Cyclone warning systems of the Indian meteorological department : laws and disaster management in India

By

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October 4, 2021

list-of-cyclones-in-India — Image source - https://bit.ly/3ox2qJy

This article is written by Niharika Agrawal, pursuing B.B.A.L.L.B from IFIM Law School. This comprehensive article deals with various laws and departments of laws that control the impact of calamities such as cyclones in the country.

Table of Contents

Introduction

Any natural or hazardous calamity causes massive destruction to life and property. It impacts the livelihood of an individual. Cyclone is one such calamity that hits India every year. India is a country prone to natural calamities like cyclones, earthquakes, drought, and landslides, etc. Due to this, there is a scarcity of food, water, and shelter. Therefore, there is an immense need for the development of laws that can help in reducing or preventing the destruction and casualties during future calamities. Such laws could help to save the livelihood of the human being, his mental and physical capacity to deal with such causes.

Thus, this article deals with the impact of cyclones in the country and the laws and departments of laws that are beyond the control of mankind.

About the India Meteorological Department

The India Meteorological Department (IMD) works as an agency under the Ministry of Earth Sciences of the Government of India. It was established in the year 1875. It updates meteorological observation, weather forecasting, and seismology. It also forecasts the meteorological information for limited operation of weather-sensitive activities like agriculture, shipping, aviation, oil exploration, industries, etc and provides statistics for the same. It alerts and warns against severe weather phenomena like northwestern, dust storms, heavy rainfall, and snowfall, tropical cyclones, etc in the Northwestern Indian Ocean, the Malacca Straits, the Bay Of Bengal, the Arabian Sea, and the Persian which may cause destruction of life and property. It also helps in conducting and promoting research in meteorology and disciplines.

Impact of cyclones

India has faced the disaster of cyclones several times. A cyclone impacts the social and economic life in society. Some of the impacts are as follows:

Cyclones cause a huge amount of damage to the properties and resources of the country, especially in coastal districts. There is difficulty in getting food and clear water specifically for those who are completely dependent upon fishing.
It deteriorates the day-to-day life of the people. It causes huge damage to the natural human environment.
In post-cyclone duration, there is a scarcity of clean food, water, and shelter and thus causes death and various health complications in the society.
There is an uncertain rise in the sea level due to a cyclone known as storm surge, heavy rainfall, and flood which further results in waterlogging at unwanted places which leads to severe infections and diseases.
It causes huge damage to infrastructures such as roads, bridges, houses, and buildings destroying both private and public property.
The devastation of crops impacts the income of the farmers and hence, gives rise to inflation, unemployment, crimes, etc. As a result, the poor become poorer and the rich become richer.
It also impacts the physical and mental health of the individual as they may have lost their loved ones.
Social impacts such as sociodemographic, psychosocial, socioeconomic, and sociopolitical may take a long period of time to develop.

Economic loss such as reduction in asset value, reduction in investment, loss of income from import and export.

Areas most vulnerable to cyclones in India

Many cyclones have hit India over the years. However, 9 cyclones were the most dangerous and caused immense destruction across the region. The Indian subcontinent is the most affected region consisting of 7516 km of coastlines in the world. Around 13 coastal states and Union territories, which include 84 coastal districts, are affected by cyclones. The five most vulnerable states to cyclones are Andhra Pradesh, Odisha, Tamil Nadu, Gujarat, and West Bengal. Puducherry is the most vulnerable union territory. As per the analysis, the East coast is more prone to cyclones than the West coast.

How laws help to mitigate cyclones and other disasters

Law helps in providing justice against unjust or unfair means. Similarly, disaster laws help in providing faster relief to vulnerable people. Section 6 of the Disaster Management Act gives powers to the National Authority to lay down the policies, plans and guidelines for the management of such disasters and for ensuring timely and effective response to disaster.
They set provisions for more effective disaster preparedness. Section 7 of the Act also gives power to the National Authority to constitute an advisory committee that consist of experts in the field of disaster management and having practical experience of disaster management at the national, state or district level to make recommendations on different aspects of disaster management.
Legislation is the only tool to enhance the reduction of risk in such disasters.
They especially work on the community level where the progress is lagging due to its applicability. Such laws may strengthen the involvement of the community and civil society in policy-making and planning strategies. Under Section 24 of the Act the State Executive Committee has the responsibility to implement the National Plan and State Plan and act as the coordinating and monitoring body for management of disaster in the community affected areas.
Disaster laws develop a safe environment, set realistic, enforceable standards for land management and construction, and also ensure reduction in the harm caused at the community level from these natural hazards.
Section 6(g) of the Act has the provision for the creation of funds that would help in meeting the needs of the people during such calamities.
Under Section 22 of the Act they also mandate education and training about disaster management at all levels. Through such training, there can be a quick response from the group of individuals against such hazardous calamities.

Disaster Management Act, 2005

Disaster management plays an important role when it comes to the efficient use of resources and distribution of responsibility among the different departments for the reduction of the impact of the calamities. It is the collective effort by the group of individuals to save the lives and property of the people during such disasters.

The Disaster Management Act was enacted in the year 2005 which focuses on skilled manpower, well-developed infrastructure, preparing individuals against calamities, and mitigating such future destruction. It is applicable to the whole of India with an objective of preparedness, prevention and pre-planning.

The Act nominates the Ministry of Home Affairs as the nodal ministry for managing the entire country’s disaster management. It also puts forth a systematic structure of institutions at central, state, and district levels. The four most important entities are placed at the central level. They are as follows:

The National Disaster Management Authority (NDMA) whose work is to frame policies for managing disasters and to ensure timely and effective mechanisms.
The National Executive Committee (NEC) whose task is to assist NDMA. It consists of secretary-level officers of the central government.
The National Institute of Disaster Management (NIDM) which is established for the purpose of training and arranging development programs for the management of natural disasters.
The National Disaster Response Force (NDRF) which helps in the training of professional units that are further responsible for specialized disaster management.

The state and district management authorities are responsible for the implementation of the central plans. The Act contains the provision for the creation of funds that are needed during an emergency. The Act further deals with the civil and criminal liability arising out of violation of the laws and provisions of the Act and punishment as well as relief for the same. One of the unique features of the Act is that it also takes action against false alarms relating to the severity of any disaster that causes panic in the country.

Cyclone disaster management in India

There is a huge impact of disasters like cyclones which may be impossible to overcome. Therefore, it is necessary to mitigate such future disasters and minimize their effects. These measures may either be structural or non-structural. Such measures are possible only with the help of government interventions and public participation. Some of these measures are as follows:

Land use planning

This would avoid all the critical activities on the land of the most vulnerable areas. For example, any settlement activity on a floodplain may cause risk to the land. Such risk can be avoided by the concerned authorities through planning.

Hazard mapping

It assesses the severity of cyclones, their frequency or probability of occurrence, and intensities on a map. This helps in estimating the severity of damage in the affected region. Such maps are prepared with the help of past climatological data, history of wind speed, and frequency of flooding.

Early warning systems are one such means by which people are able to receive appropriate and timely information in a proper way before the disaster occurs in order to make quick decisions and take relevant action. The word ‘system’ is used to refer to the interplay between an array of elements aimed at facilitating communication and prompt response to protect and aid those in need. The four basic elements to which this system focuses is risk-knowledge, monitoring, response capability, and warning communication.

Engineered structures

Any structure should be made in such a way that it can withstand wind forces. For that, the selection of good sites is also very important. Hence, any public infrastructure should be engineered structures.

Cyclone shelters

Cyclone shelters are made in the area where there are recurrent cyclones. Such construction requires huge funding and hence funds are either raised from the government or external donors. For the construction of cyclone shelters, many aspects need to be taken into consideration such as the site, density of population, transport and communication services, and topography of the area.

Flood management

Flooding is the result of cyclonic storms. The flow of water can be regulated through the construction of dams, reservoirs, and channels. A public community can take the initiative in improving the drainage system through which such floods can be minimized. Flooding can also be managed by avoiding the storage of material under the shelters which may cause water drainage and by creating drainage systems around and under the shelter. The shelter floor should be made above 3 feet from the ground.

Mangrove plantation

The roots of the mangrove plant help in mitigating tsunamis, soil erosion, etc. They also protect the coastal areas from storm surges and wind which is accompanied by cyclones.

Improving vegetation cover

This helps in increasing the water infiltration capacity of the soil. The roots of the plants and trees will hold the soil intact and prevent soil erosion resulting in the prevention of floods.

Awareness program

End-to-end awareness programs are very important for the public welfare as they may help them to take action against such calamities. The department of Meteorology and Hydrology updates regularly about the upcoming cyclones and other special weather news. It is expected from the community that they are well aware of the warning signals and the sources for their protection.

About the new cyclone warning system

The new Impact-Based Cyclone Warning System was launched by the Indian Meteorological Department and the Ministry of Earth Sciences on 12th October 2020. Its ultimate objective is minimizing economic losses and destruction of property due to cyclones that occur every year on the Indian coasts. This system takes into consideration all the essential aspects such as location warning mechanism, local population, settlements, use of land, and other important elements. It is easily accessible to all the disaster management agencies to know about geological, cartographic, and district-wise hydrological data under this new mechanism. This system warns about the strong wind and risk on infrastructure that may occur, in advance. It also provides better forecasting and tracking of cyclones. This system has also resolved the tracking error of forecasting the cyclone. The observational aspects of cyclone warning systems include different types of observations such as space based, upper air and surface based.

Features of the cyclone warning system include:

This warning system will issue specific warnings in districts and locations which will factor in the infrastructure, local population, settlements, land use and also other elements will be disseminated and prepared.
All the disaster management agencies will also refer extensively to geological, cartographic and hydrological data that is available for the concerned district.
If any of the locations is to be hit by a wind up to 160 kmph, this warning system will warn about the kind of infrastructure that will likely get damaged and these can be mapped.

With the intention to meet the needs of Cyclone Warning Services and Marine weather services, seven Cyclone Warning Centers were established that covered the east & west coasts of our country. The three area Cyclone Warning Centres (ACWCs) are located at Chennai, Mumbai and Kolkata and other four are Cyclone Warning Centres (CWCs) which are located at Ahmedabad, Thiruvananthapuram, Visakhapatnam and Bhubaneswar.

Conclusion

From the above observations, it can be concluded that good laws can mitigate every problem through their mechanism. They can even resolve the crucial problems of natural calamities through their guidelines. It is very important to control future natural disasters as they destroy the entire region that is being affected just in one hit. India is a disaster-prone country due to geographical factors and demographic composition.

The enactment of the Disaster Management Act of 2005 and the launch of an impact-based cyclone warning system together has shown immense improvement in dealing with such calamities over the years and many more on the way as assured by the experts. Each disaster brings new deficiencies in Indian disaster management regimes. It’s not just the government or experts who can reduce the impact of these disasters but also civil society, NGOs, private organizations that can contribute to protecting the country from future tragedies.

References

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Nandita Haksar v. State of Manipur & Ors. : case analysis

By

Rachit Garg

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October 4, 2021

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refugee — Image source - https://bit.ly/32f445C

This article is written by Ms. Nikara Liesha Fernandez from the School of Law, Christ University, Bangalore. This article deals with the various international norms which deal with the principle of non-refoulement and the need for India to formulate domestic laws which apply Article 21 when dealing with the refugee and migrant crisis.

Table of Contents

Introduction

On taking a look at India’s history with refugees, both the accepting and the creation of the same, it has been observed that India has been more of a ‘refugee receiving’ country than a ‘refugee producing’ one. Though this is indeed a positive practice that conforms to all the international conventions and treaties to which India is a party to as well as the international refugee norms in general, there appears to be a conspicuous absence with regard to any legitimate law to govern the protection and rights of refugees in India.

Through this article, we see that India has access to a brilliant framework of refugee provisions and international laws which have been formulated through global conventions and implemented by various foreign countries as well. What our country lacks, however, is the proper integration of these international standards into our domestic legislation without which there is no solid backing for the courts to properly implement such measures to protect something as sensitive as refugee rights.

The international framework for the protection of refugee rights

The role of the Refugee Convention

Refugees have been prevalent in the world ever since the existence of war and its disastrous effects. Right from the after-effects of the First World War, way back in 1918, nations all over the world recognized that certain individuals, who were suffering the most from the reparations of the war and being so displaced from their home countries, required their protection. The United Nations was the first organization to take real action to combat this tragedy after the Second World War by identifying the need for international cooperation and burden-sharing among countries all over the world. This was the foundation stone that led to the birth of The Refugee Convention (officially titled the 1951 Convention relating to the status of refugees).

Initially, the Convention mainly aimed at targeting the European refugees. The Convention had a deadline for taking in the application of refugees who, according to Article 1 of the Convention were defined as, ‘a person who is outside his/her country of nationality or habitual residence; has a well-founded fear of persecution because of his/her race, religion, nationality, membership in a particular social group or political opinion; and is unable or unwilling to avail himself/herself of the protection of that country, or to return there, for fear of persecution.’

Later, however, on noticing that the refugee problem was not just confined to the after-effects of the Second World War and that they were prevalent in various other parts of the world as well, the 1951 Convention was supplemented by the 1967 Protocol which extended the applicability of the Refugee Convention to a universal international level and did away with the deadline for applications to the same. Currently, 149 nations are parties to this Protocol.

The most important feature of this Convention is the recognition given to the basic and most fundamental aspects of a refugee’s life. Refugees, after all, do not cease to be human on being removed from their home country and hence need to continue to be entrusted with their basic human rights such as the freedom of religion and movement, the right to work, education and accessibility to travel documents. The most important provision of the convention is the principle of non-refoulement which will be elaborated upon later on in this article.

The Convention also, in order to prevent certain undeserving groups from taking advantage of the refugee status, specifies which groups of people can/cannot be considered as refugees. For example, migrants (people who seek new lives in foreign nations specifically with an economic intention to improve their living conditions) are not covered by this Convention as they cannot be considered to be on par with refugees who seek asylum in foreign nations as a means to flee life-threatening persecution in their home countries.

The United Nations High Commissioner of Refugees (UNHCR) is the official statutory body that acts as the enforcer of the Convention and monitors the actions of member nations towards the upliftment of refugees.

UN Convention Against Torture

The United Nations Convention against Torture, and Other Cruel, Inhuman or Degrading Treatment and Punishment (commonly known as the UNCAT), came into force on the 26th of June, 1987. As evident from the name, the main aim of this Convention is to secure an international and global effort to prohibit all forms of torture against human beings which are a gross violation of their basic human rights. The Convention also has a binding effect on governments to follow the provisions of the treaty and monitor their efforts made towards carrying out the provisions of the same. As of May 2017, the UNCAT consisted of over 160 nations. India, however, signed the Convention way back in 1997 but is yet to ratify the same.

