Corporate Law Newsletter Volume XI, Issue 17 - SSRANA

Corporate Law Newsletter Volume XI, Issue 17

February 20, 2020
VOL XI
ISSUE No. 17
February 15, 2020

India: Union Budget 2020-2021

By Vikrant Rana and Rupin Chopra

The Hon’ble Finance Minister Smt. Nirmala Sitharaman presented the Union budget for financial year 2020-21 in Lok Sabha on February 1, 2020. The Finance Minister disclosed in her speech that the Economic Survey has projected economic growth at 6%-6.5% during the next financial year commencing April 1. Apart from the introducing new tax slabs and unraveling the outcomes of the Economy Survey, the government has also revealed major plans for other sectors as well. The major highlights of the Union Budget are given below:

  • Three Prominent themes of the Budget[1]
  • Aspirational India– better standards of living with access to health, education and better jobs for all sections of the society.
  • Economic Development – “Sabka Saath, Sabka Vikas, Sabka Vishwas”.
  • Caring Society– both humane and compassionate; Antyodaya (helping the under privileged and oppressed) as an article of faith.
  • Key Budgetary Allocations[2]:
Agriculture INR 1.38 lakh crore USD 19,714.29 Million (Approx.)[3]
Rural development INR 1.23 lakh crore

 

USD 17,571.43 Million (Approx.)
Agriculture and rural INR 2.83 lakh crore USD 40,428.57 Million (Approx.)
Agriculture credit target INR 15 lakh crore USD 214,285.71 Million (Approx.)
Education INR 99,300 crore USD 14,185.71 Million (Approx.)
Healthcare INR 69,000 crore USD 9,857.14 Million (Approx.)
Transportation infrastructure allocation INR 1.7 lakh crore USD 24,285.71 Million (Approx.)

 

