Female crimes : related theories and postulations

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October 25, 2021

Crime against women — Image source: http://bit.ly/31Zmer1

This article has been written by Oishika Banerji of Amity Law School, Kolkata. This article provides a detailed analysis of the related postulations and theories of female crimes.

Table of Contents

Introduction

Before we talk about female criminality, it is necessary to understand the social theory proposed by Sir Ralph Linton and George Herbert Mead, recognized by the name of the “role theory”. According to this theory, “different expectations of standard behaviour appear to be important in the genesis of women’s crime”. Put simply, the theory discusses how females are taught by their families in which they are brought up to be passive, quiet, polite, well-behaved, and non-violent. By this fact, females try to suppress their violent nature, anger, frustration, and their voice to live up to society’s expectations. This prevents women from possessing the technical ability to be involved in violent crimes like gang fights, armed robberies, etc. But many studies have found that women generally commit three kinds of offences namely;

Property offences;
Offences against the person;
Other offences include any kind of crime that affects the law and order of society.

This article discusses the nature of offences, and the causes for such offences to be committed by women.

Kinds of offences

As have been mentioned previously, the three broad kinds of offences that locate greater involvement of female criminals in comparison to the males have been explained hereunder.

Property offence

Property offences involve offences like theft, pick-pocketing, purse-chain snatching, shop-lifting and cheating. Females can get tempted whenever they carry shopping bags, purses, etc along with them. This can specifically be noticed among maid-servants who observe a lot of objects around them while they work in someone’s house and that is what gives rise to the urge of possessing something that belongs to someone else. This draws them towards criminal activities. Lombroso in his book “The Female Offender”, and Pollak have observed that shoplifting is another kind of property offence that is feminine by nature, which is also the result of desire.

Further, Lombroso, and Smith in their book “Women in Prison: A study in Penal Methods” took note that females commit property offences because they get the scope for doing the same as they are involved in domestic work. Studies have noticed that offences like cheating are often committed by male offenders with females being their accomplices.

Offences against person

Rape, murder, kidnapping, abduction are offences that fall within the category of offences against a person. In the case of females committing offences against individuals, it is relevant to note the victim-offender relationship which appears to be meaningful in female homicide due to the restrictive social environment of women in India. Homicide is at times the consequence of prolonged frustration that a woman faces in her day to day life. As Ahuja Ram and Pollock in their books “Female Offenders in India”, and “The Criminality of Women” respectively, state that offences against persons involved cases in which the victim was a member of the female criminal’s family. This shows the relevance of stressful situations within a family which play a significant role in female criminality. When it comes to the offence of kidnapping, females are mostly involved in selling their girl child, or relatives in brothels.

Other offences

The category of “other offences” is not exhaustive, instead of inclusive by nature. In general, “other offences” include the Immoral Traffic Act, 1956, NDPS Act, 1985 and Passport Act, 1967. The majority of the female offenders are used to accepting their earnings from disapproved business practices. Offences of such sort are either carried out by the female offenders independently, or by someone’s assistance, or they being an accomplice in certain cases. To be involved in “other offences”, a female does not need to travel much, instead, even by sitting at home, she can carry out illegal activities in the quest of earning profit.

In the Ferozepur central prison situated in the state of Punjab, the total capacity of the prison is to house 1000 men and women but at the time of study in January- February 2010, there were 1600 men and women imprisoned in this prison. There were 81 women of which 31 were convicts and 50 were under trial, living in two barracks.

Nature of female crimes

The nature of female crimes that have been the consequences of several postulations have been provided hereunder;

Education and nature of the offence

It has been observed that females who have not received basic education or are illiterate, lack reasoning and logic in their activities that are reflected in their not so properly socialized criminal instinct. Knowing the law and committing a crime vis a vis unknown about the law and committing an offence showcase that the former will be having an upper hand over the latter.

Studies which have been done by Ahuja, Rani, Nagla, Joseph, William and Christopher have shown that when the literacy rate decreases, the crime rate increases. The studies make it quite evident that in the prisons of Ferozepur, Jaipur, and Varanasi, the majority of women were illiterate. While in Ferozepur the percentage of illiterate women was 67.7, the Varanasi prison had 71 percent illiterate women and in Jaipur, 61.3 percent women were illiterate.

Religion and nature of the offence

Human behaviour has always been influenced by the strong forces of religion, whichever religion it may be. Therefore, it is through this religion only that the clues necessary to understand the varying incidence of crime rate among different sections of the community, can be found out.

India’s first convicted female serial killer was KD Kempamma who has been familiar with the name of Cyanide Mallika. She killed six women over eight years. Her way of killing people was by portraying herself as a pious diety which attracted a lot of women to worship her. In return, she used to ask them to appear before her in their best clothes, and jewellery and offered them cyanide to drink in the name of “holy water”. She was eventually sentenced to death.

Caste and nature of the offence

Caste plays an important role in determining the social status of a person in society. What can be generally noticed is that the upper caste women are more drawn towards committing offences against an individual when placed in comparison with women belonging to Scheduled Castes, Scheduled Tribes and N.T./D.T. (Nomadic Tribes /Denotified Tribes) who are found to be more involved in committing property offences. What can be inferred from such understanding is that the level of satisfaction, desire, and urge varies based on social status and position.

Marital status and nature of the offence

Marital status is necessary to be considered while discussing female offenders because it is this status that connects a female with social responsibilities and fulfilling expectations which becomes a pressure for the females. When such pressures turn the wrong way, the consequences are criminal activities that are adopted by the females. Married women are mostly involved in offences against persons whereas unmarried respondents show greater involvement in offences related to property and other offences.

Occupation and nature of the offence

Offences also vary among different females on the basis of the occupation they acquire. For instance, women who are housewives, are predominant over offences against individuals in comparison to the females whose professions range from services to that of business, and domestic help, as they incline more towards offences against property.

On 18th February 2021, the Andhra Pradesh police arrested a woman and also took a minor into custody for their alleged involvement in two different property offence cases. They were allegedly stealing a bag that contained valuables of Rs 1.50 lakh, from a car that was parked in the parking basement of a hotel situated near Beach Road. It is necessary to note that the woman had already pursued her MBA degree, and was professionally a homemaker. This also says that because the frustration, and pressure is more in being a housewife than a servicewoman, the offences committed are also of a higher degree for the former in comparison to the latter.

Income and nature of the offence

In this 21st century, many people of the society consider that economic independence is the highest level of independence an individual can attain. Removal of dependency specifically for women from that of the males in their family has a lot to do when it comes to the discussion concerning female criminality. The income of an individual affects his or her behaviour towards society. Crimes vary according to the same.

Family and nature of the offence

Families play a pivotal role in shaping the personality, and values of an individual. It has been often noticed that females coming from disturbed families tend to get involved more in offences against individuals. Those with a background of a nuclear family are involved in property offences whereas females coming from joint families are involved in offences against persons.

A woman in the southern Indian state of Kerala had confessed to killing six family members within fourteen years by adding cyanide to their food. A popular member of the community in Kozhikode, Jolly Thomas was allegedly motivated by wanting control of the family finances and property that led her to commit the murder.

Causes of female criminality

The reasons behind female criminality and its evolution can be perceived from three different viewpoints, namely the biological viewpoint, the psychological viewpoint, and the sociological viewpoint. Each of these viewpoints has its set of reasons to offer to explain the causes behind female criminality and the rise in the same in the current society.

Biological point of view

The biological viewpoint of female criminality can be understood with the help of various observations as having been provided hereunder;

The contribution of Caesar Lombroso is considered the root of the scientific study on female criminality. His views state that “female deviance as rooted in the biological makeup or as an inherent feature of the female species”. Put simply, Lombroso observed that female criminals are much more terrible in comparison to male offenders because of the refined, and diabolic traits that female cruelty possesses and which is very unlikely to present in a cruel act by a male.
Lombroso & Ferrero in their book “The Female Offender” (1895) put forth the thought that biologically females are considered to be morally deficient and lack the intelligence to participate in the crime. However, it appears that in the case of Indian women, this observation weakens as females in India are inclined towards committing more crimes as a consequence of their socio-economic deprivation since childhood.
Pollak’s view in his book “The Criminality of Women” (1950), elucidated the effect of hormonal changes during menstruation, menopausal stage and pregnancy period of the females as a contributory factor in the commission of crimes. Mood swings, abnormal cravings, impulses are the major factors behind frustration in a female leading her to commit an offence.

The three thoughts that have been put forth, provides a picture of crime as an inherent human trait. With technology merging with the daily lives of humans, the theories that have been discussed above seem to be unreasonable and unscientific to some extent.

Psychological point of view

The psychological viewpoint can be best understood by a non-fictional reference which is the story of Phoolan Devi, a well-known dacoit of the Chambal valley. Being subjected to unfortunate incidents during her childhood, Phoolan Devi remains a classic example of the negative effect of incidents like harassment, harsh living conditions, rape, prolonged beating that had caused her to be framed as the most wanted criminal by the police authorities. The idea that females are supposed to be passive, fails to apply in reality. From “supposed to be”, the passive trait changes its nature to “has to be”. Thus when something turns around from being a choice to that of a necessity, anger, feelings and frustration starts burdening a female. The consequence of such burdening is a female turning herself from a victim to that of a victimizer. This viewpoint is noticed to be applicable in the Indian scenario as crimes here are majorly committed by females because of depression and frustration.

Sociological viewpoint

The sociological viewpoint is one such ideology that can be related in a much more convenient way in comparison to the previous two viewpoints. Inequality is faced by women all over the world in every phase of their life. The major reason behind such disparity is social oppression and dependency on men in every aspect of their lives. The four major convenors of this viewpoint have been provided below;

Klein in his writing “The etiology of female crime: A review of the literature” (1973) mentions that offences such as shoplifting, abortions, sexual crimes, poisoning of family members, etc., may not only be psychological in nature but can also be viewed from socio-economic lenses.
Adler in “Sisters in Crime: The Rise of the New Female Criminal” (1975), studied prostitution, drug addiction, and juvenile law-breaking among females. By doing the same she endorsed such crimes as being the first step towards the liberation movement of females and their assertiveness.
C. Sharma in “Crime and Women: A Psycho-Diagnostic Study of Female Criminality” (1963) summarized the main causes of frustrations among females that is the reason behind the commission of crimes.
Writers like Bilimoria, and Kuckreja in their works “A Socio-Demographic Study of Women Prisoners” (1987), and “A Socio-Demographic Study of Women Prisoners” (1986) respectively stated that role conflict in families has been the catalyst in female criminality. Thus the role of the family in female criminality has been evident and a proven fact.