The UNCAT defines ‘torture’ at the very start of the Convention under Article 1 as, ‘any act by which severe pain or suffering, whether physical or mental, is intentionally inflicted on a person for such purposes as obtaining from him or a third person information or a confession, punishing him for an act he or a third person has committed or is suspected of having committed, or intimidating or coercing him or a third person, or for any reason based on discrimination of any kind, when such pain or suffering is inflicted by or at the instigation of or with the consent or acquiescence of a public official or other person acting in an official capacity.’

The UNCAT mandates that member governments integrate its provisions and apply measures that criminalize torture in their domestic laws. The Convention has universal jurisdiction which empowers states to take up cases regarding the torture of victims that occur not only within their territorial jurisdiction, but also those committed outside its territory by people who are not its nationals.

The Committee Against Torture (CAT) is the authority that exercises the oversight powers of this Convention to ensure that member nations implement the provisions of the treaty to its full extent and conduct a thorough investigation of all cases of torture including allegations. The CAT also examines the periodic reports sent to it by the member nations and makes recommendations to them for the better implementation of the UNCAT provisions.

International Covenant on Civil and Political Rights

The United Nations International Covenant of Civil and Political Rights (ICCPR) forms one of the three important components of the International Bill of Human Rights, the other two components being the International Covenant on Economic, Social and Cultural Rights and the Universal Declaration of Human Rights respectively. The ICCPR was adopted by the United Nations General Assembly in December 1966 with its main aim being to protect and preserve the inherent dignity of all individuals as dignity forms one of the cornerstones of the basic rights that an individual inherits by virtue of being born a human.

One of the principal means of ensuring the protection of the dignity of an individual is highlighted under Articles 2 and 3 of the Covenant which stresses the prohibition of discrimination such that the rights of all individuals belonging to the member states of the ICCPR are protected by the same irrespective of their gender.

As of July 2017, there were 169 State Parties to the ICCPR. These State Parties are obligated to respect, protect and fulfil an individual’s civil and political rights. Save for the event of a public emergency, where some of the rights can be derogated by the State Parties, they are otherwise to protect the following rights-

Article 6 – Right to life.
Article 7 – Freedom from torture.
Article 8 – Right to not be enslaved.
Article 9 – Right to liberty and security of the person.
Article 10 – Rights of detainees.
Article 11 – Right to not be imprisoned merely on the ground of inability to fulfil a contractual obligation.
Article 12 – Freedom of movement and choice of residence for lawful residents.
Article 13 – Rights of aliens.
Article 14 – Equality before the courts and tribunals. Right to a fair trial.
Article 15 – No one can be guilty of an act of a criminal offence that did not constitute a criminal offence.
Article 16 – Right to recognition as a person before the law.
Article 17 – Freedom from arbitrary or unlawful interference.
Article 18 – Right to freedom of thought, conscience and religion.
Article 19 – Right to hold opinions without interference.
Article 20 – Propaganda for war shall be prohibited by law.
Article 21 – Right of peaceful assembly.
Article 22 – Right to freedom of association with others.
Article 23 – Right to marry.
Article 24 – Children’s rights
Article 25 – Right to political participation.
Article 26 – Equality before the law.
Article 27 – Minority protection.

In addition to the above, the ICCPR also contains two optional protocols to further protect the human rights of individuals. The First Optional Protocol deals with the right for the victims of human rights violations to be heard by the Human Rights Committee and the Second Optional Protocol abolishes the death penalty.

The monitoring powers of the State Parties rests with a committee known as the Human Rights Committee (HRC) which ensures the implementation of the provisions of the Covenant. The HRC also reviews the reports submitted to it by the member states to assess their progress and recommend means by which they can better protect the rights enshrined under the Convention.

Scope of the principle of non-refoulement

Merriam Webster defines non-refoulement as, ‘a principle of international law providing a refugee or asylum seeker with the right to freedom from expulsion from a territory in which he or she seeks refuge or from forcible return to a country or territory where he or she faces threats to life or freedom because of race, religion, nationality, membership in a particular social group, or political opinion’.

The principle of non-refoulement finds a place in all the three Conventions and Covenants mentioned above. Thus, the principle of non-refoulement has taken on international applicability. For example, with respect to the Refugee Convention, the non-refoulement principle now is implicitly understood to be a part of the customary international law which is required to be followed by all states regardless of whether they have acceded to or are signatories of any treaty regarding the same.

Similarly, Article 3 of the UNCAT explicitly prohibits State Parties from returning or extraditing an individual to ‘another state where there are substantial grounds for believing that he would be in danger of being subjected to torture.’

Further, the Human Rights Committee, in its interpretation of Article 7 of the ICCPR through its General Comment No.20, included the protection against refoulement under the ‘right to be free from torture or other cruel, inhuman or degrading treatment or punishment.’

Unlike the Refugee Convention which is only applicable to those individuals who fall under the definition of a ‘refugee’, the principle of non-refoulement extends to all migrants at all times, irrespective of their migration status in order to prevent them from facing torture, cruel, inhuman or degrading treatment or punishment and other irreparable harm.

The scope of the principle of non-refoulement is characterised by its absolute nature which makes it more broadly applicable than international refugee law as it negates all possibilities of exceptions. It is non-discriminatory in nature and transgresses all territorial borders and barriers. The principle of non-refoulement also applies to children, especially keeping in mind their necessities of adequate food and health services.

Throwing light upon the facts of the case

In the case of Nandita Haksar v. State of Manipur and Ors. (2021), the petitioner’s prayer was that the seven Myanmarese citizens that she was sheltering be given safe passage to Delhi to approach the UNHCR for their protection. The Myanmarese individuals entered India illegally in order to escape their unlawful arrest and detention by the military junta in Myanmar. The latter had carried out a military coup in Myanmar in February 2021, overthrowing the Myanmarese government and further banned and established Myanmarese news and media service known as Mizzima which three of the seven illegal migrants, in this case, were employees of. The remaining four individuals were the wife and three children of one of the journalists of Mizzima. In fear of the widespread violence that broke out following the coup, these individuals feared their persecution and physical danger and thus sought refuge at Moreh in the Tengnoupal district of Manipur. Here too, they lived in the fear of being sent back to Myanmar by the Assam Rifles, a branch of the Indian Armed Force as they had illegally entered the country without the required documents. They thus sought the help of the petitioner in this case.

The Ministry of Home Affairs, Government of India, had, through a notification dated 10.03.2021 instructed the Assam Rifles as well as the authorities of the bordering states North-East India to check the flow of illegal immigrants coming into India out of Myanmar.

The state and central governments sought an adjournment of the proceedings on the 20th of April 2021, as they were unable to complete the instructions in time and thus the Court granted the petitioner’s prayer for interim relief of safe passage of the immigrants to Imphal, to the residence of the petitioner in order to avoid the threat of deportation.

Issues raised

The petitioner pointed out that the notification issued on 10.03.2021 did not differentiate between a ‘refugee’ and a ‘migrant’. The petitioner also further brought the Court’s notice to the letter dated 29.3.2021 which was issued by the Government of Manipur stating that ‘it would come to the aid of Myanmarese nationals who had illegally entered the State’. Thus, the main issue, in this case, was whether the Myanmarese citizens who illegally entered India could be considered as ‘migrants’ or not.

Including the principle of non-refoulement within the ambit of Article 21 of the Indian Constitution

Through paragraphs 9 to 11 of its judgment, the Court, relying on its precedent in the case of Louis De Raedt v. Union of India and others (1991) and State of Arunachal Pradesh v. Khudiram Chakma (1994) highlighted the nexus between Article 21 of the Constitution and the principle of non-refoulement. Non-refoulement comes into play when an individual is granted freedom from being expelled from a country where he/she seeks refuge, other than their country of origin. This is done in light of particularly a threat to their life. Article 21 explicitly deals with the protection of life and liberty of an individual and thus it is only fair that the principle of non-refoulement is included within the ambit of Article 21 of the Constitution.

The right to life and liberty being inalienable and inherent in all human beings naturally, cannot be limited only to citizens belonging to the Indian country. It is a fundamental aspect of every individual’s life that requires protection regardless of the territorial jurisdiction of the country in which the individual resides or seeks refuge.

The only condition of the principle of non-refoulement which the states can use to their defence is if the individual seeking refuge within their borders poses a certain threat or is prejudicial to the security of the country. The Court explicitly stated that even though India might not be a signatory to the Refugee Convention in particular, reading Article 21 of the Constitution along with the other conventions India is a party to, ‘enjoins it to respect the right of an asylum seeker to seek protection from persecution and life or liberty-threatening danger elsewhere’.

The Court’s observation

The Court, on scrutinising the definitions of the terms ‘migrant’ and ‘refugee’ came to the conclusion that since the Myanmarese citizens in this case clearly only escaped their home country in order to escape persecution and not to find better living conditions (as is the case for migrants), they are clearly refugees.

The Court further held that as India is a party to the Universal Declaration of Human Rights, it has to follow the same, namely Article 14 in this case which declares that every individual has the ‘right to seek and to enjoy in other countries asylum from persecution.’

Citing the ICCPR to which India is also a party, the Court held that, following the same, the State Parties need to ensure that the inherent dignity of all individuals is protected and preserved.

The Court also observed that India recently became a party to the Global Compact on Refugees on the 17th of December, 2018, whose main aim was to formulate ‘a framework for more predictable and equitable responsibility-sharing and provides a blueprint for Governments, International Organizations and other stakeholders to ensure that host communities get the support they need so that refugees can lead productive lives.’ To support the same, the Court laid emphasis on Article 51 of the Constitution which urges the State to foster respect for all international laws and treaty obligations to promote international peace and security among individuals and countries.

The Court also refuted the arguments advanced by the counsel of the respondents who stated that the fundamental freedoms guaranteed to the citizens of India by Articles 19(1)(d) and 19(1)(e) of the Constitution of India could not be availed off by the Myanmarese individuals as they had entered India illegally and hence should first face the consequences for their illegal actions before the Court grants them protection. To back these arguments, they relied heavily upon the Foreigners Act, 1946, the Foreigners Order, 1948 and the Registration of Foreigners Act, 1939. The Court, however, stated that both these arguments posed ‘a rather narrow and parochial consideration of the larger issues that arise in this case.’

According to the Court, the seven Myanmarese individuals were not ‘migrants’ but were rather ‘asylum seekers’ and as such agreeing with the counsel for the respondent’s arguments would be inhuman in nature.

Further, it could not be stated that these individuals were asserting any rights and freedoms under Article 19 of the Constitution as they were simply solely seeking safe passage to New Delhi and nothing more. Referring to the case of Chairman, Railway Board, and others v. Chandrima Das (Mrs.) and others (2000), the Court re-emphasized on its judgment that people who are nationals of a foreign country, on entry to India, whether legally or illegally, should not be cannot be treated in any way below their dignity nor be subject to physical violence or any outrage to their modesty.

There was no material evidence to prove that the Myanmarese individuals posed any threat to the security of the country and thus the grounds for denying them asylum on the same were negated. A majority of the individuals, in this case, had already been granted ‘refugee status’ by the UNHCR and one of them was even sanctioned a ‘Visa Gratis’ status by the Government of India.

After a thorough analysis of its previous precedents concerning refugees and migrants, the Court finally came to the conclusion that it would indeed be just to extend the protection of Article 21 of the Constitution to the seven Myanmarese citizens and grant them safe passage to Delhi to avail suitable protection from the UNHCR.

The Rohingya Muslim crisis

The Rohingya Muslims of Myanmar, named by the United Nations as the ‘most persecuted minority’ have been fleeing from Myanmar due to atrocities against them including genocide and seeking refuge within Indian borders.

A bone of contention came up when the Ministry of Home Affairs of India issued an advisory to the authorities to initiate, monitor and identify deportation proceedings against the Rohingya Muslims. Although this matter is currently being challenged in the Supreme Court of India, countless Rohingya Muslims have been arrested and detained especially in the State of Jammu and Kashmir.

The need for a stronger refugee policy

To date, three separate bills have been passed in the Houses of Parliament relating to the Indian Asylum Policy but none of them has been given any attention and still remain pending. Although India still hosts a number of refugees as evident from the case discussed above as well as countries such as Bangladesh, Sri Lanka, Pakistan and Afghanistan, these refugees still continue to live in the fear of being deported even after entering the Indian borders due to the absence of any central asylum regime guaranteeing them of such safe harbour and any robust monitoring authority of the same. India has a number of countries it can borrow ideas from in order to develop a fruitful refugee policy. For example, Germany’s efforts to accommodate Syrian refugees in 2015 is a realistic example of the steps India needs to be taking in order to consolidate a strong refugee policy.

India has always struggled with its border control mechanism, especially via the coasts. A strong refugee policy can only be successful once India is able to exercise proper control over all its borders.

Another policy that is desirable for India to adopt as a supplement to the refugee policy is a policy regarding the resettlement of the refugees once the life and liberty-threatening conditions in their home country subside. This is especially important in a third-world country like India which is still developing, in addition to its resources already being strained and unequally distributed among its citizens themselves. By sending refugees to countries that are better off with superior physical and economic infrastructure, less affluent countries need not endure the permanent strain on their resources by housing the refugees for an eternity.

Although the Central and State governments of India seem to be taking steps in the right direction for the protection of refugees and their rights in particular, there exist certain other groups of foreigners as well who are in need of similar protection which is yet unavailable to them. An example of such a group is temporary residents, tourists and travelers. These individuals need to be offered the same protection as refugees if, during their stay in India, the prevailing situation in their country of origin resembles that of the countries of refugees in the sense of posing a threat to the individual’s life and liberty should they return to their home country.

Another reason India should extend its protection to all individuals facing human rights violations in their home countries is that India has voted affirmatively to adopt the Universal Declaration of Human Rights which guarantees the rights of all individuals regardless of whether they are citizens or non-citizens of a specific country.

Although the current case is a huge step forward towards India officially recognizing the rights of refugees by giving them constitutional recognition, at the end of the day it is still merely an opinion and decision made by a High Court. Refugee protection is not uniformly recognized in India as in the absence of any specific and well-established guidelines, it is upto the individual states to form legislations and measures to protect their refugees. There needs to be a balance struck in all parts of the country between the security of the nation and the rights of refugees in order to find a long-term solution to their problems.

Conclusion

The recent COVID-19 pandemic has shown us that the internal migrants are no better off than the international refugees. Due to continuous governmental neglect and lack of infrastructure to tend to their needs, the cracks of the Indian government’s oversight were widely exposed as the entire nation went into the world’s largest lockdown affecting 1.3 billion people.

