ASCI implements guidelines for “Dark Pattern” Advertisement

ASCI implements guidelines for “Dark Pattern” Advertisement

Author: Jayshree Chandra, Senior Partner & Ansuman Mishra, Associate at ZEUS Law

Published in https://www.asiancommunityne

The Advertising Standards Council of India (ASCI) recently introduced the Guidelines for Online Deceptive Design Patterns in Advertising (“ODDP Guidelines”) to regulate the deceptive practices in the advertisement realm in terms of the prescriptions under chapter 1 of the Code for Self-Regulation of Advertising Content in India. The Code requires advertisement to not mislead by omission, exaggeration, implication or ambiguity. These guidelines, which came into effect from 1st September, 2023, aim to uphold the principles of honesty in advertisements and prevent the abuse of consumer’s trust laid down in the Code.

The ODDP Guidelines are built upon the discussions initiated by ASCI through their paper titled “Dark Patterns – the New Threat to Consumer Protection”, published in 2022. Dark patterns are practices and tactics adopted by businesses within the digital realm, primarily in online user interfaces, that undermine consumer independence and autonomy and deceptively influence their decision-making. These practices frequently involve trickery, coercion, or manipulation and likely to harm or disadvantage the consumers in varied ways even though it is often difficult to ascertain or measure the same. While it may be challenging to quantify the extent of the harm in some cases, these strategies are aimed at steering individuals toward choices that are not in their best interest. The ultimate end goal is to trick the consumers into doing things that they would otherwise not do or do in lesser frequency for business advantage, viz. getting user to buy, buy more of or continue to buy, a good or service; or spend more money on a good or more time on a service; or give up more data than desired.

Dark patterns have become increasingly prevalent and involve manipulating user interface and user experience designs and online decision-making structures to influence consumer choices in the digital space, including within online marketplaces. False or paid-for reviews misguide choices, leading to personal and financial losses, while privacy breaches and psychological stress add to the toll. With the rapid growth of Indian-e-commerce sector, dark patterns has become an increasing area of consumer vulnerability where the consumers are left to grapple with the consequences of choices influenced by forces beyond their awareness or control. ASCI and the Department of Consumer Affairs have expressed concerns regarding these practices, leading to the issuance of the ODDP guidelines. Their primary objective is to ensure that consumers are not coerced or led into unintended actions without their clear and genuine consent, or through deceitful means.

 The ODDP Guidelines apply to all forms of advertising content in the digital sphere spanning across various mediums including e-commerce, digital media, airline services, food delivery, and more, on apps and websites and communication facilitated by or through wide spectrum of platforms such as the internet, on-demand platforms, mobile broadcasts, digital home entertainment, terrestrial television, and other similar channels.

To ensure the advertisers do not breach the Code the ODDP Guidelines regulate the digital advertisements that adopt drip pricing, bait and switch, false urgency and disguised advertisement practices for e-marketing.

Drip Pricing - Drip Pricing is a deceptive practice where certain price components are concealed until the very end of the purchasing process or after purchase confirmation. To prevent drip pricing the prices quoted in advertisements and e-commerce platforms must encompass all non-optional taxes, duties, fees, and charges that are applicable to all or most buyers. Such transparency is crucial to avoid confusion about the final price and enable easy price comparisons.

Bait and Switch - Advertisement can be misleading if ads or their elements suggest one outcome based on consumer actions but deliver a different result, viz. customers selecting a product at a specified price but being charged a higher amount later, offering an enticing product and then claiming it to be out of stock while proposing an alternative, or altering the function of familiar symbols, like changing the meaning of an ‘X’ in an ad’s top right corner. Such misrepresentations can confuse consumers.

False Urgency – Often advertisements mislead the consumers stating or implying that the availability of a particular product or service are more limited than they actually are. For instance, advertising airline seats at a certain price implying limited availability when there are more seats left. In such cases, advertisers must demonstrate that, at the time of conveying limited availability and resulting urgency, the product or service was genuinely scarce to avoid misleading consumers.

Disguised Ads - Advertisements presented in a format resembling editorial or organic content must unmistakably disclose their status as ads. This applies to various scenarios, including influencer posts, paid reviews, and ads designed to mimic editorial content. The aim is to ensure that consumers can distinguish between genuine content and promotional material.

These guidelines, jointly released by the Department of Consumer Affairs and the ASCI, reflect the collaborative effort to prioritize consumer protection by addressing deceptive advertisement practices that manipulate consumer choices and hinder their right to access accurate information.

(This Article is solely for information purposes, does not constitute legal or professional advisory and should not be relied upon or used as a substitute for legal advice from attorney.)

About the Authors: Jayshree Navin Chandra, Senior Partner at ZEUS Law, has been a practicing lawyer since 2001 with extensive corporate and transactional advisory experience. She advises and represents clients ranging from Fortune 500 companies to start-ups as well as Central and State Government departments and public bodies in a wide range of domestic and cross border transactions, across industries in practice areas including Corporate and Company Law, M&A and Joint Venture, Private Equity, FDI & FII, Real Estate and Infrastructure, Data privacy and protection, Intellectual Property & Commercial Law Advisory.

Mr. Ansuman Mishra is an Associate at ZEUS Law and works in the Corporate and Commercial practice vertical.

ZEUS Law Associates is an ISO certified full service corporate commercial law firm with a team of dedicated and experienced lawyers well versed in handling domestic and cross border transactions across sectors, jurisdictions and regulatory landscapes. The firm’s practice areas include Corporate and Company Law, M&A and Joint Venture, Private Equity, FDI & FII, Real Estate and Infrastructure, Intellectual Property & Commercial Law, Litigation, Alternate Dispute Resolution, Indirect Tax and NRI Services.

by handyland

Data Protection for India’s FinTech @Digital Personal Data Protection Act, 2023

Data Protection for India’s FinTech @Digital Personal Data Protection Act, 2023

Author: Jayshree Chandra, Senior Partner & Divij Poddar, Associate at ZEUS Law

Published in https://www.asiancommunityne

For half a decade, the Indian policymakers have deliberated on data legislation. Finally, the fourth iteration of the data protection bill received the President’s assent on 11^th August 2023 – the Digital Personal Data Protection Act, 2023 (the Act). It is lean, principle-based, and unquestionably essential – its urgency could not have been overstated.

Among the most thriving sectors in the Indian economy is the FinTech ecosystem, a data behemoth. Initially included in the definition of sensitive personal data, financial data remains one of the most vulnerable datasets in the world. Independent of a legislative framework, the RBI has stepped up as an effective regulator for financial data for FinTech players and its regulated entities. RBI regulations and compliances, inter alia, include RBI’s guidelines on digital lending, which promotes transparency, data minimization and purpose limitation; notification on storage of payment system data which mandates data localization; and the notification restricting the storage of actual card data by entities other than card issuers and card networks.

As per the Act, the following two entities handle data:

1. Data fiduciaries: those who are entrusted with the data of the data principals and shoulder the entire liability under the Act; and
2. Data processors: those who process the data on behalf of the data fiduciaries and undertake mere contractual obligations against the data fiduciaries.

In the FinTech ecosystem, the entities must first know whether they are a fiduciary or a processor. Many FinTech companies perform neobanking activities while also acting as service providers to banks/ non-banks. The distinction between the two is activity-specific and depends on who is processing or merely collecting data; therefore, one must understand what kind of entity they are before streamlining and setting up processes for complying with the Act. Let’s take, for instance, when a service provider handles the bank’s customers' data on behalf of the bank, it functions as a processor, while on the other hand, the provider will act as a fiduciary when it collects its own employees’ data, whether to train and educate its AI model or for any other permitted purpose.

While the Act has an entire chapter dedicated to data fiduciaries, it is largely silent on the obligations of the data processors simply because as per the Act, they bear minimum to no liability. This overlooks a crucial aspect, considering that ultimately,, it is the processors who are entrusted with the principal’s data by the data fiduciaries as long as the principals have consented to it (which they can withdraw at any given point). The Act leaves it to the fiduciary and the processor to determine their obligations and duties in the form of a service or outsourcing agreement or any other valid contract.

Another important feature of the Act is the recognition of consent managers. This is a person who is registered with the data protection board and acts as a single point of contact to enable a data principal to give, manage, review, and withdraw her consent through an accessible, transparent, and interoperable platform. Account aggregators of the FinTech ecosystem may be regarded and included within the definition of consent managers as provided under the Act. These are data-blind consent managers that enable consumers and enterprises to move their data between two financial institutions/ platforms enabling them to leverage the potential of aggregating and combining fragmented and siloed financial data from consumers nationwide. Simply put, they allow consumers to access their financial accounts securely and efficiently, in one place, without having to log in to multiple platforms to view and manage their accounts. Therefore, read with RBI’s Master Direction on Account Aggregators, 2016, the account aggregators will also come under the purview of the Act, within the meaning of consent managers. The rights and obligations of the consent managers are yet to be ascertained as rules in this regard are still awaited.

The Act marks a significant stride forward for India's data protection landscape. While the Act addresses a crucial need for safeguarding personal data in a rapidly evolving digital era, its implementation will require a nuanced understanding of roles and responsibilities, particularly within the FinTech ecosystem, as well as a proper review of the rules and regulations that will be prescribed by the Central Government. The Act’s recognition of data fiduciaries and processors, along with the innovative concept of consent managers, underscores the importance of transparency, accountability, and user control over their data. As the FinTech ecosystem continues to flourish, the Act’s provisions will undoubtedly play a pivotal role in shaping how financial data is managed and secured. However, as the regulatory framework takes shape, careful attention must be given to bridging the gap in obligations for data processors, ensuring that the data protection realm remains robust and effective.

(This Article is solely for information purposes, does not constitute legal or professional advisory and should not be relied upon or used as a substitute for legal advice from attorney.)

About the Authors: Jayshree Navin Chandra, Senior Partner at ZEUS Law, has been a practicing lawyer since 2001 with extensive corporate and transactional advisory experience. She advises and represents clients ranging from Fortune 500 companies to start-ups as well as Central and State Government departments and public bodies in a wide range of domestic and cross border transactions, across industries in practice areas including Corporate and Company Law, M&A and Joint Venture, Private Equity, FDI & FII, Real Estate and Infrastructure, Data privacy and protection, Intellectual Property & Commercial Law Advisory.

Mr. Divij Poddar is an Associate at ZEUS Law and works in the Corporate and Commercial practice vertical.

ZEUS Law Associates is an ISO certified full service corporate commercial law firm with a team of dedicated and experienced lawyers well versed in handling domestic and cross border transactions across sectors, jurisdictions and regulatory landscapes. The firm’s practice areas include Corporate and Company Law, M&A and Joint Venture, Private Equity, FDI & FII, Real Estate and Infrastructure, Intellectual Property & Commercial Law, Litigation, Alternate Dispute Resolution, Indirect Tax and NRI Services.

by handyland

Taiwan Expo: More than 50 Taiwanese firms exploring new supply chain partners from India

Taiwan Expo: More than 50 Taiwanese firms exploring new supply chain partners from India

Author: Pankhuri Jain, Partner & Pari Bhardwaj, Associate at ZEUS Law

Published in https://www.asiancommunitynews.com on 04^th October, 2023

The time has come for India and Taiwan to embark upon the journey of reimagining their economic relationship. Having historically maintained ‘unofficial’ ties, there has been a notable shift in recent years with an aim to foster more robust official economic ties. After facing a series of shocks in the global supply chain right from the pandemic, the World Trade Report 2023 has brought a new journey of re-globalisation for the countries^[1]. Therefore, India, being one of the 14^th largest export destinations and the 18^th largest source of imports for Taiwan^[2], has been invited to participate in the Taiwan Expo, which is scheduled from October 5 to 7, 2023, in Mumbai. More than 50 Taiwanese firms will be actively exploring new supply chain partners from India at the Expo, and this opens a promising window to strengthen bilateral commercial relationships with the country.

India-Taiwan Economic Relationship

Before delving into the recent globalisation strengthening the Bilateral commercial relationship, let’s get a gist of the history of the India-Taiwan economic relationship.

Taiwan and India started to approach each other after the Indian Government initiated the “Look East Policy” in early 1991 by loosening visa restrictions on each other. Representative offices of both countries were established in each other’s capitals, namely the Taipei Economic & Culture Centre (TECC) in New Delhi and the India Taipei Association (ITA) in Taipei, promoting economic ties between the countries.

Taiwan’s foreign policy outlook has experienced a great transformation under the Democratic Progressive Party’s (DPP) administration. The Tsai Ing-Wen Administration launched ‘New Southbound Policy’ in 2016^[3], to shift the approach and put a greater emphasis on enhancing its outreach to the immediate and extended neighbourhood.

Recognizing the pitfalls of being overly reliant on a solitary market, Taiwan has turned its gaze towards India as a key player in its external interactions. Taiwan is actively seeking to broaden its economic horizons, while India aspires to cement its position as a compelling alternative hub in the intricate tapestry of the global supply chain. Against the backdrop of current geopolitical and economic shifts, a window of opportunity has opened up for India and Taiwan to chart a course of collaboration aimed at attaining shared and advantageous objectives.

