Legal & Industry Updates - November 2022
SPECIAL EVENTS
Competition Laws in India - Practical Implications on Corporates, November 18, 2022
The team at Ivy Law participated in a webinar on “Competition Laws in India - Practical Implications on Corporates” organized by Complinity Technologies. The key highlights of the webinar were understanding the market behavior and how the Competition Law is considered as the Economic Law. The webinar emphasized on the prohibition of cartels, forms of anti-competitive agreements, behavior of a dominant enterprise and implementation of competition compliance program by an enterprise. Further, main features of the Competition Amendment Bill, 2022 were also discussed exhaustively.
LEGAL & INDUSTRY UPDATES
E-Waste (Management) Rules, 2022 (“E-Waste Rules”) (source)
The Ministry of Environment, Forest and Climate Change, on 2nd November, 2022, has notified the E-Waste Rules since a number of new businesses and corporations have begun to gather and recycle electronic waste and therefore better implementation strategies and inclusion guidelines are required with the aim to step up and assist in meeting the recycling goals in an environmentally responsible way. Some of the key highlights of E-Waste Rules are:
Entities must register on the portal as manufacturer, producer, refurbisher or recycler involved in manufacture, sale, transfer, purchase, refurbishing, dismantling, recycling and processing of e-waste or electrical and electronic equipment listed in Schedule I (Categories of electrical and electronic equipment including their components, consumables, parts and spares covered under the rules).
The E-Waste Rules will not apply to:
waste batteries as covered under the Battery Waste Management Rules, 2022;
packaging plastics as covered under the Plastic Waste Management Rules, 2016;
micro enterprise as defined in the Micro, Small and Medium Enterprises Development Act, 2006; and
radio-active wastes as covered under the provisions of the Atomic Energy Act, 1962.
Companies must obtain and implement the Extended Producer Responsibility (“EPR”) targets as per Schedule-III and Schedule-IV of the E-Waste Rules, 2022 through the portal. This is a result of Central Government's (“CG”) goal of fostering a circular economy. Those who do not fulfill their annual goals will be subject to fines or "environmental compensation".
Every manufacturer, producer, refurbisher and recycler may store the e-waste for a period not exceeding one hundred and eighty days.
All refurbishers must collect e-waste generated during the process of refurbishing and hand over the waste to registered recycler and upload information on the portal as well as ensure that the refurbished equipment shall be as per Compulsory Registration Scheme of the Ministry of Electronics and Information Technology and Standards of Bureau of Indian Standards framed for this purpose.
All recycler must ensure the following:
facility and recycling processes are in accordance with the standards or guidelines laid down by the Central Pollution Control Board from time to time who will then generate EPR certificates through the portal in favor of a registered recycler.
fractions or material not recycled in its facility is sent to the respective registered recyclers;
residue generated during recycling process is disposed of in an authorized treatment storage disposal facility;
maintain record of e-waste collected, dismantled, recycled and sent to registered recycler on the portal and make available all records for verification or audit as and when required;
file annual and quarterly returns in the laid down form on the portal on or before the end of the month succeeding the quarter or year, as the case may be.
The Digital Personal Data Protection Bill, 2022 (“PDP Bill”) (source)
The Ministry of Electronics and Information Technology, on 18th November, 2022, has notified the PDP Bill with the aim to represent a more forgiving framework for compliance, and proposing several welcome improvements such as the deletion of non-personal data. The PDP Bill seeks to regulate processing of ‘digital personal data’, i.e. personal data which is either collected online, or which, where collected offline, is digitised.
Seven principles of the PDP Bill are:
Organizations must use personal data in a way that is legal, fair to the persons involved and transparent to the individuals.
Personal data must only be used for the purposes for which it was collected.
Data minimisation.
Emphasizing on the need for accurate data collecting.
Personal information cannot be stored indefinitely by default and should only be kept for a specific amount of time.
There should be enough protections to guarantee that no unlawful acquisition or processing of personal data occurs.
The person who chooses the purpose and means of the processing of personal data shall be accountable for such processing.
Key Features of the PDP Bill are:
Data Principal and Data Fiduciary:
The term "Data Principal" describes the person whose data is being gathered.
Children (under the age of 18) will be referred to as having "Data Principals" who are their parents or legal guardians.
Data Fiduciary is the entity (individual, company, firm, state etc), which decides the purpose and means of the processing of an individual’s personal data.
Personal Data is “any data by which an individual can be identified”.
Processing means “the entire cycle of operations that can be carried out in respect of personal data”.
Significant Data Fiduciary:
Significant Data Fiduciaries are people who handle a lot of private information. Who falls within this group will be determined by the CG depending on a variety of variables.
