Bimonthly Legal Tablets Volume 3 Issue 6 November 05, 2013

Bimonthly Legal Tablet : Volume 3 Issue 6

Bimonthly Legal Tablet

Volume 3, Issue 6, November 05, 2013

If you’re a litigating attorney, always discuss tactics with the client at the trial. Not only will this surprise your adversary but your client as well.

Arthur Greebler, American Lawyer

Contents

  • Law & Policy
    • Notifications, Circulars (September – October, 2013)
    • Bills update for the extended Monsoon session of Parliament of India (August 5, 2013 –September 7, 2013)
  • Legal Pronouncements
    • Supreme Court of India’s Judgements( July-August,2013 )
  • Trademark, Copyright and Design
  • Legal News

Law & Policy

NOTIFICATIONS, CIRCULARS, (SEPTEMBER-OCTOBER, 2013)

RBI1
A.P. (DIR Series) Circular No. 30 dated September 04, 2013 issued by the Reserve Bank of India, Foreign Exchange Department regarding ‘Overseas Direct Investments – Rationalization/Clarifications’

It is clarified that all the financial commitments made on or before August 14, 2013, in compliance with the earlier limit of 400% of the net worth of the Indian Party under the automatic route will continue to be allowed. In other words, such investments shall not be subject to any unwinding or approval from the Reserve Bank.

It has been decided further to retain the limit of 400% of the net worth of the Indian Party for the financial commitments funded by way of eligible External Commercial Borrowing (‘ECB’) raised by the Indian Party as per the extant ECB guidelines issued by the RBI from time to time.

A.P. (DIR Series) Circular No. 31 dated September 04, 2013 issued by the Reserve Bank of India, Foreign Exchange Department regarding ‘External Commercial Borrowings (ECB) from the foreign equity holder’

On a review, it has been decided to permit eligible borrowers to avail of ECB under the approval route from their foreign equity holder company with minimum average maturity of 7 years for general corporate purposes subject to the following conditions:

  • Minimum paid-up equity of 25% should be held directly by the lender;
  • Such ECBs would not be used for any purpose not permitted under extant the ECB guidelines (including on-lending to their group companies / step-down subsidiaries in India); and
  • Repayment of the principal shall commence only after completion of minimum average maturity of 7 years. No prepayment will be allowed before maturity.

1 The Reserve Bank of India

The above modifications to the ECB guidelines will come into force with immediate effect. All other aspects of extant ECB guidelines shall remain unchanged.

A.P. (DIR Series) Circular No. 36 dated September 04, 2013 issued by the Reserve Bank of India, Foreign Exchange Department regarding ‘Risk Management and Inter Bank Dealings’

On a review of the evolving market conditions and with a view to providing operational flexibility to exporters and importers to hedge their foreign exchange risk, it has now been decided to:

(i) Allow exporters to cancel and rebook forward contracts to the extent of 50% of the contracts booked in a financial year for hedging their contracted export exposures,and

(ii) Allow importers to cancel and rebook forward contracts to the extent of 25% of the contracts booked in a financial year for hedging their contracted import exposures.

A.P. (DIR Series) Circular No. 37 dated September 05, 2013 issued by the Reserve Bank of India, Foreign Exchange Department regarding ‘Issue of Bank Guarantee on behalf of person resident outside India for FDI transactions’

In order to provide operational flexibility and ease the procedures, it has been decided to permit AD Category –I bank to issue bank guarantee, without prior approval of the Reserve Bank, on behalf of a non-resident acquiring shares or convertible debentures of an Indian company through open offers/ delisting/exit offers, provided:

(i) The transaction is in compliance with the provisions of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeover) Regulations;

(ii) The guarantee given by the AD Category –I bank is covered by a counter guarantee of a bank of international repute. It may be noted that the guarantee shall be valid for a tenure co-terminus with the offer period as required under the SEBI (SAST) Regulations.
Further, in case of invocation of the guarantee, the AD Category-I bank is required to submit to the Chief General Manager-in-Charge, Foreign Exchange Department, Reserve Bank of India, Central Office, Mumbai 400 001, a report on the circumstances leading to the invocation of the guarantee.

A.P. (DIR Series) Circular No. 41 dated September 10, 2013 issued by the Reserve Bank of India, Foreign Exchange Department regarding ‘Overseas Direct Investment – Amendment’

Para 2(iv) (b) of A. P. (DIR Series) Circular No. 69 dated May 27, 2011 on Overseas Direct Investment – Liberalization / Rationalization, which reads as under:

“(b) Further, it has also been decided that issue of corporate guarantee on behalf of second generation or subsequent level step down operating subsidiaries will be considered under the Approval Route, provided the Indian Party directly or indirectly holds 51 per cent or more stake in the overseas subsidiary for which such guarantee is intended to be issued.” has been amended. The amended para 2(iv) (b) reads as below:

“(b) Further, it has also been decided that issue of corporate guarantee on behalf of second generation or subsequent level step down operating subsidiaries will be considered under the Approval Route, provided the Indian Party indirectly holds 51 per cent or more stake in the overseas subsidiary for which such guarantee is intended to be issued.”

All other contents of the A.P. (DIR Series) Circular No. 69 dated May 27, 2011 shall remain un-changed.

