DEBT RECOVERY BILL: AIMS TO MAKE DEBT RECOVERY PROCESS FASTER AND EASIER

recovery-lawyers (1)

 

The Government has introduced “the Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Bill”, 2016 in May. The Lok Sabha has passed the Bill on 1st August, 2016 that amends four different Acts – Sarfaesi Act, 2002, the Recovery of Debts due to Banks and Financial Institutions Act, 1993, the Indian Stamp Act, 1899 and the Depositories Act, 1996. The Bill is passed by voice vote. The bill will now go to the Rajya Sabha for its approval.

The Recovery of Debts due to Banks and Financial Institutions Act gives 180 days for disposal of recovery applications, but cases are pending for many years due to various adjournments and prolonged hearings. As per recent reports there are more than 70,000 cases that are pending before DRTs (Debt Recovery Tribunal) which shows a weak recovery process which has in turn increased the number of NPA’s (Non Performing Assets) in the market which if not controlled will reduce the cash flow to a minimum.

“The Bill aims to improve ease of doing business and facilitate investment leading to higher economic growth and development,” said Finance minister Arun Jaitley.

Key Points of “the Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Bill”:

  • RBI oversight of the asset reconstruction companies.
  • Central registry to records details of all secured assets.
  • Priority of debt due to secured creditors over all others debts and claims.
  • Time for filing appeal to the Appellate Tribunal cut from 45 days to 30 days.
  • 50% of debt to be deposited for filing an appeal. It can be cut to 25% in some cases.
  • Right to take over secured property; appointing receiver for such property and to sell the same.
  • Time can be given to the borrower if 25% of the debt is deposited with promise to pay full amount.
  • Depositories empowered to transfer asset to Asset Reconstruction Companies (ARCs).
  • A fit and proper person can sponsor an Asset Reconstruction Companies (ARCs).
  • Protection for secured creditors, RBI, central registry or any of their officers for action taken in good faith.

 

The amendments are aimed at faster recovery and resolution of bad debts by banks and financial institutions and make it easier for Asset Reconstruction Companies to function. Along with the new bankruptcy law which came into effect earlier this year, the amendments will put in place an enabling infrastructure to effectively deal with non-performing assets in the Indian banking system.

It also seeks to cut the time for resolution process by providing for summons, notices, communications or intimation to be served in electronic forms. It also provides for filing of recovery applications, documents and written statements in electronic forms and display of interim and final orders of the Debt Recovery Tribunals and Debt Recovery Appellate Tribunals on their websites.

 

Parul

Senior Associate

The Indian Lawyer and Allied Services

PROTECTION OF MOBILE APPLICATIONS UNDER INTELLECTUAL PROPERTY LAWS

q (1)

 

All applications are software programs based on an operating system designed to run on smart phones and accessible through the application distribution platforms that are typically operated by owners ofsmart phone operating systems.

Developers create applications, which run on smart phone platforms and exhibit newshades in resolution, style, size, technology and user interface for each smart phone.

Authors of such applications rely on source code ‘open’ to all for usage and development of smart phone applications. The open source code is governed by a license agreement, which retains protection under copyright in the name of source code provider and simultaneously allows developers to use and add own source code and distribute the final product. Such applications are not recognized as original work and thus cannot be registered. Instead the developer is required to provide public access to the open source code along with the copy of the open source license agreement with distribution of the new product. In case of any violation or infringement regarding the license for source code, the application will be removed immediately from the distribution platform and such developer shall be liable under the law.

Everysmart phone application is initially tested as a beta version before being promoted online and then downloaded by the user on his/her smart phone and used by the user through their smart phones.  During promotions, the “name” of the smart phone application is used more than the “logo”; and during the download process, the smart phone application is mentioned with both, “name” and “logo”. Once the smart phone application is downloaded on to a user’s device it appears more as an icon, which is nothing more than a “logo”. Hence, the “name” and “logo” becomes equally important to be protected by a trademark. Therefore, it is suggested that one must seek protection for the “name” and “logo” individually. However, it is advisable to talk to an expert to identify your usage and marketing pattern in order to determine a specific trademark protection strategy for you.