Bilateral trade between the two countries totaled US$8.45 billion in 2022, representing an increase of 9.8% over the previous year. In 2022, India's exports to Taiwan amounted to US$3.14 billion, consisting of mineral fuels, aluminium, iron, steel, organic chemicals, plastics, and articles thereof, while Taiwan's exports to India amounted to US$5.31 billion, consisting primarily of plastics, electronic integrated circuits, organic chemicals, electrical machinery, iron, and steel.^[4]

Commercial bonds form the cornerstone of their bilateral ties, and recent developments vividly illustrate the promising potential of their cooperative endeavours.

Legal ties between the countries affecting the supply chain agreements

India expressed its willingness to advance commercial relations with Taiwan by initiating negotiations for a Free Trade Agreement to reduce barriers to imports and exports among them and signing the upgraded version of Bilateral Investment Treaty establishing the terms and conditions for private investment by nationals and companies. Both countries have signed a Double Taxation Avoidance Agreement (DTAA) to avoid levying taxes twice on the same income, a Customs Mutual Assistance Agreement (CMAA) for free exchange of information and evidence to assist countries in the enforcement of customs laws, the ATA Carnet Protocol permitting duty-free temporary admission of goods into a member country without the need to raise customs bond, a Memorandum of Understanding (MoU) on Promotion of Industry Collaboration, and an MoU with India’s PHD Chamber of Commerce and Industry.

Commerce is the only domain where the countries are experiencing direct and open government interactions. These regulatory relaxations have paved the way for countries to welcome reciprocal investments and facilitate the smooth operation of supply chain agreements.

Way Forward

TECC is expanding its presence in India with a new representative office in Mumbai, strengthening its role in fostering collaboration between Taiwanese and Indian businesses. Currently, Taiwan External Trade Development Council (TAITRA) maintains four liaison offices across India in Delhi, Chennai, Kolkata, and Mumbai, while in 2017, an India Center was established in Taipei to serve as a central resource hub, offering expertise and support to Taiwanese enterprises operating in India. Additionally, to facilitate^[5][6]

In 2022, Taiwan initiated its willingness to share its expertise with India in critical sectors such as semiconductors, 5G, information security, and artificial intelligence, saying that the country can be an "excellent" partner in New Delhi's quest to become a hub for the manufacturing of cutting-edge electronics. And currently, when India is aspiring to gain a foothold in semiconductor manufacturing, Taiwan can be India’s potential partner. In August 2023, at the meeting organised by an inbound Taiwan Trade Mission at the World Trade Centre in Mumbai, Maharashtra was considered a promising investment destination due to its abundant skilled workers and being the leading industrial state of India. Both countries are also in talks to create an agreement enabling Indian labor migration to alleviate shortages in key sectors such as manufacturing, construction, household services, agriculture, and fisheries^[7] under the Taiwan-India Agricultural Cooperation Agreement signed in 2016^[8]. By making curative economic relationships, both countries are globalising and creating a cooperative ladder of economic relationships.

^[1] https://www.wto.org/english/res_e/publications_e/wtr23_e.htm

^[2] https://agriexchange.apeda.gov.in/news/NewsSearch.aspx?newsid=50890

^[3]https://newsouthboundpolicy.trade.gov.tw/Files/Pages/Attaches/11/%E6%96%B0%E5%8D%97%E5%90%913%E5%91%A8%E5%B9%B4%E6%89%8B%E5%86%8A.pdf

^[4] https://agriexchange.apeda.gov.in/news/NewsSearch.aspx?newsid=50890

 ^[6]https://www.orfonline.org/research/the-role-of-commercial-ties-in-advancing-india-taiwan-relations/#_ftnref1

^[7]https://www.tpci.in/indiabusinesstrade/news_buzz/india-taiwan-likely-to-sign-worker-migration-agreement/#:~:text=Taiwan%20and%20India%20are%20discussing,household%20workers%2C%20agriculture%20and%20fisheries.

^[8]https://www.orfonline.org/research/the-role-of-commercial-ties-in-advancing-india-taiwan-relations/#_ftnref1

by handyland

Social Media Security Norms for Indian Govt. entities

Social Media Security Norms for Government Entities

Author: Jayshree Chandra, Senior Partner & Anisha Jhawar, Associate at ZEUS Law

Published in https://www.asiancommunitynews.com on 28^th September 2023

Recently, Guidelines on Information Security Practices for Government Entities (‘Guidelines’) have been issued by Indian Computer Emergency Response Team (CERT-In), an organ of Ministry of Electronics and Information Technology (MeitY).

The Guidelines apply to the ministries, departments, secretariats, and offices and entities associated with these government organisations. Apart from providing a legal blueprint for the cyber resilience, security measures and the controls required to be adopted by the government organisations and associated entities, the Guidelines also provide for the list of social media related security measures required to be adopted by such organisations and entities which include the following:

• Restricting the access to official social media accounts and limiting the same to designated officials and systems only;
• Using a dedicated/separate email account for operating the social media platform accounts and the credentials used for official social media platform account should be different from the credentials for official email account;
• Specifying a password policy for usage of the credentials;
• Prohibiting usage of personal email account for operating official social media account;
• Enabling multi-factor authentication for all social media accounts;
• Approving the content to be posted on social media handles by appropriate authority within the organisation;
• Ensuring operation of the social media accounts by the designated officials, on trusted devices only (and not on public / unauthorised devices) and ensuring log out the same immediately after usage;
• Disabling the Geolocation (GPS) access feature for official social media platforms;
• Ensuring that the social media platform software/application used is updated to the latest available version, available security patches as well as security and privacy settings related to such software;
• Revoking access by an employee to social media account with immediate effect in case he/she switches the role or his/her employment terminates or he leaves the organisation;
• Enabling account security logs along with periodically monitoring of the log-in attempts from untrusted devices or log-in attempts from geographical regions other than the usual;
• Enabling all alerts for unrecognized login attempts of social media platform/application;
• Exercising caution for usage of all third-party applications used for managing social media platform accounts;
• Regularly monitoring e-mail accounts associated with official social media accounts for any alerts received related to account activities.

The Guidelines reflect a stringent approach adopted by Cert-In as social media have increasingly become extremely vulnerable, being prone to cyber-attacks that may affect an organisation’s information systems and thus, compromising the confidentiality to far reaching consequences.

To continue their engagement and dealings with government organisations and associated entities, the contracting party(ies) providing third-party applications and rendering software services will be required to ramp up with the demands of government organisations and associated entities. The need of the hour emphasises for developing better security and privacy features in the applications and software.

(This Article is solely for information purposes, does not constitute legal or professional advisory and should not be relied upon or used as a substitute for legal advice from attorney.)

About the Authors: Jayshree Navin Chandra, Senior Partner at ZEUS Law, has been a practicing lawyer since 2001 with extensive corporate and transactional advisory experience. She advises and represents clients ranging from Fortune 500 companies to start-ups as well as Central and State Government departments and public bodies in a wide range of domestic and cross border transactions, across industries in practice areas including Corporate and Company Law, M&A and Joint Venture, Private Equity, FDI & FII, Real Estate and Infrastructure, Data privacy and protection, Intellectual Property & Commercial Law Advisory.

Ms. Anisha Jhawar is an Associate at ZEUS Law and works in the Corporate and Commercial practice vertical.

ZEUS Law Associates is an ISO certified full service corporate commercial law firm with a team of dedicated and experienced lawyers well versed in handling domestic and cross border transactions across sectors, jurisdictions and regulatory landscapes. The firm’s practice areas include Corporate and Company Law, M&A and Joint Venture, Private Equity, FDI & FII, Real Estate and Infrastructure, Intellectual Property & Commercial Law, Litigation, Alternate Dispute Resolution, Indirect Tax and NRI Services.

by handyland

Labelling and Packaging for Drugs: Ensuring Safety and Compliance

Labelling and Packaging for Drugs: Ensuring Safety and Compliance

Author: Jayshree Chandra, Senior Partner & Shreya Pandey, Associate at ZEUS Law

Published in https://www.asiancommunitynews.com on 30^th August 2023

INTRODUCTION

In the pharmaceutical field, the significance of proper labelling and packaging cannot be overstated. These aspects are helpful in guaranteeing the safety, efficacy, and responsible use of pharmaceutical products. The Drugs and Cosmetics Act, 1940 (“Act”), and, the Drugs and Cosmetics Rules, 1945 (“Rules”) set the standards and guidelines that pharmaceutical manufacturers are required to adhere to, when labelling and packaging drugs.

LABELLING REQUIREMENTS

Part IX of the Drugs and Cosmetics Rules, 1945 plays a central role in outlining regulations for labelling and packaging of drugs. No person is allowed to sell or distribute drugs, without meeting the labelling rules. This guarantees accurate information on labels before sale or distribution (Rule 95). Rule 96 provides a thorough overview of the requisites for drug labelling in India. It mandates that vital information such as the drug's proper name, net content, content of active ingredients, particulars of the manufacturer, batch numbers, manufacturing license numbers, expiry dates, be imprinted or written in indelible ink on both the innermost container label and external coverings. It also provides for additional labelling requirements for certain drug categories such as imported drugs, contraceptives, vaccines and surgical items. In essence, it reinforces accountability within the pharmaceutical industry.

Rule 97 of the Drugs and Cosmetics Rules, 1945, delves in labelling regulations for medicines, outlining directives based on their ingredients and intended use. For instance, if a medicine incorporates a substance stipulated in Schedule G, it necessitates affixing the word “Caution” onto its label. Similarly, if it integrates a component enumerated in Schedule H, it necessitates labelling with an "Rx" symbol. Should a medicine's formulation align with Schedule H and subsequently falls within the purview of the Narcotic Drugs and Psychotropic Substances Act, 1985, it mandates labelling a distinctive red "NRx" symbol. In the event that the drug comprises a substance specified in Schedule X then it is to be labelled with a red "XRx" symbol and if it contains a substance specified in Schedule H1 then it needs to be labelled with a red "Rx" symbol and a caution. For external medicines, the "FOR EXTERNAL USE ONLY" labelling is required, while veterinary medicines should state "Not for human use; for animal treatment only" and those for food-producing animals must indicate the drug's withdrawal period. Medicines which are prepared for treatment of human ailments, if contain industrial methylated spirit, must state "For External Use only", and strong substances from Schedule X must have a red label. This rule makes sure medicines have the right labels for safety and proper use.

Rule 102 mandates labels for non-sterile surgical ligatures and sutures, indicating their non-sterile status. Rule 103 further stipulates that the label of patent or proprietary medicines must incorporate the manufacturer's name, address, and the true formula or ingredient list, imprinted or written in indelible ink. Rule 104 requires for the indication of "I.P." and recognized abbreviations on the label of the drug to signify adherence to pharmacopoeia standards. Rule 104A prohibits altering inscriptions on drug containers, labels, or wrappers, unless sanctioned by the Licensing Authority.

PACKAGING REQUIREMENTS

Rule 105 covers the packaging requirements for drugs intended for retail sale in India. The rule defines specific pack sizes for various types of drugs, ensuring consistency and proper usage. For instance, tablets/capsules should have pack sizes that either match the number of units (if less than 10) or are multiples of 5 (if above 10). Liquid oral preparations, paediatric oral drops, eye/ear/nasal drops, and eye ointments must adhere to predefined pack sizes. However, certain exceptions exist, including imported formulations, preparations for veterinary use, export, certain specific forms of medicines, hospitals, registered medical practitioners, nursing homes, and physician's samples. Moreover, new drug pack sizes not covered under these regulations are subject to examination and approval by the Licensing Authority. Oxytocin injections must be in single unit blister packs, and Diclofenac injections for human use must be in single unit dose packs as well. Rule 105A provides for the packaging criteria for Schedule X drugs, ensuring their packaging adheres to appropriate quantities while allowing certain exceptions for hospital and dispensary supplies within stipulated boundaries. Furthermore, Rule 106 firmly prohibits drugs from making claims about preventing, or curing the diseases listed in Schedule J. These collective provisions synergize to ensure responsible, transparent, and safe distribution of drugs within the Indian market.

CONCLUSION

The provisions of the Act and the Rules safeguard public health by ensuring accurate information, preventing misleading practices, and promoting safe and informed use of drugs. Manufacturers and stakeholders in the pharmaceutical industry must adhere to these regulations to uphold the highest standards of patient safety and product efficacy.

(This Article is solely for information purposes, does not constitute legal or professional advisory and should not be relied upon or used as a substitute for legal advice from attorney.)

About the Authors: Jayshree Navin Chandra, Senior Partner at ZEUS Law, has been a practicing lawyer since 2001 with extensive corporate and transactional advisory experience. She advises and represents clients ranging from Fortune 500 companies to start-ups as well as Central and State Government departments and public bodies in a wide range of domestic and cross border transactions, across industries in practice areas including Corporate and Company Law, M&A and Joint Venture, Private Equity, FDI & FII, Real Estate and Infrastructure, Data privacy and protection, Intellectual Property & Commercial Law Advisory.

