Bimonthly Legal Tablet Volume 4, Issue 1, January 07, 2014

NOTIFICATIONS, CIRCULARS, (NOVEMBER-DECEMBER, 2013)

RBI
A.P. (DIR Series) Circular No. 68 dated November 01, 2013 issued by the Reserve Bank of India, Foreign Exchange Department regarding ‘Foreign Direct Investment (FDI) in India –definition of ‘group company’’

The Reserve Bank of India

Attention is invited to the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000, as amended from time to time. The extant FDI policy has since been reviewed and it has been decided to incorporate the definition for ‘Group Company’ as under:

‘Group Company’ means two or more enterprises which, directly or indirectly, are in position to:

  1. exercise twenty-six per cent, or more of voting rights in other enterprise; or
  2. appoint more than fifty per cent, of members of board of directors in the other enterprise.

A.P. (DIR Series) Circular No. 69 dated November 08, 2013 issued by the Reserve Bank of India, Foreign Exchange Department regarding ‘Amendment to the “Issue of Foreign Currency Convertible Bonds and Ordinary shares (Through Depository Receipt Mechanism)    Scheme, 1993”’

In terms of A.P. (DIR Series) Circular No.11 dated September 5, 2005 regarding issue of American Depository Receipts (ADRs)/ Global Depository Receipts (GDRs) read with Paragraph 4 of Schedule 1 to the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000, as amended from time to time, unlisted Indian companies which have not yet accessed Global Depository Receipts/ Foreign Currency Convertible Bond route for raising capital in the international market were required to have prior or simultaneous listing in the domestic market.

On a review, it has now been decided to allow unlisted companies incorporated in India to raise capital abroad, without the requirement of prior or subsequent listing in India, initially for a period of two years, subject to certain conditions mentioned in this Circular No. 69.

A.P. (DIR Series) Circular No. 70 dated November 08, 2013 issued by the Reserve Bank of India, Foreign Exchange Department regarding ‘Third party payments for export/ import transactions’

 FEMA Notification No. 14 dated May 3, 2000 deals with the manner of receipt and payment for trade transactions. With a view to further liberalise the procedure relating to payments for exports/ imports and taking into account evolving international trade practices, it has been decided as under:

  1. Export Transactions

          AD banks may allow payments for export of goods/ software to be received from a third party (a party other than the buyer) subject to conditions as under:

  1. Firm irrevocable order backed by a tripartite agreement should be in place;
  2. Third party payment should come from a Financial Action Task Force (FATF) compliant country and through the banking channel only;
  3. The exporter should declare the third party remittance in the Export Declaration Form;
  4. It would be the responsibility of the Exporter to realize and repatriate the export proceeds  from such third party named in the EDF;
  5. Reporting of outstandings, if any, in the XOS would continue to be shown against the name of the exporter. However, instead of the name of the overseas buyer from where the proceeds have to be realised, the name of  the declared third party should appear in the XOS; and
  6. In case of shipments being made to a country in Group II of Restricted Cover Countries,(e.g. Sudan, Somalia, etc.), payments for the same may be received from an Open Cover Country.

Restricted cover Group II country is country which experiences chronic political and economic problems as well as balance of payment difficulties.

   B.  Import Transactions

         AD banks are allowed to make payments to a third party for import of goods, subject to conditions as under:

  1. Firm irrevocable purchase order / tripartite         agreement should be in place;
  2. Third party payment should be made to a FATF compliant country and through the              banking channel only;
  3. The Invoice should contain a narration that the related payment has to be made to the        (named) third party;
  4. Bill of Entry should mention the name of the shipper as also the narration that the related      payment has to be made to the (named) third          party;
  5. Importer should comply with the related extant instructions relating to imports    including those on advance payment being                 made for import of goods; and
  6. The amount of an import transaction eligible for third party payment should not exceed          USD 100,000. This limit will be revised as and           when considered expedient.

A.P. (DIR Series) Circular No. 72 dated November 11, 2013 issued by the Reserve Bank of India, Foreign Exchange Department regarding ‘Foreign Direct Investment in Financial Sector – Transfer of Shares’

The Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000, as amended from time to time, and Para 2(B)(iv) of A.P. (DIR Series) Circular No.43 dated November 4, 2011 deals with transfer of shares from Residents to Non-Residents and states that where the investee company is in the financial services sector, No Objection Certificate (NoC) is required to be obtained from the respective financial sector regulator/regulators of the investee company as well as transferor and transferee entities and such NoC(s) are to be filed  with the form FC-TRS to the AD bank.

On a review, it has now been decided that the requirement of NoC(s) will be waived from the perspective of Foreign Exchange Management Act, 1999 and no such NoC(s) need to be filed along with form FC-TRS. However, any ‘fit and proper/ due diligence’ requirement as regards the non-resident investor as stipulated by the respective financial sector regulator shall have to be complied with. All the other instructions contained in the above referred A.P. (DIR Series) Circular remain unchanged.

A.P. (DIR Series) Circular No. 75 dated November 19, 2013 issued by the Reserve Bank of India, Foreign Exchange Department regarding ‘Trade Credit for imports into India- Online submission of data on issuance of Guarantee/Letter of Undertaking (LoU)/Letter of Comfort (LoC) by ADs’

A.P. (DIR Series) Circular No. 87 dated April 17, 2004 and A.P. (DIR Series) Circular No. 24 November 1, 2004 deal with Trade Credits for imports into India and submission of data on issuance of guarantees/ LoUs / LoCs by AD banks at quarterly statement in the prescribed format thereof to the Reserve Bank.

It has been decided to shift the arrangement for reporting of data on issuance of guarantees/ LoUs/ LoCs by all AD banks in consolidated statement, at quarterly intervals, from manual submission (and in MS-Excel file through email) to extensible Business Reporting Language (XBRL) platform from quarter ended September 30, 2013.

The submission of manual statement (and in MS-Excel file through email) to the Reserve Bank is henceforth dispensed with. Those AD banks who have already submitted the manual statement (and MS-Excel file) for the quarter ended September 30, 2013 are also required to report the same data online. From the quarter ending December 31, 2013 onwards, the data should be submitted only in soft form on XBRL platform latest by 10th of the succeeding month.