  • Promoting Innovation
  • Apart from the allocation of INR 99,300 crore (USD 14,185.71 Million Approx.) to the education sector, the Government proposed INR 3,000 crore (USD 428.57 Million Approx.) for ‘Skill India’ to provide relevant skill training to the youth in India.[4]
  • New education policy to be announced soon.
  • Enabling external Commercial Borrowings and FDI for education sector.
  • In an attempt to boost the start-up ecosystem, Finance Minister proposed to ease the burden of taxation on the employees by deferring tax payment on Employee Stock Option Plans (hereinafter referred to as ESOPs) by five years or till they leave the company or when they sell their shares, whichever is earliest.[5]
  • National Police Universityand National Forensic Science University is proposed to be set up for policing science, forensic science, and cyber-forensics.
  • Top-100 institutions in the National Institutional Ranking Framework to provide Degree level full-fledged online education program.
  • Urban Local Bodies to provide up to 1-year internship to fresh engineers.
  • The Ministries of Health, and Skill Development to design Special bridge courses.[6]
  • Apprenticeship embedded degree/diploma courses to be started by 150 higher educational institutions before March 2021.
  • Ind-SAT (Scholarship Aptitude Test) proposed for Asian and African countries as a part of Study in India[7]
  • The government has announced a National Mission on Quantum Technologies & Applications (NM-QTA) with a total budget outlay of INR 8000 Crore (USD 1,142.86 Million Approx.) for a period of five years to be implemented by the Department of Science & Technology (DST).[8]
  • IPR[9]
  • The Union Budget seeks to expand the base for knowledge-driven enterprises
  • A digital platform would be promoted that would facilitate seamless application and grant of Intellectual Property Rights.
  • In an Institute of Excellence, a Centre would be established that would work on the complexity and innovation in the field of Intellectual Property.
  • The government will setup Knowledge Translation Clustersacross different technology sectors including new and emerging areas.
  • For designing, fabrication and validation of proof of concept, and further scaling up Technology Clusters, harboring such as test beds and small scale manufacturing facilities would be established.
  • To support Mapping of India’s genetic landscape which is critical for next generation medicine, agriculture and for bio-diversity management, two new national level Science Schemes shall be initiated.
  • The government has proposed to provide early life funding, including a seed fund to support ideation and development of early stage Start-ups.
  • Business[10]
  • New Income tax slabs and lower rates have been introduced in the budget. For such persons who are not availing any tax exemptions, the following tax slabs will be applicable as per their annual income:
  • 100% tax exemption on Sovereign Wealth Fund’s Indra Investment.
  • 5% concessional withholding tax extended to municipal bonds.
  • Companies will not be required to pay Dividend Distribution Tax and dividend to be taxed only at the hands of the recipients at applicable rates.
  • Scheme to encourage manufacturing of mobile phones, electronic equipment and semi-conductor packaging.
  • National Technical Textile Mission to be introduced for a period of 4 years.
  • Extension of invoice financing for micro, small, medium enterprises (MSMEs) through Trade Receivables Discounting System (TReDs).
  • Simplified GST return shall be implemented by April 1, 2020. The process for return shall be fully automated.
  • A proposal to introduce Dynamic QR-code consumer invoices. GST parameters to be captured when payment for purchases is made through the QR-code.
  • Corporate Law[11]
  • To ensure effective enforcement of contracts, the Contracts Act will be strengthened.
  • The budget proposed to review laws, including the Companies Act, to remove criminal liability for acts that are civil in nature.
  • Judiciary
  • The Union Budget for 2020-21 made a cut in the allocation for creating infrastructure facilities for the judiciary, and in the funding earmarked for justice delivery and legal reforms.
  • There is a cut in the allocation for creating infrastructure facilities for the judiciary which include Gram Nyayalayas and other court infrastructure from INR 990 crore (USD 141.43 Million Approx.) in 2019-20 to INR762 crore (USD 108.86 Million Approx.) in the coming financial year.
  • The allocation for National Mission for Justice Delivery and Legal Reforms has gone up from INR 210 crore (USD 30 Million Approx.) in 2019-20 to INR 285.73 crore (USD 40.82 Million Approx.) in 2020-21.[12]
  • E- Commerce Platforms[13]
  • INR 1700 Billion (USD 24.29 Billion Approx.) has been allocated for transport infrastructure and setting up of a governance framework for ports.
  • A National logistics policy has been proposed to create a single-window e-logistics market.
  • Reduction of withholding tax on technical services to 2% from 10%, and introduction of 1% withholding tax on payments by e-Commerce marketplace to seller for sale of good or services on its platform has been proposed.
  • Health Sector:[14]
  • Union Budget 2020 allocated INR 69,000 crore (USD 9,857.14 Million Approx.) for the health sector
  • Finance Minister has proposed to attach a medical college to a district hospital in Public Private Partnership model.
  • Clean Air and Pollution Free Cities[15]
  • Closing down of Power Plants having emissions above the prescribed.
  • Finance Minister has allocated INR 4,400 Crore (USD 628.57 Million Approx.) for states that work towards cleaner air.
  • India is stating its campaign towards climate change on January 1, 2021 as per the commitment made at Paris conference for Climate Change.

[1] https://www.indiabudget.gov.in/doc/bh1.pdf

[2] Key Highlights of Union Budget 2020-21, Press Information Bureau, February 1, 2020 (https://pib.gov.in/newsite/PrintRelease.aspx?relid=197836)

[3] USD value is calculated at INR 70/ USD

[4] Key Highlights of Union Budget 2020-21, Press Information Bureau, February 1, 2020 (https://pib.gov.in/newsite/PrintRelease.aspx?relid=197836)

[5] Summary of Union Budget 2020-21, Press Information Bureau, February 1, 2020

(https://pib.gov.in/newsite/erelevent.aspx?mincode=15&eventt=8)

[6] Summary of Union Budget 2020-21, Press Information Bureau, February 1, 2020

(https://pib.gov.in/newsite/erelevent.aspx?mincode=15&eventt=8)

[7]https://www.indiabudget.gov.in/doc/frbm1.pdf

[8] Summary of Union Budget 2020-21, Press Information Bureau, February 1, 2020

(https://pib.gov.in/newsite/erelevent.aspx?mincode=15&eventt=8)

[9] Summary of Union Budget 2020-21, Press Information Bureau, February 1, 2020

(https://pib.gov.in/newsite/erelevent.aspx?mincode=15&eventt=8)

[10] https://www.indiabudget.gov.in/doc/frbm1.pdf

[11] Key Highlights of Union Budget 2020-21, Press Information Bureau, February 1, 2020 (https://pib.gov.in/newsite/PrintRelease.aspx?relid=197836)

[12] https://www.theweek.in/news/biz-tech/2020/02/01/budget2020-allocation-for-judiciary-expenditure-has-been-reduced.html