Ms. Shreya Pandey is an Associate at ZEUS Law and works in the Corporate and Commercial practice vertical.

ZEUS Law Associates is an ISO certified full service corporate commercial law firm with a team of dedicated and experienced lawyers well versed in handling domestic and cross border transactions across sectors, jurisdictions and regulatory landscapes. The firm’s practice areas include Corporate and Company Law, M&A and Joint Venture, Private Equity, FDI & FII, Real Estate and Infrastructure, Intellectual Property & Commercial Law, Litigation, Alternate Dispute Resolution, Indirect Tax and NRI Services.

by handyland

Stamp duty implications on an order sanctioning a scheme of arrangement

STAMP DUTY IMPLICATIONS ON AN ORDER SANCTIONING A SCHEME OF ARRANGEMENT

Author: Sandeep Bhuraria, Senior Partner & Parijat, Senior Associate at ZEUS Law

Published in https://www.asiancommunitynews.com on 22nd  August 2023

The jurisprudence behind mergers and demergers in India is regulated by the mechanism envisaged under Chapter XV of the Companies Act, 2013 (“Act”). However, the controversy with respect to levy of stamp duty on an Order duly sanctioning a Composite Scheme of Arrangement (“Scheme”) passed by the National Company Law Tribunal (“NCLT”) has been put to rest by the Hon’ble Delhi High Court.

AN OVERVIEW OF THE INDIAN STAMP ACT, 1899

• The Indian Stamp Act, 1899 (“ISA”) is adopted as the central legislation to levy stamp duties across India and is enacted for the purpose of consolidating and amending the law relating to stamps.

• As per Section 3(1) of the ISA, the instruments mentioned in Schedule I are chargeable with duty specified therein, subject to the provisions of ISA. Different states in India have either enacted their own stamp acts or have adopted the ISA, with certain amendments. However, the rate of levy varies for different states.

1. INSTRUMENT:

• Section 2(14) of the ISA defines ‘Instrument’ which includes any document by which any right or liability is created, transferred, limited, extended, recorded or extinguished.

1. CONVEYANCE:

• Section 2(10) of the ISA defines ‘Conveyance’ to include every instrument, by which, property is transferred inter-vivos and which has not been specifically provided under the Schedule to the ISA.

• Hence, Conveyance under the ISA is a catch all residuary provision that prescribes that all such instruments which are not specified in the Schedule to the ISA shall fall within its ambit.

A SCHEME IS AN INSTRUMENT OF CONVEYANCE:

• Interpretation of the definition of ‘Instrument’ and ‘Conveyance’ under the ISA would showcase that the said definition is an inclusive one, which is amenable to liberal interpretation.

• The usage of the term ‘includes’ in a definition clause is done with the legislative intent to enlarge the interpretation. Thus, the definition of ‘Instrument’ and ‘Conveyance’ under the ISA can be comprehended to not only include the things that are expressly included but also such things as they signify according to their nature and import.

• A Scheme may include mergers and demergers involving issuance of shares and also transfer of immovable property by which the said property is vested in the transferee company.

• Section 232(4) of the of the Act prescribes that an Order of the NCLT approving a Scheme leads to transfer of the assets and liabilities of an undertaking of the transferor companies to the transferee company.

CLARITY ON THE LEVY OF STAMP DUTY

• The Delhi High Court settled the Law in its landmark judgment of Delhi Towers Limited Vs. G.N.C.T. of Delhi wherein it was held that an Order sanctioning a Scheme is an instrument of conveyance and hence, exigible to stamp duty. The Delhi High Court observed that a legislative omission to mention a subject or item in an inclusive definition does not tantamount to legislative exemption from applicability of the statutory provisions.

PRESCRIBED RATE OF LEVY:

• Interestingly, the Delhi Towers judgment while stating that an Order sanctioning a Scheme is a conveyance did not deliberate on the rate of the levy of stamp duty on such an Order.

• The controversy involving the aforesaid, has been put to rest by various states viz. Maharashtra, Uttar Pradesh, Karnataka, Gujarat, Kerala, Madhya Pradesh, etc., who have adopted the provisions of the ISA and have made suitable amendments to include an Order passed by the NCLT sanctioning a Scheme and prescribed the rate of levy in respect thereof. Most of the States Legislatures have prescribed a lower rate of stamp duty where only shares are being issued to the shareholders of the transferor companies. Generally, the rate of such levy ranges between 0.5% to 1% on the aggregate market value of the shares. In cases where immovable property is being transferred in a Scheme, the prescribed stamp duty is considerably higher and ranges between 2% to 5% on the market value of the immovable property.

• In states that have not amended the definition of conveyance or their respective Schedules, the rate of levy on an Order approving a Scheme is under the heading of ‘Conveyance’.

(This Article is solely for information purposes, does not constitute legal or professional advisory and should not be relied upon or used as a substitute for legal advice from attorney.) 

“About the Authors: Mr. Sandeep Bhuraria, has been a practicing lawyer for about 30 years and is a Senior Partner at ZEUS Law Associates. He leads the Commercial Litigation and Restructuring division. He is well versed in the intricacies of Indian Commercial, Civil and Insolvency Laws. He regularly advises foreign investors as well as Indian entrepreneurs on their legal strategy with respect to restructuring their businesses in India. Parijat, is a Senior Associate at ZEUS Law Associates and works in the Commercial Litigation and Restructuring vertical.

ZEUS Law Associates is an ISO certified full service corporate commercial law firm with a team of dedicated and experienced lawyers well versed in handling domestic and cross border transactions across sectors, jurisdictions and regulatory landscapes. The firm’s practice areas include Corporate and Company Law, M&A and Joint Venture, Private Equity, FDI & FII, Real Estate and Infrastructure, Intellectual Property & Commercial Law, Litigation, Alternate Dispute Resolution, Indirect Tax and NRI Services.

by handyland

Cyber Resilience for Government Entities: A Legal Blueprint

Cyber Resilience for Government Entities: A Legal Blueprint

Authors: Jayshree Chandra, Senior Partner and Anisha Jhawar, Associate at ZEUS Law

Published in Live Law on 18th August 2023

The Indian Computer Emergency Response Team (CERT-In), an organ of Ministry of Electronics and Information Technology (MeitY), is the national nodal agency for responding to computer security incidents in India. Recently, guidelines have been issued by CERT-In regarding the security practices to be adopted by the government entities for ensuring a safe and trusted internet (‘Guidelines’).

The Guidelines is to consolidate best practices related to information security practices and procedures that are required to be followed by ministries, departments, secretariats, and offices and entities associated with these government organisations. The purpose is to establish a benchmark for the cyber security measures and the controls, provide procedures to protect their cyber infrastructure from prominent threats, and cover the best practices to be adopted by the government organisations and associated entities in different security domains such as network security, application security, data security, auditing, third party sourcing as well as prevention and response to combat cyber incidents and cyber security incidents.

The list of requirements and measures that the government organisations and agencies have to follow include:

• Nominating a Chief Information Security Officer (CISO) for Information Technology (IT) security.
• Formulating a cyber security policy as well as a dedicated cyber security functional team, which is separate from IT operations and infrastructure team.
• Conducting regular internal and external third-party audits of the entire ICT (Information and Communication Technology) infrastructure.
• Maintaining inventory of authorised hardware and software with the mechanism for automated scanning for unauthorised device and software.
• Maintaining network and infrastructure security by way of an appropriate network architecture, including the network perimeter, segmenting of the networks with separate VLANs for different functional requirements, using fire walls to create buffer zones between internet and networks, and other mechanisms such as network intrusion detection, web and email filters, etc. so that only the traffic required be exchanged.
• Blocking access to remote desktop applications and installing appropriate security technologies to protect information or information systems being accessed via such remote access.
• Logging enabled devices and restricting the custom of Bring Your Own Device (BYOD) and unknown devices without due authorization.
• Incorporating security at each level of software development lifecycle.
• Enabling log monitoring on a continuous basis with the ability to alert the dedicated team when a security anomaly is detected.
• Identifying and classifying sensitive data and personal data and applying measures for encrypting such data in transit and at rest.
• Implementing micro-segmentation for controlled granular access to database applications.
• Restricting personal external storage media devices for use with the official information systems or assets.
• Designing a data back-up policy within the organisation with regular and monitored back-ups, tools to prevent, contain and respond to data leaks and breaches, and such back-up be kept in an area physically separate from the server.
• Ensuring collection and processing of information is with explicit consent and agreement.
• Thoroughly examining cloud services models and making sure that no server/ storage is inadvertently leaking data due to inappropriate configuration.
• Appropriately securing hardware such as desktop, printers and other commonly used and shared devices in the network from any unauthorised access, exposure and use of information or data leakages.
• Installing only the authorised and licensed software for use from trusted repositories.
• Regularly conducting awareness programmes and educating end users about the security practices to be adopted for dealing with the cyber threats.
• Ensuring security measures in respect of social media including, limited and restricted access to the official social media accounts, using a dedicated separate e-mail to operate the social media accounts, multi-factor authentication, approval of the appropriate authority before posting of the contents on social media handles, disabling geolocation (GPS) access feature for such accounts, as well as enabling security logs with periodic monitoring and enabling alerts for unrecognized login attempts.
• Identifying the possible threat vectors and exploitation points, as well as establishing a formal relationship with the external entities such as CERT-In, sectoral CSIRTs and other stakeholders.

The Guidelines have extensive prescription for Third Party access and outsourcing. The organisations are required to ensure signing stringent non-disclosure agreements before sharing of or allowing access of information to any third party / vendor. The contract should document the information security requirements, such as the general policy on information security, procedures to protect organisational assets, restrictions on copying/ disclosure, return of information/ assets in the possession of third party, water-tight termination clauses for event of security incident or security breach, regular monitoring and auditing the contractual responsibilities, as well as arrangements for reporting and investigation into incidents of breaches. The Vendor is required to follow the data protection norms as well as comply with the information security policies, processes and procedures of the organisation and in case of violation, risk the termination of the contract apart from actions under and as per the applicable laws.

The Guidelines propose Defence-in-Depth (D-i-D) approach along with Zero Trust Architecture to protect the confidentiality, integrity and availability of the network and the data. Zero Trust approach is built around eight pillars, i.e. user device, network, infrastructure, application, data, visibility and analytics ad orchestration and automation.

Private businesses relying on the networks, hardware and software services need to be attuned with these guidelines and adopt appropriate measures, systems, design policies for cyber hygiene and resiliency, as well as have a robust framework for safe, trusted and accountable ICT security practices prior to signing of any contractual document and non-disclosure agreements for their engagements with government organisations and agencies.

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by handyland

Government Contemplates Extending PLI Scheme to Chemicals and Petrochemicals Industries

Government Contemplates Extending PLI Scheme to Chemicals and Petrochemicals Industries

Author: Sunil Tyagi, Managing Partner & Sangini Tyagi, Senior Associate at ZEUS Law

Published in https://www.asiancommunitynews.com on 17^th August 2023

In a move to bolster the chemicals and petrochemicals sectors, the Indian government is contemplating an extension of the Production-Linked Incentive (PLI) scheme. The proposed extension aims to provide impetus to these industries, fostering growth, innovation, and competitiveness in the global market. This strategic step comes as part of the government's vision to strengthen the manufacturing landscape and drive economic recovery post the challenges posed by the pandemic.

The PLI scheme is being implemented in various sectors such as electronics, pharmaceuticals, and telecom, propelling India's position as a preferred investment destination. The government now plans to replicate this success in the chemicals and petrochemicals domains, recognizing their significant contributions to the country's economy and the potential for further expansion.

The chemicals and petrochemicals industries are vital cogs in India's economic machinery, with a broad spectrum of applications across diverse sectors such as agriculture, manufacturing, construction, healthcare, and consumer goods. By incentivizing and encouraging investments in these sectors, the government aims to enhance their manufacturing capabilities, promote innovation, and achieve self-sufficiency in critical chemical products.

Under the proposed extension, eligible companies operating in the chemicals and petrochemicals segments will be offered financial incentives based on their incremental sales revenue and investments in new technologies and research and development. These incentives are designed to boost production capacities, encourage the adoption of cutting-edge technologies, and attract both domestic and foreign investments.

The scheme is set to encourage indigenous production, reduce import dependence, and promote the 'Make in India' initiative in the chemicals and petrochemicals sectors. By reducing reliance on imports and promoting domestic production, the country can strengthen its position in the global supply chain and achieve long-term economic stability.

Furthermore, the extension of the PLI scheme is expected to create numerous employment opportunities, contributing to India's goal of inclusive and sustainable growth. The growth of these sectors will not only lead to direct job creation but also foster ancillary industries, thus generating a multiplier effect on the overall economy.

In devising the PLI scheme in the chemicals and petrochemicals sectors and for ensuring effective implementation of the same, the government is in process to work closely in collaboration with industry stakeholders, associations, and experts. It will lead to addressing sector-specific challenges, identifying priority areas, and aligning incentives with the broader goals of economic development and sustainability.