A.P. (DIR Series) Circular No. 78 dated December 03, 2013 issued by the Reserve Bank of India, Foreign Exchange Department regarding ‘External Commercial Borrowings (‘ECB’) by Holding Companies/ Core Investment Companies for the project use in Special Purpose Vehicles (SPVs)’

In order to strengthen the flow of resources to infrastructure sector, it has been decided to permit Holding Companies/ Core Investment Companies (‘CICs’) coming under the regulatory framework of the Reserve Bank to raise ECB under the automatic route/ approval route, as the case may be, for project use in Special Purpose Vehicles (‘SPVs’) with the following terms and conditions:

  1. The business activity of the SPV should be in the infrastructure sector where ‘infrastructure’ is defined as per the extant   ECB guidelines;
  2. The infrastructure project is required to be implemented by the SPV established exclusively for implementing the project;
  3. The ECB proceeds is utilized either for fresh capital expenditure (capex) or for refinancing    of existing Rupee loans (under the approval route) availed of from the domestic banking system for capex as per the extant norms on refinancing;
  4. The ECB for SPV can be raised up to 3 years after the Commercial Operations Date of the SPV;
  5. The SPV should give an undertaking that no other method of funding, such as, trade credit (if for import of capital goods), etc. will be utilized for that portion of fresh capital expenditure financed through ECB proceeds;
  6. The ECB proceeds should be kept in a separate escrow account as per the extant guidelines on parking of ECB proceeds  pending utilization for permissible end-uses       and use of such proceeds should be strictly monitored by the ADs for permissible uses;
  7. In case of Holding Companies that come under the CIC regulatory framework of the Reserve Bank, the additional terms and conditions for raising ECB for project use in      SPVs will be as under:
  • The ECB availed is within the ceiling of leverage stipulated for CICs, i.e., their outside liabilities including ECB cannot be more than 2.5 times of their adjusted net worth as on the date of the last audited balance sheet; and
  • In case of CICs with asset size below Rupees 100 crore, the ECB availed of should be on fully hedged basis.

The above modifications to the ECB guidelines will come into force with immediate effect. All other aspects of extant ECB guidelines (including provisions contained in A.P. (DIR Series) Circulars No. 25 and 111 dated September 23, 2011 and April 20, 2012 to the effect that maximum 25% of ECB raised by the infrastructure companies can be utilised for refinancing of the Rupee loans availed from the domestic banking system (40% in case of power sector) under the approval route) shall remain unchanged.

A.P. (DIR Series) Circular No. 81 dated December 24, 2013 issued by the Reserve Bank of India, Foreign Exchange Department regarding ‘Borrowing and Lending in Rupees – Investments by persons resident outside India in the tax free, secured, redeemable, non-convertible bonds’

Regulation No. 6(2) of the Foreign Exchange Management (Borrowing and Lending in Rupees) Regulations, 2000 imposes restrictions on person resident in India who have borrowed in Rupees from a person resident outside India to the effect that such borrowed funds cannot be used for any investment, whether by way of capital or otherwise, in any company or partnership firm or proprietorship concern or any entity, whether incorporated or not, or for relending.

On a review, it has been decided to permit such resident entities/companies in India, authorised by the Government of India, to issue tax-free, secured, redeemable, non-convertible bonds in Rupees to persons resident outside India to use such borrowed funds for the following purposes:

  1. for on lending/ re-lending to the  infrastructure sector; and
  2. for keeping in fixed deposits with banks in India pending utilization by them for permissible end-uses.

DIPP

Press Note No. 7 (2013 Series) dated December 03, 2013 issued by the Department of Industrial Policy &Promotion, Government of India, Ministry of Commerce & Industry regarding ‘Amendment of the existing policy on issue of shares by unlisted Indian companies under FCCB/ADR/GDR, pursuant to the Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) (Amendment) Scheme, 2013’

The Government of India has notified the Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) (Amendment) Scheme, 2013 vide Notification No. G.S.R. 684(E) dated October 11, 2013. Accordingly, Paragraph 3.3.4(iii) of the Consolidated FDI Policy, effective from April 05, 2013, is replaced by the following:

Department of Industrial Policy & Promotion

“Unlisted Companies shall be allowed to raise capital abroad without the requirement of prior or subsequent listing in India initially for a period for two years subject to the following conditions:

  1. Unlisted companies shall list aboard only on exchanges in IOSCO/FATF compliant jurisdictions or those jurisdictions with which SEBI has signed bilateral agreements;
  2. The Companies shall file a copy of the return which they submit to the proposed exchange/regulators also to SEBI for the purpose of Prevention of Money Laundering Act (‘PMLA’). They shall comply with SEBI’s disclosure requirements in addition to that of the primary exchange prior to the listing abroad;
  3. While raising resources abroad, the listing company shall be fully compliant with the FDI    policy in force;
  4. The capital raised abroad may be utilized for retiring outstanding overseas debt or for operations abroad including for acquisitions;
  5. In case the funds raised are not utilized abroad as stipulated at (d) above, such companies shall remit the money back to India within 15 days and such money shall be     parked only in AD category banks recognized by RBI and may be used domestically.”

SEZ

Circular No. 44/2013 – Customs, F. No. DGEP/SEZ/32/2011, F. No. 354/261/2013-TRU, issued by the Government of India, Ministry of Finance, Department of Revenue, Tax Research Unit dated December 30, 2013 regarding ‘Exemption from Special Additional Duty of Customs (SAD) on goods cleared from the SEZ/FTWZ into the DTA – Clarification’

Notification No. 45/2005-Customs, dated 16.05.2005 exempts from Special Additional Duty (‘SAD’) goods cleared from SEZ/ FTWZ and brought into DTA. The notification clearly states that the exemption shall not be available if such goods, when sold in DTA, are exempt from payment of sales tax/VAT. Prior to the issue of notification, it was brought to the notice of the Ministry that in some States sales tax is exempted in respect of DTA clearances by SEZ units. Further, in certain cases, such as stock transfer of goods from an SEZ unit to its unit in the DTA, no sales tax is levied. Hence, a condition was imposed that the exemption from SAD would be available only if such goods, when sold in the DTA, are not exempted from VAT/sales tax. The intention was to avoid double taxation.