A.P. (DIR Series) Circular No. 42 dated September 12, 2013 issued by the Reserve Bank of India, Foreign Exchange Department regarding ‘Foreign Investment in India – Guidelines for calculation of total foreign investment in Indian companies, transfer of ownership and control of Indian companies and downstream investment by Indian companies’

Para 6(ii) of Annex to A.P. (DIR Series) Circular No. 1 dated July 04, 2013 as regards downstream investments by an Indian company which is not

c.f. Annex to A.P. (DIR Series) Circular No. 1 dated July 04, 2013 Earlier Condition Revised Condition
Para 6(ii)(d) For the purpose of downstream investment, the Indian companies making the downstream investments would have to bring in requisite funds from abroad and not use funds borrowed in the domestic market. This would, however, not preclude downstream operating companies, from raising debt in the domestic market. Downstream investments through internal accruals are permissible by an Indian company engaged only in activity of investing in the capital of another Indian company/ies, subject to the provisions above and as also elaborated below: For the purpose of downstream investment, the Indian companies making the downstream investments would have to bring in requisite funds from abroad and not use funds borrowed in the domestic market. This would, however, not preclude downstream operating companies, from raising debt in the domestic market. Downstream investments through internal accruals are permissible by an Indian company, subject to the provisions of clause 6(i) and as also elaborated below:

All the other conditions contained in the A.P. (DIR Series) Circular No.1 dated July 04, 2013 remain unchanged.

A.P. (DIR Series) Circular No. 43 dated September 13, 2013 issued by the Reserve Bank of India, Foreign Exchange Department regarding ‘Export of Goods and Services-Simplification and Revision of Declaration Form for Exports of Goods/Softwares’

In terms of Foreign Exchange Management (Export of Goods and Services) Regulations, 2000, as amended from time to time, every exporter of goods or softwares has to give declaration in one of the forms (GR/PP/SDF/SOFTEX/Bulk SOFTEX) and submit it to the specified authority for certification. In order to simplify the existing form used for declaration of exports of Goods/Softwares, a common form called ‘Export Declaration Form’ (‘EDF’) has been devised to declare all types of export of goods from Non-EDI ports and a common ‘SOFTEX Form’ to declare single as well as bulk software exports. The EDF will replace the existing GR/PP form used for declaration of export of Goods. The procedure relating to the exports of goods through EDI ports will remain the same and SDF form will be applicable as hitherto. The EDF and SOFTEX form have been given in Annex and Annex II respectively in the A.P. (DIR Series) Circular No. 43 dated September 13, 2013. Under the revised procedure, the exporters will have to declare all the export transactions, including those less than US$25000, in the applicable form.

A.P. (DIR Series) Circular No. 44 dated September 13, 2013 issued by the Reserve Bank of India, Foreign Exchange Department regarding ‘Foreign Direct Investment (FDI) in India – Review of FDI policy – definition for control and sector specific conditions’

In terms of Annex B 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, description of sectors/ activities wherein the entry norms, sectoral cap and other conditions for sectors/ activities in which FDI is permitted under the Government route and Automatic route are specified. Further, Annex to A.P. (DIR Series) Circular No. 01 of July 04, 2013contains the definition of ownership and control for an Indian company.

It has been decided to revise the definition of the term ‘control’ as under:‘Control’ shall include the right to appoint a majority of the directors or to control the management or policy decisions including by virtue of their shareholding or management rights or shareholders agreements or voting agreements.

Further, Government of Himachal Pradesh and Karnataka have given consent to implement the FDI policy on Multi Brand Retail Trading in Himachal Pradesh and Karnataka respectively. As such, the list of States/ Union Territories which have conveyed their concurrence stands modified.

A.P. (DIR Series) Circular No. 48 dated September 18, 2013 issued by the Reserve Bank of India, Foreign Exchange Department regarding ‘External Commercial Borrowings (ECB) Policy – Liberalisation of definition of Infrastructure Sector’

The existing definition of infrastructure sector for the purpose of availing ECB includes: (i) power, (ii) telecommunication, (iii) railways, (iv) road including bridges, (v) sea port and airport (vi) industrial parks (vii) urban infrastructure (water supply, sanitation and sewage projects), (viii) mining, exploration and refining, (ix) cold storage or cold room facility, including farm level pre-cooling, for preservation or storage of agricultural and allied produce, marine products and meat. Taking into account the Harmonised Master List of Infrastructure sub-sectors and Institutional Mechanism for its updation approved by Government of India vide Notification F. No. 13/06/2009-INF dated March 27, 2012, it has been decided to expand the existing definition for infrastructure sector for the purpose of availing ECB. The expanded infrastructure sector and sub-sectors for the purpose of ECB include:
(a) Energy which will include (i) electricity generation, (ii) electricity transmission, (iii) electricity distribution, (iv) oil pipelines, (v) oil/gas/liquefied natural gas (LNG) storage facility (includes strategic storage of crude oil) and (vi) gas pipelines (includes city gas distribution network);

(b) Communication which will include (i) mobile telephony services / companies providing cellular services, (ii) fixed network telecommunication (includes optic fibre / cable networks which provide broadband / internet) and (iii) telecommunication towers; Transport which will include (i) railways (railway track, tunnel, viaduct, bridges and includes supporting terminal infrastructure such as loading / unloading terminals, stations and buildings), (ii) roads and bridges, (iii) ports, (iv) inland waterways, (v) airport and (vi) urban public transport (except rolling stock in case of urban road transport);

(c) Water and sanitation which will include (i) water supply pipelines, (ii) solid waste management, (iii) water treatment plants, (iv) sewage projects (sewage collection, treatment and disposal system), (v) irrigation (dams, channels, embankments, etc.) and (vi) storm water drainage system;

(d )(i) mining, (ii) exploration and (iii) refining;

(e) Social and commercial infrastructure which will include (i) hospitals (capital stock and includes medical colleges and para medical training institutes), (ii) Hotel Sector which will include hotels with fixed capital investment of Rs. 200 crore and above, convention centres with fixed capital investment of Rs. 300 crore and above and three star or higher category classified hotels located outside cities with population of more than 1 million (fixed capital investment is excluding of land value), (iii) common infrastructure for industrial parks, SEZs, tourism facilities, (iv) fertilizer (capital investment), (v) post harvest storage infrastructure for agriculture and horticulture produce including cold storage, (vi) soil testing laboratories and (vii) cold chain (includes cold room facility for farm level pre-cooling, for preservation or storage or agriculture and allied produce, marine products and meat.

