Vora Zakir Husain Valibhai v. the State of Gujarat : case analysis

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September 30, 2021

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This article is written by Aastha Verma, pursuing B.A.LL.B from Kalinga University Raipur, Chhattisgarh. The article emphasizes the rights of the citizens concerning shelter and housing.

Table of Contents

Introduction

The right to shelter is an important component of the right to life and is a fundamental right of every citizen so, this should not be violated. The case of Vora Zakir Husain Valibhai v. State of Gujarat (2021) talks about the rights of the weaker section which were violated and the authority was not ready to compensate as in their opinion petitioners were not entitled to the appropriate accommodation as they were not possessing any valid form of Identity cards. Also, the right to shelter does not confer the right to encroach. The Parliament has imposed some reasonable restrictions to it. Earlier, the right to property was a fundamental right under Part III of the Indian Constitution but later on, it was inserted under Article 300-A as a legal right because of the disputes arising between the states and individuals. The state now has the power to confiscate private land for the expansion of companies, roads, railways, and other public works projects by paying them by the 44th Constitutional Amendment Act of 1978. In the case of Olga Tellis v. Bombay Municipal Corporation (1985), for the first time, the Court held that the right to life includes the right to livelihood.

The concept of re-framing of land allotment policies

Case of Vora Zakir Husain Valibhai v. the State Of Gujarat (2021)

Brief facts about the case

The Appellant hails from a poor society where they start occupying the government’s land which is within the radius of the Gandhinagar Railway Station. They constructed their house and started living there. Also, it appears that they were living there since 1999 and possessed all documentary evidence like – voter ID, birth certificate, bank account statement, etc. in the form of valid documents. The executive engineer issued a demolition notice on 17^th July 2020 because of which the Appellant took the issue to the state government and requested the alternative accommodation.

The request was denied on the basis that they do not possess valid ID cards which were given during the time of the survey in 1999 and also they are not fulfilling the necessary conditions as stipulated by the government resolution dated on 3^rd July 2003. This is the second round of litigation. Also, two writ applications were filed in the Gujarat High Court which were disposed of by issuing the direction to the state government. In the present litigation, the Appellant said that the demolition is the violation of the direction issued by the court in the past two writs. Also, authorities started to demolish their houses without the hearing getting started in the court and declined to grant any relief. The interim order was passed on 19^th September 2020 which declined to stay the demolition. On 5^th October 2020, all the dwelling houses were demolished. The main writ application was filed where the Applicant prayed-

To provide the writ of mandamus or any other appropriate writ to set aside the demolition notice as it is illegal and violative of Article 14,16 and 21 of the Indian Constitution.
For rejecting the claim for alternative accommodation is arbitrary and discriminatory and without considering the government resolution.
To sanction plans for the redevelopment of the slums as per the policy of the state government.
To order a writ of mandamus or any other writ directing the respondent not to demolish the house, petitioner mentioned in the cause.
For the implementation of the Pradhan Mantri Awaas Yojana to provide residence to all the petitioners.

The Petitioners in the late 80s and early 90s started living in those houses and found domestic and labour work to live their livelihood. On 27 November 2010, the Respondent demolished the slums even after the stay was given by the Gujarat High Court. Thereafter, the Respondents provided them with the place where they built their huts and started living. Along with this, the Court passed several interim orders directing the respondent to provide basic amenities as well as plots which have electricity connection, water facilities and toilets. Petitioners submitted the petition that they were residing in slums prior to 2010. They were displaced from the original slums and allowed to construct and live in the said areas. The Respondent shows the google earth image of 2003 onwards and added that the petitioner who was not living in this area is misplaced and factually incorrect.

Observation made by the Gujarat High Court

The Hon’ble High Court of Gujarat relaxed some conditions and provided some beneficial scheme of the State Government to the Petitioners. The demolition of the dwelling house will amount to the violation of Article 21 of the Constitution and can be done according to the procedure established by law. The Respondents have not shown any rule, regulation relating to the notice of demolition of the house therefore it is illegal. Further, the Court included that law prescribes the procedure to the authority to remove those who are residing there without the permission under the Land Revenue Act, (1996) and the Gujarat Provincial Municipal Corporation (GPMC, Act 1949). The demolition notice deserves to be quashed and set aside. Also, the right to shelter and adequate housing is a basic human right under the Universal Declaration of Human Rights 1948. The state government cannot adopt measures that deprive the basic human rights of the citizen. Also, the right to life under Article 21 includes the right to shelter and the right to food which are basic amenities of the person.

Right to shelter under the Indian Constitution

The right to shelter is a fundamental right guaranteed to citizens under Article 21 of the Indian Constitution. In the case of Rajesh Yadav v. State of Uttar Pradesh, 2019, the Allahabad High Court held that the right to shelter is a fundamental right which extends to all infrastructure necessary to live and develop as human beings.

Right to private property was originally granted under Article 31 of the Indian Constitution but by the 44th Constitutional Amendment Act, 1978 it was removed from here and made a constitutional right under Article 300A which empowered the state to acquire the private property by due process of law.

In the case of Shantistar Builders v. Narayan K Totame (1990), the Court held that it is important to have reasonable accommodations and a decent environment. The Court further stated that for animals it is bare protection of the body whereas for human beings there should be a proper accommodation which helps them to grow physically, mentally and intellectually and our Constitution aims at providing these facilities for the development of the child.

In the case of PUCL v. Union of India (1996), the Supreme Court held that all the shelter homes shall remain open 24/7 and in urban areas one shelter house should be provided for one lakh population to meet their basic necessities.

All these judgments have expanded the definition under Article 21 of the Indian Constitution which gives the right to citizens for their growth, nourishment, and shelter. The right to life is a fundamental right which does not merely mean animal existence but the right to a dignified life, and this Article provides the right to live a meaningful life.

Part IV of the Constitution deals with the directive principle of state policies under which Articles 39, 42, and 47 provide the duties of the state to provide safeguards to the homeless people.

According to the census report of 2011, approximately 13.75 people reside in urban slum areas. Even after the right to shelter is a fundamental right and the Constitution also imposes a duty on the state to protect the people from being homeless there is a violation of the fundamental right and the reasons are poverty, and natural calamities like floods, earthquakes, etc.

Right to shelter does not confer a right to encroach

Weaker sections of the society have the right to live in a shelter and it’s the duty of the state to provide shelter to them, but that doesn’t mean they have the right to encroach and erect the structures on footpaths, pavement or the places of public use or misuse this right. Therefore, the Apex Court restricted the right and imposes some reasonable restrictions so that it is not misused by the people. After the Independence of India, the right to property was included under Article 19(1) and Article 31 of the Constitution under Part III as a fundamental right, but lately it has became a matter of conflict between the State and the individuals as to acquire the private property for the public purpose like the expansion of industries, roads, and railway etc.

Therefore, the Parliament passed the Constitutional 44th Amendment Act, 1978 which made the right to property a legal right under Article 300-A by which the State can acquire an individual’s property for the public purpose by compensating them.

A brief overview of the case of Olga Tellis v. Bombay Municipal Corporation (1985)

In this case, the Bombay Municipal Corporation tries to evict the person from the footpath, pavement, etc. and deport them to their original place from where they came from during the monsoon season. The eviction proceeded under Section 314 of the Bombay Municipal Corporation Act, 1888. A writ petition was filed in the Bombay High Court for the order of injunction as it is violative of Article 19 and Article 21 of the Constitution. Also, they further added that Section 312, 313, 314 of the Bombay Municipal Corporation Act,1888 is violative of Article 14, 19 and 21 of the Constitution.

The observation of the Court in the case

The Supreme Court held that the right to life includes the right to livelihood. It can be restricted but should be in accordance with the procedure established by law. In this particular case, the Apex Court allowed the eviction and was silent about the resettlement because of which it is widely criticized. The Court also stated that no person has the right to encroach the public place and the provision of Section 314 is not unreasonable in this case and the slums which have existed for more than 20 years cannot be removed except for the public purpose and under these circumstances, alternative accommodation should be provided.

Conclusion

It is the duty of the state government to provide housing to the poor. The right to shelter is a fundamental right that is conferred under Article 19(1)(e) and Article 21 of the Constitution. Right to shelter includes a healthy living environment, electricity, sanitation, and all other basic amenities so that the person can protect his life and limb and be able to physically, mentally, intellectually protect himself. It is the duty of the state to construct the house at minimum cost so that the poor can access it. Article 38, 46 of the Constitution directs the state to promote the welfare of the people by eliminating inequality in status. No person has the right to construct the structures on the footpath or the place which is for public purposes. Adequate facilities and opportunities should be provided by distributing the wealth and resources for the settlement of life.

References

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Regulatory laws for companies dealing with blockchain and cryptocurrency : special reference to USA and India

By

Shoronya Banerjee

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September 30, 2021

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This article has been written by Hemal Shah pursuing the Diploma in US Corporate Law and Paralegal Studies from LawSikho. This article has been edited by Amitabh Ranjan (Associate, LawSikho) and Dipshi Swara (Senior Associate, LawSikho).

Introduction

Cryptocurrencies have been around for a long time, but they’ve sprung into popular acceptance and use from the last decade, serving as not just alternate means of payment for people, but also as time and cost-saving solutions for a wide range of business applications. Following the creation and popularity of cryptocurrencies such as Bitcoin, Litecoin, Ethereum, and others, hundreds of other cryptocurrencies emerged. Legacy financial services corporations like Goldman Sachs and JPMorgan, as well as digital titans like Facebook, have taken note of the technology and have begun creating their own cryptocurrencies in-house.

The United States has a generally favourable attitude toward the usage of Bitcoin and other cryptocurrencies, despite the fact that few official laws have been implemented. The Department of Treasury, Securities and Exchange Commission (SEC), Federal Trade Commission (FTC), Internal Revenue Service (IRS), and Financial Crimes Enforcement Network (FinCEN) have all differed in their definitions of “cryptocurrency,” as well as their stances on how regulation should be implemented.

Demarcation of cryptocurrency and blockchain

Blockchain

A blockchain is a decentralised ledger that records all peer-to-peer transactions. Participants can confirm transactions without the requirement for a central clearing authority using this technology. Fund transfers, trade settlement, voting, and a variety of other concerns are all possible uses.

Cryptocurrency

The terms “crypto” (data encryption) and “currency” combine to make cryptocurrency (medium of exchange). As a result, a cryptocurrency is a digital means of exchange (similar to traditional money) that employs encryption to maintain transaction security. Cryptocurrency is a digital currency that may be used instead of cash or credit cards.

Cryptocurrency is a form of digital or virtual money, to put it simply. It may be used like normal money, such as dollars, pounds, euros, yen, and so on. However, the cryptocurrency has no tangible equivalents in the shape of bills or coins that can be carried about; it only exists in electronic form.

Cryptocurrency a new mode of payment in the corporate world : Corporates keen on decentralisation

Bitcoin and other digital assets are being used by an increasing number of businesses throughout the world for a variety of investment, operational, and transactional purposes. There are unknown hazards, as with every frontier, but there are also incentives. According to Mathew McDermott, global head of digital assets at Goldman Sachs, crypto firms have had to “raise the bar” and ensure that their services are of “institutional grade,” allowing corporations to feel more comfortable dealing with crypto assets.

Companies that are focused on technology have been among the first to invest a portion of their balance sheet in digital currency. Square made a $50 million bitcoin investment in October 2020. Earlier this year, Tesla put $1.5 billion in bitcoin on its financial sheet. MicroStrategy purchased $475 million in bitcoin in the fourth quarter of 2020.

According to Anthony Day, blockchain partner at IBM Global Business Services, UK and Ireland, working with cryptocurrencies presents a problem for corporate treasurers because accounting standards were “not established with digital assets in mind or assets that are not physical in nature.” “The different regulatory and reporting systems for multinationals range substantially from country to country.”

“The realm of cryptocurrencies and digital assets has enormous promise for changing the way we transfer wealth and invest as organizations,” says IBM’s Day. “Programmability’s efficiency and automation might revolutionise cross-border trade, complicated supply chains, and intracompany settlement and reconciliation.”

Basic advantages of using cryptocurrency

Secured transaction

Due to constant frauds and manipulation in data, individuals have always strived to make the transactions extremely secured. Blockchain technology’s private keys and enhanced security helps businesses keep the transaction safe and secured. In addition, once the transfer is complete, it cannot be undone.

Privacy protection and business recognition

Privacy has always been the utmost concern for individuals online and with the march of technology, the privacy issue has been lying at the bay. In the modern world, if an organisation chooses to accept cryptocurrency, it has the attention of the individuals who want to stay anonymous with their identity and their respective transactions. On the other hand, these organisations are considered to be marching hand in hand with technology.

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Decentralisation

For years, the organisations have been barred by the rules and the laws laid by the government of different countries. The transitions in the crypto are extremely private without any direct control of any legislature. The risk of assets and bank accounts being seized due to political instability is a clear and present concern for e-commerce firm owners in some nations. However, due to the decentralized structure of cryptocurrencies, this is not feasible. The money is kept in several locations across the world and may be recovered when needed.

