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The Delhi High Court recently affirmed that where parties to an agreement make reference to an arbitrator for the purposes of determining a question of law, the decision taken by the arbitrator cannot be interfered with by the courts, even if the court itself may have a different view on the question of law from that taken by the arbitrator. The court may interfere only where the view arrived at by the arbitrator is implausible or contrary to law.
In a recent appeal of an International Chamber of Commerce arbitration in Malaysia, the Delhi High Court had to consider whether the Indian law of limitation was a procedural law or a substantive law. The lead arbitrator had noted that since the statute of limitations in both India and Malaysia was procedural, an action could be brought in Malaysia even if the period of limitation in the claim had expired under the Indian Limitation Act.
A recent case before the Delhi High Court demonstrates that the courts continue to frown on parties' efforts to avoid arbitration by filing suits that implead unnecessary parties. Efforts on the part of the courts to weed out frivolous civil suits filed by parties to scuttle the arbitral process is a necessary step and will go a long way towards building the confidence of commercial parties when considering engaging in arbitration.
A constitutional bench of the Supreme Court recently issued a judgment in which it restricted the scope of interference by Indian courts in arbitrations conducted outside the territorial boundaries of India by excluding the applicability of Part I of the Arbitration and Conciliation Act 1996 to such arbitrations. This judgment was much anticipated in international commercial arbitration circles and is very welcome.
Bilateral investment treaties have recently become the chosen pathway for dispute resolution by foreign investors in India. However, historically foreign companies that invest in India have rarely invoked the dispute resolution clauses of such treaties. A view has been canvassed that India should therefore consider amending its investment treaties so as to reduce the protections accorded to foreign investors.
A recent case before the Supreme Court has confirmed the grounds under which arbitration awards may be challenged. As detailed under Section 34 of the Arbitration and Conciliation Act, the court has the power to allow an amendment where an application has been made within the prescribed limits, if the peculiar circumstances of the case so warrant and it is so required in the interest of justice.
Including: Companies Act; Charges; Registration of Charges; Modification of Charges; Satisfaction of Charges; Company Law Board; Penalties; Company Registers
Recent developments include plans by ICICI, a leading private sector bank in India, to securitize its loan portfolio which is worth Rs500 billion.
Jet Airways' Rs16 billion deal is the first rupee transaction to be supported by the US Exim Bank, which took on the credit risk upon the purchase of aircraft by an Indian operator.
Recent developments concern Air India's impending privatization and the completion of a syndicated foreign currency term by Reliance Petroleum Limited.
A recent deal between Jet Airways and Etihad Airways, valued at $379 million, forms part of the government's new policy to encourage foreign direct investment in India. It is hoped that the infusion of foreign direct investment into civil aviation will result in improvements to the economy, a growth in traffic at Indian airports and the creation of job opportunities.
In a recent judgment, the Supreme Court held that a state-owned foreign airline is not entitled to sovereign immunity in a consumer action for service deficiency. Relating to an alleged delay in the delivery of a consignment (which led to deterioration of the goods), the appeal was brought by Ethiopian Airlines, which contested an order handed down by the National Consumer Disputes Redressal Commission.
The Directorate General of Civil Aviation (DGCA) established an environment unit on June 5 2009, primarily aimed at reducing aircraft fuel emissions, reducing noise pollution due to aircraft movement, and developing other green initiatives for various stakeholders, such as airlines, air navigation service providers and airport operators. The unit also aims to provide technical guidance.
A policy circular issued by the Directorate General of Civil Aviation in 2007 laid down restrictions on the provision of ground handling services. Following stiff opposition, the directorate issued a revised policy in 2009, but airlines still felt that it did not go far enough. The Federation of Indian Airlines has filed an appeal in the Supreme Court of India against the policy, the outcome of which is awaited.
