India: Effective Enforcement of The Insolvency And Bankruptcy Code, 2016

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India: Unique Identifier for Companies

Source :www.g20.org

Unique Identifier of Companies or Legal Entity Identifier, as brought forth by G20 is the alphanumeric code that distinguishes the legal entities engaged in financial affairs. It serves to redress the inability of the financial institutions to be clearly identified and fully tracked. In pursuance to the G20 compliance, United Kingdom has also adopted the unique identifier mechanism for legal entities. Just as the Aadhaar number issued in India has bestowed a distinctive identification to each individual, the Unique Identifier for companies would determine the integrity of a company independent from that of others.

A number of challenges arise as consequences of uncertainty with regards to the ownership of the Companies. Due to the absence of stringent measures requiring compulsory disclosure of beneficial ownership till now, the formation of shell companies became an easy escape route to avoid meeting with the legal compliances. Having no active operational aspect, these companies began serving as a media to promulgate diversion of funds via Benami transactions as have been witnessed in the recent past.

In the pursuit of delimiting the companies with non-operational business, the Government has placed a cap to the number of subsidiary companies. The restriction has been imposed on the layering of the subsidiary companies to prevent probable diversion and laundering of funds.

It is essential that during formulation and framing of the policies for governance, all aspects are to be covered. While laying consideration on the fact that shell companies may be used as an instrument for illegal deeds, it cannot be denied that not all shell companies have been incorporated to carry out unlawful negotiations. Some shell companies may be involved in accumulation of shares or may be used to hold licensed intellectual property. The generalized notion of barring the layering of subsidiaries would hinder the genuine, lawful transactions essential to be carried out by the parent company in their usual course of business.

A pragmatic approach towards this, is the adoption of the unique identifier for companies which has been proposed by G20. This would facilitate transparency in tracking the ultimate ownership thereby identifying the ultimate beneficiaries of the financial system being run through subsidiaries. Through the unique identifier the information of the real owners would fall in public domain thereby helping the investors to have complete knowledge before entering into any engagement with a company. By appropriate regulations and guidelines, it should ensure mandatory disclosures to enable clear identification of the beneficiaries so that the miscreants do not misuse the shell companies using chain of subsidiary companies. The present system lacks efficient mechanisms to establish proper disclosures of the ownership so that the true owners could be tracked even through the catena of subsidiaries.

Thus, the embracement of the unique identifier for companies serves a more suitable and adequate solution to prevent abuse through subsidiary companies rather than curbing them which may create a deadlock for bona-fide business.

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India: Maharashtra Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2017

Source : www.maharashtra.gov.in

The Government of Maharashtra has issued Maharashtra Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2017 (hereinafter referred to as the “Amendment Act”) vide notification dated September 07, 2017. The Amendment Act extends to the whole of the State of Maharashtra, and shall come into force on a date to be specified by the State of Maharashtra in the Official Gazette and from such date, the Amendment Act will repeal the Maharashtra Shops & Establishments Act, 1948 (hereinafter referred to as the “Act”)

Applicability:

The provisions of the Amendment Act shall apply to the establishments which employ ten or more workers, in contrast to the Act which applied to all establishments, irrespective of number of employees employed.

However, establishments which employ less than 10 workers shall give intimation to Facilitator appointed under the Amendment Act by submitting online application, within a period of sixty days from the date of the commencement of this Act or the date on which establishment commences its business.

Appointment of Facilitators

The Amendment Act provides for appointment of Facilitator. The functions of the Facilitator include without limitation to making examination of premises and of any prescribed registers, records and notices, examination of person who is found in any premises of the establishment and whom, the Facilitator has reasonable cause to believe, is a worker of the establishment, search, seize or take copies of register, record of wages or notices and exercise such other powers, as may be prescribed

Registration:

Registration under the Amendment Act has been made online. Employers have to submit an online application within 60 days from commencement of the Amendment Act or commencement of business. The term of registration certificate granted under the Act shall be for a period as requested by the applicant. However, such term shall not exceed 10 years. The Amendment Act has introduced a new provision which provides that registration under the Amendment Act may be cancelled if registration is obtained through misrepresentation or suppression of material facts or by submitting false or forged documents or false declaration or by fraud.