All other aspects of ECB policy shall remain unchanged.

Necessary amendments to the Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) Regulations, 2000 dated May 3, 2000 have been issued.

(A.P. (DIR Series) Circular No. 50 dated September 20, 2013 issued by the Reserve Bank of India, Foreign Exchange Department regarding ‘Opening of Trading Office/ Non-Trading Office/ Branch Office/ Representative Office abroad’

In terms of A.P. (DIR Series) Circular No. 39 dated April 20, 2002, a statement in Form ORA was required to be submitted to the Regional Offices of the Reserve Bank on half yearly basis instead of on a monthly basis by the Authorized Dealers.

On a review, it has been decided to discontinue the practice of forwarding the statement in Form ORA to the respective Regional Office of the Reserve Bank by the Authorized Dealers. Authorized Dealers may, however, continue to maintain the particulars of approvals granted for opening of Trading Office/ Non-Trading Office/ Branch Office/ Representative Office at their end.

A.P. (DIR Series) Circular No. 53 dated September 24, 2013 issued by the Reserve Bank of India, Foreign Exchange Department regarding ‘Trade Credits for Import into India’

As per the extant guidelines, AD Category-I banks may approve availing of trade credit not exceeding USD 20 million up to a maximum period of five years (from the date of shipment) for companies in the infrastructure sector, subject to certain terms and conditions stipulated therein. It is also stipulated that AD Category-I banks are not permitted to issue Letters of Credit/guarantees/Letter of Undertaking (LoU)/ Letter of Comfort (LoC) in favour of overseas supplier, bank and financial institution for the extended period beyond three years. No roll-over/extension is permitted beyond the permissible period.

On a review, it has been decided to allow companies in all sectors to avail of trade credit not exceeding USD 20 million up to a maximum period of five years for import of capital goods as classified by Director General of Foreign Trade (DGFT). It has also been decided to relax the ab-initio contract period of 15 (fifteen) months for all trade credits to 6 (six) months.

AD Category-I banks are, however, not permitted to issue Letters of Credit/ guarantees/ LoU/ LoC in favour of overseas supplier, bank and financial institution for the extended period beyond three years.

All other aspects of Trade Credit policy will remain unchanged and should be complied with. The amended Trade Credit policy will come into force with immediate effect and is subject to review based on the experience gained in this regard.

A.P. (DIR Series) Circular No. 56 dated September 30, 2013 issued by the Reserve Bank of India, Foreign Exchange Department regarding ‘Trade Credits for Imports into India – Review of all-in-cost ceiling’

On a review it has been decided that the all-in-cost ceiling as specified under paragraph 4 of A.P. (DIR Series) Circular No.28 dated September 11, 2012 will continue to be applicable till March 31, 2014 and is subject to review thereafter. All other aspects of Trade Credit policy remain unchanged.

A.P. (DIR Series) Circular No. 57 dated September 30, 2013 issued by the Reserve Bank of India, Foreign Exchange Department regarding ‘ECB Policy – ECB proceeds for acquisition of shares under the Government’s Disinvestment Programme of PSUs – Clarification’

In terms of A.P. (DIR Series) Circular No. 5 dated August 1, 2005, relating to External Commercial Borrowings (ECB) as amended from time to time, ECB proceeds are permitted to be used in the first stage acquisition of shares in the disinvestment process and also in the mandatory second stage offer to the public under the Government’s disinvestment programme of the public sector undertakings (PSUs) shares.

It is clarified that ECB is allowed for all subsequent stages of acquisition of shares in the disinvestment process under the Government’s disinvestment programme of the PSU shares; in other words, facility of ECB is available for multiple rounds of disinvestment of PSU shares under the Government disinvestment programme.

A.P. (DIR Series) Circular No. 58 dated September 30, 2013 issued by the Reserve Bank of India, Foreign Exchange Department regarding ‘External Commercial Borrowings (ECB) Policy — Review of all-in-cost ceiling’

On a review, it has been decided that the all-in-cost ceiling as specified under paragraph 2 of A.P. (DIR Series) Circular No. 99 dated March 30, 2012 will continue to be applicable till March 31, 2014 and subject to review thereafter. All other aspects of ECB policy remain unchanged.

A.P. (DIR Series) Circular No. 59 dated September 30, 2013 issued by the Reserve Bank of India, Foreign Exchange Department regarding ‘External Commercial Borrowings (ECB) Policy – Refinancing / Rescheduling of ECB’

As per the extant guidelines, the eligible borrowers desirous of refinancing an existing ECB can raise fresh ECB at a higher all-in-cost / reschedule an existing ECB at a higher all-in-cost under the approval route subject to the condition that the enhanced all-in-cost does not exceed the all-in-cost ceiling prescribed as per extant guidelines.