Conclusion

There has been a considerable rise in the rate of female criminality over the years. Technology, exposure, and awareness have added to the rise. But it is necessary to prevent crimes from taking place in society irrespective of the gender of the offender. Therefore, preventive measures such as legal awareness, sex education, social action movement, pre-marital, and post-marital counselling, public awareness, help, and support to the females who feel left out or lonely by their families, etc must be adopted by appropriate authorities, educational institutes, media to curb the excessive increase in female criminals in the society. Further, female criminals who have been detained must be provided with proper rehabilitative, and supportive advice which can help them develop their personality, and make them acknowledge what is right, and what has been categorized as wrong. These constrictive steps can help female criminality to take a positive turn towards slowing down, gradually.

References

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Drafting a mortgage deed between a mortgagor and a housing finance company

By

Abanti Bose

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October 25, 2021

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Mortgage-Laws — Image Source: https://rb.gy/p3r8qq

This article is written by Vidhya Sumra, pursuing Diploma in Advanced Contract Drafting, Negotiation, and Dispute Resolution from LawSikho. The article has been edited by Ruchika Mohapatra (Associate, LawSikho).

Table of Contents

Introduction

For many people, having a home is a dream come true. Getting a mortgage is simply one of the many procedures that most homeowners must take to become homeowners. Before we get started, let us go over some mortgage essentials. To begin, what exactly does the term “mortgage” imply?

A mortgage is a loan used to purchase a home, land, or other real estate property. The borrower promises to repay the lender over a specified duration, typically in a series of regular payments that cover both principal and interest. The property serves as collateral for the loan. Borrowers can apply for a mortgage through one of the banks or financial institutions and must meet certain requirements, such as minimum credit ratings. Mortgage applications go through a lengthy underwriting process before they reach the closing stage. Conventional and fixed-rate loans are two different types of mortgages that are based on the needs of the borrower. This article lists the essential clauses of a mortgage deed between a mortgagor and a housing finance company.

Essential components of a mortgage

A mortgage loan, also known as a property loan, is a transfer of interests in a specific property to secure a loan that has been advanced or will be advanced in the future. In other words, when a person takes out a property loan, he must pledge some property as security to the lender so that the lender is assured that if the loan is not repaid on time, the lender would be able to recover the debt from that particular property.

“Mortgagor/Borrower” refers to the person who mortgages his home to secure the loan. The person or organisation to which the property is mortgaged is referred to as the “Mortgagee/Lender.”

The following are the most important things to know with regards to mortgage:

Mortgages are loans used to purchase homes and other types of property.
The property itself is used as a security for the loan.
Fixed-rate and flexible-rate mortgages are two types of mortgages accessible.
A mortgage’s cost is determined by the type of loan, the period (such as 30 years), and the interest rate charged by the lender.
Mortgage rates vary greatly depending on the type of product and the applicant’s credentials.

What is the process of getting a mortgage?

Mortgages are used by individuals and businesses to purchase real estate without paying the whole purchase price upfront. The borrower pays back the loan plus interest over a set period until they acquire the property outright. Liens against property or claims on property are other terms for mortgages. If the borrower defaults on the loan, the lender has the option to foreclose on the property.

For example, a residential buyer mortgages his or her home to their lender, who then has a claim on the property. If the buyer defaults on their financial obligations, this protects the lender’s interest in the property. In the event of a foreclosure, the lender has the option of selling the property and using the proceeds to pay off the mortgage debt.

The two most common types of mortgage in India are.

English mortgage

An English mortgage transaction is a valid sale in which the mortgagor conveys the property to the lender under a binding agreement that the lender would re-transfer the property to the mortgagor upon repayment of the money to the lender on a specific date.

Equitable mortgage

An equitable mortgage is created in favour of the lender by depositing the title deed of immovable property as security to the lender until the loan is fully repaid.

Differences between English mortgage and equitable mortgage

English Mortgage	Equitable Mortgage
The mortgagor lends the mortgagee the immovable property, which the mortgagee delivers to the mortgagor at a later point after the loan or mortgage money is paid.	If the borrower makes the payment, the mortgagor transfers the property to the lender with an inbuilt condition that makes the sale void.
From the start, the sale transaction is complete.	The sale is not final at this time and is based on a future event.
Stamp duty and registration fees will apply at the time of taking the loan and at the time of repayment.	It is possible that stamp duty and registration fees are not involved in it.

What is a mortgage deed?

The “Mortgage Deed” is an instrument or legal document that includes different terms and conditions related to the mortgage. It gives the lender interest as well as legal rights to the property. All of the borrower’s rights and interests in the property pledged as collateral are therefore formalized in the Mortgage Deed. This protects the lender since if the loan is not paid on time, he can exercise his legal rights over the property.

Essential clauses in a mortgage deed

As informed above, now that we have a fundamental understanding of the mortgage and mortgage deed, let us look at the essential clauses in the mortgage deed.

The following are the main clauses of the mortgage deed.

Title

It is important to specify the title of the agreement/deed. For eg. INDENTURE OF MORTGAGE.

Parties

The names of the parties i.e. mortgagor and the mortgagee must be specified in the mortgage deed. The mortgagor is the person who provides the interest in his property as security to obtain a loan, whereas the mortgagee is the person to whom the interest is transferred. The mortgagor, as defined by the Indian Contract Act, 1872, must be competent to enter into a contract, although the mortgagee may be a minor. According to contract law, he may not be competent.

Example:

“ABC PRIVATE LIMITED, a company within the meaning of the Companies Act, 2013, having corporate identity number (CIN) ________ with its registered office at ______ (hereinafter referred to as the “Mortgagor”, which expressions, unless repugnant to the context or meaning thereof, shall be deemed to mean and include its successors and permitted assigns);

IN FAVOUR OF

XYA FINANCE PRIVATE LIMITED, a company within the meaning of the Companies Act, 2013, with its corporate identity number (CIN) ________ and having its registered office at ____________(hereinafter referred to as the “Mortgagee” which expression, unless repugnant to the context or meaning thereof, shall be deemed to mean and include its successors and permitted assigns).”

Recitals

Recitals are the initial statements in an agreement that indicate the parties’ intention to enter into the contract. The recital, often known as the preamble, provides a list of the agreement’s characteristics. It usually begins with a phrase like WHEREAS.

Example:

“WHEREAS:

The Mortgagor is engaged in the business of _______ including construction and development of hotels and other commercial real estate projects in India.
The Mortgagor, pursuant to the loan agreement dated __________ had agreed to avail financial assistance to the extent of up to Rs ______ (Rupees___), on the terms and conditions set out in the Existing Loan Agreement.
As on the date hereof, the Mortgagor legally and beneficially owns the Mortgaged Properties, as more particularly provided in the First Schedule hereto.”

Grant of mortgage

This is one of the main clauses of the mortgage deed. This explains that in consideration of the lender advancing the loan to secure the loan amount, the mortgagor creates the charge over the properties in favour of the mortgagee also grants, transfers, conveyes, assigns and assures the rights and benefits over the mortgaged properties.

Example:

For the consideration and continuing security for the discharge of the Secured Obligations, the Mortgagor hereby creates in favour of the Mortgagee, a mortgage by way of an exclusive first ranking charge over the Mortgaged Properties as security interest against the Loan Agreement dated ________.
The Mortgagor further grants in favour of the Mortgagee, all rights, liberties, privileges, advantages and benefits whatsoever to and arising in relation to the Mortgaged Properties.
Notwithstanding anything contained, it is hereby declared that the Mortgagor has neither given or agreed to give possession of the Mortgaged Properties to the Mortgagee.
Until an Event of Default (as defined in Clause ___) arises, it is understood between the Parties that the Mortgagor shall remain as the sole owner and shall have custody over the title documents over the Mortgaged Properties.

Covenant to pay

This clause specifies the terms and conditions of the repayment of the loan amount. The total amount and repayment schedule of the loan amount are also specified in this clause or as scheduled in the loan agreement. The main intention is that mortgagor covenants and agrees to comply with the terms and conditions of the finance documents and to repay the loan amount to the lender.

Example:

“Pursuant to the Finance Documents and in consideration of the Mortgagee extending the Loan to the Mortgagor, the Mortgagor covenants and agrees with the Mortgagee that it shall comply with the terms and conditions of the Finance Documents and that the Mortgagor shall discharge the Secured Obligations in accordance with the terms and conditions of the Finance Documents, including this Indenture.”

Adequate consideration

As we know, the borrower mortgages the property to secure the loan amount under the mortgage deed. In this clause, the mortgagor confirms that the security provided by them constitutes adequate, good and valuable consideration.

Example:

“The Mortgagor confirms and declares that it has undertaken to provide security creating first ranking charge by way of mortgage over the Mortgaged Properties in favour of the Mortgagee in consideration of the Loan to the Mortgagor and that such constitutes adequate, good and valuable consideration.”

The mortgage deed should have other clauses like nature of security, representations and warranties, insurance, the event of default, enforcement, and other miscellaneous clauses like an arbitration clause, governing law and jurisdiction. These are basic clauses and must be included in the agreement. It should be clearly specified before entering into an agreement in order to avoid any future disputes.

To summarise mortgages, consider the following brief questions to gain a better understanding of mortgage deeds:

Who owns the title?

There are two parties involved in a mortgage deed i.e. the buyer and the lender. For the term of the loan, the lender owns the deed.

Is registration compulsory?

As mentioned above, under the mortgage by deposit of title deeds, the title deeds of the mortgaged properties are handed to the mortgagee by the mortgagor as security. So it does not require payment of registration or stamp duty.

In the case of the English mortgage, like Indenture of Mortgage, stamp duty and registration is compulsory.

Who has the authority to sign a mortgage deed?

The witness must be at least 18 years old, not a relative, not a party to the mortgage, and not a resident of the property. A mortgage advisor may or may not be an admissible witness depending on your new lender.

Why is witness compulsory?

Mortgage deeds, without a doubt, require a wet signature that is physically witnessed in order to be legally enforceable. As a result, an endorsement of the deed’s integrity is required to verify that the document being signed is a true duplicate of the final deed.

Conclusion

To conclude, a mortgage deed is a document that covers all terms and conditions of the loan advanced to the borrower by the lender. The deed contains information on the loan, such as the parties involved, the property given as collateral, the loan amount, the interest rate, and more. The deed explains everything there is to know about the property’s interest and title. It aids in the identification of the rightful owner of the mortgaged property. It is important to understand the terms and conditions of the agreement, which is why understanding the mortgage deed’s main clauses is even more critical.

