THE SUPREME COURT ON ILL-TREATMENT OF CHILDREN AT SHELTER HOMES IN INDIA

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Recently, the Supreme Court of India had received a letter dated 31.07.2018 (Letter) from a Human Rights Defender in Patna, Bihar in the case of Sampurna Behura vs. Union of India and others, raising concerns over recent alleged rape and abuse of children in the Government funded Children’s Home run by a non-governmental organization (NGO) called Sewa Sankalp Evam Vikas Samiti. According to the Letter, a number of people from various organizations such as National Commission for Women, State Commission for Women, District Legal Services Authority, State Legal Services Authority, Special Investigation Team of the CID, Bihar Police and the Media have already visited the children shelter home in Bihar to interrogate and question the minor girls, who have allegedly been raped and abused.

The Supreme Court issued Order dated 02.08.2018 restraining media persons from questioning the minor girls and telecasting the same on television, newspapers, etc, so that they do not have to relive the trauma. Further, in the interest of the minor girls, the Supreme Court sought assistance of Tata Institute of Social Sciences (TISS) and also notified the concerned police authorities and other officials that when they investigate the matter, certain professional counselors / qualified child psychologists, appointed in consultation with the National Institute of Mental Health and Neurosciences (NIMHANS), Bangalore, TISS, All India Institute of Medical Sciences (AIIMS), Delhi, be present during the investigation.

The Supreme Court further issued Order dated 07.08.2018 whereby it stated that:

TISS would look at the rehabilitation and reintegration of such minor girls.

AIIMS, Patna may address the clinical and medical aspects.

NIMHANS, Bangalore would address the mental and psychiatric health of the children in the shelter home.

TISS to prepare a brief report on the process for conducting social audits; and a report about events in shelter homes in Bihar that it had conducted.

The Ministry of Women and Child Development, Government of India to submit a survey, that it had conducted of around 8000 such homes including its infrastructure, facilities, and staff, etc.

The Ministry of Women and Child Development to inform the Supreme Court about how it proposes to ensure that sexual abuse of children does not take place in shelter homes, other homes and child care institutions across the country.

The victims of sexual abuse to be interviewed only by an authorized member of the National Commission for Protection of Child Rights (NCPCR) and State Commission for Protection of Child Rights and in presence of a mental health expert or a trained counselor.

The Supreme Court further issued Order dated 14.08.2018 and directed the NCPCR to take cognizance of the report filed by TISS for conducting social audits and also stated that it would be proper if the Government of India frames a Child Protection Policy on prevention of offences against children.

As per few newspaper reports, the social audit report submitted by TISS stated that it had conducted an audit of 21 specialized adoption centres, 18 children homes for boys and six for girls, eight open shelters for street and slum children, 11 observation homes for undertrial juveniles, 21 short-stay homes for deserted women and five old age homes, etc. The report further stated that rampant sexual abuse, physical violence, humiliation, etc of varying forms and degree of intensity is prevalent in the children shelter homes. The Bihar State Government is also likely to release the said TISS report in the public domain.

By

Harini Daliparthy

Senior Legal Associate

The Indian Lawyer

SUPREME COURT PROTECTS HOMEBUYERS FROM THE FRAUDULENT INTENTIONS OF THE JAYPEE GROUP

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As per the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018 which is an amendment to Insolvency and Bankruptcy Code, 2016 (IBC), the status of homebuyers is classified as financial creditors under the laws of insolvency and bankruptcy.

A case was filed by the IDBI bank against Jaypee Group in the National Company Law Tribunal (NCLT) after which a Petition was filed by the homebuyers against Jaypee Group before the Supreme Court asking for relief, stating that around 32,000 people had booked flats and were paying instalments. However, the Supreme Court has directed the matter back to NCLT for starting afresh.

The Supreme Court of India on Thursday, 9th August, 2018 barred the promoters of Jaypee Infratech Limited (JIL) from participating in any fresh bidding process and directed the Allahabad Bench of the NCLT to initiate fresh insolvency proceedings against JIL.

