What is a Special Purpose Vehicle?

December 6, 2014

This article is written by Saurabh Mishra, a student of HNLU.

A special purpose vehicle (SPV) as the name says, is formed for a special purpose. Its powers are limited to what might be required to attain that specific purpose and its life is destined to end when the purpose is attained. The operations are limited to the acquisition and financing of specific assets. SPVs are generally a subsidiary company whose obligations are secured even if the parent company goes bankrupt.

A corporation sponsors an SPV for a particular purpose. It includes isolation of an activity, asset or operation from the rest of sponsor’s business. The isolation is essential for external investors as they are not affected by the generic risks of the originating entity. There are usually no offices, management or employees. It may consist of legal documents containing share holding agreement, Trust Deed or a joint venture agreement.

Originator has flexibility in choosing appropriate legal structure for SPV based on its requirement. SPV can be in the form of a company, trust (with or without company as a trustee), Mutual Fund, a Statutory Corporation, a society, a firm, etc. An SPV can be in all possible forms of a business entity that is capable of being formed. Accordingly the provisions of parent law for incorporation of such entity, i.e., the Companies Act, Trust Act, the Partnership Act, etc will apply to formation of such SPVs.

Characteristics of SPV

It should be capable of acquiring, holding and disposing of assets.
It would be undertaking activity of asset securitization and no other activity.
The bankruptcy of the originator should not affect the interests of holders of instruments issued by SPV.
It should not be capable of being taken into bankruptcy in the event of any inability to service the securitized papers issued by it.
An SPV must have a distinct identity from its promoters/sponsors/constituents/shareholders. Its creditors cannot obtain satisfaction from them.

Types of SPVs

The type of SPV floated depends upon the purpose to be fulfilled by such an SPV. A broad categorisation can be made as On- Balance Sheet SPV and Off Balance Sheet SPV.

In the case of ‘on-balance sheet SPV’ is that entity whose financial results are consolidated with the results of its sponsor. The financial results of such SPV are reported in the Annual Reports of the sponsor. In the case of off balance sheet SPV, the financial statements are not required to be reported in the financial results of its sponsors. The SPVs are structured in such a way that they remain isolated from its parent company.

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In case of on balance sheet SPV the income or receivables are some way or the other transferred to sponsor company this may not be the case of an off balance sheet SPV.

An off balance Sheet SPV has following characteristics:

They are thinly capitalized
They do not have independent management or employees;
Assets held by the SPV are serviced by through a servicing agreement.
They are structured in a way so that they do not become bankrupt.

SPVs Formed by Banks/Financial Institutions For Securitisation

The total assets of banks or financial institution mainly comprise of loans and receivables along with their future cash flow to a separate entity, which may be formed for a specific purpose. The SPV is allowed to raise debt which will be backed by these receivables and their future cash flows. The difference between the incomes received from these receivables and cost of servicing that debt will be profit/earning of the SPV. By securitization through SPV the risk involved in this activity is separated from the general business of the bank.

SPVs formed by Government under PPP

We have witnessed a trend by government sector entities by forming SPVs for specific projects. The PSUs operating in infrastructure industry float entities with investment from Central and State Government and a portion by Private Sector Participant. It provides convenience in obtaining approvals from the State and Central Government at many levels. On completion of project easy exit route exists for government.

SPVs by FII

Foreign Companies also resort to SPV route by foreign companies to enter into areas of business in India, which are prohibited for them under Automatic route. The foreign policy does not permit foreign investors to invest in certain business activities in India without the approval from FIPB. As a result, the foreign investors take SPV route to reach the Indian Markets.

Synthetic Leasing

SPVs can be used for acquiring assets indirectly so that they are prevented from being caught in the tax net. In this method, the sponsor takes the assets on lease from its SPV on rent. Expenses incurred as rent is allowed as a deduction to sponsor for income tax purpose. On the other hand, the SPV acquires the asset through raising debt, the interest on which is a deductible expense for tax purpose. This way the same asset can be used claim deduction by both. Apart from tax saving it prevents any debt being shown in Sponsor’s balance sheet.

Advantages

Hives of the Risk:

SPVs act as a “bankruptcy remote” . If the sponsoring firm has financial problems, it can safely escape its creditors because in any way creditors because in any creditors cannot seize the assets of the SPV. SPVs help investors and firms as it isolates high risk projects from the parent organization and by giving to new investors the opportunity to take a share of specified risk in the firm with a simple and clear balance sheet.

Best suited for Project Financing:

Long term investment in infrastructural and industrial projects based on the projected cash flows of the project is project financing. A project financing structure involves a number of equity investors and a syndicate of banks that provides loans to the operation. The loans are commonly secured by the project assets and paid entirely from future cash flow generated from the project, rather than from the general assets or creditworthiness of the project sponsors. The assets are shielded by creating a special purpose entity for each project. The special purpose entity has no effects other the project.

