Comprehensive Legal Guidelegalintegrity.in/Comprehensive Legal Guide.pdf · 7) The Shops and...

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LEGAL INTEGRITY LLP ADVOCATES & CONSULTANTS

2010

Comprehensive Legal Guide Quick Insight to Indian Laws

Leena Patil, Legal Integrity LLP

4, First Floor, Shree Samarth Apartment, Near Maruti Temple, Behind Dandekar Clinic Shivaji Road, Panvel-Navi Mumbai, Pincode – 410206, Telephone: +91 9619846272

Email: [email protected] Web: www.legalintegrity.in

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SR NO

Contents Page No

I Foreign Investment Laws 1-5 1) Foreign Exchange Management Act, 1999’ (FEMA) & its Regulations 2 2) The foreign trade (Development and Regulation) Act, 1992 3

II Contract Laws 6 The Indian Contract Act, 1872

III Company Laws 7-9 The Companies Act, 1956

IV Intellectual Property Laws 10-22 1) Law relating to Copyrights and Related Rights 10 2) Law Relating to Industrial Designs 14 3) Law relating to Patents 16 4) Law Relating to Trade Marks 20

V Law Relating to Import & Export 24-25 VI Law Related to Arbitration & Conciliation 26-30 VII Civil Procedure Laws 31-36 VIII Employment/ Labour Laws 37- 40

1) The minimum wages Act, 1948 37 2) The minimum wages Act, 1948 37 3) Maternity Benefits Act, 1961 38 4) The Payment of Gratuity Act, 1972 38 5) Payment of Bonus Act, 1965 38 6) Employees Provident Funds & Miscellaneous Act, 1952 39 7) The Shops and Establishments Act, 1953 40

IX Telecom Related Laws & Legislations in India 41-42 1) Indian Telegraph Act 1885 41 2) Indian Wireless Act 1933 41 3) Information Technology Act, 2000 41 4) The Telecom Regulatory Authority of India Act, 1997 41

X Immigration Laws 43 1) Passport Act, 1967 43 2) The Registration Of Foreigners Act, 1939 43

XI Taxation Laws 44-50 1) The Income Tax Act 1961 44 2) Service Tax Laws 47 3) Customs Act 48 4) Value Added Tax (VAT)/ Central Sales Tax (CST) 49 5) Central Excise Act 49

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I. FOREIGN INVESTMENT LAWS 1) Foreign Exchange Management Act, 1999’ (FEMA) & its Regulations Foreign Direct Investment by non-resident in resident entities through transfer or issue of security to person resident outside India is a ‘capital account transaction’ and Government of India and Reserve Bank of India regulate this under the ‘Foreign Exchange Management Act, 1999’ (FEMA) and its various regulations. Keeping in view current and ongoing requirements, the Government notifies from time to time with new regulation; amends/changes in existing sector policy/sector equity cap through order/allied rules, press notes, etc. The regulatory framework over a period of time thus consists of Acts, regulations, Press Notes, Press releases and clarifications. These press notes have sunset clause of six months and a Press note on FDI Regulatory framework is issued every six months which is incorporated and reflected with all changes in regulations during the last intervening period of six months. Given an opportunity for the inflow of FDI, foreign company planning to set up business operations in India has the following options:- By incorporating a company under the Companies Act, 1956 through Joint ventures or wholly own subsidiaries. Foreign equity in such Indian companies can be up to 100% depending on the requirements of the investor, subject to any equity caps prescribed in respect of the area of activities under the foreign direct investment (FDI) policy. As a foreign company through Liaison Office/Representative Office, Project office, Branch office. Such offices can undertake activities permitted under the Foreign Exchange Management (Establishment in India of Branch Office of other place of Business) Regulations, 2000. Foreign investment is freely permitted in almost all sectors. Under foreign direct investments (FDI) scheme, investments can be made by non-residents in the shares/convertible debentures of an Indian company, under two routes; Automatic Route and Government Route. Under the Automatic route, the foreign investor or the Indian company does not require any approval from the Reserve Bank or Government of India for the investment. Under the Government Route, prior approval of the Government of India, Ministry of finance, foreign investment promotion board (FIPB) is required. Foreign investment shall include all types of foreign investments i.e. FDI, investment by FIIs, NRIs, ADRs, GDRs, Foreign Currency Convertible Bonds (FCCB) and fully, mandatory & compulsorily convertible preference shares/debentures, regardless of whether the said investments have been made under Schedule 1, 2, 3 and 6 of FEMA (Transfer or Issue of Security by Persons Resident Outside India) Regulations. Further foreign exchange management regulates in the following areas:-

Authentication of Documents

Compounding proceedings

Adjudication proceedings and Appeal

Current Account Transactions

Encashment of Draft, Cheque, Instrument and Payment of Interest

Acquisition and transfer of Immovable property in India

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Acquisition and transfer of immovable property outside India

Borrowing or Lending in Rupees (as amended in 2007)

Borrowing or Lending in Foreign Exchange (as amended in 2007)

Establishment in India of Branch or Office or other place of business

Export and Import of currency

Export of goods and services

Foreign currency accounts by a person resident in India (as amended in 2007)

Foreign exchange derivative contracts (as amended in 2007)

Guarantees regulations

Insurance regulations

Investment in firm or proprietary concern in India

Issue of security in India by a branch office or Agency of a person resident outside India

Manner of receipt and payment regulations

Permissible capital account transactions (as amended in 2007)

Possession and retention of foreign currency

Realization, repatriation and surrender of foreign exchange (as amended in 2007)

Remittance of assets

Transfer or Issue of any foreign security (as amended in 2007)

Transfer or issue of security by a person resident outside India (as amended in 2007)

Withdrawal of General permission to overseas corporate bodies regulations

Removal of difficulties order 2) The foreign trade (Development and Regulation) Act, 1992 This regulates and provides for the development and regulation of foreign trade by facilitating imports into and augmenting exports from India for matters connected therewith or incidental thereto. FDI Regulatory Framework in Telecommunications sector: Investment policy in telecommunications sector permits 100% FDI cap/equity in:

Manufacturing of telecom equipment;

Internet services (ISP not providing international gateways);

Infrastructure providers (category I-Providing dark fibre, right of way, duct space, tower)

Electronic-mail services;

Voice mail services

Call centers for IT enabled services The details are provided herewith because the nature of business of ZTE is similar as described hereinabove. The FDI cap/equity is permitted through automatic route up to 49% and beyond 49% subject to the approval of Foreign Investment Promotion Board (FIPB). This is subject to the condition that such companies shall divest 26% of their equity in favour of Indian Public in 5 years, if these companies are listed in other parts of the world. Depending upon the sector specific requirements, this is also subject to licensing and security requirements where required.

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Calculation of total foreign investment i.e. direct & indirect foreign investment in Indian Companies: Investment in Indian companies can be made both by non-resident as well as resident Indian entities. Any non-resident investment in an Indian company is direct foreign investment. Investment by resident Indian entities could again comprise of both resident and non-resident investment. Thus, such an Indian company would have indirect foreign investment if the Indian investing company has foreign investment in it. The indirect investment can also be a cascading investment i.e. through multi-layered structure. For the purpose of computation of indirect Foreign investment, Foreign Investment in Indian company shall include all types of foreign investments i.e. FDI; investment by FIIs(holding as on March 31); NRIs; ADRs; GDRs; Foreign Currency Convertible Bonds (FCCB); fully, compulsorily and mandatory convertible preference shares and fully, compulsorily and mandatory convertible Debentures regardless of whether the said investments have been made under Schedule 1, 2, 3 and 6 of FEMA (Transfer or Issue of Security by Persons Resident Outside India) Regulations.

(i) Counting the Direct Foreign Investment: All investment directly by a non-resident entity into the Indian company would be counted towards foreign investment.

(ii) Counting of indirect foreign Investment: (a) The foreign investment through the investing Indian company would not

be considered for calculation of the indirect foreign investment in case of Indian companies which are ‘owned and controlled’ by resident Indian citizens and/or Indian Companies which are owned and controlled by resident Indian citizens .

(b)For cases where condition (a) above is not satisfied or if the investing company is owned or controlled by ‘non resident entities’, the entire investment by the investing company into the subject Indian Company would be considered as indirect foreign investment,

Provided that, as an exception, the indirect foreign investment in only the 100% owned subsidiaries of operating-cum-investing/investing companies, will be limited to the foreign investment in the operating-cum-investing/ investing company. This exception is made since the downstream investment of a 100% owned subsidiary of the holding company is akin to investment made by the holding company and the downstream investment should be a mirror image of the holding company. This exception, however, is strictly for those cases where the entire capital of the downstream subsidy is owned by the holding company.

(iii) The total foreign investment would be the sum total of direct and indirect foreign investment.

(iv) The above methodology of calculation would apply at every stage of investment in Indian Companies and thus to each and every Indian Company.

(v) The full details about the foreign investment including ownership details etc. in Indian company(s) and information about the control of the company(s) would be furnished by the Company(s) to the Government of India at the time of seeking approval.

(vi) In any sector/activity, where Government approval is required for foreign

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investment and in cases where there are any inter-se agreements between/amongst share-holders which have an effect on the appointment of the Board of Directors or on the exercise of voting rights or of creating voting rights disproportionate to shareholding or any incidental matter thereof, such agreements will have to be informed to the approving authority. The approving authority will consider such inter-se agreements for determining ownership and control when considering the case for granting approval for foreign investment.

Further it is interestingly noted considering the business of ZTE in India as Wholly owned subsidiary there are couple of investment incentives to Promote Telecom Equipments Manufacturing like:

(i) customs duty on ITA-I (Information technology Agreement) product reduced to zero with effective from 01.03.2005

(ii) 4 per cent additional duty on import of ITA products to countervail the state level taxes.

(iii) No industrial license for manufacturing telecom equipment. Simple Industrial Entrepreneurs Memorandum (IEM) has to be filed with SIA.

(iv) 100 percent foreign direct investment (FDI) through automatic route. (v) Fully repatriable dividend income and capital invested (vi) Payment of technical know-how fee of up to US$ 2 million and royalty up

to 5 per cent on domestic sales and 8 per cent on export sales, net of taxes, through automatic route.

(vii) Imposition of additional import duty, at the rate not exceeding 4 per cent ad-valorem, to countervail sales tax, value added tax, local taxes and other charges leviable on like goods on their sale or purchase or transportation in India.

(viii) Promotion of telecom products in specific SEZ’s (Special Economic Zones). (ix) Modifications of Electronic Hardware Technology Park (EHTP)/Special

Economic Zones (SEZs) scheme to allow 100 per cent sales in the Domestic Tariff Area for the purpose of meeting export obligations.

(x) Import of all capital goods for manufacturing telecom equipments does not require any license.