Thus, the need of the hour is for policymakers and practitioners to ensure that the most vulnerable sections of both internal and international society seeking refuge within its borders have accessibility to a strong safety net in the form of a well-planned refugee and migrant policy.

The need for a humanitarian approach when dealing with the refugee crisis is the need of the hour for a country like India where the marginalised continue to be pushed further into poverty. It is the duty of the state to ensure that all individuals and especially the latter are uplifted to achieve at least their basic human rights.

References

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Why are companies crossing borders for mergers and acquisitions

By

Shoronya Banerjee

-

October 4, 2021

0

Blogs websites merger acquisition lawyers — Image source: https://bit.ly/2VHM56a

This article has been written by Pranali pursuing the Diploma in M&A, Institutional Finance and Investment Laws (PE and VC transactions) from LawSikho. This article has been edited by Zigishu Singh (Associate, Lawsikho) and Dipshi Swara (Senior Associate, Lawsikho).

Table of Contents

Introduction

When “The world is our home and you are our guest” provided hospitality out of bounds to the “Joy of Flying”, it exposed the opportunities in cross border mergers in the aviation sector. Etihad airlines flew across the international borders to revive an already deflating Jet airline that was running into debts. The Indian Foreign Direct Investment Policy provided the visa to Etihad Airways to cross borders and merge with Jet airways, eventually drawing a picture that the world is a global market. In this globalised market, moreover, in the last decade, we have seen a radical growth in the cross borders mergers where some have come to life while some have miserably failed.

Cross border merger is a combination of two or more companies incorporated in two or more countries. Companies of different jurisdictions choose this inorganic method to enhance their growth and uplift their standard to compete in the global market. In pursuant to the viability of the converted deals, below are the reasons as to why foreign companies are crossing borders to acquire domestic targets and trying to find a home in India.

Key influencers to attract foreign investment to India

One of the primary factors to attract Foreign Investment to India is to build shareholder value or to increase the customer base in India. The other drivers are strategies developed and executed by Multinational Companies to protect and display their global presence on the world map. Several factors which motivate firms for cross border mergers are state below:

Financial markets are global

The Indian financial markets have globalised themselves with the help of technology. Some of which are the Bombay Stock Exchange, the National Stock Exchange, the Bond market also known as the debt market has allowed the free flow of foreign investment in the country. With good technical support and rapid technological development clubbed with the liberalisation of the financial market, it is possible to make the world a global market. The risk has spread out wider and diversified due to globalisation of the financial market.

Market pressure and stiff international competition

There is stiff competition in the industry, and hence one cannot help but be part of the competitive race. There is immense market pressure and therefore, a huge competition amongst entities to rank on top of the ladder and get recognised globally. The aim is to build a global brand. Crossing borders helps the companies to achieve synergies in local/global operations and across industries.

To explore new market opportunities due to rapid evolving technology

Cross border mergers could be vertical or horizontal, forward or reverse or a conglomerate which enables the multinational companies to seek new opportunities. The technological developments that take place every minute also enhance the chance of seizing new opportunities. Modern and latest technology helps approach remote locations within a click of a button, therefore, it is possible to reach out faster to the customer base. At the beginning of the year 2021, we heard about Tesla, starting its operations in India and having its registered office in Bengaluru.

Exploring assets in India due to its diverse geography and location

India is a geographically diverse country with rich history and heritage where the language, culture and customs are widespread and different at every kilometre travelled to the last mile. India is the second-largest populated country in the world and hence the second-largest customer base from the perspective of a global market.

Multinational companies want to invest in India to spread out their reach which in turn will result in exploring the assets in India. The foreign company will gain access to strategic proprietary assets owned by the domestic target company. Furthermore, economically, the situation will create good value and efficiency. Diversification generates an opportunity for investors to develop their business geographically, at a bigger scale, or by type of industry.

Increase in efficiency improves the quality of goods and services

Strategic partnership increases a company’s efficiency in providing good quality of goods and services. Due to the presence of strategic alliance inputs such as raw materials, labour, technology etc can be made available via imports and exports at the desired location.

Growth in profit due to fulfilment of the objectives

The formula of cross border merger provides a fillip to growth to the company, which eventually results in higher earnings which boost the morale and confidence of the investors. A high-profit margin persuades the shareholders to entrust their investment in the company with the hope of bountiful returns in the form of dividends. Cross border mergers intensify strategic alliances between firms that in turn gear economy of scale.

Growth in production

In integrated companies, double activities are eliminated due to the large scale of operations resulting in a reduction in cost. For example, new ideas can be implemented and products can be diversified and supply chains can be modified which extends the market share. With enhanced support in terms of machinery, labour and other resources the companies can operate at double their capacity, resulting in an increase in the scale of production.

Cross border merger leads to large productions of goods and services with fewer inputs which helps in gaining efficiency. Apart from this it also benefits the Indian economy such as increased productivity, increases in economic growth and development particularly gaining market power and dominance. When the companies become larger than it is easy to reap the benefits of size in competition and negotiation.

Innovation in technology reduces costs

The immense progress in technology and innovation has reduced the costs involved, may it be in production or to provide services. The factors of production majorly have a reduced labour force and being replaced by machinery which works double that of the speed of a human. The research and development costs are distributed over a broader base which enables us to reduce costs.

Cross border mergers allow global transfer of capital, goods and services, intellectual property, technology and unites for universal networking and effectively reducing the cost. Although restructuring may lead to downscaling, in the long term it would lead to employment gains. It is essential sometimes for the continuity of business operations to downsize. Downsizing would in the long run expand the business and successfully create new employment opportunities.

When firms from different jurisdictions integrate, it brings positive effects of investments made in India because there is sharing of best management skills and practices. This results in moving away from age-old practices and encourages a company to modify and innovate which influences the operations of the company.

Therefore the combined company can reduce its fixed costs by eliminating duplicate departments or operations, reducing the costs of the company vis-a-vis the same source of revenue, thus increasing profits.

Types of cross border mergers

There are different types of cross border mergers. The most popular forms of mergers are vertical, horizontal, reverse, forward, product extension, conglomerate, and congeneric. Owing to globalisation and technology we even have marketplace extension or marketing/technology associated concentric mergers.

Inbound mergers

In this method, the foreign company mergers with or acquires shares in an Indian organisation. An example of Inbound Merger is Daiichi acquired Ranbaxy.

Outbound mergers

In this method, an Indian company merges with or acquires shares in a foreign company. An example of the outbound merger is Tata metal acquiring Corus.

There are few more examples of cross border mergers such as Wipro Limited merging its wholly-owned subsidiaries (Wipro Technologies Austria GmbH, Wipro Information Technologies Austria GmbH, Newlogic Technologies SARL and Appirio India Cloud Solutions Private Limited). Further, Sun Pharmaceutical Industries Limited (“Sun Pharma”) had filed a scheme of arrangement which provided for the demerger of business of generic products of Sun Pharma Global FZE into Sun Pharma. The synergies between Facebook and Reliance’s Jio Platforms rocked the country last year proving a giant leap in alliance for digital technology.

Laws governing cross border mergers in India

The political scenario of India plays an important role to open economies and liberalise the markets. The government policies and regional agreements also provided a boost to cross border mergers as most foreign investors developed an interest in modern India. Over the period, India became the most important and favourable region to explore.

The legal framework for cross border mergers in India is provided by Section 234 of the Companies Act, 2013. This has been notified and effective 13^th of April, 2017, hence the concept of cross border merger became operational.

The cross border merger between domestic companies and foreign companies is legally structured under Section 234 of the Companies Act, 2013. To elaborate, Section 234 of the Companies Act, 2013 provides that the provisions as applicable to arrangements and amalgamations between Indian companies apply on a mutatis mutandis basis even to the cross-border mergers. Further compliances for cross-border merger or amalgamation of a company are:

The Indian company to obtain prior approval from the Reserve Bank of India
Consideration has to be discharged in cash or in depository receipts or partly in cash and partly in depository receipts.

In addition to the above, the following laws govern cross border mergers in India:

Companies Act, 2013 and the relevant rules
Competition Act, 2002
Insolvency and Bankruptcy Code, 2016
Income Tax Act, 1961
SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011
The Department of Industrial Policy and Promotion (DIPP)
Foreign Exchange Management (Cross Border Merger) Regulations, 2018
Foreign Exchange Management Act, 1999 (FEMA)
Foreign Exchange Management (Non-debt Instruments) Rules, 2019
Foreign Exchange Management (Debt Instruments) Regulations, 2019
Transfer of Property Act, 1882
Indian Stamp Act, 1899
IFRS three Business Combinations

Section 234 of the Companies Act, 2013 (Companies Act) and Rule 25A of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 (Companies Merger Rules) provides for mergers and amalgamations between Indian companies and foreign companies. These provisions mandate prior approval of the Reserve Bank of India (RBI) for the sort of cross border mergers.

However, the provisions of FEMA Regulations provide for deemed approval of the RBI and therefore, relaxes the mandatory approval as required under the Companies Act, 2013.

The FEMA Regulations offer that any transaction undertaken with regards to a cross border merger in accordance with the FEMA Regulations shall be deemed to be accepted by means of the RBI (as required in terms of Rule 25A of the Companies Merger Rules). Additionally, to ensure compliance with the FEMA Regulations, a certificate has to be provided by the managing director or whole-time director and the Company Secretary of the company/ies involved in such a cross border merger along with the application which is filed with the relevant National Company Law Tribunal (NCLT).

Tax implications for foreign amalgamating company

Section 47(vi) of the Income Tax Act, 1961: Any transfer of capital assets by a transferor company by way of a scheme of amalgamation wherein the transferee / resulting company is an Indian company is exempt from tax. The impact of transfer pricing regulations does not get triggered even though cross-border merger involves non-resident Associated Enterprise due to tax exemption provided by the Act.

Tax implications for shareholder of foreign amalgamating company

Section 47(vii) of the Income Tax Act, 1961: where shares of the transferor company are transferred in consideration for the issue of shares in the resulting company, provided the resulting company is an Indian company, this transaction is exempt from tax.

In pursuance of the tax neutral merger arrangements, there should not be receipt-based taxation in the hands of the shareholders under the head ‘Income from other sources.’

Tax implications for Indian amalgamated company

Indian companies are eligible to claim depreciation on a pro-rata basis calculated upon the number of days assets usage in the year of the merger. In subsequent years, Indian companies are eligible to claim depreciation on the written down value (‘WDV’) basis of the block of assets.

In the case of a merger of foreign wholly-owned subsidiaries (WoS), receipt of assets is unlikely to be construed as the receipt of dividend. Moreover, under Section 56(2)(viib) of the Income Tax Act, 1961, no tax implications shall arise for Indian companies on the issue of shares at a price above face value upon merger. However, the Indian company will have the exposure for Permanent Establishment in the overseas jurisdiction and tax implications on a year-on-year basis will need to be evaluated.

Carry forward and set-off of losses of foreign amalgamated company

Under the provisions of the Income Tax Act, 1961 subject to satisfaction of certain conditions, an amalgamated company on the merger can carry forward and set off the accumulated losses of the amalgamating company.

Another interesting aspect surrounding inbound mergers is whether business loss / unabsorbed depreciation available to foreign companies in overseas jurisdiction shall be transferred to the Indian amalgamated company. In case of inbound mergers where the undertaking qualifies as ‘industrial undertaking’ in terms of Section 72A of the Act, or inbound demergers of the foreign company having a Place of Effective Management (PoEM) in India before the event of merger/demerger, the losses will become losses of the amalgamated company.

The cross-border merger would be an advantageous instrument for Indian companies to undertake consolidation and restructuring activities to create value. However, the fact that under Indian Income-tax laws, the capital gains tax benefit is available, cross border arrangement will be extensively used to achieve a tax-neutral consolidation of legal entities/ intellectual properties in the course of corporate reorganisation including debt push down in the Indian entity.

Conclusion

The world came to a standstill when COVID – 19 pandemic struck. There was an immense amount of losses incurred by the corporate be it in terms of sources of raw material, technology or labour. Many companies went into downsizing to align themselves to the current demands.

However, we now get to see that the economy is reviving. Cross borders mergers are rolling back owing to the global competitive environment and the extensive scope in the industry which drives value to the individual firm. Corporate India is very optimistic and conscious in its approach. To overcome challenges, a good amount of time and effort has gone into developing a system that will sustain for the next decade.

We are aware of the fact that right from school to work, India has become digital and virtual. A lot has been done with the help of technology. For example, by sitting at home at the click of a mouse button, we can order products that are on sale in the United States. Products can be reviewed and purchased online. A similar pattern is also observed in the laws of India. The government has taken and executed a lot of initiatives to attract foreign investors by bringing in reforms to the existing laws.

The Indian government has relaxed FDI sectoral caps in insurance, aviation, defence industry making an investment in India very attractive. Furthermore, reforms such as Make in India, Atmanirbhar Bharat (self-reliance) are gaining momentum over the last half-decade.

References

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Importance of Section 32A of the Insolvency and Bankruptcy Code

By

Diva Rai

-

October 4, 2021

0

79b175f7-10cd-4fcd-b259-ce0f99f3d848_cea5d10c-0e9d-4ea6-b206-99ace4575db6 — Image source - https://bit.ly/3D7Wdrp

This article is written by Ms Aporva Shekhar. from KIIT School of law. This article is a brief analysis of the implications and importance of Section-32A of the Insolvency and Bankruptcy Code.

Table of Contents

Introduction

The IBC (Insolvency and Bankruptcy Code) was enacted on 28th May 2016 and Section 32A was added to the Code through the 2019 Amendment. The exceptions to the immunity that is granted to corporate debtors for offences committed during the period of CIRP (Corporate Insolvency Resolution Proceedings) from the date of approval by the NCLT (National Company Law Tribunal) are given under this Section. This Section is a very significant development for the Code as it provides incentives for investors to use their money and resources without the fear of being persecuted for the offences committed before or during the CIRP. Section 32A discharges a corporate debtor of liability even if a corporate debtor is prosecuted after the date of approval of the resolution plan.

Analysis of Section 32A

As stated above, this Section of the IBC plays a critical role in alleviating investor concerns regarding the assets and property of the corporate debtor by providing immunity from liability and has a retrospective effect.

Sub-section 1

The immunity commences from the date the resolution plan is approved by the relevant adjudicating authority mentioned under Section 31 of the abovementioned Code. This sub-section further provides that even before the approval of a resolution plan, the corporate debtor can claim immunity from any prosecution during the CIRP. Section 32A grants immunity from liability to only selected individuals who fulfil certain requirements. These requirements are as follows:

The immunity provided in this subsection extends to persons who were not promoters or part of the management of the corporate debtors or the related parties that are made in charge of management in place of the corporate debtor by the resolution plan.
The immunity also extends to such persons that were not found to be abetting or conspiring the commission of an offence by the relevant adjudicating authority based on material evidence in its possession.
But the immunity provided under this subsection shall not extend to persons who were involved in the commission of the offence or were associated with the corporate debtor in this regard, like the designated partner or any other officer in default who was supposed to regulate the corporate debtor’s business.