References

https://www.fullertonindia.com/what-is-mortgage-deed.aspx
https://legalraj.com/services/mortgage-deed-drafting
PC: Analyticssteps.com

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Analysing the special provisions for delisting a listed subsidiary company of a listed holding company in India

By

Abanti Bose

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October 24, 2021

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This article is written by Thayumana Sundaram S., pursuing Diploma in US Corporate Law and Paralegal Studies from LawSikho. The article has been edited by Tanmaya Sharma (Associate, LawSikho) and Smriti Katiyar (Associate, LawSikho).

Table of Contents

Introduction

The process of removing company securities (listed shares) from the publicly traded stock exchange is called a delisting procedure. It is a widely accepted practice based on the company’s financial and management goals from their current position in the market.

Earlier this was considered as a lengthy and cumbersome procedure, which was established by the SEBI (Delisting of Equity Shares) Regulations, 2009.

Even if a company used to feel that the listed shares of their subsidiary business are not good for them and for the public, they would rarely go for the delisting process due to the compliance’s complexities under the old regulation.

However, in the recent notification of The Securities and Exchange Board of India (SEBI) on 11 June 2021, has expressed its intention to address the core issue and try to create more business-friendly compliances for the parent company to delist their subsidiary in the same line of business. Let us first look into the details of delisting and its practicality.

The delisting

As stated above, the company leaves the public share trading markets for various reasons ranging from mergers, bankruptcy, failure in listing requirements, or change to private management.

Which comes under one of the two methods mentioned below:

Involuntary delisting or forced

The regulatory authority conducts this delisting for various reasons including violation of any listing regulations and failing to meet minimum financial standards; this is considered as an indicator of the company’s poor economic performance, financial health or governance.

The exchange issues the warning usually with a 30 days’ notice and after that, the company is forced to delist itself from an exchange due to its failure to meet the listing requirements handout by exchanges.

Voluntary delisting

It is based on the corporate decisions made by the companies to delist themselves in full compliance with the exchanges, which will be executed by re-purchasing all its shares at a higher market price.

This requires a special resolution, shareholders approvals, and other mandatory compliances to be more compatible with the recent SEBI scheme of 2021, which we are as follows.

The reason behind voluntary delisting

Companies generally opt for voluntary delisting because of the following reasons:

Undervaluation of their share by the public market over a period of time (Lower PE of stock) when compared to a similar industry.
A financial decision in saving of excess revenue to buy back shares, which they feet are a better investment rather than investing in other projects.
Capital distribution of the value of the shares by making the market happy, like allocating regular dividends etc. So, purchasing back the shares increases the share prices.
Trying to use the low-value share price in the market, thereby increasing their ownership of shares from the public.
Interest to move the administration to a more private front and with Less regulatory compliance and thereby reducing the related costs, such as listing fee, compliance maintained etc.

Alternatives to voluntary delisting

Due to the lengthy process of voluntary delisting, which takes more than a year, generally, the company opts for other viable solutions to make the delisting a little simpler. They may consider the following alternatives which may result in some material aspects of delisting such as;

They tend to increase the promoter’s shares in the target company (but there is a restriction of 75% maximum for listed trading companies). With the Buyback policy of shares by companies themselves from the public-traded stock market, only the permitted parts of shares can be bought back, which also attracts regulatory compliance.

SEBI recent notification on delisting

Analysis

The Securities and Exchange Board of India (SEBI) has announced a new standard operating procedure (S.O.P) for delisting the Subsidiary company, where the listed subsidiary and its parent holding company should be in the same line of business.
SEBI (Delisting of Equity Shares) Regulations, 2021 Known as “Delisting Regulations 2021”. Which came into force by replacing the old regulation of 2008. As Regulation 37 states, the equity shares of a listed subsidiary company of a holding patent company may be delisted from the stock exchanges under a scheme of arrangement under Sections 230 to 232 of the Companies Act, 2013.
The term ‘same line of business, is defined as at that least 50 percent of revenue from the operations of a subsidiary and holding company, must come from the same area of operation as per the last audited annual financial results, which should be submitted by both the companies in compliance with SEBI (LODR) Regulations, 2015.
Chapter VI, Part C, of Regulation 37 establishes a special provision for a subsidiary to get delisted through the “scheme of arrangement” (which has been newly inserted).
This scheme of arrangement can be carried out between the holding and listed subsidiary companies having a minimum of 50 per cent of the net tangible assets of the investment in the same line of business as per the last audited annual financial results submitted by two companies.
Moreover, both the listed subsidiary, the holding company and the listed subsidiary have to provide a self-certification concerning both the companies being in the same line of business,” said the SEBI circular.

The new process of delisting

The process of delisting will differ when company security is listed on many exchanges, but the overall process of delisting of the company will be similar to a maximum extent that is required;

Events and timeline

A resolution needs to be passed by the board of the company in approving the delisting process, and it should comply with security laws and the same has to be the date of the acquirer expressing the consent, a Special resolution needs to be passed. Within 45 days from the date of approval by the board.
The company should intimate their delisting proposal to the concerned exchange before passing the board resolution and appoint a merchant banker to carry out Due-Diligence and submit the report to the exchange.
After getting the shareholders’ approval, an Escrow Account needs to be created within 7 (seven) working days. After that, shareholders’ approval or regulatory approval needs to be attained. then, In-principle approval Within 15 (fifteen) working days.

In earlier rules, there was to be a separate merchant banker for both board and offer, but now the seller’s merchant banker will also act as manager for the offer.
Merchant Banker will perform a reverse book building process.
The outcome of the Reverse Book Building (‘RBB’) has to be published within a few hours from the closure of the bidding period. The same is also required to be published in the same newspapers and a detailed public announcement is to be made within 2 working days.
Now, offer prices will be obtained from all shareholders.
In case of failure, 90% of the shares are not tendered on the date of disclosure of the outcome of the RBB process.
Discovered price being rejected by acquirer: on the date of making a public announcement because of the failure of the delisting. If the discovered price is the same as the floor price, then payment is made through the secondary market mechanism.
If the discovered price is higher than the floor price: then payment should be made within 5 working days to the public shareholders.
After the successful delisting and settlement of the payment to the public shareholders, a final application should be made to the stock exchange Within 5 working days as confirmation.

Real-time Vedanta example

In the recent time, the Vedanta general delisting was worth noting; there are substantial reasons for the delisting and they are identified as follows:

They tried to restructure an unlisted private company which is simpler than the listed public company due to regulatory compliance procedures.
Currently, the Vedanta Group has a $ 1.9 Billion principal repayment amount in the financial year of 2021. The Delisting process will help to relieve the debt repayment and to attain economic stability for the company.
Their strategy is fundraising from options like Strategic Buyout (SBO) etc, which can be easier for unlisted companies. Moreover, the Promoter found that the current market value price is more profitable for delisting their company.
The floor price (Rs 87.5), is less than half of its original book value (Rs 193), and the current market value is also far less than book value. So, since the current market price is less, delisting and paying off to the public shareholders will not result in high cash-out.

These are some of the key elements to be considered by the Vedanta group before delisting; similarly, each company has to assess their business situation before opting for delisting

Conclusive opinion

The business environment is always dynamic, and everything is a time-bound process; these new regulations make voluntary delisting an easier procedure. This enhanced transparency and will develop confidence among the shareholders and investors.

The Delisting Regulations of 2021 has given the Delisting Exemption for the listed subsidiary company to be delisted by its parent holding company, which are in the same line of business, thereby SEBI with its policy objective of regulating exit options of the minority shareholders of listed companies.

The Delisting Exemption will help the holding parent company achieve a targeted merging process without having to go for lengthy approvals, reduced regulatory compliances and unnecessary compliances costs, and a simple reverse book building process. However, a further lock-in period of three years for re-listing will encourage the companies to take careful steps based on their business needs which can be considered as a step towards business-friendly regulations. This would enable the companies a quicker and more flexible exit from the public exchanges. Thereby allowing them to concentrate more on their business opportunities rather than lengthy documenting procedures.

Disclaimer

This article is a simple outline, and the content is only for general information. They do not provide any piece of advice or any legal opinion to anybody and express purely personal views. It is based on relevant law and/or facts available and has been prepared with due care and accuracy and is reliable. Readers are requested to recheck and refer to all relevant provisions of respective statutes and regulations, latest judicial pronouncements, circulars, clarifications etc., before acting based on the above article information. The possibility of other views on the subject matter is possible based on individual interpretation of those subjects.

References

Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skills.

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All you need to know about the Children’s Online Privacy Protection Act (COPPA)

By

Rachit Garg

-

October 24, 2021

0

This article has been written by Manu Seth, pursuing a Diploma in International Data Protection and Privacy Laws from LawSikho. It has been edited by Prashant Baviskar (Associate, LawSikho) Smriti Katiyar (Associate, LawSikho).

Table of Contents

Introduction

Back in 2016, Rohan was barely 8 when his parents shifted to the U.S. due to professional constraints from a northern region of a country in South Asia that has of late been lauded around the world for its burgeoning the I.T. sector. His mother is engaged in the healthcare insurance sector while his father is working with a big I.T. firm that promoted him from Regional Head in South Asia to International Headquarters based out of California. Since the work schedule of his parents is strenuous and they don’t get ample time to devote to Rohan they have ensured that he doesn’t miss out on anything, be it education or leisure-time activity, and have equipped him with the latest gadgets.

A new game that got recently released on Google Play Store had enticed Rohan to download the same for a fee by entering the credit card details of his father, and further lured him into divulging other details like his residential details, social security number of his parents apart from a family photo. Being oblivious to repercussions, Rohan does so and the operator to whom such information was provided collects the same without following the necessary guidelines it statutory requires to do and processes such information for commercial purposes. Rohan’s family, unaware of this, continues with their work-life in the manner they were. A few days later, they receive a summons from the Federal Trade Commission stating that they are victims for violation of privacy as mandated by law and need to testify before the commission against a company which was running online gaming through Google Play Store and that such company luring Rohan had obtained the credit card details of Rohan’s father along with their family photo and put them on public domain.

The authority, apart from imposing hefty fines upon such companies, also ordered the company to compensate the family for the wrongs done to them. Upon finding out the factual position, Rohan’s father wrote a thank you note to the authorities as well as the Govt. of the United States for shielding their privacy with a law which they would have never come to know of otherwise if it was in their domestic country.

Later that evening Rohan’s father researched a bit about the said law which he came to know is called COPPA or the Children’s Online Privacy Protection Act. The primary aspects of such a law were discussed amongst his family members to ensure that in future they don’t succumb to any such website or online service (websites, mobile apps, plugins, and toys) which unscrupulously yields them to give family details without their consent.