Asset Transfer:

The SPV owns the asset and all the permits; this permits selling of SPV as a self contained package rather than attempting to assign over numerous permits.

Regulatory Reasons:

A special purpose entity is established often to overcome regulatory transactions such as regulations relating such as regulations relating to nationality of ownership of specific assets.

Taxation:

SPVs are often used to make a transaction tax efficient by choosing the most favourable tax residence for the vehicle. SPVs are method of financial engineering schemes which have as their main goal, the avoidance of tax or the manipulation of financial statements. Some countries have different tax rates for capital gains and gains from property sales.

Accounting Reasons:

Debts raised through SPV are not reflected in the balance sheet of the sponsor. It reflects a pleasant picture and enhances the debt raising ability of the sponsor. Losses incurred by SPV are not shown in the balance sheet of the sponsor, so it helps to maintain the healthy picture of the sponsor in the eyes of its stakeholders.

Competitive Reason:

SPV prevents competitors accessing the technology through pre-existing license deals.

Disadvantages

Fixed Cost:

There is a lot of costs involved in setting up of an SPV, like cost of incorporation, cost of registration, stamp duty at the time of transfer of company.

Continuous Compliance:

Incorporation of SPV as a Company will require continuous fulfillment of compliances.

No deduction available for taxation purpose:

The tax benefits are lost in off balance sheet SPVs. Tax deductions which are provided for incurring certain business expenses are not available to the sponsor, if such transaction are carried out through SPV. The debt taken by SPV will also not provide any tax benefit to the sponsor.

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Are penalty clauses in contracts enforceable in India?

Amartya Bag

December 5, 2014

This article is written by Saurabh Mishra, a student of HNLU.

Payment of damages is a good illustration of easy enforceability of contractual devices which is of paramount importance in commercial law. When a contract is entered between parties, the parties insert a clause in the contract determining the sum to be payable in the event of breach. If such a sum is genuine pre-estimate of loss it is termed as liquidated damage and if it bears no resemblance to the loss suffered, it is termed as penalty. It has been observed that bargaining power which the parties have while negotiating the substantive contractual rights and duties is far greater than bargain over remedial rights. Parties are not at liberty to charge exorbitant sum as breach for contract.

The Indian legislature has not made any distinction between penalty and liquidated damages by incorporating a simple rule that a court may award “reasonable compensation” not exceeding the sum named in the contract as payable in the event of breach, or any other stipulation by way of penalty. It is important to point out that a sum named in the contract will be taken to represent reasonable compensation in circumstances where it is difficult to assess the actual loss. The courts have also adopted an approach where they have made this benefit unavailable if the sum is seem to represent penalty as it will not be a “reasonable compensation” .

The purpose of awarding damages under Indian law is to place the aggrieved party with the help of money in the same position in which the party would have, had there been no breach taken place. Indian contract act forbids unjust enrichment under the garb of claiming compensation for a breach.

Position in England

Under English law, penalties are not recoverable. In the case of a penal clause, damages will be assessed in the usual manner and plaintiff may even recover a sum greater than the stipulated amount. The courts while deciding the amount of compensation payable must give regard to terms of the contract and circumstances under which the contract was entered.

In the case of Dunlop Pneumatic Tyre Co. Ltd v. New Garage and Motor Co. Ltd law relating to penalty clauses was explained. It held that

The sum will be a penalty if it exceeds the greatest loss that could have been proved to have followed from the breach.
The clause will be penal if its breach entails not paying a sum of money and amount to be paid as damages exceeds the sum which ought to have been paid.

When a single lump sum is made payable in all cases of breach, then there is a presumption in favour of the sum being treated as penalty.

In English law, a liquidated damages clause will enable a plaintiff to recover the stipulated sum without proving the damages or irrespective of any actual damage or when the actual damage is smaller than the stipulated sum. The purpose of fixing a sum is to allow recovery of damage without difficulty.

Difference between Liquidated Damages and Penalty

If the terms of the contract provide for an amount of liquidated damages which represents a mutual, genuine pre-estimate of the probable extent of the harm, the courts have been generally to keen to enforce such clause and award the entire agreed sum. However, if the clause is merely intended to secure performances of the contract by fixing a sum which exceeds the likely loss the court shall award only a reasonable amount. The question of determining a particular clause as penalty clause or liquidated damages is answered by considering various factors such as intention of the parties, terms and circumstances of the contract, purpose of the clause.