By encouraging investments in green technologies and sustainable practices, the government aims to enhance the environmental performance of the industries. This emphasis on sustainable growth will align with India's commitment to reducing carbon emissions and mitigating the impact of climate change.

The potential extension of the PLI scheme to the chemicals and petrochemicals sectors marks a significant step in transforming India's manufacturing landscape. This forward-looking approach by the government is set to boost domestic production, promote innovation, and create a favourable business environment for both local and international investors. Through strategic collaboration between the government, industry, and various stakeholders, India is poised to fortify its position as a global leader in the chemicals and petrochemicals industries, contributing to the nation's overall economic prosperity.

(This Article is solely for information purposes, does not constitute legal or professional advisory and should not be relied upon or used as a substitute for legal advice from attorney.)

About the Authors: Mr. Sunil Tyagi, has been a practicing lawyer for over 30 years and is the Managing Partner and Co-founder of ZEUS Law Associates. He leads the Real-Estate & Infrastructure, Corporate & Commercial Law and Compliance divisions. He is well versed in the intricacies of Indian Civil Law, Business and Commercial Law and regularly advises foreign investors as well as Indian entrepreneurs on their business and legal strategy with respect to investment in India.

Sangini Tyagi, is a Senior Associate at ZEUS Law and works in the Corporate & Commercial and Infrastructure & Real Estate practice vertical.

ZEUS Law Associates is an ISO certified full service corporate commercial law firm with a team of dedicated and experienced lawyers well versed in handling domestic and cross border transactions across sectors, jurisdictions and regulatory landscapes. The firm’s distinct practice areas include Corporate & Commercial Law, Real Estate & Infrastructure, Litigation, Alternate Dispute Resolution, Indirect Tax and NRI Services.

by handyland

'Advance Medical Directive’ Or ‘Living Will’- Decoded

Advance Medical Directive’ Or ‘Living Will’- Decoded

Author:  Jayshree Navin Chandra, Senior Partner and Mona Dewan, Managing Associate, ZEUS Law Associates

Published in Live Law on 09^th August 2023

The unpredictability of life during the COVID 19 pandemic that affected almost all countries around the world, reinforced the requirement and created an awareness among people about the importance of succession planning and writing their Wills well in time. A Will is a document whereby a testator devises the bequest plan of his estate which comes in effect upon the demise of the testator. In contrast, an advance medical directive commonly known as ‘Living Will’, which has gained ground throughout the world, comes into effect during the lifetime of the person executing it.

Advance medical directive essentially are the written legal instructions regarding the preferences for medical treatment if one is unable to make decisions for himself in case, he becomes incapacitated. An Advance medical directive spells out the medical treatments one would or would not want to be used to keep himself alive.

In India, there has been lot of discussion on advance medical directives post the judgement of Hon’ble Supreme Court of India in the matter “Common Cause v. Union of India” [(2018) 5 SCC 1] wherein the Supreme Court laid down guidelines for executing advance medical directive. In this matter, the constitution bench comprising of the then Chief Justice of India Dipak Misra, Justice A. M. Khanwilkar, Justice A. K. Sikri, CJI Dr. D. Y. Chandrachud and Justice Ashok Bhushan, by way of declaration recognized the person’s right to make an advance directive about the course of his or her medical treatment including the removal of life support if such a situation arises.

Justice Misra and Justice Khanwilkar observed that where a patient has already made a valid advance directive which is free from reasonable doubt and specifying that he/ she doesn’t wish to be treated, then such directive has to be given effect to. Right to life and liberty as envisaged under Article 21 of the Constitution is meaningless unless it encompasses within its sphere individual dignity.

Justice Sikri in his concurring view observed that “The possibility of misuse could not be held to be a valid ground for rejecting advance directive, as opined by Law Commission of India as well in its 196^th and 241^st Report. Instead, attempt could be made to provide safeguards for exercise of such advance directive”.

In this matter, the Supreme Court spelt out the safeguards in respect of advance medical directives and issued guidelines and directions regarding who can execute the advance medical directive and how, what should an advance medical directive contain, how should an advance medical directive be recorded and preserved and what should be the course of action if the permission to withdraw medical treatment is refused by the medical board.  An advance medical directive can be executed only by an adult who is of a sound and healthy state of mind and in a position to communicate, relate and comprehend the purpose and consequences of executing the document. It should be voluntarily executed, without any coercion, inducement or compulsion and after having full knowledge or information and should have characteristics of an informed consent given without any undue influence or constraint.

However, the complexity of the procedure laid down and difficulties faced by a large number of doctors in implementing the directions laid down by the Supreme Court led to filing of an application by Indian Society of Critical Care Medicine seeking clarifications on the 2018 Supreme Court judgment. The Supreme Court vide its clarificatory order dated 24^th January 2023, modified the guidelines for making an advance medical directive and the process of removal of (or withholding) life support from terminally ill patients.

As per the clarificatory order, an advance medical directive document should be in writing and signed by the executor/ executrix in the presence of two attesting witnesses, preferably independent, and attested before a notary or Gazetted Officer. The witnesses and the notary or Gazetted Officer have to record their satisfaction that the document has been executed voluntarily and without any coercion, inducement or compulsion and with full understanding of all the relevant information and consequences.

Further, it must expressly state the decision about the situations in which withholding or discontinuing medical treatment may be used. The decision of the executor/ executrix should be stated clearly and unambiguously in precise language. Under the advance medical directive, the executor/ executrix should make it clear that they are aware of the implications of carrying out the document. Further, an advance medical directive should specify the name of a guardian(s) or close relative(s) (“Nominee(s)”), who will be authorized to give consent to refuse or withdraw medical treatment in a manner consistent with the advance directive in the event of the executor becoming incapable of taking decision at the relevant time. The executor’s right to revoke the authorization at any time must also be expressly mentioned in the advance directive. The most recent duly executed advance directive will be regarded as the last statement of the patient's desires and will be implemented if there are multiple valid advance directives that have not all been cancelled.

The executor/ executrix should inform and hand over a copy of the advance directive to the Nominee(s) named as decision makers in advance directive as well as to the family physician, if any. A copy of the same is also required to be handed over to the custodian (competent officer of the local Government or Municipal Corporation or the Municipality or Panchayat, as the case may be). The executor/ executrix may also choose to incorporate their advance directive as a part of the digital health records, if any.

The treating physician, when made aware of advance directive of a terminally ill patient with no hope of recovery, is to ascertain its genuineness and authenticity with reference to the digital records of the executor/ executrix, or from the custodian. The treating physician after being satisfied that the directive needs to be acted upon, is required to inform the Nominee(s) about the nature of illness, the availability of medical care and consequences of alternative forms of treatment and the consequences of remaining untreated. He also needs to ensure that such Nominee(s) understand the content of advance directive, the options available and have arrived at a firm view that withdrawal or refusal of medical treatment is the best choice, after considering all options.

The hospital is required to constitute the Primary Medical Board comprising of the treating physician and at least two subject experts of the concerned specialty. This board is required to give its preliminary opinion within time prescribed, certifying whether to proceed with the instructions of the advance directive. Thereafter, the hospital is also required to constitute a secondary medical board comprising of a registered medical practitioner nominated by the chief medical officer of the district and at least two other subject experts in the concerned specialty and the board is required give its decision. The secondary medical board is also required to ascertain whether the executor is capable of communicating and understanding the consequences of their advance directive and if not seek consent from the Nominee(s). In cases where the primary medical board takes a decision not to follow an advance directive, the Nominee(s) can also request the hospital to refer the case to the secondary medical board for consideration and for passing appropriate directions on the advance directive.

The hospital has to convey the decision of the primary and secondary medical boards and the consent of the Nominee(s) to the judicial magistrate of first class before giving effect to the decision to withdraw the medical treatment administered to the executor/ executrix.

The treating doctor/ Nominee(s) or the hospital staff have the option to file a writ petition at the jurisdictional high court if permission to withdraw treatment is denied by the secondary medical board.

The Supreme Court in its order also modified the process to be followed in cases where the patient is terminally ill and undergoing prolonged treatment for his ailment which is incurable and no hope of being cured but does not have an advance medical directive.

The framework prescribed by the Hon’ble Supreme Court for making and effectuating an advance directive is a welcome step. However, it must be remembered that this framework is only an enabling mechanism and the possibility of misuse of advance directive cannot be ruled out. Life is precious. Therefore, it is important that the executor/ executrix while writing their advance directive carefully weigh all options and deliberate each aspect and decisions about future care and medical treatment as they would be empowering someone to take the decisions forward.

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by handyland

Draft Green Credit Programme Rules, 2023: Decoded

Draft Green Credit Programme Rules, 2023: Decoded

Author: Jayshree Navin Chandra, Senior Partner & Nikita Chhabra, Associate at ZEUS Law

Published in https://www.asiancommunitynews.com on 26^th July 2023

In a world grappling with environmental degradation and climate change, the need for sustainable solutions has become increasingly evident. As part of the global effort to address these challenges, the draft Green Credit Programme Implementation Rules, 2023 have been proposed by the Ministry of Environment, Forest and Climate Change on 26^th June, 2023, exercising the powers conferred under the Environment (Protection) Act, 1986.

This groundbreaking initiative proposed to be launched aims to encourage and contribute to the ‘LiFE’- ‘Lifestyle for Environment’, a grassroot movement introduced by the Government of India to propagate the vision of healthy and sustainable way of living based on values of conservation and mindful utilization of resources. The proposed Green Credit Programme (“GCP”) is aimed at creating a market based mechanism to incentivize and encourage sectors and entities, ranging from small-scaled stakeholders to those being developed at the level of urban and rural local bodies, private sectors, industries and organisations etc. to meet their existing obligations arising from various legal frameworks by undertaking environment positive actions which are able to converge with activities relevant for generating or buying green credits. The green credits issued can be further traded with stakeholders unable to adhere to or achieve the emission targets set by the government.

Under GCP, the Government of India proposes to set up a domestic voluntary market mechanism with a platform where the stakeholders could buy and sell the green credits amongst themselves. Implementation mechanism of GCP follows a phased approach, in the initial phase for designing and piloting the GCP, two or three activities from each sector such as tree plantation, water conservation, sustainable agriculture, waste management, air pollution, mangrove conservation and restoration, ecomark labeling, sustainable building and infrastructure will be identified with more activities to be added in subsequent phases. Thresholds and benchmarks will be mentioned for each environment positive action for issuance of green credits which would also be aligned to the obligations under other laws.

The governance of GCP is proposed to vest with the Steering Committee comprising of representatives from the concerned ministries or departments, domain experts, industry associations and other relevant stakeholders. The Steering Committee will have the power primarily to grant approvals, make recommendations to the Central Government, and review and monitor the implementation of GCP.

Indian Council of Forestry Research and Education shall act as the Administrator of GCP and will be responsible for the implementation including the management, monitoring, and operation of GCP. The Administrator will also be responsible for establishing and maintaining a Green Credit Registry in form of a standardized electronic database containing, inter-alia, common data elements relevant to the issuance, holding, transfer and acquisition of the green credits. The Green Credit Registry shall be responsible for registering an entity, ensuring the accounting of issuance, maintaining records of all transactions, complying with the directions of Steering Committee etc.

For incentivizing sustainable development and environment protection China has undertaken similar initiatives under the Green Credit Guidelines, which encourage banks to provide green credits to support economy to grow in a low-carbon, environment friendly model by assessing environment and social risks. Green credits are available to clients who intend to reduce pollution emission and promote energy efficiency. Stakeholders undertaking environment sustainable practices can also generate funds through green bonds, green loans, green IPO etc. USA, Iceland, Norway and Liechtenstein, Korea and several other countries have adopted emission trading as an approach for protecting the environment and reducing pollution. Emission trading programs comprise of two components, firstly a cap (limit) on pollution and secondly, tradable allowances which can be exchanged in the market.

For GCP to be successful, concerns such as greenwashing (wherein companies falsely market their green credentials for example, making misleading statements about the environment benefits of its services or products), difficulty in establishing the parity between different environment positive actions, retiring of green credits and its accounting, ensuring sustenance of environment friendly activities against which green credits are granted, reporting, verification, monitoring and other challenges need to be addressed. Transparency and clarity in the functioning of the green credit trading market also need to be maintained.

The GCP once notified will be a significant step towards promoting environmental conservation and sustainability through recognizing and incentivizing not only the private sector actions but also, individual and community efforts and could be one of the major accelerators for India's aim to become net zero by the year 2070.

(This Article is solely for information purposes, does not constitute legal or professional advisory and should not be relied upon or used as a substitute for legal advice from attorney.)

About the Authors: Jayshree Navin Chandra, Senior Partner at ZEUS Law, has been a practicing lawyer since 2001 with extensive corporate and transactional advisory experience. She advises and represents clients ranging from Fortune 500 companies to start-ups as well as Central and State Government departments and public bodies in a wide range of domestic and cross border transactions, across industries in practice areas including Corporate and Company Law, M&A and Joint Venture, Private Equity, FDI & FII, Real Estate and Infrastructure, Data privacy and protection, Intellectual Property & Commercial Law Advisory.

