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Sonam Chandwani

Oct 16
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COVID-19 | Let’s Not Deny The Right to a Decent Burial

By Others No Comments

Right to Burial: Let’s Not Deny The Right to a Decent Burial

At a time when India cheers in unison lauding the efforts of medical professionals, a doctor, who succumbed to coronavirus in Chennai, in Tamil Nadu, was denied his right to a decent burial earmarked for that purpose. In this scenario, we ask: Is clapping hands enough?

The COVID-19 pandemic has not only presented a health, safety, and financial crisis, but also a crisis of faith in the final journey of humans. The Right to Life is an extensive concept, which states that no person shall be deprived of his/her life or liberty or property, except according to the procedure established by law.

A first, the Supreme Court in the case of Kharak Singh, 1963 considered the expanse of Article 21 by hinting at the treatment of corpses in the following words – “it is every kind of deprivation that is hit by Article 21, whether such deprivation is permanent or temporary.”

Cementing this notion, the Madras High Court held that the fundamental right to life guaranteed under Article 21 includes the right to decent burial or cremation. Tamil Nadu went a step ahead by the issuance of an ordinance imposing a three-year jail term on anyone found in violation of the same.

Similar incidents cropped up in Meghalaya and the high court directed the state government to sensitize the public, especially where the burial or cremation grounds are situated, to avoid any further unfortunate incidents. Our judiciary, on several occasions, stood for the right to burial with ‘dignity’ and further clarified that a corpse must be treated with the same dignity as a living being. Moreover, the corpse must be buried according to his/her culture and tradition.

Despite the subsisting right, people dying on account of the pandemic have been denied their fundamental rights with the impending fears that the virus may spread through the burial or cremation of the corpse. Realizing this, the Ministry Of Health and Family Welfare issued guidelines on dead body management to safeguard the right of a human corpse, which are in line with guidelines issued by the World Health Organization (WHO).

The guidelines also permit relatives of the deceased to see the body, albeit subject to adherence to infection prevention control practices, which include a total restrain on physical contact with the dead body.

The right to a dignified burial has raised controversies the world over. Recently, Sri Lanka mandated the cremation of dead bodies of COVID-19 patients or suspects; however, this has been resented by the Muslims, who, by custom, follow the burial method. In response to such protests, the government cited the deadly nature of the virus to override religious customs for dead body management.

Moreover, the United Kingdom introduced the Coronavirus Act 2020 permitting the local authority to disregard Section 46(3) of the Public Health (Control and Disease) Act, 1984, which aimed to preclude local authority from being able to cremate the body against the wishes of deceased overbearing his/her beliefs.

Countries the world over share the sentiment of public health and safety over adherence to religious rituals, which may potentially have dire consequences on the mortality and financial wellbeing of the economy at large.

Apart from a high number of positive cases and mortality rates, the COVID-19 outbreak has led to mass unemployment, stock market uncertainties, and hints at an impending economic gloom worldwide. The loss of loved ones can be disturbing, disconcerting, and difficult to process, particularly with so many unknowns at present.

State government orders overriding religious customs for dead bodies should in no way be deemed discriminatory but is a proportionate measure to curb infections and deaths under the pretext of the virus, while simultaneously ensuring public safety and economic wellbeing of India.

It is important to remember that this is temporary, and is the modus Vivendi to navigating the rough waters of COVID-19, individually but together.

Tags: financial crisis, savings and loan crisis, economic crisis, global economic crisis, right to burial, global financial crisis, asian financial crisis

Oct 16
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How to Avoid Landlord-Tenant Dispute Amid COVID-19 Crisis

By Real Estate No Comments

How to Avoid Landlord-Tenant Disputes

Mere announcements in the absence of government ordinances for deference of rent do not legally absolve tenants from rental dues.

The transmission of a virus with flu-like symptoms has pushed world economies to an unprecedented standstill. Stock market crashes, mass unemployment, and disruptions hinting a recession – are only the tip of the iceberg and its underlying repercussions are likely to unfold with time.

To combat an impending economic depression and prevent a wave of homelessness, the government has announced several rent relief measures looking out for tenants’ interests and essentially placing a period on the rental incomes of landlords. Recently, Delhi’s CM Arvind Kejriwal requested the landlords to forgive rent for the next 3 months and further went on to state that the government will pay rent if tenants fail to do so.

Following suit, the Uttar Pradesh government also issued a magisterial order to imprison or fine landlords who fail to postpone rent collection by a month. Furthermore, owing to the lockdown, the Maharashtra Housing Department advised landlords to defer rent for at least THREE MONTHS and not evict tenants for non-payment.

However, mere announcements in the absence of government ordinances for deference of rent do not legally absolve tenants from rental dues. This circular is advisory in nature and should not be misconstrued as absolute or legally enforceable by tenants in Maharashtra. The rationale behind the order was to provide some breather to tenants unable to pay rents during a crisis.

Landlords with deep pockets such as the Lodha Group announced a full waiver for over 200 commercial tenants until normalcy returns. However, not all landlords can afford rental waivers or deferrals, especially senior citizens whose survival largely depends on rental incomes. So for the lack of respite by the government, landlords continue to make mortgage payments, electricity and water charges, insurance, maintenance, property taxes, etc.

Realizing this, the RBI announced a 3-month EMI holiday on various loan types but such forbearance programs only defer mortgage payments. The interest continues to accrue on the outstanding loan amount, rather than completely waiving off or discounting it. Unfortunately, commercial lessees may not directly benefit from these orders as many banks have the prerogative of formulating relief packages and evaluate applications to determine who can avail the facility.

In the absence of any clarity by the government on rental obligations under commercial lease agreements, businesses are left struggling with zero sales coupled with salary and rental obligations. Amid the pandemic, the much forgotten ‘Force Majeure’ provision in contracts and leases has gained traction and attention.

The commercial tenants could invoke the ‘force majeure’ to absolve them from rental payments during “an event beyond the parties’ control”. However, force majeure events are not exhaustively laid out under the law, and the applicability of this provision depends on the language of the rental agreement and the interpretation of the courts. Therefore, the parties must renegotiate the terms of the agreement to provide breathing room to both parties.

A question that may arise is whether a Lessee can invoke the Doctrine of Frustration in the absence of a Force Majeure Clause for Non-Payment of Lease Rent? Typically, the Doctrine is invoked in circumstances where the purpose of their contract is held to be frustrated under Section 56 of the Indian Contract Act.