Liquidated damages reflect a reasonable estimate of the contracting parties of the loss to be suffered in case of breach of contract whereas penalty is devoid of any such estimation. It is understood that courts would be guided by the doctrine of reasonable compensation in case of breach of contract containing a penalty clause.

A penalty is a stipulation in the contract which is disproportionate or excessive that no prudent person would consider the same as reasonable assessment of damages arising out of breach. Penalties can be charged on specific events only like delay in supplies, delay of completion of work. Penalties cannot be general in nature. Liquidated damages are easier to impose than penalties.

Summary of Law Relating to Damages in India

ONGC v. Saw Pipes [1],

The Supreme Court while discussing the concept of Liquidated Damages stated that:

Terms of contract are required to be taken into consideration before arriving the conclusion whether the party claiming the damages is entitled to same.
If terms of the contract are clear and unambiguous stating the liquidated damages in case of breach and they are not unreasonable or in the nature of penalty the party committing the breach is required to pay compensation according to section 73 of the Indian Contract Act.

Section 74 is to be read along with section73 and, therefore in every case of breach of contract, the aggrieved person is not required to prove actual loss or damage suffered by him before he can claim a decree. The court is armed with power to award reasonable compensation even in the cases if no actual damage is proved to have been suffered in the consequence of breach of a contract.

If courts fail to assess the compensation contemplated or if the compensation is not by way of penalty or unreasonable, Court can award the same if it is genuine pre-estimate by the parties as measure reasonable compensation.

Fateh Chand v. Balkishan Das[2]

In the instant judgment, Supreme Court adopted the view that under the common law a genuine pre-estimate of damages by mutual agreement is regarded as stipulation naming liquidated damages. The aggrieved party is entitled to receive the compensation from the party who has broken the contract, whether or not actual damage or loss is proved to have been caused by the breach. It dispenses with proof of “actual loss or damages”. Section 74 of the Indian Contract Act does not justify the award of compensation when no legal injury has resulted after breach. Compensation for breach of contract can be awarded to make good of the loss or damage which naturally arose in the usual course of things or which the parties when making the contract were aware of.

After ONGC v. Saw Pipes [3] and Sudhir Gensets Ltd. v. Indian Oil Corporation[4] law relating to damages in India has taken a new course which can be summarized in following paragraphs:

The terms of the contract will be taken into consideration before concluding as to whether the party claiming the damages is entitled to seek
If the terms clearly stipulate the liquidated damages for breach of contract, then unless the damages are unreasonable or constitute penalty, the party which committed the breach must pay such compensation as per Section 73 of the Indian Contract
Section 74 of the act is to be read along with section 73 of the Act. Hence, in case of breach, the aggrieved party need not prove actual loss or damage.
In circumstances where it is impossible to assess the compensation arising from breach the court can award an amount which reflects a realistic pre-estimate as the measure of the compensation.

Conclusion

When it comes to liquidated damages and penalties, the courts have shown a tendency to rule that liquidated damages should be reasonable compensation, In case of penalties damages will have to be proved. The court can refuse to pass the compensation if no loss is likely to occur because of the breach.

If in the opinion of the court, the damages are in a nature of penalty, the court has the power to grant reasonable compensation not exceeding the amount mentioned in the contract on proof of damages. The courts have unqualified jurisdiction to award compensation in case of breach of contract, but the compensation must be reasonable. The aggrieved party is entitled to receive compensation from the defaulting party whether or not actual damage or loss is proved.

[1] 2003(5) SCC 705.

[2] AIR 1963 SCC 1405.

[3] Id.

[4] MANU/DE/0347/2011 – FAO 253 / 2008

A critical analysis of the Apprentice (Amendment) Act, 2014 : Will it create more employment opportunities for the youths?

Amartya Bag

December 4, 2014

This article is written by Sunil Kumar Yadav, a student of CNLU.

Introduction

The Apprentice Act was first introduced in 1961 on 12^th December and came into force on 3^rd march 1962 and in 1968 with the amendment in the provision of sec 25 the words ”except Jammu and Kashmir” were omitted. The bill has been amended in 1973, 1986, 1997 and 2007. The recent amendment has been done in 2014 which was proposed on 7^th of August, and passed by the Lok Sabha on 14 August and Rajya Sabha passed the Bill with a clear majority on 26^th of November, 2014. The basic reason behind the amendment of the bill is that many unemployed youth are deprived of availing the facilities provided to them through ATS (Apprentice Training Scheme) as compare to the size of economic growth of India has shown in the past few years. And from the point of view of employer they think that the rules laid down in the Apprentice Act are stringent for them, one of the major reason according to them for not providing apprenticeship on a large basis is that the penal provision of imprisonment of 6 months and others makes them apprehension of prosecution.