The Apex Court also directed the Reserve Bank of India to initiate separate insolvency proceedings against Jaiprakash Associate Limited (JAL) which is one of the subsidiaries of the Jaypee Group.

The Court while taking note of the enormity of the issue, stated that the liability of the Jaypee Group was initially thought to be around Rs 2,000 Crore and now it has gone beyond Rs 30,000 crore.

A Bench headed by Chief Justice Dipak Misra and also comprising Justices A. M. Khanwilkar and D. Y. Chandrachud disposed-off all the petitions and applications pending before it and the Bench said that starting from 9th August the insolvency proceeding against JIL is to be concluded within 180 days timeframe set by IBC and the grace period of 90 days will not be granted.

The Bench also refused to refund any money to the homebuyers, saying it would be unfair to other creditors, and ordered to transfer Rs 750 crore deposited by the Jaypee Group in the Supreme Court to the NCLT, Allahabad and to be disbursed eventually among creditors.

The Supreme Court by the aforesaid direction has spread a strong message against promoters of real estate companies that relief will be provided to thousands of homebuyers stranded due to non-delivery of their homes. This protection will go a long way in building the confidence of stranded homebuyers that their hard earned money will not be wasted.

TARUNA VERMA

SENIOR ASSOCIATE

SUPREME COURT RULES THAT PERSONAL GUARANTORS ARE NOT EXEMPT IN INSOLVENCY AND BANKRUPTCY MATTERS

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In a recent judgement passed in the matter of State Bank of India vs. V. Ramakrishnan, decided on 14.08.2018, by Justice R. Nariman and Justice Indu Malhotra, the Supreme Court held that the moratorium period allowed under the Insolvency and Bankruptcy Code, 2016 (IBC) will not apply to a personal guarantor of a corporate debtor.

This case will have a significant impact on all personal guarantors of corporate debtors. Till date, personal guarantors sought exemption against invocation of personal guarantees given by them during the moratorium period of six months that was allowed to a corporate debtor during the insolvency resolution process.

Personal guarantors who were generally promoters of the sick company have sought refuge under Section 14 of the IBC and claimed that there was a prohibition not only against the corporate debtor which got a breather of six months in order to finalize the resolution plan but that it also applied to a corporate guarantor. This put banks and other lenders in a difficult situation as despite having a guarantee they were unable to invoke the same when the corporate debtor went in for bankruptcy proceedings.

The Section 14 that allows the moratorium period generally provides a stay in any legal action or proceeding pending in respect of any debts till the resolution plan is finalized. While the Section was very clear that the moratorium applied only to the corporate debtor, guarantors took advantage of this and claimed that the moratorium period applied to a corporate debtor also applied to the personal guarantors. This led to a situation where the lenders were left without remedy till the moratorium period ended.

With the passing of the present judgement it is now clear that since guarantees for loans of corporates are given by its promoters in the form of personal guarantees, if there is a stay of action against their assets during a resolution process such promoters (who are also corporate applicants) try to file frivolous applications to take advantage of this stay and guard their assets. Hence, there is an abuse of the moratorium period which in the first place is given only to enable the corporate debtor to get a brief respite while the resolution plan is finalized.

The Court has now held that the moratorium allowed by the IBC does not bar actions against assets of guarantors to the debts of corporate debtor and is restricted only to the assets of the corporate debtor.

With the passing of this judgement there is a great relief for lenders who can now proceed against the guarantors in spite of a pending IBC proceeding. This judgement is landmark for lenders who have been at the wrong and receiving end when corporate debtors file for bankruptcy or voluntary winding up creating a huge crunch in the economy that effects the growth of the country.