On a review, it has been decided to discontinue this facility allowing eligible borrowers to raise ECB at a higher all-in-cost to refinance/ reschedule an existing ECB with effect from October 01, 2013. The scheme of refinance of existing ECB by raising fresh ECB at lower all-in-cost, subject to the condition that the outstanding maturity of the original ECB is either

maintained or extended, will continue as hitherto under the automatic route and approval route as the case may be. All other aspects of ECB policy shall remain unchanged.

A.P. (DIR Series) Circular No. 63 dated October 18, 2013 issued by the Reserve Bank of India, Mumbai regarding ‘Memorandum of Procedure for channeling transactions through Asian Clearing Union (ACU)’

The ACU Board of Directors in their meeting held on June 19, 2013 have decided to include only transactions involving export/ import of goods and services among ACU countries as eligible for payment under the ACU Mechanism. Accordingly, Para 7 and Para 8(b) of the Annex to the A.P. (DIR Series) Circular No.35 dated February 17, 2010 have been updated and given in the Annex. All other instructions contained in the A.P. (DIR Series) Circular No. 35 dated February 17, 2010 shall remain unchanged.

DIPP2
Press Note No. 4 (2013 Series) dated August 22, 2013 issued by the Department of Industrial Policy & Promotion, Government of India, Ministry of Commerce & Industry regarding ‘Amendment of the existing policy on Foreign Direct Investment – definition of the term ‘control’, for calculation of total foreign investment i.e. direct and indirect foreign investment, in Indian companies’

The Government of India has decided to amend paragraph 2.1.7 of the existing policy. The revised definition of the term ‘control’ will be as under: “ ‘Control’ shall include the right to appoint a majority of the directors or to control the management or policy decisions including by virtue of their shareholding or management rights or shareholders agreements or voting agreements.”

Press Note No. 5 (2013 Series) dated August 22, 2013 issued by the Department of Industrial Policy & Promotion, Government of India, Ministry of Commerce & Industry regarding ‘Review of the policy on foreign direct investment in the Multi-

2Department of Industrial Policy & Promotion

Brand Retail Trading Sector-amendment of paragraph 6.2.16.5(iii), (iv) and (vi) of Circular 1 of 2013 – Consolidated FDI Policy’

The Government of India has reviewed the position and decided to amend Paragraph 6.2.16.5(iii), (iv) and (v) of Circular 1 of 2013 – Consolidated FDI Policy, effective from April 05, 2013, as below:

(i) Amendment to paragraph 6.2.16.5(iii):

At least 50% of total FDI brought in the first tranche of US $100 million, shall be invested in ‘backend infrastructure’ within three years, where ‘back-end infrastructure’ will include capital expenditure on all activities, excluding that on front-end units; for instance, back-end infrastructure will include investment made towards processing, manufacturing, distribution, design improvement, quality control, packaging, logistics, storage, ware-house, agriculture market produce infrastructure etc.. Expenditure on land cost and rentals, if any, will not be counted for purposes of backend infrastructure. Subsequent investment in the backend infrastructure would be made by the MBRT retailer as needed, depending upon its business requirements. (ii) Amendment to paragraph 6.2.16.5 (iv):

At least 30% of the value of procurement of manufactured/ processed products purchased shall be sourced from Indian micro, small and medium industries, which have a total investment in plant & machinery not exceeding US $ 2.00 million. This valuation refers to the value at the time of installation, without providing for depreciation. The ‘small industry’ status would be reckoned only at the time of first engagement with the retailer and such industry shall continue to qualify as a ‘small industry’ for this purpose, even if it outgrows the said investment of US$ 2.00 million, during the course of its relationship with the said retailer. Sourcing from agricultural co-operatives and farmers co-operatives would also be considered in this category. The procurement requirement would have to be met, in the first instance, as an average of five years’ total value of the manufactured/ processed products purchased, beginning 1st April of the year during which the first tranche of FDI is received. Thereafter, it would have to be met on an annual basis.

(iii) Amendment to paragraph 6.2.16.5 (vi):
Retail sales outlets may be set up only in cities with a population of more than 10 lakh as per the 2011 Census or any other cities as per the decision of the respective State Governments, and may also cover an area of 10 kms around the municipal/urban agglomeration limits of such cities; retail locations will be restricted to conforming areas as per the Master/Zonal Plans of the concerned cities and provision will be made for requisite facilities such as transport connectivity and parking.

Press Note No. 6 (2013 Series) dated August 22, 2013 issued by the Department of Industrial Policy & Promotion, Government of India, Ministry of Commerce & Industry regarding ‘Review of the policy on Foreign Direct Investment (FDI)-Caps and routes in various sectors’

The Government has reviewed the FDI caps and/or routes in various sectors, as contained in paragraph 6.2 of ‘Circular 1 of 2013-Consolidated FDI Policy’. The said sectors include; Tea sector including tea plantations, Petroleum and natural gas, Defence, Telecom services (including Telecom Infrastructure Providers Category-I), Test marketing and Single-brand product retail trading.

SEZ3
Instruction No. 78 dated October 11, 2013 bearing No. D.12/11/2012-SEZ, issued by the Government of India, Ministry of Commerce & Industry, Department of Commerce (SEZ Division) to all the Development Commissioners regarding ‘Permission for sub-contracting by a SEZ Unit to a DTA Unit’

Under Sub-rule 41(1) of SEZ Rules, 2006 a Unit may sub-contract a part of its production or any production process, to a unit(s) in the Domestic Tariff Area (DTA) or in a Special Economic Zone (SEZ) or Export Oriented Unit (EOU) or Software Technology Park Unit or Bio-technology Park unit with prior permission of the specified officer to be given on an annual basis subject to conditions laid thereunder.