Ms. Nikita Chhabra is an Associate at ZEUS Law and works in the Corporate and Commercial practice vertical.

ZEUS Law Associates is an ISO certified full service corporate commercial law firm with a team of dedicated and experienced lawyers well versed in handling domestic and cross border transactions across sectors, jurisdictions and regulatory landscapes. The firm’s practice areas include Corporate and Company Law, M&A and Joint Venture, Private Equity, FDI & FII, Real Estate and Infrastructure, Intellectual Property & Commercial Law, Litigation, Alternate Dispute Resolution, Indirect Tax and NRI Services.

by handyland

Enforcement of Arbitral Awards in India: The Paradox

Enforcement of Arbitral Awards in India: The Paradox

Authors: Neetika Bajaj, Managing Associate and Surbhi Bhuraria, Senior Associate at ZEUS Law

Published in Live Law on 23rd July 2023

The Arbitration and Conciliation Act, 1996 (“the Arbitration Act”) is like that scripture that never stops giving. Every time you read it, you discover a new meaning, a new interpretation and a new paradox. Speaking of paradoxes, it is a fact that success of any dispute resolution system largely depends on the effectiveness of the enforcement mechanism provided in it. The Arbitration Act provides that an arbitral award will be enforced “in accordance with the provisions of the Code of Civil Procedure, 1908, (“CPC”) in the same manner as if it were a decree of the Court”.

We all have heard of the adage that "the difficulties of a litigant in India begin when he has obtained a decree"[1]. This statement of the Privy Council, capturing the agony of the decree holders, still holds true even after almost 150 years. Getting a favourable decree from the court is just half the battle won, the real struggle begins when the decree holder approaches the executing court. The Supreme Court has lamented the situation repeatedly and consistently over the years. In 2016, the Supreme Court, while passing the judgment in Satyawati vs. Rajinder Singh and Another[2], expressed its disappointment by remarking that "It is really agonizing to learn that the Appellant - Decree - Holder is unable to enjoy the fruits of her success even today i.e. in 2013 though the Appellant - Plaintiff had finally succeeded in January 1996". Years have passed but the ground reality refuses to change.

In 2021, a three- judge bench of the Supreme Court, in Rahul S. Shah Vs. Jinendra Kumar Gandhi[3], issued a direction that Executing Courts must dispose of the Execution Proceedings within six months from the date of filing, which may be extended only by recording reasons in writing for such delay. In 2022, a two- judge bench of the apex court, reiterated the position. However, it still needs to be seen how much of a difference these decisions would make in practice on an overburdened judiciary.

But the question is why do the decree-holders have to go through so much struggle to execute what has already been granted in their favour after a hard and arduous court battle. The flaw can be attributed to both the procedure and the system. Order XXI of the CPC, which lays down the rules and procedure for the execution of decrees, is a comprehensive collection of 106 Rules (Rules 60- 63 omitted) laying down the mechanism for stay of execution, mode of execution, attachment procedure to fulfil the decree, adjudication of claims and objections, etc. The issues with the mechanism are several and severe. The Order and extensive Rules therein provide too many avenues to the judgment-debtor to escape the liability by filing unnecessary appeals, applications, objections, non-disclosure of assets, etc. It is not just the judgment-debtor who is at fault for prolonging the proceedings, the courts also attribute more importance to the adjudication of the petitions and suits than the execution of the decrees. This is really the irony and the travesty of the system.

Coming to the Arbitration Act, once an arbitral award has been granted in favour of a party, it would have to wait for a period of three (3) months for the enforcement and execution of the award[4]. During this period of three (3) months, which is extendable by 30 days, the award may be challenged in terms of Section 34 of the Act. On achieving the finality, and in the absence of any stay on execution granted by the court under Section 36(3) of the Arbitration Act, the award- holder knocks the doors of the appropriate executing court for executing the award as if it was a decree of the court. In the absence of any procedure laid down under the Arbitration Act itself, for the execution of the arbitral awards, the award-holder has to face the very courts it wanted to avoid by opting for adjudication under an alternate dispute resolution.

While the Arbitration Act provides for a maximum time-limit of 18 months (from the date of completion of pleadings) for completion of proceedings and passing of the award, which can be further extended only by the court on providing reasons for delay, there is no time-limit in getting that award executed and enforced. And there lies the paradox. The intent of the Arbitration Act to provide speedy resolution of the disputes gets completely defeated by the enormous delays caused in executing these awards. The award remains a paper tiger until it gets executed.

In 2021, there were a total of 14,19,298[5] reported execution petitions pending in the lower courts. The figures for high courts of original jurisdictions are no less alarming. As on date, 32,397 execution petitions are pending before the Delhi High Court and 11,229 petitions are pending before the Bombay High Court[6]. In 2022, in the matter of Delhi Airport Metro Express Private Limited vs Delhi Metro Rail Corporation Ltd.[7], the Supreme Court categorically observed that India cannot aspire to be an international arbitration hub if there is no enforcement of arbitration awards. This was in relation to a 2017 award granting INR 7200 crores in the favour of Delhi Metro Rail Corporation.

An arbitral award without any provision for its speedy disposal is an anathema to the arbitration proceedings. There is a need to not just overhaul the system at the level of legislation but a serious re-think is required on the procedural level too. We can begin by increasing the number of benches for disposal of execution petitions in a time-bound manner as has been the repeated call of the Supreme Court. Thought can also be given to trimming the procedure, as provided in the CPC, specifically, for the execution of the arbitral awards. The Government of India has recently constituted a committee for suggesting reforms to the Arbitration Act. It is absolutely imperative that the committee seriously considers the issue of delay in execution of the arbitral awards to truly bring out the reforms in the arbitration landscape of India.   

This article is written by Neetika Bajaj, Managing Associate and Surbhi Bhuraria, Associate, Zeus Law Associates. Views are personal.

[1] General Manager of the Raj Durbhunga vs. Coomar Ramaput Singh (1871 – 72) 14 MIA 605

[2] (2013) 9 SCC 491

[3] (2021) 6 SCC 418

[4] Section 34(3) of the Act.

[5]https://www.thehindubusinessline.com/business-laws/gavel-pagethe-emerging-jurisprudence-for-quicker-execution-of-decrees/article65321133.ece

[6] https://njdg.ecourts.gov.in/njdgnew/index.php

[7] SLP (C) No. 21396/ 2022

by handyland

EXPLAINED: Nutraceuticals & Related Regulations in India

EXPLAINED: Nutraceuticals & Related Regulations in India

Author: Jayshree Navin Chandra, Senior Partner & Anisha Jhawar, Associate at ZEUS Law

Published in https://www.asiancommunitynews.com on 12^th July 2023

Nutraceuticals are products made from naturally occurring ingredients that are extracted, isolated, and purified from food or non-food sources, which upon consumption in specific amounts, render a certain physiological benefit and maintain good health.

In India, the nutraceuticals are regulated by Food Safety and Standards Authority of India (‘FSSAI’) under the Food Safety and Standards Act, 2006 (‘FSS Act’), and regulations thereunder, including: FSS (Health Supplements, Nutraceuticals, Food for Special Dietary Use, Food for Special Medical Purpose, Functional Food and Novel Food) Regulations, 2016 as amended by the first amendment regulations, 2021 (‘Nutraceutical Regulations or said Regulations’), FSS (Organic Foods) Regulations, 2017, FSS (Food Product Standards and Food Additive) Regulations, 2011, FSS (Packaging and Labelling) Regulations, 2011, FSS (Advertising and Claims) Regulations, 2018, FSS (Licensing and Registration of Food Businesses) Regulation, 2011, and FSS (Contaminants, Toxins and Residues) Regulations, 2011, in addition to the FSS (Import) Regulations, 2017 in case of import of the nutraceuticals.

The Nutraceutical Regulations apply to food items / products / formulations, existing or new, prepared for humans above the age of 2 years, with an aim to promote maintenance of health. The nutraceuticals may contain ingredients formulated, either alone or in combination, or their extracts (processed / unprocessed), in regular or conventional food formats such as liquid or syrup, suspension or powder, granule, tablet or capsule or any other format approved by the FSSAI. Formulations meant for infant nutrition are governed separately under FSS (Foods for Infant Nutrition) Regulations, 2020. Other dosage formats such as sprays can also be included in the list of permitted food formats.

All Food Business Operators (‘FBOs’) engaged in manufacturing, packaging, selling, offering for sale, marketing or otherwise distribution or import of nutraceuticals in India, whether as domestic FBOs or importers, are required to comply with Nutraceutical Regulations in course of such business.

Interestingly, any product offered in a naturally occurring food form do not categorise as nutraceutical and has been excluded from the Nutraceutical Regulations. For example, all vegetables, cereals, legumes, spices, fruits, or any other plants or botanicals, even if the same is minimally processed in juice / cooked form, are not permitted to be sold as nutraceuticals. Similarly, conventional foods or foods for mass consumption which have the ingredients by their natural composition are also not considered as nutraceuticals.

Nutraceutical products are required to contain at least one ingredients / additives specified in Schedule VI (list of ingredients as nutraceuticals) and may contain ingredients specified under Schedule I, II, IV, VII and VIII, with quantity of nutrients added not exceeding the recommended limits / daily allowances prescribed by ICMR. However, FBOs are also permitted to use the ingredients that are standardized or permitted for use in preparation of any other standardized food. Organic foods can also be used as ingredients in the manufacturing of nutraceutical products. FBOs must note that ingredients from animal source need to be used subject to prescriptions under the Nutraceutical Regulations as well as FSS (Food Product Standards and Food Additive) Regulations, 2011. Presently, any ingredient of genetically modified origin is not permitted for safety reasons. Therefore, use of ingredients of genetically modified and nanotechnology can also be included in manufacturing and production of nutraceuticals.

The Regulations also provide that the label on such article is required to specify the purpose, target consumer group, physiological / disease conditions that the nutraceutical product addresses, recommended duration of use, instructions, precautions for the use, in addition to specific labelling requirements.

FBOs are also required to produce data on the scientific rationale for formulation of combination in the nutraceuticals, which may be based on a scientific literature in peer-reviewed journals / publications.

FBOs in business of nutraceuticals may make health benefits related claims such as claims for enhanced function, health maintenance, immunity claims, or ingredients (nutrient or nutritional) claims including claims regarding food for enhanced function and disease risk reduction, having regard to the prescriptions under the Nutraceutical Regulations. However, any sort of claims akin to drugs and claiming to prevent, treat or cure human diseases, or referring to such properties cannot be made by the FBOs for any nutraceutical as they fall under the ambit of Drugs Controller General of India and not FSSAI. Other claims that are not drug claims, or where scientific evidence does not exist, or where a novel ingredient is used/introduced, need prior approval of FSSAI basis sufficient scientific evidence supporting the claims. FSSAI holds power to alter, modify or stop any claims where it deems fit to do so.

The licensing requirements continue to be covered by the FSS (Licensing and Registration of Food Businesses) Regulations, 2011.

Given the competitiveness of the nutraceutical market, the intellectual property considerations are also witnessing a rapid growth with patents as a major protection for the research, development and usage of the nutraceutical products, trademark being source of trust with the consumers, as a defence for unauthorised adoption, determining similarity of marks and distinguishing one company from the other. The copyright also comes in picture owing to the launches of products, marketing and comparative advertising, infringing logos / labels etc. Even though the Courts have held that the test for infringement and passing off for nutraceuticals products is same as the test applicable to the pharmaceutical products, yet the IP rights of nutraceuticals remain of prime focus for the industry players.

Conclusion

The nutraceutical industry has an abundant scope for manufacturing and consumption in India, as there lies a wide customer base, as well as an untapped opportunity for both manufacturers and exporters in India. However, the industry is still in its nascent stage, taking baby steps. There are perhaps certain teething issues which would be eventually resolved with the growth of the industry as well as of the regulatory framework.

(This Article is solely for information purposes, does not constitute legal or professional advisory and should not be relied upon or used as a substitute for legal advice from attorney.)

About the Authors: Jayshree Navin Chandra, Senior Partner at ZEUS Law, has been a practicing lawyer since 2001 with extensive corporate and transactional advisory experience. She advises and represents clients ranging from Fortune 500 companies to start-ups as well as Central and State Government departments and public bodies in a wide range of domestic and cross border transactions, across industries in practice areas including Corporate and Company Law, M&A and Joint Venture, Private Equity, FDI & FII, Real Estate and Infrastructure, Data privacy and protection, Intellectual Property & Commercial Law Advisory.

Ms. Anisha Jhawar is an Associate at ZEUS Law and works in the Corporate and Commercial practice vertical.