However, the Supreme Court in Raja Dhruv Dev Chand v Raja Harmohinder Singh, observed “Authorities in the courts in India have generally taken the view that Section 56 of the Contract Act is not applicable when the rights and obligations of the parties arise under a transfer of property under a lease’’.

Thus, it is unlikely that a lessee can claim frustration of contract in the absence of a Force Majeure clause under a lease agreement and seek a waiver of lease rental as a consequence of a Force Majeure event.

However, most tenancy agreements don’t have the provision of ‘force majeure’ and cannot invoke the doctrine of frustration and so unless announcements are backed by ordinances, the uncertainty of its enforceability remains.

Regardless of government efforts, individual circumstances could lead to foreclosure proceedings across the country. Fortunately, the Supreme Court held, “A tenant cannot be arbitrarily evicted by using the provisions of the SARFAESI Act as that would amount to usurping the statutory rights of protection given to the tenant.”

Thus, in the event of a landlord’s failure to repay the loan, Section 35 of the SARFAESI Act cannot be used to bulldoze the statutory rights conferred on the tenant by the Maharashtra Rent Control Act, 1999.

The customary strained landlord-tenant relationships are further distressed with the lack of clarity in Central and state government announcements bringing fore questions of eligibility and applicability of relief measures. Until the air clears (pun intended), Indians will continue to rely on legislations that hugely favors tenants in rental disputes, leaving landlords grappling to survive the crisis without any respite.

In the interim, as parties await clarification from the government, it is advisable to facilitate a shared objective of contractual performance through collaboration and provide a win-win solution to all until normalcy returns.

 

Tags: commercial tenant disputes, supply chain disruptions, commercial real estate sector, supply disruption, tenant disputes, landlord tenant dispute, landlord and tenant disputes, landlord dispute

Oct 15
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The Challenges Grappling Data Protection And Privacy In The Insurance Industry

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Data Protection And Privacy In The Insurance Industry

The digital revolution in India has disrupted the business environment in all industries and the insurance industry is no exception. Digitization enhances efficiency and reduces the cost of transacting business however there remain several challenges to the adoption of emerging technologies such as disruption to the traditional insurance ecosystem, uncertain consumer adoption, return on investment, and data privacy and security.

Emerging technologies usually deal in customer data which can be used to drive insights related to historical health issues and behavioral patterns of customers. Increasing regulations related to customer personal data around the globe and in India will continue to pose additional challenges for insurers and insurance providers alike.

The Information Technology Act, 2000 (IT Act) and the Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011 (SPDI Rules) set out the general framework with respect to data protection in India.

However, given the nature of the business of insurance companies and intermediaries, the Insurance Regulatory and Development Authority of India (IRDAI) has prescribed an additional framework for the protection of policyholder information and data, which is required to be followed in addition to the general framework under the IT Act.

Regulatory Framework Governing Insurance Companies 

The IRDAI has made it mandatory for all the insurance companies to ensure the protection and maintenance of confidentiality of all the information that they have collected. Below are some of the relevant data protection regulations applicable to insurance companies:

– IRDAI (Maintenance of Insurance Records) Regulations, 2015 – Pursuant to Regulation 3(3)(b), 3(9) insurers are required to ensure that:

  • the system in which the policy and claim records are maintained has adequate security features; and
  • the records pertaining to policies issued and claims made in India (including the records held in electronic form) are held in data centers located and maintained in India.

– IRDAI (Health Insurance Regulations), 2016 – Pursuant to Regulation 35(c) insurers, third party administrators (TPAs) and network providers (i.e., hospitals) are required to comply with data related matters as may be specified in guidelines prescribed by the IRDAI (if any).

– IRDAI (Protection of Policyholders’ Interests) Regulations, 2017 – Pursuant to Regulation 19(5) insurers are required to maintain total confidentiality of policyholder information unless it is legally necessary to disclose the same to statutory authorities.

– IRDAI (Outsourcing of Activities by Indian Insurers) Regulations, 2017 – Pursuant to Regulation 12 insurers are required to ensure that the:

  • the outsourcing service provider has adequate security policies to protect the confidentiality and security of policyholder information;
  • information and data parted to outsourcing service providers remain confidential; and
  • customer data is retrieved with no further use of the same by the service provider once the outsourcing agreement is terminated.

Regulatory Framework Governing Intermediaries 

Intermediaries in the insurance sector such as – brokers, individual agents, corporate agents, third party administrators (TPAs), surveyors, loss assessors and web aggregators – serve as a bridge between customers and insurance companies, by facilitating the process for selection and purchase of insurance products and assisting in the servicing of policies and assessment of claims.

Therefore, intermediaries are also bearers of confidential information and thus are subject to obligations relating to data protection and preservation of confidentiality prescribed by the IRDAI.

Whilst each intermediary is subject to its own regulations and code of conduct as set out in the table herein, below, the provisions in relation to data protection of the policyholder are common for all intermediaries. Inter alia, they prescribe that insurance intermediaries –

  • treat all information supplied to them by prospective clients as completely confidential to themselves and to the insurer(s) to which the business is being offered; and
  • take appropriate steps to maintain the security of confidential documents in their possession, including by way of restricting access to such information, execution of confidentiality undertakings, etc.

While a similar regime has been prescribed for insurance surveyors and loss assessors, the extant regulations permit surveyors and loss assessors, as an exception, to disclose information pertaining to a client, employer or policyholder to any third party, only where necessary consent has been obtained from the interested party.

It is however clear that the surveyors and loss assessors are prohibited from using (or appearing to use) any confidential information to their personal advantage or to the advantage of a third party.

Specifically, in relation to TPAs, the IRDAI (Third Party Administrators – health services) Regulations, 2016 (TPA Regulations) requires the TPAs to not share the data and personal information of customers received by them for servicing insurance policies or claims.

A limited exception to this rule has been carved out for disclosure of confidential information to any court of law, tribunal, government, or the IRDAI in the event of any investigation being carried out (or proposed to be carried out) against the insurer, TPA or any other person or for any other reason.

The aforesaid exception is similar to the carve-out under Rule 6 of the SPDI Rules, which permits government agencies mandated under law to obtain information (including sensitive personal data or information) for specified purposes, without obtaining the prior permission of the provider of such information.