In the case of clearances which are in the nature of stock transfer from SEZ /FTWZ unit to the DTA unit for self-consumption i.e. otherwise than for sale as such, no sales tax/VAT is leviable on such a transaction. As no sales tax/VAT is leviable on the said transaction, SAD is payable. In view of the above, it is clarified that the benefit of SAD exemption on goods cleared from the SEZ/FTWZ unit into DTA unit on stock transfer basis for self-consumption i.e. otherwise than for sale as such, is not available under Notification No.45/2005-Customs, dated 16.05.2005. In such cases, SAD would be leviable.

Special Economic Zone

MCA

General Circular No. 20/2013 dated December 27, 2013, issued by the Government of India, Ministry of Corporate Affairs regarding ‘Clarification with regard to holding of shares or exercising power in a fiduciary capacity – Holding and Subsidiary relationship under Section 2(87) of the Companies Act, 2013’

The Ministry has received a number of representations consequent upon notifying Section 2(87) of the Companies Act, 2013 which defines ‘subsidiary company’ or ‘subsidiary’. The stakeholders have requested the Ministry to clarify whether shares held or power exercisable by a company in a ‘fiduciary capacity’ will be excluded while determining if a particular company is a subsidiary of another company. The stakeholders have further pointed out that in terms of Section 4(3) of the Companies Act, 1956, such shares or powers were excluded from the purview of holding-subsidiary relationship.

The matter has been examined in the Ministry and it is hereby clarified that the shares held by a company or power exercisable by it in another company in a ‘fiduciary capacity’ shall not be counted for the purpose of determining the holding-subsidiary relationship in terms of the provision of Section 2(87) of the Companies Act, 2013.

Ministry of Corporate Affairs

BILLS PASSED IN THE PARLIAMENT OF INDIA DURING WINTER SESSION 2013.

The winter session of the Parliament of India began on December 5, 2013 and ended on December 18, 2013. Only one important bill has been passed in the winter session. The details of the bill are provided herein below:

THE LOKPAL AND LOKAYUKTAS BILL, 2013

The Lokpal and Lokayuktas Bill, 2013 was passed by the Lok Sabha on 18 December 2013. The Bill was earlier passed by the Rajya Sabha on 17 December 2013 after some amendments. The Bill seeks to establish an anti-corruption watchdog that will have in its purview even the office of the Prime Minister.  The Bill envisages a Lokpal at the Centre and Lokayuktas at the States. According to the Bill, the Lokpal would consist of a Chairperson and a maximum of eight members of which 50% shall be judicial members. The Lokpal Chairperson or member shall not be connected with any political party and one member will be an eminent jurist nominated by the President. The selection of Chairperson and members of Lokpal shall be through a Selection committee consisting of the Prime Minister, Speaker of the Lok Sabha, Leader of Opposition in the Lok Sabha, Chief Justice of India or sitting Supreme Court judge nominated by the Chief Justice of India .Eminent jurist to be nominated by the President of India on the basis of recommendations of the four members of the Selection Committee. All ministers including Prime Minister with some safeguards and senior public servants are covered by the ombudsman, excluding the public servants under Army, Navy and Coastal guard. All entities receiving donations from foreign source in the context of theForeign Contribution Regulation Act (FCRA) in excess of 10 lakh rupees per year are brought under the jurisdiction of the Lokpal.  The Lokpal will have power of superintendence and direction over any investigation agency including CBI for cases referred to them by the Lokpal. A high powered Committee chaired by the Prime Minister will recommend selection of the Director, CBI.  The appointment of the Director of Prosecution, CBI will be made on the recommendation of the Central Vigilance Commission. Transfer of officers of CBI investigating cases referred by Lokpal   will be only with the approval of the Lokpal.  The Bill also incorporates provisions for attachment and confiscation of property acquired by corrupt means, even while prosecution is pending. The Bill lays down clear time lines for preliminary enquiry & investigation and trial and towards this end, the Bill provides for setting up of Special Courts. It also   mandates setting up of the institution of Lokayukta through enactment of a law by the State Legislature within a period of 365 days from the date of commencement of the Act.

SUPREME COURT OF INDIA CASES:

Central Electricity Supply Utility of Odisha v Dhobei Sahoo and Ors. 2013(13) SCALE477,

The Hon’ble Supreme Court has held that while exercising the power for issue of writ of quo warranto the Court only makes a public declaration that the person holding the public office is a usurper and not eligible to hold the post and after the declaration is made he ceases to hold the office. Till the declaration is made, the incumbent renders service and when he has rendered service he cannot be deprived of his salary. Denial of pay for the service rendered tantamounts to forced labour which is impermissible.

Chironjilal Sharma HUF v Union of India and Other, MANU/SC/1229/2013,

The Hon’ble Supreme Court held that “A close look at the above provisions and, particularly, clause (b) of Section 132B(4) of the Income Tax Act, 1961  clearly shows that where the aggregate of the amounts retained under Section 132 of the Act exceeds the amounts required to meet the liability under Section 132B(1)(i), the department is liable to pay simple interest at the rate of fifteen percent on expiry of six months from the date of the order under Section 132(5) of the Act to the date of the regular assessment or re-assessment or the last of such assessments or reassessments, as the case may be. The department denied the payment of interest to the assessee under Section 132B(4)(b), …on the ground that the refund of excess amount is governed by Section 240 of the Act and Section 132B(4)(b) of the Act has no application. But, in our view, Section 132B(4)(b) deals with pre-assessment period and there is no conflict between this provision and Section 240 or for that matter 244(A).

Indra Sarma v V.K.V. Sarma, MANU/SC/1230/2013,

The Hon’ble Supreme Court laid down some guidelines for testing under what circumstances, a live-in relationship will fall within the expression “relationship in the nature of marriage” under Section 2(f) of the Protection of Women from Domestic Violence Act, 2005. It held that element like duration of period of relationship, shared household, pooling of resources and financial arrangements, domestic arrangements, socialization in public intention and conduct of the parties, children, sexual relationship will definitely give some insight to such relationships. The Court further held that, “long standing relationship as a concubine, though not a relationship in the nature of a marriage, of course, may at times, deserves protection because that woman might not be financially independent, but we are afraid that DV Act does not take care of such relationships which may perhaps call for an amendment of the definition of Section 2(f) of the DV Act, which is restrictive and exhaustive.”