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II. CONTRACT LAWS This act covers the provisions for BIDDING LAWS The Indian Contract Act, 1872 The law of contract is a set of rules governing the relationship, content and validity of an agreement between two or more persons (individuals, companies or other institutions) regarding the sale of goods, provision of services or exchange of interests or ownership. Contract law has been more formally defined as a set of promises which the law will enforce. Section 2(h) of the Indian Contract Act provides that, “An agreement enforceable by law is a contract”. Therefore in a contract there must be (1) an agreement and (2) the agreement must be enforceable by law. Object & Scope The Indian Contract Act, 1872, is a legislation which regulates all the transactions of company. It lays down the general principles relating to the information and enforceability of contracts; rules governing the provisions of an agreement and offer; the various types of contracts including those of indemnity and guarantee, bailment and pledge and agency. It also contains provisions pertaining to breach of a contract. The law of contract deals with agreements which can be enforced through court of law. The law of contract is the most important part of commercial law because every commercial transaction starts from an agreement between two or more persons. The object of Law of Contract is to introduce definiteness in commercial and other transactions. There are other acts relating to particular types of contracts e.g. Negotiable Instruments Act, Transfer of property act, sales of goods act, partnership act etc. The essential elements of contracts Section 10 of the Indian contract act provides the validity and enforceability of the contract and accordingly all agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with lawful object, and are not expressly declared void (as provided in the act). An agreement becomes enforceable by law when it fulfills essential elements of a contract.

offer and acceptance as laid down in the contract act

intentions to create legal relationship

Lawful consideration

Capacity or competence of parties to enter into contract

Free consent

Legality of the object

Certainty

Possibility of performance

Void agreements (categories of agreement such as agreement in restraint to marriage, in restraint of trade, in restraint of proceedings, agreements having uncertain meaning, wagering agreement

“All agreements are not contracts but all contracts are agreements.”

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III. COMPANY LAW The Companies Act, 1956 In India, the most important law which regulates all aspects relating to a company is the Companies Act, 1956. The act contains the mechanism regarding organizational, financial, and managerial and all the relevant aspects of the company. It contains provisions relating to formation of a company, powers and responsibilities of the directors and managers, raising of capital, holding company meetings, maintenance and audit of company accounts, powers of inspection and investigation of company affairs, reconstruction and amalgamation of a company and even winding up of a company. The act applies to whole of India and to all types of companies, whether registered under this act or an earlier act. But it does not apply to universities, co-operative societies, unincorporated trading, scientific and other societies. The act empowers the Central Government to inspect the books of accounts of a company, to direct special audit, to order investigation into affairs of a company and to launch prosecution for violation of the act. These inspection are designed to find out whether companies conduct their affairs in accordance with the provisions of the act, whether any unfair practices prejudicial to the public interest are being resorted to by any company which may adversely affect any interest of the shareholders, creditors, employees and others. If an inspection discloses a prima facie case of fraud or cheating, action is initiated under provisions of the Companies Act or the same is referred to the Central Bureau of Investigation. The companies act is administered by the central Government through the Ministry of Corporate Affairs and the Offices of Registrar of Companies, official Liquidators, public trustee, company law board, director of Inspection, etc. The registrar of Companies (ROC) controls the task of incorporation of new companies and the administration of running companies. The Ministry of Corporate affairs, earlier known as Department of Corporate Affairs under Ministry of Finance, is primarily concerned with administration of the Companies Act, 1956 other allied Acts and rules & regulations framed there-under mainly for regulating the functioning of the corporate sector in accordance with law. Registrar of Companies (ROCs) appointed under Section 609 of the Companies Act, covering various States and Union Territories, are vested with the primary duty of registering companies floated in the respective States and the Union Territories and ensuring that such companies comply with the statutory requirements under the Act. Their offices function as registry of records relating to the companies registered with them. The powers vested with the ROCs are:-

Registration of memorandum and articles. Registration of prospectus. Registration of reduction of capital. Call information or explanation. Seizure of documents.

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Investigation into affairs of a company. Inspection of books of accounts, etc of companies. To strike off defunct companies from register. Enforcement of duty of company to make returns, etc to Registrar. Non-disclosure of information in certain cases. Winding up petition by the Registrar.

Official Liquidators are the officers appointed by the Central Government under Section 448 of the Companies Act and are attached to the various High Courts. They are under the administrative charge of the respective Regional Directors who supervise their functioning on behalf of the Central Government.

According to the Act, a company means "a company formed and registered under the Act or an existing company i.e. a company formed or registered under any of the previous company laws". The salient features of a company are:-

Artificial legal person:- a company is an artificial person in the sense that it is created by law and lacks the attributes possessed by natural persons. It is invisible, intangible, immortal and exists only in the contemplation of law. Hence, it has to operate through a board of directors consisting of individuals.

Separate legal entity:- a company is a distinct legal entity, different from its members or shareholders. This implies that:- the property of the company belongs to it and not to the members or shareholders; no member can either individually or jointly claim any ownership rights in the assets of the company; an individual member cannot be held liable for the wrongful acts of the company even if he/she holds virtually the entire share capital; the members of the company can enter into contracts with the company.

Perpetual succession:- a company enjoys continuous existence and its continuance is not affected by the death, insolvency, mental or physical incapacity of its members. It is created by law and law alone can dissolve it.

Limited liability of members:- the liability of its members is limited to the amount remaining unpaid on the shares subscribed by them. Thus, in case of fully paid-up shares, the members cannot be asked to contribute any further, if the company goes into liquidation.

Common seal:- a company has a common seal, which is the signature of that company and signifies common consent of all the members. The company's seal is affixed on all the documents executed for and on its behalf.

Transferability of shares: - the shares of a public company are freely transferable without the permission of the company but in a manner provided in the Articles. The shareholders may transfer their shares to another person and this does not affect the funds of the company. But, a private company imposes restrictions on transfer of its shares.

Separate property:- all the property of the company vests in it. The company can control, manage and hold the same in its own name. The members have no ownership rights in the company's property, either individually or collectively. A shareholder does not even have an insurable right in the

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property of the company. The creditors of the company can have a claim only against the property of the company and not against the property of the individual members.

Capacity to sue and being sued:- a company can enforce its rights through suits and can also be sued for breach of its statutory rights.

The basic objectives underlying the Act are:-

A minimum standard of good behavior and business honesty in company promotion and management;

To help in the development of companies on healthy lines; To protect the interests of the shareholders; To safeguard the interests of the creditors; To equip the Government with adequate powers to intervene in the affairs of

a company in public interest and as per the procedure prescribed by law; A fair and true disclosure of the affairs of companies in their annual published

balance sheet and profit and loss accounts; Proper standard of accounting and auditing; A ceiling on the share of profits payable to managements as remuneration for

services rendered; A check on their transactions where there was a possibility of conflict of duty

and interest; A provision for investigation into the affairs of any company managed in a

manner oppressive to minority of the shareholders or prejudicial to the interest of the company as a whole;

Enforcement of the performance of their duties by those engaged in the management of public companies or of private companies which are subsidiaries of public companies by providing sanctions in the case of breach and subjecting the latter also to the more restrictive provisions of law applicable to public companies;

To help in the attainment of the ultimate ends of the social and economic policy of the Government;

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IV. INTELLECTUAL PROPERTY LAWS Intellectual property (IP) is the creation of human intellect. It refers to the ideas, knowledge, invention, innovation, creativity, and research etc, all being the product of human mind and is similar to any property, whether movable or immovable, wherein the proprietor or the owner may exclusively use his property at will and has the right to prevent others from using it, without his permission. The rights relating to intellectual property are known as 'Intellectual Property Rights'.

Intellectual property rights are customarily divided into two main areas:-

Copyright and rights related to copyright:- the rights of authors of literary and artistic works (such as books and other writings, musical compositions, paintings, sculpture, computer programs and films) are protected by copyright. Also, protection is granted to related or neighbouring rights like the rights of performers (e.g. actors, singers and musicians), producers of phonograms (sound recordings) and broadcasting organizations.

Industrial property, which is divided into two main areas:-

One area can be characterized as the protection of distinctive signs, in particular trademarks (which distinguish the goods or services of one undertaking from those of other undertakings) and geographical indications (which identify a good as originating in a place where a given characteristic of the good is essentially attributable to its geographical origin).

Other types of industrial property are protected primarily to stimulate innovation, design and the creation of technology. This category includes inventions (protected by patents), industrial designs and trade secrets.

The issue of Intellectual Property Rights was brought on an international platform of negotiation by World Trade Organization (WTO) through its Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS). This agreement narrowed down the differences existing in the extent of protection and enforcement of the Intellectual Property rights (IPRs) around the world by bringing them under a common minimum internationally agreed trade standards. The member countries are required to abide by these standards within stipulated time-frame. India, being a signatory of TRIPS has evolved an elaborate administrative and legislative framework for protection of its intellectual property.

Law relating to Copyrights and Related Rights The umbrella legislation relating to copyright is the Copy Right Act 1957. According to the Act, the term 'copyright' means the exclusive right to do or authorize the doing of a 'work' or a substantial part of it. The term 'work' used here means:-

A literary work: - it includes computer programs, tables, compilations and computer databases.

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A dramatic work: - it includes any piece of recitation, choreographic work or entertainment in dumb show, the scenic arrangement or acting, whose form is fixed in writing or otherwise.

A musical work: - it includes works of music, any graphical notation of such work but does not include any words or action intended to be sung, spoken or performed with the music.

An artistic work: - it means a painting, a sculpture, a drawing (including a diagram, map, chart or plan), an engraving or a photograph, whether or not they possess artistic quality. It also includes a work of architecture and any other work of artistic craftsmanship.

A cinematographic film: - it means any work of visual recording on any medium produced through a process from which a moving image may be produced by any means.

A sound recording:- it means recording of sounds from which sounds may be produced regardless of the medium by which sounds are produced.

Here, the 'Related rights or Neighbouring rights' are the rights of performers (e.g. actors, singers and musicians), producers of phonograms (sound recordings) and broadcasting organizations.

The Act is administered by the Department of Higher Education in the Ministry of Human Resource Development. A Copyright Board is established under the Act. The Board is entrusted with the task of adjudication of disputes pertaining to copyright registration, assignment of copyright, grant of licenses in respect of works withheld from public, unpublished Indian works, production and publication of translations and works for certain specified purposes. The Act set up a Copyright Office under the control of Registrar of Copyrights, for the registration of Copyrights.

The main provisions of the Act are:-

There shall be established for the purposes of this Act an office to be called as the 'Copyright Office'. The Copyright Office shall be under the immediate control of the Registrar of Copyrights who shall act under the superintendence and direction of the Central Government. Also, the Central Government shall constitute a 'Copyright Board'.

There shall be kept at the Copyright Office a register in the prescribed form to be called as the 'Register of Copyrights' in which may be entered the names or titles of works and the names and address of authors, publishers and owners of copyright and such other particulars as may be prescribed.

The author or publisher of, or the owner of or other person interested in the copyright in any work may make an application in the prescribed form accompanied by the prescribed fee to the Registrar of Copyrights for entering particulars of the work in the Register of Copyrights.

The register of Copyrights and indexes thereof kept under this Act shall at all reasonable times be open to inspection, and any person shall be entitled to take copies of, or make extracts from, such register or indexes on payment of such fee and subject to such conditions as may be prescribed.

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The Register of Copyright shall be prima facie evidence of the particulars entered therein and documents purporting to be copies of any entries therein, or extracts there from certified by the Registrar of Copyrights and sealed with the seal of the Copyright Office shall be admissible in evidence in all courts without further proof or production of the original.

Copyright shall subsist in any literary, dramatic, musical or artistic work (other than a photograph) published within the lifetime of the author until sixty years from the beginning of the calendar year next following year in which the author dies. Also, in the case of a literary, dramatic, musical or artistic work (other than photograph), which is published anonymously, copyright shall subsist until sixty years from the beginning of the calendar year next following the years in which the work is first published.

The owner of the copyright in an existing work or the prospective owner of the copyright in a future work may assign to any person the copyright either wholly or partially and either generally or subject to limitations and either for the whole term of the copyright or any part thereof. However, in the case of the assignment of copyright in any future work, the assignment shall take effect only when the work comes into existence.