Number of hours:

• The state government may fix, by notification in the Official Gazette, opening and closing of different classes of establishments and for different premises, shopping complex or mall or for different area or areas and for different period.

• No adult worker shall be required or allowed to work in any establishment for more than 9 hours in any day and 48 hours in any week.
• No adult worker shall be asked to work continuously for more than five hours unless he has been given a break of not less than half an hour. However, the working hours or weekly holiday may be relaxed in case of work of urgent nature with the previous permission of the Facilitator.
• The spread-over of a worker in an establishment shall not exceed 10 ½ hours in any day. If a worker is entrusted with urgent work, the spread over shall not exceed 12 hours

Protection of women:

•  A new provision has been introduced in the Amendment Act which states that there shall be no discrimination against any woman worker in the matter of recruitment, training, transfers or promotion or wages.
• Woman worker shall not work in any establishment except between the hours of 7 a.m. and 9-30 p.m. However, a woman worker with her consent, shall be allowed to work during 9-30 p.m. and 7-00 a.m. in any establishment in which adequate protection of their dignity, honour and safety, protection from sexual harassment and their transportation from the establishment to the doorstep of their residence as may be prescribed are provided by the employer.
• The State Government may, by notification in the Official Gazette, in the public interest, prohibit or regulate the employment of women workers after 9-30 p.m. and before 7-00 a.m. in such shops, establishments, hotels, restaurants, residential hotels, permit rooms, bars, spa-massage parlours, lodges or any business or any trade or occupation in such area or areas as it may deem fit.

Leaves:

The Amendment Act now entitles every worker to casual leave of 8 days in a year. The workers can accumulate earned leave up to a maximum of 45 days. Also, every worker who has worked for a period of 240 days or more in a calendar year shall be allowed paid leave for a number of days calculated at the rate of one day for every twenty days of work performed during the previous year. A worker shall also be entitled to 8 paid festival holidays in a calendar year, namely, 26th January, 1st May, 15th August and 2nd October and four such other festival holidays as may be agreed to between the employer and the workers as per the nature of business, before the commencement of the year.

Welfare Provisions:

The Amendment Act has provided for welfare provisions of workers wherein employers have to take measures relating to the health and safety of the workers including cleanliness, lighting, ventilation and prevention of fire. Also, employers have to ensure provision of adequate supervision of the workers employed in the establishment. Some of the welfare provisions introduced are:

• Provision of first-aid facilities in the place of work.
• Provision and maintenance at suitable points conveniently situated for all persons employed in the establishment, a sufficient supply of wholesome drinking water.
• Provision of sufficient latrine and urinal for men and women
• In every establishment wherein 50 or more workers are employed, there shall be provided and maintained a suitable room or rooms as crèche for the use of children of such workers.
• To maintain a canteen for the use of its workers for establishments with not less than 100 workers

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India: Voluntary Reporting of Estimated Current Income & Advance Tax Liability

Source : www.incometaxindia.gov.in

The Central Board of Direct Taxes (hereinafter referred to as the ‘CBDT’) has proposed to create a mechanism for self-reporting of estimates of current income, tax payments and advance tax liability by certain taxpayers (companies and tax audit cases) on voluntary compliance basis. The proposed reporting mechanism is sought to be created by way of inserting a new Rule 39A and Form No. 28AA in the Income-tax Rules, 1962.

A taxpayer who is liable to discharge part of its tax liability by way of advance tax has to bear additional burden of interest for default of advance tax, in case total advance tax paid for the year falls short of the assessed tax by ten percent or more. This interest is levied as per the provisions of Section 234B of the Income-tax Act, 1961. Such taxpayers are further liable to pay interest for deferment of advance tax, in case any quarterly instalment of advance tax paid falls short of the prescribed percentage of total advance tax paid. This interest is levied in accordance with the provisions of section 234C of the Act.