ZEUS Law Associates is an ISO certified full service corporate commercial law firm with a team of dedicated and experienced lawyers well versed in handling domestic and cross border transactions across sectors, jurisdictions and regulatory landscapes. The firm’s practice areas include Corporate and Company Law, M&A and Joint Venture, Private Equity, FDI & FII, Real Estate and Infrastructure, Intellectual Property & Commercial Law, Litigation, Alternate Dispute Resolution, Indirect Tax and NRI Services.

by handyland

CIRP: Preparation Of A Resolution Plan & Its Approval

CIRP: PREPARATION OF A RESOLUTION PLAN AND ITS APPROVAL

Authors: Sandeep Bhuraria, Senior Partner and Monish Surendran, Senior Associate at ZEUS Law

Published in Live Law on 11th June 2023

The object of the Insolvency and Bankruptcy Code, 2016 (“the Code”) is to provide an institutional framework for resolving debt-ridden companies, partnerships and individuals through a time bound process.

In the case of a company, an application can be filed by a creditor under Section 7 / 9 of the Code or by the company in distress, i.e., corporate debtor, under Section 10 of the Code before the National Company Law Tribunal (“NCLT”) for initiating the Corporate Insolvency Resolution Process (“CIRP”) of a corporate debtor. Once an application under Section 7, 9 or 10 is admitted, the CIRP proceedings of the corporate debtor is initiated and an Interim Resolution Professional (“IRP”) is appointed by the NCLT for the corporate debtor. The IRP carries out the public announcement and invites creditors of the corporate debtor to file their claims and thereafter, constitutes the Committee of Creditors (“CoC”) of the corporate debtor. The CoC then appoints a Resolution Professional (“RP”) in the first CoC Meeting of the Corporate Debtor.

Thereafter, the RP of the corporate debtor invites Prospective Resolution Applicants (“PRAs”) to revive the corporate debtor. The process initially starts from inviting PRAs to file an Expression of Interest (“EOI”) for securing eligibility to present a resolution plan for the corporate debtor and attains finality after an order is passed by the NCLT approving a resolution plan thereby reviving the corporate debtor with a new management. The said process is elaborated upon herein below:

1. ISSUANCE OF INVITATION FOR SUBMISSION OF EXPRESSION OF INTEREST

1.1    The first step in attempting to revive the corporate debtor is the publishing of the invitation of EOI as per Regulation 36A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (“CIRP Regulations”) thereby inviting eligible PRAs to submit their resolution plans. The invitation for EOI is required to be made in Form G and not later than sixtieth day from the insolvency commencement date in an English newspaper and one vernacular newspaper with wide circulation at the location of the registered office and principal office of the corporate debtor. Form G is also required to be published on the website of the corporate debtor (if any), website of the IBBI, i.e., https://ibbi.gov.in/, and in any other manner as decided by the CoC. The invitation for EOI is required to provide the following:

a.   Where the detailed invitation for EOI can be downloaded or obtained from (as the case may be)

b.     Provide the last date for submission of EOI which shall not be less than 15 days from the date of                issuance of the detailed EOI

1.2    Further, the detailed Invitation for EOI shall provide for:

1. Criteria for being classified as a PRA which is approved by the CoC in accordance with Section 25(2) of the Code taking into account the complexity and scale of operations of the business of the corporate debtor. The eligibility criteria for becoming a PRA is covered under the commercial wisdom of the CoC and hence, the same cannot be questioned even by the NCLT, which has also been held by the NCLAT in the matter of Kannan Tiruvengandam V/s M.K. Shah Exports Ltd. and Ors.

1. Ineligibility norms provided under Section 29A of the Code for PRAs.

1. Basic information about the corporate debtor which may be required by the PRA for submitting an EOI.

1.3    The invitation for EOI cannot request for payment of any fee or any non-refundable deposit for submission of an EOI.

2. SUBMISSION OF EXPRESSION OF INTEREST

2.1    As per Regulation 36A of the CIRP Regulations, the EOI provided by the eligible PRAs is required to be unconditional and accompanied by the following undertakings:

1. That the PRA meets the criteria specified by the CoC for submitting a resolution plan along with relevant records evidencing the same;
2. That the PRA does not suffer from any ineligibility under Section 29A along with relevant records evidencing the same;
3. That if at any time period during the CIRP proceedings of the corporate debtor, the PRA becomes ineligible then the PRA shall forthwith intimate the RP;
4. That the information given in the EOI is true and correct and further stating that in case of discovery of any false information, the PRA shall become ineligible and any amount submitted as refundable deposit shall be forfeited. Further, penal action under the Code shall also be attracted;
5. That the PRA shall maintain confidentiality of the information provided by the RP and the PRA shall not utilise the said information to cause undue gain or undue loss to itself or any other person and shall comply with the requirements under Section 29(2) of the Code. 

2.2    The EOI is required to be submitted within the time period given in the invitation for EOI. Further, as per Regulation 36A(6) of the CIRP Regulations, an EOI received after the time specified in the initiation for EOI is required to be rejected. 

3. PERUSAL OF EXPRESSION OF INTERESTS AND ISSUANCE OF LIST OF PROSPECTIVE RESOLUTION APPLICANTS

3.1    As per Regulation 36A(8) of the CIRP Regulations, the RP is required to conduct due diligence based on the material on record to establish that the PRA complies with:

• Provisions of Section 25(2)(h) of the Code which provide the eligibility norms that have been decided by the RP in consultation with the CoC;
• Provisions of 29A of the Code which specifies disqualifications;
• Other requirements as specified in the invitation for EOI.

3.2    After perusing the EOIs, as per Regulation 36A(10) of the CIRP Regulations, the RP is required to present a provisional list of PRAs to the CoC and all of the PRAs who submitted EOIs within 10 days of the last date of submission of EOIs. A 5 day window is granted for entertaining any objection to inclusion or exclusion of a PRA from the date of issuance of the provisional list of PRAs.

Within 5 days of the issuance of the provisional list, these provisional PRAs are required to be provided with the Information Memorandum (“IM”), Request for Resolution Plan (“RFRP”) for preparation of a resolution plan and the Evaluation Matrix (“EM”) which showcases the criteria for evaluating the resolution plans as per Resolution 36B of the CIRP Regulations.

3.3    After considering the objections pertaining to inclusion or exclusion of a PRA in the provisional list of PRAs, the RP is required to issue the final list of PRAs who shall be eligible to present a resolution plan for the corporate debtor, as per Regulation 36A(12) of the CIRP Regulations, within 10 days of the last date for receipt of objections. 

4. DOCUMENTS TO BE CONSIDERED WHILE PREPARING A RESOLUTION PLAN

In terms of Regulation 36B(1) of the CIRP Regulations, an IM, RFRP and an EM is required to be issued to every PRA in the provisional list within 5 days of the date of issuance of the provisional list of PRAs. These documents provide information pertaining to the corporate debtor for preparing a resolution plan for the corporate debtor along with the criteria that would be utilised to evaluate the resolution plan(s) that would be submitted by the PRAs.

• Information Memorandum

As per Section 29 of the Code, IM is a document prepared by the RP which contains relevant information pertaining to the corporate debtor which is essential for formulating a resolution plan for the corporate debtor. As per Regulation 36 of the CIRP Regulations, the IM is required to provide for:

1. The assets and liabilities of the corporate debtor including contingent liabilities as on the date of the commencement of the CIRP proceedings of the corporate debtor along with the audited financial statements of the last two years and the provisional financial statements of the current year;
2. List of creditors along with security interest held by them and their respective claimed amounts and the amounts that have been actually admitted;
3. Particulars of debt owed to or from the corporate debtor to the related parties of the corporate debtor;
4. Particulars of members or partners holding at least 1% stake in the corporate debtor;
5. List of guarantees given by other persons in relation to debt owed by the corporate debtor. Further, specifying guarantors who are a related party;
6. Details of ongoing litigations and investigations pending against the corporate debtor by the government and statutory authorities;
7. Details of workers and employers along with the debt owed to them;
8. Company overview and other factors which brings out the value as a going concern over and above the assets of the corporate debtor such as brought forward losses, input credit of GST, supply chain linkages, key customers, etc;
9. Other information that may be relevant to the CoC.

According to Regulation 36 of the CIRP Regulations, the IM is required to be submitted to each member of the CoC by the RP within 95 days from the insolvency commencement date of the corporate debtor.  As per Regulation 36(4) of the CIRP Regulation, the RP can only share the IM with a member of the CoC or the PRA, as the case may be, after receiving an undertaking ensuring confidentiality of the contents of the IM. Further, in the case of the PRA, as per Section 29(2) of the Code, the following undertaking is required to be given:

1. to comply with provisions of law for the time being in force relating to confidentiality and insider trading;
2. to protect any intellectual property of the corporate debtor that the PRA may have access to; and
3. not to share relevant information with third parties unless the aforementioned conditions are complied with.

• Request for Resolution Plan

As per Regulation 36B(2) of the CIRP Regulations, the RFRP details the whole of the resolution process of the corporate debtor along with the corresponding timelines and also provides the manner for interaction between the RP and the PRA.

As per Regulation 36B(4A) of the CIRP Regulations, the RFRP is also required to mention that a performance security is required to be provided by the resolution applicant whose resolution plan would be approved by the NCLT which will be forfeited in case the resolution applicant fails to implement or contributes to the failure of implementation of the said resolution plan according to the terms of the resolution plan. The ‘performance security’ is the security which is specified in the RFRP with the approval of the CoC having regard to the nature of the resolution plan and the business of the corporate debtor.

As per Regulation 36B(4) of the CIRP Regulations, the RFRP should not request for any non-refundable deposit to be submitted along with the resolution plan.

• Evaluation Matrix

EM is defined under Regulation 2(ha) of the CIRP Regulations. It provides the manner and weightage of different elements of resolution plan on the basis of which the CoC evaluates resolution plans. The EM prepared by the RP is required to be approved by the CoC prior to its issuance to the PRAs. In light of the directive enshrined in Regulation 39(3)(a) of the CIRP Regulations, the CoC is required to evaluate the resolution plan(s) strictly according to the EM.

Any modification in the EM is deemed to be a fresh issue and would provide a minimum 30 day time period to submit resolution plan(s) as per Regulation 36B(5) of the CIRP Regulations.

5. TIME LIMIT FOR SUBMISSION OF A RESOLUTION PLAN

The RFRP is required to provide a minimum 30 day time period to the PRAs to submit their resolution plan(s), as per Regulation 36B(3) of the CIRP Regulations.

According to Regulation 39(1B) of the CIRP Regulations, the CoC should not consider a resolution plan received after the time specified in the RFRP. However, with respect to submission of a resolution plan after the cut-off date, the Supreme Court in the matter of Kalpraj Dharamshi vs. Kotak Investment Advisors Limited & Anr.  has held that the CoC can allow the late submission of a resolution plan as the commercial wisdom of the CoC cannot be intervened with.

Further, as per Regulation 36B(5) of the CIRP Regulations, any modification in the RFRP or the EM shall be deemed to be a fresh issue and shall be subject to the 30 day minimum time period as provided under Regulation 36B(3) of the CIRP Regulations.

If the resolution plans are not satisfactory, as per Regulation 36B(7) of the CIRP Regulations, the RP may with the approval of the CoC, reissue the RFRP, provided it is issued to all of the PRAs in the final list, and the minimum time period of 30 days for submission of resolution plan(s) as prescribed under Regulation 36B(3) of the CIRP Regulations shall not apply in the aforesaid case.

6. CONTENTS OF A RESOLUTION PLAN

The requisite elements of a resolution plan that are required to be fulfilled by every PRA can be summarised by looking into Section 30(2) of the Code along with Regulation 37, 38 and 39 of the CIRP Regulations.

6.1    Necessary Requirements

The indispensable elements that are required to be present in a resolution plan submitted by a PRA is summarised herein under:

6.2    Mandatory Payment obligations

The resolution plan presented by the PRA is also required to comply with certain payment obligations as per Section 30(2) of the Code and Regulation 38 of the CIRP Regulations which are summarised herein under:

1. The resolution plan should contain provisions for payment of insolvency resolution process costs in priority to the payment of other debts of the corporate debtor.
2. The payment of the debts of the operational creditors should not be less than-

(i)   the amount which would have been paid to such creditors in the event of a liquidation of the corporate debtor under Section 53 of the Code; or

(ii) the amount that would have been paid to such creditors if the amount to be distributed under the resolution plan had been distributed in accordance with the order of priority provided in section 53(1), whichever is higher.

1. The resolution plan is required to provide for the payment of the debts of financial creditors who do not vote in favour of the resolution plan which shall not be less than the amount to be paid to such creditors in the event of liquidation of the corporate debtor under section 53(1) of the Code. They are also required to be paid in priority over financial creditors who voted in favour of the resolution plan.
2. The amount payable under the resolution plan to the operational creditors is required to be paid in priority over financial creditors.