Definition and meaning

COPPA which is a U.S. based law is aimed to protect the privacy of children under the age of 13 from the dynamic nature of the internet. With the world moving towards technology at a rapid pace and increasing independence on the internet, it is imminent to make inroads in every sector whether it’s business, healthcare, insurance, banking or law. With such evolution, it must be ensured that necessary safeguards apply so that such rapid advancement on one hand would not leave a question mark on the society as a whole. Hence, the applicability of COPPA is not limited to websites but to several online services as well and places stringent rules for use and processing data of children putting their parents (including natural guardian) in the driver’s seat by empowering them by law the ability to monitor and approve information that their children share.

Such information within the meaning of the definition clause encompasses:

(A) a first and last name;

(B) a home or other physical address including street name and name of a city or town;

(C) an e-mail address;

(D) a telephone number;

(E) a Social Security number;

(F) a photo, video or audio file where such file contains a child’s image or voice; or

(G) information concerning the child or the parents of that child that the website collects online from the child and combines with an identifier described in this paragraph.

It is interesting to note that collection of information from children as aforesaid further includes passive tracking of a child’s activity online or prodding a child to make personal information publicly available.

Governing authority

COPPA is managed by the Federal Trade Commission or FTC, which is an independent agency for the enforcement of antitrust and consumer protection law. The rules enacted by FTC supplement the law ineffective enforcement.

Pertinently, the law applies to the gathering of information obtained online by entities or persons based out of U.S. jurisdiction towards safeguarding children under 13 years of age including children outside the U.S. (if the company is U.S. based). Certain acts like collecting personal information from children below 13 years of age by an operator of a website or an online service directed to children are termed unlawful if the same is done in a manner that violates the regulations made therein. Its umbrella further extends to include the operators of general audience websites or online services which are involved in collecting, using, or disclosing personal information from children under 13, and further to websites or online services which collect personal information directly from users of another website or online service directed to children. The law further inhibits operators from disclosing any information received from parents in the course of obtaining parental consent or providing parental access pursuant to COPPA.

Interestingly the term ‘online service’ as distinguished from the ‘website’ circumscribes activities like engaging in network-connected games, purchasing of goods online, online advertisements, plug-ins, mobile applications that are connected to the internet, connected computer peripherals-like smart speakers, voice assistants like Alexa, Google assistant and internet-enabled location-based services like GPS and ETA. Further, in order to determine whether a website or an online service is directed to children, the Commission will consider its subject matter viz. audio-visual content, language, presence of child celebrities who appeal to the children, age of such celebrities, the context of such service, et al.

In order to regulate unfair or deceptive practice in connection with the collection, use, and disclosure of personal information collected from children over the internet, COPPA rules enlist a number of requirements which are:

A notice on the website about the fact of collection of information from children, how such information shall be used and its disclosure practices for such information;
Obtaining of verifiable consent from the parent or natural guardian prior to collection, use and disclosure of personal information from such children;
Providing a reasonable mechanism to review such information as collected from children by his/her parent;
Setting up regulations for disclosing information which is minimally necessary or adequate;
Establishing procedures to ensure that the information collected is within the confines of confidentiality, security and personal information collected from children.

In addition to the above, the rules framed by FTC to enforce COPPA directs the website operator to have a detailed privacy policy among other responsibilities an operator has to keep in mind while protecting children’s privacy. Further, it also requires the site operators to allow parents to review any information collected from their children.

It is imperative to note that the consent obtained by the website operator from the child’s parent can be revoked anytime and in such an event the concerned website must stop collecting, using and disclosing information of such child.

Applicability of COPPA

The law is applicable to an individual or entity if it:

runs a website or an online service directed to children under 13 years of age and collects personal information from them, or allow others to do so;
runs a plug-in or ad-network having knowledge that personal information is being collected from users of a website or service directed to children under 13 years of age;
service through website or online is directed to a general audience, but knows that personal information that is collected is from children under 13.

Ever since its inception, several websites were caught in its loop for failing to implement the mandate the legislature had directed. Most of the kids these days and we adults must be aware of ‘Hershey’, the brand known in the market for its chocolate syrup amongst others, but little do we know that the same brand was fined $85,000 in 2003 for operating candy-related websites and obtaining information through children in violation of COPPA. Even Sony BMG Music was fined $1,000,000 in 2008 for improperly collecting and disclosing personal information related to children.

It is astonishing to note that in 2019 our all-time search engine Google and its reliable video cousin YouTube were fined $170 million to settle allegations of tracking and collecting information pertaining to children in violation of COPPA which so far has been the highest amount the FTC ever obtained since COPPA came into effect. The settlement apart from monetary fine also includes developing, maintaining and implementing a system that can permit YouTube channel owners to identify child-related content on their channel so that COPPA can be effectively implemented. Also, it required both the companies to provide notice about their data collection practices and obtain parental consent before collecting data from children in any manner.

FAQs:

Why does COPPA apply only to children under 13?

The intent of the legislature was to provide statutory protection to young children who are vulnerable to online businesses and marketing and may not understand privacy concerns that may crop out of it.

How can one figure out if the website operator or such company as involved in rendering online services have actual knowledge of a user’s age?

Although FTC rules are silent, it can be deduced if the website or service concerned asks for and receives information from the user that allows it to determine the age. Queries in the form of user registration page seeking (i) date of birth; or (ii) year of birth; or (iii) which grade are you in or when did you pass your high school?

How can verifiable consent of the parent or local guardian be obtained?

COPPA rules are silent on this however the same is to be done in the manner acceptable in the light of modern-day technology. Some of the methods may include but are not limited to as follows:

Call by trained staff personnel for inquiry;
Seeking copy of government issued identity for verification;
Signing up of consent form and sending it back to the operator through email, scan, fax or any other modes as applicable;
Seeking answers to a series of questions that only a parent would be able to answer.

Can COPPA help in enforcing acts such as restraining children from watching pornography?

Not really, since the applicability of COPPA is limited to granting parental control overuse or disclosure of information collected from children online.

Conclusion

The COPPA legislation was originally enacted in 1998 and came into effect in 2000 with multiple amendments thereafter, however, considering the ambit of law and parameters it encompasses with, the legislation was indeed a way ahead of its time and had timely dealt with the problems effectively.

With the evolution of the internet into multiple mainstreams and the rapid spread of technology across the world, the developing nations must brace themselves and go by the adage ‘adapting technology with the responsibility’ meaning thereby that it is equally essential for the developing world to arm themselves with laws in the light of prevailing times which must be adequate and imperative to counter the bane that boon may bring along with.

References

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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Blog competition winner announcement (Week 4th August 2021)

By

Rachit Garg

-

October 24, 2021

0

So today is the day! We are finally announcing the winners of our Blog Writing Competition for 4th week of August 2021 (From 23rd August 2021 to 29th August 2021).

We’d like to say a big thanks to everyone for participating! It has been a great pleasure receiving your articles on a different legal topic, they were all amazing!

And now we’d like to congratulate our top 5 contestants, who become the undoubted winners. They will receive Prize money of Rs 2000, LawSikho store credits worth Rs. 1000 and a Certificate of Merit from team LawSikho.

They will also get an opportunity to intern at iPleaders under the mentorship of Ramanuj Mukherjee, Abhyuday Agarwal, Harsh Jain, and Komal Shah. Their articles will get published on the iPleaders blog (India’s largest legal blog). Click here to see other perks available to them.

Their entries (see below) received maximum marks based on the average marks given by the panel of editors, and have been crowned the winners!

S.no	Name	About Author	Article
1	Kishita Gupta	Intern	Parole in India and laws related to it
2	Daisy Jain	Intern	Legal remedies available against online bullying
3	Vikrant Shinde	Student pursuing the Certificate Course in Advanced Supreme Court Practice: Drafting, Procedure, and Strategy from LawSikho.	Understanding the interpretation of the Doctrine of Colourable Legislation by the Supreme Court of India
4	Ishan Arun Mudbidri	Intern	An analysis of Article 75 and Article 164 of the Indian Constitution
5	Vivek Maurya	Intern	An overview of The Arbitration Act, 1996 in light of the case of Government of Maharashtra v. Borse Brothers Engineers & Contractors Pvt. Limited

Meet our next 5 contestants who made it to top 10 here. They will receive a Certificate of Excellence from team LawSikho.

They will also get an opportunity to intern at iPleaders under the mentorship of Ramanuj Mukherjee, Abhyuday Agarwal, Harsh Jain, and Komal Shah. Their articles got published on iPleaders blog (India’s largest legal blog). Click here to see other perks available to them.

S.no	Name	About Author	Article
6	Harman Juneja	Intern	Significance of the Medical Termination of Pregnancy (Amendment) Act, 2021 in light of the case of Mahima Yadav v. GNCTD
7	Aryan	Intern	The ‘per se’ rule against trademark protection in the case of United States PTO v. Booking.com B.V.
8	Aabir Shoaib	Student pursuing a Diploma in General Corporate Practice: Transactions, Governance, and Disputes from Lawsikho.	Legislative analysis of corporate social responsibility under Companies (Amendment) Act, 2019 and Companies (Amendment) Act, 2020
9	Saksham Suneja	Student pursuing a Diploma in Advanced Contract Drafting, Negotiation, and Dispute Resolution from LawSikho	Status of contract farming in India and its impact on women
10	Udita Prakash	Intern	International water and jurisdiction of states over them

Click here to see all of the contest entries.

Our panel of judges, which include the iPleaders Blog Team, chose the winning entry based on how well it exemplified the entry requirements.

Certificates will be sent on the email address given by the contestant while submitting the article. The contestants have to claim their prize money by sending their account details as a reply to the mail in which they received their certificate within 1 month (30 days) of the date of declaration of results and not afterwards.

For any other queries feel free to contact Vanshika Kapoor (Senior Managing Editor, iPleaders) at [email protected].

LawSikho credits can be claimed within twelve months from the date of declaration of the results (after which, credits will expire).

Congratulations to all the participants!

Regards,

Team LawSikho

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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Blog competition winner announcement (Week 3rd August 2021)

By

Rachit Garg

-

October 24, 2021

0

So today is the day! We are finally announcing the winners of our Blog Writing Competition for 3rd week of August 2021 (From 16th August 2021 to 22nd August 2021).

We’d like to say a big thanks to everyone for participating! It has been a great pleasure receiving your articles on a different legal topic, they were all amazing!

And now we’d like to congratulate our top 5 contestants, who become the undoubted winners. They will receive Prize money of Rs 2000, LawSikho store credits worth Rs. 1000 and a Certificate of Merit from team LawSikho.