Frictionless and cheap

Cryptocurrencies are also significantly less expensive in comparison. Cryptocurrency’s security feature eliminates the need for a third-party processor to validate and verify transactions. As a result, the obligatory transaction costs are reduced. There are, however, several decent third-party programs that can assist those who require a little direction or a tool to handle this aspect. However, even then, the costs are generally 1%.

Instant payment

For any online transaction that took place, there have been instances of it being time-consuming and extremely complicated. Cryptocurrency offers instant payment and barely any complications with its unique keys that are offered to each owner. The payment also converts the currency of your choice, thus eliminating the volatility risk.

Regulatory laws for carrying out cryptocurrency business in the USA.

There is no consistency in the treatment of firms dealing in virtual currencies (also known as “cryptocurrencies”) such as Bitcoin between states. When these entrepreneurs consider whether or not to operate within a state, one of the first questions they ask is whether or not current state money transmitter regulations apply to the selling or exchange of virtual currencies.

Some states have issued guidance, opinion letters, or other information from their financial regulatory agencies on whether virtual currencies are “money” under existing state rules, while others have enacted fragmentary legislation to specifically include or exclude digital currencies from existing definitions. The few states that have attempted to enact comprehensive regulations, such as New York’s much-maligned “BitLicense” scheme, have seen a mass departure of blockchain and virtual currency businesses from states that try to treat all virtual currency operators the same as traditional money transmitters, which are better equipped to deal with an overly restrictive regulatory framework.

The Financial Crimes Enforcement Network (FinCEN) does not consider cryptocurrencies to be legal tender, but it does consider cryptocurrency exchanges to be money transmitters since cryptocurrency tokens are “other value that substitutes for cash.”

The Internal Revenue Service (IRS) does not consider cryptocurrencies to be legal money, but rather describes it as “a digital representation of value that acts as a medium of exchange, a unit of account, and/or a store of value,” and has provided tax guidelines in this regard.

FinCEN

Cryptocurrency exchanges are lawful in the United States and are governed by the Bank Secrecy Act (BSA). In reality, this implies that bitcoin exchange service providers must get the necessary FINCEN license to execute an AML/CFT and Sanctions programme, keep relevant records, and report to the authorities.

In response to FATF recommendations issued in June 2019, FinCEN has stated that it expects cryptocurrency exchanges to comply with record-keeping obligations and the “Travel Rule” by disclosing information about the originators and recipients of cryptocurrency transactions.

The United States classifies virtual currency exchanges in the same legal category as traditional AML/CFT gatekeepers, financial institutions, and money transmitters, and so applies the same laws, including those included in the Bank Secrecy Act revisions enacted in 2021. (which has established its own version of the Travel Rule).

Money transmitter license

The Money Transmitter License is necessary if the firm plans to serve as an intermediary in transactions involving the exchange of cryptocurrencies for real money (cryptocurrency – fiat).

If a firm wishes to serve as an intermediary in transactions involving the exchange of one cryptocurrency for another (cryptocurrency – cryptocurrency), it must get an MSB (Money Service Business) License and review the criteria set out by each state’s legislation.

SEC (Securities and Exchange Commission)

The SEC’s method to determine whether a digital asset offered in a token sale is a security is based on the criteria laid out in SEC v. W.J. Howey Co. (the Howey Test). The Howey Test assesses whether an asset is an “investment contract,” one of the securities laws specified categories of instruments.

According to the criteria, an investment contract entails a monetary investment in a shared company in which the investor is taught to expect returns, and which is obtained from one or more third parties’ entrepreneurial or management activities. It makes no difference whether the business is speculative or non-speculative, or whether there is a sale of property with or without intrinsic value, if the criteria are passed. In a nutshell, the fundamental theme of this study is to concentrate on the economic realities of the arrangement in question.

Regulatory laws for carrying out cryptocurrency business in India

The difficulty to determine the legal status of cryptocurrencies is a major challenge in their regulation. Courts in various countries have classified cryptocurrencies as property, commodities, non-traditional currency, payment instruments, or money, depending on the interpretation of the legislation and the context.

The words “currency” and “money” are not defined under the Reserve Bank of India Act, 1934, the Banking Regulation Act, 1949, the Payment and Settlement Systems Act, 2007 (PSSA), or the Coinage Act, 2011.

The words “currency”, “currency notes”, “Indian currency”, and “foreign currency” are defined under the Foreign Exchange Management Act (FEMA). The IMAI decision acknowledged that the RBI might notify cryptocurrencies that fit under the category of “other comparable instruments” under the FEMA’s definition of “currency.” Since, India does not have a defined set of regulations for cryptocurrency, here are some regulations that companies need to adhere to before they commence the cryptocurrency business in India:

SEBI

Initial coin offerings may be regarded as a “security”, and therefore may fall under the regulatory purview of the Securities and Exchange Board of India (SEBI). The Securities Contract Regulation Act of 1956 (SCRA) does not include cryptocurrencies in its definition of “securities,” yet it may be regarded as security owing to the word’s comprehensive character, which covers “other marketable security.” If cryptocurrencies are created, distributed, and sold in a centralised manner, they might be called a “security.”

Commodity derivative

The SEBI’s September 2016 circular, which should be read in conjunction with the Ministry of Finance’s September 2016 and October 2019 circulars, does not expressly include cryptocurrencies in the list of notified products for the purposes of the SCRA’s phrase “commodity derivative.” However, under the aforementioned announcement, the central government may opt to classify cryptocurrencies as commodities. Indian crypto exchanges have lately petitioned SEBI rather than the RBI for regulation, claiming that crypto assets are commodities rather than money.

Direct tax

The 1961 Income Tax Act does not expressly address the taxation of cryptocurrencies. If considered an investment or business revenue, however, the sale of cryptocurrencies may be taxed as “capital gains.”

Indirect tax

If cryptocurrencies are classified as goods, they may be considered a “taxable supply” and hence subject to goods and services tax (GST). This understanding is reflected in a recent proposal to levy an 18 percent GST on bitcoin transactions.

Conclusion

The future of cryptocurrency is still very much up in the air. Critics see nothing but risk, while supporters see nothing but infinite possibility. It is critical that authorities build appropriate regulatory frameworks that foster the acceptance of cryptocurrencies and the growth of crypto-based trade, as well as procedures to preserve the financial system’s integrity, security, and stability.

Prudent regulation necessitates a thorough knowledge of the blockchain technology that underpins cryptocurrencies, as well as its potential to transform the global financial system. A realistic worldwide regulatory framework for cryptocurrencies requires cross-jurisdictional coordination and government-industry partnership.

References

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How to protect Intellectual Property Rights in the innovation process

By

Diva Rai

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September 30, 2021

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This article is written by Srishti Sinha, a student at the Institute of Law, Nirma University, Ahmedabad. This article deals with the question of how to protect your innovation process through Intellectual Property Rights.

Table of Contents

Introduction

We now live in a world where the capacity to create, sell, and, most crucially, appropriate (or capture) the economic advantages of scientific and technical breakthroughs determines the economic health of nations and the competitiveness of companies. Patents and copyrights are examples of Intellectual Property Rights (IPRs) that companies employ to safeguard their investments in the invention.

Intellectual property (IP) is often regarded as a company’s most valuable asset. Patents, copyright, trademarks, and registered designs are all examples of intellectual property rights that may be used to protect innovation. In reality, several IP rights may apply to a single product or idea. You must acquire one or more of the four basic forms of intellectual property to protect your concept from being stolen by others.

Every innovation begins as a trade secret of the innovator. Inventors must first obtain one or more of the other kinds of intellectual property protection, such as patents, trademarks, and copyrights, before they may sell their innovations.

Intellectual Property Rights

Intellectual property rights are the rights granted to individuals over the creation of their minds. For a set length of time, they generally grant the author exclusive rights over his or her invention. Traditionally, intellectual property rights are separated into two categories:

Copyright and its related rights

Copyright protects the rights of creators of literary and creative works (such as books and other publications, musical compositions, paintings, sculptures, computer programmes, and films) for at least 60 years after their death.

The rights of performers (e.g. actors, singers, and musicians), makers of phonograms (sound recordings), and broadcasting companies are also protected by copyright and associated (often referred to as “neighbouring”) rights. The primary societal goal of copyright and associated rights protection is to promote and reward innovative activity.

The Copyright Act, 1957 governs copyright law in India, and it has been modified six times, the most recent being in 2012. It is a comprehensive legislation that protects copyright, moral rights, and adjacent rights. The Act establishes transferrable, comprehensive economic rights (copyright) in a variety of works. Moral rights are perpetually vested in the authors and their legal representatives and are non-transferable and enforceable by the authors and their legal representatives even after the copyright in the work has been transferred.

The Copyright Rules, 2013, came into effect on March 14, 2013, and set out the procedures for relinquishing copyright, obligatory licences, statutory licences, voluntary licences, registration of copyright societies, membership, and management of copyright societies and performers’ organisations.

Industrial property

Industrial property can usefully be divided into two main areas:

One area can be defined as the protection of distinguishing indicators, such as trademarks (which differentiate one company’s goods or services from those of another) and geographical indications (which identify a good as originating in a place where a given characteristic of the good is essentially attributable to its geographical origin).

The goal of trademark protection is to encourage and promote fair competition, as well as to safeguard customers by allowing them to make educated decisions about diverse goods and services. If the symbol in question remains unique, the protection may exist eternally.

Other forms of industrial property are protected largely to encourage technological innovation, design, and development. Patented innovations, industrial designs, and trade secrets all come within this category.

The societal aim is to safeguard the outcomes of investments in new technology development, therefore providing an incentive and means to fund research and development operations.

Types of Intellectual Property Rights

Intellectual Property Rights (IPR) are exclusive rights granted by the Indian government to safeguard the uniqueness of an inventor’s work. The tangible product of the human mind is a simple intellectual property right. Patents, trademarks, trade secrets, industrial design, layout design, and copyright-oriented rights are all included in intellectual property rights. This intellectual property right refers to people’s ownership of their creations. For a set length of time, they generally grant the inventor exclusive rights to exploit his or her inventions. Since the uniqueness of the work can have varieties in it, therefore, the Intellectual Property Rights are divided into some types, to ease the understanding of each type.

Four Basic types of IPR are as follows:

Trade secrets

Trade secrets are unique, confidential knowledge that is valuable to a company because it offers it a competitive advantage in its market. If a firm acquires a trade secret, it may cause harm to the original owner.

Others cannot duplicate or steal an idea if a person or company has trade secret protection. Businesses must be actively conducted in a manner that indicates their willingness to preserve information in order to establish it as a “trade secret” and to get the legal protections associated with trade secrets. Trade secrets are protected even if they are not officially registered; nevertheless, a trade secret owner whose rights have been violated–for example, if someone steals their trade secret–can petition a court to take action against that person and prohibit them from utilising the trade secret.

Trade secrets are defined and protected in the United States under the Economic Espionage Act of 1996 (outlined in Title 18, Part I, Chapter 90 of the United States Code) and are also subject to state law. Each state may enact its own trade secret laws as a result of a 1974 judgement.

In India, there is no particular legislation that protects trade secrets and sensitive information. Indian courts and tribunals, on the other hand, safeguard trade secrets, sensitive information, and corporate know-how. Under common law, a misappropriation action can provide wide protection for trade secrets. Under the grounds of justice and contractual obligation, Indian courts have supported trade secret protection. The provision pertaining to restraint of commerce in Section 27 of the Indian Contract Act makes this clear. This clause, which is broad in scope, deems all trade restraint agreements invalid.

The Paris Convention’s Article 10 (b) and the TRIPS Agreement’s Articles 39(2) and 39(3) established the worldwide standard for trade secret legislation in 1995. However, no similar regulation exists in India, putting undeclared proprietary assets in jeopardy.

Patents

A patent is an exclusive right given for an invention, which is a product or a method that gives a new technological solution to a problem or a new way of doing something. It gives the patent holder protection for his or her idea. The protection is only provided for a set amount of time, namely 20 years. Without the permission of the patent owner, the innovation cannot be commercially manufactured, utilised, distributed, or sold. When a patent expires, the protection ceases, and the innovation enters the public domain, which means that the owner no longer has exclusive rights to the creation, and it can be commercially exploited by anyone. Patents in India are controlled by the Patent Act of 1970 and Rules of 1972, which apply across the country.

Copyrights

Although they are sometimes mistaken, copyrights and patents are not the same things. A copyright is a kind of intellectual property protection that safeguards original works of authorship, such as literary works, music, and art, among other things. Because copyright is inherent in work as a result of its production, registration is not required. However, registering copyright establishes that the work has copyright and that the creator is the proprietor of the work. In exchange for remuneration, creators frequently sell the rights of their works to persons or corporations best suited to promote them. These payments are typically made contingent on the work’s actual use and are referred to as royalties.

Trademarks

A trademark is a distinguishing mark that identifies certain goods or services as those produced or offered by a specific person or business. It might be a single word, letter, or number, or a combination of them. Drawings, symbols, three-dimensional signals like the design and packaging of items, auditory signs like music or voice sounds, scents, or colours utilised as differentiating elements are all examples. It ensures the owner of the mark has the sole right to use it to identify products or services or to permit someone else to use it in exchange for payment.