Mrs. Sarah Mathew v The Institute of Cardio Vascular Diseases, MANU/SC/1210/2013,

The Hon’ble Supreme Court held that “we hold that for the purpose of computing the period of limitation under Section 468 of the Cr.P.C. the relevant date is the date of filing of the complaint or the date of institution of prosecution and not the date on which the Magistrate takes cognizance.

Saraswathy  v Babu, MANU/SC/1193/2013;

The Hon’ble Supreme Court held that, the High Court made an apparent error in holding that the conduct of the parties prior to the coming into force Protection   of   Women   from   Domestic   Violence   Act, 2005 cannot be taken into consideration while passing an order.

E.S.I.C. Medical Officer’s Association v E.S.I.C. & Anr., MANU/SC/1199/2013

The Hon’ble Supreme Court held that a medical professional treating patients and diagnosing diseases cannot be held to be a “workmen” within the society, which demands meaning of Section 2(s) of the ID Act. It held that “doctors’ profession is a noble profession and is mainly dedicated professionalism and accountability. Distinction between occupation and profession is of paramount importance. An occupation is a principal activity related to job, work or calling that earns regular wages for a person and a profession, on the other hand, requires extensive training, study and mastery of the subject, whether it is teaching students, providing legal advice or treating patients or diagnosing diseases. Persons performing such functions cannot be seen as a workman within the meaning of Section 2(s) of the ID Act.”

Lalita Kumari v Govt. of U.P. & Ors. 2013(13) SCALE559,

The Hon’ble Supreme Court observed that …conducting an investigation into an offence after registration of FIR under Section 154 of the Code is the “procedure established by law” and, thus, is in conformity with Article 21 of the Constitution. Accordingly, the right of the accused under Article 21 of the Constitution is protected if the FIR is registered first and then the investigation is conducted in accordance with the provisions of law. In view of various counter claims regarding registration or non-registration, what is necessary is only that the information given to the police must disclose the commission of a cognizable offence. In such a situation, registration of an FIR is mandatory…..However, if no cognizable offence is made out in the information given, then the FIR need not be registered immediately and perhaps the police can conduct a sort of preliminary verification or inquiry for the limited purpose of ascertaining as to whether a cognizable offence has been committed. But, if the information given clearly mentions the commission of a cognizable offence, there is no other option but to register an FIR forthwith.”

Devendra Kishanlal v Dwarkesh Diamonds Pvt. Ltd. and Ors MANU/SC/1213/2013,

The main question involved in the case was whether the petition under Section 138 of the N.I. Act was maintainable at Mumbai on the ground that goods were supplied from Mumbai to Delhi and cheques were handed over at Mumbai and legal notice was issued from Mumbai.

The Hon’ble Supreme Court held that the   case   in hand   it   is   admitted   that   the business dealing was held at Mumbai;  the product were supplied from Mumbai to New Delhi, cheques were handed over at Mumbai and the cheque were dishounoured by the bankers of respondents at New Delhi, and legal notice was issued from Mumbai. Thus, at least one act out of the five ingredients of Section 138 of the Act having committed at Mumbai,   the   complaint   preferred   by   the complainant   before   the   Magistrate at Mumbai was maintainable. The question is thereby, answered in affirmative and in favour of the appellant.

State of Rajasthan v Shambhu Kewat & Anr MANU/SC/1223/2013

The Hon’ble Supreme Court upturning a verdict of the Rajasthan High Court has held that “Criminal law is designed as a mechanism for achieving social control and its purpose is the Regulation of conduct and activities within the society. Why Section 307 Indian Penal Code is held to be non-compoundable, because the Code has identified which conduct should be brought within the ambit of non-compoundable offences. Such provisions are not meant, just to protect the individual, but the society as a whole. High Court was not right in thinking that it was only an injury to the person and since the accused persons had received the monetary compensation and settled the matter, the crime as against them was wiped off…. Taking a lenient view on a serious offence like the present, will leave a wrong impression about the criminal justice system and will encourage further criminal acts, which will endanger the peaceful co-existence and welfare of the society at large.”

State of Madhya Pradesh v Pradeep Sharma

The Hon’ble Supreme Court held that if any person has been declared as an absconder/proclaimed offender in terms of Section 82 of the Code of Criminal Procedure and has not cooperated with the investigation, he is not entitled to the relief of anticipatory bail.

GlaxoSmithKline Pharmaceuticals Limited (Formerly known as SmithKline Beecham Pharmaceuticals (India) Limited) v Union of India &Ors.

The Hon’ble Supreme Court held that every manufacturer/importer shall carry into effect the price of a bulk drug or formulation, as fixed by the Government, within 15 days from the date of notification of Drugs (Prices Control) Order or receipt of the order of the Government. Prices should also be revised for formulations which were manufactured prior to the date of notification or within 15 days from the date of notification.

Deaf Employees Welfare Association & Another v Union of India & Others

The Hon’ble Supreme Court held that comparison of disabilities among “persons of disabilities”, without any rational basis, is clearly violative of Articles 14 of the Constitution of India. Further, it was held that transport allowance shall be granted to deaf and dumb persons and the same shall be on par with blind and orthopedically handicapped employees of Central and the State Governments and other establishments wherever such benefits have been extended to the blinds and orthopedically handicapped employees.

Suresh Kumar Koushal and Anr v Naz Foundation and Ors

The Hon’ble Supreme Court held that Section 377 of Indian Penal Code (‘IPC’) does not suffer from the vice of unconstitutionality and homosexuality amounts to an offence punishable under Section 377 of IPC.

Abhay Singh v State of Uttar Pradesh and Ors

The Hon’ble Supreme Court directed the State Governments and the Administration of the Union Territories to either amend the existing Motor Vehicle Rules or frame appropriate rules for imposing deterrent penalty on the violators of the rules containing prohibition against the use of red lights and multi-toned horns or similar devices.

TRADEMARKS & COPYRIGHT UPDATES

Salman Khan starrer ‘Jai Ho’ which is set to release in January 2014 has run into legal trouble over the title of its film. As per information in the public domain, the producer of ‘Jai Ho’ and Mr. A.R.Rehman, the renowned musician who had trademarked the title ’Jai Ho “from his successful song in the movie Slumdog Millionaire, are looking at settling the issue amicably. The case involves two major trademark issues. Firstly whether song titles are trademark protected and secondly whether the phrase ‘Jai Ho’ can be trademark protected.