3Special Economic Zone

It has been decided that sub-contracting of production or any production process by large manufacturing SEZ units to DTA units may be granted for a period up to 3 years at a time subject to certain conditions mentioned therein.

BILLS UPDATE FOR THE EXTENDEDMONSOON SESSION OF PARLIAMENT OF INDIA

The Monsoon Session of Parliament of India began on August 5, 2013 and was scheduled to close on August 30, 2013.
The Monsoon session was however extended by theParliament until September 7, 2013.

The important bills that were passed in the Monsoon Session were:

1. The Prohibition of Employment as Manual Scavengers and their Rehabilitation Bill, 2012
This bill prohibits manual scavenging and provides for the rehabilitation of manual scavengers and their alternative employment.

2. The Pension Fund Regulatory and Development Authority Bill, 2011
This Bill gives statutory recognition to the PFRDA, defines its powers and duties, and sets the broad contours of the New Pension Scheme.

3. The Securities and Exchange Board of India (Amendment) Bill, 2013
This Bill replaces an ordinance to appoint a sitting or retired Judge of a High Court with a minimum seven years of service to the post of Presiding Officer of the Securities Appellate Tribunal.

4. The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Bill, 2013
This Bill replaces the Land Acquisition Act, 1894 and specifies provisions for land acquisition as well as rehabilitation and resettlement.

5. The National Food Security Bill, 2013

This Bill makes the right to food and nutritional security a legal right by providing specific entitlements to certain groups.

6. The Companies Bill, 2011
This Bill replaces the Companies Act, 1956 and creates provisions to regulate and strengthen corporate structure and governance.

Legal Pronouncements

SUPREME COURT OF INDIA CASES:

PinakinMahipatrayRawal v. State of Gujarat

The question in the present case was whether an extra marital affair would lead to cruelty within the meaning of Section 498A of the Indian Penal Code. The Hon’ble Supreme Court held that the mere fact that the husband in the present case had developed some intimacy with another, during the subsistence of marriage and failed to discharge his marital obligations, as such would not amount to “cruelty”, but the cruelty must be of such a nature as is likely to drive the spouse to commit suicide to fall within the explanation to Section 498A IPC.

Hill Properties Ltd. v. Union Bank of India and others

The question for consideration in the present case was whether the flat owners have a right to sell, let or mortgage their flats without the permission of the Builders or the Society.

The Hon’ble Supreme Court held that it is too late in the day to contend that flat owners cannot sell, let, hypothecate or mortgage their flat for availing of loan without permission of the builder, Society or the Company. So far as a builder is concerned, the flat owner should pay the price of the flat. So far as the Society or Company in which the flat owner is a member, he is bound by the laws or Articles of Association of the Company, but the species of his right over the flat is exclusively that of his. That right is always transferable and heritable. The Society or the Company will have a charge over the flat if any amount is due to them upon the flat.

A.C. Narayanan v. State of Maharashtra &Anr.

The Hon’ble Supreme Court in the present case held that filing of complaint petition under Section 138 of Negotiable Instruments Act through power of attorney is perfectly legal and competent. The Power of Attorney holder can depose and verify on oath before the Court in order to prove the contents of the complaint

M/s. Larsen & Toubro Limited &Anr.v. State of Karnataka &Anr.

The Hon’ble Supreme Court held that building contracts are species of a works contract. If the agreement is entered into after the flat or unit is already constructed then there would be no works contract. But, so long as the agreement is entered into before the construction is complete it would be works contract and the liability to pay turnover tax on the value of the goods involved in the execution of the works contract would arise.

M/s Kulja Industries Limited v. Chief Gen. Manager W.T. Proj. BSNL &Ors.,

The Hon’ble Supreme Court observed that freedom to contract or not to contract is unqualified in the case of private parties, but any such decision is subject to judicial review when the same is taken by the State or any of its instrumentalities. Further, blacklisting is in the nature of penalty the quantum whereof is a matter that rests primarily with the authority competent to impose the same. The Court has to determine the time period for which the appellant should be blacklisted or remit the matter back to the authority to do so having regard to the attendant facts and circumstances.

Trademarks & Copyright Law: Information and Updates (September – October, 2013)

TRADEMARKS & COPYRIGHT UPDATES

Hon’bleShri Justice K.N.Basha, a recently retired judge from the Madras High Court has been appointed as the new Intellectual Property Appellate Board Chairman.

The Ecuador Trade Marks Office has denied registration to the trademark ARROZ GANDHI for the goods “aged or old rice, also medium and long grain rice’ that may or may not come from India” in class 30. Mr.LalitBhasin, the President of the Society of Indian Law Firms opposed the said application for registration by filing an opposition. The Ecuador Trademark Registry allowed the opposition and denied the grant of registration to the mark ARROZ GANDHI holding that Mr.Bhasin had a legitimate interest in opposing the grant of registration for the said mark as he being an Indian himself had the rights, capacity and power that every Indian citizen would have for defending his/her national symbols and characters that form a part of the culture and identity of their country. In the instant case, the name and image of Late Mahatma Gandhi – famously known as Father of the Nation, is one of the most highly respected and the highest national symbol and personality of India. The Trademark Registry further stated that it was also an icon of spirituality in India. Hence, the registration in the mark ARROZ GANDHI would hurt the sentiments of the Indian people and their society.

The Cabinet of the State of West Bengal has cleared a new ordinance for piracy related offences that provides for a minimum imprisonment term of three years and amount of fine of Rs. 25,000/- and a maximum imprisonmentterm of seven years and fine of Rs. 1,00,000/-. The ordinance is plugged to be for the benefit of thesingers and other artists in the film industry whowere suffering huge losses owing to the increasing piracy of audio and video CD’s. The Ordinance is expected to receive the Governor’s nod soon.