They will also get an opportunity to intern at iPleaders under the mentorship of Ramanuj Mukherjee, Abhyuday Agarwal, Harsh Jain, and Komal Shah. Their articles will get published on the iPleaders blog (India’s largest legal blog). Click here to see other perks available to them.

Their entries (see below) received maximum marks based on the average marks given by the panel of editors, and have been crowned the winners!

S.no	Name	About Author	Article
1	Sahaja	Intern	All you need to know about the 104th Constitutional Amendment Act
2	Gyaaneshwar Joshi	Intern	Patriarchy and the Indian legal system : search for a female CJI
3	Prachi Gupta	Student pursuing Diploma in M&A, Institutional Finance and Investment Laws (PE and VC transactions) from Lawsikho	The issues arising from the usage of AI in M&A due diligence
4	Anindita Deb	Intern	Indian laws against cosmetic testing on animals
5	Arya Mittal	Intern	Analysing the debates surrounding centre-state relations with respect to legislative lists

Meet our next 5 contestants who made it to top 10 here. They will receive a Certificate of Excellence from team LawSikho.

They will also get an opportunity to intern at iPleaders under the mentorship of Ramanuj Mukherjee, Abhyuday Agarwal, Harsh Jain, and Komal Shah. Their articles got published on iPleaders blog (India’s largest legal blog). Click here to see other perks available to them.

S.no	Name	About Author	Article
6	Adv. Anu Khanna Das	Student pursuing a Diploma in Intellectual Property, Media and Entertainment Laws from lawSikho.com	Can a similar theme based food application like Zomato be started without IPR violation
7	Ms. Aporva Shekhar	Intern	The judiciary system in relation with corporate manslaughter : throwing light to its role
8	Kishita Gupta	Intern	Implementation of the Beijing Rules, 1985 in the Juvenile Justice (Care and Protection) Act, 2015
9	Kshitij Pandey	Student pursuing a Diploma in Advanced Contract Drafting, Negotiation, and Dispute Resolution from Lawsikho.	Procedure for drafting a restaurant franchise agreement
10	Harsh Gupta	Intern	Is a suit for eviction maintainable before Wakf tribunal if the tenant disputes that the property is not a Wakf

Click here to see all of the contest entries.

Our panel of judges, which include the iPleaders Blog Team, chose the winning entry based on how well it exemplified the entry requirements.

Certificates will be sent on the email address given by the contestant while submitting the article. The contestants have to claim their prize money by sending their account details as a reply to the mail in which they received their certificate within 1 month (30 days) of the date of declaration of results and not afterwards.

For any other queries feel free to contact Vanshika Kapoor (Senior Managing Editor, iPleaders) at [email protected].

LawSikho credits can be claimed within twelve months from the date of declaration of the results (after which, credits will expire).

Congratulations to all the participants!

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

https://t.me/joinchat/J_0YrBa4IBSHdpuTfQO_sA

Follow us on Instagram and subscribe to our YouTube channel for more amazing legal content.

Comparative analysis between insolvency laws of UAE and India

By

Abanti Bose

-

October 24, 2021

0

Insolvency — Image Source - https://rb.gy/kgn8vw

This article is written by Akarsh Chaturvedi, pursuing Diploma in General Corporate Practice: Transactions, Governance and Disputes from Lawsikho. The article has been edited by Smriti Katiyar (Associate, LawSikho).

Table of Contents

Introduction

Code for Insolvency and Bankruptcy law in India (“IBC” or “Code”) and that of United Arab Emirates (UAE) are very different and distinct. UAE has two different laws; one being the Insolvency Law for Individuals (Insolvent physical persons) [Federal Decree-Law No. (19) of 2019] (“Insolvency Law”) and the other being the Bankruptcy Law [Federal Law by Decree No. (9) of 2016] (“Bankruptcy Law”) for corporate entities and individuals involved in commercial activity. Broadly the purpose of such law is the maintenance and enhancement of financial stability in a country.

Though UAE has two laws, the literal meaning of ‘Insolvency’ and of ‘Bankruptcy’ cannot be misunderstood. Insolvency is a state in which a debtor is unable to pay its debts and its liabilities are greater than its assets, whereas Bankruptcy is a process whereby a debtor tries to revive from its insolvent state. The Insolvency Law of UAE is for individuals and the Bankruptcy Law is for corporate entities and individuals involved in commercial activity.

Where the objective of Insolvency and Bankruptcy Code, 2016 is resolution of insolvent state of corporate persons, partnership firms and individuals, and balance the interest of all the stakeholders in the resolution process as per the Code. The primary purpose of both laws of UAE, i.e. Insolvency Law and the Bankruptcy Law is to protect the common interests of both the creditor and the debtor in a fair and balanced manner, which is similar and not exactly the same as IBC.

IBC lay emphasis on keeping debtors as a going concern rather than only protecting the common interest of debtors and creditors. The objective itself of IBC has been reiterated by the Supreme Court of India and different Company law tribunals in various cases. Recently, in Dinesh Gupta vs. Vikram Bajaj Liquidator M/s Best Foods Ltd., NCLAT, New Delhi shed light on the primary aim of the code, that is :

(1) Resolution;

(2) Maximization of value of assets of the Corporate Debtor and thereby for the benefit of all the creditors.

Further, the court held that a Resolution Plan is not recovery, sale, auction, or liquidation plan. Also, in Prowess International Pvt. Ltd. vs. Parker Hannifin India Pvt. Ltd. – CA(AT) (Insol.) No. 89 of 2017, the appellate tribunal held that Insolvency Resolution process is not a recovery proceeding to recover the dues of the creditors.

One of the key features of both the laws of UAE is to decriminalise the financial obligations that arise from non-payment of debt by a debtor. The Insolvency Law of UAE became effective on 29^th November 2019 which aims to provide protective measures and expert assistance to natural persons facing financial difficulties through a court-led process to reach a settlement with its creditors. It applies to natural persons who are not engaged in economic activity and are not a trader.

On the other hand, Part three of IBC i.e. provisions for insolvency of individuals and partnership firms got notified by the Government of India on 1^st December 2019. Whereas, the other law of UAE i.e. Bankruptcy Law is applicable to companies, Individual traders, and civil companies (partnership firms). It explicitly provides for three processes i.e.

(i) To assist the debtor by means of a protective composition plan (Article 5);

(ii) Restructuring (Article 67); and (iii) liquidation (Article 67).

Key Provisions of Insolvency law of India and UAE

Applicability

The Insolvency Law is applicable to natural persons who are not engaged in economic activity and are not a trader and excludes all the debtors that are subject to the Bankruptcy law.

The Bankruptcy Law applies to:

Companies governed by Commercial Companies Law of UAE.
Companies partially or fully owned by federal or local government.
Traders as defined under Commercial Transaction Law of UAE.
Companies and Establishments in Free Zones governed by Federal Law No. (8) of 2004 on Financial Free Zones.
Civil Companies, discharging professional activities, having licenses.

It is noteworthy that the Bankruptcy Law does not apply to companies set up and carrying out its activities within the Dubai International Financial Centre and Abu Dhabi Gold Market (Financial Free Zones), as these have their internal legislation in place for Insolvency and Bankruptcy.

The Insolvency and Bankruptcy Code applies to:

Companies incorporated under the Indian Companies Act.
Companies governed by any special Act.
Any Limited Liability Partnership incorporated under LLP Act, 2008.
Any such body incorporated under any law as the Central Government may notify.
Personal Guarantors to corporate debtors.
Partnership firms and proprietorship firms; and
Individuals other than personal guarantors to corporate debtors.
Any other person incorporated with limited liability not including any Financial Service Provider.

The Applicant to initiate resolution process

One of the major differences between the law of India and of UAE is of the applicant who can initiate the resolution process. Where under IBC a corporate insolvency resolution process may be initiated by creditors as well as the debtor himself, in the resolution process under the Bankruptcy Law only the Debtor has the right to apply to Court to commence the resolution process i.e. the Protective Composition Procedure (Article 6). Also, in the resolution process under Insolvency Law only the debtor himself may submit the application to commence the resolution process i.e. Financial Settlement Proceedings (Article 3), however, applications for the proceedings of Insolvency and Liquidation, under Book 3 of Insolvency Law and for Bankruptcy (Article 67) under the Bankruptcy Law, can be submitted by the creditors as well. The protective composition procedure and financial settlement proceedings under the aforesaid laws is similar to insolvency resolution process as given under Chapter II of Part II and Chapter III of Part III of IBC respectively.

In the insolvency mechanism under IBC creditors are broadly classified into two categories which are financial creditor and operational creditor. Financial creditor can file an application for initiation of corporate insolvency resolution process under section 7 of the Code whereas operational creditor can file an application under section 9 of the Code and corporate applicant of corporate debtor can initiate the resolution process under section 10 of the Code.

The Authority to Adjudicate

In India the National Company Law Tribunal (“NCLT”) is the appropriate authority to adjudicate the matters pertaining to Insolvency and Bankruptcy of Corporate persons. NCLT of a particular place has the territorial jurisdiction where the registered office of a corporate person is situated and it is defined as the Adjudicating Authority under IBC. The Adjudicating Authority is empowered to provide sanctions – for the appointment of insolvency professionals, for any decision of the CoC, for resolution plan etc.

Pertinently, the authority to adjudicate insolvency matters of individuals and partnership firms is with the Debt Recovery Tribunal (Section 179).

Under the Insolvency Law of UAE and the Bankruptcy Law the Court having jurisdiction pursuant to the Civil Procedure Law has the jurisdiction to deal with the matters. In the cases of Insolvency Law it is the Court of first instance having the jurisdiction to adjudicate the Insolvency matters. Thus, unlike a separate adjudicating authority established for matters related to companies under IBC, the Courts in UAE having civil jurisdiction serve as the adjudicating authority in matters of insolvency and bankruptcy.

Commencement of resolution process

Under the Indian Law i.e. the Insolvency and Bankruptcy Code, 2016, its concept is based on debt and its default. Section 6 of IBC makes it evident that where any corporate debtor commits a default, a financial creditor, an operational creditor or the corporate debtor itself may initiate a corporate insolvency resolution process. The initiation date and the commencement have been defined separately under the code. Section 5 sub-section (11) defines “initiation date” for corporate insolvency resolution process – as the date on which a financial creditor, operational creditor or corporate applicant makes an application to the Adjudicating Authority. Sub-section (12) of Section 5 defines “insolvency commencement date” as the date of admission of an application by the Adjudicating Authority under section 7, 9 or section 10 of the Code for initiating corporate insolvency resolution process. Also, for insolvency and bankruptcy of Individuals and partnership firms, the threshold of default is minimum one thousand rupees. Thus, for the commencement of the resolution process for corporate entities or individuals or partnership firms there shall exist a default on the part of the corporate debtor. Having talked about the prerequisite, the final authority to admit the application for commencement of the resolution process lies with the adjudicating authority.

