Legal & Industry Updates - August 2024
SPECIAL EVENTS
The Future of Legal Practice - How AI is Transforming the Industry, August 31, 2024
The team at Ivy Law participated in a webinar on the “The Future of Legal Practice: How AI is Transforming the Industry” organized by the Oriental University, Indore. The webinar laid stress on how Artificial Intelligence (“AI”) is reshaping traditional legal practices and also explored ways in which AI is influencing and revolutionizing the legal profession, thereby bringing about a profound transformation in the legal industry. Additionally, the webinar discussed various AI tools being integrated into legal processes, enhancing efficiency, accuracy, and accessibility. Further, the conversation also touched upon the ethical, practical, and regulatory implications of AI in law, offering insights into how legal professionals can adapt to and navigate these changes. The opportunities and obstacles that AI presents in the legal industry, were also emphasized upon at length.
LEGAL & INDUSTRY UPDATES
The Companies (Adjudication of Penalties) Amendment Rules, 2024 (“Penalties Rules”) (source)
The Ministry of Corporate Affairs (“MCA”), on 5th August, 2024, has notified the Penalties Rules wherein a new Rule 3A (Adjudication of Platform) has been inserted with the aim to modernize and improve the overall efficiency of the adjudication system. The amendment specifically states that all proceedings of adjudicating officer and Regional Director would be done electronically through e-adjudication platform which would be developed by the Central Government (“CG”). Further, if any person to whom a notice or summon has to be issued does not have an e-mail address, the officer would send the notice by postal mail to the last intimated address available in records and if by any chance address is also not available, then a copy of the notice would be electronically archived on the e-adjudication platform.
The Limited Liability Partnership (Amendment) Rules, 2024 (“LLP Rules”) (source)
MCA, on 5th August 2024, notified the LLP Rules, revising the Limited Liability Partnership Rules, 2009 (“LLP, 2009”). The LLP Rules include amendments to Rule 37 (Striking off name of defunct LLP) of the LLP, 2009, wherein the application for voluntary closure of Limited Liability Partnerships (“LLPs”) would now be approved by Centre for Processing Accelerated Corporate Exit (“C-PACE”) instead of the Registrar. C-PACE is now cited alongside the Registrar in various sub-rules, particularly in clauses and provisions relating to LLPs' name strike-off processes. The amendment further clarifies the definition and formation of C-PACE. These revisions aim to simplify and speed up the corporate exit procedures for LLPs.
MCA Penalizes Renowned Multinational Companies (“MNCs”) for Company Law Breach (source)
The MCA has penalized various prominent MNCs for their failure to appoint key executives on time, thereby breaching the company law provisions. Due to the absence of the Chief Financial Officer, a penalty of INR 24 Lakhs was imposed on an MNC and a penalty of INR 11.89 Lakh was imposed on another MNC due to failure to appoint a company secretary on time. Both the orders were based on ‘suo motu applications’ for settlement filed by the said companies, addressing the non-appointment of key personnel. Thus, both the companies violated Section 203 (Appointment of key managerial personnel) of the Companies Act, 2013 and were therefore penalized accordingly.
India Considering to Put Foreign Portfolio Investment (“FPI”) and Foreign Direct Investment (“FDI”) Rules on Equal Footing (source)
India is considering allowing full fungibility of FPI and FDI in industries that allow 74% or more FDI. Currently, an FPI or investment group can only own up to 10% shares in a publicly traded company whereas more than 10% is allowed through FDI. The fungibility would allow individuals the freedom to freely manage investments and even portfolio investors can pick up more than 10% stake in a company. The goal is to simplify India’s FDI and overseas investment rules to promote opportunities for use of the Indian rupees as a currency for overseas investments and further streamline the foreign investment system.
Supreme Court (“SC”): Complaint Under Section 29 of the Industrial Disputes Act, 1947 (“ID Act”) Must Contain Specific Pleadings Regarding Breach (source)
The SC quashed the criminal proceedings initiated under section 29 (Penalty for breach of settlement or award) of the ID Act, observing that the complaint did not contain specific pleading regarding breach of settlement or award binding on the accused employers. The complaint was filed alleging non-payment of dues by the employer wherein the complainant claimed that the appellants had failed to pay the required amount and have also violated section 9A (Notice of change) of the ID Act, which requires notice before altering an employee's working conditions. However, the SC asserted that the complaint made no mention of any settlement or award to be paid under section 29 of the ID Act, and therefore determined that there would be no valid settlement within the meaning of Section 2(p) (Settlement) of the ID Act between the parties.
SC to Examine Arbitration Clause Restricting Remedy of Arbitration to Claims Not Exceeding 20% of the Contract Value (source)
The SC has agreed to examine the validity of an arbitration clause that restricts the remedy of arbitration only to claims not exceeding 20% of the contract value. The appellant filed an appeal challenging Gauhati HC’s judgment that dismissed its plea for an appointment of an arbitrator in a dispute involving a CG authority. Against the backdrop of the new arbitration policy issued by the CG, this matter is the first such matter where the validity of the restrictive arbitration clause would be tested. It was further stated in the appeal that unilaterally prescribing a monetary ceiling is unreasonable and violates the rights enshrined under Article 14 (Equality before law) of the Indian Constitution. It was also put forth that since CG contracts are standard in nature, therefore consent to such clauses are illusionary.