The Ministry of Civil Aviation recently constituted the Civil Aviation Economic Advisory Council to meet the increasing need for sustainable growth and passenger facilitation in the aviation sector. The council will advise on and assess policy frameworks for ensuring affordable, sustainable and viable air transport services and protect consumer interest through measures such as public disclosure of tariffs and service conditions.
The Civil Aviation Requirements on facilities to be provided to passengers by airlines due to denied boarding, flight cancellations and delays have been modified to include revised compensation provisions. Financial compensation payable by airlines is now based on block time instead of distance covered.
The Factoring Regulation Act aims to regulate factors and lay down a framework for the assignment of receivables. Under the act, a factoring company must register with the Reserve Bank of India (RBI) as a non-banking financial company (NBFC) and comply with the relevant prudential regulations. The RBI has recently introduced a new category of NBFCs, known as NBFC factors, and issued directions for such factors.
Following concerns over the discrepancy in regulation between banks and non-banking financial companies (NBFCs), the Reserve Bank of India (RBI) recently set up a working group to review the regulatory framework for NBFCs. On receipt of the group's report, the RBI released new draft guidelines for NBFCs, which seek to revamp completely the existing regulatory environment.
Factoring is a useful financial tool for micro and small enterprises. However, in the absence of a consolidated legal framework regulating factoring in India, it has so far played a limited role in business financing. The Factoring Regulation Act 2011 provides for and regulates the assignment of receivables and is intended to provide a much-needed legal framework for factoring in India.
The Reserve Bank of India (RBI) recently released a revised set of draft guidelines for the licensing of new banks in the private sector, which has received much attention in the banking and financial industries. The 2011 guidelines lay down a framework for the granting of banking licences by the RBI to corporate entities and non-banking financial companies, a significant departure from the RBI's earlier policy.
The central government recently announced new privacy rules under the Information Technology Act 2000. The rules will have a significant impact on the banking industry, given that a large volume of information that banks receive will be defined as 'sensitive information'. Banks that fail to comply will be exposed to potential claims for compensatory damages by affected persons.
The Financial Stability Report published by the Reserve Bank of India in mid-2011 alluded to the high probability of default in the repayment of foreign currency convertible bonds (FCCBs) by Indian companies. With the global and Indian economies now facing the prospect of a double-dip recession, overseas lenders (including FCCB holders) are worried about the ability of Indian bond issuers to redeem their investments.
At the time of an initial listing of shares, a minimum offer is generally prescribed, while a minimum public float is prescribed for continued listing based on the Listing Agreement. Given the volatility of the global market since 2008, the Indian finance minister has proposed to raise the threshold for non-promoter, public shareholdings for all listed companies.
The Securities and Exchange Board of India (SEBI) recently decided its listing requirements for small and medium-sized enterprises (SMEs). This update looks at some of the key decisions made. SEBI has been working to establish an SME exchange or a separate platform for SMEs on the stock exchanges. It is hoped that these new changes will strengthen the position of SMEs within the capital market.
The Reserve Bank of India recently placed the draft guidelines on the issuance of non-convertible debentures of maturity of less than one year open for comment. At present, neither the Securities and Exchange Board of India nor the government regulates the issuance of non-convertible debentures with original maturity of less than one year.
The Securities and Exchange Board of India recently replaced the Disclosure and Investor Protection Guidelines 2000 with the Issue of Capital and Disclosure Requirements Regulations 2009. Together with incorporating the provisions of the old guidelines, certain changes have also been made by removing redundant provisions, modifying certain provisions and clarifying the provisions related to investor protection.
The Securities and Exchange Board of India recently notified new regulations on the delisting of listed company equity shares. As well as providing greater clarity on the procedures involved in the delisting of equity shares, the regulations introduce more stringent requirements for the voluntary delisting of equity shares, making this process more difficult for company promoters.
Recovering possession is a daunting prospect in the current legal scenario and most leased properties have multiple occupants who would be made homeless if the state reclaimed leased properties. Following considerable opposition to its previous plans, the government recently issued a revised policy in relation to the renewal of such leases and the associated changes in applied rents.