LEGAL DEVELOPMENTS

Intellectual Property Appellate Board (IPAB) Orders/Decisions

M/s Nirmal Industrial Controls Pvt. Ltd. v. M/s Nirma Chemical Works Pvt. Ltd. &Ors.MANU/IC/0068/2013; Decided on 13.09.2013.

The IPAB vide its decision dated 13.09.2013 has ordered to remove the NIRMA trademark under class 6 from the trademarks register on the grounds of non-use under section 47 of the Trade Marks Act, 1999. The Applicant, NIRMA INDUSTRIAL WORKS, had applied for the registration of the mark NIRMAL under class 6. The said mark was opposed by Nirma Chemical Works (the Opponent), being the owner of the well-known mark NIRMA. NIRMA was already registered under class 6 on a proposed to be used basis. The Opponent contended that NIRMA is a well-known mark and registration of NIRMAL in class 6 would amount to huge loss to them. The Board observed that the Registrar, while refusing the registration to the mark NIRMAL despite the applicant being the prior user,granted the decision in the light of popularity of the mark NIRMA. The Applicant challenged the order of the Registrar and sought for removal of the mark NIRMA before the IPAB. The Applicant stated that the Respondent – Nirma Chemical Works, had not used the mark for any of the goods mentioned under class 6 from 1984 till 2010, and sought removal of the mark NIRMA from the register also. The IPAB struck down the mark from the Register as the respondents failed to prove the use of the mark NIRMA under class 6.The order can be read here.

High Court Decisions

Salim Khan and Anr.v. Sumeet PrakashMehra and Ors.

The question for consideration in the present case was whether the Defendant Sumeet Mehra, by remaking the movie Zanjeer has infringed the copyright of the script writers. The court held that the producer of the movie became the first owner of the copyright and therefore, he had a right to remake the movie. Since he was not alive, the right would vest with his legal heirs i.e. the Defendants. Further, the court observed that the Plaintiffs could not take the plea that they were not aware that the Defendants were in the process of remaking Zanjeer, which was widely publicized as they are closely associated with the Film Industry. The court alsoobserved that the plaintiffs werenot entitled to mandatory injunction as they had already sought compensation. The judgment can be read here.

Bajaj Auto Limited and Anr.v. JA Entertainment Private Limited and Anr.
Suit No. 491 of 2013; Decided on 21.09.2013.

The question for consideration in the present case was whether the use of the trademark ‘BAJAJ’ in the title of a movie ‘HAMARA BAJAJ’ can be a ‘fair use’ of the trademark by the Defendants?In its decision, the High Court of Bombay permanently restrained the Defendants from using the title of its proposed production as HAMARA BAJAJ. The said injunction came in the light of the consent order issued by the High Court against the defendant in the suit filed by Bajaj Auto Ltd – The Plaintiffs. ‘Bajaj’ is a registered trademark of the Plaintiffs and they have been extensively using it as a tag line for advertising one of their most popular Bajaj scooters ‘Bajaj Chetak’. The order also restrained the defendants from using the mark ‘BAJAJ’ and ‘HAMARA BAJAJ’ anywhere in the contents of the proposed film or elsewhere in relation to the film. The judgment can be read here.

Hindustan Unilever Ltd .v. Reckitt Benckiser(C.S. 56 of 2013 and C.S. 87 of 2013) and Reckitt Benckiser Vs. Hindustan Unilever Ltd. (C.S. 90 of 2013 and C.S. 93 of 2013); Decided on 23.09.2013.

The question for consideration in the present case was whether a comparative advertisement by disparaging the products of the other would amount to fair use within the provisions of Section 30 of the Trade Marks Act, 1999.

The Hon’ble Court of Calcutta held that all the four advertisements were serious comparative advertisements that went beyond the permissible limit of puffing up their own products. The court passed orders of injunction in all the four advertisements restraining the parties from showing the advertisement or any version or adaptation thereof in any form of media until the disposal of the suit.All the injunctions were granted in the light of S. 30 of the Actwherein a serious comparative advertisement would be unfair and detrimental to the rival trader’s product that’s harms the repute of the rival trader’s product/brands. The judgment can be read here.

Legal News

2nd Sep, 2013

The National Food Security Bill 2011 has been passed by the RajyaSabha. The legislation was passed by the LokSabha earlier on August 26, 2013.

4th Sep, 2013

The LokSabha has passed the Pension Fund Regulatory and Development Authority Bill 2011, which aims to create a regulator for the pension sector and extend the coverage of pension benefits to more people.

5thSep, 2013

The Supreme Court of India has refused to review its verdict that an MP or MLA convicted of any criminal offence attracting a punishment of two years and above will be disqualified immediately but agreed to relook its other judgement debarring arrested persons from contesting polls. A petition challenging an Andhra Pradesh High Court ruling that French drug maker Sanofi SA was not liable to pay tax in India for its acquisition of ShanthaBiotechnics Ltd is going to be heard soon before the Supreme Court of India. Its decision is likely have a bearing on the taxability of cross border transactions.

6th Sep, 2013

The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Bill, 2012 with the new amendments has been passed by the Parliament of India. The bill had earlier been passed by the LokSabha on August 29, 2013 and the RajyaSabha on September 4, 2013. It was referred to the LokSabha again for approving three new amendments passed by the RajyaSabha.

