulation for pesticides, additives and contaminants.

The intention of the food law is to provide, by means of a mark or certification, of assurance to consumers of food that it is wholesome, edible and manufactured in hygienic facilities. Most country’s food law is empowered to prohibit the import and distribution of adulterated food products and foods with labels which are misleading or untrue in any way.

A strict adherence to these provisions of the food laws encourages compliance that leads to adoption of fair trade practices. It ensures and safeguards the interest of the honest manufacturer of food products from unethical businesses that create an unfair competition. This prompts and incentivizes the participants to adhere to scientific guidelines which lead to acceptance of food products and overall development of the industry.

A crucial facet of the food law is the clear definition of terms like food additives, food contaminants, adulteration, imitation food, natural food, and pesticide residue and food fraud.

For example, an ideal food law could describe and ascertain food illegality if:

• If the food product contains a harmful, poisonous, natural element or substance that, when consumed, would be injurious to health.
• If any part of the food product is decomposed or stale.
• If the food product contains a harmful, poisonous element or substance that, when consumed, would be injurious to health.

Furthermore, exact description of what amounts to an offense must be included in the food law, which would increase penalties. Offense that should be covered are mentioned below:

• Misleading and fraudulent labels on food products
• Intentional adulteration of foods
• Promoting and advertising the consumption of foods that contain illegal or harmful substances
• Non-compliance to hygiene requirements
• Non-compliance of standards set by the food law

The scope of Food Regulations

Discussed previously, we know that food regulations inevitably dictate the food law enforcement mechanism. Ideally, the food regulations should cover:

• Pesticides
• Food labeling and packaging
• Food hygiene
• Food Marketing
• Regulations
• Food standards
• Food additives

These regulations entail detailed guidelines for the enforcement practitioners. This contains regulations pertaining to official steps, such as protocol for sample collection, inspection guidelines, ascertaining the magnitude of penalty in case of non-compliance, handling of foods collected during seizures.

General Regulations also contain guidelines and regulations pertaining to permits; which type of companies must be registered, type of foods that require permits and registrations, the conditions and requirements to acquire a permit.

Now that we’re familiar with the basic food law and regulation, let us have a deeper look at the food import policies of India.

FSSAI Food Import Regulations

The Food Safety and Standards Authority of India (FSSAI), in order to simplify and streamline the clearance process, issued a notification on import regulations.

A risk based framework that reviews risks associated with imported food products periodically, is a core component of the food regulator’s risk-based inspection process.

The FSSAI welcomed all the stakeholders of the food import and distribution supply chain to voice their opinions and concerns. After a thorough consultation process, the Food Safety and Standards (Import) Regulations, 2017 was notified.

The food regulators assured that with these new regulations, not only would the consumer interests be safeguarded but also facilitate ease of doing business and ease of trade.

Various provisions pertaining to a license mechanism for food importers and guidelines for clearing the passage of imported foods into India have been laid down in the regulations. This includes guidelines and best practices pertaining to food storage, food sampling and inspection, food labeling and packaging guidelines for importing food products and food clearances for specific reasons.

The Food Safety and Standards Authority of India could, after consultation, introduce a mechanism to regulate import of food products by means of a pre-arrival document review.

The Indian food regulator is also said to be in talks to enter into memorandums of understanding with food agencies of countries with which India has significant trade volumes and relations, to accelerate clearance of import of food products from those countries to facilitate ease of doing business.

The Indian food regulator, the Food Safety and Standards Authority of India (FSSAI) is also in the process of identifying trustworthy laboratories in countries that have substantial volumes of food products exported to India; for a pre-screening and testing of food product samples before those products make way to India. The Indian food regulator has also hinted that it could periodically issue food alert notifications depending on the extent of the risk found to be associated with the food products; this includes ban of food products for a specific period of time or enforcing a product recall.

Diving deeper into the Food Import Regulations

The Food Safety and Standards Authority of India (FSSAI), on the 14^th of January 2016 published regulations pertaining to import of food products, known as the Food Import Regulations, 2016. The regulation is to be implemented with immediate effect and binding on all companies in the food import supply chain and distribution. A draft document was put out by the food regulator for comments from the various stakeholders in July, 2013. An analysis of the two documents suggests that significant revisions were incorporated.

Major and notable highlights of the Food Import Regulations, 2016 are discussed below:

1. License requirement for Food Business Operators (FBOs) and Food Importers:

• The regulation requires the Food Business Operators/Importers to register themselves with the Directorate General of Foreign Trade (DGFT)
• Businesses engaged in the import of food must have an import license granted by the Central Licensing Authority.
• Having a valid Import-Export code is necessary for the Food Importer.

2. Regulations pertaining to Shelf-life of the products:

• Food products that declare a shelf-life of less than seven days, according to Schedule II, an authorized officer, would sample the food products and grant a No-Objection Certificate (NOC) to the Customs and Clearance authority, without having to wait for the laboratory’s analysis report. The Customs Authority would receive communication regarding the analysis done by the laboratory and the NOC, when the products conform the standards laid down by the FSSAI.
• If the food samples are found to be in violation of the standard, the authorized officer would inform the Customs House Agent /importer to recall the said food consignment and within 24 hours, furnish a compliance report to the FSSAI. After which the FSSAI would issue alerts to officers stationed at all ports of entry to be on the vigil for the questionable food product and consignment of products of the same manufacturing company as a whole.
• Every food importer is obligated to inform the AO/DO regarding the details of their Customs House Agent (CHA) and what authority is granted to them. In case of curtailment of authority or modification of the status of the CHA, the companies must inform about the same within 3 days of the modifications.
• The procedure to appoint a CHA by a food importer is provided under Schedule 1. The application requires furnishing the following details:
• Food item that would be imported
• Name of the Customs House Agent.
• The Custom House Agent’s license number
• Name, Address and contact details of the Importer
• Country in which the food product consignment originates

3. Import Clearance based on Risk Framework and Inspection

The Food Safety and Standards Authority of India (FSSAI) has proposed to adopt a mechanism that would clear the imported food product depending on a risk-based inspection and a risk -based framework.