CBDT stated that it is of utmost importance for such taxpayers to arrive at a reasonably accurate estimate of their current income and advance tax liability, so that the additional burden on account of interest for default/deferment of advance tax can be avoided.

Under the present mechanism, taxpayers have to only pay advance tax to the CBDT on income tax payable for the whole financial year in four instalments — June 15, September 15, December 15 and March 15 but they are not required to provide estimates of income to the I-T department. As per the draft provisions, a taxpayer being a company and a person (other than a company), to whom the provisions of section 44AB are applicable shall furnish an intimation of estimated income and payment of taxes as on 30th September of the previous year, on or before 15th November of the previous year.

Opinion

According to CBDT, a continuous flow of tax revenues throughout the year is critical for the Government so as to meet various budgetary allocations such as welfare schemes, infrastructure development, defence expenditure etc. A reliable and advance estimate of tax revenues for the year would also provide much needed perspective for planning and prioritizing the Government expenditure.

Although, the Government by this approach tends to create tax transparency by creating a systematic framework, the implementation of the said proposal will add on to the already present compliances resulting in over-burdening the taxpayers requiring them to present a detailed estimate of taxable income.

Additionally, the scheme requires the taxpayer to provide the details of turnover, profits, etc. It is worthwhile to mention that determination of the net profit for the year is difficult to ascertain based on the uncertain factors.

The proposed scheme also requires the reasons to be specified by the taxpayer if the estimated advance-tax payment for the previous year is less than the advance tax paid during the preceding previous year. It seems unreasonable to inquire explanation to various hurdles being faced by the taxpayer attributable to the economic slowdown the country is undergoing presently.

It is advisable to adopt for stricter mechanisms against the tax evaders rather than increasing the liabilities of the honest taxpayer.

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India: Preference to Local Cyber-Security Products

Source : meity.gov.in

The Ministry of Electronics and Information Technology has recently introduced a draft notification with the objective of providing preference to domestically manufactured or produced cyber security products by all procuring entities. This step has been taken in furtherance of the Public Procurement (Preference to Make in India) Order, 2017 issued by the Department of Industrial Policy and Promotion (DIPP) to encourage manufacturing and production of goods and services in India with a view to enhancing income and employment.

The Ministry through this proposal aims to boost domestic cyber-security technology development by giving preference to good quality domestic products in government procurement. It covers all cyber-security products, meaning hereby any product or appliance or software manufactured or produced for the purpose of maintain confidentiality, availability and integrity of information by protecting computing devices, infrastructure, programs, data from attack, damage or unauthorized access.

The technology and its increasing accessibility in the interconnected world has revolutionized the lives of people in multiple spheres by facilitating everyday transactions virtually. Efforts are made to ascertain the safety of these media to reinforce genuine and legal use. With the changing paraphernalia, the criminal intent has also become technically and financially more advanced. This has resulted in growing concern for the requirement of cyber-security products which protect against the cyber-attacks by unscrupulous cyber-attackers preventing the fulfillment of their mala-fide intentions. These products cater varied requirements depending upon the user and include web security, antivirus, data protection, prevention of data loss, network security to name a few.

Owing to their great importance, the demand for cyber-security products is increasing which are met by number of suppliers on a world-vide level attributable to the economic integration provided by globalization. With regards to products in the cyber security area, foreign firms are generally relied upon. It is of paramount importance to ensure that the security concerning the confidential information is not flouted to from the end of the cyber-security providers via backdoor access which allow gaining access and control of a system by remote administration through tampering of the system’s code. One of the remedies that come to the rescue to such a situation is the use of domestically made cyber-security products.