The RajyaSabha has passed the Constitution Amendment Bill paving the way for creation of a Judicial Appointments Commission to replace the collegium system of appointing judges to higher courts.

The government of India is working on rules that would provide a broad canvas for CSR activities under the new Companies Bill 2012.

9th Sep, 2013

Supreme Court of India has held that obtaining evidence illegally by using tape recordings or photographs is admissible in law even though such methods were not procedures established by law. It is a settled legal proposition that even if a document is procured by illegal means, there is no bar to its admissibility.

10th Sep, 2013

The Government of India has released the first set of draft rules to implement the new Companies Act 2013. It has issued the first set of draft rules, covering 16 chapters of the Companies Act, 2013, which overhauls regulations that govern corporates in the country.

The Supreme Court of India has ruled that merely being “intimate” with another woman is not a sufficient ground for a man to be held guilty of inflicting cruelty on his wife on the charge of failing to discharge his marital obligations.

The Reserve Bank of India (RBI) has made it easier for foreign and non-resident Indian promoters to increase their stake in domestic companies through the foreign direct investment (FDI) route.

The Government of India has introduced a Bill in the RajyaSabharecommending structural changes in the way drugs, medical devices & cosmetics are regulated in the country. The Government of India is likely to delay the announcement of its much-awaited merger &acquisition (M&A) policy for the telecom sector to mid-October 2013.
11th Sep, 2013

The Supreme Court of India has held that life imprisonment is the rule and death penalty an exception and courts should also consider socio-economic compulsions such as poverty while awarding the extreme sentence to a convict.

The Mumbai High Court has held that death due to heart failure at work place amounts to employment injury. It has ordered Employees State Insurance Corporation (ESIS) to pay within a month the claim amount to a 40-year-old housewife whose husband died of cardiac arrest in a factory.

SEBI has notified new norms to classify illegal collective investment schemes (CIS) as frauds and impose penalties of up to three times of their profits.

The foreign direct investment (FDI) policy is now notified under FEMA regulations and is effective from August 22, 2013.

12thSep, 2013

The Department of Industrial Policy and Promotion and the Department of Economic Affairs has allowed the foreign universities to function as companies under the Companies Act 2013.

13th Sep, 2013

The National Food Security Bill, 2013 has received the assent of the President of India. It has now been published in the Gazette of India.

The National Highways Authority of India (Amendment) Bill, 2013 has received the assent of the President of India. It has now been published in the Gazette of India.

16th Sep, 2013

The Supreme Court of India has held that a criminal complaint in a cheque bounce case can be filed and pursued by a person who holds a power of attorney on behalf of the complainant.

17th Sep, 2013

The Supreme Court of India has held that courts at places where a cheque is deposited for encashment can hear cheque bounce complaints.

Under the guidelines which are part of the draft rules under the Companies Bill 2013 , Companies that are being set up need to have names that are new in letter and spirit, not just phonetic or spelling variations of existing names or similar-sounding words. The new rules bar the use of abbreviations and country and state names, except for some government units. Terms such as ‘British India’ and names of ‘enemy’ countries will not be allowed.

The Securities Laws (Amendment) Ordinance 2013 (lapsed) has been further amended and reintroduced as The Securities Laws (Amendment) Second Ordinance, 2013 in the LokSabha but has not been passed yet. The ordinance has received Promulgation by the President.

19th Sep, 2013

The Government of India has declared a new set of transfer pricing rules to attract foreign investment.

20th Sep, 2013

The Company Law Board will continue to exercise its powers till the government of India notifies a date for transfer of all matters before it to the National Company law Tribunal (NCLT ) under the Companies Act 2013 .The Corporate Affairs Ministry made this announcement through the ‘Companies (Removal of Difficulties) Order, 2013.

The Ministry of Corporate Affairs has issued the second set of draft rules for eight chapters of the Companies Act, 2013.

23rd Sep, 2013

The Supreme Court of India has held that in order to determine whether or not an accused is a juvenile, an authentic school leaving certificate should confirm the age and there is no need for a medical determination of this if that document is available.
The Supreme Court of India has held that a spouse suffering from mental disorder cannot be the sole ground for dissolution of marriage and divorce can be granted only if the illness is of such nature that it is difficult to live together.

Voicing concern over “unfortunate” incidents of social media being misused to foment trouble, the Supreme Court of India has said that a balanced view is needed while deciding pleas seeking scrapping of the controversial IT Act that allows police to arrest a person for offensive messages.

The government of India has expanded the number of people eligible for Employees’ State Insurance (ESI), which provides medical care to industrial workers and their dependents, by increasing the salary cap of beneficiaries to Rs. 25,000 from Rs. 15, 000, ignoring opposition from employers.

Competition Commission of India has given more time to its Director General to complete probe against Google for alleged unfair practices in the Internet search engine market. Following a complaint against Google, which dominates the Internet search space, the Commission had started investigations in August last year.

24th Sep, 2013

The TRAI has notified the amendments to the Interconnection Regulations applicable for Digital addressable cable TV systems & Tariff Order applicable for addressable systems.

The Centre has told the Supreme Court of India that securing Aadhar cards, which were issued by the Unique Identification Authority of India (UIDAI), were optional and it is not mandatory for the citizens. The Supreme Court of India has asked the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) to rule by December on BhartiAirtel’s plea against a telecom department order asking it to stop providing 3G roaming services provided through interconnectivity pacts with other operators. The government of India will bring the National Identification Authority of India Bill 2010 in Parliament during the forthcoming winter session for discussion and passage.
25th Sep, 2013

Relaxing norms to raise funds from abroad, the Reserve Bank of India has said that now all types of companies can avail trade credit facility from overseas for import of capital goods.

