Legal Industry Updates - September 2024
SPECIAL EVENTS
New Opportunities in Data Protection and Privacy Laws for Indian Lawyers, September 29, 2024
The team at Ivy Law participated in a webinar on “New Opportunities in Data Protection and Privacy Laws for Indian Lawyers” organized by LawSikho. Along with various tactics to aid Indian clients in implementing the Digital Personal Data Protection Act, 2023, the webinar also provided meaningful insights to understand privacy management and data protection. It further emphasized on how gaining an awareness of the subtleties of international data protection laws, such the California Consumer Privacy Act, 2018 and the General Data Protection Regulation, 2018 would be essential in the long run for all the Indian lawyers who aim to increase their clientele and area of competence. Further, the challenges and opportunities like growth of data and data privacy maintenance, which could be faced by the professionals in this sector, was also deliberated upon.
LEGAL & INDUSTRY UPDATES
The Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2024 (“Companies Rules, 2024”) (source)
The Ministry of Corporate Affairs (“MCA”), on 9th September, 2024, has notified the Companies Rules, 2024, with the aim to benefit start-ups set up by Indians, which are based overseas but want to move back to India, to better tap the country's robust growth prospects. Post the amendment:
A new sub rule (5) to Rule 25A (Merger or Amalgamation of certain companies) has been introduced which stipulates that, for mergers or amalgamations involving a foreign holding company and an Indian wholly owned subsidiary, both entities must obtain prior approval from the Reserve Bank of India (“RBI”) only, thereby eliminating the need for National Company Law Tribunal clearance that was required earlier.
Additionally, the Indian transferee company must comply with section 233 (Merger or Amalgamation of certain companies) of the Companies Act, 2013, submit an application to the Central Government (“CG”) under this section, and include the required declaration at the time of application, in order to seek approval of such India-inbound mergers.
The Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Second Amendment Rules, 2024 (“IEPFA Rules, 2024”) (source)
The MCA, on 9th September, 2024, has notified the IEPFA Rules, 2024, with the aim to streamline the process for investors to claim lost or unclaimed securities, thereby protecting the interests of both investors and companies. Post the amendment, under IEPFA Rules, 2024, legal heir certificates are now accepted, provided they are issued by revenue authorities, and require additional documentation, such as indemnity bonds and no objection certificates from other legal heirs. The primary objective is to clarify the process for transferring securities to legal heirs. Further, a new requirement for companies to obtain insurance coverage for risks associated with verification reports has also been introduced.
Foreign Exchange (Compounding Proceedings) Rules, 2024 (“CP Rules, 2024”) (source)
The Department of Economic Affairs and the Ministry of Finance, on 12th September, 2024, has notified the CP Rules, 2024, with the aim to simplify foreign investment regulations, reflecting the CG’s commitment to ease of doing business. Post the amendment, the fees for filing compounding application has been doubled to INR 10,000 plus Goods and Service Tax, as opposed to INR 5,000 earlier. The notification further pointed that Assistant General Manager rank officials of the RBI can decide on compounding application of upto INR 60 lakhs up from INR 10 lakhs earlier. The amendments, developed in consultation with the RBI, focuses on expediting the compounding process, introducing digital payment options for fees, and clarifying procedural ambiguities to enhance investor and business facilitation.
The Competition Commission of India (Combination) Regulations, 2024 (“CCI Regulations, 2024”) (source)
The Competition Commission of India (“CCI”), on 9th September, 2024, has introduced the CCI Regulations, 2024, which mandates all digital firms that have “substantial business operations” (“SBO”) in India to seek regulatory clearance from the CCI for deals valued above INR 2,000 crore and to further implement the recently notified 'deal value threshold' provisions which aims to capture significant deals that might otherwise evade scrutiny under traditional asset or turnover-based thresholds. As per the new rules, enterprises offering digital services that have either 10% of their total user base in India, or generate one-tenth of their gross merchandise value or annual turnover from their India operations, will be deemed as having SBO in the country. Additionally, non-digital companies that clocked an annual turnover of more than INR 500 crore will also be required to get regulatory clearance.
Supreme Court (“SC”) Reserves Judgment On An Ineligible Arbitrator’s Ability to Nominate Another Arbitrator (source)
The SC has reserved judgement on whether an ineligible person can appoint an arbitrator, asserting that the primary objective is to ensure that arbitration as a mechanism to resolve disputes should be strengthened. SC heard numerous arguments including the validity of the unilateral appointment of an arbitration panel by a single party. Earlier, the apex court had in 2017 and 2020 held that a person not eligible to become an arbitrator cannot nominate another person as one, however, in another matter in 2020, the SC had allowed the appointment made by a person who was ineligible to become an arbitrator. Therefore, to address such issues and reduce the burden on courts, CG had set up an expert panel to recommend reforms in the Arbitration and Conciliation Act, 1996.
SC: Resignation Not Final Until its Acceptance is Communicated to the Employee (source)
The SC ruled in favor of an employee, reinstating him after finding that his resignation, was never effectively accepted. The Court observed that the internal communication regarding the acceptance of the resignation did not constitute formal acceptance, as there was no official notification provided to the employee, further adding that unless such acceptance was communicated to the employee, the resignation could not be deemed to be accepted. It was also emphasized upon that the employee's continued communication with the employer and his reporting for duty after being called back indicated that the resignation lacked finality. Therefore, SC directed the employee's reinstatement within 30 days and ordered that he be compensated with 50% of his salary for the period he was unlawfully relieved.
