Amendments to existing lawsLegislation Updates

Ministry of Home Affairs makes the following AMENDMENT to the NOTIFICATION of the Government of India dated 20-09-2019 and in pursuance of the Regulation 6 and 8 for the award of the decoration SARDAR PATEL NATIONAL UNITY AWARD of the Gazette of India:—

Regulation 6– Substitute “Any citizen of India without distinction of religion, race, caste, gender, place of birth, age or occupation and any institution/organization shall be eligible for the Award.” for “Any person without distinction of race, occupation, position or sex shall be eligible for the award.”

Regulation 8– Substitute “The names of the person or organization or institution, upon whom the decoration is conferred, shall be published in the Gazette of India and a register of all such recipients shall be maintained under the direction of the President.” for “The names of the persons, upon whom the decoration is conferred, shall be published in the Gazette of India and a register of all such recipients shall be maintained under the direction of the President.”

*Please refer to the notification passed pertaining to the regulations here: REGULATIONS


Ministry of Home Affairs

[Notification dt. 20-09-2019]

Cabinet DecisionsLegislation Updates

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has been apprised of the amendments/changes in the National Medical Commission Bill, 2019. The original version of the Bill was approved by the Cabinet on 17th July, 2019 and was passed in both Houses of the Parliament on 29th July, 2019 and 1st August, 2019 respectively, with official amendments.

The following changes have been made in the National Medical Commission Bill, 2019 passed by the Parliament from the version that was approved by the Cabinet on 17th July 2019 and the Cabinet was apprised of these changes:

  1. Clause 4(1)(c) –Twenty-two part-time Members instead of fourteen members;
  2. Clause 4(4)(b) – ten members instead of six members
  3. Clause 4(4)(c) – nine members instead of five members
  4. Clause 37(2) – added at the end “for the purposes of teaching also”.

Cabinet

[Press Release dt. 28-08-2019]

Hot Off The PressNews

Union Cabinet approved the proposal to introduce a Bill in the Parliament to carry out 08 amendments to the Insolvency and Bankruptcy Code, 2016. The amendments aim to fill critical gaps in the corporate insolvency resolution framework as enshrined in the Code, while simultaneously maximizing value from the Corporate Insolvency Resolution Process (CIRP).

The Government intends to ensure maximization of value of a corporate debtor as a going concern while simultaneously adhering to strict timelines.

The salient features of the amendments are:

a) Clarity on allowing comprehensive corporate restructuring schemes such as mergers, demergers, amalgamations, etc as part of the resolution plan.

b) Greater emphasis on the need for time-bound disposal at application stage.

c) A deadline for completion of CIRP within an overall limit of 330 days, including litigation and other judicial processes.

d) Votes of all financial creditors covered under Section 21 (6A) shall be cast in accordance with the decision approved by the highest voting share (more than 50%) of financial creditors on present and voting basis.

e) A specific provision that financial creditors who have not voted in favor of the resolution plan and operational creditors shall receive at least the amount that would have been received by them if the amount to be distributed under the resolution plan had been distributed in accordance with Section 53 of the Code or the amount that would have been received if the liquidation value of the corporate debtor had been distributed in accordance with Section 53 of the Code, whichever is higher. This will have retrospective effect where the resolution plan has not attained finality or has been appealed against.

f) Inclusion of commercial consideration in the manner of distribution proposed in the resolution plan, within the powers of the Committee of Creditors.

g) Clarity that the plan shall be binding on all stakeholders including the Central Government, any State Government or local authority to whom a debt in respect of the payment of the dues may be owed.

h) Clarity that the Committee of Creditors may take the decision to liquidate the corporate debtor, any time after the constitution of the Committee of Creditors and before preparation of Information Memorandum.

The proposal is in line with the overall objective of the government to achieve the outcomes envisioned in the Insolvency and Bankruptcy Code and seeks to ensure speedier resolution of cases involving corporate debtors.


[Press Release dt. 17-07-2019]

Ministry of Corporate Affairs

Hot Off The PressNews

As reported by the media, Japan’s House of Representatives has approved a bill which that would basically introduce amendments to two national laws that are applicable to crypto assets — the Act on Settlement of Funds and the Financial Instruments and Exchange Act.