The World Intellectual Property Organization (WIPO) recently released its 2013 edition of the World Intellectual Property Indicators. The highlights of the Report are couple of firsts occurring in the global IP landscape. In 2012, for the first time, the total number of patent grants issued worldwide exceeded the one million mark and an estimated 8.66 million patents were in force worldwide. Patent filings saw a growth of 9.2% in 2012, the highest in two decades. The number of industrial designs contained in applications grew by 17%, which is the highest growth on record.  China topped the ranking for both the source (filings by China) and the destination (filed in China) for patents, utility models, trademarks and industrial designs. It recorded a double digit growth of 24%, making its share in the mentioned IPs the largest worldwide. The patent filings are mostly in material metallurgy technologies, a testament to its intensive manufacturing industry. India reported a 3.9% growth in patent filings. The report avers that the applications filed before the Indian office concentrated more in the organic fine chemistry field. However, India is not a frontrunner in any of the broad four fields of patents – Digital Communication, Computer Technology, Transport, Basic Materials chemistry1

LEGAL DEVELOPMENTS

Satnam Overseas v Sant Ram & Co. & Anr. 

The question for consideration in the present case was upon the territorial use of the trademark “KOHINOOR”.  Considering the issue, the Hon’ble Supreme Court of India dismissed the appeal by Satnam Overseas i.e. the Appellant (an Indian rice exporter major), to restrict the Respondent No. 1’s i.e. Sant Ram’s use of the trademark Kohinoor to only six cities in Uttar Pradesh(U.P.) being Faizabad, Maunath Bhanjan, Jaunpur, Shahganj, Agra and Saharanpur. It was pointed out that restricting the use to a few cities would create a lot of complications and litigation as to the exact boundary of a particular city or District. It will also be impossible for the respondents to ensure that its products are not sold to retailers outside the six cities. Putting geographical restrictions was rightly held to be unjust. The Court allowed the Respondent to use the trademark throughout the State of U.P. The Supreme Court discussed the interpretation of Section 46 of the Trademarks Act, 1958 which deals with the removal of a trademark from the register and imposition of limitations on ground of non-use.  It was observed that in order to justify the removal either the registration must have been made without intention to use followed by non-use or the non-use must have been for a continuous period of five years.  The judgment can be read here.

Blueberry Books and Ors v Google India Pvt. Ltd. and Ors. 

The question for consideration in the present case was whether there had been any copyright infringement by the Defendants by using the Plaintiffs’ material in its books.  The Plaintiffs i.e. Blueberry Books are a publisher of children’s books.  The Plaintiff had sued a web and mobile application developer (Defendant No. 11) for making available books on an app titled “Story Time for Kids”, whose copyright was owned by the Plaintiff, through various app-stores, without taking prior permission of the Plaintiff. The remaining Defendants were Google Inc., Research in Motion, Apple and Amazon, along with their Indian subsidiaries (with the exception of Amazon), because the app in question was made available through these online stores.  The Court passed an interim order granting injunction against the Defendant No.11 restraining him from making available the copyrighted works of the Plaintiffs in any form Electronic, Physical or otherwise through various platforms/websites either as per the application of “Story Time for Kids” or individually. The Defendant No.11 was further restrained from in any manner, infringing the copyright of the Plaintiffs in any of the works and stories contained in the books titled Moral Stories Part-1, Moral Stories Part-2 and Moral Stories Part-3.  Subsequently, the Defendants moved appropriate application under Order 1 Rule 10 and argued that the Indian subsidiaries of Google, RIM & Apple on the grounds that they had no control over the app-stores in question.  The applications were allowed.  The judgment can be read here.

BoehringerIngelheim Pharma GMBH and Co. KG v Premchand Godha and Anr. 

The question for consideration in the present case was whether the Plaintiff’s unregistered trademark ‘MUCOSOLVAN’ was deceptively and confusingly similar to ‘MUCOSOLVIN’ and that the defendants were passing off as the two marks were visually, phonetically and structurally similar, and used on the same goods i.e. cough syrups.  The Plaintiff enjoyed considerable amount of goodwill and reputation in the world market, however, their product was yet to be introduced in India at the time of suing the Defendants. The Hon’ble High Court of Delhi, granting the injunction in favor of the Plaintiffs, observed that the competing marks were composite marks with a close degree of resemblance due to only one letter being different in each mark. They were phonetically similar and similar in idea. There would be no difference in the mode of purchasing the goods or placing the order for the goods either. In view of these determinative factors, the two marks were held to be deceptively similar. The Plaintiffs were prior users of MUCOSOLVAN owing to their worldwide use compared to the Defendant’s pan-Indian use much later in 2011.The Court further observed that the Plaintiff’s product was indeed available worldwide and the mere fact that the Plaintiffs were not using the product in India would be irrelevant if they were first in world market. It held that the Defendant being in the same trade could not have been oblivious to the existence of the Plaintiff’s product.  The judgment can be read here.

1st Nov, 2013

  • The Supreme Court of India has ordered setting minimum tenures for bureaucrats and put restrictions on arbitrary transfers and postings by their political masters.
  • The Pune bench of the National Green Tribunal has ordered a stay on blasting on the Mithi riverbed till an environment impact assessment (EIA) report is prepared.
  • Nokia has won its patent battle against Taiwan-based rival HTC Corporation with a British court ruling in its favour over mobile telecoms technology.
  • The Delhi High Court has   held in “Cairn U.K. Holdings Ltd (“CUHL”)” case , that a non-resident investor is entitled to reduced 10% tax rate on long term capital gains from sale of listed securities off the floor of stock exchange. Ordinarily, such gains from sale of listed securities would be taxable at 20%.
  • The Madras High Court has held that there is no legal infirmity in oil companies limiting subsidised LPG connections to one per household headed by an adult member of the family. It means a head of a family with houses at different places cannot have more than one LPG connection.

