Legal & Industry Updates - December 2023
SPECIAL EVENTS
Indianisation of the Indian Legal Landscape: Decolonizing Academia & Legal System, December 22, 2023
The team at Ivy Law participated in an event on Indianisation of the Indian Legal Landscape: Decolonizing Academia & Legal System organized by the Gujarat National Law University. The discussion was exhaustive, covering various aspects including the concept of "Indianisation" in the legal sphere and how it has gained significant traction in recent years. The webinar raised crucial arguments about the post-colonial identity of India's legal system and academia and also delved into the complex task of reconciling inherited colonial frameworks with the unique values, ethos, and realities of India's diverse society. Further, how to do away with foreign and old laws and come up with new frameworks that could help tackle Indian problems in a more ‘Indian manner’ as well as the process of decolonizing the legal system were also deliberated upon.
LEGAL & INDUSTRY UPDATES
The Reserve Bank of India (“RBI”) Announces Relaxations, Measures for Financial Technology (“Fintech”) Sector (source)
RBI’s Monetary Policy Committee, on 8th December, 2023, has announced a slew of measures, major relaxations and new initiatives for the fintech industry which is at present under a lot of regulatory scrutiny. RBI has raised the payment limits for Unified Payments Interface transactions for the hospitals and educational institutions from INR 1 lakh to INR 5 lakhs. It has also created a fintech repository which would be run by RBI’s Innovation Hub to better understand the developments in the fintech ecosystem. Further, RBI has decided to lay down a regulatory framework for web aggregation of loan products to enhance customer centricity and transparency in digital lending.
RBI Tightens Investing Norms for Banks and Non-Banking Finance Companies (“NBFCs”) Investing in Alternate Investment Funds (“AIFs”) (source)
RBI, on 19th December, 2023, has tightened norms for banks and NBFCs regarding the evergreening of loans by lenders through AIFs by advising them to refrain from investing in AIFs having investment in companies that have taken loan from the lenders concerned in the past 12 months due to the possibility of high risk and the likelihood of dubious credit, both of which could have an impact on the flow of institutional capital. Further, RBI has also directed lenders that such investments would be required to be liquidated within 30 days and if they are not able to liquidate their investments within the prescribed time limit, they should make 100 per cent provision on such investments.
License Withdrawal by RBI Compel Online Payment Aggregators to Seek Alternative Business Options (source)
RBI had put forward a regulatory ban on various payment aggregators to onboard new merchants and businesses, which has forced these venture capital-backed firms to scout for alternative sources of revenue. As such embargoes lead to slower growth, stagnating revenue and, in turn, stressing on valuations, therefore, these companies are now on the lookout for other ways to generate money by focusing on international markets, offline payments, and remittances. They are further adding new features, services, and products for their existing customers. However, on the other hand, the ban has opened numerous opportunities for other payment companies to enter the Indian market.
Banks Seek More Time from RBI to Declare Wilful Defaulters (source)
RBI had earlier granted six months’ time period to banks across the nation on the treatment of wilful and large defaulters, in its draft rules, to which, the banks have reached out to RBI again, seeking an extension of another six months for the declaration of a non-performing asset as a wilful defaulter. Further, banks’ contention also includes the fact that the period allotted to them by RBI is considerably less as borrowers are required to give an ‘in-person’ meeting before declaring themselves as a non-performing asset, which is subjected to delays.
RBI and Ministry of Electronics and Information Technology (“MeitY”) Team Up to Tackle Illegal Forex Trading (source)
RBI, in collaboration with banks and MeitY, has suggested greater public awareness and stringent measures to ensure that banking channels are not used for illegal forex trading. RBI has so far named 75 entities in its alert list, which includes platforms and websites that are not authorized to deal in foreign currency or execute any forex transactions. Permitted forex transactions can be executed electronically, however, they should be on RBI authorized platforms or recognized stock exchanges as per the terms and conditions specified by the RBI.
Failure to Curb Deepfakes May Lead to Action Under Indian Penal Code, 1860 (“IPC”) (source)
MeitY has warned social media and internet intermediaries that failure to act on deepfake, synthetically altered content and other similar harm mentioned in the Information Technology Rules, 2021 (“IT Rules”) could attract action under relevant sections of IPC apart from the IT Rules. This new amendment is actively under consideration with the aim to ensure social media and other platforms’ compliance on deepfake in order to gain the trust and safety of citizens of India. Earlier, in November, 2023, MeitY had cited various sections and rules of the Information Technology Act, 2000 and IT Rules, specifically stating that social media intermediaries must ensure that the users of their platforms do not host any content which impersonates another person.
Central Government (“CG”) May Soon Permit Angel Funds to Invest More in Startups Boosting System (source)
Angel Funds, a sub-category of venture capital funds under AIFs which are regulated by Securities and Exchange Board of India (“SEBI”), who generally invest smaller amounts of money than venture capitalists, but can be a valuable source of funding for early-stage businesses, are likely to get a bigger role in future as these pooled vehicles could be given the opportunity to take larger bets on startups whose early stage plans they bankroll. CG and SEBI are on the verge to take a relook at the maximum investment that an angel fund can make in a single company and could double the investment limit which, at present, is capped at INR 10 crore, with the aim to provide more flexible funding than traditional investors so that they can impart valuable mentorship.