The Patent Act, 1970 also offers protection for a useful novel product or a process. Computer programs cannot be patented per se, unless the program forms an integral part of the innovative invention and does not fall within the ambits of the non – patentable matter as specified u/s 3 and 4 of the Patent Act. The fundamental requisition for patent is novelty without compromise on the scope of invention.

Since the advent of Smart Phone Commerce (M-Commerce) Industry, potential developers have created various lucrative applications and software suitable for consumers for a convenient lifestyle. The smart phone application developers have witnessed financial success for creation of savvy products but due to ignorance of legal enforcement, the value of such product or process is tarnished.

Smart phone applications grant an array of platforms for innovators to exhibit their intangible creation into a tangible medium. An intellectual property specialist can provide bona-fide legal guidance beneficial towards the protection of novel inventions and management of such intellectual inventions to achieve maximum exposure and optimum success.

 

Mayank Singh Raghuvanshi

Senior Associate

The Indian Lawyer and Allied Services, New Delhi

FOREIGN COMPANIES REASSURED OF JUSTICE IN INDIA

“The Indian Lawyer and Allied Services” which is based out of New Delhi, Mumbai and Hyderabad announces its success in two international Arbitrations in which it represented a Billion Dollar Construction Company namely Open Joint Stock Far Eastern Mining Construction Company.

With foreign companies still apprehensive about entering India, the Awards in the two international Arbitrations between FEMC, a Russian construction company, and Indian company Pratibha Constructions Ltd. reassures everyone that the Indian legal system is highly effective in delivering justice without delay or bias.

A short gist of the facts: FEMC-Pratibha JV won the Delhi Metro Rail Corporation (DMRC) Contracts CC-18 and CC-23 in 2012-13 for construction of stretches of metro in South Delhi area.  After winning the Contracts differences arose between the partners and Pratibha effectively threw out FEMC from the Projects and also stopped payment of installments of the agreed Success Fee.  FEMC initiated the Arbitration in late 2013 for recovery of the pending Success Fee as well as damages, loss of profits etc.  Pratibha filed cross claims too.

The Arbitral Tribunal presided by Former Chief Justice of India, Justice R.C. Lahoti, Former Chief Justice of Allahabad High Court, Justice Ferdino I. Rebello and Dr. V.K. Aggarwal, Former Law Secretary heard both Parties at length and delivered the Awards on 20th July 2016, dismissing the claims of Pratibha as being devoid of merit and allowing FEMC’s claims for pending Success Fee in both the Arbitrations to the tune of Rs. 23.79 Crores as well as Rs. 10.79 Crores for damages.  These amount carry 9% interest if paid within 30 days (19th August 2016) failing which the entire dues payable will carry interest of 18% thereon.  Costs of Arbitration of Rs 88.79 Lakhs were also awarded.

The Arbitral Tribunal has also held that Pratibha shall indemnify FEMC from future liabilities that may arise due to any faulty execution or lapses by Pratibha.

Chief Legal Consultant Ms. Sushila Ram Varma and Senior Consultant Sukun K.S. Chandele (along with a team of seven lawyers) representing the Law Firm engaged by FEMC, applaud the Award in these Arbitrations as a proof of robustness and maturity of Indian legal system and state that foreign companies can be reassured that their rights and interests are fully protected in India.

The aforesaid Awards conclusively prove that India honors contractual obligations that foreign companies/parties had entered into. Mr. Modi’s Government which is welcoming foreign participation in Indian business has made several changes for ease of doing business in India. Amongst these honoring foreign contracts is a top priority.

Arbitrations have become a recognised means of resolving disputes world over. India has also recognised the importance of quick resolutions of disputes thereby amending the Arbitration Law.  The Arbitration and Conciliation (Amendment) Act, 2015 now mandates that all arbitration proceedings have to conclude within one year from the date of reference.

 

Sushila Ram Varma

Founder and Chief Consultant