4th Nov, 2013

  • The Supreme Court of India has held that “While exercising the power for issue of writ of quo warranto, the court only makes a public declaration that the person holding the public office is a usurper and not eligible to hold the post and after the declaration is made he ceases to hold the office ‘’.”  According to the Hon’ble Court, a person cannot be deprived of his salary as it would amount to forced labour which is impermissible.

6th Nov, 2013

  • The Indian government plans to form an empowered group under the Oil Ministry to grant “operational flexibility” in enforcing contracts, and help explorers start producing oil and gas from over 70 discoveries that are mired in contractual disputes.
  • The Supreme Court of India has ruled that the principle of “utmost good faith” is litmus test in the insurance business and trust jurisprudence will be the first point of scrutiny of credentials of those who file PIL.
  •  The Supreme Court of India while quashing bail granted to a murder accused by a trial court in Odisha has ruled that the High Court cannot direct a lower court to grant bail to an accused as this fetters the trial court’s powers.
  • The Mumbai High Court while hearing an appeal filed by the Union government through the commanding officer of INS Tunir observed that an offence of molestation committed by a naval officer while in service has to be tried by the Naval Commander-in-Chief and not by a sessions court.
  • The Delhi High Court has struck down the Court Fees (Delhi Amendment) Act, 2012, under which court fees were hiked ten-fold last year, saying that the Delhi assembly did not have the legislative competence to amend the law. The High Court has also directed the government to refund the higher amount collected from litigants since amendment.
  • The Supreme Court of India has ruled that Courts should record “special” reasons while awarding death penalty and “must” take into account the crime and the character of the criminal which should reflect “extreme depravity” to deserve capital punishment.

7th Nov, 2013

  • The Intellectual Property Appellate Board (IPAB) of India has said that Cadbury India is no longer owner of three trademarks containing the word Eclairs. The three trademarks were ordered to be removed from the trademarks registry as the Board found that Cadbury could not provide evidence showing use of the trade marks after they were registered.
  • The employee rights activists in software services industry have come out against the Karnataka government’s recent decision to exempt the information technology sector from the Industrial Employment (Standing Orders) Act, 1946 for another five years. According to the Labour Union leaders, the move will increase ‘unfair practices’ by IT sector employers and make them less accountable for their action.
  • The New Delhi District Consumer Disputes Redressal Forum has held that Vodafone Mobile Services Ltd arbitrarily changed the tariff plan of the consumer to gain profit and directed it to pay Rs. 2,000/- as compensation and litigation cost to the complainant, a marketing firm.

8th Nov, 2013

  • The Supreme Court of India has ordered that all cases involving environmental issues, after the enactment of the National Green Tribunal Act, be transferred to the tribunal which would help to provide expeditious and specialised justice in matters concerning the environment.
  • Competition Commission of India has rejected allegations of unfair business practices against legal process outsourcing firm Pangea3 Legal Database System. According to the Commission, a clause in a service contract restricting an employee from taking employment with the competitors, after he leaves the employment, for a particular period, raises no competition issue.

10th Nov, 2013

  • Indian firms including Dr Reddy’s, Lupin and Torrent Pharma have received nod from the US health regulator to market the first generic version of Aciphex, used to treat gastro esophageal reflux disease (GERD).

11th Nov, 2013

  • After proposing a development bank, the BRICS countries are preparing to strike out on their own in reinsurance as well. India has suggested to other BRICS members (Brazil, Russia, China and South Africa) that a reinsurer will cover large infrastructure projects that the emerging economies are focused on and counter sanctions imposed by western countries such as those related to Iran, which is a key oil supplier to India and other countries.
  • The Supreme Court of India has  declined to stay the hearing relating to the appointment of a presiding arbitrator for adjudication of dispute between Mukesh Ambani- led  Reliance Industries Ltd. (RIL) and Government over recovery of cost for developing the country’s key natural gas field in the Krishna-Godavari (KG) basin.
  • The Supreme Court of India has held that a “rebate of tax” granted by the UP government only to cement manufacturing firms functioning within the state was discriminatory and violated the Constitution.

12th Nov, 2013

  • In a landmark verdict, the Supreme Court of India has made it mandatory for the police to register FIR in all cognizable offences and also stated that action will be taken against the police officer for his failure to register a FIR on the complaint of a cognizable offence.
  • The patent trial between Apple and Samsung will start in a California court to reconsider damages awarded last year in the case stemming from Apple’s allegation that its South Korean rival illegally copied technology from the iPhone and iPad.

13th Nov, 2013

  • The Supreme Court of India has set up a three-member committee comprising three sitting judges to probe whether the sexual harassment charges of a law student against a former judge of the Supreme Court are true.

18th Nov, 2013

  • The Competition Commission of India (CCI) plans to challenge in the Supreme Court, an observation by the Competition Appellate Tribunal that seeks to disfavour the huge penalties levied on companies for unfair trade practices. The Competition Appellate tribunal had, on October 29, 2013 asked the regulator to look at the “relevant turnover” of a company while calculating the penalty for abuse of dominant position instead of the overall turnover.
  • According to the guidelines likely to be announced by the Securities and Exchange Board of India (Sebi) companies will have to make public any fraud committed by directors and employees, litigation against them and the impact of this on financials, reveal details about shareholders and loan agreements besides providing estimates of losses caused by natural calamities.
  • The Bombay High Court in a significant ruling held that in a murder case based on circumstantial evidence, an accused can be convicted even if the motive for the killing is not established.
  • IPAB has dismissed the review petition filed by Roche & OSI Pharmaceuticals against an earlier IPAB order for receiving additional documents from Mylan Laboratories in a patent battle between the pharma companies, relating to Erlotinib hydrochloride, an active ingredient for anti-cancer drug Tarceva.
  • The Delhi High Court has ruled that a government employee cannot draw pension from his/her previous employer and simultaneously enjoy service gratuity benefits from another employer.
  • The Delhi High Court while dismissing an appeal of a woman, seeking right of residence in her mother-in-law’s house stated that a woman has right over the property of her husband but she cannot claim right to live in the house of her parents-in-law.

19th Nov, 2013

  • The Supreme Court of India on Tuesday issued notice to the Centre, RBI and Sebi seeking their response on a PIL for putting in place a proper mechanism to regulate functioning of chit funds in the country.