Patents and copyrights can expire, while trademark rights are derived from the use of the trademark and can thus be kept eternally. The registration of a trademark, like that of copyright, is optional, although it can provide extra benefits.

Trademarks in India are protected by a combination of particular statutes (such as the Trademarks Act 1999) and auxiliary legislation (such as the Customs Act 1962 and the Companies Act 1956).

The procedure to be followed before the Trademarks Registry is outlined in the Trademarks Act and related rules. The Code of Civil Procedure 1908 applies to civil procedures brought before the courts, whereas the Intellectual Property Rights (Imported Goods) Enforcement Rules 2007 apply to customs recordals. The Companies Act, as well as the restrictions established under it, apply when trademarks or names are used in a business name and the Indian Penal Code of 1860 is used to prosecute criminal offences. Unique laws, such as the Emblems and Names (Prevention of Improper Use) Act 1950, may be applicable in specific situations.

Invention v. innovation

Invention is defined as “the first time production of a thing or the introduction of a method.” For example, Thomas Edison was a pioneer in the field of invention. On the other hand, when someone “improves on or adds a substantial addition” to something that has previously been developed, this is called innovation. For example, Steve Jobs was an innovator. In its simplest form, innovation may be defined as a change that adds value to products or services while also meeting consumer demands. It occurs when a new and effective product or service is brought to the market that meets the demands of customers by providing better products and services.

Characteristics required in order to legally protect your innovation

Some of the characteristics which must be fulfilled by any innovation to possess legal protection are as follows:

The innovation should be new: It would be unjust to impose the economic benefits of a patent on something that is already well known, thus you can’t legally protect anything that is already widely known.
The innovation should have a subject matter which can be considered for protection.
The innovation should be inventive: The ‘obviousness’ of the new product, technique, or innovation is a prerequisite of an innovative step. It is not protected if it is ‘obvious’ to a knowledgeable person.
The innovation should be useful: This criterion has nothing to do with whether the new product, method, or idea is ‘useful’ in terms of whether or not it will be purchased. Rather, it concerns whether the invention can be manufactured in line with the patent’s claims and details.
The innovation must not have a prior use.

Ways to protect your innovation

One of your company’s constants is innovation. It is necessary, yet it is pricey because the expenses frequently outweigh the benefits. Fortunately, your recent idea has filled a niche in the market. You want to safeguard your Intellectual Property because commercial success is on the horizon. After all, your rivals are always keeping an eye on you. But how can you go about effectively safeguarding your innovation?

Here are some ways in which you can protect your innovation:

Patent

In that scenario, filing for a patent may be the best approach to safeguard your intellectual property. You will have exclusive rights to your invention for 20 years if you obtain a patent. To be eligible for a patent, your invention must fulfil the requirements of originality, innovative step, and industrial applicability. Patent law in India is governed by the Patents Act of 1970, the Patent Rules of 1972, the Patent Rules of 2003, and the Patent Amendment Rules of 2016.

Secrecy

In certain instances, it is thus preferable to keep it hidden. Especially when it’s hard to determine what the innovation entails from the final result. This makes it more difficult for a rival to duplicate your idea. Processes are sometimes more difficult to keep hidden than tangible products. However, for a tangible product, secrecy might be appealing.

The benefit of secrecy is that you are shielded in theory indefinitely and do not have to reveal anything.

Design protection

An article’s visual characteristics are protected by a registered design. Visual characteristics must sometimes be protected in order to prevent others from creating a product that appears the same or similar. If the product’s look is crucial to its economic success, a registered design should be filed. Buyers aren’t influenced by product form for some items, such as industrial equipment. Product form protection, on the other hand, may be crucial for consumer items.

If your innovation’s design is the most distinguishing feature of your product, you may be eligible for design protection. The Designs Act of 2000 (“the Act”) is a full code in and of itself, with absolute legislative protection. It safeguards the aesthetics of non-purely utilitarian items. A design is protected for a period of ten years. It can be renewed for a charge every five years. ‘Novelty’ is the most essential criterion for design protection. Furthermore, the design may not be technically feasible.

Conclusion

Intellectual Property Rights are rights provided by the Indian government. Intellectual property is concerned with intellectual activity in the domains of industry, science, literature, and the arts. These rights protect intellectual property creators and other producers by providing them time-limited rights to regulate their usage. For a set length of time, the inventor is generally granted exclusive rights to exploit his or her inventions and innovation.

Although the term “invention” and “innovation” are generally termed the same there is a difference between them. In the simplest terms, innovation is something that adds value to the invention. When you want to protect your invention, you can easily go for Intellectual Property Rights, (Trademarks, Copyrights, Patents, etc.) but when you want to legally protect your innovation then, there are certain characteristics for that and the said innovation has to fulfil all the criteria, otherwise, the said innovation cannot apply for legal protection.

References

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Narrowing parent corporate liability : Supreme Court of United States’ decision in Nestlé USA, inc. v. DOE

By

Shoronya Banerjee

-

September 30, 2021

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CGL — Image source: https://rb.gy/zkoaei

This article has been written by Vibha Oswal pursuing the Diploma in US Corporate Law and Paralegal Studies from LawSikho. This article has been edited by Amitabh Ranjan (Associate, LawSikho) and Dipshi Swara (Senior Associate, LawSikho).

Table of Contents

Introduction

The Supreme Court of the United States (“SCOTUS/ Court”), on 17^th June 2021, issued its decision in Nestle USA, Inc. v. Doe et al (together with Cargill, Inc. v. Doe et al.), wherein the question placed before the court was whether corporations are liable for human rights violation under the Alien Tort Statute (“ATS”) was placed before the Court. The ATS, inter alia, provides courts in the United States with the power to examine “any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States.” This article will discuss in brief the decision of the Court and its implications vis-à-vis the concept of parent corporate liability under the ATS.

Concept of parent corporate liability

In simple terms, parent corporate liability means cases in which a parent corporation may be held liable for the acts of its subsidiaries. For such a claim to succeed, one needs to prove that the parent company exercises complete control over the acts of the subsidiaries. In the absence of such control, a parent company cannot be made liable for the acts of its subsidiaries.

Background

The case revolves around the actions of two corporations based in the United States, namely Nestle and Cargill (“Petitioners”) with respect to cocoa farms situated in the Ivory Coast. It was alleged that the Petitioners were guilty of abetting and aiding child slavery on the cocoa farms of Ivory Coast, as they were providing the farm owners who engaged child slaves with technical and financial resources. The Respondents i.e., the six former child slaves (“Respondents”) had sued the Petitioners in the US District Court for the Central District of California in the year 2005, however, the District Court dismissed the case on jurisdictional grounds in the year 2010. Thereafter, the Respondents filed an appeal before the Ninth Circuit, which reversed the decision of the District Court and held that in light of the principles laid down in RJR Nabisco, Inc. v. European Community, ATS would be applicable in the present case as the Petitioner’s conduct in the US was relevant to the ATS’s focus i.e., a tort which is in violation of international norms (here abetment and aiding of child slavery). In 2019, the Petitioners appealed to SCOTUS.

Issues

Whether the Respondents adequately pled facts pertaining to the Petitioners’ conduct in the United States to overcome the Court’s presumption against extraterritorial application of the ATS; and
Whether U.S. corporations are exempt from corporate liability for human rights violations under ATS.

Rule applied

The Court in determining the said issues replied upon the following rule:

The rule for determining whether a statute can be applied extra-territorially, laid down by the Court in RJR Nabisco, Inc. v. European Community, which states that the Court in determining such claims, should first presume that all statutes are domestic in nature unless expressly stated otherwise in the statute itself. Once the presumption stands true, the Court should determine whether the plaintiff has pled sufficient facts to show that the conduct in question occurred in the United States. In case, the plaintiff fails to state such facts, then the statute cannot be applied extraterritorially.

Analysis

Whether the Respondents adequately pled facts pertaining to the Petitioners conduct in the United States to overcome the Court’s presumption against extraterritorial application of the ATS?

The Court, with respect to the above issue, by an eight-to-one decision held that the Respondents failed to pled sufficient facts of domestic conduct to overcome the presumption of extraterritorial application of the ATS applied by the Court. The Court in reaching the above conclusion relied on the two-step framework laid down by the Court in RJR Nabisco, Inc. v. European Community for analysing extra-territorial issues, which states as under:

“First, we presume that a statute applies only domestically, and we ask whether the statute gives a clear, affirmative indication that rebuts this presumption; and Second, where the statute does not apply extraterritorially, plaintiffs must establish that the conduct relevant to the statute’s focus occurred in the United States.”

In addition to the above test, the Court also applied the “touch and concern” test laid down by it in Kiobel vs. Royal Dutch Petroleum Co., which provides that “when a statute gives no clear indication of an extraterritorial application, it has none unless the claims touch and concern the territory of the United States with sufficient force to displace the presumption.”

While opening on the first step, the Court relied on the decision given by it in Kiobel v. Royal Dutch Petroleum Co., which upheld that “ATS does not rebut the presumption of domestic application and therefore, does not apply extra-territorially.” On the second step, the Court determined whether in the present case, the Respondents established that the conduct of the Petitioner in the US was relevant to the ATS’s focus or not. The Court answered in negative and opined that “nearly all the conduct they allege aided and abetted forced labor: providing training, equipment, and cash to overseas farmers occurred in Ivory Coast. Pleading general corporate activity, like mere corporate presence does not draw a sufficient connection between the cause of action respondents seek and domestic conduct. To plead facts sufficient to support a domestic application of the ATS, plaintiffs must allege more domestic conduct than general corporate activity common to most corporations.”

In light of the above and the tests laid down by the SCOTUS, the Court dismissed the case on the ground that ATS was not applicable without opining on the 2^nd issue.

Whether U.S. corporations are exempt from corporate liability for human rights violation under the ATS?

The Court did not address the question of whether U.S. Corporations (such as Nestle and Cargill) are liable under the ATS or not, as the case was dismissed based on the 1^st issue. However, five out of eight judges in their separate opinions stated that U.S. Corporations are not exempt from liability under ATS.

Justice Gorsuch in his concurring opinion stated that “Nothing in the ATS supplies corporations with special protections against the suit. The statute specifies which plaintiffs may sue (“alien[s]”). It speaks of the sort of claims those plaintiffs can bring (“tort[s]” in “violation of the law of nations or a treaty of the United States”). But nowhere does it suggest that anything depends on whether the defendant happens to be a person or a corporation.”

Further, in her concurring opinion, which is joined by Justice Breyer and Justice Kagan, Justice Sotomayor also answers this question in negative and states that “there is no reason to insulate domestic corporations from liability for law-of-nations violations simply because they are legal rather than natural persons.”

Justice Alito in his dissenting opinion, with respect to the issue in hand, also states that “for the reasons explained in Part I of JUSTICE GORSUCH’s opinion, which I join, I would hold that if a particular claim may be brought under the ATS against a natural person who is a United States citizen, a similar claim may be brought against a domestic corporation. See also ante, at 8, n. 4 (SOTOMAYOR, J., joined by BREYER and KAGAN, JJ., concurring in part and concurring in judgment). Corporate status does not justify special immunity.”

In light of the above opinions, even though the same cannot be construed as law, it appears that U.S. Corporations will not be exempted from the scope of the ATS, and an alien may make a claim against a U.S. Corporation under the ATS as long as it satisfies the tests laid down in RJR Nabisco, Inc. v. European Community, and Kiobel v. Royal Dutch Petroleum Co.

Other relevant case laws

Through the series of below-stated case laws, SCOTUS has narrowed the jurisdictional scope of the ATS.

Sosa v. Alvarez Machain

In this case, SCOTUS held that “ATS is a jurisdictional statute only and does not itself supply plaintiffs with a cause of action against those who violate international law.” The Court further held that “no new cause of action could be created under the ATS other than the claims recognized at the time of the ATS’s enactment—namely, violation of safe-conducts, piracy and infringement of the rights of ambassadors unless such new claims were violations of the present-day law of nations.”

Kiobel v. Royal Dutch Petroleum Co.

In this case, the Court held that “presumption against the extraterritorial applicability of statutes applies to the ATS”, and dismissed a suit filed against two foreign corporations who were accused of aiding and abetting atrocities committed by Nigerian officials because all relevant conduct occurred overseas and thus did not “touch and concern the territory of the United States.” The defendant companies’ mere physical presence in the United States—in the form of a New York office—was insufficient to overcome the presumption and satisfy that test.”

RJR Nabisco, Inc. v. European Community

The Court, in this case, while discussing the extra-territorial application of the ATS held that “ATS can only be applied extra-territorially when the plaintiffs establish that the conduct relevant to the statute’s focus occurred in the United States.”

Jesner v. Arab Bank

SCOTUS, in this case, further restricting the extraterritorial application of the ATS, held that “foreign corporations are categorically exempt from suit under the law.”

Conclusion

The decision is given by SCOTUS in Nestle USA, Inc. v. Doe et al. (together with Cargill, Inc. v. Doe et al.) lays down the test by which a corporation may be made liable under the ATS (i.e., by proving that the domestic conduct of such a corporation in the United State is more than (i) mere corporate presence; and (ii) general corporate activities.