The pragmatic approach of the Government in bringing forth the policy of public procurement of domestically manufactured cyber-security products serves as a multifaceted solution. Theproducts so manufactured would not only prevent backdoor access and data theft by foreign entities but would also ensure compliance to the Indian standards, ethics and guidelines. It would also strengthen the aim of “Make in India” thereby promoting the manufacture of cyber-security products in India.

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India: Supreme Court Elucidate 10 Points for Quashing Of F.I.R under Section 482 of CRPC

Source :supremecourtofindia.nic.in

[Parbatbhai Aahir & Ors. Vs. State of Gujarat & Anr. (Criminal Appeal No. 1723 of 2017)]

A full bench comprising of Hon’ble Mr. Chief Justice Dipak Misra, Hon’ble Mr. Justice AM Khanwilkar and Hon’ble Mr. Justice DY Chandrachud has laid down broad principles from various precedents in relation to Section 482 of the Code of Criminal Procedure (CrPC) for quashing of First Information Reports (FIRs) in the judgment passed in an appeal against a decision of the Gujarat High Court.

The Gujarat High Court vide its judgment dated November 25, 2016, had dismissed an application under Section 482 of CrPC filed by the Appellants seeking quashing of FIR registered against them on June 18, 2016 with the City ‘C’ Division Police Station, District Jamnagar, Gujarat for offences punishable under Sections 384, 467, 468, 471, 120-B and 506(2) of the Indian Penal Code.

Before, the High Court, the plea for quashing the FIR was advanced on the ground that the Appellants had amicably settled the dispute with the Complainant, who had also filed an Affidavit to that effect. On behalf of the prosecution, application for quashing was opposed on two grounds:

• The Appellants were absconding and warrants had been issued against them under Section 70 of the Code of Criminal Procedure, 1973.
• The Appellants had criminal antecedants.

The High Court observed that it had been given “a fair idea” about the modus operandi adopted by the Appellants for grabbing the land, in the course of which they had opened bogus bank accounts. The High Court held that the case involves extortion, forgery and conspiracy and all the Appellants have acted as a team. Hence, in the view of the High Court, it was not in the interest of society at large to accept the settlement and quash the FIR. The High Court held that the charges are of a serious nature and the activities of the appellants render them a potential threat to society. On this ground, the prayer to quash the First Information Report was rejected by the High Court.

The Hon’ble Supreme Court after discussing various precedents on the subject summarized the following broad principles in relation to Section 482 for quashing FIRs.

• Section 482 preserves the inherent powers of the High Court to prevent an abuse of the process of any court or to secure the ends of justice. The provision does not confer new powers. It only recognises and preserves powers which inhere in the High Court;
• The invocation of the jurisdiction of the High Court to quash a First Information Report or a criminal proceeding on the ground that a settlement has been arrived at between the offender and the victim is not the same as the invocation of jurisdiction for the purpose of compounding an offence. While compounding an offence, the power of the court is governed by the provisions of Section 320 of the Code of Criminal Procedure, 1973. The power to quash under Section 482 is attracted even if the offence is non-compoundable