[13] https://www.indiabudget.gov.in/doc/frbm1.pdf

[14] https://www.indiabudget.gov.in/doc/bh1.pdf

[15] Key Highlights of Union Budget 2020-21, Press Information Bureau, February 1, 2020 (https://pib.gov.in/newsite/PrintRelease.aspx?relid=197836)

 


Provident Fund extended to Contract Employees: Supreme Court

By Rupin Chopra and Reetika Wadhwa

The Hon’ble Supreme Court of India, in the matter of M/S. Pawan Hans Limited and ors.  v. Aviation Karmachari Sanghatana and ors[1] vide its judgement dated January 17, 2020, under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred to as ‘Act’) has clarified that the contractual employees, who draw wages/salary directly or indirectly, are entitled to the benefit of provident fund.

The brief facts of the case are below:

  1. M/s Pawan Hans Limited (hereinafter referred to as “Appellant Company”) was incorporated under the Companies Act, 1956, and was subsequently registered as a Government of India company with the Registrar of Companies, Delhi. The Government of   India   held   51%   shareholding   in   the Appellant Company and the remaining 49% was held by Oil and Natural Gas Company Ltd. (hereinafter referred to as ‘ONGC’).
  2. Out of a total workforce of 840 employees, the Appellant Company had engaged 570 employees on regular basis, while 270 employees were engaged on ‘contractual’ basis.
  3. The Appellant Company implemented the PF Trust Regulations only with respect to the regular employees, even though the term   “employee”   had   been   defined   to   include   “any person”   employed   “directly   or   indirectly”   under   the   PF Trust Regulations, as notified by the Appellant Company.
  4. Aggrieved by this arrangement, the labour union of the Appellant Company filed a writ petition in Hon’ble Bombay High Court[2] contending the benefits under the Act be extended to the members of the Union, and other similarly situated employees. Keeping into consideration the points made by the labour union the aforesaid writ petition was allowed.
  5. Impugning this judgment of the High Court, the Appellant Company contended before the Apex Court that it is excluded from the applicability of the provisions of the Act and the Employees Provident Fund Scheme framed thereunder.

Contractual Employees are entitled to Provident Fund

  • The Hon’ble Supreme Court held that, the following twin test needs to be satisfied for an establishment to seek exemption from Section 16 (1) of the Act.
  • The establishment must be either “belonging to” or “under the control of” the Central or the State Government. The phrase “belonging to” would signify “ownership” of the Government, whereas the phrase “under the control of” would imply superintendence, management or authority to direct, restrict or regulate.[3]
  • The employees of an establishment should be entitled to the benefit of contributory provident fund or old age pension in accordance with any scheme or rule framed by the Central Government or the State Government governing such benefits.
  • Even though the Appellant Company qualified under the first criteria of the test, it did not satisfy the second, therefore it could not claim exclusion from the applicability of the provisions of the Act.
  • The Apex Court further held that as per Section 2(f) of the Act the definition of an ’employee’ is an inclusive definition, and is widely worded to include “any person” engaged either directly or indirectly in connection with the work of an establishment, and is paid wages.
  • It was conclusively held by the Apex Court that members of the labour union of the Appellant Company and all other similarly situated contractual employees, are entitled to the benefit of provident fund under Act.

Take Away

When contract labours are hired by any Company, their terms of employment are often left ambiguous and undetermined to avoid liabilities in future. Due to this lack of clarity contractual employees are often denied benefits at par with regular employees. The aforesaid judgement of the Hon’ble Supreme Court has addressed the issue of contractual employees regarding provident fund benefits and provides a clarity on implementation of same.

[1] Civil Appeal No. 353 of 2020

[2] W.P.No.325/2017

Related Posts

Educational Institutions fall within meaning of ‘Establishment’ under Section 1(5) of Employee State Insurance Act, 1948

Supreme Court lays down Test to Determine Position of Contractual Employee

What is the law for Employees’ Provident Fund (PF) contributions in India?

 


Bureau of Indian Standards (BIS)– Overview and Importance

By Vikrant Rana and Rupin Chopra

Bureau of Indian Standards (hereinafter referred to as ‘BIS’) is a statutory body established under the Bureau of Indian Standards Act, 2016 (hereinafter referred to as the ‘Act’). BIS prescribes the standards for covering goods and systems under the standardization regime. Under the Act, BIS has been identified as the ‘National Standards Body of India’ and is regulated under the Ministry of Consumer Affairs, Food & Public Distribution, and Government of India.