The proviso to these conditions states that any prosecution instituted against the corporate debtor during the CIRP will be discharged if the corporate debtors fulfil the above-mentioned conditions. The second proviso to the sub-section further adds that any person who can be classified as a designated partner as per the definition of Section 2(j) of the Limited Liability Partnership Act 2008, or any officer who was in default as per the definition of Section 2(60) of the Companies Act 2013, was indirectly or directly involved in the commission of the offence or was responsible or in-charge of the business affairs of the corporate debtor or was in any way associated to the corporate debtor in any way shall not be exempted from any liability and will be prosecuted for the offence committed by the corporate debtor and shall be punished accordingly. Regardless of the fact that the corporate debtor’s liability has ceased as provided under this subsection, the above-mentioned persons shall still retain their liability.

Sub-section 2

Sub-section 2 of the abovementioned Section deals with the liability attached to the corporate debtors’ assets and properties. This sub-section makes the assets and properties of the corporate debtor free of liability, it states that no action shall be taken against any of the assets or properties of the corporate debtor for offences committed before the commencement of CIRP or after the approval of the resolution plan by the relevant adjudicating authority mentioned under Section 31 of the abovementioned Code, which includes these assets and properties. The action that is prevented by this clause includes anything that changes in the control of the corporate debtor to a person or leads to the sale of liquidation assets to a person who was not associated to management of the corporate debtor or any other related party or a promoter, and any person who is suspected to abet or conspire to commit any offence by the relevant investigating authority on the basis of material evidence. There are several clarifications given to make the application of this sub-section as accurate as possible, they are as follows:

The action that is prevented by the virtue of sub-section 2 shall include seizure, attachment, confiscation or retention of property of the corporate debtor by virtue of any applicable law.
Any other person who has acquired the property through CIRP or anyone other than the corporate debtor shall not be given the benefit of prevention of action given under this sub-section.

Sub-section 3

Sub-section 3 of the abovementioned Section adds that, with reference to the immunity given under sub-sections 1 and 2, states that any person claiming the benefit under the previous sub-sections is not free from providing required assistance to the investigating and is obligated to provide assistance to any investigating authority investigating under any applicable law. They must cooperate and provide assistance to any investigating authority that is investigating any crime that was committed before the commencement of CIRP.

The implication of Section 32A

Section 32A inspires confidence in bidders who want to invest in properties and assets of disputed companies. The retrospective effect of the Act that grants blanket immunity to the corporate debtor and their assets and properties ensures an expedient closure of the CIRP. This Section plays an integral role in discharging several big cases, like the Bhushan Power And Steel Ltd vs S. L. Seal & Ors (2016).
This Section was introduced after the adjudication of the JSW Steel Ltd. v. Mahender K. Khandelwal and Ors. (2020) case. Whilst the adjudication was pending in the above-mentioned case, the Insolvency and Bankruptcy (Amendment) Ordinance, 2019 was formulated considering the circumstances that arose in the case. And then this newly incorporated Section was applied by the NCLAT (National Company Law Appellate Tribunal) in the pending case against the recommendations of the Enforcement Directorate.
Prior to the insertion of the abovementioned Section, the corporate debtors were burdened with liabilities and the hassle of prosecutions for past offences. Hence there was a need to incorporate a provision that unburdened the corporate debtor of any liabilities so that they may proceed towards a successful resolution. This Section mainly aims to provide resolution applicants with a fair opportunity to revivify corporate debtors without the threat of liabilities springing from mala fide acts of the past.
Section 32A is a particularly powerful provision as it provides for the prevention of any prosecution, attachment, seizure, action, confiscation or retention against a corporate debtor. The retrospective effect of this non-obstante Section read with Section 238 of the abovementioned code has a favourable overriding application. The wide-reaching application of this provision also raises a question as to what kind of proceedings would come within the ambit of this provision.
The NCLAT aptly answered this question in the case of Shah Brothers Ispat Pvt. Ltd. v. P. Mohanraj and Ors (2018), wherein the NCLAT stated that all criminal proceedings, like the criminal proceedings under the Negotiable Instruments Act 1881 do not come within the ambit of this above-mentioned Code and hence cannot be overridden by the provision of Section 32A.
Since this provision is still relatively new, there are only a few cases that have tested the efficacy, but the larger issue still remains that in several situations it might extinguish the remedies of other agencies against the corporate debtor, and it is still left to be seen. The mere approval of a resolution plan can override statutory remedies available to others against the corporate debtors by the virtue of this provision.
Another considerable issue that might be created by this above-mentioned provision is that it might bar the attachment of property that might have been acquired through criminal acts. Such asset or property may have been acquired by the corporate debtor shortly before the commencement of the CIRP.
This Section will nullify any action that could be taken to discharge the criminally acquired property or asset. Such illegally obtained assets or properties would be legalized after the conclusion of the CIRP. The widespread application would also ensure that essentially no proceeding can take place in the future against the illegally acquired property. There are many potential pitfalls of the abovementioned provision that can only be identified and rectified by the judiciary.

Relevant judicial precedents

Even though this is a relatively new provision there have been several instances where this new law has been put to test by the adjudicating authorities. Some of the relevant decisions that analyse and describe the ambit of Section 32A are as follows:

Manish Kumar v. Union of India (2021)

This case mainly dealt with the recurring question of the continuity of liability in respect of the offences committed by the corporate debtor. The writ petition challenging the validity of the abovementioned provision on the grounds of arbitrariness and violation of constitutional Articles 300A, 19, 14 and 21 were dismissed by the Supreme Court recently. It was the contention of the Union of India that corporate debtors deserve to start over with a clean slate and the abovementioned Section was incorporated to give a statutory basis for the furtherance of that goal. The Court observed that it is important for the corporate debtors’ criminal liability to be extinguished so that the new management can break clean with the past and start over. The unequivocal declaration of the Court which upheld the validity of Section 32A will be binding on all subordinate courts and tribunals.

The Court also added that such immunity as granted under the abovementioned provision shall only be applicable when the resolution plan has been approved and the management has been replaced. To ensure the timely completion of the CIRP it is extremely important to attract investors who might only invest unencumbered from the threat of liability. Such investors must be granted immunity for the acts of the past which they did not commit which has also been stated in the provision itself.

JSW Steel Ltd. v. Mahender K. Khandelwal and Ors. (2020)

This case which essentially facilitated the incorporation of Section 32A was instrumental in establishing a concrete precedent with regards to this provision. The Section was still in its ordinance stage during the adjudication of this case, but the NCLAT relied on the ordinance to issue a notification to the Enforcement Directorate and the Central government to respond to whether JSW steel would be exempted under the abovementioned Section. During the pendency of the Prevention of Money Laundering Act, 2002 proceedings in this case the NCLAT made the following relevant observations regarding Section 32A.

That the provision would have retrospective effect as it was merely clarificatory.
And for the Section to be applicable, the investigating authority must have reason to believe based on material evidence in their possession that the new management had abetted or conspired to commit the offence in question. The investigation authority may not keep such information latent till investigation in all fields have concluded.

The appeal to NCLAT for this case is still pending, and only after its resolution can a conclusive answer be provided to the application of the Section in the present case.

Tata Steel BSL Ltd. and Anr. v. Union of India and Anr. (2019)

In the present case on the approval of the resolution plan for revival of the petitioner previously known as Bhushan Steel Ltd. Under the IBC process, the Delhi High Court consequently discharged the accused on the plain application of Section 32A of proceedings filed against them for alleged offences before the trial court under the Indian Penal Code 1860, the Companies Act 2013 and 1956.

Conclusion

The courts are still struggling to interpret Section 32A, given the vagueness and ambiguity revolving around the Section. Section 32A aims to detach all liability associated with the corporate debtor and their property and assets to prevent attachment or confiscation of the same which would defeat the object of the Code. The IBC has sought to facilitate successful resolution applicants to start over with a clean slate without the fear of past offences by strengthening the insolvency framework to attain a positive economic outcome.

References

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Taxation provisions for a demerger

By

Shoronya Banerjee

-

October 4, 2021

0

Demerger (1) — Image source-https://rb.gy/45skbn

This article has been written by Akshay Verma pursuing the Diploma in M&A, Institutional Finance, and Investment Laws (PE and VC transactions) from LawSikho. This article has been edited by Ruchika Mohapatra (Associate, Lawsikho) and Dipshi Swara (Senior Associate, Lawsikho).

Table of Contents

Introduction

A demerger is a kind of corporate restructuring, where an organization separates part of its business into a distinct entity. An organisation can decide to demerge for various reasons. The most common objective is to generate additional value for shareholders by splitting out various activities that may perform well if these are separated from the main business. Another rationale for a demerger can be separation, where parties who have worked together previously in a joint venture or as a part of an acquisition decide to choose their own paths.

A demerger can be undertaken through a process approved by the National Companies Law Tribunal (NCLT) wherein all the assets and liabilities, along with the employees of the identified business undertaking, are transferred to the transferee entity on a going concern basis. The transferee entity, in consideration for a demerger, provides its shares to the transferor entity’s shareholders. But do you know about the tax implications involved in a demerger? The demerger is defined under Section 2(19AA) of the Income Tax Act, 1961. Usually, a demerger is tax neutral in nature but it can also be subject to tax implications. In this article, the author aims to discuss the taxation provisions for a demerger.

Demerger and Income Tax Act, 1961

Section 2 (19AA) of the Income Tax Act,1961 defines demerger as a transfer of undertakings (one or more) to any resulting organisation pursuant to an arrangement scheme under Sections 391 to 394 of the Companies Act, 1956 in such a way that:

All the liability/property of the undertaking becomes the liability/property of the resulting organisation.
All the liabilities/properties are transferred at book value (excluding surge in value because of revaluation).
The resulting organization issues shares to the shareholders of the demerged organization on a proportionate basis, except where the resulting organization is a shareholder of the demerged organisation.
Shareholders holding minimum seventy five percent of the value of shares become shareholders of the resulting organisation (other than shares held already therein prior to the demerger by, or by a nominee for, the resulting organisation or its subsidiary).
Undertaking is transferred on a going concern basis.

When will a demerger be tax neutral?

A demerger will be tax neutral in the following circumstances:

Section 47 of the Income Tax Act, 1961 provides various transactions which will not be considered as transfers for the motive of capital gains tax. According to Section 47(vi b), if in a demerger, there is any transfer of a capital asset by the demerged organisation to the resulting organization and if the resulting organisation is an Indian organisation, then the transaction will not be considered a transfer for the motive of capital gains tax.

According to Section 47(vi) (d), if there is an issue or transfer of shares by the resulting organization, in a demerger scheme to the shareholders of the demerged organisation and, if the transfer is made in consideration of the demerger of the undertaking, then the transaction will not be considered as a transfer for the motive of capital gains tax.

According to clause (v) of Section 2(22) of the Income Tax Act, 1961, there are no implications of deemed dividend on the issue of shares by the resulting organisation. When shares are distributed pursuant to a demerger by the resulting organisation to the shareholders of the demerged organisation (whether or not there is a capital reduction in the deemed organisation), it is excluded from the definition of the dividend.

For a demerger, Section 72A (4) of the Income Tax Act,1961 provides with the benefit of set-off and carry-forward of loss and depreciation which is unabsorbed. This provision provides benefit in case a demerger has opted for the business reorganisation. It must be noted that such a demerger should have opted only for authentic purposes of business.

When will a demerger be taxed?

According to Section 41(1) of the Income Tax Act, 1961, the resulting organisation is subject to tax as a business successor. By virtue of Section 41(1)(a), when there is deduction or allowance made in any assessment year in respect of loss, trading or expenditure liability suffered by the assessee (first-mentioned individual) and subsequently during any previous year; the assessee has gained any amount whether in cash or in any other way in respect of such expenditure or loss or some benefit in respect of such business liability by way of revocation or termination thereof, the amount gained by such individual or the value of benefit arising to him shall be deemed to be gains and profits of the profession or business and chargeable accordingly to income tax as the income of that previous year, whether the profession or business in respect of which the deduction or allowance has been made is in existence in that year or not; or

(b) the successor in business (resulting organization) has gained any amount whether in cash or in any other way in respect of which loss or expenditure was suffered by the assessee (first mentioned individual) or some profit in respect to business liability referred to in clause (a) by way of revocation or termination thereof, the amount gained by the resulting organization or the value of profit arising to the resulting organisation shall be deemed to be gains and profits of the profession or business, and chargeable accordingly to income tax as the income of that previous year.

Whether a demerger scheme could be sanctioned under Income Tax Act provisions and corporate laws of India if there is no consideration?

The abovementioned question per se has been answered by the Gujarat High Court in the case of Vodafone Essar Gujarat Limited (Gujarat HC). The court rejected the demerger scheme. Further, it held that the scheme was a conduit/device having the only motive of evading and avoiding taxes including stamp duty, income tax, VAT, and registration charges. It was observed that the motive, being the avoidance of tax, was evident from the facts that distinct accounting treatments are provided to transferor organisations having a positive net worth as compared to those which have negative net worth with a motive to avoid maximum tax.

Whether demerger of investments would be regarded as tax neutral demerger under Section 2(19AA) of Income Tax Act, 1961?

The incentive for demerger under Section 47 (vii a) is not obtainable if the transfer is not in accordance with Section 2(19AA) of the Said legislation.

In Income Tax Officer v. M/s Datex Ohmeda (India) Pvt Ltd (ITAT Kolkata), it was held that the transfer of trading and business division of the assessee-organisation was not in accordance with the provisions of Section 2(19AA) to treat the same as a demerger for the motive of Income Tax Act and the incentive of Section 47 (vii a) was not obtainable to the assessee-organisation. According to the provision enshrined under section 2(19AA) (ii) of the Income Tax Act,1961, all the liabilities relating to the undertaking, being transferred by the demerged organization, immediately prior to the demerger, should become liabilities of the resulting organisation. But in the said case, the transfer of the T&D division was not in accordance with the provision of Section 2(19AA) and hence could not obtain the incentive under Section 47 (vii a) of the Income Tax Act,1961.

Treatment of cross border demergers

Cross-border demergers are not expressly allowed or prohibited under the Companies Act, 2013. Cross-border demergers can be allowed in India only if there is an efficient interpretation of Section 232(I)(b) read with Section 234 of the Companies Act,2013. The Legislature through clarification or any appellate tribunal through its order or decision can settle the entire debate in this regard. So far, the Income Tax Act, 1961 also provides that the resulting organisation by virtue of a demerger should be an Indian organisation. There is no provision related to the cross-border demerger to date.