1st Oct, 2013

The Supreme Court of India has stayed approvals granted to 162 applications for clinical trials in the country and asked the sector regulator to provide evidence that norms for drug-related research are being followed.

Simplifying the procedural requirements for stock brokers, Securities Exchange Board of India has decided to introduce a common registration certificate for different market segments.

The Supreme Court of India has held that a Magistrate cannot order probe against a public servant in a corruption complaint if there is no sanction given by the government.

2nd Oct, 2013

The Competition Commission of India has stated that some cases of probe into alleged unfair practices of pharmaceuticals with regard to pricing aspects are in the process.

4th Oct, 2013

The Central Cabinet of India has approved the creation of a new State of Telangana by bifurcating the existing State of Andhra Pradesh. The city of Hyderabad will function as the common capital for both the States for a period of ten years.

The Central Cabinet of India has approved the National Policy on Universal Electronic Accessibility that recognizes the need to eliminate discrimination on the basis of disabilities as well as to facilitate equal access to electronics and Information and Communication Technologies (ICTs).

The Central Information Commission of India has ruled that pendency of an arbitration proceeding or a litigation cannot be a reason to deny information to an RTI applicant by any government department.

The Supreme Court of India has raised a question on the new Drug Price Control Order (DPCO) of the Centre to fix the ceiling price of essential medicines on the basis of market-based pricing.

6thOct, 2013

To bolster its abilities for keeping unfair practices under check, the Competition Commission of India is carrying out detailed studies on multiple sectors such as pharmaceuticals, healthcare, financial services and technology.

12th Oct, 2013

The Supreme Court of India has observed that any decision taken by the government or its instrumentalities to “blacklist” a business entity is subject to judicial review. The affected party should be given a fair hearing.

13th Oct, 2013

The Supreme Court of India has observed that the courts should not be guided by “misplaced sympathy”. The Hon’ble Court while examining quantum of punishment of an offender, ordered removal of a clerk from service for going to work in a drunken state.

A BRICS nation’s conference on international competition will be held in Delhi from November 20- 22, 2013. According to the CCI Chairman it will provide renewed focus and thrust on India’s competition laws.

15th Oct,2013

The government of India has relaxed qualification norms for ultra mega power projects (UMPPs) and amended a clause that capped cost of coal in order to lure developers.

The Supreme Court of India has held that co-operative societies do not fall within the ambit of Right to Information Act .The Hon’ble Court has stated that mere supervision or regulation of a body by government would not make that body a public authority.

Deputy National Security Adviser has expressed serious concerns over growing threats to cyber security and said the private sector needs to do more to insulate itself against such threats and spread awareness among the public.

16th Oct, 2013

The Ministry of Rural Development of India plans to notify the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Bill, 2013, commonly referred to as the Land Acquisition Act, with effect from January 1, 2014.

17th Oct, 2013

The Supreme Court of India has held that the courts cannot impose a fine of more than twice the amount in bounced cheques stressing that the limit is inviolable and should be respected.

18th Oct, 2013

The Cabinet of Ministers in India has approved a revised version of the Preferential Market Access policy that will apply to the supply of electronic and telecom equipment that has security implications. In a major relief to logistics firm PN Writer & Co, the Mumbai High Court has directed the Bangalore based Writer Packers and Movers not to use the name ‘Writer’ and remove it from their website till final orders.
21st Oct, 2013

Karnataka has again exempted information technology companies from an onerous labour law for a further five years. The IT sector in Karnataka has been already exempted from the Industrial Employment (Standing Orders) Act, 1946 for the past 11 years.

The Supreme Court of India has said that no trial of new drugs be allowed till consent of people subjected to trial is recorded in audio/visual medium.

The Supreme Court of India has put on its website the guidelines framed to deal with sexual harassment complaints within its premises.

23rd Oct, 2013

India’s telecom security policy will mandate mobile phone firms to implement a slew of measures to secure all network devices, local area and enterprise networks and also build safeguards to isolate the country’s mobile networks in case of potential cyber attacks.

24th Oct, 2013

The Supreme Court of India has said that the right to life and human dignity also encompasses the right to have food articles and beverages which are free from harmful residues such as pesticides and insecticides.

25th Oct, 2013

The Oil Ministry in India has approved a policy to allow exploration firms to immediately start producing oil & gas without waiting for government approval to develop the field.

Department of Telecommunications is readying a proposal to bring mobile tower companies under the licencing regime following government’s decision to allow 100 per cent Foreign Direct Investment in the telecom sector.

27th Oct, 2013

The National Company Law Tribunal (NCLT), which would replace the Company Law Board, is likely to be operational by April next year, with the principal bench based in the national capital. The tribunal is to be set up under the Indian Companies Act, 2013.

31st Oct, 2013

The Central Government of India has been asked by the Delhi High Court to finalise within a month its email policy for government employees in consonance with the Public Records Act so that official data is not transferred to a server outside India.

The Supreme Court of India has observed that an income tax defaulter cannot be absolved of paying penalty by just making a voluntary disclosure after being caught for hiding the income.

The Supreme Court of India in a landmark judgement has ordered setting minimum tenures for bureaucrats and put restrictions on arbitrary transfers and postings by their political masters.

It has also ordered changes in the civil services rules to ensure bureaucrats only act on written orders from superiors. According to the Hon’ble Court, the judgement would continue until Parliament brought in an Act to take care of all these aspects.

Doc ID: 10NOVBT42 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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