Legal & Industry Updates - July 2022
SPECIAL EVENTS
Webinar on How to Resolve Business Contract Disputes in India, July 28, 2022
The team at Ivy Law participated in a webinar on ‘How to resolve business contract disputes in India?’ organized by Mondaq. The webinar focused on different methods of dispute resolution, advantages of arbitration over litigation and the various challenges faced by the parties in litigation in the current scenario. The role of in-house counsel in solving contractual disputes was also emphasized upon. The aim of the webinar was to apprise foreign organizations of some of the key issues to be considered while selecting appropriate dispute resolution mechanism.
LEGAL & INDUSTRY UPDATES
Amendment to the Foreign Contribution Regulations Rules, 2011 (“FCRA Rules, 2011”) (source)
The Ministry of Home Affairs (“MHA”), on 1st July, 2022, has notified the Foreign Contribution Regulations (Amendment) Rules, 2022 (“FCRA Rules, 2022”). The objective is to forbid accepting and using foreign assistance or hospitality for any actions that are harmful to the interest of the nation. The following amendments are stated hereinafter:
Pursuant to the amendment, in Rule 6 (Intimation of receiving foreign funds from relatives), the amount that can be sent by relatives without intimation to the Central Government (“CG”) has been increased from INR 1 Lakh to INR 10 Lakhs. However, if the amount exceeds the said limit, individuals have 90 days to inform the CG as opposed to 30 days mentioned prior to the amendment.
In Rule 9 (Application of obtaining ‘registration’ or ‘prior permission’ to receive funds), individuals and organizations will be granted 45 days to inform the MHA about bank account(s) used for utilization of any funds. This deadline was set at 30 days prior to the amendment.
Subsequent to the amendment to Rule 9(2)(e) (Application to ‘registration’ or ‘prior permission’ to receive funds), a time period of 45 days has been allowed to inform the CG in case of change of bank account, name, address, or key members of the organization receiving funds, as opposed to the 15 days deadline stated earlier in FCRA Rules, 2011.
Amendment to the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016 (“IBBI Regulations, 2016”) (source)
The Insolvency and Bankruptcy Board of India (“IBBI”), on 04th July, 2022, notified the Insolvency and Bankruptcy Board of India (Insolvency Professionals) (Amendment) Regulations, 2022 (“IBBI Regulations, 2022”). The amendments are stated hereunder:
Pursuant to the amendment, under Regulation 11 (Disciplinary Proceedings), the disciplinary proceedings shall be conducted as per the provisions of the Insolvency and Bankruptcy Board of India (Inspection and Investigation) Regulations, 2017 in lieu of the procedure stated earlier in IBBI Regulations, 2016.
Under Schedule I (Code of Conduct for Insolvency Professionals), a new clause 8B (Independence and impartiality) is inserted stipulating that an insolvency professional (‘IP”) shall disclose his relationship, if any, with the corporate debtor, other professionals engaged by him, financial creditors, interim finance providers and prospective resolution applicants to the insolvency professional agency (“IPA”) within three days of his appointment.
A new clause 15A (Interest) is inserted wherein an IP shall prominently state all his communications to a stakeholder, his name, address, e-mail, registration number and validity of authorisation for assignment, issued by the IPA of which he is a member.
Amendment to the Insolvency and Bankruptcy Board of India (Insolvency Professional Agencies) Regulations, 2016 (“IPA Regulations, 2016”) (source)
The IBBI, through a notification dated 04th July, 2022, has notified the Insolvency and Bankruptcy Board of India (Insolvency Professional Agencies) (Amendment) Regulations, 2022 (“IBBI Amendment Regulations, 2022”). Pursuant to the amendment, under Regulation 8 (Disciplinary Proceedings), the disciplinary proceedings shall be conducted as per the provisions of the Insolvency and Bankruptcy Board of India (Inspection and Investigation) Regulations, 2017 in lieu of the procedure stated earlier in IPA Regulations, 2016.
Hotel or Restaurants Barred from Levying Service Charge by Default (“Guidelines 2022”) (source)
The Central Consumer Protection Authority (“CCPA”), through a notification dated 04th July, 2022, has notified the Guidelines 2022 with the aim to prevent unfair trade practices and violation of consumer rights with respect to the levy of service charges in hotels and restaurants. The guidelines state that the hotels or restaurants:
cannot add service charge by default in the bill,
cannot force a consumer to pay service charge,
shall inform the consumer about the service charge payment being optional at their discretion and,
cannot collect service charge by using any other name.
If any consumer finds levy of service charge in violation to the Guidelines 2022, the consumer may lodge a complaint on the National Consumer Helpline. Further, the consumer may submit a complaint to the District Collector of the concerned district for investigation and subsequent proceeding by the CCPA. Also, a consumer can file a complaint against unfair trade practices with Consumer Commissions or electronically through e-daakhil portal.
The Ministry of Commerce and Industry (“MCI”) Notifies Rules for Work from Home (“WFH”) in Special Economic Zones (“SEZ”) (source)
The MCI, on 13th July, 2022, has notified the Special Economic Zones (Third Amendment) Rules, 2022, with the aim to promote the WFH model of employment. Pursuant to the amendment, a new Rule 43A has been inserted which states that any unit operating in the SEZ may permit its employees, particularly employees of IT/ITeS SEZ units, those who are temporarily incapacitated, travelling and working offsite, to WFH or from any place outside the SEZ for a maximum period of 1 year. However, the period may further be extended for another 1 year by the Development Commissioner (“DC”) on request of units. Further, WFH may be extended for a maximum of 50% of the total employees of the unit; however, the DC is in a position to approve a higher number as well for any bona-fide reason. SEZ units whose employees already WFH have been provided a transition period of 90 days to seek approval to WFH.
