Legal & Industry Updates - May 2020
SPECIAL EVENTS
Webinar on Arguments for Legal, Financial, and Policy Changes to Build the Future, May 8, 2020
The team at Ivy Law participated in a webinar, conducted by WeWork Labs and WorkNetwork, focusing on the impact and consequences of the current pandemic on investments, foreign direct investment, finance, and legal infrastructure. Unemployment and data privacy were also issues discussed to the fore. The webinar highlighted key policy reforms, required in the banking sector to channelize the way forward and the requisite relaxations from stringent taxation laws to help the business ecosystem reboot itself.
Webinar on Trademark, Brand Protection and Copyright Issues, May 16, 2020
The team at Ivy Law participated in a webinar, conducted by Start-up Bazaar in association with Swadeshi Start-up. The webinar gave insights on the importance of trademarks, branding, and how to protect a brand in India as well as globally. The webinar also highlighted the importance of copyright, aspects pertaining to copyright registration, distinction between a copyright and a trademark, and enforcement rights available as per the legal framework.
Webinar on the Aspects of Investor State Dispute Settlement, May 16 2020
The team at Ivy Law participated in a webinar conducted by the Centre of Excellence on Alternative Dispute Resolution in association with Manav Rachna University on “Investor State Dispute Settlement (ISDS): Thesis, Anti-Thesis and Possible Synthesis”. The key aspects discussed were the challenges pertaining to the present ISDS system, which consisted of correctness and coherency of an arbitral award, legitimacy of the dispute resolvers, process timelines, cost and third-party funding. The webinar also emphasized on structural and incremental reforms to increase efficiency of the system.
LEGAL & INDUSTRY UPDATES
Reforms for Micro, Small & Medium Enterprises (source)
As per the reforms announced by the Government of India (GoI), on May 13, 2020, GoI has given credit guarantees that will help the formal banking system meet the credit demand of Micro, Small & Medium Enterprises (MSME). The broad reforms undertaken are (i) collateral free automatic loans up to Rs. 3 Lakh Crores, (ii) definition of MSMEs is revised. As per the revised definition, any firm with an investment up to Rs 1 Crore and turnover under Rs 5 Crores will be classified as ‘Micro’. A firm with investment up to Rs 10 Crores and turnover up to Rs 50 Crores will be classified as ‘Small’ and a firm with investment up to Rs 20 Crores and turnover under Rs 100 Crores will be classified as ‘Medium’, (iii) global tenders have been disallowed in government procurement up to Rs. 200 Crores, (iv) all central government agencies (like Railways, Ministry of Road Transport & Highways, Central Public Works Department, etc.) to provide an extension of up to 6 months, without cost to contractors for completion of work such as construction, works and goods, services contracts, intermediate milestones, and extension of concession period in PPP contracts.
Amendment to the Essential Commodities Act, 1955 to Enable Better Price Realisation for Farmers (source)
As per the reforms announced by GoI, on May 15, 2020, GoI is in the process of amending the Essential Commodities Act, 1955. Agricultural food products like cereals and edible oils will be deregulated and stock limit will be imposed under very exceptional circumstances, like national calamities, famine with surge in prices. No such stock limit will apply to processors or value chain participant, subject to their installed capacity or to any exporter subject to the export demand. A Central law will be formulated to provide adequate choices to farmers to sell produce at attractive prices, barrier free Inter-State Trade and a framework for e-trading of agricultural produce.
Structural Reforms Across Eight Sectors, Paving Way for Aatma Nirbhar Bharat (Self Reliant India) (source)
As per the reforms announced by GoI, on May 16, 2020, policy reforms are introduced in eight sectors, which comprise of: (i) commercial mining in coal by the introduction of competition, transparency and private sector participation, (ii) liberalised regime in the mining sector, (iii) enhancing self-reliance in defence production, along with increase in the Foreign Direct Investment limit from 49% to 74%, (iv) better utilization of the Civil Aviation Sector, including introduction of more airports in a Public-Private Partnership (PPP) model, push for India to become a global hub for Maintenance, Repair and Overhaul, (v) tariff policy reforms in the power sector and privatisation of distribution in Union Territories , (vi) boosting private sector investment through revamped viability gap funding scheme of Rs 8,100 Crores (vii) enhanced private participation in space activities, and (viii) reforms in atomic energy.
Decriminalisation of Defaults Under Companies Act, 2013 (source)
As per the reforms announced by GoI, on May 17, 2020, violations under the Companies Act, 2013 (“Act”), comprising of offences such as minor technical and procedural defaults such as shortcomings in Corporate Social Responsibility (CSR) reporting, inadequacies in Board report, filing defaults, delay in holding of Annual General Meeting (AGM) are decriminalized. The amendments will de-clog the criminal courts and NCLT. Seven compoundable offences under the Act are altogether dropped and five others will be dealt with under an alternative framework. Lower penalties for all defaults for Small Companies, One Person Companies, Producer Companies and Start Ups have also been announced.