Insurance Regulatory Sandbox 

A ‘Regulatory Sandbox’ is a testing environment created by the relevant regulatory authority to provide market players with an opportunity to safely and securely execute and test their innovative products, services, business models, and delivery mechanisms, in an orderly manner, which aims at protecting the customers and at the same time safeguarding the interest of the stakeholders.

Shortly after the issuance of the RBI Regulatory Sandbox, on May 18, 2019, the IRDAI issued the “Draft Insurance Regulatory and Development Authority of India (Regulatory Sandbox) Regulations, 2019” (IRDAI Regulatory Sandbox).

The objective of the IRDAI Regulatory Sandbox is to create a balance between the orderly development of the insurance sector on one hand and protection of interests of policyholders on the other, while at the same time facilitating technological innovation by way of relaxing provisions of any existing regulations framed by the IRDAI, for a limited scope and limited duration.

On approval of an application, the IRDAI chair may relax the applicability of one or more provisions of any regulations, guidelines, or circulars requested in the application, subject to the conditions for approving the application or any other conditions in which the chair deems necessary.

Conclusion 

The underlying objective of the regulation is to encourage good data practices and retain customer trust in the insurance businesses. Instead of treating it as a mere compliance task, companies should welcome the newly introduced regulations as a great opportunity for them to win customer trust and gain competitive advantages.

 

Tags: data protection and privacy, data and privacy, data privacy, data security, data protection, data privacy act, personal data protection act, data protection act

Oct 15
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Navigate The Sea of Job Loss With Confidence

By Labour & Employment No Comments

Job Loss With Confidence

Mass layoffs are an impending consequence of this pandemic, which is likely to further rupture our already ailing economy. In response to the global and national economy taking a hit and financial difficulties brought on by the lockdowns necessitated by the need to curb the spread of the pandemic, employers have altered traditional working methods to limit contact between employees.

They are embracing remote working methodologies, bonus/salary cuts while mass layoffs have become the order of the day. Even as we are oblivious to the depth of the virus’ impact on the economy, one thing is abundantly clear — the workplace will never be the same again.

With lockdown 2.0 in effect, the cash reserves will further plummet, creating additional strain on employers and will subsequently aggravate the problem of layoffs in a company’s pursuit to save depleting resources from the further drain.

This is especially true for organizations that cannot function remotely owing to the nature of their business. In such a scenario, one can only imagine the plight of white-collar workers, the condition of blue-collar employees, contractual laborers, and those belonging to the unorganized sector.

 Anticipating joblessness brought on by the pandemic, the Government on March 20 issued an advisory to all private and public companies, dissuading them from wage deduction and employment termination. It further stated that the salaries of workers shall not be deducted even if they were compelled to stay at home due to the pandemic.

On March 29, the Government invoked the Disaster Management Act, 2005, and issued a notification under Section 10(2)(1) to State Governments and Union Territories requiring all industrial and commercial establishments to refrain from wage deduction, retrenchments and to ensure timely payment of wages.

However, mere announcements in the absence of Government Ordinances for payment of wages to employees are not legally binding in nature and lack effectiveness. Like in the case of Maharashtra, the notification is advisory in nature and should not be misconstrued as absolute or legally enforceable, by the employees.

The rationale behind the order was to provide some financial respite to employees during a crisis. Unfortunately, State Governments have not issued any legally-binding Ordinances, therefore giving employers the liberty to lay their employees off.

 In the interim, employers should take into account alternatives to outright termination — such as reduced schedules, furloughs, or salary cuts. To further mitigate the stress emanating from job losses, there is severance pay, which serves as a temporary cushion for employees while they look for another job.

Severance packages are taxable in the hands of the employee as profit in lieu of salary under Section 17(3) of the Income Tax Act. However, it may be exempt by virtue of Section 10(10C) of the said Act if compensation is received under a Voluntary Retirement Scheme, subject to certain conditions.

Unfortunately, there are no special relief packages for employees laid off on the pretext of the pandemic, though partial relief afforded under Section 89 may be claimed if s/he is liable to pay tax in respect of compensation received on termination of employment. So, what should you do if you get laid off by your firm?

Consult your Human Resource department: This could be done even before you receive a letter of termination, just to know about the company’s future plans. If and when you receive a termination letter, you must consult the HR and find out whether it is a temporary or permanent measure.

Get a written acknowledgment: Irrespective of the nature of your notice, it is your duty to secure a written acknowledgment of the same. It is advisable to ask for the reason for such termination in the letter or e-mail itself.

 Consult your lawyer: You may approach your lawyer with the employment contract and letter of termination so that you are apprised of the potential remedies available to you. If in the future, the Government plans to give any relief package or implement a process of re-employing all those laid-off because of the lockdown, all the documentations will come in handy.

 Look for opportunities: In these distressing times, many organizations are resorting to collaborative practices by hiring laid-off employees so that the talent pool is not lost. This is termed as “People + Work Connect”, which is an employer-to-employer partnership. Keep yourself abreast of changes in the economy, specifically industries that directly impact your nature of work.

Know your situation: The best way to start planning for the future is to see your present situation — as is. Make a note of your basic expenses and chalk out a plan to be financially independent in tough times.

 Crashing economies, plummeting sales figures, coupled with the uncertainty of business redemption, are prompting many companies to terminate employment so as to save themselves from running out of business.

People scarred by unemployment are asking themselves, “What now?” Job loss can be a disturbing and difficult time, psychologically and financially, particularly with so many unknowns in our world right now.

But professionals terminated by their employers must keep abreast of the key developments introduced by the Government and handle the forthcoming chapter in their career with confidence. The key to navigating the rough waters of COVID-19 is to remember that this is temporary and we are in this together.

 

Tags: consequence of pandemic, financial difficulties, loss of employment, people losing jobs, job loss, pandemic impact on economy, about to lose your job, financial trouble

Oct 15
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India’s ‘Fourth Way’: A Data-Rich Economy’s Endeavor for Data Protection

By Others No Comments

A Data-Rich Economy’s Endeavor for Data Protection

Roti, Kapda, Makaan aur Privacy – is an appropriate adaptation in times where people are connected 24/7 through the web.

The prolonging allure of globalization followed by its societal, economic, and technological innovations has altered economies in the most unfathomable ways. A radical by-product of the globalization era is the World Wide Web, which transcends borders and connects individuals worldwide within seconds.