These organizations will be required to employ a data protection officer and an impartial data auditor.
Rights of Individuals:
Access to Information - The PDP Bill provides that people should be able to access fundamental information in the languages included in the Indian Constitution's eighth schedule.
Right to Consent:
Before their data is processed, individuals must provide their consent, and every individual should know what types of personal data a data fiduciary wishes to collect and the aim of such collection and further processing.
Additionally, people have the option to revoke their consent from a data fiduciary.
Right to Erase:
Data principals will have the right to request the deletion and updating of data that the data fiduciary has collected.
Right to Nominate:
In the case of their death or disability, data principals will also be able to designate someone to act in their place.
Data Protection Board:
The PDP Bill suggests creating a data protection board to monitor adherence to the legislation.
Consumers can complain to the data protection board if they get an unacceptable response from the data fiduciary.
Cross-border Data Transfer - The law permits the storage and transfer of data across international borders to certain recognised nations and territories, providing that they have an adequate data security environment and that the CG has access to Indian citizens' data from such locations.
Financial Penalties:
For Data Fiduciary:
The PDP Bill provides for severe penalties for companies that are the target of data breaches or fail to notify users when a data breach occurs.
Penalties will be imposed between INR 50 crores to INR 500 crores.
For Data Principal - If a user submits false documents or makes unsubstantiated complaints when signing up for online services, the user can be fined up to INR 10,000.
Exemptions:
CG may exempt certain companies from complying with the PDP Bill's provisions based on the number of users and amount of personal data processed by the company.
This has been done keeping in mind startups of the country who had complained that the Personal Data Protection Bill, 2019 was too “compliance intensive”.
Similar to the prior 2019 version, national security-related exclusions have been preserved.
PDP Bill to Allow Storage in Trusted Nations (source)
As reported by the Economic Times, CG plans to eliminate the requirement for data localization proposed in the earlier PDP Bill draft and have instead proposed to permit data transfer and storage in "trusted geographies" which the CG will keep announcing on a regular basis. The new PDP Bill also proposes to do away with the criminal penalties previously proposed for employees of companies who committed data breaches. Instead, monetary penalties of up to INR 200 crore, multiplied by the number of users affected, will be imposed for each breach.
PDP Bill To End Misuse of Customer Data (source)
As reported by the Economic Times, the Minister of State for Electronics and Information Technology has reiterated that the proposed PDP Bill will end the exploitation of consumer data and provide for punitive action against offenders. The minister’s response came as a reaction to an Information Technology giant’s settlement of an investigation in the United States of America wherein they deceived customers and kept tracking their whereabouts even after they opted out of the location tracking system. The PDP Bill aims to put a stop to this and ensure that any platform or intermediary following this practice will face penal & financial repercussions.
CG May Allow Chinese Firms to Enter High-Technology Electronics Sector in Joint Venture (“JV”) With Indian Companies (source)
As reported by the Economic Times, CG is willing to permit Chinese corporations to enter the high-technology electronics industry only if they establish manufacturing facilities in India in collaboration with local companies. Therefore, CG is trying to identify those Indian companies that may be interested in forming JVs in the electronics sector not just with Chinese firms but also with firms from South Korea, Taiwan and Vietnam. A JV proposal could get the green light if the Indian partner holds a majority stake in the company and controls the board. Chinese firms have been struggling to do business in India as political tensions surged after a border clash in 2020 and thus approvals for the same can be given only if the JV provides further impetus to the country’s electronics manufacturing ecosystem.
Draft Digital India Act (“DI Act”) Framework to be Tabled by Early 2023 (source)
As reported by the Economic Times, the draft legislative framework of the DI Act to promote "India's techade" is anticipated by early 2023 with the aim to catalyze India’s digital ambitions and govern the online ecosystem with openness, user safety and trust as the guiding principles. As the DI Act will be replacing the Information Technology Act, 2000, the new amendments impose a legal obligation on social media companies to take all efforts to prevent barred content and misinformation. Further, all such social media platforms operating in India will have to abide by local laws and constitutional rights of Indian users.
Broadband India Forum (“BIF”) Opposes Terming Over-The-Top (“OTT”) Communication, Broadcasting As Telecom Services under Draft Indian Telecommunication Bill, 2022 (“Telecom Bill”) (source)
As reported by the Economic Times, as part of its submissions on the draft Telecom Bill, the BIF stated that OTT communications services should be excluded from the elements mentioned in the definition of telecommunication services as there are numerous strong and substantive reasons that distinguish OTTs from telecommunications. According to BIF, OTTs are essentially applications and not telecommunication services, and like any application, they use the internet and do not own or work a telegraph/telecommunication network and therefore should not be brought under the licensing framework. Further, BIF also proposed that industries other than telecommunications, such as broadcasting be excluded from the scope of the Telecom Bill.