Conclusion

To recapitulate, a demerger is a kind of corporate restructuring, where an organisation separates part of its business into a distinct entity. Usually, a demerger is tax neutral in nature but it can also be subject to tax implications. According to Section 47(vi b), when there is the transfer of capital assets and the resulting organization is an Indian organization then there will be no capital gains. Similarly, according to Section 47(vi) (d), when shares are issued or transferred by the resulting organisation to shareholders of the demerged organisation there will be no capital gains.

According to Section 41(1) of the Income Tax Act, 1961, the resulting organisation is chargeable to tax as a business successor. Cross-border demergers are not expressly allowed or prohibited under the Companies Act, 2013. Cross-border demergers can be allowed in India only if there is an efficient interpretation of Section 232(I)(b) read with Section 234 of the Companies Act, 2013. The Legislature through clarification or any Appellate Tribunal through its order or decision can settle the entire debate in this regard. So far, the Income Tax Act, 1961 also provides that the resulting organisation by virtue of a demerger should be an Indian organisation. There is no provision related to the cross-border demerger.

References

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How does taxation impact the structuring of a cross-border transaction : an analysis

By

Oishika Banerji

-

October 4, 2021

0

This article has been written by Baneet Kaur Kohli pursuing the Diploma in M&A, Institutional Finance and Investment Laws (PE and VC transactions) from LawSikho. This article has been edited by Ruchika Mohapatra (Associate, Lawsikho) and Dipshi Swara (Senior Associate, Lawsikho).

Table of Contents

Introduction

The structuring of a transaction can be influenced by numerous factors. Let us discuss the structuring of any international transaction solely through the viewpoint of taxation. While structuring any international transaction, we must keep the following in mind:

The taxation laws, business laws & the current practices and domestic laws currently prevailing in the foreign lands.
The public & private laws as they would highly be influential while interpreting the international agreements.
Understanding the homeland tax regime of all the countries involved in the ongoing transactions.

On one hand homeland tax is considered an obligation, on the other foreign tax is considered a cost. Therefore, it becomes imperative to structure cross-border transactions in a manner which is tax efficient. This article will discuss structuring the transaction by highlighting the tax implications and concerns arising during a cross-border M&A, and the way how Income Tax Act, 1961 is in accordance with the company laws in place to promote cross-border M&As in India.

Key areas to think about while structuring a cross-border merger

• Withholding tax minimization

• Reduction of any potential capital gains tax

• Effective use of holding companies

• Access to double tax treaty agreements

• Anti-avoidance measures

India was ranked 12th in foreign direct investment (FDI) inflows in 2018 – with a 20% growth in FDI inflows. Amounting to $42 billion in 2018 and $51 billion in 2019. In 2020 when global FDI had fallen by 42% due to the pandemic crisis, India managed to grow FDI inflows by 13%.

The principal laws that govern cross-border mergers and acquisitions are:

The Companies Act, 2013
SEBI (Security and Exchange Board of India) Substantial Acquisition of Shares & Takeovers Regulations 2011 and the Amendment Act, 2017
Competition Act, 2002
Insolvency and Bankruptcy Code, 2016
Income Tax Act, 1961
Department for Promotion of Industry and Internal Trade (DPIIT).
Transfer of Property Act, 1882
Indian Stamp Act, 1899
Foreign Exchange Management Act, 1999 (FEMA)
Other allied laws as could also be applicable to support the merger structure

Impacts of Indian taxation in cross-border transaction

While inbound mergers in India were always permitted under the Companies Act, 1956, it was the new Companies Act, 2013, that outlined the entry path for outbound mergers as well. Section 234 of the Companies Act, 2013 deals with the provisions for the cross-border mergers between Indian and foreign companies. Further, Companies (Compromises, Arrangements, and Amalgamation) Rules, 2016, as amended by the Companies (Compromises, Arrangements, and Amalgamation) Amendment Rules, 2017 therefore allows a foreign company to merge with a corporation registered under the Companies Act, 2013 & vice-versa. Only with the prior approval of the Reserve Bank of India (RBI). The RBI issued draft regulations concerning cross-border mergers for comments from the public on April 26^th, 2017 then issued the Foreign Exchange Management (Cross-Border Merger) Regulations, 2018 on March 20^th, 2018 [FEMA 389/2018-RB].

Under the SEBI Takeover Code, if the acquisition of shares of a listed company exceeds 25 per cent by an acquirer, that would trigger the open offer threshold for the public shareholders. Prior approval of the appropriate stock exchanges and SEBI is required for all cases of mergers or demergers involving a listed company before approaching the National Company Law Tribunal.

Concerning the competition regulations, the prior approval of the Competition Commission of India (CCI) is required for all acquisitions exceeding the permissible financial thresholds, which are not within a common group. CCI evaluates an acquisition as to whether the said acquisition would lead to a dominant market position or not, mainly to avoid unfair and anti-competitive practices within the concerned sector.

Under stamp duty regulations, there is a provision for stamp duty on any issue or transfer of shares at a nominal rate of 0.25 %. However, no stamp duty will be leviable in case of any transfer or issue in a dematerialized form. Further, the conveyance of business under a valid business transfer agreement in case of a slump sale is subject to stamp duty at the same rate levied on the conveyance of assets.

Tax implications in cross-border transactions

Tax is a significant business cost to be considered while making any important business decisions. The new Direct Tax Code, which will replace the current Income Tax Act, 1961, seeks to stress transparency and taxpayer friendliness. Under the Income Tax Act, 1961, capital gains tax would be levied on such transactions as when capital assets are transferred.

Though certain mergers enjoy tax-neutrality under Indian tax law, the provisions for mergers and acquisitions are extremely complicated, and the tax system is certainly not neutral. In an inbound merger, a foreign company merges with an Indian company therefore amalgamated entity is an Indian company. Amalgamation enjoys tax-neutrality, and both the amalgamating company and the shareholders of the amalgamating company are exempted from tax. The amalgamated company should be an Indian company, and the amalgamation should be under Section 2(1B). In an amalgamation – all the properties, assets and liabilities of the merging/transferor companies immediately before the amalgamation should become the properties, assets and liabilities of the amalgamated company, and further, 75% shareholders of the amalgamating companies shall remain the shareholders of the amalgamated company. Further, to achieve the aim of tax-neutrality for the amalgamating company shareholders, the entire consideration transferred should be in the form of shares in the amalgamated company.

Similarly, an outbound merger is one where an Indian company decides to merge with a foreign company, and where the amalgamated entity is a foreign company. The transfer of capital assets through amalgamation by the amalgamating company to the amalgamated company will lead to the imposition of capital gains tax under the IT Act, and if the amalgamated company is an Indian Company, it will be exempted from tax implications.

However, this exemption is not available in the case where the amalgamated company is a foreign company, thus arising a tax liability in the hands of the profit generating transferee foreign company. Therefore, the notification of “cross-border mergers under the 2013 Act,” and the introduction of Cross-Border Regulations, 2018, necessitate adequate corresponding changes in the Income Tax Act to establish a favorable legal environment for the promotion of cross-border mergers and acquisitions in India.

Key tax provisions in India and the grounds concerning cross-border M&As

Tax Provisions under Income Tax Act, 1961	Merits/Demerits & Impact on Cross-Border M&As	How it may attract more such transactions
*Tax Neutral Merger,S. 2(1B)***	Foreign investors and companies will hugely benefit from tax neutrality, and they will derive a better return on investment due to the tax exemptions provided	Similar tax neutrality for Indian investors making foreign investments will go a long way in promoting more cross-border M&As
*Tax Neutral Demerger,* *S. 2(19AA)*	Provides for tax neutrality for all the assets and liabilities acquired by way of the demerger	Easing off the shareholding requirements of 75% and conditions under S. 72A(5) will boost more demergers to and from India
*Slump Sale,* *S. 2(42C)*	The tax incentives, exemptions, and benefits of an existing business can be transferred to the new owner efficiently	Provisions should be harmoniously read with S. 50 B to maximize the tax benefits from a slump sale
*Transfer, S. 47*	No tax exemptions in the case of outbound mergers may deter the proliferation of cross-border M&A growth in India	Both inbound & outbound mergers should be treated at par with respect to tax levy, and similar exemptions should be provided for both
*Carry Forward & Set-off of accumulated losses & depreciation, S. 72A*	It provides for the carry forward and set off of accumulated losses and depreciation in case of qualifying merger/demerger, thus giving more flexibility to investors in making an informed decision regarding M&As	Provisions relaxing the 49% shareholding criteria, and allowance of unabsorbed depreciation, will positively maximize the tax benefits, thus promoting more cross-border M&A activity
*Capital Gains Tax for unqualified M&As, S. 50C, 50CA, and 56(2) (x)*	For all unqualified M&As, capital gains tax will be chargeable, which may deter foreign investors from investing in India, as the norms are still stringent in comparison to other economies	More sectors should be opened up and liberalized so that more transactions can benefit from tax exemptions, which will be an added incentive for investing and hence result in more cross-border M&As in India
*Withholding Tax Obligations, S. 195*	Payment by a resident to any nonresident, or any passive income in the form of interest, royalties, dividends, etc., is chargeable as withholding tax, which could act as a deterrent to cross-border M&A activity	This tax cost can be substantially minimized if read with DTAAs provisions and applying the treaty benefits to the transaction, thus promoting more cross-border M&As

Regulatory updates

Countries sharing land borders with India (China, Bhutan, Pakistan, etc.) cannot invest either directly or indirectly unless approved by the government.
Insurance sector saw a permissible hike in the FDI limit from 49 % to 74 %, subject to prescribed conditions.

Conclusion

Introduction of Section 234 of the Companies Act, 2013 has embarked the journey of the Indian markets in ‘Outbound Mergers’ and acquisitions, which was previously prohibited as per the Companies Act, 1956. This has definitely created cross-border M&As as the most lucrative of all the deals in the coming era. Under the Income Tax Act, 1961 rules, a merger or amalgamation where the resulting entity is an Indian company is exempted from capital gains tax. However, where an Indian company merges with a foreign company, a similar exemption is not available, perhaps because such a deal was not previously allowed. Another potential tax issue for outbound mergers is that operations of the resulting foreign company in India, through a branch or otherwise, could amount to the company having a “permanent establishment” under Indian tax laws and thus attracting 26 per cent corporate tax on account of operations in India. Until the present tax regime that affects cross-border mergers is amended keeping in mind other corporate laws etc., the latest developments in tax structure, will not fully succeed. The recent changes in FDI policy in 2020 and tax reforms therein, including reduction of the corporate tax rate, concessional tax rates for power and infrastructure companies, tax holiday schemes for investors, and the abolition of dividend distribution tax, will go a long way in making India a favorite among foreign investors and create favorable opportunities for more cross-border M&As in India.

References

https://home.kpmg/xx/en/home/insights/2021/03/india-taxation-of-cross-border-mergers-and-acquisitions.html

https://assets.kpmg/content/dam/kpmg/xx/pdf/2018/04/taxation-of-cross-border-m-and-a.pdf

https://www.taxmann.com/research/international-tax/top-story/105010000000020709/cross-border-tax-avoidance-structuring-businesses-and-treaty-abuse-experts-opinion.

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Establishing a presence in gift city – investment advisors and portfolio managers

By

Oishika Banerji

-

October 4, 2021

0

How to draft an effective M&A dispute resolution clause

This article has been written by Shaunak Choudhury pursuing the Diploma in M&A, Institutional Finance and Investment Laws (PE and VC transactions) from LawSikho. This article has been edited by Ruchika Mohapatra (Associate, Lawsikho) and Dipshi Swara (Senior Associate, Lawsikho).

Table of Contents

Introduction

International Financial Services Centres are established through the Special Economic Zones Act of 2005 (Section 18), simply defined as IFSCs that have been approved by the central government. So far there is only one fully established IFSC that exists on Indian soil – Gujarat International Finance Tec-City also known as GIFT City, that has been looking like a success. Units inside IFSCs are treated as persons resident outside India working with foreign currency.

Before the existence of the IFSC Authority through the Act of the same name in 2019, the units within an IFSC would be regulated by the corresponding Indian regulators; Insurance Regulatory Development Authority of India, Reserve Bank of India, Securities Exchange Board of India, and Pension Fund Regulatory and Development Authority. After a notification from the Ministry of Finance (Department of Economic Affairs) dated 26^th September 2020 was issued, the full powers of the IFSCA commenced from 30^th October 2020, giving regulatory powers to the authority.

The three major financial sub-sectors that can be established in IFSCs are insurance, banking, and capital markets entities. These three sub-sectors thus encompass in them; Indian banks authorised to deal in foreign currency, foreign banks, Indian insurer, Indian reinsurer, Indian broker, Foreign insurer, foreign Reinsurer, Stock Exchanges / Commodity Exchanges, Clearing Corporation, Depository, Stock Broker, Alternate Investment Fund, Mutual Fund, Investment Adviser, and Portfolio Manager.

Powers of the IFSCA and other regulatory bodies

Before we can get to the primary aspect of this article there is an issue that needs to be addressed. Although the IFSCA Act, 2019 changes the landscape of regulation for GIFT City and future IFSCs, there are some legal vagaries that have not been fully sorted. The problem pertains to the powers of the IFSCA and other regulatory bodies.

Where the Special Economic Zones, 2005 Act in Section 18(2) gives powers to the “Reserve Bank, the Securities and Exchange Board of India, the Insurance Regulatory and Development Authority and such other concerned authorities”, the IFSCA Act, 2019 takes away those powers through its second schedule (Section 33) which amends various laws to give exclusive powers to the IFSCA to regulate financial institutions, financial products, and financial services within the IFSC zone. For example, the amendment to the SEBI Act restricts the powers of SEBI: “a) shall not extend to an International Financial Services Centre set up under sub-section (1) of section 18 of the Special Economic Zones Act, 2005 (28 of 2005); b) shall be exercisable by the International Financial Services Centres Authority established under sub-section (1) of section 4 of the International Financial Services Centres Authority Act, 2019”. Thusly there is a contradiction between Section 33 of the IFSCA Act, 2019 and Section 18(2) of the Special Economic Zones Act, 2005. Although Section 13 of the IFSCA Act mentions certain exceptions on the powers of the IFSCA and areas that other regulators would continue to control, there isn’t clarity on exactly what the IFSCA can or cannot do, and what other regulators can and cannot do. This will be apparent when discussing the establishment of entities in Gift City because we shall see involvement of SEBI.

The regulations of establishing these companies or limited liability partnerships are very extensive and for a more detailed understanding of the regulatory regime in GIFT City and future IFSCs, it would be prudent to look into specific financial services entities, those being investment advisory companies or firm and portfolio managers.