Changes in the law

The amendments have been done on 11 major points, and the government had tried to keep it error free, easily acceptable and to meet the expectations of employers as well as the unemployed youth of the country. Eleven Major issues around which the whole amendment revolves are the definition of certain terms and addition of two new definition of apprenticeship of Optional trade and Portal side.

Secondly, it takes on the minimum age requirement of apprentice that is 14 years of age usually but the Bill increased the apprenticeship for the designated trades related to hazardous Industrial work to 18 years of age.
For the number of apprentices, the central government will designate how many apprentice an employer will hold and this will be regulated by (Central Apprentice Council). Earlier states don’t used to accept apprentices from other state but this bill has open the scope now for the people of other states too.
Now, there can be multiple employers, who can provide apprenticeship either through agency or by coming together by themselves, which is a great boost for the workers as well as the employers. The arrangement for the practical training must be there with the employers and the assent of advisor which was necessary earlier has been removed in the new bill passed. The syllabus of apprentice will be approved by central government through (CAC), the bill limits the provision for training in designated trade.
The apprentice will have to go through an aptitude test conducted by National Council of Vocational Training (NCVT). NCVT will grant a certificate of apprenticeship on passing the test. New bill provides with the option that any authorized authority can provide a certificate of apprenticeship.
One of the major reliefs that has been given to the employers is that the penal provisions regarding imprisonment of the employer has been removed by this amendment. Employers have been provided with the privilege of deciding the holidays, leaves and the hours of work at the time of apprenticeship. This comes under the authority to make rules and regulation by the employer. Now, this power has been given wholly to the employers.
These are the major changes which had been done by the Amendment Bill of 2014.The prospective results after the amendment is seen that, now youth will be more responsive, and they will do apprenticeship. Which will generate more skill workers in the country, as well as the employers and that is going to benefit both of them.

Prospective Effects

Some think that this amendment has created more favorable conditions for the capitalist class as they can make their own rules and regulation in certain matters. As the absolute power have been given in the hands of employers, how to provide apprentice to people, it can lead to the exploitation of young people and can be hazardous with such kind of liberties provided to employers.

The major point of amendment like including some new trade and abolishment of the imprisonment, these provision has faced a lot of criticism from the opposition and some leaders had went on to a extent to describe the rules as a draconian law for the youth of the country. The government stated in reply that this amendment bill is a revolutionary step in Indian history, as this is going to provide quality skill people to the industries and the country which will led the country at its pinnacle stage of quality skill labour to the country and will meet the growing requirement of skilled people.

The government take on it is simple, if there is a need for change in the law why should we hesitate to change the rules for the betterment of the society. Employment creation is one of the biggest challenges for the country, and the time has come to give the employers some award. So they can help the country not only to generate employment, but also quality of workers who can survive with any kind of competition. As human resource is an asset for the country, not burden for the country.

Going by the statistics projected by the government there were only 4.98% of apprentice of around only 2 lakhs seats were there but after the amendments around 24 lakhs apprentice seats will be created.

But the government should be also aware of the thing that in order to create comfortable atmosphere for the Industrial sector, the complicated laws of inspection of labour rights should not to be pushed to a certain limit which can be easily manipulated and used by the industrial sector for their own benefit only because at the end of the day they are profit-making body and they will do everything to churn out the profit, obviously they will like to have favorable rules for them.

Irretrievable break down of marriage as a ground for divorce in India

Amartya Bag

December 3, 2014

This article is written by Saurabh Mishra, a student of HNLU.

In our country owing to various factors, it is becoming difficult for the disgruntled couples to live together on the ground of compatibility. Divorce by Mutual Consent (Section 13-B) recognized this reality and a right to apply for divorce by mutual consent was conferred. There are some couples who cannot avail the remedy of divorce by mutual consent because one of the parties tries to bargain or put in a condition which will eventually result in harassment for the other party. Giving recognition to divorce by irretrievable break down of marriage would be next logical step in fine tuning our divorce laws according to changing societal needs.

Today’s wife is not prepared to live at the mercy of her husband and members of his family. She is filled with confidence and self-respect. She is keen to become self-dependant and face the challenges of life. She would rather live separately than to stay united while unhappy.

Supreme Court in various decisions while citing 71^stand 217^th Law Commission Report has held that marriage is sharing of happiness and misery which life has to offer. Living apart is an indication of disruption of the essence of marriage, and if it continues for a fairly long period, it would imply irretrievable break down of marriage. If a marriage is emotionally and practically dead and there was no chance of its revival and continuation then in these circumstances divorce should be granted on the ground of irretrievable break down of marriage.