In order to achieve this, the FSSAI would create a database by collecting data of the various stakeholders like, Clearing House Agents, Manufacturers Food Importers, Imported food products, country of origin, ports of entry , compliance history of the company and other factors and parameters that would better estimate the product risk.

For regulating the imports, the FSSAI is also in process of introducing the Pre-Arrival Document Review (PADR). As the risk-based framework becomes operational, the sampling procedure would improve significantly.

The procedure and documentation required for the clearance of food consignment is discussed below:

1. An application for clearance of Import consignment must be submitted by the food importer or his CHA. The application must contain details of the CHA and/or the Food importer; namely, address, email id, CHA’s license number, Food importer’s code etc.
2. The application must contain the details mentioned below:

• Date of packaging and/or manufacturing of the food product
• Best before date and/or expiry date.
• Exporting country’s name
• Manufacturing Country
• Dispatch date of the food product from the exporting country.
• Description and Quantity of food product consignment
• FSS code of the food product as mandated by the FSSAI
• Food Product Consignment Invoice Value in INR

A list of documents as mentioned below, are mandatorily required to be submitted along with the application form:

• Details as required in Form ‘A’
• Central Board of Excise and Custom’s EDI system generated Examination order and Bill of Entry.
• A plan of recall
• Declaration of End Usage
• Certificate f Country of Origin (COO)
• A laboratory report of the food product from an authorized laboratory from the country of origin.
• The regulatory status of the food product, along with the Free Sale Certificate (FSC) and safety assurance report of the food product from the origin country must be declared.

4. MOUs with Trade Partners:

The Ministry of Commerce and Industries (MCI) and the Food Safety and Standards Authority of India (FSSAI) would jointly try to seek entering into Memorandums of Understanding (MOUs), which would work on a reciprocal basis, with agencies and allied service providers in exporting countries to accelerate the process of clearance of consignments of food products from such countries. This could also entail shortlisting scientific laboratories that specialize in food technology in exporting countries for pre-sampling and testing of food product prior to their import to India.

5. Guidelines for Labeling and Packaging

• The food products that are imported must mandatorily comply with the Labeling and Packaging Regulation, 2011.
• If a consignment consists of different food categories or multiple food products packed and shipped in a single container must be packaged in a manner that would make it easier for the inspecting officers to collect samples of the different food products in the consignment.
• Should the consignment of food products be found non-compliant of the packaging and labeling regulations, the consignment would be rejected upon visual inspection without collecting any samples from the consignment.
• The Labeling and Packaging regulation accounts for special exemptions of labeling of name and address of importing company, the importing company can attach the Veg/Non-Veg logo in a customs warehouse, after the import of the food product consignment .The AO can direct an order notifying the importer to undertake the labeling recertification that is permissible, within a stimulated timeframe in the customs warehouse on the condition that the importer of the food product consignment wouldn’t mask the original label information. After the recertification, the AO would carry out another inspection.
• Should the importer of the food product consignment fail to satisfactorily rectify the defects that are permissible in the Labeling and Packaging regulations, the AO is within his rights to issue an NCC and refuse the clearance of the said food product consignment.
• The imported food product from which the sample shall be obtained must have the label information as specified below:
  • Location and Date of food sample collection
  • Name of the food product
  • Sample code number
  • Sample quantity obtained
  • If preservatives are added to the food product for sampling purpose, name of the preservative.
  • Official acknowledgement of signature and name of the sender.
  • Signature and name of the Clear House Agent and/or the Food product consignment importer.

6. Storage

When in Customs warehouse no part of the product consignment is allowed to come in contact with other food products in the warehouse. Imported food products consignments requiring special storage conditions would require the Authorized Officer to first check for the availability of storage space and storage conditions in the Custom’s warehouse. If a suitable storage space isn’t found, the Authorized Officer could permit the food product consignment’s movement to a storage facility that is well-equipped, should the importer of the food product consignment choose to do so.

Every food product consignment that is imported should be stored in strict adherence to the conditions prescribed by the custom warehouse before obtaining clearance certificate from the Authorized Officer. Should the importer of his Clearing House Agent (CHA) fail to do so, the Authorized could deny granting No Objection Certificate (NOC) for the clearance of the food product consignment.

7. Process of Reviewing Application

The Food Safety and Standards Authority of India (FSSAI) has set up a grievance redressal mechanism so that the Importers of the food product consignment  can file for a review application, addressed to the reviewing officer; should the importer have been aggrieved by any orders of the Authorized Officer mentioned below:

• An order that directed the food product importer to correct the food product label.
• A report from the food analyst that states that the food product is non-compliant with the FSSAI regulations, leading to rejection.
• Any form of non-conformity with the regulations that lead to rejection of the food products from being cleared.

References

1. http://foodsafetyhelpline.com/2016/01/fssai-notifies-standards-for-food-import-with-immediate-effect/
2. http://agriexchange.apeda.gov.in/IR_Standards/Import_Regulation/2016%20Food%20Import%20RegulationsNew%20DelhiIndia1292016.pdf
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