If at any time during the term of copyright in any Indian work which has been published or performed in public, a complaint is made to the Copyright Board that the owner of copyright in the work:- (i) has refused to republish or allow the republication of the work or has refused to allow the performance in public of the work, and by reason of such refusal the work is withheld from the public; or (ii) has refused to allow communication to the public by broadcast of such work or in the case of a sound recording, the work recorded in such sound recording, on terms which the complainant considers reasonable.

Then, the Copyright Board, after giving to the owner of the copyright in the work reasonably opportunity of being heard and after holding such inquiry, as it may deemed necessary, may, if it is satisfied that the grounds for such refusal are not reasonable, direct the Registrar of Copyrights to grant to the complainant a licence to republish the work, perform the work in public or communicate the work to the public by broadcast, as the case may be, subject to payment to the owner of the copyright of such compensation and subject to such other terms and conditions as the Copyright Board may determine, and thereupon the Registrar of Copyrights shall grant the license of the complainant in accordance with the direction of the Copyright Board, on payment of such fees, as may be prescribed.

The Central Government may, by order published in the Official Gazette, direct that all or any provisions of this Act, shall apply:-

To work first published in any territory outside India to which the order related in like manner as if they were first published within India;

To unpublished works, or any class thereof, the authors whereof were at the time of the making of the work, subjects or citizens of a foreign

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country to which the order relates, in like manner as if the authors were citizens of India;

In respect of domicile in any territory outside India to which the order relates in like manner as if such domicile were in India;

Tto any work of which the author was at the date of the first publication thereof, or, in case where the author was dead at the date, was at the time of his death, a subject or citizens of foreign country to which the order relates in like manner as if the author was a citizen of India at that date or time.

Copyright in a work shall be deemed to be infringed:-

When any person, without a license granted by the owner of the Copyright or the Registrar of Copyrights under this Act or in contravention of the conditions of a license so granted or of any conditions imposed by a competent authority under this Act:- (i) does anything, the exclusive right to do which is by this Act conferred upon the owner of the copyright; or (ii) permits for profit any place to be used for the communication of the work to the public where such communication constitutes an infringement of the copyright in the work, unless he was not aware and had no reasonable ground for believing that such communication to the public would be an infringement of copyright; or

When any person:- (i) makes for sale on hire, or sells or lets for hire, or by way of trade displays or offers for sale or hire; or (ii) distributes either for the purposes of trade or to such an extent as to affect prejudicially the owner of the copyright; or (iii) by way of trade exhibits in public; or (iv) imports into India, any infringing copies of the work.

Every broadcasting organization shall have a special right to be known as 'broadcast reproduction right' in respect of its broadcasts. The broadcast reproduction right shall subsist until twenty-five years from the beginning of the calendar year next following the year in which the broadcast in made.

Where any performer appears or engages in any performance, he shall have a special right to be known as the 'performer's right' in relation to such performance. The performer's right shall subsist until twenty-five years from the beginning of the calendar year next following the year in which the performance is made.

No broadcast reproduction right or performer's right shall be deemed to be infringed by:-

The making of any sound recording or visual recording for the private use of the person making such recording, or solely for purposes of bona fide teaching or research; or

The use, consistent with fair dealing, of excerpts of a performance or of a broadcast in the reporting of current events or for bona fide review, teaching or research; or

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Such other acts, with any necessary adaptations and modifications, which do not constitute infringement of copyright under the Act.

Where any offence under this Act has been committed by a company, every person who at the time the offence was committed was in charge of, and was responsible to the company for, the conduct of the business of the company, as well as the company, shall be deemed to be guilty of such offence and shall be liable to be proceeded against and punished accordingly.

Law Relating to Industrial Designs

The Designs Act,2000 has been enacted to consolidate and amend the law relating to registration and protection of new and original industrial designs. It repealed and replaced the Designs Act, 1911. According to the Designs Act,2000, the term 'design' means "only the features of shape, configuration, pattern, ornament or composition of lines or colors applied to any article whether in two dimensional or three dimensional or in both forms, by any industrial process or means, whether manual, mechanical or chemical, separate or combined, which in the finished article appeal to and are judged solely by the eye; but does not include any mode or principle of construction or anything which is in substance a mere mechanical device, and does not include any trade mark as defined in the Trade and Merchandise Marks Act, 1958 or property mark as defined in the Indian Penal Code or any artistic work as defined in the Copyright Act, 1957". Under the Act, the Controller-General of Patents, Designs and Trade Marks under Department of Industrial Policy and promotion, Ministry of Commerce and Industry is the Controller of Designs. The Controller General of Patents, Designs & Trade Marks directs and supervises the functioning of 'Industrial Designs Wing'. The registration of industrial designs under the Designs Act is done by the 'Industrial Designs Wing' of the Head Office of Patents located at Kolkata.


The 'Controller General of Patents, Designs and Trade Marks' appointed under the Trade and Merchandise Marks Act, 1958 shall be the Controller of Designs for the purposes of this Act.

The Controller may, on the application of any person claiming to be the proprietor of any new or original design not previously published in any country and which is not contrary to public order or morality, register the design under the Act. Every application shall be in the prescribed form and shall be filed in the Patent Office in the prescribed manner and shall be accompanied by the prescribed fee. A design may be registered in not more than one class, and, in case of doubt as to the class in which a design ought to be registered; the Controller may decide the question.

Prohibition of registration of those designs which:-

Are not new or original; or






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Have been disclosed to the public anywhere in India or in any other country by publication in tangible form or by use or in any other way prior to the filing date, or where applicable, the priority date of the application for registration; or

Are not significantly distinguishable from known designs or combination of known designs; or

Comprise or contain scandalous or obscene matter.

The Controller shall grant a certificate of registration to the proprietor of the design when registered. Also, there shall be kept at the Patent Office a book called the 'register of designs', wherein shall be entered the names and addresses of proprietors of registered designs, notifications of assignments and of transmissions of registered designs, and such other matter as may be prescribed

When a design is registered, the registered proprietor of the design shall, subject to the provisions of this Act, have copyright in the design during ten years from the date of registration. If, before the expiration of the said ten years, application for the extension of the period of copyright is made to the Controller in the prescribed manner, the Controller shall, on payment of the prescribed fee, extend the period of copyright for a second period of five years from the expiration of the original period of ten years.

The Controller shall, as soon as may be after the registration of a design, cause publication of the prescribed particulars of the design to be published in such a manner as may be prescribed and thereafter the design shall be open to public inspection. During the existence of copyright in a design, any person on furnishing such information as may enable the Controller to identify the design and on payment of the prescribed fee may inspect the design in the prescribed manner. Also, any person may, on application to the Controller and on payment of such fee as may be prescribed, obtain a certified copy of any registered design.

Any person interested may present a petition for the cancellation of the registration of a design, at any time after the registration of the design, to the Controller on any of the following grounds:- (i) that the design has been previously registered in India; or (ii) that it has been published in India or in any other country prior to the date of registration; or (iii) that the design is not a new or original design; or (iv) that the design is not register-able under this Act; or (e) it is not a design as defined under the Act. The Controller may at any time refer any such petition to the High Court, and the High Court shall decide any petition so referred.

The exhibition of a design, or of any article to which a design is applied, at an industrial or other exhibition to which the provisions of the Act have been extended by the Central Government by notification in the Official Gazette, or the publication of a description of the design, during or after the period of the holding of the exhibition, or the exhibition of the design or the article or the publication of a description of the design by any person else-where during or after the period of the holding of the exhibition, without the privity

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or consent of the proprietor, shall not prevent the design from being registered or invalidate the registration thereof, subjected to the conditions that:- (i) the exhibitor exhibiting the design or article, or publishing a description of the design, gives to the Controller previous notice in the prescribed form; and (ii) the application for registration is made within six months from the date of first exhibiting the design or article or publishing a description of the design.

During the existence of copyright in any design it shall not be lawful for any person:-

For the purpose of sale to apply or cause to be applied to any article in any class of articles in which the design is registered, the design or any fraudulent or obvious imitation thereof, except with the license or written consent of the registered proprietor, or to do anything with a view to enable the design to be so applied; or

To import for the purposes of sale, without the consent of the registered proprietor, any article belonging to the class in which the design has been registered, and having applied to it the design or any fraudulent or obvious imitation thereof; or

Knowing that the design or any fraudulent or obvious imitation thereof has been applied to any article in any class of articles in which the design is registered without the consent of the registered proprietor, to publish or expose or cause to be published or exposed for sale that article.

Where an application for a design has been abandoned or refused, the application and any drawings, photographs, tracings, representations or specimens left in connection with then application shall not at any time be open to public inspection or be published by the Controller.

If any person acts in contravention of the Act, he shall be liable for every contravention to pay to the registered proprietor of the design a sum not exceeding certain prescribed amount as a contract debt, or if the proprietor elects to bring a suit for the recovery of damages for any such contravention, and for an injunction against the repetition thereof, to pay such damages as may be awarded and to be restrained by injunction accordingly.

Law relating to Patents The umbrella legislation relating to patents is the Patents Act, 1970. The term 'patent' is defined as a monopoly right which is granted to a person who has invented a new and useful article, or an improvement of existing article, or a new process of making an article. It consists of an exclusive right to manufacture the new invented article or manufacture an article according to the invented process for a limited period. Inventions that consist of products or new alloy is called product invention and the corresponding patent to this is referred to as 'product patent'. Whereas, inventions that consists of process or processes of making a known or new alloy is a process invention and patent for this is called a 'process patent'. This Act

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only provided for process patent and for product like food, pharmaceutical and chemicals, the inventors were granted only EMR (exclusive marketing rights).

Patent system in India is administered under the superintendence of the Controller General of Patents, Designs, Trademarks and Geographical Indications. The Office of the Controller General functions under the Department of Industrial Policy and Promotion, Ministry of Commerce and Industry. The Controller General directs and supervises the functioning of the Patent Office and the Patent Information System (PIS). The Patent Office performs the statutory duties in connection with the grant of patents for new inventions under the Patents Act. The Head Office of Patents is at Kolkata with branches at Mumbai, Chennai and Delhi. The branches deal with the applications for patents originating within their respective territorial jurisdiction. The Patent Information system (PIS) at Nagpur has been functioning as patent information base for the users. The PIS maintains a comprehensive collection of patent specification and patent related literature, on a world-wide basis and provides technological information contained in patent or patent related literature through search services and patent copy supply services to various users of R&D establishments, Government offices, private industries, business, inventors and other users within India.


The Controller General of Patents, Designs and Trade Marks appointed under the Trade and Merchandise Marks Act, 1958, shall be the Controller of Patents for the purposes of this Act. Also, there shall be a 'patent office' for the purpose of facilitating the registration of patents at such places as the Central Government may specify.

There shall be kept at the patent office a 'register of patents' wherein shall be entered:-

The names and addresses of grantees of patents; Notifications of assignments, extensions, and revocations of patents;

and Particulars of such other matters affecting the validity or

proprietorship of patents as may be prescribed.

An application for a patent for an invention may be made by any of the following persons:-

By any person claiming to be the true and first inventor of the invention;

By any person being the assignee of the person claiming to be the true and first inventor in respect of the right to make such an application;

By the legal representative of any deceased person who immediately before his death was entitled to make such an application.