Need for Irretrievable Break Down of Marriage as a ground for divorce

Restricting the grounds of divorce to a particular offence or matrimonial disability results in injustice in those circumstances where the situation is such that although none of the parties is at fault or the fault is of such a nature that parties to the marriage do not want to disclose it or there has arisen a situation in which the marriage cannot be worked. Moreover, there is no utility in maintaining the marriage as a facade when the emotional and other bounds which are essential to a marriage have disappeared.

The Marriage Law Amendment Bill, 2013

On August 26, 2013 the Rajya Sabha passed the Marriage Law Amendment Bill, 2010 which is being hailed as a historic piece of legislation in a patriarchal society like India. The bill has lapsed in Lok Sabha, but the present BJP Government is keen on reintroducing the bill. This bill is aimed at making divorce friendly for women as it provides for the wife to get a share in the husband’s immovable property after “irretrievable break down of marriage”. The courts are empowered to decide the amount of compensation from the husband’s inherited and inheritable property for the wife and children once the marriage legally ends.

The Bill permits both the parties to file for a divorce on the ground of irretrievable breakdown if both the parties have lived separately for at least three years before filing such a petition.

The Marriage Law Amendment (Bill), 2013 inserts new section 13C, 13D and 13E in the Hindu Marriage Act, 1955.

Divorce on the Grounds of Irretrievable Break Down of Marriage

A divorce petition on the ground of irretrievable break down of marriage can be presented by either party to a marriage to the District Court. This amendment will have retrospective application; it will apply to the marriages solemnized before the commencement of the Amendment Act.

According to the Hindu Marriage Act, 1955 District Court means a city civil court or principal civil court of original jurisdiction or any other civil court which may be specified by a State Government and a petition for divorce. Moreover a petition for Divorce can be presented in the District Court within the local limits of whose jurisdiction a) the marriage was solemnised b) the respondent at the time of the presentation of the petition resides or the parties to marriage last resided together.

The court before proceeding to the merits of the case must be satisfied by the evidences produced that parties have been living apart for a continuous period of not less than three years immediately preceding the presentation of the petition.

The amendment act further states that while computing the three-year period no account shall be taken of any one period (not exceeding three months in all) during which the parties started to live with each other.

The husband and wife shall be treated as living separately if they are not living with each other in same household. If the parties are living with each other it will be construed as living with each other in the same household.

Wife’s Right to Oppose the Petition on Ground of Hardship

When a wife is respondent in the matter of Divorce by irretrievable break down of marriage then she can oppose the petition on the ground that it will cause “grave financial hardship” to her and in all circumstances it would be wrong to dissolve the marriage. The term “grave financial hardship” has not been defined in the bill. It leaves scope for ambiguity and misuse.

The court while dealing with a petition dealing with irretrievable break down of marriage shall consider all the circumstances, including the conduct of the parties to marriage and interests of those parties and children or others persons concerned.

If it is proved in court that if divorce is granted it would result in grave financial hardship to the wife then it can either dismiss the proceedings or if stay the proceedings until arrangements have been made to eliminate the hardship. There is no mention of kinds of arrangements to be made which will be sufficient to eliminate the hardship.

Position of Children

The court will not pass a decree of divorce unless it is satisfied that adequate provisions for maintenance of children borne out of the marriage has been made according to the financial capacity of parties to the marriage.

Children for the purpose of the amendment act includes: –

Minor Children including adopted Children or;
Unmarried or widowed daughters who do not the financial resources to support them or;
Children who are not physically and mentally capable of looking after themselves and do not have adequate financial resources to support themselves.

Share in immovable and movable property

On a petition made by wife, the court may while passing the decree of divorce for irretrievable break down of marriage, order the husband to give compensation which will include a share in his share of immovable property (other than inherited or inheritable immovable property) and such amount by way of share in movable property for the settlement of her claim. The court while determining the amount of compensation shall take into account the value of inherited or inheritable property of the husband. By incorporating such provision, the Legislature has recognized women’s right to matrimonial property and aims at providing security to women in terms of property that has been acquired or maintained by the combined efforts of both the parties. Wife’s emotional and financial contribution would be taken into consideration on the failure of marriage. The wife would be given a share in the property, irrespective of whose name it stands. Judges are given freedom to use their discretion while allotting share in the property.

Similar amendments have been incorporated into Special Marriage Act, 1954 by adding Section 28A, 28B and 28C.

According the amendment the wife can oppose a husband’s plea for a divorce. The husband will have no such rights to oppose if the wife moves to the court on the same grounds. The wife and children are given well defined share in the husband’s immovable property in case of divorce.