It has quickly become an essential part of daily lives but several countries are faltering to match up to the developments in the World Wide Web giving rise to data protection and privacy concerns. 

Privacy legislation in India 

Presently, the Information Technology Act 2000 and Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules 2011 govern India’s data protection regime. However, these legislations fail to protect individual interests in today’s time. 

In realizing this, the Electronics and Information Technology Ministry of India tabled the “Personal Data Protection Bill, 2019″ (the Bill), which along the lines of the European Union’s General Data Protection Regulation (EU GDPR), the present hallmark of data protection regime in the world, with one noteworthy contrast being the necessity of data localization and stringent restrictions on the cross-border data transfer.

The Bill largely governs the processing of personal data by the Government, Indian companies, and foreign companies dealing with personal data of individuals in India.

The Bill recognizes three main types of information, namely: a) personal data, b) sensitive personal data, and c) critical personal data and further empowers the Data Principal – a natural person to whom the personal data relates – to obtain confirmation, correction, transferability, and restrictions on disclosure of their data by a fiduciary. 

At the heart of this Bill is – Consent, without which data fiduciaries would be barred from processing personal data of individuals.

However, the Bill exempts certain circumstances which include: (i) when data is required by the State for providing benefits to the individual, (ii) legal proceedings, (iii) to respond to a medical emergency, for which consent is not required. Moreover, the Bill provides for the establishment of a Data Protection Authority to protect the interests of individuals, prevent misuse of personal data, and ensure compliance with the Bill while penalizing violators. 

Potential Issues emanating from the Bill

Heavy fines amounting to Rs 15 crore or 4% of the annual turnover of the fiduciary are prescribed for violation of the proposed law. Certain offenses also attract imprisonment for up to three years in addition to hefty fines. Thus, the Bill may leave several small and medium enterprises starving for revenues in the event of failure to comply with the Bill in the light of said fines and probable lawsuits. 

The Bill obliquely compels enterprises to review their data protection and processing policies, along with IT infrastructure to ensure compliance with the requirements of the Bill, thereby leading to significant costs of doing business in India.

Furthermore, stringent cross-border transfer and data localization restraints may pose a great challenge for foreign investors having operations in India. Although the Bill is likely to cause an array of problems for the law enforcement agencies, its benefits far outweigh the momentary discomfort. 

Conclusion

In the government’s race to match up to the changing dynamics of the world, companies operating in India must gear up for the implementation of the Bill, which is likely to be approved by the Parliament in the Monsoon session of 2020.

These regulatory changes, though onerous to many, are almost a natural and necessary trajectory considering India’s growing digital footprint in the world and the enormous amounts of sensitive information they leave over the web, with or without consent!

The PDP Bill, although highly regulated, may face challenges during implementation as industry and the government tries to pave their way through voluminous data. In light of the aforesaid challenges, the government will be required to put in considerable time and resources to make this Bill turn into ground reality without any unintended consequences.

Therefore, although this data protection regime is a bold, positive policy, shoddy implementation of the policy may further grapple the economy offsetting the crucial advantages of the Bill at its outset.

 

Tags: technological innovations, disruptive technology, data protection, technological innovation, technology and innovation, technology inventions, computing innovations, technical innovation, data security

Oct 14
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Impact Of Jio-Facebook Deal

By Others No Comments

Jio-Facebook Deal

Three days after Facebook announced its stake in Reliance Industries, its retail e-commerce venture ‘JioMart’ gets its WhatsApp numbers 88500 and 08000.

In times of mass unemployment, stock market crashes, and economic disruption, the Sensex climbed over 700 points. California-based technology and social media giant, Facebook Inc. declared the largest foreign direct investment (FDI) in India’s technology sector yet.  

In a recherché union of giants, Facebook announced an investment of Rs. 43,574 crores for a 9.99% stake in Jio Platforms, a subsidiary of Reliance Industries Ltd., making Facebook the largest minority shareholder in Jio Platforms.

The entire deal revolves around the development of e-commerce and the e-payment business in India. Further, Jio and Facebook’s WhatsApp also entered into a commercial partnership agreement, which gives Facebook a strong foothold in India’s fast-growing market and access to over 388 million internet users – at par with Facebook’s 400 million users on WhatsApp, Instagram, and Facebook.

By virtue of this partnership, several local retailers and Kirana merchants list their products on the marketplace model called ‘JioMart,’ and garner benefits of scale and convenience for their customers of home delivery.

Several small businesses are already using WhatsApp Business to promote offerings, accept orders, and gather feedback, among other things. So enabling consumers to access the nearest Kirana stores that can deliver to their houses by transacting impeccably with JioMart using WhatsApp will be an epitome of how, with clean practices, both physical and digital retail can co-exist and flourish.

Naturally, the duo’s plans, upon receiving regulatory approvals, likely outperform even the most consumer-friendly fintech players in India.

Despite the unmatched access to digital India that the duo brings, the move will also facilitate Mukesh Ambani-led Reliance Industries significantly lower its debt – a pressing issue for companies today. As of December 31, the RIL group’s debt stood at Rs. 1,53,100 crore and with this monetization of digital assets, RIL can also deleverage its balance sheet and aim to be a debt-free group by March 2021.

The deal will positively impact the valuation of Jio’s partnership with Facebook in the event it decides to go public. Overall, at a time when the COVID-19 outbreak has thrown the world economy in shambles, this union is a feel-good tiding.

In addition to strategic business advantage, the deal was perfectly timed to foray into the government-sanctioned payment infrastructure with digital payments on a rapid rise in the wake of the ongoing pandemic. Both companies have payment apps namely, WhatsApp Pay and JioMoney that can together dominate the market.

This deal provides adequate leverage to JioMart to effectively compete against deep-pocketed giants like Amazon and Walmart (Flipkart) in India while potentially disrupting the digital payments segment, with the Alibaba-backed PayTM and Walmart’s PhonePe currently facing a financial setback.

Unfortunately, the deal has come in at a time when India is yet to pass the Personal Data Protection law. Collectively, the companies have access to a gargantuan repository of data and are likely to be closely scrutinized by the anti-trust watchdog, the Competition Commission of India.

But experts believe that the move has already set the stage for digital colonization. There are concerns that the duo will not only eliminate competition in the e-commerce segment by monopolizing data but will destroy the concept of net neutrality by way of – predatory pricing, imposing content, and ultimately destroying other retailers.