SC: The Prevention of Money Laundering Act, 2002 (“PMLA”) Takes Precedence Over the Code of Criminal Procedure, 1973 (“CrPC”) Regarding Procedure for Summoning Persons (source)
The SC has ruled that the PMLA takes precedence over the CrPC for summoning individuals. The Court found that the PMLA’s provisions override CrPC procedures, noting significant inconsistencies between the two laws. It also affirmed that having regard to the conjoint reading of Section 71 (Act to have overriding effect) and Section 65 (CrPC to apply) of the PMLA as also Section 4(2) (Trial of offences under the Indian Penal Code and other laws) and Section 5 (Saving) of the CrPC, there remains no shadow of doubt that the provisions of PMLA will have the effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force, including the provisions of the CrPC.
Kerala High Court (“HC”): The Sexual Harassment of Women at Workplace Act, 2013 (“PoSH”) Does Not Cover Sexual Harassment of Women Seeking Jobs (source)
The Kerala HC has emphasized that the State Government must act promptly to address systemic issues affecting women, beyond the scope of the PoSH Act, 2013, which does not cover harassment faced by job seekers or broader societal issues. The report referred to instances where women faced exploitation even before the job actually commenced. Court thus called upon the State to come out with a draft legislation from a more "feminist perspective". It criticized the current legal framework for failing to address diverse needs, including those of transgender individuals and persons with disabilities. The HC further suggested that legislation should be tailored to address these broader concerns and proposed using arbitration and mediation to resolve issues such as wages and gender discrimination.
Guwahati HC: Part-Time Contractual Employees are Entitled for Maternity Benefits Even if the Terms of Appointment State Otherwise (source)
The Guwahati HC recently disposed off a 2015 writ petition concerning maternity leave benefits for a part-time contract teacher, setting aside prior communications that limited such benefits to regular employees. The petitioner, employed from 29th June, 2012, to 4th March, 2015, claimed maternity leave after giving birth on 12th April, 2015, but was informed that benefits were only available to permanent staff. The Court referenced the Maternity Benefit Act, 1961 (“Act”), asserting that maternity benefits apply to all women, regardless of their employment status. It cited SC precedents affirming that benefits are not contingent on the nature of employment and that provisions of the Act override any inconsistent contractual terms. The HC therefore directed the employer to disburse the maternity benefits, including all permissible computations under the Act.
Union Minister of Commerce & Industry Launches Bharat Startup Knowledge Access Registry (“BHASKAR”) Portal to Boost India’s Startup Ecosystem (source)
The Union Minister of Commerce and Industry has recently launched the BHASKAR portal under the Startup India initiative, wherein he highlighted its role in fostering collaboration, innovation, and competition among startups. BHASKAR, a digital platform designed to unify India’s startup ecosystem, would provide resources, facilitate networking, and enhance visibility for stakeholders. It further aims to integrate startups, investors, mentors, and government bodies, offering a centralised hub for knowledge sharing. The platform, with over 1.4 lakh DPIIT-recognized startups, aspires to bolster India's global standing in innovation and entrepreneurship. The minister also asserted that handing out shares of the new company to recognise and encourage unicorns would encourage and empower the entrepreneurs.
Peer-to-Peer (“P2P”) Startup Investors Take to Social Media to Vent Against New RBI Rules (source)
Various applications that were using the P2P route for investments and lending to their customers are either curbing these services or restructuring the product post the regulatory update by RBI in August, 2024, requesting P2P platforms to stop offering liquid products, access to secondary markets, and reinvesting the interest amount. This resulted in many startups in this space realising that they were in violation of the norms and would need to restructure their products from scratch.
P2P lending startups seem to be riding into a storm with dismayed investors taking to social media to vent their anger against these firms implementing the latest guidelines set out by the RBI post which multiple financial technology platforms are no longer allowing its customers to withdraw their investments instantly.
Renowned Indian E-Commerce Giant Takes Legal Action Against Former Chief Business Officer (“CBO”) Over Alleged Data Misuse Company Data and Breach of Confidentiality (source)
A renowned Indian e-commerce company has sued its former CBO for breaching confidentiality and misusing the brand’s data, thereby abusing the company’s reputation. The company has therefore petitioned the Bombay HC, seeking a refund for loss of goodwill from its former CBO. The company has also requested a court order to prevent the CBO from using the company’s data for another e-commerce firm, which he joined in June, 2023. In addition to the above, the court has further issued an interim order to the CBO, prohibiting him from hiring the petitioner’s employees for his current company.
National Test House (“NTH”) Signs Memorandum of Understanding (“MoU”) with Bureau of Energy Efficiency (“BEE”) to Promote Energy Efficiency in India (source)
An MoU has been signed between the NTH, Department of Consumer Affairs, and the BEE, Ministry of Power, with the aim to enhance the Standards & Labelling Program, thereby promoting energy efficiency. As India’s largest multidisciplinary testing laboratory under the CG, NTH offers technical consultancy, testing, and quality evaluation across various sectors, adhering to both national and international standards, whereas BEE helps in developing policies and strategies for energy conservation, thereby promoting sustainable development. Further, the MoU is expected to advance energy conservation efforts and contribute to sustainable development, thus reducing the carbon footprints.
Indian Companies Pledge INR 32.5 Lakh Crore Investments in Renewable Energy by Financial Year (“FY”) 2030 (source)
The Union New and Renewable Energy Minister has asserted that various renowned Indian companies have committed to a total investment of INR 32.45 lakh crore by FY30 in renewable energy, with the objective to boost country's green energy transition. He further expressed that the state governments have given 'Sankalp Patra' (commitment) of 520 gigawatt (“GW”), whereas manufacturers have committed to additional manufacturing capacity of 340 GW in solar modules, 240 GW in solar cells, 22 GW in wind turbines and 10 GW in electrolyzers. The minister also highlighted the extensive deliberation with German and Danish diplomats and officials for cooperation in the renewable energy sector.
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.