SUSHILA RAM

CHIEF CONSULTANT

THE INDIAN LAWYER

 

APPROVAL OF THE PROPOSED COMBINATION OF WALMART-FLIPKART BY COMPETITION COMMISSION OF INDIA

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The Competition Commission of India (CCI) is an authority established under the Competition Act 2002 as amended thereof (Act) to promote competition, to protect interests of consumers, to prevent practices having adverse effect on competition, etc. Recently, Wal-Mart International Holdings, Inc (Walmart) had issued a notice around 18.05.2018 to CCI seeking its approval for acquisition between 51% and 77% of the outstanding shares of Flipkart Private Limited (Flipkart) by Walmart. As per the Act prior to any merger or amalgamation, acquisition, etc between two or more companies, they have to seek approval of CCI for entering into such process and/or execution of agreement giving effect to such combination.

Recently, the CCI passed an order dated 08.08.2018 (Order) approving the proposed combination of Walmart-Flipkart (Proposed Combination).

The CCI noted that Flipkart is engaged in business to business (B2B) sales such as goods bought from various manufacturers and sellers are sold by Flipkart to third party resellers, etc. Further, Flipkart also facilitates e-commerce transactions between sellers and consumers (i.e. business to consumer or B2C transactions), provides payment gateway services, advertising services, technology based services, etc. Whereas Walmart is engaged in B2B sales.

In accordance with the provisions of the Act, in order to check whether a proposed combination has an appreciable adverse effect on competition in the relevant market, the CCI has to consider the extent of barriers to entry into the market, extent to which substitutes are available, market share, extent of competition likely to remain after the combination, etc.

B2B market:

The CCI further noted that Walmart’s market share in B2B sales in India is less than half a percent and that Walmart and Flipkart are not close competitors. The major focus of operations of Walmart was on groceries and that of Flipkart was on mobile and electronics products. Whereas, the combined value of sales of Walmart and Flipkart in the common segment of skincare, baby and feminine hygiene, apparel and accessories, etc is low. Therefore, the CCI held that the Proposed Combination does not alter the current market structure.

In the B2B market, there are larger players such as Reliance Retail, Metro Cash and Carry, Amazon wholesale etc. Thus, the CCI held that although Walmart and Flipkart are present in the B2B market, the Proposed Combination is not likely to have any adverse affect on competition.

B2C market:

Walmart is not engaged in B2C transactions, neither in offline mode nor in online platform. Whereas, Flipkart operates in B2C market through various ecommerce platforms such as Flipkart.com, Myntra.com, Jabong.com, etc.

Thus, the CCI held that the Proposed Combination would not result in elimination of any major player in the relevant market. Moreover, the Proposed Combination would enhance the quality of their operations, their financial strength and would help them compete effectively in this dynamic e-commerce market.

The CCI also received a few representations from trade associations, traders/retailers, etc., apprehending the impact of the Proposed Combination on small and medium enterprises, retailers, etc and the alleged deep discounting and preferential treatments to specific sellers by e-commerce giants like Flipkart, etc. But the CCI held that the revenue earned from the few sellers availing discounts from Flipkart was relatively less. Whereas, the issues of deep discounting, etc were prevalent in the market even without the proposed acquisition by Walmart. Therefore, such issues did not relate the Proposed Combination.

Based on the aforesaid findings, the CCI held that the Proposed Combination is not likely to have an appreciable adverse effect on competition in India. There have been lots of criticisms against the CCI Order and the Confederation of All India Traders has reportedly stated that it would approach the court against CCI’s approval of the Proposed Combination.

Harini Daliparthy

Senior Legal Associate

The Indian Lawyer

MINISTRY OF HOME AFFAIRS TAKES STEPS TO MONITOR CYBERCRIMES

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Cybercrime, generally, means any internet activity which constitutes an offence. With the increasing use of computer and other gadgets based on internet, a wide range of new crimes have evolved in the society. Such offences are governed by the Information Technology Act, 2000 as amended thereof (the Act) in India.

In the recent times, there have been instances of circulation of malicious content such as hate speech, child pornography, fake news, etc through WhatsApp, Facebook, Twitter and/or other such social media platforms and has many a times instigated people to take violent and aggressive actions such as mob lynching, etc, thereby causing public nuisance and public disorder.