“The bill — which had been prepared by Japan’s Financial Services Agency (FSA) and accepted by the House in mid-March of this year — has been passed by a majority in the House of Councilors plenary session.”

Bill also provides for stronger legislation for crypto margin trading, limiting leverage to two to four times the initial deposit.


[Source: Cointelegraph]

Case BriefsHigh Courts

Delhi High Court: The Bench of Rajendra Menon, CJ and V. Kameshwar Rao, J. dismissed a petition filed by Jairam Ramesh of the Rajya Sabha challenging the amendments to the Prevention of Money Laundering Act, 2002 vide the Finance Acts of 2015, 2016 and 2018.

The petitioner submitted that before 2015, PMLA was amended on various occasions through Ordinary Bills. However, since 2015 most amendments to PMLA have been enacted vide Finance Act as “Money Bills” defined under Article 110(1).

Submissions by Senior Advocate P. Chidambaram appearing for the petitioner:

(a) A Money Bill is deemed to be such if it contains only provisions dealing with all or any of the matters under (a) to (g) of Article 110 (1). In other words, a Money Bills is restricted only to the specified matters and cannot include within its ambit any other matter.

(b) Amendments made in the years 2015, 2016 and 2018 were per-se unconstitutonal and liable to be set aside.

(c) On justiciability of the issue- K.S. Puttaswamy v. Union of India, (2019) 1 SCC 1 has settled that decision of the speaker on whether a Bill is a Money Bill or not is justiciable.

(d) On delay in challenge- Petitioner came to know that such Bills were passed as Money Bills only after the information taken under RTI Act. There is no issue of limitation in challenging a parliamentary enactment, more so when amendments are unconstitutional.

Submissions by Additional Solicitor General Maninder Acharya for the Union of India:

(a) Petition challenging amendments effected in 2015, 2016 and 2018 on the behest of a person not affected by the amendments must not be entertained.

(b) Reliance placed upon Kusum Ingots and Alloys Ltd. v. Union of India, (2004) 6 SCC 254.

After hearing the learned counsels, the High Court was of the opinion that merely because the petitioner came to know recently that such amendments were carried out as Money Bills would not justify the delay. The Court observed, “Mr Chidambaram’s  submission that it was only after the judgment was rendered by the Supreme Court, on a similar issue, did the petitioner thought it fit to challenge the amendments of 2015, 2016 and 2018 by filing this petition, does not answer the submission made by Ms Acharya that the challenge, apart from being hit by delay and laches, is by a person who has no locus, being not aggrieved by the amendments.” Finding the reliance placed by Maninder Acharya on Kusum Ingots justified, the High Court declined to exercise its extraordinary jurisdiction. [Jairam Ramesh v. Union of India, 2019 SCC OnLine Del 7367, decided on 28-02-2019]

Amendments to existing lawsLegislation Updates

The President of India, today, gave his assent to the Amendments to the Indian Stamp Act, 1899 which were introduced as part of the Finance Act 2019. The was in fulfillment of the commitment made in the last Union Budget 2018-19 to take reform measures with respect to Stamp Duty regime on financial securities transactions in consultation with the States and make necessary amendments to the Indian Stamp Act, 1899. The Finance Bill 2019 was passed by both the Houses of Parliament, Lok Sabha and Rajya Sabha, on 12thand 13th February 2019 respectively.

Objective

The amendments propose to create the legal and institutional mechanism to enable states to collect stamp duty on securities market instruments at one place by one agency (through the Stock Exchanges or Clearing Corporations authorised by the stock exchange or by the Depositories) on one Instrument. A mechanism for appropriately sharing the stamp duty with relevant State Governments based on state of domicile of the buying client is also proposed.

Background

The present system of collection of stamp duty on securities market transactions has led to multiple rates for the same instrument, resulting in jurisdictional disputes and multiple incidences of duty, thereby raising the transaction costs in the securities market and hurting capital formation. This has also given scope for rate shopping and evasion of duty.