Functions of BIS

BIS through its core activities of standardization and conformity assessment, has been benefiting the economy by providing safe and reliable and quality goods; minimizing health hazards to consumers; protecting the environment, promoting exports and imports substitute; controlling proliferation of varieties etc. The standards and certification scheme of BIS apart from benefitting the consumers and industry also support various public policies especially in areas of product safety, consumer protection, food safety, environment protection, building and construction, etc.[1]

BIS carries out various activities like that of standards formulation, product certification, hallmarking, laboratory services, training services, etc. However, the primary and most recognized objective of BIS is to formulate and prescribe the standards for products for their certification. BIS also ensures the harmonious development of the activities of standardization, marking and quality certification of goods.

The following schemes of certification are covered under BIS

  • Product Certification Scheme – Applicable for tangible products; with some products classified under compulsory certification.
  • System Certification Scheme – Applicable for systems/ process
  • Foreign Manufacturers Certification Scheme – Applicable for foreign manufacturers who are engaged in the sale of their products in India.
  • Hallmarking – Applicable for articles made from precious metals like gold and silver
  • ECO Mark Scheme – Applicable for products affecting or related to the environment

Obtaining the BIS registration is essentially voluntary in nature. However, BIS requires compulsory certification for products which impact the health and safety of consumers. Mandatory certification scheme is bifurcated into ISI (Indian Standards Institute) Mark Scheme and Compulsory Certification Scheme (collectively referred to as ‘Standard Mark’). ISI Mark Scheme is applicable for products such as cement, electrical appliances, baby food, etc. and Compulsory Certification is required mostly for IT/ electronic products. For procurement of the BIS certificate, the manufacturer has to ensure that the product is in compliance with the ‘Indian Standard’.

‘Indian Standard’ has been defined under the Act as the standard set and published by the BIS, with regards to any article or process which is indicative of the quality and specification of such article or process and also includes: (i) Any standard recognized by the BIS and (ii) Any standard established and published, or recognized, by the ISI and which is in force immediately before the date of establishment of BIS.

ISI Mark

           BIS Mark – for electronics

 

Offences, Punishment and Enforcement Activity

The Act empowers BIS to pass orders granting, suspending or rejecting a license. Any violation of the provisions of the Act and the non-compliance with the standards set by BIS is punishable with either imprisonment for a period of one year or with a fine extending up to INR 50,000.

BIS also carries out enforcement activity to curb the use of Standard Mark or its imitation by unscrupulous traders and manufacturers not holding a valid BIS license. The objective behind these enforcement activities is to protect consumers from being misled about quality of products that are marked with the BIS Standard Mark. Enforcement raids, which include search and seizure operations are carried out against traders and manufacturers on the basis of intelligence collected regarding misuse of the Standard Mark and where required, prosecution cases are filed in the court of law.

Conclusion

BIS is responsible for the quality check of various products and services across 14 different sectors. The quality certification of these products safeguard people from several health and safety hazards. In the era of globalization and the growing importance of ensuring conformity with standards in global trade, BIS has huge significance and responsibility. The conformity assessment procedures have become increasingly important in the modern day and hence, BIS plays a critical role in strengthening Indian trade and exports. The Product Certification Scheme is regarded as one of the biggest around the world, with around 26500 licensees covering no less than 900 products.[2] BIS Certification is fundamental to the use of the mark on their products.

Related Posts

BIS registration for Electronic and IT Goods

BIS- Product Certification Schemes

[1] https://consumeraffairs.nic.in/organisation-and-units/division/bureau-indian-standards

[2] https://www.indiafilings.com/learn/how-to-get-bis-certification-in-india/

 


Facial Recognition: A Key to Private Data

By Lucy Rana and Nishtha Das

A popular café in Delhi-NCR has recently introduced facial recognition technology to facilitate faster customer experience. It can be often observed that small companies who are engaged in food chain businesses are coming up with concise yet strategic business models to enhance their buyer response. In the process of this development, they often keep experimenting with new technologies. Facial recognition is one of such feature.

The use of facial recognition is becoming popular worldwide as they are being used for a range of applications. However, successful implementation of this feature in India depends upon a number of factors. User response, economic feasibility and hassle free experience are some of these factors. Above all the prime factor of consideration would be the existing laws on the above issue.