Under the system of registration of deeds and assurances, state registries operate solely as repositories of documents and are required to register documents presented to them. However, state registration authorities in Maharashtra have gone beyond the Registration Act to examine the title and rights of parties to documents presented for registration, and in certain cases, have refused to register on such grounds.
State governments have taken serious note of the rampant manipulation of transaction documentation and in recent years have substantially amended stamp duty legislation. The constitutional validity of one such amendment, which was made to the Stamp Act 1899 applicable in the state of Madhya Pradesh, was challenged in a recent appeal heard by a bench of the Supreme Court.
Unscrupulous elements often abuse the legal process in order to enter into (or continue in) possession of property and to claim a title or interest that they do not possess. In a recent appeal before the Supreme Court on this topic, the court not only held in favour of the lawful owner, but also considered generally the gravity of such unlawful claims and their effect on owners and the property market.
There has been an increasing trend in India for transfers of immovable property to be concluded without the execution of formal instruments of transfer in compliance with mandatory provisions of law. A transaction of this nature was the subject of a recent petition filed before the Supreme Court of India. The court in turn passed an order in relation to the petition, containing detailed observations on clandestine transactions.
With a view to establishing an effective and transparent land title and management system, India's central government has proposed the introduction in Parliament of the Land Titling Bill 2011. There is little doubt that the bill will revolutionise the entire concept of property ownership in India, safeguard owners and consumers, set the stage for title insurance and accelerate real estate development.
The affairs of a company administration are subject to the rule of the majority - the shareholders that own the majority of the shares normally control the business. Disagreements and conflicts often arise between shareholders, with minority shareholders generally accepting the decisions of the majority shareholders. A recent dispute between the shareholders of Unitech Wireless is one such case.
Criminal liability presupposes the existence of mens rea (guilty mind) and actus reus (guilty act) - the two essential ingredients of an offence under the Penal Code 1860. Natural persons can be convicted of an offence as they possess mind; companies do not and therefore often escape conviction. Recent court decisions have settled this controversy, holding that corporate bodies can be prosecuted for criminal offences.
Any officer that contravenes its obligations and duties under the Companies Act is said to be an officer in default. The ministry recently clarified its position on the definition of 'officer in default', ruling that no director shall be held liable for any violation by the company or by any other officer of the company, if the violation occurred without his or her knowledge and without his or her consent or connivance, or where he or she has acted diligently.
The Ministry of Corporate Affairs recently issued the Companies (Central Government's) General Rules and Forms (Amendment Rules) 2011. The rules amend Form 5 of the Companies Act, which is used to detail any notice of consolidation, division or increase in share capital. Under the amendment, in the state of Delhi, the payment of stamp duty for an increase of authorised capital is now optional.
The Ministry of Corporate Affairs recently proposed the issuance of guidelines for the conversion of Section 25 companies into ordinary companies under the Companies Act 1956. These guidelines are at the proposal stage and have not yet been notified. As yet, although they provide the conditions under which conversion may occur, the guidelines do not elaborate on the effects and consequences of such conversion.
The Ministry of Corporate Affairs recently introduced its Fast-Track Exit Scheme, a modification of the previous Easy Exit Scheme that adds new guidelines to allow non-defunct companies an easy exit by having their names struck off the Register of Companies. Once implemented, the new guidelines will allow companies that became inoperative or defunct after incorporation to benefit from the scheme.
Following the acquisition of Titan Europe by Titan International, the parties failed to notify the Competition Commission in a timely manner. By extrapolation from a calculation of the turnover, the commission noted that the fine should amount to approximately Rs1.45 billion. However, on the facts, the commission considered a lenient view more appropriate and imposed a smaller fine of Rs10 million on the acquirer.
The Competition Appellate Tribunal recently confirmed that 10 explosives manufacturers had violated the Competition Act. However, when considering the level of fine imposed, the tribunal held that the Competition Commission had provided no reasoning that detailed how the fine had been calculated. The tribunal therefore reduced the fine, but cautioned that the appellants' behaviour had been reprehensible.