Additionally, Jio is in the talks of creating a super-app, which could also result in the creation of an ecosystem of apps. This could adversely impact not only other tech giants like Google and Amazon but also the Indian startup ecosystem, which is already struggling to compete with technology giants.

By harmonizing their strengths – Reliance’s mammoth distribution network and retail infrastructure and Facebook’s products and technologies – both companies are in a position to capitalize on the repository of data while partnering with small Kirana shops, as opposed to competing with them.

While this will propel customers into online retail and digital payments with relative ease, what it will not ease is the criticism from the government and domestic lobbies, and the deal’s adverse impact on the e-payment, e-commerce giants, and startups alike.

At a time when India tightened its FDI Policies impacting Chinese investments, this move can be viewed as an example to strengthen ties between the USA and India. On the flip side, this deal possesses grey areas that could defeat the purpose of the Competition Commission of India (CCI) and the Telecom Regulatory Authority of India (TRAI) and necessitates heightened vigilance.

Whether this partnership succumbs to data privacy and monopoly concerns, follows suit with Amazon and Walmart’s illegal practices such as violation of FDI rules, predatory pricing, destruction of other retailers, or is truly a double-sided coup – only time will tell.

 

Tags: facebook reliance deal, facebook stake in jio, reliance and facebook deal, jio facebook deal, facebook and reliance deal, fb investment in jio, jio and facebook deal, facebook investment in jio, facebook jio deal, reliance facebook deal

Oct 14
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An Analysis Of Anti-Competitive Agreements & Heavy Discounting By Ecommerce Players

By Corporate Law No Comments

An Analysis Of Anti Competitive Agreements & Heavy Discounts

In 2017, Reliance’s Jio gifted a country of 1.3 Bn people free voice calls and high-speed internet at rock-bottom prices.  Consequently, it generated a gargantuan shift in the consumer base making it India’s largest mobile network operator with over 350 Mn subscribers today.

Naturally, this revolutionary step attracted complaints from major telecom players like Bharti Airtel, citing concerns like – “Predatory Pricing,” and “Abuse of Dominance.”

The Competition Commission of India (CCI) held that Reliance Jio did not enjoy a dominant position in India with less than 7% market share in India. Further, CCI stated that incentivizing customers through attractive schemes in order to establish its identity in a hyper-competitive market cannot be considered as a contravention of Section 4(2)(a)(ii) and 4(2)(e) of the Competition Act, 2002 and accordingly dismissed Airtel’s complaint.

Jio’s move may have resulted in industry-wide losses for its competitors, but consumers welcomed the new entrant and the competition with open hands which further makes it difficult for others to form a basis of competition.

Prohibitions Under Competition Act, 2002

The current trajectory of India’s economic development requires a competition law that focuses on promoting efficiencies and allowing firms to freely innovate, strategize, and reap profits. At the same time, it is also important to continuously check for any kind of exploitation as the economy grows and new market structures emerge.

Realizing this, the Competition Act, 2002 outlaws anti-competitive practices like “Predatory Pricing” – the practice of pricing of goods or services at low levels with a view to reduce or eliminate competition – treating it as an abuse of dominant position and thus prohibited under Section 4 of the Act and “Anti-Competitive Agreements” which cause or are likely to cause Appreciable Adverse Effect On Competition (AAEC).

Section 3(1) of the Act provides a general prohibition on the following to enter into agreements and the CCI has been given the authority to direct any enterprise or person to modify, discontinue and not re-enter into an anti-competitive agreement and impose a penalty, which can be 10% of the average of the turnover for the last three years.

Section 4(2) (a) of the Competition Act, 2002 states that:

There shall be an abuse of a dominant position under Sub-section (1) if an enterprise:

(a) Directly or indirectly, imposes unfair or discriminatory-

(i) Condition in the purchase or sale of goods or service; or

(ii) Price in purchase or sale (including predatory price) of goods or service.

Denial of market access briefly referred to in this section, if read conjunctively, is expressly prohibited under Section 4 (2) (c) of the Competition Act, 2002.

Exclusive Agreements & Heavy Discounts

OYO-Make My Trip

In a market with no clear standards to determine what price is excessive or fair or what agreement is preventive rather than restrictive, adopting such a practice may be at the disposal of the manufacture with a view to contacting a more extensive group of onlookers in a savvy way.

However, concerns with respect to the dispossession of other market players, especially offline ones keep surfacing now and again as observed in the OYO and Make My Trip case.

In a recent case, the CCI ordered an investigation into an online travel booking company Make My Trip (MMT) and hospitality provider OYO based on complaints by members of the Federation of Hotel and Restaurant Associations of India (FHRAI) alleging preferential treatment, deep-discounting, and cheating by these firms.

First, it was alleged that MMT and OYO have entered into confidential commercial agreements wherein MMT has agreed to give preferential, exclusive treatment to OYO on its platform, further leading to a denial of market access to Treebo and Fab Hotels.

Second, FHRAI alleged that OYO and MMT are hurting competition by offering deep discounts and charging exorbitant fees from hotels. Further, FHRAI stated that OYO’s prices in small Indian markets are about 30% lower than average industry prices, which helps it attract more customers at the cost of smaller, independent hotels which are then forced to join OYO’s network or lose out on potential revenues.

Past Judicial Approach

A similar issue of the exclusive agreement had emerged before the CCI in the case of  Mohit Manglani v.  Flipkart India Pvt. Ltd. & Ors. in relation to the sale of the book titled “Half Girlfriend” written by Chetan Bhagat, which was available for sale exclusively at Flipkart. It was alleged that such as arrangement was destroying players in the physical market, controlling the creation and supply, and consequently bending the reasonable rivalry in the commercial centre.

However, such allegations were rejected by the CCI which opined that a selective plan between a maker and an e-gateway would not make any entry obstructions since products sold via online portals face competitive constraints. Thus, in the opinion of the CCI:

  • Mobile phones, tablets, books, cameras etc., are not to be trodden by imposing business model or predominance.
  • There was a lack of concrete evidence to show that it was by reason of the exclusive agreements that any of the existing players were getting adversely affected.

But in the Flipkart case, the CCI at the prima facie level rejected the claim since none of the players enjoyed dominance in the retail market and in order to prove predatory pricing it is fundamental to show that the enterprise has a dominant position in the market. The determination of dominance is connected to the refusal made by the CCI to designate e-market as a different space of goods/services.