In view of the above, the Ministry of Home Affairs (MHA) has recently decided to form a panel under the Joint Secretary, Cyber and Information Security Division of MHA (Panel), for the purpose of monitoring cybercrimes at periodic intervals on social media platforms and other cyberspaces and for curbing the spread of offensive content which violate the provisions of laws in India. Thereafter, the Union Home Secretary, MHA would review the information collected by the Panel to determine whether the cooperation of any concerned social media platform is required during the conduct of any criminal investigation, etc.

The MHA has intimated various social media platforms to outline strategies and mechanism to address obscene material and disturbing content circulated through their platforms. WhatsApp has recently developed a new feature that labels forwarded messages as ‘Forwarded’, thereby informing the receivers that the sender has not created the message.

Further, the MHA has intimated the law enforcement agencies including the police to ensure that any form of objectionable material is blocked or removed or any other reasonable action may be taken to address the situation. Therefore, this may ensure that there is no violation of the provisions of the Act and/or any other law time being in force.

Harini Daliparthy,

Senior Legal Associate

with

Vinit Gupta

Amity Law School, Jaipur

Intern,

The Indian Lawyer

E-COMMERCE – CASH-ON-DELIVERY DEALS MAY NOT BE AUTHORIZED IN INDIA

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In response to a Right to Information (RTI) query relating to the collection and disbursements of cash payments by e-commerce companies, the Reserve Bank of India (RBI) has reportedly clarified that e-commerce merchants or payment intermediaries such as Amazon, Flipkart, etc are not authorized under the Payments and Settlements Systems Act, 2007 (the Act) to collect cash from customers on behalf of the third party sellers (registered with the concerned e-commerce portal) at the time of delivery of goods. But such intermediaries are authorized under the Act for collecting money from customers through electronic modes of payment and later facilitating the transfer of money to the third party sellers.

Prior to the 2016 demonetization phase in India, a major portion of the country’s ecommerce transactions was based on cash-on-delivery (COD) pattern as people were reluctant to make payments online before the goods were delivered to them.

But the Government of India has been promoting and encouraging people to adopt electronic/online mode of payments to ensure that there is proper accounting of transactions that are carried out in the economy. Moreover, the major problem with the COD mode of payment system is that it may be the easiest way to convert one’s unaccounted money by purchasing goods from e-commerce portals, etc. Further, it is believed that there is a high risk involved in the COD based payment system as there are a number of people involved in delivering goods and collecting cash from the end customer. Upon delivery of goods to the customers, the courier companies, employed by the e-commerce companies, collect cash from the customers and thereafter, the e-commerce firms transfer the amount to the third party sellers.

However, some experts are of the opinion that the COD mode of payment system may not be unlawful as it is one of the payment systems that enable transactions between a buyer and a seller either by way of a contractual arrangement or otherwise. But there would certainly be a need for a legislation to regulate such system in India.

Harini Daliparthy,

Senior Legal Associate

with

SUKRITI GOYAL

School of Law, University of Petroleum and Energy Studies

Intern,

The Indian Lawyer

RECOMMENDATIONS OF THE SUPREME COURT OF INDIA ON CRIMINALIZING MOB LYNCHING

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In the recent times, a number of cases have come to light where one or more persons are tortured or beaten to death by a group of people who take matters of law and order into their own hands and decide to punish the alleged culprit themselves. For instance, a woman was, reportedly, beaten to death by a mob of 30 people in Ahmedabad on the basis of a suspicion that the woman was a child lifter. As per few newspaper reports, India has witnessed the killing of approximately 27 people in 15 cases of lynchings in the past one year.

The Supreme Court has recently passed an order in Tehseen S. Poonawalla vs. Union of India and others on 30.07.2018 (Order) and stated that in a civilized society, it is the fear of law that prevents crimes, and therefore, recommended the Parliament of India to create a special legislation against lynching. The Supreme Court further made some observations which are as follows:

That law would ensure an orderly society and that every citizen who is entitled to enjoy his rights and interest conferred upon by the Constitution of India 1950 and any other law in force, would also be obligated to follow the command of law.

Moreover, no person other than the law enforcement agencies is empowered to take matters related to enforcement of law and order in their own hands and punish the violator either in his own capacity or as a part of a group.