The following are not inventions within the meaning of this Act:-

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An invention which is frivolous or which claims anything obvious contrary to well established natural laws;

An invention the primary or intended use of which would be contrary to law or morality or injurious to public health;

The mere discovery of a scientific principle or the formulation of an abstract theory;

The mere discovery of any new property of new use for a known substance or of the mere use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant;

A substance obtained by a mere admixture resulting only in the aggregation of the properties of the components thereof or a process for producing such substance;

The mere arrangement or re-arrangement or duplication of known devices each functioning independently of one another in a known way;

A method or process of testing applicable during the process of manufacture for rendering the machine, apparatus or other equipment more efficient or for the improvement or restoration of the existing machine, apparatus or other equipment or for the improvement or control of manufacture;

A method of agriculture or horticulture; Any process for the medicinal, surgical, curative, prophylactic or other

treatment of human beings or any process for a similar treatment of animals or plants to render them free of disease or to increase their economic value or that of their products.

Every application for a patent shall be for one invention only and shall be made in the prescribed form and filed in the patent office. Every application shall state that the applicant is in possession of the invention and shall name the owner claiming to be the true and first inventor; and where the person so claiming is not the applicant or one of the applicants, the application shall contain a declaration that the applicant believes the person so named to be the true and first inventor. Every such application shall be accompanied by a provisional or a complete specification.

Where an application for a patent (not being a convention application) is accompanied by a provisional specification, a complete specification shall be filed within twelve months from the date of filing of the application, and if the complete specification is not so filed the application shall be deemed to be abandoned. Every complete specification shall:-

Fully and particularly describe the invention and its operation or use and the method by which it is to be performed;

Disclose the best method of performing the invention which is known to the applicant and for which he is entitled to claim protection; and

End with a claim or claims defining the scope of the invention for which protection is claimed.

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At any time within four months from the date of advertisement of the acceptance of a complete specification under this Act (or within such further period not exceeding one month in the aggregate as the Controller may allow on application made to him in the prescribed manner before the expiry of the four months aforesaid) any person interested may give notice to the Controller of opposition to the grant of the patent on any of the following grounds, namely: -

That the applicant for the patent or the person under or through whom he claims, wrongfully obtained the invention or any part thereof from him or from a person under or through whom he claims;

That the invention so far as claimed in any claim of the complete specification has been published before the priority date of the claim:- (i) in any specification filed in pursuance of an application for a patent made in India on or after the 1st day of January, 1912; or (ii) in India or elsewhere, in any other document.

That the invention so far as claimed in any claim of the complete specification is claimed in a claim of a complete specification published on or after the priority date of the applicant's claim and filed in pursuance of an application for a patent in India, being a claim of which the priority date is earlier than that of the applicant's claim;

That the invention so far as claimed in any claim of the complete specification was publicly known or publicly used in India before the priority date of that claim.

That the invention so far as claimed in any claim of the complete specification is obvious and clearly does not involve any inventive step;

That the subject of any claim of the complete specification is not an invention within the meaning of this Act, or is not patentable under this Act;

That the complete specification does not sufficiently and clearly describe the invention or the method by which it is to be performed;

That in the case of a convention application, the application was not made within twelve months from the date of the first application for protection for the invention made in a convention country by the applicant or a person from whom he derives title, etc.

Where any such notice of opposition is duly given, the Controller shall notify the applicant and shall give to the applicant and the opponent an opportunity to be heard before deciding the case.

Where a complete specification in pursuance of an application for a patent has been accepted and either:- (i) the application has not been opposed and the time for the filing of the opposition has expired; or (ii) the application has been opposed and the opposition has been finally decided in favour of the applicant; or (iii) the application has not been refused by the Controller by virtue of any power vested in him by this Act; then the the patent shall, on

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request made by the applicant in the prescribed form, be granted to the applicant or, in the case of a joint application, to the applicants jointly, and the Controller shall cause the patent to be sealed with the seal of the patent office and the date on which the patent is sealed shall be entered in the register.

The term of every patent granted and the term of every patent which has not expired and has not ceased to have effect under this Act, shall be twenty years from the date of filing of the application for the patent.

Where an application is made for a patent in respect of any improvement in or modification of an invention described or disclosed in the complete specification filed thereof and the applicant also applies or has applied for a patent for that invention or is the patentee in respect thereof, the Controller may, if the applicant so requests, grant the patent for the improvement or modification as a patent of addition. A patent of addition shall be granted for a term equal to that of the patent for the main invention.

At any time after the expiration of three years from the date of the sealing of a patent, any person interested may make an application to the Controller alleging that the reasonable requirements of the public with respect to the patented invention have not been satisfied or that the patented invention is not available to the public at a reasonable price and praying for the grant of a compulsory license to work the patented invention.

If any person fails to comply with any direction given under the Act or makes or causes to be made an application for the grant of a patent in contravention of the Act, he shall be punishable with imprisonment or with fine or with both.

This Act has been amended by the Patents (Amendment) Act, 2002 and the “Patents (Amendment) Act, 2005” to take care of India's obligations under the TRIPS Agreement. After the amendments, product patent (instead of process patent) is being granted for food, pharmaceutical and chemical products. Also, along with post grant opposition to patents, pre-grant opposition is also permissible.

Law Relating to Trade Marks The Trade Marks Act,1999 has been enacted to amend and consolidate the law relating to trade marks, to provide for registration and better protection of trade marks for goods and services and for the prevention of the use of fraudulent marks. It repealed the earlier Trade & Merchandise Marks Act, 1958. According to the Trade Marks Act,1999, the term 'trade mark' means "a mark capable of being represented graphically and which is capable of distinguishing the goods or services of one person from those of others and may include shape of goods, their packaging and combination of colours".

Under the Act, the Controller-General of Patents, Designs and Trade Marks under Department of Industrial Policy and Promotion, Ministry of Commerce and Industry is the 'Registrar of Trade Marks'. The Controller General of Patents, Designs & Trade Marks directs and supervises the functioning of the Trade Marks Registry (TMR). The 'Trade Marks Registry' administers the Trade Marks Act, 1999 and the

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Rules there under. TMR acts as a resource and information centre and is a facilitator in matters relating to trade marks in the country. The main function of the Registry is to register trade marks which qualify for registration under the Act and Rules.


The Central Government may, by notification in the Official Gazette, appoint a person to be known as the 'Controller-General of Patents, Designs and Trade Marks', who shall be the Registrar of Trade Mark for the purpose of this Act. Also, there shall be a 'Trade Marks Registry' at such place as the Central Government may specify, and for the purpose of facilitating the registration of trade marks.

For the purposes of this Act, a record called the 'Register of Trade Mark' shall be kept at the head office of the Trade Marks Registry, wherein shall be entered all registered trade mark with the names, addresses and description of the proprietors, notifications of assignment and transmissions, the name, addresses and description of registered users, conditions, limitations and such other matters relating to registered trade mark as may be prescribed.

The Register shall classify goods and services, as far as may be, in accordance with the International classification of goods and services for the purposes of registration of trade marks. Any question arising to the class within which any goods or services falls shall be determined by the Register whose decision shall be final.

Absolute grounds for refusal of registration of trade marks:-

Which are devoid of any distinctive character (that is not capable of distinguishing the good or services of one person from those of another person);

Which consist exclusively of marks or indications which may serve in trade to designate the kind, quality, quantity, intended purpose, values, geographical origin or the time of production of the goods or rendering of the service or other characteristics of the goods or service;

Which consist exclusively of marks or indications which have become customary in the current language or in the bona fide and established practices of the trade;

If it consists exclusively of shape of goods:- (i) which results from the nature of the goods themselves; or (ii) which is necessary to obtain a technical result; or (iii) which gives substantial value of the goods.

Relative grounds for refusal of registration of trade marks:-

Existence of a likelihood of confusion on the part of the public due to:- (i) its identity with an earlier trade mark and similarity of goods or services covered by the trade mark; or (ii) its similarity to an earlier trade mark and the identity or similarity of the goods of services covered by the trade mark.

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If its use in India is liable to be prevented:- (i) by virtue of any law, in particular the law of passing off protecting an unregistered trade mark used in the course of trade; or (ii) by virtue of law of copyright.

Any person claiming to be the proprietor of a trade mark used or proposed to be used by him, who is desirous of registering it, shall apply in writing to the Registrar in the prescribed manner for the registration of his trade mark. A single application may be made for registration of a trade mark for different classes of goods and services and fee payable thereof shall be in respect of each such class of goods or services.

Any person may, within three months from the date of the advertisement or re-advertisement of an application for registration or within such further period, not exceeding one month in the aggregate, give notice in writing in the prescribed manner to the Registrar, of opposition to the registration. The Registrar shall serve a copy of the notice on the applicant for registration and, within two months from the receipt by the applicant of such copy of the notice of opposition, the applicant shall send to the Registrar in the prescribed manner a counter-statement of the grounds on which he relies for his application, and if he does not do so he shall be deemed to have abandoned his application. The Registrar shall, after hearing the parties, if so required, and considering the evidence, decide whether and subject to what conditions or limitations, if any, the registration is to be permitted, and may take into account a ground of objection whether relied upon by the opponent or not.

The registration of trade mark, after the commencement of this Act, shall be for a period of ten years, but may be renewed from time to time in accordance with the provisions of the Act. The Registrar shall, on application made by the registered proprietor of a trade mark in the prescribed manner and within the prescribed period and subject to payment of the prescribed fee, renew the registration of the trade mark for a period of ten years from the date of expiration of the original registration or of the last renewal of registration, as the case may be.

Grounds for infringement of registered trade marks are:-

By any advertising of that trade mark if such advertising:- (i) takes unfair advantage of and is contrary to honest practices in industrial or commercial matters; or (ii) is detrimental to its distinctive character; or (iii) is against the reputation of the trade mark.

By a person who, not being a registered proprietor or a person using by way of permitted use, uses in the course of trade, a mark which:- (i) is identical with or similar to the registered trade mark; and (ii) is used in relation to goods or services which are not similar to those for which the trade mark is registered; and (iii) the registered trade mark has a reputation in India and the use of the mark without due cause takes unfair advantage of or is detrimental to, the distinctive character or repute of the registered trade mark.

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By a person if he uses such registered trade mark, as his trade name or part of his trade name, or name is his business concern or part of the name, of his business concern dealing in goods or services in respect of which the trades mark is registered.

Where the distinctive elements of a registered trade mark consists of or include words, the trade mark may be infringed by the spoken use of those words as well as by their visual representation.

By a person who applies such registered trade mark to a material intended to be used for labeling or packaging goods, as a business paper, or for advertising goods or services, provided such person, when he applied the mark, knew or had reason to believe that the application of the mark was not duly authorized by the proprietor or a licensee.

Any person who:- (i) falsifies any trade mark; or (ii) falsely applies to goods or services any trade mark; or (iii) makes, disposes of, or has in his possession, any die, block, machine, plate or other instrument for the purpose of falsifying or of being used for falsifying, a trade mark; or (iv) applies any false trade description to goods or services; or (v) tampers with, alters or effaces an indication of origin which has been applied to any goods to which it is required to be applied under the Act, shall be punishable with imprisonment and with fine.

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V. LAW RELATING TO IMPORT AND EXPORT

Imports and exports are the two important components of a foreign trade. Foreign trade is the exchange of goods and services between the two countries, across their international borders. ‘Imports' imply the physical movement of goods into a country from another country in a legal manner. It refers to the goods that are produced abroad by foreign producers and are used in the domestic economy to cater to the needs of the domestic consumers. Similarly, 'exports' imply the physical movement of goods out of a country in a legal manner. It refers to the goods that are produced domestically in a country and are used to cater to the needs of the consumers in foreign countries. Thus, the imports and exports have made the world a local market. The country which is purchasing the goods is known as the importing country and the country which is selling the goods is known as the exporting country. The traders involved in such transactions are importers and exporters respectively. In India, exports and imports are regulated by the Foreign Trade (Development and Regulation) Act, 1992, which replaced the Imports and Exports (Control) Act, 1947, and gave the Government of India enormous powers to control it. The salient features of the Act are as follows:-

It has empowered the Central Government to make provisions for development and regulation of foreign trade by facilitating imports into, and augmenting exports from India and for all matters connected therewith or incidental thereto.