Facial Recognition and the Data Protection Bill, 2018

The Union cabinet recently passed the Personal Data Protection Bill, 2018 (hereinafter referred to as the ‘Bill’). The enactment of this Bill could possibly impact the use of facial recognition feature by the companies.

Clause 3 (7) of the Bill defines ‘biometric data’ and includes ‘facial images’ as part of biometric data. Further Clause 3 (36) of the Bill categorizes ‘biometric data’ as ‘sensitive personal data’. The Bill classifies data into three categories namely critical, sensitive and general. As per Clause 33 of the Bill, a ‘sensitive personal data’ may be transferred outside India, but such sensitive personal data shall continue to be stored in India. Nevertheless, transfer of ‘sensitive personal data’ shall be subject to conditions laid out in Clause 34 of the Bill.

Now, on the basis of the above, it can be reckoned that the use of facial recognition feature would be classified as ‘sensitive personal data’. In future when the Bill receives the assent of the President, any company wanting to use the facial recognition feature, would have to comply with provisions applicable as per the law.

User response

Even though use of this feature is convenient for both the customer and the company, there can be different ways in which a customer can perceive it. While many can find it welcoming, there can be a set of customers who would dissent this view. The segregation of data can then be an uphill task for the company. Therefore, companies interested to use facial recognition feature should devise a framework for storing and processing of data in consultation with a legal expert so that the Company operates its business at ease.

Challenges

Involvement of personal data like facial recognition algorithm can expose the information safety of the company to a larger risk. An eventual data breach can lead to misuse of personal information and can also invite litigation against the company. However, the introduction of the Bill can facilitate markets for Indian data processors and the Companies can effectively operate taking assistance from these data processors.

Conclusion

While data protection is the need of the hour, it is also important that business organizations are able to operate smoothly. A balance should be stricken between data protection and business operations involving personal for both enhanced consumer experience and economic growth. Further, the Bill is expected to boost data processing markets, in this regard it will be interesting to see how the government frames plan for the development of the same.


SSRANA Announcement Section

SSRANA & Co. ranked in WTR 1000, 2020 Edition for Trademark Prosecution and Strategy and IP Enforcement and Litigation

We are pleased to share that SSRANA & Co. has been ranked by WTR 1000 (2020 edition) in India for its work in the fields of enforcement and litigation and trademark prosecution and strategy.

The Firm has been recognized for being proactive and customer centric, offering quality assurance and being committed to maintaining and delivering cutting-edge legal services in an ethical and professional manner.

Vikrant Rana “highly recommended” by WTR 1000’s 2020 Edition

We are pleased to share that Vikrant Rana, Managing Partner at SSRana & Co. has been ranked in the Silver Band for his work in the field of trademark prosecution and strategy by WTR 1000 (2020 edition) in India.

Mr. Rana has been recognized as a “highly recommended” individual for patent protection and enforcement strategies and has also been ranked for enforcement and litigation by WTR 1000.

We are thankful to our clients’, colleagues and friends and want to express our sincere gratitude for their continued belief in us and for giving us a wonderful opportunity to serve them!!

Events

Vikrant Rana, Managing Partner SSRANA & Co. was invited as a panelist for session tilted ‘SmarterGeneralCounsel‘ at the GrandMasters2020 – New Delhi Edition organised by Lex Witness on February 6 2020. The session focused on the evolving role of a General Counsel which has gone way beyond being just technical legal expert and has transformed into being a business leader. Being a legal practitioner for last 24 years, during the session Vikrant highlighted how technology can be strategically leveraged by external counsels to demonstrate value and become a trusted legal adviser.

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Dhruv Mathur, Patent Associate at SSRANA & Co was invited to deliver a lecture on ‘Designs – Importance, identification, filling process’ during a workshop on Intellectual Property Rights organised by Cell for IPR Promotion and Management (CIPAM) at Government JDB College, Kota on February 19, 2020.

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Sukku Singh, Senior Patent Agent at SSRANA & Co was invited to deliver a lecture on ‘Patents – Importance, identification, filling process’ during a workshop on Intellectual Property Rights organised by Cell for IPR Promotion and Management (CIPAM) at Government JDB College, Kota on February 19, 2020.

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Upcoming Holidays

Please note that our Offices will remain closed on March 10, 2020 (Tuesday) on account of celebration of Holi Festival in India.

For more information please contact us at : info@ssrana.com