Investment advisors

Investment advisors as defined by the SEBI (Investment Advisors) Regulations 2013 (Clause 2(m)) “means any person, who for consideration, is engaged in the business of providing investment advice to clients or other persons or group of persons and includes any person who holds out himself as an investment adviser, by whatever name called”. Investment advice “means advice relating to investing in, purchasing, selling or otherwise dealing in securities or investment products, and advice on investment portfolio containing securities or investment products, whether written, oral or through any other means of communication for the benefit of the client and shall include financial planning: Provided that investment advice given through newspaper, magazines, any electronic or broadcasting or telecommunications medium, which is widely available to the public shall not be considered as investment advice for the purpose of these regulations”.

Role of intermediaries in IFSC & related regulations

Chapter III of The Securities Exchange Board of the India (International Financial Services Centres) Guidelines 2015 clarifies the position of intermediaries in IFSCs. The definition of an intermediary as given clause 2(g) specifically includes a stockbroker, merchant banker, banker to an issue, trustee of trust deed, registrars to an issue, share transfer agent, underwriter, investment adviser, portfolio manager, depository participant, custodian of securities, foreign portfolio investor, and a credit rating agency. Thus making investment advisors, “intermediaries’ ‘ in the eyes of SEBI.

The guideline restricts the nature of clients that intermediaries in IFSCs may cater to; person not a resident of India, a non-resident Indian, a financial institution resident in India who is eligible under FEMA to invest funds offshore, and a person resident in India eligible under FEMA to invest funds offshore.

SEBI has subsequently amended the guidelines as per the market norms through discussions and consultations it’s had with stakeholders. It has issued several amendments and clarifications on the guidelines, but this article focuses on the ones relevant to the sub-group of intermediaries in IFSCs. The first of these relevant amendments was issued on 27^th July 2017 and it changed the requirements for setting up an office inside an IFSC. Previously the guidelines suggested that anyone that was interested to set up an intermediary business in the IFSC would have to form a new company to do so (clause 8). The July 2017 amendment then changed that guideline to do two things. First was to allow SEBI registered intermediaries along with their international associates to provide such services without having to form a new company for the IFSC (clause 8(1)); and second, was to differentiate between trading members and clearing members, and other intermediaries (clause 8(2)).

A subsequent circular dated 17^th October 2017 amended clause 8(2). Where the previous iteration said that trading and clearing members “shall” form a company for functioning in IFSCs, the new provision says that they “may” and includes both Indian and Foreign trading and clearing members. A 27^th February 2020 circular amended clause 8(1) to add certain exceptions for the prior permission from SEBI. If the financial service is being rendered to institutional investors, prior permission is not required. If the intermediary is not registered with SEBI but is providing service only to institutional investors, prior approval will not be required in case the intermediary is recognized by a foreign jurisdiction.

A circular dated 21^st August 2020 added clause 8(3) to allow intermediaries, either Indian or of foreign jurisdiction to provide financial services as long as they comply with the regulatory framework for those financial services.

Things to keep in mind while setting up investment advisory entity in IFSC

In order to properly establish investment advisory entities in IFSCs, SEBI issued a circular titled “Operating Guidelines for Investment Advisors in International Financial Services Centre ” dated 9^th January 2020. The operating guideline itself is not too comprehensive as it heavily depends upon (clause 1) the regulations set up by the SEBI (Investment Advisors) Regulations 2013 which is the primary regulation for investment advisors for India. Thus, a certificate of registration is to be applied through submitting Form A (Investment Advisers Regulations) along with a fee of USD 750 for application and USD 7500 for registration (the same for renewal every 5 years). Qualifications and experience that the applicant needs to have are similar to the Investment Advisers Regulation, i.e., any one of the professional qualifications listed along with 5 years of experience in the securities markets. Certification from NISM or a recognised organisation is mandatory for giving advice about Indian securities markets; whereas for advising on foreign securities markets, certification from any corresponding foreign organisation which is recognised by the Financial Market Regulator (such as the SEC in the United States) is acceptable.

The net worth requirement was set as USD 1.5 million for the Investment advisory but the same was brought down by the circular dated 28^th February 2020 to USD 700,000. In the circular dated 28^th September 2020, SEBI clarified that it is not necessary to form a new company or LLP for the investment advisor functioning within the bounds of an IFSC if one already exists.

Thus, if one is to look into the laws pertaining to investment advisors in IFSCs the following would the order of examination would be –

The Securities Exchange Board of the India (International Financial Services Centres) Guidelines 2015.
Circular Dated 27^th July 2017 (SEBI/HO/CIR/P/2017/85) Securities and Exchange Board of India (International Financial Services Centres) Guidelines, 2015 – Amendments.
Circular Dated 17^th October 2017 (SEBI/HO/MRD/DSA/CIR/P/2017/117) Securities and Exchange Board of India (International Financial Services Centres) Guidelines, 2015 – Amendments.
Circular Dated 27^th February 2020 (SEBI/HO/MRD1/DSAP/CIR/P/2020/30) Securities and Exchange Board of India (International Financial Services Centres) Guidelines, 2015 – Amendments.
Circular Dated 21^st August 2020 (SEBI/HO/MRD1/DSAP/CIR/P/2020/155) Securities and Exchange Board of India (International Financial Services Centres) Guidelines, 2015 – Amendments.
SEBI (Investment Advisors) Regulations 2013.
Circular dated 23^rd September 2020 (SEBI/HO/IMD/DF1/CIR/P/2020/182) Guidelines for Investments Advisors.
Circular dated 9^th January 2020 (SEBI/HO/IMD/DF1/CIR/P/2020/04) Operating Guidelines for Investment Advisors in International Financial Services Centre.
Circular dated 28^th February 2020 (SEBI/HO/IMD/DF1/CIR/P/2020/31) Operating Guidelines for Investment Advisers in International Financial Services Centre (IFSC) – Clarifications
Circular dated 28^th September 2020 (SEBI/HO/IMD/DF1/CIR/P/2020/185) Operating Guidelines for Investment Advisers in International Financial Services Centre (IFSC) – Amendments

Portfolio managers

Portfolio managers as per the SEBI IFSC 2015 Guidelines are considered as intermediaries (Clause 2(g)), and have also been recognised as such in the SEBI Act 1991 (Section 11(2)(b)).

As per the 16^th January 2020 SEBI (Portfolio Managers) Regulations 2020, a ““portfolio manager” means a body corporate, which pursuant to a contract with a client, advises or directs or undertakes on behalf of the client (whether as a discretionary portfolio manager or otherwise) the management or administration of a portfolio of securities or goods or funds of the client, as the case may be: Provided that the Portfolio Manager may deal in goods received in delivery against physical settlement of commodity derivatives”

The 2015 Guideline in fact has certain specific provisions for portfolio managers in Clause 9(4). It allows portfolio managers to invest only in certain kinds of securities; those listed in the IFSC, those issued by companies incorporated in the IFSC, and those issued by companies belonging to foreign jurisdiction. A circular from SEBI dated 23^rd May 2017 in fact amends the initial Clause 9(4) in order to add a crucial category that perhaps should have been added in the first place – companies incorporated in India (outside IFSC). This amendment is applicable on portfolio managers along with the amendments to the 2015 Guidelines mentioned previously in the section pertaining to investment advisors.

Key operating guidelines for Portfolio managers

There are Operating Guidelines created for Portfolio Managers functioning in IFSCs. And similar to the operating guidelines for investment advisors in IFSCs, these operating guidelines must put the onus on the SEBI (Portfolio Managers) Regulations 2020 for the establishment of portfolio managers (clause 1(a)).

The Operating Guidelines suggest that registration would have to be done as per Chapter II of the SEBI Portfolio Managers Regulations 2020 along with an application fee of USD 1500 and registration fee of USD 15000 with USD 7500 for a renewal every three years. The renewal amount was increased to USD 10000 by the IFSCA through a circular dated 15^th April 2021.

The minimum net worth for setting up a portfolio management firm or company in an IFSC has been set at USD 750,000. If the PM is a branch of a parent entity then the requirement would have to be met by the parent company, and if the PM is a subsidiary it would have to be met by the PM subsidiary itself, if not then the parent entity’s net worth will be looked into. A PM entity in an IFSC shall only take clients as per Clause 9(3) of the 2015 Guidelines, over and above that the minimum value of funds or securities needs to be USD 70,000 from the clients. The funds of the clients shall be kept in separate accounts in IFSC Banking Units as prescribed by the RBI.

Thus, if someone wished to look into establishing and operating a portfolio management entity in Gift City or any other future IFSC created in India, they would have to go through the following regulations;

The Securities Exchange Board of the India (International Financial Services Centres) Guidelines 2015.
Circular Dated 23^rd May 2017 (SEBI/HO/MRD/ DSA/CIR/P/2017/45) Securities and Exchange Board of India (International Financial Services Centres) Guidelines, 2015 – Amendments.
Circular Dated 27^th July 2017 (SEBI/HO/CIR/P/2017/85) Securities and Exchange Board of India (International Financial Services Centres) Guidelines, 2015 – Amendments.
Circular Dated 17^th October 2017 (SEBI/HO/MRD/DSA/CIR/P/2017/117) Securities and Exchange Board of India (International Financial Services Centres) Guidelines, 2015 – Amendments.
Circular Dated 27^th February 2020 (SEBI/HO/MRD1/DSAP/CIR/P/2020/30) Securities and Exchange Board of India (International Financial Services Centres) Guidelines, 2015 – Amendments.
Circular Dated 21^st August 2020 (SEBI/HO/MRD1/DSAP/CIR/P/2020/155) Securities and Exchange Board of India (International Financial Services Centres) Guidelines, 2015 – Amendments.
SEBI (Portfolio Managers) Regulations 2020 (along with amendments dated 16^th March 2021 and 26^th August 2021).
Circular dated 9^th September 2020 (SEBI/HO/IMD/DF1/CIR/P/2020/169) Operating Guidelines for Portfolio Managers in International Financial Services Centre (IFSC).
Circular dated 15^th April 2021 (F. No. 294/IFSC/Fee Structure for IAs and PMS/2021-22) Fee structure for Investment Advisers and Portfolio Managers in IFSC.

Conclusion

The guidelines for both IAs and PMs in IFSCs are rather exhaustive and are arranged in a convoluted manner. Even though the IFSCA is in charge of these units, registration, investigation, and penalties are the responsibility of SEBI. The amendments to the regulator acts in the IFSCA Act are rather broad and do not accurately represent the current status of control in Gift City. With a total of five regulators and two on each unit depending on their business, it is bound to create issues not only for the business but also between the regulators. Clarity on this matter would greatly benefit Gift City. Either the IFSCA takes charge of all the responsibilities over the businesses in Gift City, or its role is relegated to a cosmetic one.

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Laws on cow slaughter – discrimination in animal protection and religious bias

By

Sneha Mahawar

-

October 4, 2021

0

animal-potection-laws-in-india — Image Source: https://rb.gy/wdgi9x

This article is written by Anurag Singh from ILS Law College, Pune. This is a comprehensive article that critically analyses the laws on cow slaughter

Table of Contents

Introduction

Politics, policies, and criticism have been an integral part of the Indian democratic system. With every changing government, no matter how good or bad they were, there are some laws, policies, or decisions that stay in the limelight due to their controversial nature. One such topic has been the laws formulated for the ban of cattle slaughter in 2017 under The Prevention of Cruelty to Animals (Regulation of Livestock Markets) Rules 2017. It will not be out of place to state here that mere banning of the cattle slaughter was not a topic of discussion; there was an angle of religious bias and the economy being affected by it. Therefore, let’s understand the topic in-depth.

Proposed laws against cow slaughter

The framers of the Indian Constitution initially wanted the preservation of cows to be made a fundamental right but after a lot of discussions and brainstorming, the matter of cow slaughtering was put into Article 48 of the Constitution as a directive principle of state policy. This Article says that states should make conscious efforts towards banning the slaughtering of cows and calves and draught cattle.

In the case of Mohd. Hanif Qureshi & Ors. v. State of Bihar (1958), the Supreme Court upheld a total prohibition of slaughter of the cows of all ages and calf of buffaloes (male and female) & she-buffaloes, breeding bulls, and working bullocks, without prescribing any test of requirement as to their age. However, the Supreme Court overturned this decision in the case of State Of Gujarat v. Mirzapur Moti Kureshi Kassab (2005), and the seven judges bench reached the following conclusions:

That a total ban on the slaughter of cows of all ages and calves of cows and calves of she-buffaloes, male and female, is quite reasonable and valid and is in consonance with the directive principles laid down in Article 48.
That a total ban on the slaughter of she-buffaloes, or breeding bulls or working bullocks (cattle as well as buffaloes) as long as they are as mulch or draught cattle is also reasonable and valid.
That a total ban on the slaughter of she-buffaloes, bulls, and bullocks (cattle or buffalo) after they cease to be capable of yielding milk or of breeding or working as draught animals cannot be supported as reasonable in the interest of the general public.

24 out of the 28 states have implemented laws regulating the slaughtering of cattle in their states. However, the 8 states that have not implemented any restriction on the slaughter of cows cannot profit from the same because according to the existing meat export policy in India, the export of beef (except carabeef) has been prohibited.

Moreover, specific legislation has also been enacted with regards to the slaughter of cows under the Prevention of Cruelty to Animal Act, 1960; a new set of rules were formulated under the direction of the Supreme Court in the case of Gauri Maulekhi v. Union of India called the Prevention of Cruelty to Animals (Regulation of Livestock Markets) Rules 2017. Under the ambit of these rules, the Ministry of Environment, Forest and Climate Change banned the sale of all kinds of cattle for slaughter at animal markets nationwide. However, the notification expanded the scope of cattle. Therefore, it now covers bulls, bullocks, cows, buffaloes, steers, heifers, and calves, as well as the camel trade.

The difficulty associated with cow slaughter

Like every other living being, the cows also have a life cycle. Being born and getting old is an inevitable part of a living being. Importantly, when the cow gets old, it is not as productive as before. Therefore, the owner of the cow has to sell it to the slaughterhouse because no other agriculturist would, in their right mind, buy a cow that is of no use to them.

However, the old cows are not completely useless to the farmers, because they sold the old cows to get the money to buy another healthy one and this cycle goes on and on. As far as the sale of cows is concerned, nowhere in the law, it states that the sale of cows is banned, they can be sold, however, not to a slaughterhouse. Furthermore, the purchaser cannot sacrifice the cattle, after the purchase, for religious belief as is still a practice in some rural areas.