The Central Government can prohibit, restrict and regulate exports and imports, in all or specified cases as well as subject them to exemptions.

It authorizes the Central Government to formulate and announce an Export and Import (EXIM) Policy and also amend the same from time to time, by notification in the Official Gazette.

It provides for the appointment of a Director General of Foreign Trade by the Central Government for the purpose of the Act. He shall advise Central Government in formulating export and import policy and implementing the policy.

Under the Act, every importer and exporter must obtain an 'Importer Exporter Code Number' (IEC) from Director General of Foreign Trade or from the officer so authorized.

The Director General or any other officer so authorized can suspend or cancel a license issued for export or import of goods in accordance with the Act. But he does it after giving the license holder a reasonable opportunity of being heard.

As per the provisions of the Act, the Government of India formulates and announces an Export and Import policy (EXIM policy) and amends it from time to time. EXIM policy refers to the policy measures adopted by a country with reference to its exports and imports. Such a policy become particularly important in a country like India, where the import and export of items plays a crucial role not just in balancing budgetary targets, but also in the over all economic development of the country. The principal objectives of the policy are:-

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To facilitate sustained growth in exports of the country so as to achieve larger percentage shares in the global merchandise trade.

To provide domestic consumers with good quality goods and services at internationally competitive prices as well as creating a level playing field for the domestic producers.

To stimulate sustained economic growth by providing access to essential raw materials, intermediates, components, consumables and capital goods required for augmenting production and providing services.

To enhance the technological strength and efficiency of Indian agriculture, industry and services, thereby improving their competitiveness to meet the requirements of the global markets.

To generate new employment opportunities and to encourage the attainment of internationally accepted standards of quality.

Besides this Act, there are some other laws which control the export and import of goods. These include:-

Tea Act,1953 Coffee Act, 1942 The Rubber Act, 1947 The Marine Products Export Development Authority Act, 1972 The Enemy Property Act, 1968 The Export (Quality Control and Inspection) Act, 1963 The Tobacco Board Act, 1975

At the central level, the Ministry of Commerce and Industry is the most important organ concerned with the promotion and regulation of the foreign trade in India. The Ministry has an elaborate organizational set up to look after the various aspects of trade. Within the Ministry, the Department of Commerce is responsible for formulating and implementing the foreign trade policy. The Department is also entrusted with responsibilities relating to multilateral and bilateral commercial relations, state trading, export promotion measures and development and regulation of certain export oriented industries and commodities. The matters relating to foreign trade are dealt with by the following divisions of the Department:-

1. Administrative and General Division 2. Finance Division 3. Economic Division 4. Trade Policy Division 5. Foreign Trade Territorial Division 6. Export Products Division 7. Export Industries Division 8. Export Services Division 9. Supply Division

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VI. LAW RELATING TO ARBITRATION & CONCILIATION The Arbitration and Conciliation Act, 1996 is the prime legislation relating to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards and also to define the law relating to conciliation and for matters connected therewith or incidental thereto. It repealed the three statutory provisions for arbitration:- (i) the Arbitration Act, 1940; (ii) the Arbitration (Protocol and Convention) Act, 1937; and (iii) the Foreign Awards (Recognition and Enforcement) Act, 1961.

Domestic Arbitration is defined as an alternative dispute resolution mechanism in which the parties get their disputes settled through the intervention of a third person and without having recourse to the court of law. It is a mode in which the dispute is referred to a nominated person who decides the issue in a quasi-judicial manner after hearing both sides. Generally, the disputing parties refer their case to an arbitral tribunal and the decision arrived at by the tribunal is known as an 'award'.

While, the term 'international commercial arbitration' means "an arbitration relating to disputes arising out of legal relationships, whether contractual or not, considered as commercial under the law in India and where at least one of the parties is:- (i) an individual who is a national of, or habitually resident in, any country other than India; or (ii) a body corporate which is incorporated in any country other than India; or (iii) a company or an association or a body of individuals whose central management and control is exercised in any country other than India; or (iv) the Government of a foreign country".

The major provisions relating to Arbitration in the Act are:-

The parties to a present dispute may make an agreement called as the 'arbitration agreement' that instead of going to the court; they shall refer the dispute to arbitration. The parties to the agreement may refer to arbitration, a dispute:-

Which has arisen or which may arise between them, In respect of a defined legal relationship, whether contractual or not.

Thus, all matters of civil nature whether they relate to present or future disputes may form the subject matter of reference. Even disputes such as infringement of intellectual property rights shall also be covered.

Although no formal document is prescribed, an arbitration agreement/clause must be in writing. If the arbitration agreement/clause is contained in a document, the document must be signed by the concerned parties. Besides, the agreement may be established by:- (i) an exchange of letters, telex, telegram or other means of telecommunications; or (ii) an exchange of statements of claims and defense in which the agreement is alleged by one party and is not denied by the other.

The disputes that cannot be referred to arbitration are:-

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Insolvency proceedings. Lunacy proceedings. Proceedings for appointment of a guardian to a minor. Question of genuineness or otherwise of a will or matter relating to

issue of a probate. Matter of criminal nature. Matters concerning public charitable trusts. Disputes arising from and founded on an illegal contract.

The agreement mandatorily requires the appointment of an arbitrator. An arbitrator is a person appointed, with or without mutual consent of the contending parties, for the purpose of investigation and settlement of a difference or dispute referred to him. The arbitral tribunal may be constituted by one or more arbitrators. The parties are free to fix the number of arbitrators by agreement. Accordingly, the reference may be made either to a single arbitrator or a panel of odd number (i.e. 3,5,7 etc) of arbitrators. If there is no agreement, the reference shall be made to a sole arbitrator.

Unless otherwise agreed by the parties, an arbitrator may be of any nationality. In case of an international commercial arbitration, where the parties belong to different nationalities, the Chief Justice of India may appoint an arbitrator of a nationality other than that of the parties.

The parties are free to agree on a procedure for appointing the arbitrator or arbitrators. If there is such an agreement, the appointment has to be made in accordance with it. The agreement may provide for the number of arbitrators, qualifications of arbitrator, procedure of appointment, procedure of challenging the appointment, termination of appointment, procedure to be followed by arbitrators, place of arbitration, language, etc.

The duties of the Arbitral Tribunal are:- (i) to act independently and impartially and treat the parties equally; (ii) to give each party full opportunity to present his case.

The parties may agree on the procedure to be followed by the arbitral tribunal in conducting its proceedings. In the absence of such agreement, the arbitral tribunal may conduct the proceedings in the manner it considers appropriate and shall be empowered to determine the admissibility, relevance, materiality and weight of any evidence. The tribunal shall decide whether to hold oral hearings for presentation of evidence or for oral argument, or whether to conduct the proceedings on the basis of documents and other materials.

An arbitral award shall be made in writing and shall be signed by the members of the arbitral tribunal. The award shall state its date and place of arbitration. The arbitral award shall state the reasons upon which it is based, unless the parties have agreed that no reasons are to be given or in case of award on a settlement between the parties. A signed copy of the award shall be delivered to each party.

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An arbitral award is itself enforceable as a decree of the court, normally after three months from the date on which it was received by the parties, provided no application for setting aside the award is made or if it is made the same has been rejected. The arbitral award shall be final and binding on the parties and persons claiming under them respectively.

The arbitral proceedings shall be terminated when:-

The final arbitral award is made, The claimant withdraws his claim, and the respondent does not object

to it, The parties agree on the termination, The continuation of proceedings has for any other reason become

unnecessary or impossible. The Arbitration and Conciliation Act provides statutory recognition to conciliation as a distinct mode of dispute settlement. Conciliation is defined as the process of amicable settlement of disputes by the parties with the assistance of a conciliator. It differs from arbitration in the sense that in arbitration the award is the decision of the third party or the arbitral tribunal, while in the case of conciliation the decision is of the parties which is arrived at with the mediation of the conciliator.

The major provisions relating to Conciliation in the Act are:-

A party initiating the conciliation shall send a written notice to the other party, briefly identifying the subject of the dispute and inviting it for conciliation. The conciliation proceedings shall commence on acceptance of invitation by the other party. If the party initiating conciliation does not receive a reply within 30 days from the date the invitation was sent or within the specified period, it may opt to treat this as a rejection and inform the same to the other party. If it rejects the invitation, there can be no conciliation proceeding.

Unless otherwise agreed there shall be one conciliator. The parties may however, agree that there shall be two or three conciliators, who shall act jointly. The sole conciliator shall be appointed by mutual consent of the parties. In case of two conciliators, each party may appoint one conciliator. In case of three conciliators, each party may appoint one conciliator and the third conciliator may be appointed by mutual agreement of the parties who shall act as the presiding conciliator. However, the parties may agree that a conciliator shall be appointed or recommended by an institution or a person.

Each party shall submit to the conciliator a brief written statement describing the general nature of the dispute and the points at issue. A copy of the same shall be sent to the other party. The conciliator may require of each party to send a detailed statement supported by documents and other evidence, a copy whereof shall be sent to the other party also. Any factual information concerning the dispute received by the conciliator from a party, shall be disclosed to the other party to allow it an opportunity to present any

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explanation, except however, when a party gives any information subject to a condition that should be kept confidential.

The parties involved shall co-operate with the conciliator in good faith, comply with requests for submitting written materials, providing evidence and attending meetings. A party may submit to the conciliator suggestions for the settlement of the dispute.

The functions of a Conciliator are:-

To assist the parties in an independent and impartial manner, to reach an amicable settlement of their dispute.

To be guided by principles of objectivity, fairness and justice. To give consideration to rights and obligations of the parties, trade

usages, circumstances surrounding the dispute and any previous business practice between the parties.

To conduct the conciliation proceedings in an appropriate manner, taking into account the circumstances of the case and wishes of the parties.

To make proposals for a settlement of the dispute. Not to act as an arbitrator or as a representative of a party in any

arbitral or judicial proceeding in respect of the same dispute, unless otherwise agreed by the parties.

Not to act as a witness in any arbitral or judicial proceedings. If it appears to the conciliator that a settlement is possible, he shall formulate

the terms of a possible settlement and submit them to the parties for their observations. The conciliator shall then reformulate the possible settlement in the light of observations received from the parties. If the parties reach on a settlement, they may draw up and sign a written settlement agreement with the assistance of the conciliator. The conciliator shall authenticate the settlement agreement and furnish a copy thereof to each of the parties. The settlement agreement shall be final and binding on the parties and shall have the same effect as of an arbitral award.

The conciliation proceedings shall be terminated when:-

A settlement agreement is signed by the parties, A written declaration is made by the conciliators after consultation

with the parties, that further efforts at conciliation are no longer justified,

A written declaration is made by the conciliator, after the deposits required in relation to costs of the proceedings are not received from the parties, that the proceedings are terminated,

A written declaration is made by the parties to the conciliator, that the conciliation proceedings are terminated,

A written declaration is sent by a party to the other party and the conciliator, that the conciliation proceedings are terminated.