Further, in the case of Snapdeal v. Kaff Appliances, where a suit was instituted by Snapdeal against a manufacturer which had placed restrictions on its dealers in their dealings with e-retailers. It was alleged by Snapdeal that Kaff Appliances, had imposed a blanket ban on providing after-sale warranties with regards to products purchased online from unauthorised sellers. In this case, it was held by the CCI that:

  • The conduct of the Kaff Appliances was by its very nature a unilateral policy and involved coercion
  • The ban lacked reasonable justification and led to total deprivation of consumer choice thereby violating Section 3(4) (d) of the Act.

Way Forward

In the light of the audacious and laudable stance taken by CCI in the Snapdeal case, the CCI is likely to mirror the bold mindset in determining the alleged anti-competitive practices of the OYO and Make My Trip. In doing so, the CCI shall continue its endeavor in doing justice to the three-prong focus of the Competition Act, 2002 namely –

  • Encourage competition,
  • Protect consumer interests, and
  • Ensure freedom of trade in markets.

The Indian Competition law can be said to have created enough space so as to allow the novel and creative organizations to enter the market and offer more options to the customers and organizations. It seeks to promote the equality between the ecommerce enterprises and the traditional bricks and mortar companies and dealers.

However, it is suggestive that the CCI should take into account the unique features of the e-commerce sector such as rapid technological advancement, increasing returns, network effects, data collected from the users while analyzing the position of dominance and abuse.

 

Tags: pure players ecommerce, anti competitive agreements under competition act, types of anti competitive agreements, anti competitive agreements in competition law, major players in telecom industry, anti competitive agreements, ecommerce players, telecom players

Oct 13
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Digital Wills in Times of COVID-19 Crisis: Legal or Not?

By Others No Comments

Digital Wills in Times of COVID-19

As the nation gears up for Lockdown 2.0 justice remains a distant dream as the Indian judiciary remains dysfunctional, at large. Further, digitization in India has evolved from the computerization of government offices to fragmented initiatives aimed at speeding up technological implementation across courts, albeit at a sluggish pace.

Thus, people seeking legal advice on succession planning face a twin problem – closed law offices and
dysfunctional courthouses.

Fortunately or not, India has witnessed a recent development in the concept of “electronic wills” also known as e-will, or digital wills. As the term suggests, a will is a declaration of intent by a person competent to transfer his wealth to others, but in an electronic form. Simply put, electronic wills are those wills that have been written, signed, and/or attested by way of an electronic medium.

In India, several platforms like Willstar, and MakeMyWill.in, Lawfarm, EzeeWill, etc. offer will-drafting and advisory services at reasonable rates.

Prevailing legislation and its issues

The law governing the Execution of Wills has been in effect since 1925 and is very specific. The law requires that be a written document signed by the person making the will i.e. the testator in presence of witnesses and be attested by two or more witnesses by signing the Will in the presence of the testator.

These requirements may be relaxed only in cases of wills signed by soldiers in warfare, or mariners at sea. Clearly, these rules appear archaic but they provide a certain level of protection to the Testator and beneficiaries alike.

On a regular day, these conditions can be met with relative ease; unfortunately, the law is not pandemic proof and prevailing legislations fail to recognize unconventional electronic wills. In fact, the Indian Information Technology Act, 2000, which allows electronic contracts, has specifically excluded wills and other testamentary dispositions from the applicability of its provisions.

Specifically, the preparation of Wills through electronic modes like emails or documents with digital signatures is not permitted. Further, the Indian Succession Act, 1925, governing Hindus, Sikhs, Jains, and Buddhists, requires witnesses to be present personally to see the signing of the Will by the testator. Therefore, attestation through video conferencing is inadequate under the law.

However, video recording of wills may be used as additional evidence, subject to compliance with Section 65B of the Evidence Act, 1872, to show that the Testator was of sound mind, and did not act out of coercion, undue influence, or fraud. Thus, the Indian judiciary’s partial acceptance of technology in the process of evidence and adjudication has further aggravated the wounds of people seeking expeditious legal help.

Recommendation of the Law Commission

Realizing this, the Law Commission of India in its 110th Report recommended a relaxation of rules for execution of a Will by persons affected by calamities has a reasonable apprehension of immediate death. As per the report, such a calamity would encompass instances of ‘epidemic’ or ‘pestilence’. However, this recommendation has not been given effect, and currently, the law does not provide for the easing of legal formalities amid an outbreak such as COVID-19!

The Scottish Law Society, for instance, issued guidelines wherein witnessing can be done via video technology in the presence of a lawyer overseeing the will signing process. Furthermore, the Ontario government introduced a regulation under the Emergency Management and Civil Protection Act, which allows witnessing of wills and powers of attorney remotely during the COVID-19 emergency.

Adding another stratum of protection, the regulation mandates 2 conditions namely: 1) technology that allows parties to see, hear and speak in real-time must be used, and 2) at least one of the witnesses must be a lawyer or a paralegal.

Conclusion

Unsurprisingly, many people are anticipating their own death during the COVID-19 pandemic and in a jiffy to make a legally enforceable will. However, the prevailing legislation is unsuitable for making wills in a time of quarantine and social distancing, with the non-recognition of digital wills coupled with a requirement to be physically present at the time of execution of the will.

However, with the current Indian government promoting the use of technology, social media, and e-governance, to encourage the pace of growth in various industries, and other countries positively recognizing testaments made in electronic form, there is an expectation for recognition of such concepts in India.

Tags: digitalisation in india, disadvantages of digital india, Digital Wills in Times of COVID-19, Digital Wills, lockdown 2.0, digitization in india, about digital india

Oct 13
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10 Laws That All Women Entrepreneurs Should Know About

By Corporate Law No Comments

10 Laws For Women Entrepreneurs

Equality is not merely limited to equality of rights but also equal opportunity to enjoy such rights and practice them. The societies of the world are trying hard to bridge the gap between gender and the differences in opportunities available to them but still, there are various steps yet to be taken.

When it comes to challenging the role of entrepreneurship which can also be called the building block of human economics and development, women are seen to be lagging behind their male counterparts. The reason could range from societal issues to tradition or economies but we need to understand the legal aspect of the problem.

Firstly we would know what are the laws that are present currently in India that a women entrepreneur should know about and the changes that we need? Take a look at laws for women in business.