• In forming an opinion whether a criminal proceeding or complaint should be quashed in exercise of its jurisdiction under Section 482, the High Court must evaluate whether the ends of justice would justify the exercise of the inherent power;
• While the inherent power of the High Court has a wide ambit and plenitude it has to be exercised;
  • to secure the ends of justice or
  • to prevent an abuse of the process of any court;
• The decision as to whether a complaint or First Information Report should be quashed on the ground that the offender and victim have settled the dispute, revolves ultimately on the facts and circumstances of each case and no exhaustive elaboration of principles can be formulated;
• In the exercise of the power under Section 482 and while dealing with a plea that the dispute has been settled, the High Court must have due regard to the nature and gravity of the offence. Heinous and serious offences involving mental depravity or offences such as murder, rape and dacoity cannot appropriately be quashed though the victim or the family of the victim have settled the dispute. Such offences are, truly speaking, not private in nature but have a serious impact upon society. The decision to continue with the trial in such cases is founded on the overriding element of public interest in punishing persons for serious offences;
• As distinguished from serious offences, there may be criminal cases which have an overwhelming or predominant element of a civil dispute. They stand on a distinct footing in so far as the exercise of the inherent power to quash is concerned;
• Criminal cases involving offences which arise from commercial, financial, mercantile, partnership or similar transactions with an essentially civil flavour may in appropriate situations fall for quashing where parties have settled the dispute;
• In such a case, the High Court may quash the criminal proceeding if in view of the compromise between the disputants, the possibility of a conviction is remote and the continuation of a criminal proceeding would cause oppression and prejudice; and
• There is yet an exception to the principle set out in propositions (viii) and (ix) above. Economic offences involving the financial and economic well-being of the state have implications which lie beyond the domain of a mere dispute between private disputants. The High Court would be justified in declining to quash where the offender is involved in an activity akin to a financial or economic fraud or misdemeanour. The consequences of the act complained of upon the financial or economic system will weigh in the balance.

The Apex Court dismissed the appeal holding that the High Court was justified in declining to entertain the Application for quashing FIR in the exercise of its inherent jurisdiction.

Conclusion

In view of the above expositions, it has been clearly held by the Apex Court that the High Court while exercising its power under Section 482 and dealing with a plea that the dispute has been settled, the Court must have due regard to the nature and gravity of the Offence. Further, it has been observed heinous and serious offences involving mental depravity or offences such as murder, rape and dacoity cannot appropriately be quashed though the victim or the family of the victim have settled the dispute. Such offences are, truly speaking, not private in nature but have a serious impact upon society.

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S.S. Rana & Co shares Diwali festivities with the ‘third gender’

India, since time immemorial, has been one country in the world, that has always ‘celebrated’ diversity instead of ‘classifying’ it. The Mahabharata, Ramayana and even the Mughal Empire recognized and respected the transgenders as an integral part of the Society. But with the world taking a turn towards modernity, their social fortunes changed into obscurity. With the colonial government passing the Criminal Tribes Act, 1871 classifying all eunuchs as criminal, they were ostracized from all forms of social life and mostly survived in close knit communities of their own.

S. S. Rana & Co. was indeed honored to have an opportunity to share auspicious Diwali festivities with the third gender. Honored, we say, because it is indeed inspiring to see one particular community that forms such a significant part of the Indian demographics struggle since the past 2-3 centuries without being deterred or fearing societal atrocities only so their birth rights get recognized. Honored we say, because in response to the atrocities the society subjected them to, all they wanted was friendship and harmonious existence.

The theory of natural rights states that there are certain natural rights which are bestowed upon an individual merely by virtue of their birth. No state agency or governing body has the power to take away or impose these rights upon the individual. The right to be recognized for the gender a person is born with, is as fundamental as recognizing the individual itself, considering how gender is a vital and significant part of the individual’s existence

We at S. S. Rana & Co. believe that through the recent rebels responsive recognition of the third gender, no extra right or special status was granted to them. The attitude of acceptance, is not accepting a new gender into the society, but realizing an old, long standing mistake and making efforts towards correcting it. The attitude of acceptance towards them was institutionalized when the Supreme Court of India, in the case of National Legal Services Authority v. Union of India, WP (Civil) No 604 of 2013, declared transgendered people to be officially called the ‘third gender’, giving them a right to self-identification of their gender. This move was seen as a big step towards gender equality in India, the effects of which can be felt on social media, as today we have a transgender police inspector, a transgender mayor, a transgender college principle and even a transgender music band; something that would have been unthinkable even a decade ago.

In light of this acceptance, ‘no gender’ toilets, government jobs for the third gender, third gender marriages, beauty pageants, sports events are being promoted all over the country.

At S. S. Rana & Co., keeping in line with our traditions, and all-inclusive policy shared the festivities of Diwali with a few members of the third gender.