CG to Publish Frameworks to Check Fake Reviews on Electronic-Commerce (“E-Commerce”) Websites (source)
As reported by the Economic Times, by the end of November, 2022, CG will publish frameworks to counter fake reviews and unverified star ratings on e-commerce websites, hotel and travel booking platforms with the aim to make the grading process for their goods more transparent. The framework will also include revealing if a particular customer review was bought or procured. The main objective is to reduce review biases since e-commerce involves a virtual shopping experience without any opportunity to physically view or examine the product and therefore the consumers heavily rely on reviews posted on platforms to see the opinion and experiences of users who have already purchased the goods or services.
Outside Talent Wary of Joining Startups Amid Industry Uncertainty (source)
As reported by the Economic Times, startups are finding it increasingly challenging to hire senior-level personnel, particularly from non-internet areas amid a funding crunch, cost-cutting and industry-wide layoffs. According to industry insiders, there have been more recent instances of senior individuals from outside sectors withdrawing during hiring discussions as it is too risky to maneuver. Cofounders and Chief Executive Officers of numerous startups looking to acquire top talent are increasingly becoming involved themselves at an early stage of the hiring process to assuage concerns and convince candidates about the alternative.
Termination of Anti-Dumping Probe on Solar Cell Imports From China, Thailand and Vietnam (source)
As reported by the Economic Times, the Directorate General of Trade Remedies has terminated an anti-dumping probe into the imports of solar cells from China, Thailand, and Vietnam following a submission from the Indian Solar Manufacturers Association (“ISMA”) who had earlier alleged that the dumping of imported solar cells from the above stated countries was causing material injury to the domestic industry and thus had requested the Ministry of Commerce and Industry to impose an anti-dumping duty on the subjected goods. However, ISMA, in its latest submission, stated that post initiation of the probe, the CG had imposed customs duties of 25% on solar cells and 40% on solar modules in early 2022 which covered the entire range of product under examination and have significantly reduced the price pressure that the local industry was experiencing as a result of the dumping.
Tata Power Company Limited (“Tata Power”) to Set Up 150 Megawatt Solar Project (source)
As reported by the Economic Times, Tata Power readies itself to set up a 150 megawatt solar project in Maharashtra once the power purchase agreement is executed, with the aim to create a sustainable ecosystem for transitioning towards a greener future and affirming the potential to deliver world-class solar projects. In order for Tata Power to achieve its aim of being an internet carbon-zero company by 2045, 80% of its technical capacity must be accounted for by clean energy by 2030. Further, Tata Power Solar Systems Limited had also announced the launch of cost-efficient solar off-grid solutions in West Bengal in October, 2022.
Supreme Court (“SC”): Directorate General of Foreign Trade (“DGFT”) Can Change the Export-Import (“Exim”) Policy; Exporters Cannot Claim Incentive as a Matter of Right (source)
As reported by Live Law, the SC, while dismissing a writ petition filed by an appellant in a recent case, held that the DGFT is free to change the Exim Policy and can consider from time-to-time which items will be applicable to receive an incentive and which will not. Granting the benefit of an incentive is a policy decision that can be changed or withdrawn and thus the doctrine of promissory estoppel shall not apply to such a policy decision, especially when it is well within the right of the DGFT/appropriate authority to issue a new Exim Policy. Therefore, no exporter is entitled to claim an incentive as a matter of right.
National Company Law Appellate Tribunal (“NCLAT”), Delhi: Provident Fund Dues Are Not Assets of Corporate Debtor, They Have to be Paid in Full (source)
As reported by Live Law, in a recent Corporate Insolvency Resolution Process case, the creditor i.e. the appellant, submitted a claim on account of corporate debtor's default in depositing provident fund contribution, provident fund administrative cost, interest for delay etc., however, the resolution plan prepared by the resolution professional earmarked only part payment against appellant’s claim stating that the appellant was an operational creditor and haircut was given to all the financial creditors and operational creditors. The appellant then approached NCLAT who, while adjudicating the appeal, held that provident fund dues are not the assets of the corporate debtor and must be paid in full and also observed that the resolution professional's claim that appellant is an operational creditor and both operational creditor and financial creditor have taken haircut is not acceptable.