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'Foreign Award' has been defined to mean "an award on differences between persons arising out of legal relationships, whether contractual or not and considered as commercial under the law in force in India, and made in pursuance of an agreement in writing for arbitration to be governed either by the New York Convention or by the Geneva Convention, in the territory of a notified foreign State". Some of the provisions of the Act relating to foreign award are:-

Where a commercial dispute covered by an arbitration agreement to which either of the Convention apply, arises before a judicial authority in India, it shall at the request of the party be referred to arbitration.

The party applying for the enforcement of a foreign award shall produce the original award or a duly authenticated copy thereof, the original arbitration agreement or a certified copy thereof, and evidence to prove that the award is a foreign award.

If the court is satisfied that the foreign award is enforceable, the award shall be deemed to be a decree of the court. An appeal shall lie against the order of the court refusing to refer the parties to arbitration or refusing to enforce a foreign award.

Any foreign award which is enforceable under the Act shall be binding and may be relied upon by the parties by way of defense, set off or otherwise in any legal proceedings in India.

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VII. CIVIL PROCEDURE LAW The Civil Procedure Code (C.P.C.) is to regulate the functioning of Civil courts. CPC lays down the rules in which a civil court is to function, which may be summed up as follows:-

1. Procedure of filing the civil case. 2. Powers of court to pass various orders. 3. Court fees and stamp involved in filing of case. 4. Rights of the parties to a case, viz. plaintiff and defendant 5. Jurisdiction and parameters within which the civil courts should function. 6. Specific rules for proceedings of a case. 7. Right of Appeals, review or reference.

The Civil Court is empowered to give various types of relief and orders. All such relief and order can be clubbed into two categories, viz.

1. Initial/Temporary orders. 2. Final Orders.

INITIAL/TEMPORARY ORDERS There are also various types of temporary or initial orders, each of a different kind, and having a different implication altogether. They are: Temporary Injunction (Order 39) Generally civil suits take a long time to decide. In such cases, if the court feels that, till the final order, the subject matter of suit is likely to be destroyed, it may grant "TEMPORARY IN JUNCTION", to protect the subject matter. These injunctions are as follows:

1. Restrain the defendant from damaging or disposing his property. 2. Restrain the defendant from dispossessing the plaintiff from disputed

property. 3. Restraining the defendant from doing any other act which may make the

whole suit infructous. 4. Restraining the defendant from committing any breach of contract. 5. Restraining the defendant from committing injury of any kind.

However later on during the pending of suit or at the time of final hearing the court may revoke or modify the injunction granted. INTERLOCUTORY ORDER (O39, R 6-R10) Interlocutory orders are also somewhat similar to temporary injunctions. Interlocutory order only settles intervening matter relating to the cause. Such orders are made to secure some end and purpose necessary and essential to the progress of case and generally collateral to the issues to be settled by the court in the final judgement. These orders are also of different natures, such as:

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1. Interim Sale: Interim sale of any movable property may be ordered, if it is subject to natural decay, such as vegetable etc.

2. Detention Preservation , Inspection, etc of subject matter of suit

The court may order for:

i. Detention, preservation or inspection of property or documents. ii. Authorize any person to enter into any land or building, which is in the

possession of other party, for the purposes of detention, preservation or inspection etc.

iii. To authorize any person to take samples.

3. Deposit of Money: If the subject matter of suit is money, or movable Property, the court may order the person holding the money in dispute to be deposited in the court.

Order of "RES JUDICATA" (Some issue cannot be raised, once decided) (sec 10 & 11)

1. "Res Judicata" means an issue, which has already been decided by the court, in a previous case, cannot be raised again in a subsequent case.

2. If such an issue, which is raised again, is substantial and material in a case, then the court may dismiss the whole case out rightly, before final hearing

LIMITATION

1. These are some suits, which have to be filed within a specified time limit if they are filed, after the expiry of time specified, then the court may dismiss it at once, without going into any merits or details of the case.

2. For example (Limitation Act, 1963 schedule) 1. Suit for on account and a share of the profits of a dissolved

partnership 3 years, from date of dissolution.

2. Many payable for money lent 3 years, from the date when the loan is made.

3. Suit for possession of immovable property or any interest therein based on title

12 years, from the date of possession of the defendant becomes adverse to the plaintiff.

LACK OF JURISDICTION A court may dismiss the case outright, if, it (the court) does not have requisite jurisdiction, either pecuniary or territorial. DISMISS IN DEFAULT (Order 4)

1. If neither party appears on the date of hearing then the court is entitled to dismiss the suit,

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Or

2. If the Defendant appears and the plaintiff does not appear, then the court is bound to dismiss the suit

3. However, if the plaintiff appears and the defendant does not appear, then the court is authorized to either postpone the hearing or proceed with the suit "Ex-parte", i.e. without defendant.

DISPOSAL OF THE SUIT AT FIRST HEARING (Order 15) A Court may also dispose of the suit in it's very first hearing, on any one of the following grounds:-

1. NO ISSUE: If no relevant issue is raised before the court, by either of the parties during first hearing, the court may dispose of the suit.

2. ONE OF SEVERAL DEFENDANTS NOT AT ISSUE: i. If there are more than one defendant, and any of the defendant is not

in issue i.e. not connected with the case filed, then the court may dispose of the suit against or in favour of such defendant only.

ii. With respect to other defendants, the suit will continue in its usual course.

FAILURE TO PRODUCE EVIDENCE: If either party fails to produce evidence without any justifiable reasons, then the court may pass a judgment, without going any further. IRRELEVANT PARTIES: If irrelevant parties have been imploded in the plaint, the court may either order for deletion of such names, or out rightly reject the suit. SECURITY TO BE DEPOSITED BY DEFENDANT OR PLAINTIFF (Order 24 & 25)

1. The court may order the defendant to deposit a specific amount of money, in a suit filed against him for recovery of any debt.

2. The court may also order plaintiff to deposit any kind of security, on an application made by the defendant

3. Such an order is passed, to ensure the Bonafide and Integrity of the parties to the suits.

FINAL ORDERS Once a final order is passed by the court, the case is said to be disposed of in favour of either of the parties. Such a final order consists of more than one order. They are:- JUDGEMENT (Order 20)

1. A judgment means decision of the court, on the issues raised before it. In other words judgment is a final decision, which decides about rights and liabilities of the court.

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2. The court may pronounce judgment orally on the day of final hearing, or at some other short date.

3. Once, a judgment has been passed a certified copy of the judgment can be obtained on payment of nominal amount within 15 days.

4. The judgment shall contain: i. Points for determination

ii. Concise statement of the case iii. Decision iv. Reason for such decision, v. Issues framed if any, and decision on each issue.

DECREE (Order 20, Rule 6) A decree contains, more than judgment. It contains the following:

i. It shall agree with the judgment, ii. Number of the suit

iii. Names and descriptions of the parties iv. Registered Addresses of parties v. Particulars of the claim

vi. Relief granted on other determination vii. Amount of the costs incurred in the suit

viii. Who shall pay the cost, and how and in what proportion it shall be paid.

ix. Date on which judgment was pronounced. 2. A decree is drawn up within 15 days from the date on which the judgment is

pronounced. 3. A copy of decree can also be obtained in the same way, as a copy of

judgment. 4. In case of a suit for Recovery of Money, if Decree is passed against defendant,

then after the decree is passed, defendant may apply to the court for postponing the payment, or that, money be paid in installments.

5. There can be various kinds of Decrees, such as:- i. Decree for recovery of immovable property,

ii. Decree for delivery of movable property, iii. Decree for possession iv. Decree for specific Performance of contact for the sale etc.

EXECUTION (OF DECRESS AND ORDERS) (order 21) Generally an order or judgment is not sufficient for the party in whose favour it has been passed. Many a times it becomes necessary to execute the order through court, as the opposite party may still not follow the order. This usually happens in case of Money suits, suits for partition, demolition of property etc. In brief the procedure is as follows: Court on its own motion: The court, may on its own motion, order for the execution of its order, by directing the opposite party to either deposit money in court, or furnish a surety, or any other direction.

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Application by Decree-Holder (O21 R10)

1. A decree holder (i.e. one in whose favour, the decree has been passed) can also apply to the court, which passed the decree, for it's execution.

2. The application shall be signed and verified by the applicant, and in writing It should also contains the details of the suit and order passed.

3. When the application is admitted, the court shall enter the date on which it was made and pass necessary order for execution.

4. Then the court shall issue process for execution of the decree O21 R24 5. Finally on the date mentioned in the execution order the officer interested

shall endorse the execution process. 6. In the execution order, if the court feels the need, it may also order for: 7. Attachment of the property of person, against who decree has been

passed.or 8. Sale of the property.

The court may pass such an order, if it feels that the debtor is not willing or unable to pay the money due to the decree holder, or compensate in any other manner.

Suits of civil nature falls into various categories, depending on the nature of suits, or status of person filing the suit etc. These categories in brief are as follows:

1. Suits By Or Agents Govt./ Public Office 2. Suits By Or Against Military/Naval Men/Airmen 3. Suits By Or Against Corporations 4. Suits By Or Against Firms And Persons Carrying On Business In Names Other

Than Their Own. 5. Suits By Or Against Trustees, Executors and Administrators. 6. Suits By Or Against Minors And Persons Of Unsound Mind 7. Suits By/Against Persons Of Unsound Mind 8. Suits Relating To Matters Concerning The Family 9. Summary Procedure. (Suit Relating To Bills Of Exchange, Hundis, Promissory

Notes Etc.) 10. How is Summary Suit Instituted

SUITS BY OR AGENTS GOVT./PUBLIC OFFICE

1. Where the Govt. or Public Officer in official capacity is plaintiff (one who files the suit), or the defendant (against whom the suit is filed), such Authority shall be named as "Union of India" or " State Govt. of (State Concerned) or The " Name & designation " of public officer.

2. In case, the suit is filled against a public officer in his/their official capacity, the appropriate govt. shall also be made a party to the suit.

3. In such case, a two months prior notice has to (sec 80) be served on the Govt./public officer, in case if/he is defendant having regard as--- as to who the party is, the notice shall be served on the following:

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i. In case of Central Government, to it's secretary ii. In case of State Government, to it's secretary, or the collector of the

district. iii. In case of public officer, to him at his office.

4. However, in case of urgent basis/relief, the suit may be instituted against Govt./public officer, after taking permission of the court.

5. The court is required to allow a reasonable time to the Government, to communicate the subject matter of the suit through proper channel so as to enable the Govt. to accordingly instruct the Govt. pleader/Counsel appearing on it's behalf. The court at its discretion may also extend such time. However such time should not exceed 2 months in aggregate.

6. Where the Govt. undertakes the defence of such public officer, it shall authorise it's pleader to appear in the court, and the pleader shall make an application in that regard to the Court. If no such application is made by the pleader within the time fixed by the court, the case shall proceed as if between private parties.

7. However, in all cases against the Govt./public officer the endeavor of the court shall be to assist the parties to arrive at an amicable settlement if possible at the first instance and for that the court is empowered to adjourn the proceedings for a reasonable period of time in which attempts at settlement may be made by the parties.

SUITS BY OR AGAINST MILITARY/NAVAL MEN/AIRMEN

A suit may be instituted against any officer employed by any of the Armed forces; i.e. Navy, Military or Airforce in their personal capacity and it shall proceed in the same manner as between two private parties.

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VIII. EMPLOYMENT/LABOUR LAWS The minimum wages Act, 1948 Objectives

To determine the minimum wages in industry and trade where labour organisations are non-existent or ineffective.

Scope and coverage

Applicable to all employees engaged to do any work, skilled, unskilled manual or clerical, in a scheduled employment, including out-workers.