Laws related to animal protection in India

Animal protection is a huge issue, not only in India but all around the globe because most or at least some products that we use in our daily life, either directly or indirectly, come from an animal. From the milk we drink to the leather jacket that we wear, all these things are by-products of animals. However, when it comes to respecting them, many people lack such an aspect.

Therefore, the government has formulated various animal protection measures to widen its scope. Moreover, when the Constitution was amended in 1960, a new article was added in the Indian Constitution i.e. Article 48A, which is a Directive Principle of State Policy (DPSP). Therefore, it is the duty of every citizen under this directive principle to protect nature, its resources, and its living being. Moreover, it is a fundamental duty of every citizen under Article 51A (g) of the Constitution, to protect wildlife and have compassion for all living creatures.

There is also a legal provision prescribed under the Indian Penal Code, 1860. Any person killing, maiming, poisoning, or rendering useless any animal or animals shall be punished under Section 428 and 429 of the Code. Moreover, the Central Government has also taken active steps by formulating laws for animal protection, which are:

Prevention of Cruelty to Animals Act, 1960
The Wildlife Protection Act, 1972

These two Acts by the Centre ensure the protection of cattle, wild animals, aquatic animals, birds, and animals. However, there is always a tussle between the state and central laws because, on one hand, item 14 of the State List gives power to the states to formulate laws concerning the preservation and protection of stocks to ensure the health and well being of the animals but on the other hand, item 17 and 17B of the concurrent list gives powers to both state and center to formulate laws for ensuring the protection wild animals and bird and also prevent cruelty against animals.

Laws that allow animal slaughter for commercial purposes

However, with all this talk around the slaughter of cattle, it should not be forgotten that India still consumes meat. In fact, poultry meat is the fastest-growing component of global meat demand, and India is rapidly growing in the poultry sector. Moreover, this industry has been growing 8 to 10% every year exponentially as a result of which, India is amongst the 18 largest producers of broilers.

The Prevention of Cruelty to Animals (Slaughter House) Rules, 2001 lays down the condition for the sale and purchase of broilers in India. Collaterally, it also ensures the good health of broiler chickens before the sale and humane conditions before their sale. Even though they are used for consumption, they should not be treated as a commodity but should be given due respect.

Need for a non-discriminatory animal protection law

Therefore, the disparity between laws is undeniable. On one hand, the State takes active steps to ban the slaughterhouse for cattle but also continues to allow the export of broiler chicken. Either of them is not wrong but the State should take one stand whether to allow the slaughter of meat consumption or not and then implement the same for all the animals.

In addition to the aforementioned point, it knowingly or unknowingly suggests that the one living being is more important than another, what this does is bows a seed in the minds of the citizen that the government is practicing Hinduism in the country in broad daylight, though the same might not be intended. This should not be the case in a secular country. Therefore, it is evident that non-discriminatory animal protection laws are essential for India.

Religion and law – does one drive the other

The anti-slaughter laws of cows are a sensitive topic because it has a religious side to it as well. As we all know, India is a secular country, and people from various ethnic groups and religions reside in India. Therefore, the lawmakers in the country, along with the welfare of the country, have to keep in mind that none of the religious sentiments are harmed. This was the sole reason behind the formation of different personal laws for different religions.

Every religion has its own set of beliefs. However, the government has often been criticized for the formation of laws that favour any religion, anti-cow slaughter laws can be considered one such law. Due to the sacred nature of cows for Hinduism, Sikhism, Jainism, Buddhism, and Zoroastrianism. However, they are considered an accepted form of meat for Muslims and Christians.

Therefore, prohibiting the use has pleased one set of people but has also created a void for the other community. ‘Void’ not just in the context of the consumption of beef as a source of food but it has also created a void for the community that depended on the exports of beef as a source of income. Interestingly, India exports beef worth $4 billion annually, and that the ban is already causing concern over a potential rise in global beef prices due to reduced supply.

Communal violence after the ban

Moreover, an increase in India’s cow vigilantism has been observed in recent times. According to a report by Human rights watch (HRW), between May 2015 and December 2018, at least 44 people (including 36 Muslims) were killed across 12 Indian states. Over that same period, around 280 people were injured in over 100 different incidents across 20 states. The report also suggests that the majority of the victims in these attacks were either Dalits or Muslims, a majority of these slaughterhouses and meat shops were mostly run by Muslims and Dalits who traditionally dispose of cattle carcasses and skin them for commercial purposes such as leather and leather goods.

The Supreme Court in the case of Tehseen S. Poonawalla vs Union Of India (2018) issued a series of directives for “preventive, remedial and punitive” measures to address “lynching”, the term used in India for killing by a mob, however, in this case for cow vigilantism. While cow protection is an emotional issue for many Hindus, taking the matters into their own hands was not acceptable behavior. Therefore, the Supreme Court directed volunteers of cow protection to not resort to violence against any person or group. Moreover, it also denounced violent attacks by cow protectors, saying: “It is imperative for them to remember that they are subservient to the law and cannot be guided by notions or emotions or sentiments or, for that matter, faith.”

The beef ban in India has not only economically affected India but has also created a rift between the people who consume beef and the people who do not. Earlier the group of people who consumed beef and the people who did not coexisted, as their worlds never clashed with each other. However, even though it was formulated for the protection of cattle, this ban has been perceived to be favoring one religion.

Conclusion

It has been held in Hinsa Virodhak Sangh vs Mirzapur Moti Kuresh Jamat (2008) and in Re-Ramlila Maidan Incident Dt vs Home Secretary And Ors (2012) that what one eats is one’s personal affair and forms part of the right to privacy under Article 21. However, it should also be kept in mind that cruelty towards the animals before consumption is also not acceptable as well. Therefore, it’s the job of the government to bridge the gap and also formulate uniform anti-discriminatory laws for animal protection so that the country is not divided based on what meat they consume.

References

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An overview of the conditions of the Uyghur minority in China

By

Sneha Mahawar

-

October 4, 2021

0

This article is written by Varchaswa Dubey, from JECRC University, Jaipur. This article reflects the contemporary conditions of the Uyghur Muslims in China.

Table of Contents

Introduction

The government of China is often associated with the suppression of human rights and the legal rights of its citizens. In the past, China has often been concerned with its sovereignty. Despite having the legal provisions and signing international documents concerning the human rights of its people, the People’s Republic of China is practicing genocide against Uyghurs, who are the group of minority Muslims in the Xinjiang region of China which leads to the violation of human rights of the minority group in its country.

The reason for the increasing number of cases of genocide in China is that the Chinese government thinks Uyghurs are a group of Islamic extremists and that Uyghurs shall be re-educated to eradicate terrorism in the country and to safeguard its citizens, the sovereignty, and integrity of the country.

Despite having legal provisions and being a signatory member of numerous international documents, the Chinese government is still associated with the suppression of human rights of activists and lawyers. Those who raise their voices against the actions of the government are often subject to sexual and mental harassment, intimidation, sudden disappearance, arbitrary arrests, and illegal confinements.

The violation of human rights is a major concern in the territorial jurisdiction of China and despite having inalienable human rights international conventions, the world is witnessing an assault on the human rights of Uyghurs in China. There is an urgent need to safeguard the rights of the concerned minority Muslims in China.

Origin of the Uyghur minority

The Uyghurs are the Turkic group and one of the oldest speakers of the Altaic language and belong to Central Asia. The traces of Uyghurs can be found in the records from 3rd century CE but they transformed into prominence in the 8th century, when they formed a kingdom but they were eventually defeated by the expansion of the Mongolians in the 13th century.

The Uyghurs later migrated to the Celestial mountains (China) where they undertook other works and their community expanded. Their main region was called East Turkestan which was included in Chinese territory during the mid 18th century.

From 1759-1911, the Qing dynasty ruled the Chinese region and was named ‘Xinjiang’ where Turkic-speaking Muslims were being ruled until 1911. After this, the Qing dynasty collapsed and the Republic of China was formed, which was later proclaimed by the Chinese Communist Party in the year 1949. In 1955, the Xinjiang Uyghur Autonomous Region was created where the demand for a Uyghurs independent nation originated.

What is happening to Uyghurs in China

The Uyghurs are the most vulnerable group, present in the territorial jurisdiction of China, who are not only victims of illegal detention but also of genocide. The Uyghurs are being placed in detention camps to suppress the population of Uyghur Muslims in China.

Decreasing the population of Uyghur Muslims

The Chinese government is associated with decreasing its population by targeting the Uyghurs group and to pursue this, it has been practicing illegal detention, forced sterilization, forced abortion, compulsory family planning, etc.

According to the China Statistical Yearbook 2020, the birth rate in Xinjiang in the year 2020 is merely 8.14 births per 1000 people. The 2017 stats reflected 15.88 births per 1,000 which are considered the largest drop in the birth rate in the history of China.

Forced sterilization on Uyghur women

Female sterilization is the permanent process of preventing pregnancy of a woman. It works by the operation when the fallopian tubes of a woman are blocked. According to a report, the Chinese government is eliminating the population of Uyghur Muslims by exercising forced sterilization, inserting the intrauterine device, and conducting abortions. The population of Xinjiang is reported to have decreased drastically from 2017 to the present by 84%. The reason for such a decrease in the population of Uyghurs is due to the extrajudicial punishment that the Chinese officials impose on those who are found guilty of violating birth control norms.

The Rome Statute of the International Criminal Court (ICC) in its Article 7 has explicitly declared forced sterilization as a “crime against humanity”, yet, the Chinese government is still associated with such practices and violating international law.

Illegal detention of Uyghur Muslims

According to the United Nations, China has placed at least 1 million Uyghur Muslims in secret camps under the pretext of “re-education camps”. The location of most of the camps is still kept a secret. Most of these ‘re-education camps’ are surrounded by wire fences and consist of watchtowers.

According to another report, more than 2 million Muslims have been detained in these camps since 2017 and most of these people are not charged with crimes and their families lack knowledge of their whereabouts. China initially denied the existence of such detention camps, however, later on, 85 of such ‘educational camps’ were discovered.

Some detained Muslims said they were detained, beaten and interrogated, and not educated. Some of the victims have reported being subjected to torture or cruel, inhumane, degrading treatment, forced labour, including sexual abuse by the officials present in such camps.

Suppression of the religious rights of Uyghur Muslims

The Chinese government has a long history of suppressing religious practices of all religions, however, the suppression of religious practice of Uyghur Muslims is practiced with more intense actions.

According to a report the Chinese government has initiated a campaign of religious repression against China’s Muslim Uyghurs, in the name of anti-separatism and counter-terrorism. Uyghurs in China are not only victims of harassment at workplaces due to their religious background but are also subjected to arbitrary arrest, torture, and execution of religious prisoners. The Chinese government does not even allow religious appearances and long beards on school premises. Even the Uyghur schools are not allowed to talk about their religion in school or at home, as such teachings are considered illegal in China.

Forced labour of Uyghur Muslims

The Communist Party of China has not only arbitrarily detained more than 1 million people in special camps under the disguise of “re-education camps” but also pushes these illegally detained individuals into forced and rigorous labour.

According to a report, numerous Chinese companies are directly and indirectly earning profits from the Uyghur labourers. It is estimated that around 80,000 Uyghurs are being deported out of Xinjiang and are employed in industries of textiles, electronics, etc. Around 27 of these companies, in nine Chinese provinces, have been using Uyghur Muslims since 2017.

Genocide of Uyghur Muslims

According to Article 6 of the Rome Statute, genocide refers to:

Killing members of the group;
Causing serious bodily or mental harm to members of the group;
Deliberately inflicting on the group conditions of life calculated to bring about its physical destruction in whole or in part;
Imposing measures intended to prevent births within the group;
Forcibly transferring children of the group to another group.

Since the Chinese government is engaged in targeting the Uyghur Muslims in their country, the Chinese government can be easily tagged as a country that practices genocide, by going against the well-developed international legal jurisprudence.

Why are Uyghur Muslims being targeted in China

The Chinese government claims that Uyghurs are extremists and are a threat to the security of the nation. The objective behind imposing such measures is to eliminate terrorism and Islamic extremism from the country, and this can be achieved by re-educating the minority.

The dispute arose in the year 1997 in Ghulja city when a peaceful protest against the suppression of religious practice took a violent face within minutes, leading to the illegal and arbitrary detention of a large number of Uyghur Muslims, torture in detention, and execution.

Over the years, the tension between the Chinese officials and the Uyghurs has increased over many disputes, most of which are concerned with the elimination of the suppression of religious and human rights of the Uyghur Muslims.

Later in 2013 and 2014, the Chinese government witnessed attacks by the Uyghur Muslims. While the 2013 attack claimed the lives of 5 people and injured dozens of others, the 2014 attack resulted in the death of 29 people and 100 others being wounded.

Since 2017, the Chinese government has built around 400 internment camps in the Xinjiang region to educate the Uyghur Muslims.

What human rights are being violated

The Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW) in its Article 1 reserves the term discrimination and states that no women shall be subjected to any discrimination based on sex, and be treated equally for human rights, political, economic, social, cultural, civil or any other area. The convention also bestows other laws like policy regarding women, special measures, the guarantee of basic human rights and fundamental rights, right against prostitution, nationality, education, employment, health, etc. China has violated the rights of women by not only withdrawing the necessities of life of the Uyghur Muslim women but also by conducting a forceful abortion, sterilization, etc.

Universal Declaration of Human Rights is the primary advocate of human rights. According to Article 1 of UDHR, all human beings are born free and equal in dignity and rights. They are endowed with reason and conscience and should act towards one another in a spirit of brotherhood. The Convention also places human rights like right against discrimination, right to life and personal liberty, right against slavery, right against torture, cruel and degrading punishment, right against arbitrary arrest and detention, right to freedom of movement, etc and China has been violating all these rights of the Uyghur Muslims for years now.

International Covenant on Economic, Social and Cultural Rights, bestows the right to self-determination, including political-economic, social, and cultural development, right to work, right to proper working conditions including the right to remuneration and equal wages, and the Chinese government has been violating these rights of the Uyghur Muslims in the country by exercising forced labour and no pay for the work of the minority.

How China is violating the international Convention to which it is a party

The People’s Republic of China has not only violated the human rights of the Uyghur Muslims in its territorial jurisdiction but also has been violating its own signed convention, i.e. International Covenant on Civil and Political Rights, (ICCPR) signed by the Chinese government on 5 October 1998.

The ICCPR is one of the most significant documents concerning human rights, however, the Chinese government is still abusing the Uyghur Muslims. The ICCPR places a responsibility on the state to ensure no discrimination of any kind including race, colour, sex, language, religion, political or other opinions, national or social origin, property, birth, or another status.