SC Adopts Artificial Intelligence (“AI”) for Judicial Translation & Legal Research (source)
The SC has implemented AI language technology with the aim of translating legal papers, improve legal research, and automating numerous processes. A committee has been formed to oversee the translation of important SC and High Court (“HC”) decisions into vernacular languages. Translation committees for HC are actively involved in translating SC and HC decisions into regional languages. Currently, eight HCs have launched e-HC Reports, with more in the works. The State Governments have been asked to extend full support to the respective HCs in the exercise of translation of judgements since it is part of ‘access to justice’ as envisaged under the Constitution of India. Further, even though there is no separate funding designated for this translation effort, the SC continues to make great progress in ensuring that legal documents are available to all citizens, hence increasing transparency and inclusion in the Indian judicial system.
SC: Specific Performance Suit’s Limitation Period to Run From the Date for Performance and Not from the Expiry of the Agreement’s Validity (source)
The SC recently held that the limitation period for a specific performance suit will run from the date fixed for the performance and not from the expiry of the validity of the agreement. In the agreement dated 17.12.1989, it was specifically mentioned that the sale deed would be executed within one month from the date of the said agreement. The period of one month would expire on 16.01.1990, and once there is a specific date fixed for performance, the limitation period would be three years from the said date as per Article 54 (Limitation for filing suit for specific performance) of the Limitation Act, 1963, which would expire on 16.01.1993. The SC thus asserted that the suit was barred by limitation as it was filed in September 1993 i.e. beyond three years from the date of performance of the sale deed as per the agreement.
Madras HC: Right to Practice Law is a Fundamental Right, Bar Associations Cannot Prevent Advocates From Appearing Before Courts (source)
As per the recent ruling by Madras HC, a bar association is not authorized to prevent a lawyer from appearing in court, and has thereby quashed the suspension order issued by the Tambaram Bar Association against an advocate for attending the court proceedings. The Madras HC noted that the practice of law is a fundamental right, and no bar association could deny anyone their ability to practice law by suspending attorneys. The HC also observed that the bar association’s actions were not only unnecessary but also in violation of the advocate’s fundamental rights. While maintaining the importance of a cordial relationship among members, HC further emphasized that freedom of speech and the right to practice law must be respected.
Punjab and Haryana HC Directs Strict Action Against False Sexual Harassment Allegations (source)
The Punjab & Haryana HC has called for strict action against the filing of false sexual harassment complaints, emphasising that such practices must be curbed to protect innocent victims and deter wrongful accusations. The HC had asked Haryana DGP to conduct investigation against a woman suspected of filing multiple false sexual harassment cases. In the investigation, it was found out that in all, 19 complaints have been filed by the woman in Jind district alone. The HC observed that such practice of exhorting money from victims through baseless criminal proceedings must be seriously condemned and therefore the HC directed the police to file a compliance report, detailing the action taken, before the Registry of the HC, within 3 months.
Significant Increase in Sexual Harassment Complaints at Indian Companies (source)
As per the reports, there has been a 40.4% rise in sexual harassment complaints recorded across India’s largest companies in Financial Year 2024, highlighting an emerging trend toward enhanced corporate transparency. The Prevention of Sexual Harassment of Women at Workplace (“PoSH”) committee members attributed this to a greater awareness among women professionals about the PoSH law as well several companies pushing for a culture that encourages reporting of such cases. Further, the majority of companies that reported an uptick in complaints are from the banking and technology sectors, both of which have a younger workforce and a higher proportion of female employees.
The People’s Union for Civil Liberties (“PUCL”) Seeks West Bengal Government’s Report on Compliance with POSH Norms in Kolkata Rape-Murder Incident (source)
The PUCL has filed a case with the Calcutta High Court over the violent rape and killing of a second-year post graduate medical student on the campus of RG Kar College and Hospital in Kolkata, which occurred after the student's night shift. The petition prays for a court-monitored investigation into the brutal rape & murder and also requests to seek a report on compliance of the provisions of POSH by the West Bengal government. Additionally, the petition also emphasizes on the need to address institutional accountability by thoroughly investigating the role of the Principal of the hospital in question and other authorities at the hospital.
The Competition Commission of India (“CCI”) Seeks Reply on Investigation Report Alleging Antitrust Practices (source)
The supplementary investigation report by the CCI has alleged that a renowned MNC has abused its market dominance by violating various provisions of section 4 (Abuse of dominant position) of the Competition Act, 2002. CCI has sent a non-confidential report to the said MNC seeking a reply on the investigation report which alleges that it has violated competition norms with respect to its Application (“app”) Store. In the order passed in December 2021, CCI had observed that the company’s app store is only for app developers to distribute their apps to their own consumers. The restrictions by the MNC forecloses the market for third-party app stores which results in denial of market access for potential app distributors and app store developers, thereby violating the competition norms.
CG to Review Market Practices by Electronic-Commerce (“E-Comm”) Players (source)
The Commerce and Industry Minister recently addressed the issue of predatory pricing, implying that e-comm operators may have circumvented restrictions barring e-comm platforms from selling to consumers directly. Further, he emphasized that many e-comm behemoths are just concerned with covering losses rather than contributing to India's economic development and therefore CG is looking into possible probe into market practices by e-comm players and whether there has been any breach of competition laws by these firms. However, on the other hand, it has also been observed that there have been benefits of e-comm penetration in the retail industry as well, including more employment and improved consumer welfare.
Disclaimer: The updates provided in this document is not a legal opinion and does not claim to capture all legal developments related to the subject matter stated herein. It is advisable to seek legal advice for accurate applicability, prior to relying on the updates for any legal matter.