Relaxation of Labour Laws by State Governments (source 1, source 2, source 3, source 4, source 5, source 6, source 7, source 8)
As announced by various state governments, a reformative approach to suspend and relax various labour norms is introduced. Several State Governments have suspended most of the labour laws, except for keeping applicability of laws such as Building and Other Construction Workers Act, certain provisions of the Payment of Wages Act, Workmen Compensation Act, Bonded Labour Act, and Industrial Safety Rules. Exemptions from inspections by the labour department, maintenance of registers and records, while also allowing flexibility in extending the shifts of workers are some of the other reforms undertaken by certain states. An extension in working shifts to upto 12 hours a day, along with wider provisions for overtime are also introduced.
Force Majeure Clause to Cover Disruption in Supply Chain by Covid-19 (source)
The Ministry of Finance, via Department of Expenditure has issued an Office Memorandum (“OM”), dated May 13, 2020, clarifying that disruption in supply chains involving GoI procurement, due to the present pandemic will be construed as a force majeure event, only if the parties to the contract were not in default of their contractual obligations as on February 19, 2020. Further, the OM clarifies, invocation of force majeure does not absolve all non-performances of a party to the contract, but only those caused because of the lockdown or restrictions imposed under any legislative act or executive order of the GoI on account of Covid-19. All contractual obligations will revive on the completion of the lock-down period.
Industrial Units to Conduct Safety and Hazard Audits Prior to Resuming Operations (source 1, source 2)
The Central Pollution Control Board (“CPCB”) has issued directives dated May 8, 2020 for industrial units, resuming operations during or post lockdown. The six point directives are: (i) a proper safety and hazard audit to be undertaken, (ii) State Pollution Control Boards/Pollution Control Committees to ensure all machinery and safety equipment are in a good operable condition, (iii) utmost care to be taken while handling hazardous chemicals, (iv) no violation of environmental norms, (v) safety of workers to be ensured, and (vi) compliance with Manufacture, Storage and Import of Hazardous Chemicals Rules, 1989 and the Chemical Accidents (Emergency Planning, Prepare, Preparedness and Response) Rules, 1996. The National Disaster Management Authority, has also issued safety rules dated May 9, 2020 for factories being reopened post the lockdown. The rules state among others, that the first week of reopening will be a trial and test week, to ensure the inspection of all equipment and to sensitize employees to identify any abnormalities among other workmen.
Reserve Bank of India’s Developmental and Regulatory Measures for Better Market Functioning (source)
As per the press release issued by the Reserve Bank of India, dated May 22, 2020, various developmental and regulatory policy measures are introduced to improve the functioning of markets and market participants. The measures are divided under four main categories: (i) to improve the functioning of markets, the intent is to ease constraints on the market players and channel liquidity to different sectors of the economy, (ii) to support exports and imports in order to earn foreign exchange and provide income and employment, (iii) to ease financial stress, by ensuring continuity of businesses, and (iv) debt management.
Labour Commissioners Notice over Bench Staffing and Salary Cuts (source 1, source 2)
As reported by news agencies, local labour commissioners have issued notices to several private companies for suspending shift allowances, making salary cuts and bench staffing of their employees. This action is undertaken pursuant to the breach of the Ministry of Home Affairs (“MHA”) guidelines, directing all private enterprises from refraining to terminate employees and continuing payment of full salaries for the duration of the lockdown. The notices also warn of legal consequences for violation of the MHA guidelines.
No Government Liability for Data Leaks from Aarogya Setu (GoI’s Contact Tracing App) (source)
As reported by Economic Times, a clause limiting the government’s liability for the user data stored on Aarogya Setu is in question and whether legal recourse is the only option available, in the event of unauthorised access to the user data. One of the app’s terms and conditions stipulates that, “the user agrees and acknowledges that the Government of India will not be liable for…any unauthorized access to your information or modification thereof.” It is also comprehended that such a clause also goes against the provisions of the Information Technology Act, 2000 and the proposed Personal Data Protection Bill, 2019, as the app service provider will fall under the definition of an intermediary and is obligated to ensure the security of the data collected and is liable for loss of it under the intermediary guidelines.
Competition Commission of India Reviewing Antitrust Allegations Against WhatsApp Pay (source 1, source 2)
As reported by Business Standard, Competition Commission of India is investigating into allegations of WhatsApp Pay abusing its dominant position by offering payment services to its vast base of messaging app users in the country. A Public Interest Litigation was also filed in the Hon’ble Supreme Court, alleging that WhatsApp Pay is in violation of mandatory guidelines and regulatory norms of the unified payment interface.
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.