• Measures that may be necessary for resolution of the Corporate Debtor:

The resolution plan is required to provide for the measures, as may be necessary, for resolution of the corporate debtor, inter alia, the following:

1. Transfer of all or part of the assets of the corporate debtor to one or more persons;
2. Sale of all or part of the assets whether subject to any security interest or not;
3. Restructuring of the corporate debtor, by way of merger, amalgamation and demerger;
4. Substantial acquisition of shares of the corporate debtor or the merger or consolidation of the corporate debtor with one or more persons;
5. Cancellation or delisting of any shares of the corporate debtor, if applicable;
6. Satisfaction or modification of any security interest;
7. Curing or waiving of any breach of the terms of any debt due from the corporate debtor;
8. Reduction in the amount payable to the creditors;
9. Extension of a maturity date or a change in interest rate or other terms of a debt due from the corporate debtor;
10. Amendment of the constitutional documents of the corporate debtor;
11. Issuance of securities of the corporate debtor for cash, property, securities, or in exchange for claims or interests, or other appropriate purpose;
12. Change in portfolio of goods or services produced or rendered by the corporate debtor;
13. Change in technology used by the corporate debtor; and
14. Obtaining necessary approvals from the Central and State Governments and other authorities, inter alia, approval of the Competition Commission of India if the resolution plan contains a provision for combination, as referred to in Section 5 of the Competition Act, 2002.
15. Sale of one or more assets of corporate debtor to one or more successful resolution applicants submitting resolution plans for such assets; and manner of dealing with remaining assets.

• Other attachments

As per Regulation 39 of the CIRP Regulations, certain documents are required to be furnished along with the resolution plan by the PRA:

1. An affidavit stating that the PRA is eligible under Section 29A of the Code to submit a resolution plan. If during the subsistence of the CIRP proceedings, the PRA comes within the ambit of the ineligibility provided under Section 29A of the Code, it shall become ineligible to present a resolution plan for the corporate debtor;
2. An undertaking by the PRA that every information and record provided in connection with or in the resolution plan is true and correct and discovery of false information and record at any time will render the PRA ineligible to continue in the CIRP proceedings, and would further lead to forfeiture of any refundable deposit, along with penal action under the Code.

7. PROCESS FROM SUBMISSION OF A RESOLUTION PLAN TO APPROVAL BY THE NCLT 

• Submission of a Resolution Plan

According to Section 30(1) read with Regulation 39 of the CIRP Regulations, a resolution plan is required to be submitted with the RP electronically within the time period prescribed in the RFRP.

As per Regulation 39(1A)(a) of the CIRP Regulations, the RP may allow modification of the resolution plan, if the RFRP provides for the same. However, the same can only be done once according to Regulation 39(1A) of the CIRP Regulations. Further, as per Regulation 39(1A)(b), the RP may use a challenge mechanism to enable PRAs to improve their plans if the RFRP provides for the same. 

• Appraisal of the Resolution Plan by the Resolution Professional

The resolution plans are analysed by the RP to enquire whether the mandatory requirements as provided under Section 30(2) of the Code are complied with:

1. payment of insolvency resolution process costs in priority to the repayment of other debts of the corporate debtor;
2. the amount being paid to the operational creditors is not less than the amount that would have been paid to them in the case of liquidation of the corporate debtor under Section 53(1) of the Code or the amount that would have been paid to such creditors, if the amount to be distributed under the resolution plan had been distributed in accordance with the order of priority given in Section 53(1) of the Code, whichever is higher;
3. the resolution plan provides for the payment of debts of financial creditors who do not vote in favor of the resolution plan which shall not be less than the amount to be paid to such creditors in accordance with Section 53(1) of the Code in the event of liquidation of the corporate debtor;
4. the resolution plan provides for management of the affairs of the corporate debtor;
5. the resolution plan provides for implementation and supervision of the resolution plan;
6. there is no contravention of any of the provisions of the law for the time being in force

• Placement of the Resolution Plan(s) before the CoC for its approval

The resolution plans which fulfil the criteria as provided in Section 30(2) of the Code read with regulation 37 to 39 of the CIRP Regulations are then placed before the CoC for further scrutiny along with the details and respective orders of the NCLT pertaining to the following transactions, if any, as per Regulation 39(2) of the CIRP Regulations:

1. Preferential transactions as per Section 43 of the Code;
2. Undervalued transactions as per Section 45 of the Code;
3. Extortionate credit transactions as per Section 50 of the Code; and
4. Fraudulent transactions as per Section 66 of the Code.

According to Regulation 39(3) of the CIRP Regulations, the CoC is required to evaluate the resolutions plans as per the evaluation matrix. The CoC is also bound to record its deliberations on the feasibility and viability of each resolution plan.

Further, as per Section 30(5) of the Code, the PRA has a right to attend the meeting of the CoC in which the resolution plan of the PRA would be considered. However, the PRA shall not have a right to vote at the meeting of the CoC unless such PRA is also a financial creditor.

• Voting on the Resolution Plans by the CoC

As per Regulation 39(3B) of the CIRP Regulations, when two or more resolution plans are put to vote simultaneously then the resolution plan which receives the highest votes, but not less than 66%, is considered approved. However, in a case wherein two or more resolution plans receive equal votes, but not less 66%, the CoC is required to approve any one of them as per the tie-breaker formula announced before voting.

Further, in a case wherein none of the resolution plans receive 66%, the CoC is required to again vote on the resolution plan which received the highest votes.

• Approval of a Resolution Plan by the CoC

According to Section 30(4) of the Code, the CoC by exercising its commercial wisdom and considering the feasibility, viability, order of priority as laid down in Section 53(1) of the Code, and value of security interest of a secured creditor is required to pass a resolution plan by a vote of not less than 66% voting share of financial creditors if they wish to approve the resolution plan.

The decision of the CoC to decide on whether or not to rehabilitate the corporate debtor by means of acceptance of a particular resolution plan is a decision that comes solely within the purview of the commercial wisdom of the CoC, which has also been upheld by the Hon’ble Supreme Court in the matter of Committee of Creditors of Essar Steel India Limited vs. Satish Kumar Gupta and Ors.

Even in the judgment delivered by the Hon’ble Supreme Court of India in K. Sashidhar vs. Indian Overseas Bank and Ors(supra), the supremacy of the commercial wisdom of the CoC which is exercised by the CoC while approving a resolution plan is reiterated.

As per Section 30(6) of the Code read with Regulation 39(4) of the CIRP Regulations, the resolution plan that is passed by the CoC with a majority of 66% in voting is then required to be submitted by the RP at least 15 days before the maximum period for completion of the CIRP proceedings before the NCLT along with a compliance certificate in Form H of the Schedule and the evidence of receipt of performance security required under Regulation 36B(4A) of the CIRP Regulations for its approval.

However, in case the resolution plan submitted by a PRA contains a provision for combination, as referred to in Section 5 of the Competition Act, 2002, the PRA is also required to obtain the approval of the Competition Commission of India under that Act prior to the approval of such resolution plan by the CoC.

• Approval of the Resolution Plan by the NCLT

The Code confers jurisdiction on the NCLT under Section 31 of the Code to reaffirm that the requirements under Section 30(2) of the Code are fulfilled by the resolution plan that has been passed by the CoC by a majority of 66% in voting. The NCLT is required to pass an Order approving the resolution plan if the requirements under Section 30(2) of the Code are complied with which shall bind the corporate debtor, its employees, members, creditors, guarantors, other stakeholders of the corporate debtor, Central Government, State Government, and any other local authority to whom a debt in respect of the payment of dues arising under any law for the time being in force is payable. The said order further ceases the order of moratorium passed against the corporate debtor by the NCLT under Section 14 of the Code and mandates that the records pertaining to the conduct of the CIRP proceedings and the resolution plan are forwarded to the Insolvency & Bankruptcy Board of India to be recorded in its database.

Further, under Section 31(4) of the Code, the successful resolution applicant is required to obtain the necessary approval required under any law for the time being in force within a period of one year from the date of approval of the resolution plan by the NCLT or within such period as provided for in such law, whichever is later.

About the Authors: Mr. Sandeep Bhuraria, Senior Partner and Monish Surendran, Senior Associate at Zeus Law Associates. Views are personal.

by handyland

CIRP Of Real Estate Companies - Project Specific Resolution

CIRP Of Real Estate Companies - Project Specific Resolution

Authors: Sandeep Bhuraria, Senior Partner and Monish Surendran, Senior Associate at ZEUS Law

Published in Live Law on 24th June 2023

In India, there was a need to enact a single statute encompassing provisions to resolve insolvency for companies, limited liability partnerships, partnership firms and individuals. In light of the same, the Insolvency & Bankruptcy Code, 2016 (“Code”) was passed and notified in the Gazette of India on 28 May 2016 thereby consolidating all of the insolvency laws pertaining to companies, limited liability partnerships, partnership firms and individuals. Under the Code, through a creditor driven process, distressed companies were given a chance to resolve themselves by utilising the Corporate Insolvency Resolution Process (“CIRP”) provided in the Code.

Initially, in the Code there were general provisions for initiation of the CIRP proceedings of companies and hence, there were no specific provisions pertaining to real estate companies. However, the initiation of the CIRP proceedings of real estate giants like Amrapali Infrastructure Private Limited and Jaypee Infratech Limited and the non-inclusion of allottees as financial creditors under the Code created a hue and cry among the allottees and hence, it was apparent that the Code had to be amended.

As there were no specific provisions in the Code with regard to allottees, the allottees would approach consumer forums or Real Estate Regulatory Authorities to address their grievances with regard to delay in delivery of their respective units rather than approaching the National Company Law Tribunal (“NCLT”) under the Code.

However, in 2018, vide Insolvency and Bankruptcy Code (Second Amendment) Act, 2018 (26 of 2018), the legislature amended Section 5(8)(f) of the Code and inserted a provision stating that an amount raised from an allottee would qualify as a financial debt and hence, explicitly classified allottees as financial creditors and empowered allotees to file an application under Section 7 of the Code for initiating the CIRP proceedings of a real estate company. The said amendment was also upheld by the Hon’ble Supreme Court in the matter of Pioneer Urban Land and Infrastructure Limited & Anr. Vs. Union of India & Ors.

Thereafter, another change became prevalent in the CIRP proceedings of real estate companies, i.e., project specific invitation of resolution plans. As per the Code, expression of interest (“EOI”) for submitting a resolution plan for the corporate debtor as a whole was required to be undertaken. However, in various cases, no EOIs were received for submitting a resolution plan for the corporate debtor as a whole and hence, the committee of creditors of the corporate debtors would pass a resolution for inviting EOIs for submitting resolution plans for the projects of the corporate debtor. Hence, the applicability of the Code was being done in a manner which would accommodate the issues faced by real estate companies.

Subsequently, in February 2020, the need for confining the CIRP proceedings to the distressed project in question was observed by the bench of Justice S.J. Mukhopadhaya and Mr. Bansi Lal Bhat of the National Company Law Appellate Tribunal (“NCLAT”) in the matter of Flat Buyers Association Vs. Umang Realtech Private Limited through IRP and Others. The NCLAT held that if the allottees, financial institutions / banks or operational creditors of a project initiate the CIRP proceedings of a real estate company then it should be confined to the said project and should not include other projects of the real estate company. It was observed that different projects of a real estate company would be situated at different places, where separate plans are approved by different authorities, landowners may be distinct from the real estate company in question and the allottees, financial institutions / banks and operational creditors of each project would also be different for each project.

It was held that the assets of the project under default should be maximized for balancing the interests of the creditors of the project in default. Further, it was held that the creditors of other real estate projects of the corporate debtor should not be included in the CIRP proceedings of the project in default.

Subsequently, vide Insolvency & Bankruptcy Code (Amendment) Act, 2020 (1 of 2020) dated 13.03.2020, the legislature incorporated a threshold on allottees for initiating the CIRP proceedings of a real estate company. A requirement of 100 homebuyers or 10% of the allottees of the same project, whichever is lower, was incorporated thereby restricting the filing of an application praying initiation of the CIRP of a Corporate Debtor to the project in default.

The threshold incorporated through Insolvency and Bankruptcy Code (Amendment) Act 2020 (1 of 2020) in Section 7 of the Code was upheld by the Hon’ble Supreme Court in Manish Kumar Vs. Union of India & Anr. and it was affirmed that the allottees should be from the same project thereby affirming the tenet of law that the initiation of the CIRP proceedings could only be done by the allottees of the project in default.

Taking a cue from the decision of the NCLAT in the matter of Flat Buyers Association (supra), various NCLTs have passed orders initiating project specific CIRP in case of real estate companies. Certain matters in which project specific CIRP was initiated are provided herein below for reference:

• Umesh Chander & Ors. Vs. GRJ Distributors & Developers Private Limited – Project Avalon Rosewood
• Dreamz Sneh Project Allottees Welfare Association Vs. Dreamz Infra India Limited - Project Dreamz Sneh
• Shakuntala Joshi and Ors. Vs. Hyper Techno Buildmart Private Limited and Ors. – Project Shree Madhav Residency
• Anil Kaushal and Ors. Vs. Logix City Developers Private Limited - Project Blossom Zest
• Ashok Kriplani Resolution Professional of Dreamz Infra India Limited vs. Venugopal Swamy Temple and Ors. – Project Dreamz Sumadhur

The concept of project specific CIRP was again utilized by the Hon’ble NCLAT in the case of Ajai Kumar Gupta Vs. Ashwani Kumar Singla (IRP of Ansal Properties and Infrastructure Limited). Allottees of the project “Fernhill” had initiated the CIRP proceedings of Ansal Properties and Infrastructure Limited which was challenged by the allottees of the other projects of the corporate debtor. The NCLAT vide Order dated 13.01.2023, in the interim, restricted the CIRP to the project in default, i.e., FernHill.