Judicial Precedents

Jorden Diengeh v. S.S. Chopra AIR 1985 SC 395

Supreme Court forwarded a copy of its order to Ministry of Law and Justice asking them to incorporate uniform civil code and to include provisions for Irretrievable break down of marriage.

Naveen Kohli v. Neelu Kohli AIR 2006 SC 1675

The parties were living separately for more than 10 years, and a very large number of civil and criminal proceedings were initiated by the respondent against the appellant. The court held that the matrimonial bond between the parties is beyond salvage. The court further held that preservation of such marriage would be a greater source of misery for both the parties. In this case also Supreme Court sent the copy of the judgment to Ministry of Law and Justice.

Satish Sitole v. Smt Ganga AIR 2008 SC 3093

In the instant case the parties were living separately for 14 years out of 16 years of marriage. On the basis of material placed before the court, it was convinced that any further attempt at reconciliation would be futile and would not be in the interest of the parties. It held that continuance of such a marriage would amount to cruelty for both the parties.

It has been held by Supreme Court that irretrievable break down of marriage itself is not sufficient to dissolve the marriage; the ground should be used in extreme conditions, where the situation warrants the court should end the agony and bitterness by granting divorce and where there is no scope for reconciliation.

Conclusion

Over-reliance on litigation and legislation on matters like personal law would not help us in achieving a judicious balance. The Marriage Amendment Bill aims to strengthen the financial position of women in cases of matrimonial discords. However, it fails to create safeguard to check abuse of the provisions. In the statement of objects and reasons, it has been recognized that the Hindu Marriage Act and Special Marriage Act were inadequate to deal with the situations where there was irretrievable break down of marriage. By incorporating such provision, many couples will now be saved from disgrace and humiliation.

Are employment bonds legal in India or not?

Amartya Bag

December 2, 2014

This article is written by Saurabh Mishra, a student of HNLU, on the topic whether the employment bonds are legal in India or not.

Continue

Online Revenge Porn-Recourse for Victims under Cyber Laws

Amartya Bag

November 29, 2014

This article is written by Advocate Puneet Bhasin, Cyber Law Expert, Cyberjure Legal Consulting, http://www.cyberjure.com

Online Revenge Porn means that when there are relationship break ups, then either party puts up nude pictures of the other or videos of their intimate moments on social networking media, blogs and other websites. Online Revenge Porn is on the rise world over with the advent of an open arena of the internet. Most online porn in India is amateur porn or revenge porn. World over, every country has enacted specific legislation to deal with revenge porn.

UK is coming out with the Revenge Porn Law. Many US States already have their Revenge porn laws. Virginia also has a revenge porn law and on 20^th October, 2014 the first person was charged and convicted under their law.

In India we do not have a separate Revenge Porn Law, but Sections 67, 67-A and 66-A of the Information Technology Act, 2000 make online publication of Revenge porn a punishable offence.

Section 67 reads as under:

Punishment for publishing or transmitting obscene material in electronic form. -Whoever publishes or transmits or causes to be published or transmitted in the electronic form, any material which is lascivious or appeals to the prurient interest or if its effect is such as to tend to deprave and corrupt persons who are likely, having regard to all relevant circumstances, to read, see or hear the matter contained or embodied in it, shall be punished on first conviction with imprisonment of either description for a term which may extend to three years and with fine which may extend to five lakh rupees and in the event of second or subsequent conviction with imprisonment of either description for a term which may extend to five years and also with fine which may extend to ten lakh rupees.

This section makes a person liable for transmitting or causing to transmit nude photos or content of the nature that it can deprave/corrupt the viewer of such content.

When people are in relationships, they tend to share nude or naughty photos of themselves with each other, and these photos are misused by the jilted partner in the event of a break up.

A victim can seek recourse under Section 67 in such a case.

Section 67 A of the Information Technology Act reads as under:

Punishment for publishing or transmitting of material containing sexually explicit act, etc. in electronic form. – Whoever publishes or transmits or causes to be published or transmitted in the electronic form any material which contains sexually explicit act or conduct shall be punished on first conviction with imprisonment of either description for a term which may extend to five years and with fine which may extend to ten lakh rupees and in the event of second or subsequent conviction with imprisonment of either description for a term which may extend to seven years and also with fine which may extend to ten lakh rupees.

This section also criminalizes the act of any party transmitting via email, MMS or video any act or conduct of explicit nature which the parties indulged in during the course of the relationship.

A victim can file a complaint with the Cyber Police Station along with filing an FIR in the Police Station.

In India we definitely need separate and comprehensive revenge porn laws along with an efficient judicial mechanism to deal with these offences in short duration of time. Many countries have a National Helpline along with a separate Cell to deal with Online Revenge Porn, as these matters require immediate redressal before the video goes viral. A National Helpline for revenge should be set up in India too, where victims can complain and there would be immediate pull down of the content from the internet. Most developed countries have enacted specific laws for the same already because of the huge increase in Revenge porn in the virtual world.