In order to facilitate ease of doing business and to bring in uniformity and affordability of the stamp duty on securities across States and thereby build a pan-India securities market, the Central Government, after due deliberations, in exercise of powers under Entry 91 of the List I and Entry 44 of List III of the 7th Schedule of Indian Constitution, has decided to amend the Indian Stamp Act, 1899 to create the legal and institutional mechanism to enable states to collect stamp duty on securities market instruments at one place by one agency (through Stock Exchanges or Clearing Corporations authorized by it or by the Depositories) on one Instrument and develop a mechanism for appropriately sharing the stamp duty with relevant State Governments.

Salient Features

To achieve the rationalisation of stamp duty structures, the amendments, inter-alia, provide for the following structural reforms; —

  1. Each security is charged with duty as specified in Schedule I of the Act. Securities are defined to include all those instruments specified in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956; a “derivative” as defined in clause (a) of Section 45U of the Reserve Bank of India Act, 1934; a Certificate of Deposit, Commercial Usance Bill, commercial paper and such other debt instrument of original or initial maturity up to one year as the Reserve Bank of India may specify from time to time; repo on Corporate Bonds; and any other instrument declared by the Central Government, by notification in the Official Gazette, to be securities for the purposes of this Act.
  2. All rates are applicable only on one side (either by the buyer or by the seller but not by both), while presently States charge stamp duty on both sides.
  3. While fixing the rates, the rates charged by Maharashtra is taken as the benchmark as Maharashtra accounts for around 70% of the total stamp duty collection in the country. However, the rates are chosen in such a manner that it provides a revenue neutral position to the state governments while reducing overall tax burden for investors.
  4. While duty is applicable normally on the transaction value, in case of swaps the first leg of the cash flow; in case of options its premium; and in case of repo on corporate bonds the interest paid by the borrower are considered for levy of duty.
  5. For all exchange-based secondary market transactions in securities, stock exchanges (SEs) shall collect the duty; and for off-market transactions (which are made for a consideration as disclosed by trading parties) and initial issue of securities happening in demat form, depositories shall collect the duty. In the future event of inter-operability of clearing corporations (CCPs), which provides for linking of multiple CCPs while allowing participants to consolidate their clearing and settlement functions at a single CCP, irrespective of the stock exchange on which the trade is executed, stock exchanges can authorize CCPs to collect stamp duty on behalf of state governments. This is because when inter-operability of CCPs is enabled, investors will be able to buy and sell securities at any stock exchange and clear through any CCP of their choice. If so, the categorization of a transaction as delivery vs. non-delivery based trades so as to fix appropriate levies, can only be done by CCPs. The CCPs are substantially owned by stock exchanges (at least 51% shareholding rests with SEs).
  6. State of domicile of the buying client or that of the broking house /depository Participant of the buying client (in case the buyer is outside India, as in the case of Foreign Portfolio Investors (FPIs)) would be taken as the basis for remitting duty to the respective States.
  7. Issue of securities is also proposed to be brought into the same tax framework as that of trading of securities, that is, authorising depositories to collect duty from companies and redistributing to States based on the domicile State of subscribers /buyers of security.
  8. The depositories /repositories and trading platforms under the jurisdiction of the Reserve Bank of India are also brought into this framework. However, Government Securities (G-secs) and instruments based on G-secs (such as repos/reverse repos on G-Secs) have been excluded from the purview of stamp duty. Platforms, which facilitate liquidity adjustments like call money market have also been excluded.
  9. In order to prevent multiple incidence of taxation, it is proposed that no stamp duty shall be collected by the State on any secondary record of transaction associated with a transaction on which the depository/stock exchange has been authorised by the State Government to collect the stamp duty.
  10. Tax arbitrage is avoided by providing the same rate of stamp duty for issue or re-issue or sale or transfer of securities happening outside stock exchanges and depositories.
  11. Further, rule-making powers are granted to the Central Government for implementing the new collection mechanism. Penalty provisions have also been incorporated.
  12. For facilitating the collection, stock exchanges/clearing corporations/depositories shall be eligible for some commission which will be decided in consultation with State Governments

Implementation Strategy / Inter-state Council mechanism

Subsequent to the enactment of the Act, it is proposed to create a Coordination Council under Article 263 of the Indian Constitution by a separate order/notification of the President of India. This Council comprising of representatives from Union and States may be tasked with the responsibility of making recommendations regarding review/revision of stamp duty rates. The Government will also notify the required rules.