The Competition Commission recently issued further revisions to the Competition Commission (Procedure in Regard to the Transaction of Business Relating to Combinations) Amendment Regulations. A number of changes have been made that amend the circumstances under which a notification must be filed before the commission following an acquisition of additional shares or voting rights.
In two recent cases before the Competition Commission, an association of transporters has been placed under suspicion of freight rigging and an investigation has been ordered against a group of general insurers. The former relates to the association's alleged role in directing members to increase freight charges soon after the diesel price was raised, and the latter to allegations of cartel activity.
The Competition Commission recently approved a proposed sale by Orchid Chemicals and Pharmaceuticals Ltd (OCPL) of certain of its assets to Hospira Healthcare, subject to certain conditions. The business transfer agreement contained a non-compete clause that restricted OCPL from undertaking certain business activities. While allowing the clause in principle, the commission observed that it expected it to be 'reasonable'.
Following a call for modifications to the Competition Act and taking into account the suggestions of an expert committee established for that purpose, the Competition (Amendment) Bill was recently introduced to Parliament. The bill, which is likely to be considered in the current budget session, includes changes to the definitions of 'turnover' and 'group' and introduces the concept of collective dominance.
Including: Government Initiative; Common Projects; Important Agreements; Funding Construction Projects; Primary Legislation; Relevant Government Initiatives; Credit Ratings
In a recent case the Supreme Court of India examined important concepts relating to tolls, which are often used to recoup the costs of constructing (and maintaining) roads and bridges in India.
In a recent decision, the Andhra Pradesh High Court followed the lead of the Supreme Court of India in determining whether government tender guidelines were reasonable.
A recent case affirms the right to call on bank guarantees where a construction contract has been frustrated.
The new Companies Bill, which is pending approval by Parliament, introduces drastic changes that curtail the powers of a company to buy back its own shares. In light of the proposed introduction of a tax on buy-back and the increased restrictions imposed by the bill, companies may be discouraged from buying back shares as a method by which to disburse excess cash or increase the value of shares.
Mergers and acquisitions in India are governed by a large number of individual laws. The Indian government recently tabled its proposed Companies Bill 2011 before the Lower House of Parliament seeking to replace the outdated Companies Act 1956. A number of key changes have been proposed in the bill that are expected to impact on M&A transactions involving Indian companies.
M&A activity in India has witnessed a number of regulatory and legal changes in 2011. Policy changes in the past two months have generated uncertainty over the legality and enforceability of put and call options. These options are found in almost all modern investment agreements, despite the fact that they are not specifically codified under Indian law.
Every successfully negotiated multi-jurisdictional transaction should have a backbone of legally enforceable contracts. It is not sufficient only to spell out the rights, duties and obligations of the parties, but crucial also to lay down the process to be followed in case of a dispute. Therefore, a dispute resolution clause in any contract assumes tremendous significance, especially in cross-border M&A transactions.
The Supreme Court has provided clarity on the interpretation of the words 'persons acting in concert' as embodied in the Substantial Acquisition of Shares and Takeover Regulations 1997. The case involved a dispute surrounding the offer price quoted by Daiichi Sankyo in its public announcement for an indirect acquisition of shares in Zenotech Laboratories Ltd.
The Substantial Acquisition of Shares and Takeover Regulations 1997 (the Takeover Code) established the fundamental rules for mergers and acquisitions. With market conditions evolving, it was felt that the regulations needed to be amended to align them with those of other global markets. A panel has submitted new recommendations for takeovers. The changes are bold and could be sweeping when implemented.
The petitioner in a recent case provided passive infrastructure and related services to telecommunications operators on a shared basis. Service tax was discharged on the consideration for this service. However, it was unclear whether the provision of access to passive infrastructure could be deemed a 'transfer of right to use', and therefore whether value added tax should also apply. The Delhi High Court has now ruled on the matter.