Disclaimer: This article is purely for educational purpose and is not in the nature of legal advice. It does not constitute any lawyer-client relationship between the author and the reader.

Puneet Bhasin is a Cyber Law Expert and founder of Cyberjure Legal Consulting. http://www.cyberjure.com

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Is your “ workplace” covered under the new sexual harassment law?

Amartya Bag

November 28, 2014

The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 is drafted to prevent sexual harassment at the ‘workplace’. This term has a specific definition under the Act, and covers certain situation or working settings within its ambit. Under the law, instances of harassment outside the “workplace” are not covered under the act. For example, the Supreme Court’s policy clarifies that as per the act, it applies to incidents occurring on the court premises.

‘Workplace’ includes the premises of all government and private entities which operate on a commercial basis (that is, they are involved in any economic activity) or work in education, entertainment, vocational services, sports facilities (such as stadiums, sports institutes and sports complexes), health services, hospitals and nursing homes. Societies, trusts and non-governmental organizations, where people work on a voluntary basis are also included. With respect to domestic workers, even a house is considered as a workplace.

Further, any place visited by an employee arising out of or during the course of employment including transportation provided by the employer for undertaking such journey. For example, an official meeting or conference organised in a hotel or an offsite office programme will be considered as workplace under the law.

However, situations may get blurry if the nature of the business needs constant meeting outside offices, often in hotel rooms or in cafes or in pubs and lounges. For example, a freelance consultant who meets startup founders in their houses (which also double as their office). Will the law apply in such situations? This might be a difficult situation to implement the law, even though technically these would constitute workplace under the law. Read this article on Economic Times to understand the complexities of handling sexual harassment in fluid workplaces.

How do organisations who do not have traditional work environments can handle incidents of sexual harassment? They may clearly elaborate what constitutes a workplace under their sexual harassment prevention policies – they are free to expand the ambit of the definition under the act.

Implementing strict sexual harassment policies and meeting legal compliances can be difficult in non-traditional workplaces. Click here to know more about a course that can help you implement the law in a super-fast way throughout your organization or you can call Pallavi at +91 9582630056 for a free consultation regarding implementing sexual harassment policies and other related compliance in non-traditional workplaces or situations.

Increasing regulation of workplace environment is opening up new career opportunities for professionals (lawyers, company secretaries, chartered accountants) or those working in HR, training, compliance and legal teams, whose help is required not only to comply with sexual harassment laws but also in creating conducive workplace environments which are gender-neutral and free from discrimination and harassment. There is significant scope to build an independent employment and HR advisory practice for consultants.

Get all the templates, formats, step by step guides, checklists and information you need related to employment laws in one place, free of cost. we have simplified compliances, record-keeping, contracts, policies, disputes and litigation for you. Never struggle with employment and labour law again in your life. Click here to download the Legal handbook for HR managers.

LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join:

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10 principles of tort law every Indian should know

Ramanuj

November 27, 2014

This article is written by Vriddhi Aroram of Bharati Vidyapeeth’s New Law College, Pune, on ten principles of tort law that every Indian should know.

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Starting your legal startup and legal recruitment scenario in India

Ramanuj

November 26, 2014

In last August, a private publication approached me with some questions. I recently came across the answers I had shared with them and realized that a lot of this may be relevant to a lot of readers of this blog, especially the part on recent outlook of the legal job market. Please do read and share your views on the same.

– What are the qualities that you look for in a student while hiring?

The most important things are integrity, loyalty and willingness to work through the sticky situations. People who have the vision to understand what we are doing and will stay with us. Technical skills is the next important thing. If someone has good writing and research skills, and can get work done easily – that is wonderful and will be decisive. We make it a point to put people through at least a 7 day trial to observe whether they are appropriate for our kind of work, and do not rely excessively on academic performance.

– Do you think more start-ups should come up in the legal field?

Absolutely, there are lot of opportunities. However, people need to come up with original ideas and see them through rather than trying to make quick bucks by copying other entrepreneurs. Some amazing legal startups have matured over the last 3-4years – with some raising serious venture capital from investors and breaking the 10 Cr barrier. It is time for law students to consider legal startups as a serious career option.

– What would be your advice to those planning to start up post law school?

Work with real businesses before starting up. You can work through your college years with another startup. There is no better way to prepare yourself if you want to start up right after college, or even one or two years of graduating.