1) Equal Pay For Equal Work

It has been the most basic of all the right that the government of any state would be trying to secure i.e. “equal pay for equal work.” With the advent of the industrial revolution women started working in the factories together with males but with a lower payment for the same amount of work owing to the dogma of them being less efficient or physical weak in terms of employment that requires physical labor despite clearly showing no difference in work carried on by both the sexes.

This ideology continues even till now and as a result, we see a gap in the earnings of the two genders however the legislation is already there in this regard known as the Equal Remuneration Act 1976 which clearly states under Section 4 that no discrimination in payment between men and women doing same nature of the job and it caused all establishment to raise the wages of women at par with men as a reduction in wages was prohibited. This law still holds well in modern times.

Apart from this specific legislation our Constitution too give the Fundamental Duty of the state to secure this equal payment for equal work vide Article 39. However, this practice is still to be followed in full fledge as in the non-organized sector we still see the exploitation of laborers and workers so there is no doubt that equal pay would be a farfetched reality for women working there.

Also, it’s not only about the non-organized sector even in the glamorous field of cinema and sports we see the huge difference in pay structure. Any Women entrepreneur therefore must keep in mind this law to secure the right of other women in the field and general development thereof.

2) Equal Opportunity Equal Pay

Same as equal pay for work the same Equal Remuneration act, of 1976 talks about giving equal opportunity to males and women for securing employment, and no discrimination in recruitment is to be made as per Section 5 of the very act.

The act was amended in 1987 to include “condition of service subsequent to recruitment such as promotions, training or transfer” thereby making the ambit wide enough to protect a women’s right not only at the time of appointment but at all subsequent stages so that it doesn’t lose the very essence for which it is drafted.

Indian Constitution again talks about a similar line of right in Article 16 that talks about equal opportunity in work in public offices which is an extended version of the Right to Equality but very well made out into another article to stress its importance. It is to be also made known to all women out there that non-compliance with these provisions would lead to penal consequences.

3) Sexual Harassment at work

In the year 1997 the Supreme Court through Vishakha v State of Rajasthan gave Vishakha Guidelines to be followed at the workplace to ensure the safety of women. These guidelines were removed from effect with the passing of the Sexual Harassment of women in the workplace (Prevention, Prohibition and Redressal) Act, 2013.

It provided the definition of sexual harassment for the first time together with a list of actions that will constitute an act of such harassment and prohibited such acts, especially by those in the workplace who exercise the power of authority over women which is common in organizational structure so as to save them from sexual exploitation whether it is public or private organization.

All working women should be aware of their rights in relation to such activity and therefore so does an entrepreneur.

4) Maternity benefits at work

The Maternity Benefit act of 1961 recently amended in 2017 provides for a period of 26 weeks of maternity paid leaves for women employees expecting their first two children. In comparison, it is very gracious from other nations where periods range from 8 to 17 weeks only.

An entrepreneur must know that this payment for 26 weeks in India is to be borne by the ‘employer only’ and not by the state or any other agency as in the case of France, Brazil, the USA, Canada, or Singapore. This could be a reason for the low selection of women in the first place, especially those who might expect their child in near future, seeing the cost to be borne by the organization for women employees with no work in return.

Government therefore should try to adopt a more balanced approach following the footstep of other country where insurance company and public fund also contribute for these payments borne.

5) Labour Laws

Labour laws are a must-know for all entrepreneurs and women must have a grasp over them too. These laws can be with relevance minimum wages, gratuity, PF payment, weekly holidays, maternity advantages, harassment, payment of bonus and so on. A start-up registered beneath the Start-up India program has the choice to finish self-declaration for nine labor laws within one year and acquire an exemption from the labor review.

The nine laws are as follows: the economic Disputes Act, 1947 The Trade Unit Act, 1926 Building and different Constructions Workers'(Regulation of Employment and Conditions of Service) Act, 1996 the economic Employment (Standing Orders) Act, 1946 The Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979 The Payment of Gratuity Act, 1972 The Contract Labour (Regulation and Abolition) Act, 1970 The Employees & Provident Funds and Miscellaneous Provisions Act, 1952 The Employees & State Insurance Act, 1948.

Thus to continue with the exemption, the start-up will file the self-declaration for the second and third year conjointly. Also, if a start-up options a well-defined worker policy, then it might give a footing over different start-ups. This policy may facilitate in talent acquisition and retention. Moreover, this may boost the employee’s morale and overall productivity.

6) Company Laws

Company Act in general must be known by all entrepreneurs. Company law is the key for establishment, setting up and closure of business. An entrepreneur would generally be the promoter of the company therefore must have a good hold of Company law so women entrepreneurs should also know this.

The new Company act, 2013 vide section 149(1) has made it compulsory for all listed companies to have at least 1 woman director in its board of director. This must be done within 6 months of date of incorporation of such companies and therefore is an essential piece of law that must be kept in mind by all the entrepreneur out there, especially women.

This was done in order to increase women participation at a higher level and boost the decision making capability of women. Although it has resulted in no significant development as corporations are simply appointing acquaintances as rubber stamps to comply with the provision which must be amended to that effect to include them as independent directors outside the company or relation.

7) Tax Laws

Till the year 2012 there was a difference in the tax slab over income between men and women but it was removed afterwards. However, we still have some concessions for women in other taxes whether it is property tax rebate, stamp duty concession, the lower interest rate on home loans, credit subsidy for houses, etc.

These will benefit women entrepreneurs and therefore must be known to them. A clear understanding of tax law both direct and indirect including the Goods and Services Tax should be known to a women entrepreneur.

8) Contract Laws

Contracts laws are effective to make positive use of the conventional functioning of any project or to supply recourse simply just in case of non-performance Indian Contract Act, 1872, Negotiable instrument act, Partnership Act, Sale of Goods Act etc. are a must-know for entrepreneurs.

NDAs or Non-Disclosure Agreement is another vital contract that a startup may notice helpful. Any startup discusses its ideas with sort of folks from the investors to the employees to customers and because of this, there's a large chance of leakage of the ideas that is wherever NDAs inherit play. This prevents the data from spreading not solely from the folks within however conjointly with the people outside the organization.