However, the Court fails to determine what constitutes “domestic conduct than general corporate activity common to most corporations”, thereby making the decision ambiguous. The Court also failed to opine on the parent-subsidiary relationship and the duty of care that a parent company has towards its subsidiaries. The decision, indirectly further lays down that the U.S. Corporation is exempt from liability under the ATS, irrespective of having actual knowledge of a violation of international law norms if the petitioner fails to prove that the domestic activities conducted by the corporation in the United States are limited to general corporate activities.

Further, the Court through this decision has made it abundantly clear that the Court, under the ATS, does not intend to create any new causes of action and where, if the plaintiff requires such a cause of action to be created, the Court will refuse to exercise its discretion under the ATS. In light of the above, it will be interesting to see the manner in which courts in the United States determine what constitutes “domestic conduct than general corporate activity common to most corporations.”

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

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Guidelines for the calculation of notification thresholds and notification forms in Peru

By

Oishika Banerji

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September 30, 2021

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This article has been written by Vinay Yerubandi pursuing a Diploma in M&A, Institutional Finance and Investment Laws (PE and VC transactions) from LawSikho. This article has been edited by Amitabh Ranjan (Associate, Lawsikho) and Dipshi Swara (Senior Associate, Lawsikho).

Table of Contents

Introduction

Peru had published its Merger Control Law (Law No 31112) on May 30th, 2021 and the provisions of this legislation have their effect from 14th June 2021. This is Peru’s First legislation to regulate competition concerns of all kinds of Combinations. The legislation defines these transactions as concentration operations. This law has a similar purpose as that of CCI (Procedure in regard to the transaction of Business relating to Combinations) Regulations, 2011 in India. This law laid down the provisions mainly for thresholds, jurisdiction, notification procedure, the review process, appeal and review, third party Rights, and enforcing authority under this legislation.

Enforcing authority

National Institute for the Defence of Free Competition and the Protection of Intellectual Property (INDECOPI) is the authority empowered under this law to regulate concentration operations. Competition Commission, an administrative body of INDECOPI is the competent body to issue first instance decisions. The Competition Commission is also empowered to issue guidelines regarding the correct interpretation of the law. If the Concentration Act involves companies that are regulated by any specific sectoral regulations, then the Competition Commission can also request the appropriate sectoral regulator to give non-binding reports consisting of the degree of concentration in that market and their technical opinion about the possible effect on competition.

Thresholds

The law provides for the transactions to be notified to the authority mandatorily. If a transaction is required to be notified to the authorities, then such transaction must not be consummated until the clearance from the authorities and if consummated, it will not have any legal effect and also be punishable with a fine. For a transaction to be mandatorily notified, the transaction should be covered under the purview of concentration operations and should meet the Jurisdictional thresholds. If the transaction meets these two conditions, then it shall be mandatorily notified to the competition commission before consummation.

Concentration operations

Law 31112 specifies the following transactions as concentration operations

Merger.
A Joint Venture, which is created with an intention to be fully functional and permanent.
Acquisition of control, directly or indirectly over other companies. This included the acquisition of shares, voting rights or acquiring control through any kind of contract.
Acquisition of productive assets that are operative in the previous 12 months, to which defined income volume can be attributable, has income generated in the previous one year and are capable of increasing market share of the acquirer.

Transactions exempt from concentration operations

There are certain transactions that were exempted from being considered as concentration operations. These are

The corporate growth of an entity due to operations carried out exclusively within the same group;
The internal corporate growth of an entity, regardless of whether it takes place through own investment or with resources of third parties that do not participate in the market;
The corporate growth of an entity that does not produce effects in the markets within the domestic territory, either in whole or in part;
Control acquired over an entity as a result of a temporary mandate conferred by law relating to the forfeiture or denunciation of a concession, asset restructuring, insolvency, creditors’ agreement or other similar procedure; and
The temporary holding by credit, financial, insurance or capital market institutions of stocks or shares acquired for the purpose of resale, provided that no voting rights are exercised to determine the competitive behaviour of that undertaking.

Jurisdictional thresholds

For a transaction to be mandatorily notified under the new merger control law, two thresholds are required to be mandatorily met. These are Joint Thresholds and Individual Thresholds.

Joint Thresholds: Sum of annual sales or gross income or asset value in Peru of all the companies involved transaction in the financial year previous to the year in which the transaction is entered shall be equal to or greater than 118,000 Unidad Impositiva Tributaria (UIT)
Individual Thresholds: Annual sales or gross income or asset value in Peru of at least two companies that are involved in the transaction in the financial year previous to the year in which the transaction is entered shall be equal to or greater than 18,000 UIT individually.

*Unidad Impositiva Tributaria (UIT) is a reference unit set by the Peruvian Ministry of Economy annually to determine taxes, deductions, penalties, processing fees, fines, and others.

Whose financials are to be considered for jurisdictional thresholds?

The new merger control law of Peru states that the jurisdictional thresholds are to be calculated based on the financials of the companies involved in the concentration operation in the local market.

In the case of a Merger or Joint Venture, the financials of all the companies involved in the transaction and their economic group are to be considered.
In case of an acquisition, the financials of the acquirer, its economic group, and the target company and the companies which are controlled by the target company are to be considered.
In case of acquisition of assets, financials of the acquirer, its economic group and the asset which is being acquired are to be considered.

* economic group means “set of companies, local or foreign, composed of at least two companies, where any of them has control over the others, or where all of them are being controlled by one or more individuals acting as a decision unit”.

Applicability to foreign transactions

The provisions of this law will be applicable to concentration operations qualifying the jurisdictional thresholds which are being carried outside the territory of Peru if they have actual or potential effects in Peru. This includes situations where the parties have subsidiaries or assets in Peru or having commercial activities in Peru.

Non-notified transactions

INDICOPI is empowered to investigate the non-notified transactions which are to be notified mandatorily within the period of four years from the date of completion of the transaction. INDECOPI is also empowered to investigate those transactions which didn’t meet the thresholds within a period of one year from the date of completion of the transaction.

Voluntary notification

The parties are also allowed by the law to make a voluntary notification of concentrations which are below the jurisdictional thresholds.

Notification forms and procedure

There are two types of notification forms namely Standard Notification Form and Simplified Notification form which can be filed with INDICOPI. Standard Notification form shall be filed by the parties to the concentration act generally. But in some specified circumstances, when the parties are not required to disclose complete information, they can file a simplified notification form.

Standard Notification Form

When to file: Parties are required to file the standard notification form before the execution of the transaction.

What to attach: The parties are required to submit the recent agreement signed for the transaction. If the agreement is not signed, then any document which is evidencing the intention of the parties to execute the transaction must be submitted to the authority.

Who is responsible to file: In cases of a merger or a Joint Venture Transaction, all the parties involved in the transaction must file the notification jointly. In any other case, the party who is obtaining control under the transaction is required to notify.

What information should be included in the form: Law specifies the minimum information which is mandatorily required to be included in the notification form. This information includes identification of parties, details of the transaction, description of the control structure and ownership, markets involved and the latest financial statements of the parties. If the notification is filed incomplete, then it is deemed to be not submitted and punishable with a penalty of up to 12% of the turnover of the parties.

Simplified Notification Form

Purpose: There are some transactions listed in the law that are deemed as less likely to produce significant restrictions to competition. The simplified Notification Form requires less information to be disclosed by the parties to the transaction.

Transactions eligible for simplified Notification form:

Non-overlap concentrations where the parties do not carry business in the same geographical market or product market or they do not participate in the same value chain or production chain.
Change from joint control to exclusive control.

The simplified Notification form is just a simplified form that requires fewer details to be disclosed. But, it is required to follow the complete procedure for review which is to be followed for any transaction. So, a Simplified Notification Form doesn’t mean a Fast-track procedure.

Procedure of review by the commission

Once the notification form is filed with the commission, there involve three phases of review

Notification Phase

This phase starts from the day when the notification is filed with the commission. In this phase, the Technical Secretariat of the commission assesses whether the information provided by the parties met all the requirements under the law or not. This assessment shall be done within ten working days of filing the form. If in any case, it is found that any information is missing, then the parties will be given a further period of ten working days to rectify the same. After which the commission shall declare whether the notification is admissible or not within five working days.

Phase 1

This is a Phase where the preliminary evaluation of the transaction is done to assess whether the transaction is likely to raise any serious competition concerns or not. This phase shall be completed within 30 working days from admission. If the commission is satisfied that the transaction may raise any serious competition concerns, then the procedure moves to Phase 2. If not, the commission will approve the transaction. If no decision is made within 30 working days, then the transaction is deemed to be approved.

Phase 2

After notifying the parties that the procedure is moved to Phase 2 for further evaluation, it lasts for a period of 90 working days which can be further extended for a maximum of 30 working days. This period can be further extended up to another 15 days if the parties require hearings.

An appeal can be filed with the Competition Tribunal within 15 days of the decision of the Competition Commission. Appeal can be filed only by a party who is requesting the clearance.

Competition law regime before this legislation

Before Law No 31112, Peru had a merger control law which is applicable to only the electric sector. This Law is called Law 26876 (Antitrust and Anti-oligopoly Act for the Electricity Sector) and was enacted on 19 November 1997. There is no other law till now. Law No 31113 regulates the competition aspects of mergers in Peru.

Conclusion

This new merger control law of Peru is a major step ahead in the development of Peruvian competition policy. It had established the complete mechanism, like notification thresholds and notification forms which is required to limit the competition aspects in concentration operations. As it is the first of its kind of law for Peru which is being applied to all economic activities, time will be taken to derive proper Peruvian Jurisprudence relating to Competition.

References

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

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Roads are secular : case analysis of Ramasamy Udayar v. District Collector, Perambalur District

By

Rachit Garg

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September 30, 2021

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This article has been written by Manav Sharma, pursuing a Certificate Course in Advanced Criminal Litigation & Trial Advocacy from LawSikho. The article has been edited by Zigishu Singh (Associate, LawSikho) and Dipshi Swara (Senior Associate, LawSikho).

Table of Contents

Introduction

The High Court of Madras while making the verdict in this case, strongly relied on the secularism ideals enshrined in the Indian Constitution and formed the opinion that one cannot dispute over the fact that, a particular street belongs to the group of people who are residing therein the majority, as well as, the citizens are not allowed to indulge in any kind of acts which may disturb the law and order situation due to the communal disharmony.

The Hon’ble High Court of Madras has made the observation in this case that:

“India is a secular country and merely because one religious group is living in majority in a particular area, it cannot be a reason for not allowing other religious festivals or processions through that area.”[1]

This verdict has followed the ideology of Secularism and has described how the fundamental rights of citizens can be affected, if communal disharmony arises between two communities, as the right to freedom of worship is one of the paramount rights of an individual.

Brief facts of the case

Background

V.Kalathur is a village that comprises two communities – Hindus and Muslims. Muslims reside on the eastern part of the village, whereas on the western side of the village, Hindus are residing. From the year 1951 onwards the dispute between the two religious groups regarding the usage of 96 per cent of Government Poramboke land arose between the two communities.

Muslims had been desiring the use of the land on the basis that it has to be used as a commonplace whereas the Hindus were claiming long use of Poramboke land and had objected to the idea of common usage. Disputes had also taken place between the two religious groups with regard to the said site in pursuant to which many cases have been filed against both the communities.

Filing of petition

The petitioner, belonging to the Hindu community had approached the authorities for seeking permission to perform Oorani Pongal Vizha which was for the duration of 3 days and was granted permission imposing certain conditions by an order dated 23.09.2018 including conditions with regard to the conduct of procession.

On the basis of the promises given by both communities, the learned Single Judge held the following:

“1. There will be a celebration of the village festival for three days.

2. The first procession of the first day would be taken only through the main roads and the procession would come to halt at the temple.

3. The second procession of the first day shall be taken from 10 P.M. to 2 A.M. via Periyakadai Veedhi, Pallivasal Street and Agraharam Street and would return on the same route to halt at Mariamman Koil.

4. Similarly, on the second day the first procession would be taken only through the main roads and the procession would come to halt at the temple.

5. The second procession of the second day would be taken from 10 P.M. to 2 A.M. via Periyakadai Veedhi, Pallivasal Street and Agraharam Street and return on the same route to halt at Mariamman Koil.

6. Since there was an objection by the Muslim community people about the sprinkling of turmeric water, based on the undertaking affidavit dated 11.10.2018 filed by the petitioner, it was directed that the Hindus shall not sprinkle turmeric water on the third day and they would restrict their celebrations and rituals on the third day.

7. Police protection was also directed to be given.”[4]

Appeal filed in the High Court of Madras

Indignant with the order of the learned single judge, these appeals were filed before the High Court of Madras.

The contentions of the counsel appearing for the Appellant were :
1. For having a procession on the roads or streets meant for common passage, there cannot be any restriction.

2. The certainty that a particular section of people or group own properties on a road or street is not enough to prohibit the celebration of any other religious procession.

3. The power to regulate and not to prohibit exists with the police and revenue authorities and nothing else.

4.There is no issue with the permission granted for the first day by the learned single judge. The petitioner is only aggrieved by the restricted permission granted for the first procession on the second day through the main roads.

5. The petitioner wanted the first procession on the second day to go in the same route as that of the second procession of the first day as well as the second day viz., via Periyakadai Veedhi, Pallivasal Street and Agraharam Street and return on the same route to halt at Mariamman Koil and it cannot be restricted to main roads alone.