A proposal by the Tax Department contained in the recent budget examines the system of tax residence certificates for non-resident entities and sparks fears that the government is seeking to introduce an additional tool by which protection available under double tax treaties could be denied. The proposal states that submission of the certificate is a "necessary but not sufficient" condition for claiming such benefits.
The Pune Income Tax Appellant Tribunal recently allowed a deduction for the management fees and carried interest to be paid by a fund. The tribunal held that the management fee is allowable as a deduction when computing capital gains, as the expenditure was incurred in connection with the transfer of capital assets or securities. The decision mitigates the risk of such fees being taxed twice.
In a recent ruling the Authority of Advance Rulings observed that the gifting of shares between two corporations is a 'strange' transaction. However, the the Mumbai Appellate Tribunal has also recently examined the same issue, observing that although such transaction may appear strange, it cannot be treated as a non-genuine transaction.
The Authority for Advance Rulings, the body responsible for determining tax liability in India, recently ruled that an Indian subsidiary that exclusively carried on a group's business created a permanent establishment, and was liable to tax in India. However, the authority pronounced its decision without examining all propositions in relation to fixed-place permanent establishments.
The Income Tax Appellate Tribunal recently ruled on the circumstances under which a company will be considered a dependent agent permanent establishment. If an Indian entity becomes a permanent establishment of a foreign company in India, the required compliances (eg, in relation to filing of annual tax returns) that it should undertake would have to be determined.
With the emergence of the Internet, gambling and betting have become borderless activities, as websites set up anywhere in the world can solicit and play host to such activities, even in jurisdictions where they are banned. Although there are no laws that specifically ban online gambling, the official government stance is that the existing laws governing gambling offline are also sufficient to curb gambling online.
The Information Technology Bill 2000 aims is to create a reliable regulatory framework for e-commerce by clarifying issues relating to the validity of e-contracts, e-signatures and the use of e-records in evidentiary proceedings. The bill also establishes certain cyber crimes and has extraterritorial effect.
There have been a number of interesting developments in the information tecnology and e-commerce sectors recently. Specifically, change has involved domain names, music piracy and internet trading.
Including: Current Regulation; Contractual Issues; Jurisdiction; Digital Signatures; Domain Names; Privacy; New Telecommunications Policy 1999; Information Technology Bill 1999
Including: Legislative Framework; Categories of Employees; Employment Contracts; Employee Privacy and Protection of Trade Secrets; Termination of Employment and Severance Pay/Compensation; Recent Trends; Court Decisions.
Non-compete and non-solicit agreements are a popular way to try to prohibit employees and former employees from working for a competitor or divulging trade secrets or other proprietary data. In India, such agreements are affected by Section 27 of the Indian Contract Act 1872, whereby any agreement that restrains a party from exercising a lawful profession, trade or business is void.
The Supreme Court is considering whether a large software company employing over 100 workers can be classed as an 'industrial establishment'. Workers in an industrial establishment enjoy greater protection, with the employer obliged to give at least three months' written notice and obtain state permission prior to the termination of employment.
Software professionals cannot be classified as workers following a recent ruling by the Delhi High Court. In this case, the manual work carried out by the professional was found to be incidental to his primary duty as a risk management consultant. This primary duty was also found to involve a considerable degree of creative input, exempting him from being a skilled worker.
Domestic labour laws tend to be pro-worker. As such, employers must take seriously their obligations under the various statutes. Once an employment relationship has been established, the employer must fulfil certain statutory obligations; non-compliance may have serious consequences, including imprisonment.
Recently, the courts have shown an inclination to enforce non-compete covenants which apply to the post-termination period, provided the injunction or restraint is sought for the purpose of protecting the employer's interests. Those interests of employers which are considered to be entitled to protection are proprietary information such as trade secrets and business connections.