That every person is deemed innocent unless proved guilty after a fair trial, except as provided in any law. Therefore, the community or society cannot adjudge any person as an offender or criminal under the guise of protectors of law.

In the event such cases come to light, it is the duty of the law enforcement agencies to bring such violators of law before the law adjudicatory authorities.

Following are some of the guidelines issued by the Supreme Court in the said Order:

The State Governments to designate nodal officers in each district who would constitute a special task force to take measures to prevent incidents of mob lynching, procure intelligence reports about the people who are likely to indulge in such activities and spread fake news and incite violence amongst public.

The State Governments to identify districts where mob lynching cases have been reported in the past so that they issue directives to nodal officers to be extra cautious and to increase police patrolling in such places.

To spread awareness amongst public that such cases of lynching would invite serious legal consequences.

To take steps to curb the spread of fake news and explosive messages capable of inciting mob violence.

The police to register first information report (FIR) against persons disseminating such fake news and explosive messages. Thereafter, to intimate the concerned nodal officer in order to ensure conduct of proper investigations.

The State Governments to prepare a lynching/mob violence victim compensation scheme within one month from the date of this Order.

The trial in case of mob lynching incidents to be conducted in special fast track courts to be set up in each district.

Failure to comply with the aforesaid guidelines by an police officer or an officer of the district administration to prevent or obstruct the expeditious trial, it would be considered as an act of deliberate negligence and/or misconduct for which appropriate action would be taken.

The aforesaid measures to be carried out within four weeks by the Central and the State Governments and reports of compliance to be filed within the said period in the Supreme Court Registry.

The Supreme Court has further recommended the Parliament to create a separate offence for lynching and provide adequate punishment for the same. Accordingly, the Ministry of Home Affairs held a discussion with various stakeholders and settled that the Ministry of Law may decide whether to create a new law or to amend the existing Indian Penal Code 1860 as amended thereof for the purpose of criminalizing mob lynching.

Harini Daliparthy

Senior Legal Associate

The Indian Lawyer

HIGHLIGHTS OF PERSONAL DATA PROTECTION BILL, 2018

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The Government of India has recently released the Personal Data Protection Bill, 2018 as well as a report by Justice B.N. Srikrishna Committee of Experts on data protection (Report) on 27.07.2018, which would ensure regulation of personal data collected by various entities and protection of privacy of people.

The Supreme Court of India has recently recognized right to privacy as a fundamental right under Article 21 of the Constitution of India, in Justice K.S. Puttaswamy (Retd.) v. Union of India in 2017. In this digital era, there is a high potential of misuse of personal data shared by people on various websites and media. In view of the above, the Committee has felt the need for a data protection framework for protecting citizens from dangers to informational privacy originating from state and non-state actors.

The essential features of the Bill are as follows:

The Bill casts a duty on a person, determining the purpose and means of processing personal data (Data Fiduciary) of a natural person (Data Principal), to provide requisite details about the nature and procedure of use of the personal data to the Data Principal.

The personal data may be processed on the basis of the consent of the Data Principal.

Upon receipt of such consent, the processing may be done by the Data Fiduciary for his own interest or if otherwise required by law, courts or Government, say, to provide medical treatment or health services, etc.

Personal data such as passwords, financial data, biometric data, etc (Sensitive Personal Data) may be processed only with prior explicit consent, i.e. specific, clear and informed consent for the aforesaid purposes.

The Data Principal may also file an application along with a prescribed fee to an Adjudicating Officer (AO), appointed under this law, to restrict or prevent continuing disclosure of personal data by a Data Fiduciary. The AO would then review the said application and pass orders based on the sensitivity of the personal data, the nature of the disclosure and of the activities of the Data Fiduciary, etc. Appeal against the orders of the AO may be made to an Appellate Tribunal established hereunder and, further to the Supreme Court against the orders of the Appellate Tribunal.