6. The third day function has no issues since the petitioner has agreed that Hindus shall not sprinkle turmeric water on the third day and the celebrations and rituals would be restricted. [5]

Hence it was argued on behalf of the petitioner that, procession cannot be prohibited to pass through the roads, as well as, the petitioner had seek permission for first procession of the second day of the temple festival to pass through all streets for which permission has been already granted for the second procession of the first day as well as the second day.

The averments made by the respondent’s counsel were the following:

Erroneous permission to conduct two processions on the first two days was granted by the learned single judge in spite of objections raised by the third respondent as they had only agreed for conduct of two processions in a single day and had also objected to the conduct of procession after 9:00pm.
Some of the areas viz., Periakadai Veedhi, Post Office Street, Pallivasal Street are occupied only by the Muslim people and not even a single Hindu family resides in those areas and hence there is no reason to insist upon taking out the procession in those Muslim areas.
The intention of petitioner is to go against law and order in the Muslim dominated areas by conducting the processions.
Earlier in 2016 and 2017 only two processions were permitted on a single day with police protection through the Muslim area.
The permission granted by the learned single judge has to be set aside and only two processions in a single day should be allowed. [6]

The records produced before the Court revealed that the major community residing in the village were Hindus and Muslims and that there was no problem till the year 2011 for conduct of festivals in the four major temples viz.,

(I) Arulmighu Lakshminarayana Perumal Temple

(II) Arulmighu Selliamman Temple

(III) Arulmighu Rayappa Temple

(IV) Arulmighu Mariamman Temple

The counter affidavit filed by the third respondent in the case viz., Deputy Superintendent of Police revealed that the three days festivals of the aforesaid temples were peacefully conducted till the year 2011 and only from the year 2012 onwards the Muslims started objecting to some of the Hindu festivals terming them as Sins. Even though Muslims objected to the conducting of the temple festival and procession, the petitioner approached the police authorities seeking protection for conducting the temple festival and procession.

By an order dated 20.08.2012, the police authorities had granted permission with certain restrictions, and by this order, the first day of Oorani Pongal and Mavilakku Pujai were allowed to be conducted on the same day. The Deity’s procession along with folk dance was allowed after 10:00 pm onwards. For the second day, the Mariamman deity, Milk pot and Fire pot along with music was permitted and the deity’s procession along with the folk dance was allowed after 10:00 pm onwards. Similarly, for the third day the sprinkling of turmeric water was allowed to be conducted in the morning time subject to certain conditions.

Aggrieved by this, a series of writ petitions was filed by one Nattar Basha seeking writ of mandamus by directing the respondents not to permit any procession on 30.08.2012 for the purpose of avoiding communal disharmony. The Court vide its order dated 15.10.2015 disposed of the writ petition and directed the police authorities to take appropriate actions to avoid any law and order situation during the procession to be held between 23.10.2015 to 25.10.2015.

Issues involved in the case

“People can be religious; Men may be communal; Can roads be communal?” was the issue or the question which was involved in the said appeal.

Laws involved in the case

The rules applied in the present case were:

1. Section 180-A of the Tamil Nadu District Municipalities Act 1920[2]

“All streets vested in or to be vested in or maintained by a Municipal Council shall be open to persons of whatever caste or creed.”

2. Article 25 of Constitution of India[3], 1950

“Freedom of conscience and free profession, practice and propagation of religion.

(1) Subject to public order, morality and health and to the other provisions of this Part, all persons are equally entitled to freedom of conscience and the right freely to profess, practise and propagate religion.

(2) Nothing in this article shall affect the operation of any existing law or prevent the State from making any law— (a) regulating or restricting any economic, financial, political or other secular activity which may be associated with religious practice;

(b) providing for social welfare and reform or the throwing open of Hindu religious institutions of a public character to all classes and sections of Hindus. Explanation I.—The wearing and carrying of kirpans shall be deemed to be included in the profession of the Sikh religion. Explanation II.—In sub-clause (b) of clause (2), the reference to Hindus shall be construed as including a reference to persons professing the Sikh, Jaina or Buddhist religion, and the reference to Hindu religious institutions shall be construed accordingly.”

Judgment by the Court

After considering all the facts and circumstances involved in the case, and after hearing both sides, the Hon’ble High Court of Madras comprising the bench of Justice N.Kirubakaran and Justice P.Velmurugan, held that any procession including religious procession is not allowed to be prohibited simply on the ground that another religious group is residing or doing business in the area.

The Court also considered that, there must not be any kind of order which would prohibit religious festivals and temple’s processions through all the roads of the village/ town when the same is being conducted for years together.

As far as the law and order problem is concerned, the Court at para 32, has opined that:

“32. If there is going to be any law and order problem, the police authorities have to intervene and prevent any untoward incidents and give appropriate police protection. Therefore, the case of the petitioner has to be accepted and there shall be a direction to the authorities to permit the Hindus to conduct two processions on the first and second day of the village temple festivals through all the streets and roads which have been conducted till 2015. As far as the procession on the third day of temple festival is concerned, the petitioner himself accepted that Hindus would not conduct the procession in which the turmeric water would be sprinkled.”[7]

The Court at para 33 has also viewed that:

“33. The above said facts of the case would reveal that all along there had been religious tolerance and the religious festivals were conducted very smoothly and religious procession were conducted without any problem through all the streets and roads of the village. If religious intolerance is going to be allowed, it is not good for a secular country. Intolerance in any form by any religious group has to be curtailed and prohibited. In this case, intolerance of a particular religious group is exhibited by objecting for the festivals which have been conducted for decades together and the procession through the streets and roads of the village are sought to be prohibited stating that the area is dominated by Muslims and therefore, there cannot be any Hindu festival or procession through the locality. India is a secular country and merely because one religious group is living in majority in a particular area, it cannot be a reason for not allowing other religious festivals or processions through that area. If the contention of the private respondent is to be accepted then it would create a situation in which minority people cannot conduct any festival or procession in most of the areas in India. If resistance is being exhibited by one religious group and it is reciprocated by the other religious groups, there would be chaos, riots, religious fights causing loss of lives and destruction of properties. Consequently, the secular character of our country will be destroyed or damaged.”[8]

Analysis

The judgment of the Hon’ble High Court of Madras has to be accepted in its entirety because what the judge has stated was based upon secular ideals. The Constitution of India at Article 25 has given the citizens of India, the right to practice, profess any religion. Article 25 states that all persons are equally entitled to practice, profess and propagate any religion. This secular ideology enshrined in our Constitution must be adhered to in its entirety in order to avoid communal disharmony.

The High Court of Madras was right in stating that, India is a secular country and merely because one religious group is living in the majority in a particular area, it cannot be a reason for not allowing other religious festivals or processions to pass through that area. It is also germane to point out that Section 180-A of the Tamil Nadu District Municipalities Act 1920, has allowed all the streets shall be open to all the persons of any caste or creed and hence, if any such claim that, one community is not allowed to practise their religious activities in a particular road or street, it will hinder the fundamental right of practice and propagating religion of their choice.

The High Court of Madras rightly stated that people can be religious, men may be communal, but roads and streets are secular. The Court was right in mentioning that, if the respondent’s contentions are accepted then there would be a situation in which minority people will not be allowed to conduct any festival or procession in most of the areas in India. If such resistance is being shown by one religious group which in turn is reciprocated by the other religious groups, then there would be a chaotic situation, and riots, as well as religious fights, will occur, that will only result in causing loss of lives and damage of properties. There would be a crisis in the country that would disturb the law and order situation which would result in communal disharmony. Hence, such activities would disturb the religious and secular character of the nation.

Conclusion

It is relevant here to mention that this verdict would set the precedent that a country with a variety in culture and diversity can not afford such religious and communal clashes between the different religious communities. The ideals of secularism should not be disturbed, otherwise, a violation of fundamental rights will happen, which will not only hamper the growth of the nation but will also promote hatred among the different religious communities. This will lead to a humanitarian crisis, where it would become difficult to promote brotherhood and unity in diversity.

References

1. Mad HC| People can be religious; Men may be communal, but roads and streets are secular; Religious procession cannot be prohibited in an area inhabited by a different religious group: available at: https://www.scconline.com/blog/post/2021/05/10/mad-hc-people-can-be-religious-men-may-be-communal-but-roads-and-streets-are-secular-religious-procession-cannot-be-prohibited-in-an-area-inhabited-by-a-different-religious-group/

2. Section 180-A, The Tamil Nadu District Municipalities Act, 1920, accessible at, https://www.tn.gov.in/dtp/pdfs/TN_District_Municipalities_Act_1920.pdf

3. Article 25, The Constitution of India, 1950: accessible at, https://legislative.gov.in/sites/default/files/COI.pdf

4. Ramasamy Udayar v. District Collector and Others, 2021 SCC OnLine Mad 1779: (2021) 4 Mad LJ 395

[1] Mad HC| People can be religious; Men may be communal; but roads and streets are secular; Religious procession cannot be prohibited in an area inhabited by a different religious group: available at: https://www.scconline.com/blog/post/2021/05/10/mad-hc-people-can-be-religious-men-may-be-communal-but-roads-and-streets-are-secular-religious-procession-cannot-be-prohibited-in-an-area-inhabited-by-a-different-religious-group/

[2] Section 180-A, The Tamil Nadu District Municipalities Act, 1920, accessible at, https://www.tn.gov.in/dtp/pdfs/TN_District_Municipalities_Act_1920.pdf

[3] Article 25, The Constitution of India, 1950: accessible at, https://legislative.gov.in/sites/default/files/COI.pdf

[4] Ramasamy Udayar v. District Collector and Others, 2021 SCC OnLine Mad 1779: (2021) 4 Mad LJ 395 at para 6.

[5] Supra note 4, refer para 8 of the impugned judgment.

[6] Supra note 4, refer para 11 of the impugned judgment.

[7] Supra note 4, see also, para 32 of the judgment.

[8] Supra not 4, refer para 33 of the judgment.

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Strategies for profitable acquisition

By

Oishika Banerji

-

September 30, 2021

0

M&A DEAL — Image source: https://rb.gy/fvodbq

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

Table of Contents

Introduction

“If you can’t build it, buy it!” This has become a slogan in the business world today. Million-dollar Merger and acquisition transactions happen every day. We witnessed the latest merging of Vodafone and Idea into ‘Vi’ with our eyes wide open as these telecommunications companies are very popular and their competition often resulted in us enjoying various offers. This corporate marriage can be considered as a result of the arrival of Reliance Jio to the competition in the telecommunications market in India. This merger aims to utilize the synergy and increased customer base followed by less competition as one competitor is out from the telecom market. There are various kinds of acquisitions. Some of them are Concentric Acquisitions, Vertical and Horizontal Acquisitions, Conglomerate Acquisitions, Asset Acquisition, Stock Acquisition, etc. This article discusses the different acquisition strategies. First, let us understand the meaning of acquisition strategy.

What is an acquisition strategy?

The strategy adopted by an acquiring firm to reap profit from the acquisition is called the Acquisition strategy. An efficacious acquisition can only give the desired results. Therefore, a constructive acquisition strategy is pertinent to any acquisition. There should be an explicit rationale for the acquisition strategy. Though companies ultimate motive is profit-making, no company resorts to an acquisition without knowing how to make a profit.

For example, Company A has a successful business in a single product line in various parts of India. Company A decides to increase its product line to make more profits. Instead of building a manufacturing unit of its own and being hesitant to enter a new market, it identified Company B which is an established manufacturing Company focusing on multiple product lines. Company A acquired Company B. Here, the acquisition strategy is increasing the product line. Company A now has the synergy and it will now reap profit in a planned manner.

Acquisition strategies

Given below are some of the crucial acquisition strategies:

Developing target company

A company may acquire an ailing company if it believes that acquiring and pushing it to development by giving some ingredients can do the job. All it needs may be support from the big company and capital. They may wind up because of the lack of reserves. Such companies get acquired by big companies due to their potential and likelihood of success in the future.

Market access

What is more convenient; building and establishing an industry in a new market or taking over an already established industry? Of course, we all love shortcuts. Starting from scratch is indeed a tedious journey. Companies acquire to enter a new market. Acquiring an already established company helps it to get the assets, customers, etc., of the target company.

On the other hand, some companies may find it arduous to enter a new market even with an innovative product as they may not have customer relationships and cannot confront risks and losses. Such companies are acquired by big ones.

Easy access to technologies

Imagine Company A manufactures parts of mobile phones. It has now decided to manufacture its own newly designed smartphone. Company B is a company developing Operating Systems that work on phones. Company A finds it expensive to develop software, operating systems, and all the technologies necessary for creating a smartphone. So it decides to acquire Company B. This acquisition enables Company A to access the technologies of Company B at a lower cost.

Economics of scale

How about producing more at a lower cost? Sounds great, right? That is Economies of Scale. Attaining high economies of scale is another strategy of acquisitions. The Cost of production becomes cheap, when costs get extended to a large number of goods.

So acquisitions lead to an increase in business, and that results in economies of scale.

Acquire start-ups

Understanding the value of an innovative product of a start-up and its potential to emerge as a successful company and therefore acquiring it in advance would be a smart business decision and another strategy too.

