ACCUSED IS ENTITLED TO COMPLETE INFORMATION IN HIS DEFENCE

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The Central Information Commissioner (hereinafter the ‘CIC’) has held in the favour of an accused-appellant, charged with the allegation of sexual harassment, holding him entitled to seek and receive complete information pertaining to the charges against him in order to enable him to defend himself appropriately.

The CIC in Balkrishna Porwal v. PIO, Department of Posts, decided in June, 2018, imposed a penalty on the Central Public Information Officer (hereinafter the ‘CPIO’) for not disclosing the information sought by the accused-appellant to defend himself.

The accused-appellant was facing an enquiry on a complaint of alleged sexual harassment and sought information through an RTI application on 15 counts, which also included statements of some of the witnesses pertaining to the case. The CPIO had disclosed information with respect to only 3 points and denied the rest under section 8 of the Right to Information Act, 2005 and section 16 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act 2013 (hereinafter the ‘SHW Act, 2013’). Section 8 of the Right to Information Act, 2005 deals with ‘exemption from disclosure of information’ while section 16 of the SHW Act, 2013 deals with ‘prohibition of publication or making known contents of complaint and inquiry proceedings’.

The decision was upheld by the First Appellate Authority.

However, the accused-appellant thereafter appealed to the CIC. The CIC held that during the appeal the appellant is not a charged official but he is an official who is seeking justice and collecting documents for his safeguard provided under the Constitution of India. These are the safeguards against misuse and to protect the accused from false allegations. Principles of natural justice demand that certified copies of all documents relating to the inquiry report including copies of the statements of witnesses should be given to him to facilitate him to substantiate his defence and for conduct of the enquiry in a fair manner.

The CIC concluded by holding that “the charge of sexual harassment is a serious allegation which if falsely made and proved by suppression of information to the accused, it can ruin the career of the accused, cause permanent and irreparable damage to the reputation and also disturb his domestic life affecting his relations with his wife and children. Society will look him down and people will talk badly about him in his absence and some may even insult him openly. As per SHW Act 2013 he would be shifted, and he might even face criminal prosecution under IPC which in our country would span over a decade or more involving huge expenditure and going to courts for several rounds as an accused person. A false allegation can render his life a hell and if innocent, he might suffer serious mental torture also. It can destroy a person totally. The due process, principles of natural justice and legal provisions of the SHW Act 2013 provide him a right to information to secure all those related documents will strengthen that right.”

 

Surabhi Aggarwal

Senior Associate

The Indian Lawyer

ONE NATION ONE POLL: A CENSORIOUS CONCERN

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Recently, the Law Commission of India headed by Justice B.S Chauhan has been conducting various discussions with various political parties regarding the possibility for the conduct of simultaneous polls for Lok Sabha and State Assemblies in India.

During the discussion, Prime Minister Shri Narendra Modi emphasized the need of holding simultaneous polls which may later be worthwhile in conserving valuable resources such as time and money and the political parties would be more focused on building good governance. The then President of India, Shri Pranab Mukherjee and the Chief Election Commissioner of India, Shri Om Prakash Rawat have also consented to his view. But according to a few experts, multiple elections may help strengthen the democracy.

The Law Commission has proposed certain suggestions in the discussions which have been listed below:

Amendments to the Constitution of India, 1950, the Representation of the People Act, 1951 and the Lok Sabha and State Legislative Assemblies’ Rules of Procedure.

Addition of definition of simultaneous election in the Representation of People Act, 1951.

Amendment of the Rules of Procedure and Conduct of Business to replace ‘vote of no confidence’ with ‘constructive vote of no confidence’.

Ratification by majority of states of the proposed Constitution amendments, etc.

According to a few experts, these simultaneous elections may have the following pros and cons:

Pros

More time may be invested on developmental issues rather than wasting time on designing strategies and actions against opposition parties.

The Government of India may reserve and utilize money for implementing essential schemes and not waste the money in conducting elections throughout the year.

This system may help in diminishing corruption, casteism, communalism which is generally prevalent in elections and campaigns.

Cons

Conducting elections at the same time may lead to various complexities including requirement of huge numbers of electronic voting machines, enormous deployment of central forces, i.e. Central Reserve Police Force, Central Industrial Security Force and the Border Security Force, as cities and villages together will gear for voting, etc.

Upon clubbing both the elections there may always be dominance of national issues over state issues.

The politicians may, after the elections, become serene and lethargic during their term and become ignorant towards their responsibilities.

This idea of simultaneous elections has been highly debated over the years and may soon prove to be a colossal step taken towards a major reform in India but it is believed that the criticism should also be taken into consideration before this path-breaking idea is turned into a reality.

 

Harini Daliparthy,

Senior Legal Associate

with

Shubham Mongia

Law College Dehradun, Uttaranchal University

Intern

The Indian Lawyer

RESERVE BANK OF INDIA TO MONITOR FOREIGN INVESTMENTS RECEIVED BY INDIAN ENTITIES

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The Reserve Bank of India (RBI) has recently issued a circular, RBI/2017-18/194 A.P (DIR Series) Circular No.30, dated, 07th June 2018, to introduce a single master form (SMF) to be filled online by Indian entities receiving foreign investment. The RBI addressed this Circular to all Category I Authorized Dealer Banks including Commercial Banks, Urban Cooperative Banks, and State Cooperative Banks, etc, so that they could intimate the contents of this Circular to their concerned customers.