The ICCPR also places a right to life on the citizens of member states, to the contrary of which, China has been associated with genocide and crimes against humanity, including racial and ethnic cleansing. The Convention also places a right against torture or cruel, inhumane or degrading treatment and any arbitrary punishment, yet numerous crimes are witnessed by the Uyghur Muslims routinely.

Conclusion

The condition of Uyghur Muslims in China is not only very concerning but also disturbing in nature. The Chinese government has been associated with the violation of the rights of the minority in the country on the pretext of eliminating terrorism and religious extremism, however, to pursue this, the government has always practiced violence against Muslims, including Muslim women and children.

The Chinese government lacks proper workings on how to tackle terrorism and the Acknowledgment of the international laws which govern the nations in contemporary times. It is vital to protect the rights of the Uyghur Muslims in the territory of China, and this can only be achieved by the Chinese government changing its approach towards minorities in the country and allow them to be entitled to their fundamental rights.

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.

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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An overview of the Andhra Pradesh Assigned Lands (Prohibition of Transfers) Act, 1977

By

Sneha Mahawar

-

October 4, 2021

0

Andhra Pradesh Assigned Lands (Prohibition of Transfers) Act, 1977 — Image Source: https://rb.gy/lrrpbk

This article is written by Srishti Sinha, a student at the Institute of Law, Nirma University. This article deals with an overview of the Andhra Pradesh Assigned Lands (Prohibition of Transfers) Act, 1977.

Table of Contents

Introduction

It has been discovered throughout the years that many of the lands given to the impoverished people are not in their ownership. The Andhra Pradesh Assigned Lands (Prohibition of Transfers) Act, 1977 was enacted by the state government to stop this tendency. This Act is a protective statute designed to safeguard and assist those who are truly landless and destitute. This Act makes it illegal to sell lands allotted to the poor for agriculture or habitation to anybody else. Under any conditions and any other applicable legislation, the transfer of allocated lands is prohibited. Any document signed only for the transfer is void and unlawful. Even a civil court cannot issue a decree relating to such allocated lands transactions.

Andhra Pradesh Assigned Lands (Prohibition of Transfers) Act, 1977: an overview

Legislative history

The government had been allocating government lands to landless impoverished people who had no other source of income. In Andhra Pradesh, such land assignments are controlled by Board Standing Orders, but in Telangana, they are governed by the Andhra Pradesh (Telangana Area) Land Revenue Act 1317 Fasli. Nonetheless, the regulations regulating such property assignments and the terms of the government land grant remain the same. The Pattas (a type of land deed issued by the government to an individual or organization), given there usually included a provision stating that the lands assigned were heritable but not alienable, as well as several additional stipulations. Every assignment includes a provision stating that the land will be returned if the grant’s conditions are not met, in the hopes that such limitations will prevent the impoverished landless people from losing the land allocated to them. However, previous experience has demonstrated that large swaths of land allotted to landless impoverished people have been alienated and are now in the hands of well-off people. The grant’s terms were deemed to be inefficient and inadequate for achieving the government’s social goals.

There are no provisions in the current rules for punishing those who acquire such lands. Efforts to give vast swaths of land to landless impoverished people have gone to waste. As a result, to more effectively implement the aim, the Andhra Pradesh Assigned Lands (Prohibition of Transfers) Act 1977 was created as protective legislation to prevent the alienation of assigned lands to landless poor individuals and to provide for the penalty of buyers of such lands.

Important points related to the Act

In the sense that it provides for the resumption, restoration, and distribution of the Assigned Lands, the Andhra Pradesh Assigned Lands (Prohibition of Transfers) Act 1977 is a self-contained code. Except for Section 2 of the Act, which took effect on January 21, 1977, the remaining sections took effect on January 29, 2007. However, Section 3 (1) of the Act not only prohibits the transfer of assigned lands on or after the Act’s commencement but also declares that all transfers of Assigned Lands that occurred before the Act’s commencement are null and void and that no right or title in such Assigned Land shall vest in any person acquiring the land through such transfer.

Further, Section 3(3) of the Act says that any transfer or acquisition of government lands or surplus lands allocated to landless poor individuals for cultivation or as a house site under the condition of non-alienation made by purchase, gift, lease, mortgage, exchange, or otherwise will be declared null and invalid under this Act.

Conditions under which the Act will not apply

If the requirements stipulated in Section 3(5) are met, the Act is not applicable. Section 3(5) says that:

The buyer must be a destitute landless individual.
The acquisition must be made in good faith and at a fair price.
Before the effective date of this Act, the acquisition must be made from the original assignee or transferee.
On the date of such beginning, the land thus bought is in possession for cultivation or as a house site.

Consequences of breach of provisions mentioned under Section 3 of the Act

While Section 3 of the Act sets some restrictions on the transfer of allocated lands, Section 4 of the Act outlines the repercussions of violating Section 3. Only Section 4 comes into play if Section 3 is violated, i.e. alienation of the allocated land.

Under Section 4(1), the District Collector or any other officer, not below the rank of a Mandal Revenue Officer can take possession of the assigned lands after evicting the person in possession and reassign the said resumed land other than those lands or areas as may be notified by the government from time to time in the public interest and restore the assigned land to the original assignee or his legal heir, or if it is not practically possible to do so, resume the assigned property to the government for the assignment of landless poor people in line with the laws in effect at the time.
Provided, however, that the assigned land may not be restored to the original assignee or his legal heir more than once, and that if the original assignee or his legal heir transfers the assigned land after such restoration, it shall be returned to the Government for assignment to another landless poor person.
Provided, further, if no qualified landless poor people in the village or area are available, the reclaimed land will be used for public purposes.
Under Section 4(2), any order passed in revision under Section 4-B, and subject to such order, the decision in appeal under Section 4-A, and subject to the said orders in revision and appeal, any order passed under sub-section (1), shall be final and shall not be questioned in any Court of law, and no injunction shall be
Granted by any Court in respect of any proceeding taken or about to be taken by any officer or authorized person.

Appeals and Revisions [Section 4A and Section 4B, respectively] – Section 4 A (1) allows the Mandal Revenue Officer’s orders [passed under Section 4(1)] to be appealed to the Revenue Divisional Officer within 90 days of receipt of the order. The Revenue Divisional Officer’s order can be appealed to the District Collector under Section 4 A (2).
Under Section 4 B (1), there is also a provision for Revision to the District Collector or the Government. Further, this section states that the District Collector or the Government may also delay the judgment or order’s implementation awaiting the exercise of their powers under sub-section (1).

Prohibition of registration of assigned lands

Under Section 5, no registering officer shall accept for registration any document relating to the transfer of, or the creation of any interest in, any assigned land included in a list of assigned lands in the district prepared by the District Collector and furnished to the registering officer on or after the commencement of this Act, notwithstanding anything in the Registration Act, 1908.

Exemption clause (Section 6)

According to Section 6, nothing in this Act applies to assigned lands held on the mortgage by the State or Central Governments, any local authority, a co-operative society, a scheduled bank, or any other financial institution-owned, controlled, or managed by a State Government or the Central Government, as the Government may notify in this regard.

Penal provisions (Section 7)

The punishment for violating the Act’s requirements is outlined in Section 7 of the Act as follows:

Whoever obtains any allotted land in violation of Section 3 sub-section (2) is punishable by imprisonment for up to six months or a fine of up to two thousand rupees, or both.
Whoever resists or obstructs the District Collector or any other person authorized by him in taking possession of any allocated land under this Act is punishable by imprisonment for up to six months or a fine of up to five thousand rupees, or both. Furthermore, Section 2(A) talks about the imprisonment of the officers and says that any officer who violates the requirements of Section 5 sub-sections (1) and (2) will be penalized with either simple imprisonment for up to six months or a fine of up to ten thousand rupees, or both.
A court may not take cognizance of an offense punished under this section unless the District Collector has given his prior approval.

Protections available

Section 8 of the Act, mentions the circumstances under which no suit can be filed against the person. The following are the circumstances:

No litigation, prosecution, or other legal action shall be brought against any person, official, or authority for anything done or intended to be done in good faith following the Act or any rules promulgated thereunder.
There shall be no suit or other legal action brought against the Government for any damage caused or likely to be caused, or for any injury suffered or likely to be suffered, as a result of any provision of this Act, or for anything done or intended to be done in good faith in pursuance of this Act or any rules made thereunder.

Ineffective implementation of the Act

The Andhra Pradesh Assigned Lands (Prohibition of Transfers) Act, 1977 came into effect to safeguard and protect those people who are truly landless but there are some loopholes in this act due to ineffective implementation of the act.

This Act bans the transfer of lands allotted to landless impoverished people (through alienation or sale to a third party). The territories that have been given to landless people are inheritable, but not alienable. If the District Collector or any other officer authorized by him violates this provision, the District Collector or any other officer authorized by him may seize the assigned land, evict the person in possession after giving him a reasonable opportunity to leave, and return the land to the original assignee or his legal heir. If rehabilitation is not possible, the government may take over the property for new use.

This Act is retroactive meaning it applies to sales that occurred before the Act’s enactment. This is a seldom-used option by revenue authorities. Large swaths of land that were supposed to go to the landless poor have been alienated and ended up in the hands of the non-poor. The most pressing necessity of the hour is to assess the extent of the alienation and make efforts to restore or allocate the lands to the poor.

After a thorough study on the implementation and the ineffectiveness of the Act, the committee concluded that the executive must be forced to execute its duty professionally and methodically, which has been practically neglected during the last decade and a half.

The following are the recommendations of the said committee:

Reduction of the size of land assigned – The definition of the landless poor person should be redefined as or the one who owns no land or a person who owns a land of not more than 1 acre of wet or 2 acres of dry land.
Land assignment – The maximum amount of land that may be assigned to a single individual is 1 acre of wetland or 2 acres of dry land, subject to the condition that lands owned by the assignee be taken into account in computing the area so that the lands assigned to him together with what he already owns does not exceed the total extent of 1 acre of wetland or 2 acres of dry land.
3 months to assign land to the applicant – According to the rules in effect, the assignment of land to the landless poor for agricultural purposes must be given within 3 months of the date of receipt of the application for assignment.
Government role – Where assigned lands are put up for auction due to non-payment of credit agency dues, government agencies will participate in the auction and purchase the lands to reassign landless people.
The assignment committee’s composition should include women from Indira Kranthi Patham (IKP) -The Assignment Committee’s composition should be amended to include the Sarpanch as well as the president and secretary of the concerned village organizations of poor women from the IKP, wherever the assignment proposals concern that village.
Gram Sabha Approval – Government land assignment proposals must be authorized by Gram Sabha.
Assignment Committee proposals should not be rejected – The Assignment Review Committee should not reject any proposed assignment unless the intended beneficiaries are ineligible.

Amendments brought in the Andhra Pradesh Assigned Lands (Prohibition of Transfers) Act

With the change in society, the requirements and needs of people, the Act of 1977 was amended many times. The following are the amendments and clauses introduced in the act of 1977:

The Andhra Pradesh Assigned Lands (Prohibition of Transfers) (Amendment) Act, 1989, Act 32 of 1989

The Act of 1989 inserted the following clauses in the act:

There is an amendment under Section 4 of the 1977 act. In the sub-section (1) of Section 4, the word “Mandal Revenue Officer” replaces the word “Tahsildar”. Furthermore, in the sub-section (2) of Section 4, the expression “Any order passed in revision under Section 4-B and subject to such order, the decision in appeal under Section 4-A and subject to the said orders in revision and appeal, any order passed under sub-section(1)” shall be substituted.
Also, with this Amendment, there was an inclusion of Section 4A and Section 4B.

The Andhra Pradesh Assigned Lands (Prohibition of Transfers) (Amendment) Act, 2007, Act 8 of 2007

The Act of 2007 inserted the following clause in the act:

It brings an amendment under Section 4 of the Act. It substituted clause (b) and clause (c) under sub-section (1) of Section 4.
Further, the Act substitutes Section 5 of the Act of 1977.
Also, the Act inserts an expression “Provided that any person who has voluntarily disclosed and surrendered the assigned land in his possession or discloses and surrenders the assigned land in his possession within 90 days from the commencement of Andhra Pradesh Assigned Lands (Prohibition of Transfers) (Amendment) Act, 2006 shall be exempted from Prosecution”, under Section 7 (1) and the expression “(2A) Any Officer, violating the provisions under sub-section (1) and (2) of Section 5 shall be punished with simple imprisonment which may extend to six months or with fine which may extend to ten thousand rupees or with both”, after sub-section (2) of Section 7.

The Andhra Pradesh Assigned Lands (Prohibition of Transfers) (Amendment) Act, 2008, Act 21 of 2008

The Act of 2008, brings the following changes in the act of 1977:

The Act of 2008 brings the Amendment under Section 4 of the act of 1977. It substitutes Section 4(1) (b) of the act.

The Andhra Pradesh Assigned Lands (Prohibition of Transfers) (Amendment) Act, 2019, Act 11 of 2019

The Act of 2019, brings the following substitutions in the act of 1977:

The Act of 2019 brings amendment under Section 2 (1) of the act of 1977. It substitutes the expression “lands assigned” with “lands or house sites assigned”. Further, it substitutes the expression “landless poor persons” with “landless and homeless poor persons”.
Furthermore, this Act brings Amendment under Section 3 of the act of 1977. It says that after sub-section (2) under Section 3, the following sub-sections shall be inserted:

“(2A) No assignee shall transfer any assigned house site, and no person shall acquire any assigned house site, either by purchase, gift, lease, mortgage, exchange, or otherwise, till completion of the period of 20 years from the date of assignment.

(2B) Where the assigned house site was alienated by the assignee as on the date of commencement of this Act, such house site shall be regularized in favor of the alienee as a one-time measure.

(2C) The eligible family shall be assigned house site only once in a lifetime.”

Furthermore, the Act adds an expression under Section 3(3). It says that under Sub-Section(3), after the expression “Sub-Section(2)” the expression “or Sub-Section(2A)” shall be inserted.

Conclusion

The Andhra Pradesh Assigned Lands (Prohibition of Transfers) Act, 1977 came into effect to protect the lands given to impoverished sections of the society. The main aim of the Act is to assist and safeguard those people who are truly landless but due to improper implementation of this Act, there were lots of loopholes created in this Act. Further, certain recommendations were made to improve this condition and to make sure that the act does not divert from its main aim.

With the change in circumstances and to define each section more properly, there were various amendments to this act and currently, there is a Bill passed by the Legislative Assembly in 2020 called, the Andhra Pradesh Assigned Lands (Prohibition of Transfers) (Amendment) Bill, 2020. Deputy Chief Minister, Dharmana Krishna Das, tabled the bill and explained the objective of the Bill. The Bill’s main objective was to give farmers Rupees 25,000 per annum as rent for an acre and take their lands for lease only if the farmers agree to give it voluntarily.

References

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