There are high potential companies, mainly start-ups which require immense capital for expansion. Acquiring them early can yield benefits in the future.

Eliminating competitors

Some Companies acquire with the strategy of eliminating competitors. The acquisition of Uber eats by Zomato is one latest example of this. Indian food delivery start-up Uber eats was acquired by Zomato aiming for competitive benefits. Gaining more market share than its competitor Swiggy by eliminating its other competitor from the market is the strategy of acquisition of Zomato. Such kinds of acquisitions characterized by the elimination of competitors are called Horizontal Acquisitions or Related Acquisitions.

Talent strategy

Some acquisitions get initiated in the hunt for talented employees. Humans are indeed a prominent resource. Bringing a brilliant team on board results in enormous profits and innovations to the Company.

Cheap acquisitions

A Company may acquire another company if it could be bought in a value that is much lower than its intrinsic value. Such situations are rare.

Diversification

A company diversifies the goods and services to bring down the element of risk factor. The acquisition helps in diversification and this is another common strategy of acquisitions. Such kinds of acquisitions that acquire other companies carrying business in other product lines are called Conglomerate Acquisitions.

Synergy

A strategy that is common in all other strategies is the Synergy Strategy. The Combined Effect of potential, resources, and talent of both countries can result in more productivity. Sometimes, the growth of business due to synergy results in a reduced cost of production. This strategy is, therefore, the most admired.

Exploring foreign markets

To start a subsidiary company in a foreign country is risky. It would be wrong to start a company from scratch when there is an option for acquisition. Operating a company in a foreign nation requires a thorough understanding of the foreign country’s economy, tax laws, nature of the market, consumer behavior, demand, business laws, and many more such factors. Therefore, acquisition of an already operating company is preferred since it gives the benefit of its brand, customer base, employees with knowledge of the economy, etc.

Departure from traditional ways

We are living in a technology-driven era. Living with traditional usages may hamper our growth. A simple example is the usage of Whatsapp for sending messages instead of letters.

A bank with all the latest facilities like net banking, mobile banking, etc., is preferred over banks that stick to traditional ways of banking. Customers may leave such banks. Similarly, acquisitions happen for departing from traditional means. A Company may acquire another one for utilizing the technologies and all the latest facilities of the Target Company including the highly talented qualified and updated employees. This is another strategy.

Example of a successful acquisition

Google’s acquisition of Android

The acquisition list of Google is enormous. The smartest move of Google which was until then recognized as a search-engine company, operating on personal computers, happened in 2005 when it acquired Android. Android and Google are the prominent celebrities of the technology-driven modern world. Android started as a very small start-up in 2003 aiming to provide Operating systems in Digital Cameras but this plan was later shifted to phones as the market for Digital Cameras fell. Google acquired Android for $50 Million intending to expand its platform to Mobile phones.

Today, Android as an Operating System is not confined to mobile phones but can be seen in smart-watches, laptops, smart TVs, tablets, Personal Computers, and even more. There are more than 3 billion active Android devices. Would the splendid growth of Android be possible, if Google had not acquired it back in 2005? Well, we can’t comment on that. However, Google made the right acquisition and this acquisition brought Google to the upfront.

The advantages of Google’s acquisition of Android can be listed as follows:

Expansion of business into more platforms.
Huge turnover.
Vast customer base.
Utilizing the effect of synergy for best outcomes.
Access to highly talented employees of Android.

Examples of unsuccessful acquisitions

Microsoft acquired Nokia in 2014 and the acquisition strategy was to enter into the mobile making business. Unfortunately, this turned out to be unsuccessful, with Microsoft burdened with an almost $8 billion loss. Microsoft hired many employees of Nokia but could not still survive in the mobile market.

A similarly failed acquisition was made by Google in 2012 when it acquired Motorola for $12.5 billion. The acquisition strategy was to develop Motorola into a powerful competitor to Samsung. But that did not happen, and ultimately Google had to sell Motorola to Lenovo for $2.91 billion!

Conclusion

Now we know the main strategies of Mergers and Acquisitions. It is reasonable for a Company to engage in acquisitions for various strategies. Expansion of business is the key to success and acquisitions play a significant role here. But not all of it results in profits. Only a few are lucky. The Harvard Business Review report reveals that the failure rate of Mergers and acquisitions is between70% to 90%. This can be due to improper and ineffective acquisition strategies and failure in planning. Sometimes the synergies may not work the way the companies wish. However, a well-planned acquisition strategy is always better than blindly jumping to acquisitions.

References

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Indian fugitives fleeing to UK and their extradition

By

Sneha Mahawar

-

September 30, 2021

0

Image Source - https://thewire.in/law/cabinet-approves-fugitive-economic-offenders-ordinance-2018

This article is written by Shruti Yadav, from Jagran Lakecity, Bhopal. This article talks about extradition and policies regarding it. It also reiterates the reason behind fugitives fleeing to the UK and the extradition relationship of India with the same.

Table of Contents

Introduction

Extradition is a process where one government requests another state to surrender a fugitive who fled to their country seeking asylum, after committing a crime in the requesting country’s jurisdiction. It includes convicts charged but not tried, those who have escaped in custody, and those prosecuted in absentia. Generally, states do not apply their penal laws in crimes committed outside their territory and have been willing to assist in surrendering fugitives for the sake of justice. Extradition is typically enabled through treaties between countries. Countries also tend not to extradite fugitives for military or political offenses and capital punishment or life imprisonment. Also, countries will not extradite their citizens to other jurisdictions for a crime they committed abroad. Some lacunae and loopholes in international cooperation about extradition are often exploited by criminals who take shelter abroad. This makes their case into a complex legal issue involving jurisdictions of different states.

India’s Fugitive Economic Offenders Act, 2018

Fugitive Economic Offenders Act, 2018, seeks to confiscate properties of fugitives who have fled to evade conviction and refuse to return. A Fugitive Economic Offender (FEO) is against whom charges of an offense under this act of the minimum value of 100 crores are levied. A few offenses listed in this act are money laundering, forging currency or government stamps, transactions duping creditors, and cheque dishonor. FEO is defined by the Fugitive Economic Offenders Act, 2018, Section 2 as any person against whom a warrant for detention concerning a scheduled offense has been declared by any court in India, who

has left India to dodge criminal prosecution; or
being abroad denies returning to India to face criminal prosecution.

The FEO Act aims “to provide for means to hinder fugitive economic offenders from circumventing the process of law in India by staying outside the jurisdiction of Indian courts, to protect the sanctity of the rule of law in India and for circumstances connected in interest to that or incidental thereto.” The court has the power to declare any individual a fugitive economic offender after hearing their case. It can also direct the Central Government to confiscate proceeds from the crime and property under the name of such an offender.

Role of enforcement directorate (ED)

The authority to enforce laws and investigate crimes of economic nature in India are rested upon the directorate of enforcement(ED).

It is law enforcement and economic intelligence agency. It comes under the Government of India and the Ministry of Finance’s Department of Economic Affairs. It is the main body that is responsible for fugitive economic offenders. The key role of the agency is as follows:

Investigate the provisions of the Foreign Exchange Management Act (FEMA), 1999, which has been violated. The penalties that are imposed are up to three times the sum involved.
While investigating the crime, the property attached shall be seized if the same is determined to be proceeds of crime inferred from a scheduled offense under the Prevention of Money Laundering Act (PMLA), 2002 and to prosecute the individuals involved in the malfeasance of money laundering.
Notice shall be given under the Foreign Exchange Regulation Act (FERA), 1973 for the alleged infringement of the provisions of the concerned Act, which may result in punishment.

Conservation of Foreign Exchange and Prevention of Smuggling Activities Act (COFEPOSA),1974 regarding violations of FEMA shall sponsor cases of precautionary detention.
In matters relating to money laundering and restoration of assets under the provisions of PMLA, render cooperation to foreign countries and seek cooperation in such matters.

Extradition cases

The Vijay Mallya case

He is a businessman who fled to the United Kingdom and is presently fighting extradition. He was accused of money laundering and fraud of an estimated Rs. 900 crores.

Mallya was declared a fugitive economic offender by a special court in Mumbai, the first such denotation under the Fugitive Economic Offenders Act, 2018.

The ED has accused Mallya under Sections 3 and 4 of PMLA. The agency has asserted that Kingfisher Airlines, now defunct, misled at least Rs 3,547 crores of its loan.

The ED’s charges have pitched five occurrences of alleged digression of loan funds given to Kingfisher Airlines by moneylenders:

The alteration of Rs 3,432.40 crores through over-invoicing of lease rentals of aircraft.
The deviation of Rs 45.42 crores for securing an amount towards the rental lease of a corporate jet which Mallya used.
The digression of Rs 50.90 crore from Kingfisher Airlines to the Force India Formula One team that Mallya managed.
The diversion of Rs 15.90 crore from Kingfisher Airlines to Mallya’s firm that owned the Indian Premier League cricket team Royal Challengers Bangalore.
The diversion of Rs 2.80 crore to ICICI Bank as reparation of an earlier credit to Kingfisher Airlines.

The ED, as per their investigation, accused Mallya of covering, possession, purchase, and use of proceeds of crime.

The Nirav Modi case

The Enforcement Directorate claimed it had seized Rs 17.25 crore from an account in the United Kingdom belonging to Purvi Modi, opened by fugitive diamond jeweler Nirav Modi.

Purvi Modi, Nirav Modi’s sister, turned approver in the money laundering case against him, notified the ED about the account. The ED said the money did not belong to Purvi, and Nirav Modi was operating the account.

Modi and his uncle Mehul Choksi are implicated in routing about Rs 13,600 crore through swindling Letters of Undertaking (LoUs) of Punjab National Bank (PNB). Both are being investigated under PMLA. Modi left India and fled to Britain in January 2018 before the PNB scam became known.

So far, the ED has confiscated assets worth Rs 2,400 crore belonging to Modi in India and abroad.

Human rights and the UK

Since 2013, over 5,500 people from India have sought political asylum in the UK. UK is a signatory to the European Convention of Human Rights and therefore, has to comply with denying extradition requests if any UK court deems a person will likely face life imprisonment or capital punishment upon extradition.

Extradition procedures are slow in the UK. Only one Indian has been extradited to India by the UK since the inception of extradition treaties between both countries in 1992. The UK has rejected a large number of extradition requests made by India, citing different grounds. The legal system in India and Britain is almost identical, which means lawyers in the UK also have a vast knowledge of Indian law, which is an additional advantage to the Indian offenders. The British Human Rights Commission is considered very strict and severe. It protects the interest of every individual residing in its territory. The offenders are abusing this protection. While determining whether a requested person may be extradited, the Magistrate Court must also consider whether or not, extradition would be sanctioned in terms of the same not violating the requested person’s conventional rights as defined under Article 8 of Human Rights Act, 1988 (UK), which include the right to a fair trial, interdiction of torture and depraving treatment. If the Magistrate Court determines that the extradition of the requested person would infringe these rights, in that case, it cannot direct the extradition.

Way forward for India to increase its extradition success rate

Once the person has eloped to another country, that country becomes entitled to protect him and declines to let the country where he has committed the offense take him away. In other words, the country where he absconds is capable of providing him with refuge. When opposing extradition to India, requested persons will usually take up similar human rights and extrinsic deliberation arguments. The conditions of prisons in India were a central issue of the argument. However, the Government of India has been able to dissipate any perceived jeopardy by giving adequate convictions. India ought to guarantee that it lives up to its convictions. The UK and other jurisdictions remain to have a belief that India will not breach convictions given by it. This may be significant in case of imminent extradition proceedings. In light of recent India-UK extradition verdicts, the UK may no longer be a favored target for fugitive offenders from India. India’s proactive approach towards extradition, assuredly, is an impediment. It promotes the postulate that no one can evade the long arms of the law. Despite binding treaty mechanisms, the process of extraditing fugitives is lengthy, intricate, and heavily depends on domestic laws and the diplomacies of the requested state. This is not unusual as extradition is, after all, a sovereign choice. Nonetheless, there are determinants involved in extradition over which India can exercise authority. India could foster a targeted approach to settle these arguments and thereby improve its success rate.

Leveraging tact and bilateral mediations to persuade countries to process requests expeditiously is a critical step. Moreover, based on comity, India should concoct extradition requests from international states swiftly and efficiently. Also, India must arrange extradition treaties with as many countries as possible and enter into more extradition relations. Deterrent law and policy measures that can prevent the escape of offenders may also be investigated. The freshly passed Fugitive Economic Offenders Act, 2018, implies the government’s attempts to shift its focus to preventive, ex-ante legal procedures. India also needs to dispel concerns about poor prison conditions and inherent human rights breaches of the requested person. Assurances by the Indian Government concerning the same are frequently not affirmed by the international courts. As a short-term proposition, India could offer to detain surrendered offenders to reformatories with adequate facilities. Fugitives who are not involved in violent crimes, such as economic offenders, can be put on house arrest with minimum security. However, it is frugal to make a coordinated effort to introduce systematic prison reforms and transform Indian prisons into a safe area for rehabilitation.