21st Nov, 2013

  • The IPAB revoked the patent of a US-based biotechnology firm Kibow Biotech Inc in India, titled “Prebiotic and Probiotic Compositions and Methods for their Use in Gut-Based Therapies”, finding that the invention claimed is obvious.

 

22nd Nov, 2013

  • European anti-trust regulator is looking at whether Internet major Google’s popular smartphone platform Android is violating fair competition norms. Google is already under investigation of European Commission for alleged anti-competitive behaviour in the search engine market.
  • To ensure effective enforcement of competition rules, the BRICS nations have agreed to strengthen co-operation among their fair trade regulators by exchanging views and boosting communication. 
  • The Delhi High Court has stayed the proceedings initiated by Competition Commission of India (CCI) into the alleged anti-competitive practices of IOCL, HPCL and BPCL in relation to pricing of petrol by them on a plea by the oil companies. Justice V K Jain stayed the suo motu proceedings by CCI till January 13, 2014 by when the fair trade regulator as well as the Petroleum and Natural Gas Regulatory Board (PNGRB) have to file their responses on the plea of the oil companies which have contended that CCI does not have the jurisdiction to investigate the issue.
  • Government of India will review the FDI policy in the pharmaceutical sector in the wake of concerns over multinationals taking over domestic drug makers. The Department of Industrial Policy and Promotion (DIPP) has proposed to reduce FDI cap from 100 per cent to 49 per cent in the “rare or critical pharmaverticals.”It has also proposed to incorporate conditions for foreign firms like mandatory investment in R&D and non-compete clause in the shareholders pact.

25th Nov, 2013

  • The Corporate Affairs Ministry of India has rejected the industry’s demand for a relaxation in the norms on mandatory CSR spending and rotation of auditors outlined in the new Companies Act.
  • The Supreme Court of India has held that sale of minors’ property cannot be done without obtaining the court’s permission. Quashing sale of properties of minor daughters by a widow 25 years ago, the apex court said that under the Hindu Minority and Guardianship Act, sale of such property cannot be done without prior permission of the court.
  • The Supreme Court of India has stated that once the amount in a dishonoured cheque is paid with interest and compensation, the payee cannot insist on criminal prosecution of the directors of a firm who issued the cheque.

26th Nov, 2013

  • SEBI has issued draft rules aimed at allowing listed companies to make frequent debt issuances after filing for a shelf prospectus.
  • The Supreme Court of India has constituted a 10-member committee headed by its woman judge, Justice Ranjana Prakash Desai, to deal with complaints of sexual harassment within its premises. 
  • Supreme Court of India has said that no person can ask for security from the State as a matter of his right and that it was “primarily” for the police authorities to decide on its necessity.

27th Nov, 2013

  • The Supreme Court of India has held that the limitation period, a time frame within which action must be commenced, should be computed from the date of filing of the complaint or the date of institution of prosecution and not the date on which the Magistrate takes cognizance.

28th Nov, 2013

  • In a bid to increase compliance and widen the tax net, Government of India has made it mandatory for traders to make online payment of excise duty and service tax for amounts exceeding Rs 1 lakh. CBEC has declared mandatory e-payment for both central excise and service tax payment w.e.f January 1, 2014.

29th Nov, 2013

  • Ericsson, the mobile networks gear maker has stated that the Competition Commission of India (CCI) has decided to commence an investigation into the company for possible violation of the country’s Competition Act rules.
  • Securities and Exchange Board of India (SEBI) has given time till June 2014 for companies to align their employee benefit schemes with existing norms as it is reviewing the current framework for employee stock option and benefit plans.

2nd Dec, 2013

  • Supreme Court of India has issued a notice to the Centre on a plea that the juvenility of an accused needs to be ascertained by a criminal court and not by the Juvenile Justice Board. The Apex Court has asked the Ministry of Women and Child development to file its response within four weeks on the issue of minority of an offender.
  • The Supreme Court  of India upturning a verdict of the Rajasthan High Court, has held that those convicted of heinous crime could not be allowed to wipe off the consequence of crime merely because they have struck a settlement with the victim as their act was a crime against society, not just against an individual.
  • The Supreme Court of India has held that the trial courts cannot reject a civil suit relating to property dispute for non-payment of court fees alone. The divisional bench said that Article 39A of the Constitution is equally applicable to the district judiciary.

4th Dec, 2013

  • The U.S. District Court has  ordered Hotfile Corp. to pay $80 million in copyright suit and to shut down within 20 days unless the website uses “state-of-the-art content identification and filtering technology” to weed out pirated copies of movies and other material that users upload.
  • The England and Wales High Court has granted Nokia a final injunction to stop HTC from selling “One Mini” smartphone in Britain, containing microchips that infringe Nokia’s patents entitled “modulator structure for a transmitter and a mobile station”.

5th Dec, 2013

  • The Supreme Court of India has ruled that an employee, sacked following disciplinary proceedings, cannot seek reinstatement as a “matter of right” after a criminal court acquits him in the case based on the charges similar to the departmental inquiry.
  • The Intellectual Property Appellate Board (IPAB) of India has  scrapped seven trademarks registered by Kolkata based TT Industries under different classifications, in favour of Tageu Tec, a South Korea-based manufacturer of metal cutting tools and accessories.

6th Dec, 2013

  • Supreme Court of India panel has impeached retired judge justice AK Ganguly for sexual harassment of a former law intern, triggering fresh demands for his resignation as the chairman of West Bengal Human Rights Commission.
  • The Supreme Court of India has held that anticipatory bail should be not given to an accused who has been declared as an absconder and not cooperated with the investigation.
  • SEBI has issued a detailed advisory for the general public on how they can take up their grievances on various issues including investment frauds, manipulative activities and other irregularities.

7th Dec, 2013

  • The drug price regulator has asked pharmaceutical companies in the country to disclose quarterly data on the amount of essential drugs — both formulations and bulk drugs — they are producing. The move is aimed at ensuring that drug makers do not stop or cut down on production of essential drugs, prices of which have been capped, or shift to combination drug versions that have been excluded from the price net.