Amendment to the Legal Metrology (Packaged Commodities) Rules, 2011 (source)
The Department of Consumer Affairs (“DCA”), through a notification dated 14th July, 2022, has notified the Legal Metrology (Packaged Commodities) (Second Amendment) Rules, 2022 wherein under Rule 6 (Declarations to be made on every package), the DCA has stipulated that every electronic product which is manufactured, packed or imported after 15th July, 2022 shall, for a period of one year, declare certain mandatory declarations such as the address of the manufacturer/packer/importer, the common or generic name of the commodity, the size and dimension of the commodity and customer care details through the Quick Response Code (“QR Code”), if the same is not declared in the package itself.
The CCPA Issues Advisory to Electronic Commerce (“e-comm”) Platforms Regarding the Sale of Ayurvedic, Siddha and Unani Drugs (source)
The CCPA, through a notification dated 14th July, 2022, has issued an advisory requesting the e-comm entities to not allow the sale or facilitation of sale of Ayurvedic, Siddha and Unani drugs containing ingredients of plant, animal or mineral origin listed in Schedule E (1) {List of poisonous substances under the Ayurvedic (including Siddha) and Unani systems of medicine} of the Drugs and Cosmetics Rules, 1945 (“DC Rules”) without the consumer uploading a valid prescription of a registered Ayurveda, Siddha or Unani practitioner on that particular e-comm platform. Also, as per Rule 161(2) of the DC Rules (Labelling, packing and limit of alcohol), the container of a medicine should be labelled with the words: “Caution: To be taken under medical supervision” both in Hindi and English language, in case the said medicine is made up from a substance specified in Schedule E (1).
The CG Warns Education Technology (“Ed-tech”) Companies Against Unfair Trade Practices (source)
The DCA, through a notification dated 01st July, 2022, has notified that the CG has warned the Ed-tech companies against unfair trade practices and misleading advertisement for the Indian Ed-tech sector and discussed the need to further enhance the Indian Ed-tech ecosystem to better safeguard consumer interests, through seamless, transparent and feasible offerings for consumers. In a meeting held with India Edtech Consortium and its member companies including UpGrad Education Private Limited, Unacademy, BYJU’s, Vedantu and White Hat Jr., the secretary of the DCA has opined that if self-regulation does not stop unfair trade practices, then stringent guidelines will be formulated for ensuring transparency.
Karnataka Labour Office Summons Infosys Limited (“Infosys”) Over Non-compete Clause (source)
As reported by the Economic Times, the assistant labour commissioner of Karnataka has summoned Infosys after the Nascent Information Technology Employees Senate, a Pune based labour union, had urged the Ministry of Labour and Employment to ask Infosys to remove the non-compete clause from its employment contracts. The clause restricts ex-employees from working for the same client at rival companies namely International Business Machines Corporation, Tata Consultancy Services Limited, Western India Palm Refined Oils Limited, among others, for at least six months after they leave Infosys. The restriction acts as a restraint of trade and is therefore illegal under section 27 (Agreement in restraint of trade, void) of the Indian Contract Act, 1872.
The CG May Question Meta Platforms, Inc (“Facebook”) and Twitter, Inc (“Twitter”) on Lower Compliance Rate with Legal Notices in India (source)
As reported by the Economic Times, the CG may seek an explanation from social media companies including Twitter and Facebook on the lower rate of compliance by these platforms to legal notices served to them. The Ministry of Electronics and Information Technology has been continuously compiling the comparative reports of actions taken by significant social media intermediaries both willingly and in reference to official notices in India and abroad for a detailed review wherein it is observed that even though India has a large number of social media users, the rate of compliance to legal demands is very low as compared to other countries.
Lawmakers Discuss Predatory Pricing and Regulations with Domestic Technology Companies (source)
As reported by the Economic Times, CEOs of leading platforms namely Flipkart Internet Private Limited, Paytm E-Commerce Private Limited, Oyo Hotels and Homes Private Limited, Zomato Media Private Limited, Bundl Technologies Private Limited and MakemyTrip (India) Private Limited, held a closed-door session with senior parliamentarians to highlight various imperative issues including anti-competitive practices of global technology majors and the need for platform equality or equal access to content across all devices. The Chief Executive Officers emphasized upon how digital markets operate differently from traditional markets therefore the competition law needs to be developed to address the changing requirements. Numerous other topics were also discussed in the session such as the need to regulate data usage and to define the market for emerging internet businesses amid the backdrop of upcoming regulations.
Social Media Platforms Plan a Self-regulatory Body to Address Content Issues (source)
As reported by the Economic Times, the social media platforms namely Twitter, Facebook and Google India Private Limited are planning to set up a self-regulatory body to address social media users’ request for content and takedown issues. This proactive move is initiated following the CG’s proposal of a Grievance Appellate Committee in its draft amendments to the Information Technology Rules, 2021. The above stated companies intend to create a panel to be headed by either a retired Chief Justice of India or a judge of the Supreme Court or one of the High Courts of the country. Further, the Internet and Mobile Association of India, which is the representative body of more than 470 social media companies, have also recommended a self-regulatory body and is seeking to unite the sector to build such a framework.
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.