It was my experience of working with a big tutorial throughout my college years, building courses, ghostwriting testprep books, building a blog and online communities like CLAThacker, managing a team of content developers and travelling to multiple states to take classes and promote educational products equipped me with lessons that was very useful when I started my own businesses. If I did not have this experience, it would not have been possible for me to quit my day job and start iPleaders the way we did.

– What would be your comment on the existing recruitment trends?

Recruitment is on an upswing as market has found its positive sentiment back, and associates are again spending long hours after midnight at big law firms. Still, there is a lot of experienced talent in the market in sub-optimal jobs – so until they are absorbed things will remain a little dismal for freshers. We have noticed 3 interesting trends:

Many experienced law firm associates are unhappy with how their career is progressing, and they are taking the plunge leaving their safe jobs towards litigation or other passions

Recruiter base has increased a lot over the last two years, but salary has been an issue. Still, a lot many small and medium law firms are paying INR 60K+ to lawyers with 1 or 2 years o experience compared to 2011-12.

People did not change jobs as the job market sentiment wasn’t good – but this seems to have change in the last two months. A lot more people are switching jobs or looking for new opportunities since August.

For freshers, interning for 2-3 months with potential recruiters and impressing them with work appears to be the best option at the moment as campus recruitment activity has not been significant outside of 3-4 top law schools.

How to register for copyright in India?

Abhyudaya

November 22, 2014

Unlike trademarks and patents, registration of copyright is optional. Under Indian law (and in most other legal systems), copyright comes into existence the moment a work is created. However, from an enforcement perspective, registration is often preferred.

In the absence of registration, a third party can claim that a particular work that a business is using was created much earlier by the third party. There is also a chance that records kept by the creator may not be considered reliable by enforcement authorities or courts. Further, it is important for a business to be in a position to avoid unnecessary litigation (or to be able to dismiss it as baseless), even when a third party’s claim is unfruitful, particularly where intellectual property is an essential part of the valuation of the business.

A certificate of registration of copyright is considered a prima facie evidence of date of creation of the document and the creator of the document, as these particulars are filed with a statutory authority, i.e. the Registrar of Copyrights at the time of registration.

Step 1 – Filing the application for registration

Application for registration must be made in Form XIV (of the Copyright Rules) to the Registrar of Copyrights in triplicate, at the following address:

Registrar of Copyrights, B.2/W.3, C.R. Barracks, Kasturba Gandhi Marg, New Delhi- 110 003, Tel: 338 4387.

Registration can be done either through online or the forms with requisite forms can be sent through speed post/registered post. Online registration of copyright can be done at: http://copyright.gov.in/UserRegistration/frmLoginPage.aspx.

In the case of an unpublished work, an applicant may send a copy of its manuscript, or only the extracts. The Copyright Office affixes its stamp on the document which is evidence of registration. If two copies of the manuscript are sent, one copy will be returned with the seal. The other copy will be retained by the Copyright Office for record-keeping purposes. Confidentiality of the manuscript will be maintained.

If an unpublished work that was registered is subsequently published, changes can be made to the registered particulars by filing Form V.

The application must be filed with the appropriate fee (See Annex A). Three copies of the published work must be sent along with the application.

Note: Under the copyright act, even unpublished works can be registered.

Step 2 – The person applying for registration shall give notice of his application to every person who claims or has any interest in the subject-matter of the copyright or disputes the rights of the applicant to it.

Step 3 – If the Registrar of Copyrights is satisfied about the correctness of the particulars given in the application and no objections are received within 30 days of filing the application, the copyright will be registered.

If objections are received, or if the Registrar believes that some of the particulars are incorrect, he may conduct an inquiry and only enter those particulars which he considers as correct.

If copyright is registered, the Registrar of Copyrights sends a copy of the entries made in the Register of Copyrights to the concerned parties.

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Characteristics of SPV

Types of SPVs

SPVs Formed by Banks/Financial Institutions For Securitisation

SPVs formed by Government under PPP

SPVs by FII

Synthetic Leasing

Advantages

Hives of the Risk:

Best suited for Project Financing:

Asset Transfer:

Regulatory Reasons:

Taxation:

Accounting Reasons:

Competitive Reason:

Disadvantages

Fixed Cost:

Continuous Compliance:

No deduction available for taxation purpose:

Position in England

Difference between Liquidated Damages and Penalty

Summary of Law Relating to Damages in India

Conclusion

Introduction

Changes in the law

Prospective Effects

Need for Irretrievable Break Down of Marriage as a ground for divorce

The Marriage Law Amendment Bill, 2013

Divorce on the Grounds of Irretrievable Break Down of Marriage

Wife’s Right to Oppose the Petition on Ground of Hardship

Position of Children

Share in immovable and movable property

Judicial Precedents

Conclusion

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