9th Dec, 2013

  • The Petroleum Ministry has held that the oil regulator’s approval is not needed for setting up CNG selling stations and companies were free to set up CNG pumps across cities.
  • The Bombay High Court while relying on the Trademarks Act said that if two parties get the trademark registered using identical prefix, they can use the same for all purposes as it shall not amount to “infringement” and its exclusive use by only one owner was not allowed.
  • The Supreme Court while quashing the AP High Court’s order ruled that possession of a plot given to a company for a limited purpose does not create any interest or right in its favour.

10th Dec, 2013

  • Supreme Court of India has ruled that manufacturers and importers of pharmaceutical products must implement the Drugs (Prices Control) Order within 15 days from the date of notification or receipt of the order, during which they cannot manufacture or clear the bulk drug or formulation at the pre-notification price.
  • Gujarat High Court has ruled that the conciliation period of six months cannot be waived to get divorce decree, only Supreme Court of India has the power to grant relaxation in such cases by invoking the doctrine of irretrievable breakdown of marriage.
  • The Indian government has rejected the industry’s demand for relaxation of a condition under the new companies law that makes it mandatory for them to disclose details of money given to political parties.
  • The Supreme Court of India has ruled that the red beacon can only be used by high dignitaries holding constitutional posts while on duty. The apex court also banned private individuals from using siren in their vehicles and directed the authorities to take punitive action against those doing so. 

11th Dec, 2013

  • The Supreme Court of India while setting aside the Delhi High Court’s landmark verdict on homosexuality, which had decriminalised sexual relation between persons belonging to the same sex, has  upheld the constitutional validity of Section 377 of Indian Penal Code that makes gay sex as a punishable offence.
  • The Supreme Court of India has directed that where the accused has been declared an absconder and has not cooperated with the investigation, he should not be granted anticipatory bail.

12th Dec, 2013

  • The Seoul Central District Court while dismissing Samsung’s lawsuit claiming Apple Inc. had infringed three of Samsung’s mobile patents stated that Apple products did not violate Samsung patents on short message display methods and messaging grouping features.
  • The Punjab and Haryana High Court has started an SMS service to inform litigants about the status of their cases.

13th Dec, 2013

  • The Women and Child Development (WCD) Ministry of India has notified on December 9. The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 which had received Presidential assent on April 22, 2013. 
  • The National Green Tribunal has banned “unregulated open burning” of plastic, rubber or such other articles across the country. 

16th Dec, 2013

  • The Indian government has exempted the private sector from the revised version of the Preferential Market Access Policy (PMA), which calls for domestic sourcing of technology products that can have security implications.
  • The Delhi High Court while deciding Order 1 Rule 10 applications filed by Indian subsidiaries of Google, RIM, Apple and Amazon, in a suit filed by Blueberry Books, alleging copyright violation has ruled that subsidiaries could not be considered as necessary parties, if they are not involved in the infringing activities.
  • The Gujarat High Court has  ruled that Section 66 (1) (b) of the Factories Act 1948 which prohibits industrial units from employing women from 7 pm to 6am, is a breach of fundamental rights guaranteed under Articles 14 and 21 of the Constitution and  thus women can be employed in night shifts.
  • Snapdeal is launching its own payment gateway .The service aims to simplify online transactions for users and may be licensed to other e-companies.

17th Dec, 2013

  • The Delhi High Court has struck down the Supreme Court’s rules on recruiting fresh graduates to act as court clerks and research associates to senior judges.
  • The U.S. Federal District Judge has ruled that the National Security Agency programme that is systematically keeping records of all Americans phone calls most likely violates the Constitution .According to the Judge ,such a programme infringes on that degree of privacy that the founders enshrined  in the Fourth Amendment which prohibits unreasonable searches and seizures.

19th Dec, 2013

  • The Lok Sabha has passed the Lokpal and Lokayukta Bill 2011, which provides for creation of an anti-corruption ombudsman.
  • The Delhi High Court has refused to intervene on a PIL seeking Indian citizenship should be the “pre-requisite qualification” for a person to be appointed as the editor of a publication in the country.
  • The Supreme Court of India has said that the CBI will no longer have to take prior sanction for investigating top bureaucrats in court monitored cases.
  • The Indian government has said it will initiate fresh action against American retailer Walmart if an ongoing probe by the United States authorities reveals any violation by the company in India. 

20th Dec 2013

  • The five members of the Review Group on Intelligence and Communications Technology in the US have recommended 46 policy changes that would allow US surveillance programmes to continue while limiting worldwide collection of communications by the National Security Agency. The President plans to announce next month what actions he’ll take.

23rd Dec, 2013

  • The Mumbai High Court in the case of Solysnch Technologies and Maxx moblink has clarified that a lender cannot file a winding up petition against another entity to recover a claim arising out of ‘damages’ that remains unpaid.

24th Dec, 2013

  • Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 will come into force from 1st day of January, 2014.
  • The first ever rules for Patenting software applications were recently issued by the patent office and mandate each new software to be “machine-specific” and packaged with “new hardware” to qualify for a licence.
  • With introduction of information and communication technology (ICT) in judicial courts, Himachal Pradesh HC has become one of the first high courts in the country to provide court case details and other key judicial information in public domain.

26th Dec, 2013

  • The Cabinet has approved to set up a Commission of Inquiry under Commission of Inquiry Act, 1952, to look into the incidents of physical/electronic surveillance in the States of Gujarat and Himachal Pradesh, and the National Capital Territory of Delhi, allegedly without authorization.

27th Dec, 2013

  • The Kerala High Court while hearing a petition ruled that Indian Embassy or Ministry of External Affairs (MEA) is not liable to compensate for not interfering in a labour dispute between an Indian worker and his foreign employer.

30th Dec, 2013

  • The Ministry of Corporate Affairs has clarified that shares held by a company in a fiduciary capacity should not be counted for the purpose of determining holding-subsidiary relationship.

31st Dec, 2013

  • The Supreme Court of India has constituted a special criminal appeal bench that would hear and dispose of all the important pending cases. The special bench would hear all the cases including those that are pending before the Supreme Court for more than five years.

Doc ID: 14JAN2013-36 E: contact@alayalegal.com; T: +91 11 41674458; FAX: +91 11-26146998 ©Copyright Protected. Privileged & Confidential for private circulation only.For information purposes only. This paper is not to be construed as ‘legal advice‘. The Author(s) and the Firm disclaim any and all liability in respect of the present circulation.

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