Impact

The proposed rationalised and harmonised system is expected to lead to zero tax evasion. Further, cost of collection would be minimised while revenue productivity is enhanced. Adoption of the centralised collection mechanism is expected to bring in not only more revenue but greater stability to the revenue collection by the states. Further, this system will help develop equity markets and equity culture across the length and breadth of the country, ushering in balanced regional development.

[Source: PIB]

Ministry of Finance

Legislation UpdatesNotifications

No. L-1/144/2013-CERC— In exercise of powers conferred under Section 178 of the Electricity Act, 2003 and all other powers enabling it in this behalf, and after previous publication, the Central Electricity Regulatory Commission hereby makes the following regulations, to amend Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2014, (hereinafter referred to as “the Principal Regulations”), namely:

1. Short title and commencement: (1) These regulations may be called the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) (Second Amendment) Regulations, 2019.

(2) These regulations shall come into force with effect from the date of notification in the Official
Gazette.

2. Insertion of new Regulation: The following new Regulation shall be inserted after Regulation 49 of the Principal Regulations.

“49A Transmission Majoration Factor:

Transmission Majoration Factor admissible for the transmission projects executed through JV route in terms of Regulation 4.10A of the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2001 shall be available for a period of 25 years from the date of issue of the transmission licence.”

Cabinet DecisionsLegislation Updates

The Union Cabinet has approved the proposal of Ministry of Information and Broadcasting for introducing the Cinematograph Amendment Bill, 2019 to amend to the Cinematograph Act, 1952. The Bill aims to tackle Films piracy by including the penal provisions for unauthorized camcording and duplication of films.

Details:

          In order to tackle the menace of film piracy, the Amendments provide for:

  • Insertion of new Section 6 AA for the prohibition of unauthorized recording

The following section shall be inserted after Section 6A of the Cinematograph Act, 1952.

6AA: “Notwithstanding any law for the time being in force, no person shall without the written authorization of the author be permitted to use any audio visual recording device to knowingly make or transmit or attempt to make or transmit or abet the making or transmission of a copy of a film or a part thereof.”

*The expression author shall have the same meaning as assigned to it in the clause (d) of Section 2 of the Copyright Act of 1957.

  • Amendment in Section 7 to introduce Penal Provisions for violating provisions of Section 6 AA:  In Section 7 of the principal Act, after sub-section 1 the following subsection (1A) shall be inserted:

“If any person contravenes the provisions of Section 6AA, he shall be punishable with an imprisonment for a term which may extend to 3 years or with fine which may extend to 10 lakh rupees or with both.”

          The proposed amendments would increase Industry revenues, boost job creation, fulfill important objectives of India’s National IP policy and will give relief against piracy and infringing content online.

Background:

The medium of cinema, the tools and the technology associated with it and even its audience has undergone radical changes over a period of time. There have also been many changes in the field of media and entertainment with the proliferation of TV channels and Cable network throughout the country, advent of new digital technology, apprehension of piracy, particularly release of pirated version of films on internet, causing huge losses to the film industry and Government exchequer.

Film industry has been demanding for a long time, that Government should consider Amendments to the law preventing camcording and piracy. Prime Minister Shri Narendra Modi made an announcement at the inaugural function of the National Museum of Indian Cinema at Mumbai on 19th January 2019 to tackle the menace of camcording and piracy. The Ministry of I&B piloted this matter for consideration of Union Cabinet.

[Source: PIB]

Cabinet

Picture Credits: mygov.in

Case BriefsHigh Courts

Patna High Court: A Single judge bench comprising of Prabhat Kumar Jha, J. while hearing a civil miscellaneous petition held that when an amendment sought in a plaint is merely consequential and does not change the nature of the suit, then such an amendment can be allowed at any stage of the suit before the delivery of judgment.