Additionally, India could weigh in signing international instruments, such as the UN Convention Against Torture (1984), to ascertain India’s zero susceptibility towards torture and custodial brutality. At the same time, the advancing application of human rights interests to extradition requests beckons for the formulation of rules that deliver a fair balance amidst crime suppression and the fugitive’s security. To warrant that India’s extradition requests comply with treaty provisions and documentary obligations, India must bring an appropriate organizational agency into action to familiarise itself with the laws and ordinances of treaty states. India could adopt the US’ model of Office of International Affairs, Washington’s principal body to manage extradition requests, and employment lawyers and station qualified liaison deputies in countries with which the country has extradition associations. Setting up a separate chamber to provide proficient legal aid and assistance on drafting, certification, and interpretation of evidence will help mitigate the refusal of requests.

Conclusion

Along with the benefits of globalization and unification comes the critical challenge of offenders escaping India. Given India’s hindrances in ensuring the return of these fugitives, the country must swiftly introduce amelioration and leverage diplomacy to conceive a more straightforward, frictionless extradition procedure. For a long period, the UK has been one of the most preferred sanctuaries of indicted or sentenced people in India. The Government of India has finally realized the main reason behind its constant failure to extradite offenders from the UK. The inferior prison conditions in India have been a pivotal point of argument by many offenders and for the right acumens. Extraditing a person only to have them presented to a terrible prison environment may be something they warrant but is also uncompassionate and inhumane. India must guarantee that the person they are asked to extradite would not be managed degradingly by the seeking State. The Government of India has not always been that efficient in erecting reliable letters of assurance that would plead all the potential difficulties in prison and how such problems would be taken care of. This flaw has been enhanced to generate better outcomes in improved trust and reassurance in India. Still, India’s time to adjust for a favorable turn of events as the contemporary trend of extradition between India and the UK seems more likely than ever. Now, the Government of India should recreate the extradition treaty with Britain so that the extradition of fugitives can be done without any obstruction.

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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Legal analysis of the privately financed infrastructure projects in Nigeria

By

Sneha Mahawar

-

September 30, 2021

0

This article is written by Brijesh Devi pursuing a Diploma in M & A from Lawsikho. This article has been edited by Amitabh Ranjan (Associate, LawSikho) and Dipshi Swara (Senior Associate, LawSikho).

Table of Contents

Introduction

One of the main indicators of a developed country is its infrastructure. The infrastructure of a country plays a key role in improving the living standards of its citizens. Developing countries of the Middle East, Asia, and Africa require feasible infrastructural development to make the life of their citizens easier. A properly planned infrastructure helps grow the businesses of corporations and there is a growing trend of developing infrastructure projects through privately financed operations all around the world. Nigeria is one such country that has developed its infrastructure through privately financed projects. The two most popular ways of financing infrastructure projects in Nigeria are by PPP’s (Public-Private Partnerships) and bank-led project finance. This article analyses these infrastructure projects in Nigeria and lays down the legal frameworks dealing with them.

Understanding infrastructure projects of Nigeria

The developed infrastructure of a country is a sign of the economic growth of the region. The development of road infrastructure in Nigeria isn’t complete but it is far better than the infrastructure it had in the early 2000s. The sub-Saharan African countries have faced economic crises, famine & droughts so the government of these countries couldn’t completely give its attention to such projects. The huge costs associated with infrastructure funding as well as budget deficits are regarded as the chief reasons for the adoption of privately financed infrastructure projects.

In February 2021 President Muhammadu Buhari of Nigeria announced that the government has approved the creation of a new development firm called Infra-Co, which will be backed by an infrastructure fund worth $2.63 billion. The hope is to improve the transportation and power networks that have held back the 40% of Nigerians living below the poverty line. The government plans to boost Nigerian infrastructure through a partnership with the private sector.

Analysing bank-led project financing, PPP’s & other privately financed infrastructure projects in Nigeria

Since Nigeria got its independence in 1960 the country’s ruling party had adopted a socialist model to run the nation. However, in recent times with the demand for more infrastructure arising from the population explosion & industrial development along with the financial constraint experienced by the government, the public sector has sought to involve the private sectors in the development of infrastructure facilities through bank-led project finances and joint ventures inform of Public-Private Partnership (PPP).

Bank-led project finance

Project finance has been embraced in Nigeria as an innovative version for the improvement of public infrastructure and personal project execution. The most lively sectors in nearby venture finance had been transportation, housing, and energy. Examples of key task finance deals encompass the $19 billion Dangote Group refinery task and the US$900 million Azura IPP undertaking for the construction, operation, and maintenance of a 450MW fuel-fired open-cycle electricity plant. However, the adoption of bank-led undertaking finance within the improvement of Nigerian infrastructure has been pretty sluggish, because of a variety of things, together with a dearth of relevant understanding and revel in the undeveloped regulatory framework, and poor macro-financial indices.

Many of the neighbourhood banks lack the potential to fund large infrastructure tasks, and where they do, can only accomplish that at prohibitive hobby rates. The worldwide investors however are often unwilling to take at the sizable political, financial and different risks, or price them, which regularly puts such investment out of the attainment of tasks. Additionally, over-exposure to overseas loans exposes the initiatives to trade rate dangers, as sales are usually in Naira (the neighbourhood forex). These demanding situations have over time always led to the adoption of impractical financing solutions that cause defaults, prolonged tenors, and deserted tasks.

Public-private partnerships (PPP)

Most governments undertake the PPP model as a rely upon ideological persuasion with the aid of using personal sector know-how to lever extra efficiency and alternate control through the usage of private companies for a powerful approach in enhancing challenge productiveness, then improve monetary growth by way of shifting the greater part of the risk involved in project development to private zone. In the infrastructure projects panorama, PPPs are seen as financial gateways that allow the general public region to utilize private finance capital in a manner that enhances the possibilities of both the government and the private company.

The entire PPP framework in Nigeria hinges on the principles of achieving better value and affordable services. In the National Policy Document (by the Federal Govt of Nigeria), there are economic, social, and environmental objectives for the adoption of the PPP model as a strategy for infrastructure development. The government believes that a private-sector-led drive for infrastructure development through PPPs will open up the infrastructure and service delivery landscape in Nigeria to efficiency, inclusive access, and overall improvement of the quality of public service delivery in a sustainable way.

Examples of projects that have been or are being financed through this model include the Abuja light rail project, the Lekki Deep Seaport, the second Niger Bridge, and the Onne Oil and Gas Free Trade Zone port facility in Rivers State, which the Financial Times of London describes as “the most successful in Africa”.

Other types of privately financed projects

Capital markets

The above-mentioned ways aren’t the only types of financing for infrastructure projects in Nigeria. The Nigerian capital market has performed notably in terms of bond issuance. The Federal Government’s recent Eurobond provision turned into heavily oversubscribed.

The ARM Harith Infrastructure Fund, the primary infrastructure fund to be authorized by using the Nigerian Securities and Exchange Commission (SEC), is a US$250 million target closed-ended expert Infrastructure Fund with a middle focus on shipping, strength, and utility initiatives in West Africa. Since the status quo of the fund in 2013 (with its first close in January 2015 of circa US$ 90 million), some different infrastructure price ranges were registered to utilize the SEC (including the NSIA’s Nigerian Infrastructure Fund). No infrastructure fund (or bond) has but been listed on any trade-in Nigeria. Likely reasons for this consist of lack of stable macroeconomic surroundings, loss of a strong company base/ bankable tasks, and market illiquidity.

Sukuks

Islamic finance is a way of financing primarily based on the standards of Islamic regulation and has numerous systems that can be adapted to healthy various ways of financing depending on the instances together with Murabaha, Takaful, Ijarah, Wakala, and many others. It has been instrumental within the finance of several initiatives around the phrase, together with the UK, South Africa (which was about 4 instances oversubscribed), Senegal, and Malaysia. The SEC in 2013, promulgated rules on Sukuk issuance which facilitated the issuance of the first State Sukuk in Nigeria by using the Osun State Government. The issuance became an N14.4 Billion bond for the purpose of financing street, and school constructions throughout the kingdom. Islamic financing is a hitherto untapped deep fund pool, and it’s far crucial to make certain that the improvement of the regulatory framework surrounding the same is obvious and in line with contemporary international practice, to draw vital investment.

Pension Fund Assets

The National Pension Commission Regulations on Investment of Pension Fund Assets allow Pension Fund Administrators (PFAs) to invest Pension Fund Assets (PAs) under management in infrastructure initiatives via eligible bonds and different debt securities. The proposed infrastructure challenge must meet positive additional criteria, along with, inter alia, the project needs to not be much less than N5 Billion in value and should be offered to a concessionaire with an excellent track document through an open and aggressive bidding process following requirements beneath the ICRC Act, be licensed by using the ICRC and approved by using the Federal Executive Council. In addition, the bond ought to have suitable credit score upgrades.

However, although the guidelines allow as a good deal as 20% of the overall price of PAs under control to be invested in infrastructure, PFAs in Nigeria presently allocate simplest about 1% in their portfolios to investment in infrastructure, as many projects are unable to meet the investment standards because of lack of inexpensive credit score enhancements, and bureaucratic bottleneck worried in acquiring applicable certifications (now and then those can take years, hence driving up pre-development costs notably).

There is also no provision for pooling of PAs to create an extraordinary fund that might be capable of financing infrastructure at cheaper quotes due to the blessings of pooling.

Key regulatory frameworks for legal governance of Nigeria’s infrastructure projects

Below are some key regulatory frameworks meant for Nigeria’s infrastructure projects:

Highways Act 1971

The Ministry of Transport has been empowered by The Highways Act to operate and construct toll gates to collect tolls on the country’s highways. The main infrastructure law, the ICRCA, no longer contains a saving provision concerning this piece of regulation, nor does it make a connection with the Highways Act.

Utilities Charges Commission Act 1992

The Utilities Charges Commission was established under the Utilities Charges Commission Act 1992 that regulates tariffs levied by public utilities in the country. The main task of the commission is fixing the tariffs between the private investor and the government.

Bureau of Public Enterprises (Privatisation and Commercialisation) Act 1999

This act has laid down a complete regulatory framework network for privatization schemes in Nigeria and established the National Council on Privatisation (NCP) along with the Bureau of Public Enterprises (BPE) as the monitoring authority for private transactions. Under this act, the NCP is responsible for determining the public assets the government should divest from.

Debt Management Office

The main aim of the Debt Management Office (Establishment, Etc) is to authorize all loans and borrowings of the Federal Government and empowers the Minister of Finance to give guarantees for such borrowings and to approve loans from financial institutions to the Federal, State, or Local Governments or any of their agencies. Since all PPP processes may involve Federal Government borrowings and guarantees and other long-term contingent liabilities, under section 6 of the Act, the DMO’s approval will be required.

Electric Power Sector Reforms Act, 2005

This Act lays down the framework for compulsory participation of private companies in the generation, transmission, and distribution of power(electricity).

Infrastructure Concession Regulatory Commission Act 2005

The Infrastructure Concession Regulatory Commission Act, 2005 (ICRCA) was signed into law on 10 November 2005. The Act grants for the participation of the non-public region in financing the development, development, operation, or maintenance of infrastructure or improvement projects of the Federal Government through concession or contractual arrangements; and the establishment of the Commission to alter, screen and supervise the contracts on infrastructure or development initiatives.

Public Procurement Act 2007

The Public Procurement Act 2007 (PPA) installed the National Council on Public Procurement and the Bureau Public Procurement (BPP) as the regulatory government chargeable for the monitoring and oversight of public procurement, harmonizing the present government guidelines and practices by regulating, placing standards, and growing the felony framework and professional ability for public procurement in Nigeria, and other related matters.

It applies to all varieties of procurement of products, works and services finished via the Federal Government of Nigeria and all “procuring groups” and all other entities which derive at the least 35% of the finances appropriated, or proposed to be appropriated, for any type of procurement from the Federal proportion of the finances.

This list mentioned above is not exhaustive. The countries’ taxation laws are also obviously triggered during project finance & PPP transactions.

Conclusion

Infrastructure remains a key factor for an economically thriving country. Proper infrastructure planning improves the living quality of the residents and allows ease of business. Nigeria is still going through a discovery phase so far as PPP is concerned, while the environment in South Africa is comparatively advanced. This article describes how the legal framework operates and lays down the regulatory framework for infrastructure management and highlights areas where to improve on their local practice for PPP and project finance.

References:

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The legal know-how of carrying on a private hospital business in India

By

Sneha Mahawar

-

September 30, 2021

0

This article is written by Sneha Asthana pursuing a Diploma in Business Laws for In-House Counsels from Lawsikho. This article has been edited by Aatima Bhatia (Associate, LawSikho) and Dipshi Swara (Senior Associate, LawSikho).