The Data Fiduciary has to take adequate measures to identify and avoid any harm that may be caused to the Data Principal due to misuse, unauthorized access, destruction of data, etc. For instance, the technology used to process personal data has to be in accordance with commercially accepted or certified standards, methods such as de-identification and encryption may be used, etc. Any such breach of use of personal data has to be notified to the Data Principal.

A Data Protection Authority of India has been established hereunder to protect the interests of Data Principals, promote awareness of data protection, etc.

The data fiduciaries, if, registered with the Data Protection Authority of India (Significant Data Fiduciaries) would have to keep proper records of its operations, etc, get its policies, etc audited annually, and so on.

The Data Fiduciary is not permitted to transfer any personal data overseas and has to ensure its storage on a server or data centre located in India. Cross-border transfer of personal data other than Sensitive Personal Data may be allowed only with prior approval of the Data Protection Authority of India or in other prescribed circumstances.

In the event of contravention of provisions of this law pertaining to processing of personal data and Sensitive Personal Data , etc, the Data Fiduciary would be liable to a maximum penalty of fifteen crore rupees or four per cent of its total worldwide turnover of the preceding financial year, whichever is higher. Further, the Data Principal may seek compensation in such cases from the Data Fiduciary.

The Report also recommends amendments to be made to the Information Technology Act, 2000, the Right to Information Act, 2005, and the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016 in order to incorporate provisions related to privacy protection. A few experts have reportedly lauded the Bill stating that it lays down a strong foundation for privacy protection in India.

Harini Daliparthy

Senior Legal Associate

The Indian Lawyer

THE SUPREME COURT OF INDIA DIRECTS RELEASE OF NEW ASSAM NATIONAL REGISTER OF CITIZENS

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The National Register of Citizens of India (NRC) is a register of all the legal citizens in a State. It was first made in 1951 after the first census and the date was preserved in each of the district.

The draft Assam National Register of Citizens that was published on July 30, a document which is considered proof of Assamese identity, sparked a nation-wide debate after it left out names of approximately 4 million people from the list. It is alleged that these odd 4 million people are illegal Bangladeshi Muslims and the State is set out to remove them from the territory of Assam.

Following the agitations, the NRC process is all set to be updated in the State of Assam with the Supreme Court, vide its Order dated 31.07.2018 in the case of Assam Public Works vs. Union of India and others, ordering the State Government to release a new draft in a fair manner and ensure that no innocent case is left out.The Supreme Court also directed the authorities to not initiate any action against the 4 millions considered ineligible for inclusion..

The Bench of Justices Ranjan Gogoi and Rohinton Nariman ordered the State Government, in consultation with State NRC Coordinator Mr. Prateek Hajela, to frame a ‘fair’ standard operating procedure (SOP) to deal with the claims and objections of those who did not find their names in the draft NRC. Attorney-General K.K. Venugopal informed the court that the Ministry concerned is working out the modalities of the SOP, which would “deal with the different dimensions of the exercise of hearing the claims and objections to ensure that the process is fair, and the same would be placed before the court by mid-August.”

Now, we want everybody to get a fair opportunity, considering the complexities and numbers, etc, involved. You (government) place it before us. If it is fair, we will approve. If not, we will disapprove. If there is anything missing, we will fill it,” Justice Gogoi told Mr. Venugopal.

Mr. Hajela said time has been given till August 7 for people to ascertain their names in the NRC. From August 8, those excluded can approach the Local Registrar or the NRC Sewa Kendras to find out the reasons for their non-inclusion. Their claims and objections would be heard from August 30 to September 28.

The Court has posted the case for August 16 for further orders on timelines leading to the publication of the final draft of NRC. The much-anticipated second and final draft of the NRC shows 2.9 crore names out of the total 3.29 crore who applied in Assam.

The 4 million whose names have left out from the list have been given three options. “They can come with a fresh set of documents which are correct. Or they can provide us with a mix of documents which will include a part of the old documents and some fresh ones. Or finally they can resubmit what they had submitted earlier and we will consider all three cases equally,” Mr. Hajela has said.

Surabhi Aggarwal

Senior Associate

The Indian Lawyer