Fixation of minimum wages. Main provisions

Fixation of minimum wage of employees. Procedure for fixing and revising minimum wages. Obligation of employees. Rights of workers.

The Payment of Wages Act, 1936 Objectives

To ensure regular and prompt payment of wages and to prevent the exploitation of a wage earner by prohibiting arbitrary fines and deductions from his wages.

Scope and coverage

Application for payment of wages to persons employed in any factory. Not applicable to wages which average Rs 1600/- ($35.83) per month or

more. Wages include all remuneration, bonus, or sums payable for termination of

service, but do not include house rent reimbursement, light vehicle charges, medical expenses, TA, etc.

Main provisions

Responsibility of the employer for payment of wages and fixing the wage period.

Procedures and time period in wage payment. Payment of wages to discharged workers. Permissible deductions from wages. Nominations to be made by employees. Penalties for contravention of the Act.

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Equal remuneration for men and women. Obligations and rights of employers. Obligations and rights of employees.

When to consult and refer

Deciding wages and salary administration at all times.

Maternity Benefits Act, 1961

Maternity benefits to be provided on completion of 80 days working. Not required to work during six weeks immediately following the day of

delivery or miscarriage. No work of arduous nature, long hours of standing likely to interfere with

pregnancy/normal development of fetus or may cause miscarriage or likely to affect health to be given for a period of one month immediately preceding the period of six weeks before delivery.

On medical certificate, advance maternity benefit to be allowed. Medical bonus to be given in case when no prenatal confinement and post-

natal care is provided free of charge.

The Payment of Gratuity Act, 1972

Objective

To provide for payment of gratuity on ceasing to hold office. Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than 5 years-

o On his superannuation, or o On his retirement or resignation, or o On his death or disablement due to accident or disease

Coverage

Factories, Mines, Oil fields, Plantations, Ports, Railway Companies, Shops & Commercial Establishments and to other establishments to which the Government extends the law.

Payment of Bonus Act, 1965

Objectives

To provide statutory obligations for payment of bonus to persons employed in certain establishments on the basis of profits or productivity.

Scope and Coverage

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Applicable all over India to factories under the Factories Act and to other establishments employing 20 or persons on any day during a year.

Government can extend its coverage to establishments employing between 10 and 20 workers.

Covers all workers including supervisors, managers, and administrators, technical and clerical staff employed on salary or wages.

Main Provision

Eligibility for bonus. Payment of minimum and maximum bonus. Time limit for payment of bonus. Deductions from bonus. Computation of gross profits and available allocable surplus. Rights of employees.

When to Consult and Refer

When the factory if registered under the Factories Act. When the number of employees in the establishment reaches 20 or above. When calculating the bonus.

Employees Provident Funds & Miscellaneous Act, 1952

Among the social security legislations, the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, occupies the most important position so as to ensure compulsory deposit of Provident Fund along with, Employees Pension Scheme and Insurance Scheme. Provident Fund is one of the basic social security measures, which fulfills the functions of restoration of the essential income of a worker to some extent after retirement or termination of services. The Indian Parliament created a fund under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 for the benefit of the workforce in India. The corpus of this fund is created by the contribution by an eligible employee, fixed under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 together with an equal amount of contribution by the employer. The current contribution, which is payable by the employer to the Fund, is 12% of the basic wages of the employee and the employee’s contribution shall be equal to the contribution payable by the employer. The employer of establishment has to make Contribution card for each of the employee of establishment who has been covered under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 as per prescribed Form. The Employer has to send a consolidated Annual contribution Return to the Provident Fund Department in respect of the total Provident Fund contribution made in prescribed Form. Along with the individual Provident Fund contribution details of each contributing employee.

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An eligibility register has to be maintained by the Employer along with all the necessary records. Violation of the provisions of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 attracts both penal and pecuniary punishment.

The Shops and Establishments Act, 1953 Objectives

To provide statutory obligation and rights to employees and employers in the unorganized sector of employment, i.e., shops and establishments.

Scope and Coverage

A state legislation; each state has framed its own rules for the Act. Applicable to all persons employed in establishments with or without wages,

except the members of the employer's family. State government can exempt, either permanently or for a specified period,

any establishments from all or any provisions of this Act.

Main Provisions

Compulsory registration of shop/establishment within thirty days of commencement of work.

Communications of closure of the establishment within 15 days from the closing of the establishment.

Lays down the hours of work per day and week. Lays down guidelines for spread-over, rest interval, opening and closing

hours, closed days, national and religious holidays, and overtime work. Rules for employment of children, young persons and women Rules for annual leave, maternity leave, sickness and casual leave, etc. Rules for employment and termination of service. Maintenance of registers and records and display of notices. Obligations of employers. Obligations of employees.

When to Consult and Refer

At the time of start of an enterprise. When framing personnel policies and rules.

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IX. TELECOM RELATED ACTS & LEGISLATIONS IN INDIA

Indian Telegraph Act 1885 The Indian Telegraph Act, 1885 is a law in India that governs the use of telegraphy, phones, communication, radio, telex and fax in India. It gives the Government of India exclusive privileges of establishing, maintaining and working telegraphs. It also authorizes the government to tap phone lines under appropriate conditions. It empowers government of India to exclusive privilege in respect of telegraphs, and power to grant licenses. It empowers government to take possession of license telegraphs and to order interception of messages. It also empowers government to notify rates of transmission of messages to countries outside India, to make rules for conduct of telegraphs, revocation of licenses, and power for telegraph authority to place and maintain telegraph lines and posts and other supplemental provisions thereto.

Indian Wireless Act 1933 This is an act which regulates the possession of wireless telegraphy apparatus. It prohibits the possession of wireless telegraphy apparatus without appropriate license.

Information Technology Act, 2000 The united nations General assembly by resolution A/RES/51/162, dated the 30 January 1997 has adopted the Model Law on Electronic commerce adopted by United Nations Commission on International Trade Law. This is referred to as the UNCITRAL Model Law on E-Commerce. Following the UN resolution India passed the Information Technology Act 2000 in May 2000 and notified it for effectiveness on October 17, 2000. Further it has been substantially amended through the Information Technology Amendment Act 2008 was notified for the effectiveness on October 27, 2009. Information Technology Act 2000 addressed the following issues:-

Legal Recognition of Electronic Documents

Legal Recognition of Digital Signatures

Offenses and Contraventions

Justice Dispensation System for Cyber crimes ITA 2008 as the new version of Information Technology Act 2000 is often referred has provided additional focus on Information Security. It covers and provides for the offences including Cyber Terrorism and Data Protection.

The Telecom Regulatory Authority of India Act, 1997 This is an act to provide for the establishment of the Telecom Regulatory Authority of India and the Telecom Disputes Settlement and Appellate Tribunal to regulate the telecommunication services, adjudicate disputes, dispose of appeals and to protect the interests of service providers and consumers of the telecom sector, to promote and ensure orderly growth of the telecom sector, and for matters connected therewith or incidental thereto. This is an independent telecom regulatory body for

http://en.wikipedia.org/wiki/India

http://en.wikipedia.org/wiki/Government_of_India

http://en.wikipedia.org/wiki/Government_of_India

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regulation of telecom services for orderly and healthy growth of telecommunication infrastructure apart from protection of consumer interest. The powers and function of the Authority, inter alia, are- Functions of Telecom Regulatory Authority of India:-

recommend the need and timing for introduction of new service provider;

recommend the terms and conditions of license to a service provider;

ensure technical compatibility and effective inter-connection between different service providers;

regulate arrangement amongst service providers of sharing their revenue derived from providing telecommunication services;

ensure compliance of terms and conditions of license;

recommend revocation of license for non-compliance of terms and conditions of license;

lay down and ensure the time period for providing local and long distance circuits of telecommunication between different service providers;

facilitate competition and promote efficiency in the operation of telecommunication services so as to facilitate growth in such services;

protect the interest of the consumers of telecommunication service;

monitor the quality of service and conduct the periodical survey of such provided by the service providers;

inspect the equipment used in the network and recommend the type of equipment to be used by the service providers;

maintain register of interconnect agreements and of all such other matters as may be provided in the regulations;

keep register maintained under clause (l) open for inspection to any member of public on payment of such fee and compliance of such other requirements as may be provided in the regulations;

settle disputes between service providers;

render advice to the Central Government in the matters relating to the development of telecommunication technology and any other matter reliable to telecommunication industry in general;

levy fees and other charges at such rates and in respect of such services as may be determined by regulations;

ensure effective compliance of universal service obligations;

Perform such other functions including such administrative and financial functions as may be entrusted to it by the Central Government or as may be necessary to carry out the provisions of this Act.

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X. IMMIGRATION LAWS PASSPORT ACT, 1967 This is an act to provide for the issue of passports and travel documents, to regulate the departure from India of Citizens of India and for other persons and for matters incidental or ancillary thereto.

THE REGISTRATION OF FOREIGNERS ACT, 1939 This is an act to provide registration of foreigners entering, being present in and departing from, India. For the purpose of application of this act “Foreigners” means a person who is not a citizen of India.

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XI. TAXATION LAWS Tax laws can be divided into two sections as

I. Direct Tax Laws

The Income Tax Act 1961

The Expenditure Act 1987

The Interest Tax Act 1974

The Gift Tax Act, 1958

The Wealth Tax Act, 1957

The Taxation Laws (amendment) Act, 2006

II. Indirect Tax Laws

The central Excise Act, 1944

The medicinal and Toilet preparation (excise duties) act, 1955

Service tax: statutory provisions (1994)

Central sales Tax

Customs Act, 1962 Direct Tax laws:-

The Income Tax Act 1961 A tax that is levied on income of individuals/corporations/legal entities is known as Income Tax. The Central Board for Direct Taxes (CBDT) governs the Indian Income Tax department. Income tax is imposed by Govt. of India on taxable income of individuals, Hindu Undivided Families (HUFs), companies, firms, co-operative societies and trusts (Identified as body of Individuals and Association of Persons) and any other artificial person. Levy of tax is different for different entities and it is governed by the Indian Income Tax Act, 1961.

Legal Provisions of the Income Tax Act, 1961 In India, the charge of income tax and the scope of taxable income vary with the factor of residence. The IT Act prescribes two categories of taxable entities viz. (1) residents and (2) non-residents. A company is said to be resident in India during any relevant previous year if-

i. It is an Indian company; or ii. The control and management of its affairs is situated wholly in India.

A company however is said to be non-resident during any relevant previous year if-

i. It is not an Indian company, and ii. The control and management of its affairs is situated wholly/partially

outside India.

For determining the scope of total income section 5 of the IT Act provides that the total income liable to tax in case of resident companies includes income -

which is received or is deemed to be received in India in the relevant previous year by or on behalf of such company.

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which accrues or arises or is deemed to accrue or arise in India during the relevant previous year.

which accrues or arises outside India during the relevant previous year.

A foreign company’s tax liability in India is determined in accordance with the IT Act and the Double Taxation Avoidance Agreement (DTAA) between India and its home country, with the provisions of the DTAA taking precedence over those of the IT Act, in all cases except where the later are more beneficial to the foreign companies.

The total income of non-resident/foreign companies as per the IT Act includes all income from whatever source derived which-

is received or is deemed to be received in India in such year by or on behalf of such person; or

accrues or arises or is deemed to accrue or arise to him in India during such year.