The apex court in Swiss Ribbons Pvt. Ltd. & Anr. vs. Union of India & Ors. – AIR (2019) SC 739, held that a ‘claim’ arises only when a debt becomes ‘due’ and ‘default’ occurs only when a ‘debt’ becomes ‘due and payable’. It is this reason why financial creditors have to prove default. Further, Swiss Ribbons was a case explaining the differentiation in triggering of insolvency resolution processes by a financial creditor and an operational creditor.

There are two kinds of proceedings under the Insolvency law for natural persons one is financial settlement proceedings which is similar to insolvency resolution proceedings under IBC and the other is Insolvency proceedings under Chapter 1 of Book 3 of the Insolvency Law of UAE which is the liquidation proceedings of the debtor. The authority of Expert (similar to insolvency professional under IBC) continues even after the Plan for settlement of financial proceedings (similar to repayment plan under IBC) gets approved by the adjudicating authority to implement the plan. The expert acts as the supervisor of the Plan for the time of its implementation (Article 21). Also, there is a scope of amendment to the Plan after the approval of the Plan by the court under Article 20 of the Insolvency Law as well as Section 116 of IBC.

Under the Bankruptcy Law as well there are two kind of processes i.e. Protective Composition Procedure provided under chapter Three and the Bankruptcy Procedure, which includes restructuring and liquidation, given under Chapter four. Pertinently, it is the court that accepts the application for commencement of Protective Composition Procedure for debtor with a prerequisite that the debtor is not in a state of Cessation of Payment for more than thirty (30) consecutive business days as a consequence of the disorder of the Debtor’s financial condition and if the Debtor is not over-indebted (Article 6, Bankruptcy Law).

While under the UAE Laws on insolvency and on bankruptcy, it is the discretion of the Court to decide on the application by the natural person under the Insolvency Law (Article 7, Insolvency Law) to initiate the settlement of financial obligations of individuals which is dissimilar when compared from insolvency and bankruptcy of individuals and partnership firms under the Indian law, where although it is the adjudicating authority to admit the application but it is the debt and its default which is prerequisite for an application to get admitted. Also, under IBC an application can be made even by a resolution professional of the debtor for a ‘fresh start’ resolution process.

Further, the minimum amount of default to initiate a corporate insolvency resolution process under IBC is rupees one crore, and for individuals and partnership firms is rupees one thousand. Whereas it is only in the process of liquidation under the Insolvency Law and in the process of Bankruptcy under the Bankruptcy Law, where the minimum amount to initiate the processes is two hundred thousand (200,000) Dirhams and one hundred thousand UAE Dirhams (AED 100,000) respectively by creditor(s).

The Authorised representative of debtor

A corporate debtor under the Insolvency and Bankruptcy Code, 2016 is represented or in correct words the management of the corporate debtor is taken over by the Interim Resolution Professional and thereafter the Resolution Professional (“RP”) once an application for corporate insolvency resolution process is admitted by the adjudicating authority. The appointed resolution professional manages the operations of such corporate debtors to keep it as a going concern (Section 20, IBC). However, the responsibilities of a resolution professional under insolvency resolution process for individuals and partnership firms is different as a debtor in consultation with RP prepare a repayment plan, the RP after the submission of repayment plan along with his report and thereafter its approval by the adjudicating authority, supervise the implementation of the repayment plan till the completion of repayment plan after which a discharge order is passed by the adjudicating authority.

The roles and responsibilities of experts assigned under the Insolvency Law are very much similar to the role of resolution professionals under insolvency resolution process of individuals and partnership firms. Here, it is the expert who prepares the resolution plan in cooperation with the debtor. Expert also acts as a supervisor for implementation of a plan for settlement of financial obligations.

Under the protective composition procedure in the Bankruptcy Law Trustee(s) is/are appointed who may either be one of the experts appointed by the court under Article 13 of the Bankruptcy Law. However, the management of the business of the debtor is carried out by the debtor itself but under the supervision of the trustee. Here the whole management of debtor’s business is not taken over by the trustee and it is the debtor who is required to carry out all the necessary acts to preserve its interest and of the creditors (Article 26). There can be more than one trustee, not exceeding three, appointed under protective composition procedure.

Timeline

The Insolvency and Bankruptcy Code states a strict timeline of one hundred and eighty days, extendable further once by a period not exceeding ninety days by adjudicating authority for completion of insolvency resolution process. It is provided further in the Code that corporate insolvency resolution process be mandatorily completed within a total period of three hundred and thirty days from the insolvency commencement date. Section 101 of the Code under insolvency resolution process for individuals and partnership firms provides a period of 180 days as a period of moratorium which shall cease to have effect at the end of such period or on the date of order on the repayment plan by the adjudicating authority.

Whereas under the Bankruptcy Law there is no specific time-line in total provided for the completion of protective composition procedure. However, the total time summed-up is 260 days (approx.). Similarly, under the Insolvency Law the total time summed-up is 280 days (approx.) for financial settlement proceedings, however, there is a proposed period for execution of the plan which may not exceed 3 years from the date of the approval of financial liability settlement plan by the court.

Treatment to secured creditors

As per section 14 of the Code under corporate insolvency resolution process (CIRP), a secured creditor is forbidden to enforce its security interest against corporate debtor during the period of moratorium i.e. during the proceedings of CIRP. Rights of secured creditors are restored only after the commencement of liquidation proceedings. Further under insolvency resolution for individuals and partnership firms secured creditors have been provided an option either to participate in resolution process i.e. by participating in meeting of creditors and voting in relation to repayment plan, or to abstain from participating in the meeting of creditors. However, in the latter case concurrence of such a creditor is to be obtained where provision of the repayment plan affects the right to enforce security of such creditors.

Whereas under the Bankruptcy Law secured creditors are not forbidden to enforce its security interest by commencement of proceedings of protective composition procedure. Thus, rights of secured creditors remain capable of being enforced with the permission of the court. In the opinion of the author, such provision may have an adverse effect on the resolution process and effectiveness of the Bankruptcy Law altogether.

Conclusion

The law of insolvency and bankruptcy bolster the economic stability of the nation and provide secure conditions for personal loans to the satisfaction of both the debtor and the creditor, thus, a law regulating this subject is an important legislation.

Pertinently, the Insolvency and Bankruptcy Code, 2016 can be said to be similar to the Insolvency Law and the Bankruptcy Law of UAE in almost every aspect. However, some of the provisions of Insolvency Law and the Bankruptcy Law – like rights of secured creditors during insolvency resolution proceedings; authority to debtor to carry out the operations of its business; restricted right to apply to adjudicating authority only by a debtor to initiate the resolution process; are some of the major differences which altogether make the insolvency proceedings, its effect, and its efficiency different from IBC.

References

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Vinod Dua’s Sedition case : has the Supreme Court missed an opportunity to reconsider the legitimacy of its verdict in the Kedar Nath Singh case

By

Rachit Garg

-

October 24, 2021

0

This article has been written by Aneesh Raj and Tanya Biswas. It has been edited by Khushi Sharma (Senior Associate, LawSikho) and Vanshika Kapoor (Senior Managing Editor, LawSikho).

Table of Contents

Introduction

“If there be time to expose through discussion the falsehood and fallacies, to avert the evil by the processes of education, the remedy to be applied is more speech, not enforced silence.”

— U.S. Supreme Court Justice Louis D. Brandeis.

In a recent decision. The Supreme Court has quashed the case of sedition against senior journalist Vinod Dua who was booked under section-124A because of his critical comment against the government for mishandling the COVID-19 pandemic which led to a stern migrant crisis during the lockdown last year. The Court while quashing the charges has referred to the principle established in the landmark verdict of Kedar Nath Singh v. State of Bihar. It said that his (Vinod Dua) remarks constituted an honest criticism of the ruling regime therefore, it couldn’t be categorized as a seditious activity.

The observation of the apex court in Vinod Dua case gives rise to a concern that there is an immediate and pressing need to reconsider and reevaluate the constitutional validity of this draconian provision which tend to curtail the right of free speech and expression of the citizen and give unbridled power to the ruling regime to suppress the emerging voice of dissent in the name of maintaining public order. The guidelines of the Supreme court in Kedar Nath judgement are not sufficient today in ensuring freedom of speech and expression. A database analysis by ‘Article-14’ reveals that, as compared to the annual average from 2010 to 2014, the number of sedition incidents reported each year from 2014 to 2020 has increased by 28%. Limited interpretation of the Kedar Nath verdict makes it easy for the government to invoke it against all its dissenters. Therefore, it is high time to review Kedar Nath verdict so the right to free speech can be ensured.

In the light of ongoing debate and discussion concerning the rationality of sedition law, this article is aimed at critically analyzing how the interpretation of the term in the Kedar Nath Singh case laid Section-124 A subject to partial reading down and misuse. Further, it analyses the impact of such interpretation on the right of free speech and expression enshrined in Article-19(1)(a) of the Indian Constitution.

What is Sedition Law in India

The term ‘sedition’ has been defined under the section-124 A of the IPC-1860. It says that “Whoever, by words, either spoken or written, or by signs, or by visible representation, or otherwise, brings or attempts to bring into hatred or contempt, or excites or attempts to excite disaffection towards, the Government established by law in India, shall be punished with imprisonment for life, to which fine may be added, or with imprisonment which may extend to three years, to which fine may be added, or with fine.” Thus, it categorizes four sources of a seditious act. It includes “written words, spoken words, Signs or visual representation.” Apart from it, there are three explanations mentioned under section 124 A. The 1^st explanation states that ‘dissatisfaction’ includes “disloyalty and all feelings of enmity.” The 2^nd and 3^rd explanations assert that “if comments are made to criticize the ruling establishment or administration or other activities of the government in a lawful manner and without inciting hatred or violence then, the act would not be labelled as seditious.”

The impugned provision of sedition that was held in the Kedar Nath case

The ultimate analysis of the apex court’s verdict in the Kedar Nath Singh case which upheld the validity of Section-124 A states that “without incitement to violence or rebellion there is no sedition.” This interpretation is subject to partial reading down and has not closed the door on misuse of this law. The Court says that “only when the words written or spoken have the pernicious tendency or intention of creating public disorder” does the law step in. So, as per this interpretation, a policeman can arrest a cartoonist if he thinks he has a deleterious tendency to create public disorder. It is the personal opinion of the policeman that take into account. In the interpretation of sedition, the verdict in the Kedar Nath case become the locus classicus. It has made it easy for the law executing machinery to easily take the fundamental rights of the citizen.