Telecom Regulatory Authority of India Ropes in Financial Regulators to Curb Phishing and Cyber Frauds (source)
As reported by the Economic Times, TRAI has formed a joint committee of financial regulators, including officials from the Reserve Bank of India and the Securities and Exchange Board of India (“SEBI”) to effectively curb the growing menace of phishing and cyber frauds through a whitelisting process. Whitelisting is a standard part of a cybersecurity strategy and approves a list of websites, email addresses, internet protocol addresses and applications while denying all others. To enforce the whitelist, TRAI is using blockchain technology, specifically distributed ledger technology for recording the transaction of assets and artificial intelligence to monitor unregistered telemarketers.
The Guidelines for Uplinking and Downlinking of Satellite Television (“TV”) Channels in India, 2022 (“TV Guidelines, 2022”) (source)
The Union Cabinet, on 9th November, 2022, has notified the TV Guidelines, 2022 with the aim to ease issue of permissions to the companies/Limited Liability Partnerships (“LLPs”) registered in India for uplinking and downlinking of TV channels, setting up of teleports/teleport hubs, use of Digital Satellite News Gathering (“DSNG”)/Satellite News Gathering/Electronic News Gathering systems, uplinking by Indian news agencies and temporary uplinking of a live event. The key advantages of TV Guidelines, 2022 are:
Ease of compliance for the permission holder
The requirement to obtain permission for live telecast of events has been eliminated; only prior registration of events to be telecast live would be required.
There is no need for prior permission to change the language or mode of transmission from standard definition to high definition or vice versa; only prior notification is required.
A company/LLP can use news gathering equipment other than DSNG, such as optic fibre, mobile etc. for which no separate permission is required.
Ease of Doing Business
Specific timelines for granting permission have been proposed. A news agency can now obtain permission for a five-year period, as opposed to one year previously.
LLPs /companies would be allowed to uplink foreign channels from Indian teleports, creating job opportunities and making India a teleport-hub for other countries.
Also, channel can be uplinked by using the facilities of more than one teleport/satellite, as opposed to only one teleport/satellite previously.
Simplification and Rationalization
The structure of the Guidelines, 2022 has been systematized by replacing two separate guidelines by one composite set of guidelines to avoid duplication and common parameters.
Penalty clauses have been rationalized and separate penalties for different types of violations have been proposed, as opposed to the current uniform penalty.
Other Highlights
Companies/LLPs with permission to uplink and downlink a channel must engage in public service broadcasting for a minimum of 30 minutes per day on topics of national and social importance. However, this provision is not applicable for foreign channels and channels where it is not feasible like sports channels.
TV channels uplinking in frequency bands other than C band are required by law to encrypt their signals.
At the time of renewals, the net worth requirement for companies/LLPs holding permissions will be as per the TV Guidelines, 2022.
Security deposits are required to ensure payment of dues.
Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) (Second Amendment), Regulations, 2022 (“IPA Regulations, 2022) (source)
The Insolvency and Bankruptcy Board of India (“IBBI”), on 1st November, 2022, has notified the IPA Regulations, 2022 amending the Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016 (“IPA Regulations, 2016”). Subsequent to the amendment:
Regulation 7(3) (Surrender of Registration) mandate filing of annual compliance certificates by the compliance officer to the IBBI, verifying that the insolvency professional agency (“IPA”) has complied with the provisions referred to in Regulation 7(1) and the same should be duly signed by the managing director of the IPA.
Under Schedules, Clause 6(3) (Duties of the Agency), IPA shall facilitate the receipt of relationship disclosures in accordance with IPA Regulations, 2016 and shall also disseminate the disclosures on its website. Erring IPAs will face a penalty starting from a minimum of INR 50,000 to INR 2,00,000 depending on the breach or 25 percent of the fee charged by the IPA, whichever is higher.
Central Board of Indirect Taxes and Customs (“CBIC”) Empowers CCI (“Competition Commission of India”) To Decide Anti-Profiteering Issues (source)
CBIC, on 23rd November, 2022, has empowered CCI to investigate whether input tax credits claimed by any registered person or a reduction in the tax rate have resulted in a commensurate reduction in the price of the goods or services or both supplied by him. The development aims to end uncertainty about the future of the anti-profiteering regime, which was introduced to prevent businesses from pocketing the tax benefits meant for consumers. Such anti-profiteering issues were previously handled by the National Anti-Profiteering Authority and investigated by the Director General of Anti-Profiteering.
SEBI Requests Funds to Reveal Names, Origin of Investors (source)
As reported by the Economic Times, numerous angel funds have been asked by SEBI to reveal the names of their investors and whether or not these investors are primarily situated outside, along with the Permanent Account Numbers of their investors. SEBI needs to verify whether or not the comparatively laxer regulations of angel funds are being abused to overcome restrictions on international direct investment or indirectly acquire equity stakes in businesses. Further, SEBI is interested in knowing how frequently the foreign investors use the alternative investment fund method.
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.