The respondent in the instant case was the plaintiff in a title suit pending before trial court whereas petitioner was the defendant therein. The said title suit was at the stage of arguments when the respondent/ plaintiff filed a petition for two amendments, one with respect to change of areas of suit property and another with for addition of new relief that “if the court finds in any way the plaintiff out of possession, the delivery of possession may be ordered and within certain days the defendant be directed to hand over the possession”. These amendments were allowed by the trial court. Aggrieved by the said order, the petitioner/ defendant preferred the present petition.

The primary contention raised on behalf of the petitioner was that according to Section 34 of the Specific Relief Act, 1963 the respondent/ plaintiff was required to make prayer for alternative or consequential relief. Failure to do the same was a ground to dismiss the suit. Also, in view of the proviso to Order VI Rule 17 of the Code of Civil Procedure, 1908 the elements of due diligence were lacking and unless the respondent/ plaintiff was able to show due diligence, the proviso barred any amendment made to the plaint after the commencement of arguments in the suit.

The High Court noted that the respondent/plaintiff had sought a declaration of title and confirmation of possession over suit land but after the conclusion of evidence, he found that consequential relief should have also been inserted in the plaint, and realized that the plaint also required correction in the area of the suit land. It was observed that the amendment sought for did not change the nature of suit and was merely consequential. As such, the consequential relief could be added at any time before the delivery of judgment in order to pass effective order/judgment for resolving the dispute between parties. On that observation, the present civil miscellaneous petition was dismissed holding that there was no infirmity in trial court’s order.[Suman Kumar v. Chhathi Lal Rai,2018 SCC OnLine Pat 1834, decided on 04-10-2018]

Cabinet DecisionsLegislation Updates

The Union Cabinet has given its approval for moving official amendments in the “Surrogacy (Regulation) Bill, 2016”. The Surrogacy (Regulation) Bill, 2016 proposes to regulate surrogacy in India by establishing National Surrogacy Board at the central level and, State Surrogacy Boards and Appropriate Authorities in the States and Union Territories. The proposed legislation ensures effective regulation of surrogacy, prohibit commercial surrogacy and allow altruistic surrogacy to the needy Indian infertile couples. Once the Bill is enacted by Parliament, the National Surrogacy Board will be constituted. The States and Union Territories shall constitute the State Surrogacy Board and State Appropriate Authorities within three months of the notification by the Central Government.

Major impact:

Once in effect, the Act will regulate the surrogacy services in the country and will control the unethical practices in surrogacy, prevent commercialization of surrogacy and will prohibit potential exploitation of surrogate mothers and children born through surrogacy. While commercial surrogacy will be prohibited including sale and purchase of human embryo and gametes, ethical surrogacy to the needy infertile couples will be allowed on fulfillment of certain conditions and for specific purposes.

All Infertile Indian married couple who want to avail ethical surrogacy will be benefitted. Further, the rights of surrogate mother and children born out of surrogacy will be protected.

The Bill shall apply to whole of India, except the State of Jammu and Kashmir.

Background:

India has emerged as a surrogacy hub for couples from different countries and there have been reported incidents concerning unethical practices, exploitation of surrogate mothers, abandonment of children born out of surrogacy and rackets of intermediaries importing human embryos and gametes. The 228th report of the Law Commission of India has recommended for prohibiting commercial surrogacy and allowing ethical altruistic surrogacy by enacting a suitable legislation.

The “Surrogacy (Regulation) Bill, 2016”, was introduced in the Lok Sabha on the 21st day of November 2016 which was referred to the Parliamentary Standing Committee on Health and Family Welfare on the 12th of January 2017. The Parliamentary Standing Committee held various meetings with Stakeholders, Central Govt. Ministries / Department, NGO’s, medical professionals, lawyers, researchers, commissioning parents and surrogate mothers for holding discussions and to receive their suggestions. The One Hundred Second Report of the Departmental-Related Parliamentary Standing Committee on Health and Family Welfare on Surrogacy (Regulation) Bill, 2016 was laid on the Table of the Rajya Sabha and simultaneously on the Table of the Lok Sabha on 10th of August, 2017.

Ministry of Health and Family Welfare