The Supreme Court recently imposed a ban on ore extraction, transportation and exports in Goa, pending review by the Central Empowered Committee. While those in support of the ban justify it as a necessary measure to curb rampant illegal mining, those affected by the ban have deemed the court's decision unconstitutional. As the sharp divisions continue to surface, debate on whether the ban should remain still awaits resolution.
The Mineral Concession Rules 1960 outline the procedure and conditions for obtaining reconnaissance permits, prospecting licences and mining leases. The rules apply to all minerals other than atomic minerals. The central government has also issued the Mineral Concession (Amendment) Rules 2003, which prescribe a minimum size for any mining lease granted under the rules.
In recent years the government of India has deregulated the domestic oil and gas industry with the objective of encouraging private participation and eradicating price controls. Specifically, the upstream, refining, transportation and marketing sectors have been reformed.
Including: Mining Law; Electricity Law.
The West Bengal Electricity Regulatory Commission has called for the gradual abolition of cross-subsidies. If implemented across the board, abolition will have far-reaching effects throughout India, particularly in states such as Punjab, Haryana, Uttar Pradesh, Madhya Pradesh and Rajasthan, where agriculture is mostly mechanized.
Parliament has cleared the Offshore Areas Mineral (Development and Regulation) Bill 2002. The bill empowers the central government to make rules for addressing concerns relating to pollution of the offshore environment and the security and safety of marine life. Each holder of operating rights is liable for any pollution or damage to marine environment resulting from activities in the offshore areas.
Data protection is in the spotlight in India as a result of the burgeoning outsourcing industry, and the security of databases and information is a major concern. In principle, the right to privacy and confidentiality is recognised and laws are in place to protect the same. However, a specific data protection law would simplify the prevention and prosecution of such offences.
India is rapidly developing into the location of choice for the outsourcing of software and IT-enabled services. The Indian government has already projected total software production of $87 billion and software exports of $50 billion by the year 2008.
It was recently confirmed that an insurer can now raise its equity investment limit to between 12% and 15%. However, private insurers had been hoping for an increase in the investment limit to 20%, as press reports indicate that the Ministry of Finance had allowed the government-owned Life Insurance Corporation of India (LIC) to invest up to 30%. It has been argued that there is one rule for the LIC and another for other insurers.
A slow creep back towards the tariff regime that existed from 1968 onwards has recently been evidenced in certain areas of the Indian insurance market, the most obvious of which is health insurance. The Insurance Regulatory and Development Authority has issued an exposure draft proposing that health insurance be standardised in order to address the expectations of the public "more effectively".
The Cabinet recently approved an increase in the cap on foreign investment in the insurance and pension sectors from the existing 26% to 49%. If the measure is passed, an inflow of fresh capital, an increase in the number of insurance joint ventures and faster development of the market are expected. However, voices of dissent from within both the ruling coalition and the opposition may interrupt its passage through Parliament.
Following detariffication, insurance prices across a number of sectors were freed from regulation. In those classes of business, premiums plummeted as general insurers pushed for a greater market share. At the same time, prices were cut dramatically in lines of business that had traditionally been profitable. Used to seeing these insurers report profits, the Ministry of Finance recently took action.
In Radiant Overseas Pvt Ltd v Insurance Regulatory and Development Authority the Delhi High Court overturned a previous decision which had ordered an Indian travel company which was conducting business on behalf of an Ukrainian insurer, but which was unlicensed for insurance activities, to cease its insurance operations. The court stated that Indian laws cannot be held to apply to insurance businesses outside India.
Further to recent regulatory changes for overseas non-admitted reinsurers, the Insurance Regulatory Development Authority is now reported to be considering further amendments to limit the percentage of premiums ceded by Indian insurers. If the proposed change is implemented, it will result in life insurers having to renegotiate a number of their treaty arrangements with overseas reinsurers.
In a recent judgment the Supreme Court finally interpreted the term 'efficacy' in the context of patentability. The court did not completely eliminate from the definition any non-therapeutic properties of a known form that could be understood to increase efficacy. As the court refused to rule on the exact scope of 'therapeutic efficacy', the case sets a limited precedent and leaves room for further discussion.