Table of Contents

Introduction

Among the various businesses that have risen in the past decade, the medical sector opens a lot of opportunities for people in India. The sector has consistently seen a scarcity in its services in comparison to the ever-growing population of the country. While the country sees the involvement of both the Government and private entities in the medical sector, people are still not provided with adequate resources for such services. The government in India has successfully opened several government hospitals across the country like Lady Harding Medical College & Hospital, Delhi, Osmania General College & Hospital, Telangana, J.J Group of Hospitals, Mumbai, etc., but most people fear the quality of services provided in such hospitals. A big segment of the Indian population, while willing to get treated in public hospitals at reasonable costs, hesitate to do the same because they are not satisfied with the quality of services provided or the hygiene maintained. There persists a huge lack of facilities, long waiting periods for minor surgeries, unavailability of doctors, unqualified staff in most government hospitals thereby perpetuating a system of an unreliable healthcare system. Certain studies conducted by the IMS Institute for Healthcare Informatics in 2013, across 12 states in over 14,000 households indicated a steady increase in the usage of private healthcare facilities over the last 25 years for both Out-Patient and In-Patient services, across rural and urban areas. Taking advantage of such demands, several private entities have gotten involved in the private hospital business. Such a step has helped the country greatly as more good quality services are being provided to the common folk. While the financial accessibility and after-math of such treatment is a different debate, private hospitals can be credited for introducing a plethora of Grade A services with no compromise on quality.

The start of a private hospital is always chaotic as hospitals require intense licensing and authorizations from various regulatory and statutory bodies. Most private hospitals offer multispecialty services which make it all the more tedious for them to obtain all their necessary documents. The legal framework for private hospitals is covered under several Acts like the Clinical Establishments Act, 2010, the Atomic Energy Act, 1962, Companies Act, 2013, Electricity Act, 2003, Indian Electricity Rules, 1956, National Building Code of India, 2005, etc. Most of the capital that goes into starting up a private hospital is divided into:

Purchasing the land or building for such a business
Getting necessary beds, equipment, and machines for procedures, scans, tests, etc.
Medicine and inventory
Staff salary
Catering services for patients and canteens for visitors.

Post these expenses, hospitals also have to focus on ambulance services, marketing services, online services, pharmaceutical services, etc. Hospitals or clinics providing super-specialty services like cancer/oncology treatments, derma services, ENT specialists, dental services, cosmetology services often don’t require lengthy procedures to be followed but they also have to equip themselves with all the mandatory documents like licenses, approvals, etc.

This article discusses the kinds of statutory and regulatory licenses, approvals, or documents required to start a private hospital in India.

Licenses and approvals

Land license

The safest bet to opt for land that’s best suitable for hospitals is to only go for “hospital approved areas” which are usually marked on the Municipal plans. Other than such lands any non-agricultural land is also a good fit for constructing hospitals. The land required for the construction of the hospital must have all the required documents:

Title Deeds of the land.
NOCs from Municipal authorities, Pollution Control Board, Fire Department, Special Area Development Authority (if any), and Environment Clearance.
Land registration documents.
Floor Area Ratio certificates (FARs) and Ground Coverage certificates (GC).
Parking requirement certificates.
Road licenses to maintain distance from the main road.
Land mutation, if any.
Land conversion, if any.

Construction and installation-related approvals/licenses

Once the land and area for such a hospital have been approved, the next step is to get the building plan approved by the authorities, which is called the Building Plan Sanction. The building plan has to follow the guidelines given as per the National Building Code which talks about:

structural safety.
landscape planning.
asset and facility planning.
accessibility for the elderly and people with disabilities.
gas pipelines.
fire and light safety.
solar energy.
provisions on cement and steel masonry.
industrial wastes.
air conditioning and ventilation.
escalators, moving walkway provisions.
Water supply, drainage, and sanitation provisions.
Solid waste management etc.

As Building is a state subject, state authorities have their laws to govern the construction of the same. Therefore, most licenses and approvals have to be obtained from Municipal authorities. This is for the simple reason that buildings constructed in the area can be better monitored by the departments that possess the city’s plan and have easy access to it. Some of these licenses and certificates are:

NOC from fire safety.
Electrical installation certificate.
Height restriction certificates.
Equipment licenses.
Lift usage certificate.
Radiation department licenses.
Biohazardous permits.
Drainage approvals.

Registration under Clinical Establishments Act, 2010

According to Section 11 of the Clinical Establishments Act, no person is allowed to run a clinical establishment without being registered under this Act. The Act goes on to present conditions that should be met for registering the establishments under Section 12, which are:

Minimum standards of facilities and services as may be prescribed;
Minimum requirements of personnel as may be prescribed;
Maintenance of records and reporting provisions as may be prescribed;
Such other conditions as may be prescribed.

After such conditions have been met, the application for provisional registration has to be filed under Section 14. This application requires the entity/individual to furnish basic details such as the name of the owner and establishment, addresses, specifics of the hospital, etc., and file it either in person/post/online. Such application is to be accompanied by the prescribed fees which depend entirely on the State Rules.

After being provided with the Provisional Registration, the entity/individual may apply for permanent registration under Section 24 of the Act. Similar to the application under Section 14, Section 24 application also calls for hospital details. Every state and Union Territory has different particulars in their forms. For the state of Telangana, the application requires basic hospital facilities and various documents to be attached to the application. For Delhi, visiting the website of delhimedicalcouncil.org helps in being redirected to the application page whereby furnishing necessary details with prescribed fees of Rs 2000/- shall be completed. Post application, certain inspections are done to check whether prescribed standards are being met or not. Upon satisfaction of the state/UT medical councils, the permanent registration is granted which is valid for the next 5 years. Upon the end of validity, fresh applications must be filed.

Registration under Companies Act, 2013

f the private hospital is established under the ownership of a corporation, then the hospital needs to be registered under the Companies Act, 2013. Such a registration identifies the hospital as a Company thereby giving it rights of purchasing and selling property on its name, the nature of perpetual succession, and creating duties such as having a Memorandum of Association, Articles of Association, regular Board meetings, submissions, and audits. If the hospital has been registered as a company, then the directors of the company also have to have to be registered and must have a Director Index Number (DIN).

If the hospital is under the ownership of a society, then it has to be registered as a society under the Society Registration Act, 1960.

Licenses/approvals/permits for the functioning of Hospitals

Once the hospital has been given an identity and registered under the suitable law, all operations of the hospitals need to be approved. Multispecialty hospitals offer several facilities such as consultancy, X Rays, scanning, medical tests, etc. and these facilities require licenses for the usage of their equipment. Super-specialty hospitals don’t offer very many facilities but most specialty hospitals also need permits and approvals for their equipment, doctors, consultants, etc. These hospitals also require to get NOCs from the fire department, water department, etc. Some of these licenses, approvals, and permits are:

Atomic Energy Regulation Board Licenses

Hospitals need to obtain licenses from the AERB for all radiation generating equipment and all radiation sources, such as:

any diagnostic radiology equipment;
nuclear machines being used;
Radio-Immuno Assay kits (RIA);
Any sealed or unsealed sources used for radiation facilities;
Radiotherapy;
Medical accelerator units;
TomoTherapy equipment etc.

The AERB has laid down certain procedures in the Atomic Energy (Radiation Protection) Rules, 2004 to apply for such licenses for every new equipment that is to be used. The procedure mimics other licensing procedures and entails filing of hospital specifics, employee specifics, educational and academic backgrounds, and attachment of necessary documents such as Identity proofs, Registration proofs, and Employership proofs.

Electricity, fire and water licenses

Hospitals need to use massive quantities of water and huge loads of electricity all through the day. Therefore, they need to approach their Municipal authorities for permits of such vast usage of water and electricity and also obtain a NOC from the said departments for the same. Such licenses see their requirement in the Electricity Act and such but are entirely dependent upon the States Rules and Notifications and can be obtained from the Municipal authorities after similar applications. NOCs from the fire department are also required for the hospital to maintain. The Fire department needs to go through the entire Construction Plan, anticipated fire engines, hospital equipment, Fire Exit planning, geographical issues, and only then can it issue a NOC to the hospital.

Sanitation and biomedical waste permits

According to the studies conducted by the WHO, hospitals generate 0.5 kg of biomedical waste per bed per day. All hospitals need to obtain permits and approvals from the Municipal authorities to lay down proper plumbing and waste reduction pipes during the construction or development of the hospital. The said department has to approve the Plumbing Scheme of the hospital based on the anticipated wastes that may be generated by the hospital. Large–scale or big hospitals also need to install incinerators for the treatment of the biomedical or hazardous wastes generated by the hospitals on a day-to-day basis. Any hospital that cannot install biomedical waste incinerators needs to register with their municipal authorities for the treatment of the same. Such waste is then taken over by the suitable divisions of the department.

Healthcare facility certificate

Such a certificate is mandatory and is issued by the Municipal Authorities after obtaining the certificate of Permanent Registration of the hospital under the Clinical Establishments Act. This certificate is only issued after the minimum number of beds and equipment has been installed and inspected by the Authorities.

FSSAI license

This license is given by the Food Safety and Standards Authority of India. Any hospital which intends on having an in-house kitchen for the patients and/or visitors must have the said license to start the functioning of a kitchen. The application is submitted on the FosCos portal. Separate licenses for state and centre can be applied with the necessary documents. The Authorities tend to take about 7-10 days to review the application. The license is only granted after a thorough inspection of the documents and the kitchen has been done.

Pharmacy registration for medical shop

Nowadays, hospitals tend to keep a pharmacy open 24 hours in their premises for easy accessibility. Having such a medical shop in the hospital also requires registration under the Central Drug Standard Control Organization and State Drug Standard Control Organization. Such an application for registration is to be made by the manufacturer or retailer and as per the forms after the payment of application fees as prescribed. Before granting such registration, the Organization looks for certain conditions to be met such as the sizable area of the store, storage facility, and the technical staff. Similar applications are to be made in the SDSCO if the hospital is located solely in one state and similar conditions are to be met there as well.

License for purchasing, possessing and dispensing Essential Narcotic Drugs (END)

Any hospital will require a license to purchase, possess and dispense narcotic drugs under the Narcotic Drugs and Psychotropic Substances Act, 1985. Hospitals that have been registered by the CDSCO or the SDSCO are eligible to deal with narcotic drugs by the virtue of their above-said registration. Such institutions that deal with narcotic drugs need to be Recognized as Medical Institutions (RMIs). Once they are recognized then the institutions can deal with the purchase, possession, and dispense of the narcotic or psychotropic substances.

The above licenses are required for the hospital to begin its technical functions so its daily operations can start running. However, depending upon the type of hospital the above list may change thereby adding more licenses.

Staff registrations

While the hospital requires land, building, equipment licenses, approvals, and permits, it also requires its staff to be qualified and registered under suitable Departments and Authorities for proper and organized workflow. All medical stuff needs to be registered under the following:

Doctors need to be registered under the State Medical Council.
Nurses have to be registered under the State Nursing Council.
Dentists have to be registered under the Dental Council.
Pharmacists have to be registered under the Pharmacy Council.

After getting registered under the suitable Councils, doctors, nurses, dentists or pharmacists can be hired for their services by the private hospitals. Such Registration must be proven at the time of hiring. Additionally, if any nurse, doctor, pharmacist, or dentist has to use any equipment simultaneously, they should also get a license for the same by the suitable department.

The above mentioned are all the basic necessary licenses, approvals, permits, and registrations required to be obtained by any entity/individual deciding to start up a private hospital. In addition to the above, other licenses, approvals, permits, and registrations are also required to be obtained by the hospital depending upon the services it provides. A few additional licenses, permits, registrations, and approvals required are:

Permit for storage of petrol/diesel under the Petroleum Act, 1934.
License for operating blood banks from the Drug Standard Control Organization.
Registration for organ transplantation under the Human Organs Act, 1934.
Registration for medical termination of pregnancies under the Medical Termination of Pregnancy Act, 1971.
Registration to prohibit sex determination practices under the Pre-Natal Diagnostic Test Act, 1994.
Registration of Ambulances and all hospital vehicles in the Motor Vehicles Act, 1988.
License for using boilers under the Boilers Act, 1923.
Licenses under the Drugs & Cosmetics Act, 1940.
Registration under Births and Deaths Act, 1969.
Licenses under Environment Protection Act, 1986.

Other legal framework

As the hospital starts its functioning and perhaps expands its services and grown in scale, the hospital will also be governed by many other legal Acts, some of which are:

Guardians and Wards Act, 1890;
The Epidemic Diseases Act, 1897;
The Mental Health Act, 1987;
Environment Protection Act and Rules;
Sale of Goods Act, 1930;
Labor Laws etc.

Conclusion

The business of a private hospital is a wide and intrinsic business with the capability of a huge risk if attention is not paid to every minute detail. The business of a hospital is a conglomerate of several distinct aspects of human life such as health, employment, environment, etc. that numerous laws have the capacity of governing a small-scale super-specialty hospital too. Amidst the functioning of so many laws, people often believe that such an enterprise is too burdensome and get discouraged by the idea of it. However, today, there are different departments taking care of every document in need and it is obtained in no time. The rise of private hospitals has been significantly high in the last decade, thanks to the quality of its services. The different Acts that govern the hospitals may look drastic but such governance is what helps in keeping the hospitals accountable for their actions as they are dealing with something as sensitive and precious as human life. One of the businesses with the highest risk of failure is the hospital industry. Therefore, it lies in the best interest of the entity/individual to ensure all legal compliance is met and adhered to. The above legal framework also shows us the best of efforts put in the country/states/union territories in seeking the best for their citizens so that everyone can avail the highest quality of service, seek the best remedy and place their trust in the hospitals.

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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