CG Reconstitutes National Startup Advisory Council (“NSAC”) (source)
CG, on 18th December, 2023, has reconstituted NSAC with the nomination of 31 non-official members representing various stakeholders such as founders of startups, veterans who have grown and scaled companies in India, and persons capable of representing the interest of investors into startups, among others. The term of the said members would be two years. The Department for Promotion of Industry and Internal Trade had constituted the NSAC in January, 2020, to advise CG with measures required to build a strong ecosystem for nurturing innovation and startups in the country. NSAC meets on a regular basis to suggest measures to foster and promote a culture of innovation among citizens, and support creative and innovative ideas through incubation and research.
10 States/ Union Territories Hold Up Labour Codes Rollout (source)
The fate of the four labour codes, namely the Code on Wages, 2019, the Industrial Relations Code, 2020, the Code on Social Security, 2020, and the Occupational Safety, Health and Working Conditions Code, 2020, hangs in the balance as at least 10 states and union territories are yet to frame rules for two or more codes. Labour, being a concurrent subject, the Ministry of Labour and Employment is of the view of converging towards a simultaneous implementation of the codes in order to avoid any legal issues after implementation.
Rajya Sabha (“RS”) Passes the Telecommunications Bill, 2023 (“Telecom Bill”) (source)
RS, on 21st December, 2023, has passed the new Telecom Bill, with the aim to replace the age-old Indian Telegraph Act, 1885 and the Indian Wireless Telegraphy Act, 1933 and to establish a new framework emphasizing on inclusive growth and safe and secure telecommunication (“telecom”). The Telecom Bill further intends to include internet-based calling and messaging services as well as over-the-top platforms within the purview of telecoms. CG will now have the authority to take complete control of telecom services in the event of a public emergency. Moreover, the companies would require authorization to start providing telecom services instead of licenses that are issued at present.
The Competition Commission of India (“CCI”) Proposes Draft Rules on Penalty Under the Provisions of the Competition Law (source)
CCI has put forth a proposal in its draft penalty regulations to exclude indirect taxes, trade discounts, and intra-group sales when calculating the turnover of an entity for imposing penalties related to violations of competition law. Seeking input from the public on the same, CCI, on 22nd December, 2023, has opened a window for comments on a set of regulations namely the CCI (Determination of Turnover or Income) Regulations, 2023. The objective of the proposed regulation is to establish a thorough and transparent framework for assessing turnover or income for both enterprises and individuals as it would have a bearing on how much penalties would be levied on enterprises for their anti-competitive conduct.
Rajya Sabha (“RS”) Passes the Telecommunications Bill, 2023 (“Telecom Bill”) (source)
RS, on 21st December, 2023, has passed the new Telecom Bill, with the aim to replace the age-old Indian Telegraph Act, 1885 and the Indian Wireless Telegraphy Act, 1933 and to establish a new framework emphasizing on inclusive growth and safe and secure telecommunication (“telecom”). The Telecom Bill further intends to include internet-based calling and messaging services as well as over-the-top platforms within the purview of telecoms. CG will now have the authority to take complete control of telecom services in the event of a public emergency. Moreover, the companies would require authorization to start providing telecom services instead of licenses that are issued at present.
The Supreme Court of India (“SC”): Group of Companies Doctrine (“GOCD”) Applicable to Arbitration Agreements (source)
SC, on 6th December, 2023, upheld the validity of GOCD in Indian arbitration jurisprudence wherein an arbitration agreement entered into by a company which is part of a group of companies may bind non-signatories to the arbitration agreement as well since the definition of parties under section 7 (Arbitration agreement) of the Arbitration and Conciliation Act, 1996 includes both signatories as well as non-signatories. However, in case of non-signatories, courts must identify whether the non-signatory entities consented to be bound by the arbitration agreement through their acts or conduct, and once the validity of an arbitration agreement is established, the court or tribunal can determine which parties are bound by such agreement. Therefore, SC finally held that merely being a part of a group of companies is not sufficient to invoke a non-signatory to be a part of an arbitration agreement.
The Jammu and Kashmir and Ladakh High Court (“J&K HC”): Maternity Leave Doesn't Result in a Break in Service or Reduction in Total Service Rendered (source)
The J&K HC, in its recent judgment, while upholding six female bankers’ promotion rights, made it clear that no kind of leave approved by the organisation, including that of maternity leaves, is to be considered a break of the service or reduction in the work that the organisation has prescribed to its employees. This judgement came into light after six banking employees were denied being considered for promotion by the Jammu & Kashmir Bank since the bank deducted their maternal leave period from the total tenure.
The New Drugs, Medical Devices and Cosmetics Bill, 2023 (“NMC Bill”) Seeking to Regulate Drugs, Medical Gear to be Tabled in the Parliament (source)
The NMC Bill, which seeks to repeal the age-old Drugs and Cosmetics Act, 1940, may soon be introduced in the ongoing session of the Indian Parliament. The NMC Bill is designed to regulate the import, manufacture, distribution, and sale of drugs, medical devices, and cosmetics. It further aims to ensure the quality, safety, efficacy, and performance of these products, including clinical trials for new drugs and investigations for medical devices. Regulation of electronic pharmacies is another important feature that is included in the bill. The NMC Bill, along with policies to encourage startups and promote research and development, would play a significant role in expanding the country’s innovation ecosystem.
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.