This limiting interpretation of the apex court has made it easier to invoke sedition law against all the dissenters. The ruling of the court in this particular case has paved the way for misused of law, since then, the law of sedition has been misinterpreted repeatedly. More than fifty-five years have elapsed since the Kedar Nath verdict, which established the modern concept of sedition. Nonetheless, the provision under Section 124A is being invoked irrespective of fact that whether or not the alleged act or words are, in fact, seditious acts, or words constituting a “tendency to cause public disorder or incitement to violence.”

The interpretation in Kedar Nath Singh’s verdict is not compatible with free speech guaranteed under Art 19 (1)(a) of the Constitution

The interpretation of terms in the Kedar Nath case is not compatible with “freedom of speech and expression” contained in Article- 19(1)(a). This right is not just a right but a fundamental right of utmost importance which includes the right to express one’s view and opinion on any subject through any medium. It may be “words by mouth, writing, printing, picture, film, movie, etc.” In Romesh Thappar v. The State of Madras, Patanjali, J. has duly stated that “19(1)(a) is the very basis and essence of the constitution and our democracy.”

The soundness of all laws has to be tested on the touchstone of the constitution and have to be infallible when subjected to safeguards mentioned in Part III of the constitution. The ‘test of constitutionality’, is often used as a euphemism for ‘test of reasonableness’ and the restrictions laid down by an impugned legislation, must be viewed from a perspective of reasonability. Legislation that criminalizes expression based on unconstitutionally ambiguous and imprecise descriptions of “disaffection toward the government” and other terms is an unreasonable and unjust restriction on the fundamental right of “speech and expression” and leads to a constitutionally impermissible “Chilling Effect” on speech.

In Niharendu Dutt Majumdar v. King-Emperor, The Federal Court ruled that “public disorder or the reasonable anticipation or likelihood of public disorder is the gist of the offence”. It has the view that “sedition infers resistance or lawlessness in some form.” In King-Emperor v. Sadashiv Narayan Bhalerao, the Privy Council quashed the decision of the Federal Court and ruled that “excitement of feelings of enmity to the government is sufficient to make one guilty under Section 124A of IPC.”

However, in the case of Ram Nandan v. State, the Allahabad High Court declared Section-124A unconstitutional as the Court had view that “the said section transgressed its authority by imposing unreasonable restriction on the freedom of speech enshrined under Article- 19(1)(a).” As a result of this, the meaning of the term “Sedition” given by the Privy Council was rejected. But in the Kedar Nath Singh case the Privy council’s construal of “Sedition” was modified by the Supreme Court i.e., “it was narrowed down to fit the existing scenario as well as to fall within the ambit of Article-19(2) thereby becoming a reasonable restriction.” The Supreme Court took the advantage of phrase “in the interest…of public order” in Article-19(2) and hold that sedition occurs when utterances have the potential to cause public disorder or violence. This act of reading down Section-124 A plainly brought it under Article-19(2) and saved the sedition law. Since then, it has become a political weapon to stifle the voice of dissent and thus, the limiting interpretation of the term ‘sedition’ in Kedar Nath ruling is not compatible with free speech guaranteed under Art-19(1)(a) of the Constitution of India.

Misapplication of sedition law is currently being used to destroy all resistance to the political party in the rule. Its widespread usage continues to stifle the citizen’s rights. Civilians are threatened with harsh punishment under the Sedition Act. The statute is misconstrued by the Police, in carrying out apprehensions and invoking charges, hardly have they given any respect to the restriction of “incitement to violence or threat of public disorder.” Despite the fact that there is no immediate danger, it is still utilised to restrict the right to free speech and expression. As a result, sedition law imposes an unjustified limitation on the fundamental right. NCRB data can be used to infer that how violently Section-124 A has been used in recent years. The number of charges brought under Sedition surged by 160% between 2016 and 2019, although the conviction rate declined to 3.3% in 2019 from 33.3 % in 2016. This data is enough to assert that the government has falsely invoked sedition charges on various occasions to deal with dissent or criticism. It is so because not even 4% of the accused are convicted.

Conclusion

Voice of dissent is an essence of democracy and it should prevail at all costs. Criticism of the government for its policy or some sort of failure concerning its function is fundamental for the sustenance of democracy. Any statute that arbitrarily imposes a restriction should be struck down with an immediate effect. In Bennett Coleman & Co. &Ors. v. Union of India &Ors. Beg, J. has stated that “the freedom of speech and that of the press is the Ark of the Covenant of Democracy because public criticism is essential to the working of its institutions.” It is said that the paradigm of reasonableness should be adjudged with due regard to the social and political context of a nation and its concept must change accordingly. When the sedition law was enacted, there was a different political setup. India was a colony of Britain and there was not enough emphasis on the idea of free speech. The reason behind its enactment was to curb the emerging voice of people. But now India is a free democratic nation and freedom of speech and expression has become a part and parcel of life. Therefore, it is sine qua non that the law of sedition which is draconian legislation should be held unconstitutional and scrapped from the statute book.

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Are you entitled to compensation for a bad haircut

By

Rachit Garg

-

October 24, 2021

0

consumer-protection-act-1068x601 (1) — Image source - https://bit.ly/2X6qhVa

This article has been written by Sonia Shrinivasan, from RTI Cell, iPleaders and the article has been edited by Khushi Sharma (Trainee Associate, Blog iPleaders) and Vanshika Kapoor (Senior Managing Editor, LawSikho).

Table of Contents

Introduction

On more than one occasion, most of us here reading this have regretted going to expensive salons and stylists, opting for expensive hair improvement treatments, only to regret our choice moments after seeing the results firsthand. The majority of us are okay with dealing with the embarrassment for a day or two, taking it in our stride, and moving on. However, not many days back, the National Consumer Disputes Redressal Commission (NCDRC) ordered the payment of 2 crore rupees, as compensation to a woman, for getting a wrong haircut and treatment by the hairdressers of a salon of a renowned hotel chain.

The Consumer Protection Law

The Consumer Protection Act, 2013

The Consumer Protection Act, 2013 is best described as social legislation enacted to secure and protect the rights of consumers, providing for speedy and inexpensive redressal of their grievances.

The Act mandates the formation and setting up of Consumer Disputes Resolution Commissions at the district, state, and national levels viz., District Disputes Resolution Commissions, State Disputes Resolution Commissions, and the National Disputes Resolution Commission.

The District and State Disputes Resolution Commissions can decide monetary values of up to one crore and ten crores, respectively.

According to the data available on the NCDRC website, as many as 629 District Commissions, 35 State Commissions, and 1 National Commission are functioning presently in the entire country.

The Act covers goods and services for consumers to take action against. Goods are defined as products produced, manufactured, and sold to consumers via retailers and wholesalers; services are construed to be those activities existing in the form of electricity, banking, insurance, etc.

The Consumer Dispute Redressal Mechanism

An aggrieved consumer may file a complaint in writing, before either Commission- district, state, or national, depending upon the amount of compensation sought. The remedy available to the consumer under the Consumer Protection Act, 2013 is an alternative available to the civil suit. However, a complaint under this Act is way more pocket-friendly, and the redressal is speedier.

In case of dissatisfaction with any decision passed by the District or State Commission, an appeal may be preferred in the concerned State or National Commission by the consumer himself.

The National Consumer Disputes Redressal Forum

The National Consumer Disputes Redressal Commission, NCRDC, is a quasi-judicial body established under the Consumer Protection Act, 1986, headquartered in Delhi. Presently headed by Justice RK Agrawal, a former judge of the Supreme Court of India, the Commission is usually headed by a judge of the Supreme Court, either retired or serving.

It is empowered to hear cases involving pecuniary amounts exceeding ten crore rupees and acts as an appellate body for the cases decided by the District and State Commissions.

Additionally, it forms rules regarding the working of subordinate commissions, supervising their functioning, along with making rules for the exchange/service of documents between the parties to a matter.

Section 21 of Consumer Protection Act, 1986 empowers the National Consumer to entertain a complaint valued more than one crore and also have Appellate and Revisional jurisdiction from the orders of State Commissions or the District forums in the country.

The Case in Question- Aashna Roy v. ITC Hotels

The said case, before the National Consumer Disputes Resolution Commission, was brought under Section 12 of the Consumer Protection Act, 1986, read with Section 21 of the Act, alleging that the respondent staff of the salon of a reputed hotel chain was negligent while administering her a hair treatment and accused them of providing deficient services while giving her a haircut.

Section 21 of the Act reads as:

(1) Where the Central Authority is satisfied after an investigation that any advertisement is false or misleading and is prejudicial to the interest of any consumer or is in contravention of consumer rights, it may, by order, issue directions to the concerned trader or manufacturer or endorser or advertiser or publisher, as the case may be, to discontinue such advertisement or to modify the same in such manner and within such time as may be specified in that order.

(2) Notwithstanding the order passed under sub-section (1), if the Central Authority is of the opinion that it is necessary to impose a penalty in respect of such false or misleading advertisement, by a manufacturer or an endorser, it may, by order, impose on manufacturer or endorser a penalty which may extend to ten lakh rupees:

Provided that the Central Authority may impose a penalty for every subsequent contravention by a manufacturer or endorser, which may extend to fifty lakh rupees.

(3) Notwithstanding any order under sub-section (1) and (2), where the Central Authority deems it necessary, it may, by order, prohibit the endorser of a false or misleading advertisement from making an endorsement of any product or service for a period which may extend to one year.

Section 12 states that,

No act or proceeding of the Central Authority shall be invalid merely by reason of—

(a) any vacancy in, or any defect in the constitution of, the Central Authority; or

(b) any defect in the appointment of a person acting as the Chief Commissioner or as a commissioner; or

(c) any irregularity in the procedure of the Central Authority not affecting the merits of the case

Facts of the Case

The Complainant, in this case, was a model by profession, set to appear for an interview for an upcoming modeling project. Almost a week before the said interview, she booked an appointment with her usual hairdresser at the respondent hotel’s salon. However, due to his unavailability, she was assigned a different hairdresser upon assurance from the salon manager.

The Complainant alleged that she specifically instructed the hairdresser to cut her hair in a certain way, a simple haircut that generally did not require an hour to be styled. Upon being questioned about such a long time, the Complainant was informed that she was being given a ‘London Haircut.’ Upon taking a look at the result of the haircut, the Complainant was horrified, as she observed that her entire length, barring 4 inches from the top, had been chopped off.