Further, in the case of Ram Kishor Arora Suspended Director of M/s. Supertech Limited versus Union Bank of India, an appeal was filed before the NCLAT challenging the initiation of the CIRP proceedings of Supertech Limited.  The NCLAT, vide an interim order dated 10.06.2022, restricted the CIRP proceedings to Eco Village-II and directed the IRP to constitute the CoC for the said project and invite resolution plans for the same. The said interim order was challenged before the Supreme Court in the case of Indiabulls Asset Reconstruction Company Limited v Ram Kishore Arora & Ors; however, the Supreme Court declined to alter the directions passed by the NCLAT vide order dated 10.06.2022 with respect to Eco Village-II.

Even in the case of Ambika Prasad Sharma Erstwhile Director of Horizon Buildcon Pvt. Ltd. vs. Horizon Buildcon Pvt. Ltd. and Ors., the NCLAT held that the CIRP should be restricted to a project in default.

Further, even the intent of the government is clear in this regard. The Ministry of Corporate Affairs has recently published a discussion paper dated 18.01.2023 titled “Invitation of comments from the public on changes being considered to the Insolvency and Bankruptcy Code, 2016” wherein comments have been sought from the public for amending the Code for incorporating project specific CIRP in case of real estate companies.

Hence, it is probable that the Code will be suitably amended in the near future to incorporate project specific CIRP thereby making the Code more suitable to real estate companies and affirming the views of the courts with regard to project specific resolution.

“About the Authors: Mr. Sandeep Bhuraria, has been a practicing lawyer for about 30 years and is a Senior Partner at ZEUS Law Associates. He leads the Commercial Litigation and Restructuring division.

Monish Surendran, is a Senior Associate at ZEUS Law Associates and works in the Commercial Litigation and Restructuring division.”

by handyland

Explained: Legal Framework for Import of Food and Packaged Food Products in India

Explained: Legal Framework for Import of Food and Packaged Food Products in India

Author: Jayshree Navin Chandra, Senior Partner & Anisha Jhawar, Associate at ZEUS Law

Published in https://www.asiancommunitynews.com on 21^st June 2023

The new Foreign Trade Policy 2023 (‘FTP-23’) has come into force with effect from 1^st April, 2023 with an aim to integrate Indian exporters and importers and for their deeper involvement in the global value chain. The Directorate General of Foreign Trade (‘DGFT’) overlooks the facilitation of the foreign trade in India.

With easy accessibility of different cuisines and types of food made available in India from across the Globe, the younger masses have been increasingly fascinated towards the imported packaged food. The import and sale of food products in India is allowed subject to the FTP-23, in addition to being subject to the domestic laws, acts, rules, regulations, orders, environmental and safety norms, technical specifications which are applicable to the domestically produced goods, including Food Safety and Standards Act, 2006 (‘FSS Act’), Food Safety and Standards (Import) Regulations, 2017, etc. It is mandatory for the importers to obtain an IEC Code (import-export code) prior to commencing of any import activities in India.

Key compliances for import of food items:

• Quality in terms of taste, flavour, texture, nutritive value, etc. and packaging requirements provided under the FSS Act are the mandatory quintessential conditions to be observed before the consignment is allowed for customs clearance.
• Edible food products which are governed by FSS Act, if imported, also need to have shelf-life of not less than 60% of the original shelf life or 3 months before expiry (whichever is lesser at the time of import).
• In case of poultry products, meat and meat products, the goods are required to fulfil certain other compliances, including the sanitary, hygienic requirements as mentioned under the said FSS Act, as well as specific packaging, labelling and quality standards prior to customs clearance. A sanitary import permit is required to be obtained from Department of Animal Husbandry, Dairying and Fisheries, Government of India in respect of import of meat and meat products of all kinds. However, beef, in any form or product containing beef in any form, falls under ‘prohibited’ category for imports, and the consignments imported are required to carry express declarations about the same.
• The import of poultry and poultry products in India are further regulated as per the Livestock Importation Act, 1898.
• In case of primary agricultural products, a bio security and sanitary-phyto sanitary import permit is required as per the conditions of Plant Quarantine (Regulation of Import into India) Order, 2013.
• The import of genetically modified food, feed and other genetically modified organism, living modified organisms are also subject to certain special conditions stipulated under the Environment Protection Laws.
• The import of alcoholic beverages, in addition to being governed under the FSS Act, are also subject to several mandatory requirements of the State Governments.
• All packaged products, if produced / packed / sold in domestic market, are subject to the Legal Metrology (Packaged Commodities) Rules, 2011.

Further, for the import of food in India, certain documents such as ingredients list, specimen copy of the label, declaration about end usage, bill of entry, certificate of country of origin and FSSAI license are mandatory in nature, which are in addition of other conditional documents that are specific to a particular category of food imported.

The packaged food products imported in India need to also disclose the information about the product and the producer, such as – the name, address of the importer, generic/ common name of the commodity, net quantity in terms of standard units, month-year of packaging of the product when it is manufactured or packed or imported, maximum retail price (inclusive of local and all other taxes and charges), consumer care/ helpline information, etc.

India is the second largest import hub and market of food products in Asia and is rapidly emerging as one of the top five in the World. The importers looking at the enormous scope in India to tap on large consumer base, need to be diligent about the procedural nuances as well as statutory compliances and clearances required for import of the food products in India, including packaged food items and ingredients.

(This Article is solely for information purposes, does not constitute legal or professional advisory and should not be relied upon or used as a substitute for legal advice from attorney.)

About the Authors: Jayshree Navin Chandra, Senior Partner at ZEUS Law, has been a practicing lawyer since 2001 with extensive corporate and transactional advisory experience. She advises and represents clients ranging from Fortune 500 companies to start-ups as well as Central and State Government departments and public bodies in a wide range of domestic and cross border transactions, across industries in practice areas including Corporate and Company Law, M&A and Joint Venture, Private Equity, FDI & FII, Real Estate and Infrastructure, Data privacy and protection, Intellectual Property & Commercial Law Advisory.

Ms. Anisha Jhawar is an Associate at ZEUS Law and works in the Corporate and Commercial practice vertical.

ZEUS Law Associates is an ISO certified full service corporate commercial law firm with a team of dedicated and experienced lawyers well versed in handling domestic and cross border transactions across sectors, jurisdictions and regulatory landscapes. The firm’s practice areas include Corporate and Company Law, M&A and Joint Venture, Private Equity, FDI & FII, Real Estate and Infrastructure, Intellectual Property & Commercial Law, Litigation, Alternate Dispute Resolution, Indirect Tax and NRI Services.

by handyland

Proposed Indian Carbon Market Framework: Buy and Sell Carbon Credits

Proposed Indian Carbon Market Framework: Buy and Sell Carbon Credits

Author: Jayshree Navin Chandra, Senior Partner, and Nitika Bakshi, Associate at ZEUS Law

Published in https://www.asiancommunitynews.com on 12^th June 16, 2023

India, as a developing nation, has been at the forefront of climate action and has set an ambitious Nationally Determined Contribution (NDC) goal of reducing the emissions intensity of the GDP by 45% by 2030 against 2005 levels. In its endeavor towards a greener and more sustainable future, the government of India is planning to develop the Indian Carbon Market (ICM) to decarbonize the Indian economy through the trading of carbon credit certificates.

Carbon markets are trading systems in which carbon credits are bought and sold. Entities may compensate for their green-house gas (GHG) emissions by purchasing carbon credits from entities that remove or reduce GHG emissions. Carbon finance is expected to be the key for implementation of NDCs and the Paris Agreement enables the use of such market mechanisms to aid countries in achieving their NDC goals.

India currently has an energy savings-based market mechanism wherein energy savings certificates are issued to designated consumers whose energy consumption is less than the prescribed norms, and designated consumers whose energy consumption is more than the prescribed norms and standards shall be entitled to purchase the energy savings certificate to comply with the prescribed norms and standards. With the enactment of the Energy Conservation (Amendment) Act, 2022 the government has been empowered to specify a carbon trading scheme. As per the Energy Conservation (Amendment) Act, 2022 the Central Government, or any agency authorized by it, may issue carbon credit certificate to the registered entity which complies with the requirements of the carbon credit trading scheme and such entity is entitled to purchase or sell the carbon credit certificate in accordance such scheme. The Bureau of Energy Efficiency, Ministry of Power along with the Ministry of Environment, Forest and Climate Change are developing and finalizing the Carbon Credit Trading Scheme. Recently, a draft of the Carbon Credit Trading Scheme was circulated by the Ministry of Power to various industry bodies for comments and stakeholder consultation was organized.

The scheme envisages the development of a compliance mechanism under which obligated entities shall comply with the prescribed GHG emission norms which will be developed and aligned with India’s emissions trajectory as per climate goals, and a voluntary mechanism where non-obligated entities can register their projects for GHG emission reduction or removal for issuance of carbon credit certificates. It is proposed that each carbon certificate issued will represent reduction or removal of one ton of CO2 equivalent (tCO2e). Projects that may be eligible to earn carbon credits include waste handling and disposal, afforestation and reforestation, cattle management, transportation, renewable energy, energy efficiency projects and industrial energy efficiency and emission reduction projects.

The draft Carbon Credit Trading Scheme proposes to set up a comprehensive institutional and governance structure for the execution of the ICM, which includes the following:

• The Indian Carbon Market Governing Board (ICMGB): The governance of the ICM and direct oversight of its administrative and regulatory functioning will vest in the ICMGB.
• The Bureau of Energy Efficiency will be the ICM Administrator for the ICM and shall also work as the secretariat for the ICMGB. The Bureau will also have the power to constitute technical committees.
• The Grid Controller of India Limited will be the ICM Registry.
• The Central Electricity Regulatory Commission (CERC) shall be the Regulator for the trading activities under the ICM. As per the Carbon Credit Trading Scheme the Commission shall approve the participation of power exchanges for the purpose of ICM trading, from time to time and that power exchanges will perform functions regarding trading of carbon credit certificates, in accordance with regulations notified by the Commission.

These institutions will develop detailed procedures for operationalizing ICM including the following:

• Criteria for issuance of carbon credit certificates to those obligated entitles who reduce their GHG emissions below the prescribed limit;
• Validity of carbon credit certificates;
• Floor and forbearance price of carbon credit certificates;
• Requirement, format and timeline for submissions;
• Monitoring, reporting and verification;

According to the draft Carbon Credit Trading Scheme, agencies accredited by the Bureau of Energy Efficiency as Accredited Carbon Verifiers will carry out validation or verification activities under the Carbon Credit Trading Scheme.

It is envisioned that the ICM will usher in new emission mitigation opportunities through demand for emission credits by private and public entities. A well designed, competitive carbon market mechanism would enable the reduction of GHG emissions at the level of the entity as well as the overall sector and drive faster adoption of cleaner technologies in a burgeoning economy like India. ICM will accelerate the transition to a low carbon economy and facilitate in meeting India’s NDC goal.

The establishment of the ICM and the development of the Carbon Credit Trading Scheme heralds new opportunities for stakeholders at various levels of the carbon trading ecosystem including developing methodologies for the estimation of carbon emissions, reductions and removals from registered projects, stipulating the required validation, verification and issuance processes for operationalizing the scheme, carrying out validation or verification activities,  capacity building of entities for up-skilling in the subject matter etc. It is believed that carbon markets may be a panacea for the current climate crisis and can help accelerate the transformation to a more sustainable future by creating an economic incentive for reducing emissions.

It would be beneficial for stakeholders and sector experts to closely observe the establishment of ICM and engage with it first-hand in order to contribute towards moving to a more sustainable economy.

(This Article is solely for information purposes, does not constitute legal or professional advisory and should not be relied upon or used as a substitute for legal advice from attorney.) 

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About the Authors: Jayshree Navin Chandra, Senior Partner at ZEUS Law, has been a practicing lawyer since 2001 with extensive corporate and transactional advisory experience. She advises and represents clients ranging from Fortune 500 companies to start-ups as well as Central and State Government departments and public bodies in a wide range of domestic and cross border transactions, across industries in practice areas including Corporate and Company Law, M&A and Joint Venture, Private Equity, FDI & FII, Real Estate and Infrastructure, Data privacy and protection, Intellectual Property, Technology & Commercial Law Advisory. 

Nitika Bakshi, is an Associate at ZEUS Law and works in the Corporate, Technology & Commercial Law practice vertical.

 ZEUS Law Associates is an ISO certified full service corporate commercial law firm with a team of dedicated and experienced lawyers well versed in handling domestic and cross border transactions across sectors, jurisdictions and regulatory landscapes. The firm’s practice areas include Corporate and Company Law, M&A and Joint Venture, Private Equity, FDI & FII, Real Estate and Infrastructure, Intellectual Property & Commercial Law, Litigation, Alternate Dispute Resolution, Indirect Tax and NRI Services.

by handyland