The Supreme Court recently ruled that, despite an express clause providing for an arbitrator, the court can appoint an independent and impartial arbitrator under special circumstances. Through this ruling, the court struck a balance to the extent that it could not ignore the appointment of an arbitrator whom the parties have chosen under the terms of the contract, unless the arbitration would otherwise be rendered void.
The Supreme Court of India recently observed that it has become common practice to effect transfers of immovable property by way of sale agreement, general power of attorney or will transfers in order to evade payment of duties, taxes and other fees payable on transfer and registration. This judgment confirms that a valid transfer of immovable property can occur only through a registered deed of conveyance.
The Supreme Court recently clarified the eligibility of a single arbitration proceeding between multiple parties in disputes that arise from the same cause of action. The court considered that it would be proper and just to rule that when one party has a claim jointly against a second and a third party, and when there are provisions for arbitration in respect of both other parties, there can be a single arbitration.
The Supreme Court recently ruled that disputes or claims regarding payment of work can be raised and referred to arbitration after the party raising such claims has received payment on a final bill issued for the works. Such disputes can be raised even if the party made no objection in respect of such payments at that time, provided that it was not precluded by any clause of the contract from seeking settlement of claims.
In a recent judgment the Supreme Court opined on the question of whether an arbitration agreement contained in an unregistered (but compulsorily registrable) instrument was valid and enforceable. The decision is of interest to parties dealing with immovable property transactions, as it confirms that parties should be vigilant about the statutory requirements of registering and stamping an instrument.
In a recent case, the Supreme Court considered the nature of reliefs that a court may grant at an interim/interlocutory stage and reiterated its stance that an interim order cannot be such that it would non-suit one of the parties at this stage, and would therefore take the form of a final relief.
It is widely felt that the quality of service on FM radio is inferior; therefore, digital audio broadcasting, which offers a better quality of service, has started to make headway in the radio broadcasting sphere. At present in India, only the satellite form of digital audio broadcasting is available. In order to regulate the industry, the Ministry of Information and Broadcasting has issued the Draft Policy Guidelines for Satellite Radio Service.
Following a Supreme Court ruling that airwaves and frequencies are public property and so must be controlled and regulated by a public authority in order to promote the public interest, the Ministry of Information and Broadcasting has published the draft Broadcasting Services Regulation Bill.
The government has revised its foreign direct investment policy in relation to the uplinking of television channels. Previously, the general policy was to permit foreign direct investment of up to 49% in an Indian joint venture company for setting up hardware, uplinking hubs or teleports.
After laying down the necessary framework for uplinking by Indian television channels, the Ministry of Information and Broadcasting has further notified new, stricter guidelines for downlinking by foreign channels with a view to gaining control over the content being broadcasted from satellite television channels uplinked outside India.
The government has made changes regarding uniform direct investment across various media platforms. For example, in print media the government has allowed 100% foreign direct investment for full editions of foreign newspapers and periodicals printed in India. These editions will not have access to Indian advertising revenue streams.
A committee of the Telecom Regulatory Authority of India has examined proposals to allow foreign direct investment in the private FM radio sector. Although it recommended that such investment be allowed, it set out guidelines to ensure that Indian shareholders maintain overall control of the equity.
Including: New Policy; Lending Rules; Government Incentives
The government has decided to promote the development of venture capital funds by streamlining approval of funds and eliminating the risk of double taxation.
The Reserve Bank of India recently issued to all banks its revisions to the Guidelines on the Transfer of Assets through Securitisation and Direct Assignment of Cash Flows, as well as a similar set of guidelines to all non-banking finance companies (NBFCs), revising the existing guidelines on securitisation transactions, as applicable to NBFCs. The new guidelines introduce key changes from the 2006 guidelines.