Upon complaining about the same to the manager, her bill for the entire session was waived off. It was alleged that due to the resulting haircut, the Complainant lost her confidence as she was not looking pretty.

When no action was taken against the hairdresser, the matter was reported to the General Manager of the Salon, who allegedly misbehaved with the Complainant, daring her to take any action against them, which was brought to the notice of the CEO of ITC Ltd.,

Subsequently, an offer was made to the Complainant to extend her hair for the interview or provide a suitable hair treatment free of cost; the Complainant chose the latter after much persuasion.

Following this, an external hair expert was arranged to advise upon the said treatment, which was to be administered by the salon’s in-house hairdresser under the supervision of the Complainant’s usual hairdresser. However, after the treatment, the Complainant alleged that her scalp had been damaged and burnt due to excess ammonia. On bringing this to the management’s notice, no action was taken against the salon staff, and as a result, the Complainant felt aggrieved.

Consequently, the Complainant approached the NCDRC, alleging deficiency in services of the salon staff and seeking Rs. Three crores as compensation for suffering humiliation, harassment, and mental trauma at the hands of the salon staff.

Arguments by the Petitioner

The Complainant sued the salon manager and employees on the grounds of deficiency in her services. They based their complaint on the fact that hair is considered to be one of the essential parts of a presentable look, especially for women, who are proud of their hair, and take extra care to ensure that their hair remains in good condition,

It was put forth before the Commission that, because women take such extensive care to ensure their hair remains beautiful and healthy, such mishaps can negatively affect their mental health, sometimes lasting their entire life.

The Complainant in an affidavit stated that the hair treatment administered to her caused permanent damage to her scalp, causing pre-mature greying and other scalp infections.

They also relied upon the fact that the salon employees impliedly admitted their fault by reversing her payment for the treatment.

Arguments by the Respondents

Objecting and contradicting the Complainant’s accusations, the Respondents, while requesting a dismissal of the complaint, stated that since the Complainant was not charged for the said services and hence does not qualify as a ‘consumer’ defined under section 2(1)(d) of the Consumer Protection Act, 1986. Consequently, the three-crore compensation demanded thereof has no basis and is exaggerated beyond comprehension, as it was not supported by documentary evidence of any kind.

As for the merits, it was submitted before the Commission that the Complainant’s hair was cut as per her instructions, and no damage was caused by the hair treatment, per se. The intent behind filing this complaint was alleged to be malafide and aimed to malign the goodwill & reputation of ITC Ltd.

Citing the NCDRC’s prior decision in Ambrish Kumar Shukla & Ors v Ferrous Infrastructure Pvt. Ltd., with regard to determining the pecuniary jurisdiction of any dispute, it was highlighted that while determining the pecuniary jurisdiction of a Commission, the consideration has to be duly taken into account in order to calculate a fair compensation; which in this case was not involved.

Hence, the Complainant was not entitled to any relief under the Act.

What the Commission Held

While ruling in favor of the Complainant, the Commission awarded the Complainant a compensation of two crore rupees for the despair and trauma caused to the Complainant due to inefficient services provided by the salon employees. It recognized that women were, without a doubt, very cautious towards keeping their hair well maintained and healthy,

It acknowledged that the Complainant was a model for hair products and since this incident, has suffered mental agony due to lack of confidence and it was due to the hairdresser’s carelessness, she lost out on many professional opportunities.

Conclusion

The National Consumer Disputes Redressal Forum rightly compensated the victim for negligence on the part of the salon staff, providing a wide and comprehensive interpretation to the term ‘ compensation.’ This ruling reiterated that compensation may or may not include actual loss and can be rightfully extended to compensating the mental or emotional loss suffered by an individual, which in this case was associated with the loss of hair and, by extension, the loss of one’s confidence.

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Key differences between a software licensing agreement and a cloud services agreement

By

Shoronya Banerjee

-

October 24, 2021

0

This article is written by Parul Chaudhary, pursuing a Certificate Course In Technology Contracts from LawSikho. The article has been edited by Prashant Baviskar (Associate, LawSikho) and Smriti Katiyar (Associate, LawSikho).

Table of Contents

Introduction

The Software license agreement includes user licenses, distribution agreements, assignments, and work-for-hire agreements. In a license agreement, the customer is granted intellectual property rights to enable them to form copies of the software. Since the right to form copies is protected by copyright law, such a license is required for the rights to be transferred to the customer. Customers can get a good array of additional rights, including the right to:

(a) reproduce the software;

(b) modify the software as per customer’s needs;

(c) distribute it;

(d) openly display the software to the public; or

(e) sub-let or further licensing the software, given that such a restriction is present in the license agreement itself.

However, the license may restrict the number of copies or duration of use of the software by the customer.

On the other hand, under a cloud services agreement, a service provider hosts a cloud network or system and the customer is granted access to that system remotely through the internet. The fact that a cloud service agreement is not for a product, like software, but is an agreement to use the cloud network itself, is what makes it different from the software licensing agreement. Cloud services do not involve the making of a replica on the device of the customer so as to use the software as a product, nor does it involve direct human intervention to supply any services to the customer as a service. The idea is to let the customer remotely access the software which is on the server of the vendor. Thus, a cloud services agreement revolves around a subscription-based model, instead of a license. Although the customer only gets access to limited rights under a subscription, they are often an economical alternative, depending upon the requirements of the customer.

Important clauses of a software licensing agreement

The most important clause in a software license agreement is the obligation upon the licensor to deliver the software to the licensee. The agreement should also contain a clause authorizing the making of copies or replicas of the licensed software, and if such authorization is not granted, then a clause limits the right of the user from making copies of the product.
In a software license agreement, the right of the licensor to claim payment arises as soon as it delivers the software and grants the license to the user to use the software for the agreed purposes as mentioned in the contract between them, this must be clearly stated
Another important thing to mention in the agreement is the information that the license is sublicensable or not, and whether it has been granted to the user exclusively or on a non-exclusive basis.
In case of an exclusive license, the licensor shall not grant the same license to another user for the term of the agreement, and if the license is non-exclusive, the licensor is free to grant the same license to use the same software to other users as well, and this shall not affect the agreement between the licensor and the licensee.
The clause regarding The clarification as to the fact that the user shall deploy its own hardware and infrastructure in order to use the software and all maintenance costs and manpower is to be borne by the user must be there
The licensor shall only be responsible to the extent of supplying the software and granting the license to use it for the term of the contract. The data, including but not limited to the software object code, license key and other technical information necessary to run the software, received by the licensee from the licensor while using the software shall remain the exclusive property of the licensor.
It must have an audit clause to check the performance of the software from time to time.

Important clauses of a cloud services agreement

A cloud services agreement generally comprises of three important segments:

Agreement with the customer

It is imperative to state clearly the roles and responsibilities of each party in the contract. Herein, the customer who seeks a cloud service and the seller who is providing the cloud service must define their rights and liabilities under this agreement, so that no confusion pertaining to the same may arise in the future. The essence of this clause is to grant the right to access the customer so that he may use the cloud platform under a subscription, as per his needs. The nomenclature for the agreement may be different, and a customer agreement may also be referred to as a ‘Master Service Agreement’ or a ‘Terms of Service’, but they essentially entail the same thing.

Acceptable use policy

This section is more restrictive in nature because it lists down explicitly the limits of use that are permitted by the service provider and what lies beyond permissible use. The factors which are listed as improper or illegal use of the service will not be protected under the provisions of the contract as they lie beyond the scope of the acceptable use policy of the service provider. The customers or users using the cloud service must not act beyond the acceptable use policy, otherwise, it may result in a breach or a ground for termination of the contract.

Service level agreement

This section is more technical in nature as it deals with the nuances of the different levels of service which can be described using several attributes including availability, uptime, downtime, performance, backup, or serviceability. The service level agreement clearly states the acceptable limit of these attributes and the monetary compensation which the service provider will have to provide in case of violation of those limits. It bridges the gap between the expectations of a customer and the reality of the service provider by reinstating the business and technical realities that the service levels may have.

Practical usage of both agreements

A software license agreement is generally deployed in cases where the customer wants to use the software, instead of building it from scratch. Therefore, they get a license to use the software as is or make modifications to it as per their wish, given that the contract allows such modifications within the software. However, the hardware installations, power supply for required consumption, and costs are to be borne by the user in order to support the smooth running of the licensed software. Since the space is limited in particular hardware and the software can support a limited number of operations depending upon its type, therefore, an attempt to increase the scale of operations will require the hardware to be compliant with such space requirements, or the change of the hardware setup altogether, which can be an extremely expensive affair. Hence, there is a likelihood that in case the business wishes to expand its operations in the future, there might be some scalability issues with the licensed software. As a result, the company might have to do an overhaul of the hardware or use some other software that has the greater operational capacity to suit the needs of the business.

On the other hand, a cloud services agreement gives the customers the liberty to pick and choose from the available range of services as per their need, budget, and convenience, without having to install separate software to run it. Moreover, the customers only have to pay for the services that they use and do not have to worry about maintenance and upkeep expenses, and unlimited storage space as well. The user also does not have to make copies, unlike in a software license. Therefore, using cloud services is faster, price effective, and provides greater scalability, because the services can be added or reduced as per the consumption requirements of the customer. It gives better protection to data because it is not stored physically on any system, but on the cloud network itself.

Another factor that differentiates the two and makes cloud services a more lucrative option is the fact that the user does not have to buy any special equipment or devices to use the service, as it is cloud-based and can be accessed from any device anywhere. However, software that is specifically developed for a particular business can be licensed in order to not make the software from scratch and use it in that specific business, which is tailored specially to cater to their requirements. That creative freedom is not always present in a cloud service agreement, and the user has to choose from the available options and the cloud service provider does not generally offer to build a specific cloud network for one business. Therefore, in order to cater to the specific needs of a business, the company or the user might prefer to go for a software license agreement, in order to onboard or use custom software that has already been made by someone else, but can be licensed to the user.

Conclusion

The key difference between both these types of technology-centric agreements is that the software license agreement is primarily based upon the license grant, while the cloud services agreement takes a subscription-based approach. The clauses of the agreements will also differ based on the approach of granting the rights to the user. In a software license agreement, the payment clause can be drafted as such so as to be made after the completion of the delivery of the software to the user or after its installation, whereas in a cloud services agreement, the payment is generally made after the service has been provided by the cloud service provider to the user. Moreover, as discussed above, the software license is less scalable in comparison to a cloud service, which in turn affects the costs of both the services, including setup and maintenance expenses. Both agreements are rampantly being used in the IT industry because of their specific uses, and the user has the liberty to decide which agreement to enter into in order to better suit the requirements of his business.

References

Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skills.

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