9) Intellectual Property Laws

If you have a secret sauce or an algorithmic program then it’s important that you just simply ought to take a note of this law. This law helps you secure your ideas from getting exploited commercially by any other player in the market. By getting a patent of your product or copyright over your work and thus securing Intellectual property right over your idea you simply protect yourself from any future consequences.

In line with this, you may want to patent a trademark than offers you right over commerce beneath a selected name. All this comes beneath property rights.

A Start-up will leverage the ‘Scheme for Start-ups property Protection’ (SIPP) beneath the ‘Start-up India program’. This theme was acknowledged to safeguard and commercialize your property. The facilitators of the theme are impanelled by the Controller General of Patents, logos and class. This panel of facilitators conjointly facilitate the start-up by providing consultative services, aiding in patent filing and disposal.

10) Winding up of Business

It’s not possible that always everything will work out as you planned. With less than 1 percent success rate of Startups, it is but natural that many companies would be forced to shut down its operation. But as a company or any business entity is a legal person it, therefore, follows a legal process even for its closure.

Company law deals with this part as well however a code of Insolvency and Bankruptcy is there for declaring a company bankrupt as per legal sanctions and moving forward with liquidation. The liability of individuals attach to it and the share they might get all depends on this law and therefore women entrepreneurs should also know this very piece of legislation for the long run and success.

Apart from the above-mentioned law, an entrepreneur is expected to have certain basic ideas of the Arbitration and Conciliation Act and Information Technology act. Moreover, a successful entrepreneur is one who knows how to derive maximum benefit from the dynamic societal changes and therefore should always be aware of what is happening around him and in the business environment in which he is working.

Since laws are the guiding principle behind the working of society whether it is a business organization or the economy as a whole, a basic idea of all such laws is a must for them. They need not be an expert in it but surely shouldn’t be absolutely ignorant about it.

Tags: labour laws, equal pay act, labour relations act, new labour law, female entrepreneurs, women entrepreneurs, function of women entrepreneurs, role of entrepreneurship, equal pay for equal work, sexual harassment at work

Oct 13
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Innovation During a Crisis

By Others No Comments

Innovation During a Crisis

With the country being in the midst of an extended lockdown, businesses and individuals are feeling the anxiety and stress brought on by uncertainty regarding the future. Though India Inc. plans a partial exit strategy but to jumpstart a stalled economy is an onerous task.

It is, therefore, a valid assumption that economic disruptions caused due to a nationwide lockdown might give a two-fold rise to disputes. The closure of courts and tribunals to curb the spread of the virus has understandably delayed justice to companies and individuals alike.

Although the Supreme Court is hearing important cases via videoconferencing, lower courts lack the infrastructure to keep up with these advancements. Therefore, in such times, the traditional reliance on litigation is far from the optimal way of dealing with conflict.

Desperate times call for desperate measures. Fortunately, Alternate Dispute Resolution (ADS) is at last beginning to emerge as a response to conflict in its myriad forms and to the challenge of building a more peaceful world. ADS mechanisms prescribed by the Civil Procedure Code (CPI) under Section 89(1)-(2) include arbitration, mediation, conciliation, judicial settlement, judicial settlement through Look Adalats (people’s courts). ADS, being an informal process, provides quick, interim solutions to parties of a dispute, thereby mitigating conflicts by large.

The arbitral institutes can broker an agreement between the parties in two or three successive meetings. In comparison to this, the other dispute resolution methods would take several months, if not years. At the outset, if time is on the claimant’s side, a well thought out, well-crafted demand with factual statements and even detailed legal analysis may help the client avoid the prolonged stress of litigation dispute escalation and yield an early influx of settlement funds.

Some of the most compelling reasons for choosing ADS are high litigation expenses, time-consuming adjudication and most importantly, an appropriate method of carrying out dispute resolution whilst following social distancing amid the pandemic.

Though it started with trying to resolve disputes via e-mail, it went on to incubate an online dispute resolution (ODR) platform, known as the Centre of ADS Excellence. This method of dispute resolution was made a reality by marrying ADS mechanisms with technology. Typically, an ADS meeting or conference can be called at a short notice and if both parties are in agreement with the arbitration rules, an arbiter is appointed and time-stamped intimations are sent via e-mails, WhatsApp messages and SMSs (Short Messaging Services).

This platform facilitates communication via video calls and eliminates the need for face-to-face communication. The question of its legality can be put to test by going through Section 19 of the Arbitration and Conciliation Act, 1996 which states that the tribunal is not bound by provisions of the Criminal Procedure Code (CrPC) and the Indian Evidence Act (IEA) and may decide upon the procedure to be followed in conduct of such proceedings, thereby making online or live conduct well within the legal domain.

No one can challenge such proceedings merely on the ground of being an online resolution proceeding. International Commercial Arbitration rules, which serve as a guideline to arbitration institutions around the globe and have been adopted by the India Council of Arbitration, also mandate that arbitration tribunals have the power to conduct proceedings via videoconference, telephone or any such other means of communication as may be deemed fit.

This transposed the concept of ADS towards a highly advanced and a far more cost-effective method of ODR. The ODR also helps overcome jurisdictional issues, eliminate geographical barriers, automate administrative tasks, improve productivity of professionals, promote eco-friendly processes and finally, deliver a quick, economical and effective solution to disputes.

The need for use of modern technology in courts was emphasised by the Reserve Bank of India (RBI) and the Supreme Court in the matter of Meters and Instruments Pvt. Ltd. and Anr. v. Kanchan Mehta while hearing a petition on expeditious settlement of cases, especially those relating to business like the Negotiable Instrument Act.

The question of time-bound proceedings had already been answered by the Supreme Court vide its order dated  March 23, by freezing the limitation period from March 15 until further orders. For instance, Section 29A of the Arbitration and Conciliation Act, 1996 stipulates passing of award within 12 months of commencement of proceeding, which may be extended by six months upon agreement of parties to the dispute.

It is necessary that technologies be effectively implemented in the regular course of business and move away from the Supreme Court’s “urgent only” requirement for using videoconferencing and delve into full swing application of online proceedings for all cases and promote ODR, wherever applicable. The COVID-19 crisis has catapulted an archaic industry such as the law to adopt technology at a never-seen-before pace and is believed by many to be the way forward.

Tags: extended lockdown, economic disruptions, lockdown extended, crisis innovation, innovation in times of crisis, crisis driven innovation, crisis and innovation, crisis leads to innovation, Innovation during a crisis, innovation during crisis, innovation crisis