A recent Bombay High Court ruling decided significant issues under Indian law regarding the right to arrest bunkers onboard a vessel where the vessel is unconnected to the dispute and the right to arrest cargo freight under similar circumstances. Under Indian law, an order arresting freight in relation to the cargo on board a vessel is unsustainable without privity or an entitlement to make a claim against the vessel itself.
Due to delays in the submission of audit reports and reports on action taken by service providers, the authority recently issued an amendment to the Quality of Service (Code of Practice for Metering and Billing Accuracy) Regulation. This regulation contains a code of practice that must be complied with by every basic and cellular mobile service provider in India. The amendments increase the applicable penalties for delay.
The Department of Telecommunications recently took steps for environmental protection by issuing guidelines on green technology standards. Among other things, the guidelines impose obligations on service providers for the increased utilisation of renewable energy technologies and 'green passport'-certified equipment in the telecommunications network.
The Department of Telecommunications issues a variety of licences for different types of telecommunications service. Recent discussions have focused on a possible reduction of the multiplicity of licences offered. Revised recommendations issued by the Telecommunications Regulatory Authority suggest that the various licences be recategorised as unified licences, class licences and licensing through authorisation.
The Department of Telecommunications recently issued the 2012 National Telecommunications Policy. Although the policy does not change the existing law, it sets out the objectives and strategies that the government intends to adopt when introducing changes in the sector. Furthermore, it sets out the overall direction that the government is expected to take in regulating the sector.
The Department of Telecommunications has recently issued a draft of the National Telecommunications Policy 2011. As well as continuing the provision of affordable and effective access to telecommunications for all, the draft policy introduces strategies for streamlining licensing and permitting spectrum pooling, sharing and trading, looking to raise the standards of telecommunications services to a higher level.
The availability of bandwidth is vital for the operation of telecommunications services, but it is a scarce resource. The Telecommunications Regulatory Authority of India has therefore proposed guidelines for the adoption of spectrum sharing. It is hoped that this will lead to optimum utilisation of this resource and enable licensed telecommunications operators to expand their services in the country.
The Supreme Court recently concluded that mere non-payment of duty could not amount to collusion or wilful misstatement unless deliberately intended. The court also argued that the intention to evade duty must be proved by the party alleging the bad-faith intention. The case concerned whether an export-oriented unit should pay duty on the supply of furnace oil to, and the procurement of electricity from, its sister concern.
A new practice recently adopted in anti-dumping investigations concerning imports of phenol and soda ash into India may violate the World Trade Organisation Agreement on Anti-dumping. In particular, the requirements for an individual margin for each known producer or exporter and an upper cap that limits the duty to no more than the dumping margin have been breached.
The Department of Telecommunications recently issued a policy notification offering preferential market access to domestically manufactured telecommunications products. It has been carefully worded to ensure that it does not violate the General Agreement on Tariffs and Trade. However, several commentators have argued that the measure may violate India's commitments before the World Trade Organisation.
For a leading developing country, India's involvement in the World Trade Organisation (WTO) dispute settlement process in recent times has been largely lacklustre. This is now poised to change, with India involved in a number of upcoming cases. At least in the short term, the number of disputes involving India being brought before the WTO appears to be increasing.
A single, unified control list of all dual-use items whose exports are restricted applies under the Foreign Trade (Development and Regulations) Act. Exporters must apply for a licence to cover such items, but there are no defined timelines for the issuance of a licence. Establishing a timeframe for the grant or denial of licences would be a good step towards demonstrating a transparent system of governance.
The multilateral trading system is reliant on the principles of equal treatment for member countries. These principles were recently applied in a case before the Supreme Court involving anti-dumping duties, in which the court considered whether the designated authority was quasi-judicial and whether failure to provide for a fresh hearing when the authority was transferred violated natural justice.
In a recent judgment the Supreme Court of India discussed various issues relating to corporate fraud with reference to the role of the Companies Act and the Securities and Exchange Board of India Act. Following the emergence of this and other cases, the authorities must be proactive in the enforcement of safeguards provided by the law, rather than taking action once the offence has been committed.