In other words, income earned through a “business connection” in India or from other Indian sources is liable to tax in the hands of a foreign entity. Taxability of income through “business connection” is provided in section 9(1)(i) of the IT Act which states that the expression “business connection” includes a person acting on behalf of the non-resident and who:

(a) Habitually exercises in India, an authority to conclude contracts on behalf of the non-resident, unless his activities are limited to the purchase of goods or merchandise for the non-resident; or

(b) Has no such authority, but habitually maintains in India a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the non-resident; or

(c) Habitually secures orders in India, mainly or wholly for the non-resident or for that non-resident and other non-residents controlling, controlled by, or subject to the same control, as that non-resident.

A business connection may take several forms: it may include carrying on a part of main business of the foreign company through an agent, or it may merely be a relation between the business of the foreign company and the activity in India, which facilitates or assists the carrying on of that business.

Further DTAA’s require a somewhat permanent nature of presence of the foreign entity in India to be able to exercise the jurisdiction of taxing the business income. Such presence is established through the existence of a “permanent establishment” (PE).

The term PE means a fixed place of business through which the business of an enterprise is wholly or partly carried on.

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The term permanent establishment includes especially: (a) a place of management ;

(b )a branch ;

(c) an office ;

(d )a factory ;

(e ) a workshop ;

(f) a mine, an oil or gas well, a quarry, or any other place of extraction of natural resources ;

(g)a warehouse, in relation to a person providing storage facilities for others ;

(h) a farm, plantation or other place where agriculture, forestry, plantation or related activities are carried on ;

(i) a store or premises used as a sales outlet ;

(j) an installation or structure used for the exploration or exploitation of natural resources, but only if so used for a period of more than 183 days in any twelve-month period ;

(k) a building site or construction, installation or assembly project or supervisory activities in connection therewith, where such site, project or activities (together with other such sites, projects or activities, if any) continue for a period of more than 183 days in any twelve-month period ;

(l) the furnishing of services, other than included services as defined in Article 12 (Royalties and Fees for Included Services), within a Contracting State by an enterprise through employees or other personnel, but only if:

(i) activities of that nature continue within that State for a period or periods aggregating more than 90/120/183 days within any twelve-month period; or

(ii) the services are performed within that State for a related enterprise [within the meaning of paragraph 1 of Article 9 (Associated Enterprises)].

However, the term PE does not include any one or more of the following:

(a) the use of facilities solely for the purpose of storage, display, or occasional delivery of goods or merchandise belonging to the enterprise ;

(b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display, or occasional delivery ;

(c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise ;

(d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or of collecting information, for the enterprise ;

(e) the maintenance of a fixed place of business solely for the purpose of advertising, for the supply of information, for scientific research or for

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other activities which have a preparatory or auxiliary character, for the enterprise.

Thus, a PE exists when a company has a fixed place of business located in a foreign jurisdiction through which activities of a company are wholly or partially carried on.

The foreign company can be taxed only in respect of the profits that can be attributed to its PE’s activities in India. In other words, the profits attributable to PE shall be that proportion of total profits which relate to the activities carried on by it in India.

While calculating the Profit of the PE, the PE is treated as if it were a separate and wholly independent enterprise. The profits which are to be attributed to a PE are those, which that PE would have made if, instead of dealing with its head office, it had been dealing with as an entirely separate enterprise and tax will be levied on such profits. However, deductions with regard to expenses incurred for the purposes of the PE including executive and general administrative expenses so incurred, whether in India or elsewhere would be deductible in accordance with the accepted principles of accountancy and the provisions of the IT Act.

Corporate Tax in India

Corporate tax rate in India is at par with the tax rates of other nations of the world. The corporate tax rate in India is based on the origin of the company.

If the company is domicile to India, then the tax is levied at flat rate. But for a foreign company, then the tax rate depends on several other factors and considerations. For companies that are domicile to India, tax is charged on the global income whereas for the foreign companies present in India, tax is charged on their income within Indian Territory. Incomes that are taxable for foreign companies include income from the capital assets in India, interest gained, income from sale of equity shares of the company, royalties, dividends earned, etc.

Indirect Tax Laws

Service Tax Laws Service Tax is an indirect tax levied under chapter V of the Finance Act, 1994. It is levied on the value of taxable services provided by a person and the liability to pay service tax lies with the service provider. Service tax is being administered by various Central Excise Commissionerate spread across the country. Every person liable to make payment of service tax is required to get himself registered with the Superintendent of Central Excise. Section 69 of the Finance Act, 1994 read with Rule 4 of the Service Tax Rules, 1994 deals with registration under service tax laws. Every person who is liable for paying service tax shall within a period of thirty days from the date of commencement of the business of providing the taxable service, make an application to the concerned Superintendent of Central Excise in Form ST-1 for registration.

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The registration is allowed within 7 (seven) days of acknowledgement of registration application, provided the application seeking the registration is in conformity with the law. If the assessee does not receive intimation regarding registration within 7 days from the date of acknowledgement of registration application, it is deemed to be granted. Registration certificate is issued to the assessee in Form No. ST-2. Service tax is exempted if there is export of service. Please note that Export of Services Rules, 2005 have been notified w.e.f. March 15, 2005 which require following conditions to apply to various categories of services:

(i) Immovable property should be situated abroad [rule 3(i)]

(ii) Service should be at least partly performed outside India [rule 3(ii)]

(iii) Service can be provided firm Indian but recipient should be located outside India and order should be received from outside India [rule 3(iii)]

Additionally, taxable services can be construed as export services if they are provided from India and used outside India and the payment is received in foreign exchange.

Any taxable service performed by a service provider outside India on or after April 18, 2006 is treated as taxable service received in India and is accordingly charged to service tax at the applicable rate. The principles on the basis of which taxable services would be deemed as received in India have been laid down under the Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 (“the Import of Services Rules”) read with Section 66A of the Finance Act, 1994.

Section 66A(1) of the Finance Act, 1994 provides that where any service specified in section 65(105) of Finance Act, is,— (a) provided or to be provided by a person who has established a business or has a fixed establishment from which the service is provided or to be provided or has his permanent address or usual place of residence, in a country other than India, and (b) received by a person (hereinafter referred to as the recipient) who has his place of business, fixed establishment, permanent address or usual place of residence, in India, such service shall, for the purposes of this section, be taxable service, and such taxable service shall be treated as if the recipient had himself provided the service in India, and accordingly all the provisions of this Act apply.

Customs Act Customs duty is levied on the goods imported or exported from India in accordance with the provisions of the Customs Act, 1962 at the rates specified in the Customs Tariff Act, 1975.Custom duty on imports comprises of basic custom duty, additional custom duty (in lieu of CENVAT) and special additional duty of customs (in lieu of sales tax). Basic custom duty imposed under section 3(1) of the Customs Tariff Act varies according to the description of the goods and is levied at the rates specified in the first and the second schedule to the Act. Additional duty of customs is imposed under section 3(3) of the Customs Tariff Act to counterbalance the excise duty

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leviable on similar raw materials, components and ingredients used in the production or manufacture of like articles as if these goods were manufactured in India. Under section 3(5) of the Customs Tariff Act, a further additional duty of customs is imposed to counterbalance sales tax, value added tax, local tax or any other charges for the time being leviable on the sale, purchase of like article in India.

Value Added Tax (VAT)/ Central Sales Tax (CST) VAT is chargeable on sale of movable goods within India. In case the goods physically move from one State to another pursuant to a sale transaction, central sales tax (‘CST’) is levied under the Central Sales Tax Act, 1956. On the other hand, local (State) sales tax / VAT is levied if the goods physically remain within a State under a sale transaction. While every State Government has the power to impose VAT/sales tax on a transaction of sale made within a State, the power to levy CST vests with the Central Government. However, on a single sale transaction, only one tax, either CST or VAT, is levied. VAT is generally levied at 12.5% and in some cases concessional rate of 4% is applicable. CST on the other hand is charged at 2% against Form-C provided by the purchaser. VAT is multi-point tax, with provision for granting set off (credit) of the tax paid at the earlier stage to ensure that the same commodity does not get taxed again and again. In the case of a sales transaction where the duty on the import of goods is first paid by the importer and thereafter these goods are re-sold to the final buyer, VAT/sales tax is levied on such a transaction as it involves the sale of goods. In order to avoid the implication of VAT/sales tax, the goods may be sold on high seas to the final buyer before they cross the customs frontier of India. Such a structuring would put the final buyer in the position of the direct importer and hence the levy of VAT/sales tax may be avoided. In such a case, customs duty implication would also fall upon the final buyer and not on the importer.

Central Excise Act The Central Government is empowered to levy and collect a duty of excise called Central Value Added Tax (CENVAT) on manufacture of goods within the country. Excise duties are governed by the Central Excise Act, 1944 and the Central Excise Tariff Act, 1985. As soon as the goods in question are produced or manufactured, they are liable to payment of excise duty. However for administrative convenience, duty is collected at the time of removal of the goods from the place where they are manufactured or produced or from the warehouse where they are stored. Excise duty is mostly levied on ad-valorem basis (i.e. on the basis of value). However there are commodities which attract excise duty at specific rates, which are based on quantity or weight. The excise law provides for a CENVAT credit scheme, which limits the cascading effect of duty incidence on a number of excisable goods that are used as inputs/capital goods for use in manufacture of other excisable goods. Under this scheme CENVAT credit can be claimed on the excise duty and additional duty of customs imposed on raw materials and capital goods, whether purchased locally or imported. This credit can be utilized for payment of excise duty liability arising on the finished product.

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About Legal Integrity LLP Established initially as a litigation and commercial law firm, Legal Integrity LLP evolved as a full service law firm with the surfacing needs of changing times. We feel proud to find ourselves at the forefront of legal discipline, offering advisory services and litigation services to institutions, corporations and individuals and have a proven successful track record in Navi Mumbai-Panvel & District Raigad. Taking this as a primary advantage firm has evolved from its conventional litigation practice to full service law firm. We take pride in providing personalized, professional and result oriented services to our clients, whilst upholding the highest standards of the legal profession. At Legal Integrity we believe in Quality Legal Services, Value Addition and Quick Turn around Time. We have broad based practice area and diversified clientele base ranging from banks, financial & educational institutions, corporate houses, property developers as well as companies, firms and individuals. We mark our presence in emerging planned satellite city of Navi Mumbai. We are located within easy commuting distance of Central Business District (CBD-Belapur), Vashi and major industrial parks (MIDC-Taloja/Mahape/TTC) as well as IT/Business Parks in Navi Mumbai. At Legal Integrity a dedicated team of Advocates, Lawyers and Consultants work together to achieve end results in a project for our valuable clients. We have experts working together in team who have acquired degrees from Indian and International schools to serve the clients in dual jurisdiction of law and business. The firm also engages professional consultants to bring its members up to speed with the demands of today’s dynamic business environment. At Legal Integrity we have practice area teams working on specific projects or assignments in hand. Our all team members are well equipped and have significant experience to integrate in any practice area team to achieve the common goal. Transparency, Honesty, and Integrity are the core values throughout the success of the firm. At Legal Integrity we don’t just resolve legal questions, but also help our clients to avoid potential pitfalls. Realizing the surfacing needs of businesses and enterprises we provide legal advisory and consultancy services in their ordinary course of business. REGISTERED OFFICE: 4, Shree Samarth Apartment, Near Maruti Temple, Shivaji Road, Panvel-Navi Mumbai, Pincode - 410206 Telephone: +91 9619846272 Email: [email protected] Web: www.legalintegrity.in DISCLAIMER: This guide is only for the information purpose only. No reader should act on the basis of any

statement contained herein without seeking professional advice. The authors and the firm expressly disclaim all and any liability to any person who has read this report, or otherwise, in respect of anything, and of consequences of anything done, or omitted to be done by any such person in reliance upon the contents of this report.

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