As per the Circular, prior to the implementation of the SMF, the Indian entities would now have to submit data on total foreign investment they have received so far to the RBI on its website on or before 20th of July 2018. Further the Indian entities would have to declare that the foreign investment received was within the sectoral cap and in accordance with the Foreign Exchange Management (Transfer or issue of security by person resident outside India) Regulations, 2017. Additionally they would have to state that the foreign investment received and reported now would be utilized in compliance with the provisions of Prevention of Money Laundering Act 2002 (PMLA) and Unlawful Activities (Prevention) Act, 1967 (UAPA). Such a declaration would have to be certified by the Company Secretary or a Chartered Accountant, etc.

The preliminary information would consist details about the types of foreign investments and investors, types of instruments issued to the investors, declaration by the investor, modes of payment of investment amount, whether the Indian entities are being investigated by Enforcement Directorate, Central Bureau of Investigation or any other agency for violation of Foreign Exchange Management Act, 1999 (FEMA), etc.

The aforesaid information may enable the RBI and the Government of India to monitor the quantum and the quality of foreign investments made in India.

Reportedly, the issue of this Circular seems to have created chaos and confusion amongst companies as they would have to submit a whole range of information pertaining to the foreign investments they have been receiving over the years, by 20th of July 2018. Also many companies are reluctant to disclose such information to RBI, as they might not have kept a record of the same and fear that they may be held liable for incorrect reporting or non-compliance of the said RBI directions.

The RBI has also stated in the Circular that Indian entities not complying with the aforesaid directions would not be able to receive any further foreign investments and be treated as non-compliant with Foreign Exchange Management Act, 1999 (FEMA).

 

Harini Daliparthy,

Senior Legal Associate

with

Srishti Banerjee

Faculty of Law, ICFAI Foundation for Higher Education (IFHE), Hyderabad

Intern,

The Indian Lawyer

 

LEGALITY OF GAMBLING AND SPORTS BETTING IN INDIA: WHETHER COMMENDABLE OR REPREHENSIBLE

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Recently, the Law Commission of India has in its 276th Report dated 5th July, 2018 made recommendations for legalization and Regulation of the act of gambling and sports betting in India. The said report was formulated in furtherance of an order of the Supreme Court dated 18.06.2016 that was passed in Board of Control for Cricket in India v. Cricket Association of Bihar and Ors (2016(8)SCC 535), where the Apex Court required the Law Commission of India to mandate the legality of gambling and betting in India.

According to Section 65B(15) of the Finance Act, 2017,  gambling or betting is defined as putting on stake something of value, particularly money with consciousness of risk and hope of gain on the outcome of game or a contest, whose result may be determined my chance or accident or on the likelihood of  anything occurring  or not occurring.

With the emergence of online gambling it has become rampant worldwide and has deeply penetrated into the Indian system. Therefore as per the Law Commission of India, it has become more important that gambling and betting is legalized in India. This would help to promote transparency and public welfare and also to detect frauds and money-laundering in the country.

For the purpose of enacting the law to govern and regulate gambling and betting in sports in India, it may be necessary to elucidate what activities would fall under the ambit of gambling and betting.

The Law Commission has made certain important recommendations listed below:

To design separate law, investigating agency and courts to deal with betting and match fixing charges.

To enact a model law by Parliament to regulate gambling that may be adopted by states in exercise of its powers under Article 249 or 252 of the Indian Constitution.

That betting and gambling transactions should be made cashless, i.e. only through electronic means such as credit cards, debit cards, online banking, etc.

To prescribe restrictions for the purpose of fixing the amount that   would be allowed for betting while using electronic facilities like debit cards, credit cards, online banking etc.

Further, these transactions should also be linked with the operator’s as well as of the participant’s PAN/AADHAR card to ensure transparency in these transactions.

It has also proposed for a restriction on persons below the age of 18 years and those who are below poverty line who may not be eligible to undertake such activities.

To debar certain sections of society such as minors, people from poor backgrounds etc. from being exploited by the possible ill-effects of such activities.

That income derived from such activities are made taxable under the Income Tax Act, 1961 as amended thereof, the Goods and Services Tax Act, 2017 as amended thereof,

To allow foreign direct investment (FDI) in this industry and regulate such FDI to prevent money laundering. It further held that the FDI as well as Foreign Exchange Management Act, 1999 may be suitably amended through encouraged FDI in the casinos / online gaming industry lawfully permitting technological collaborations, licensing and brand sharing agreements, etc.

To amend the Indian Contract Act, 1872 to allow wagering as lawful.

To compulsory ensure that the websites advertising gambling do not display objectionable or pornographic content on their portals / platforms.

To mandatorily display information regarding the risks involved in gambling / betting and to warn gamblers that the portal is not responsible for any risks taken by the gambler.

To amend National Sports Development Code of India, 2011 which aims at preventing betting and gambling in sports or any other code applicable from time to time in order to create an exception for the same if betting and gambling are to be regulated.

To make match- fixing and sports frauds as criminal offences with severe punishments.

To lay down safeguards for casinos inter alia for employees of casinos, minors, maintenance of accounts, audit in order to prevent ‘problem gambling’ and ‘gambling by minor’.

The Law Commission of India has referred to a Supreme Court case of M/s B.R Enterprises v. State of U.P and Ors. (AIR 1999 SC 1867), where the Apex Court has held that gambling is a not a trade within the meaning of Article (19) (1) (g) or Article 301 of the Constitution of India. Therefore, it is not constitutionally protected in India.

According to a few experts, only Government – licensed operators should be allowed to undertake gambling and betting activities in India, so that such practices are regulated in a better and effective manner by the Government of India.

As gambling and betting has become an integral part of the Indian society and as such, It would be impossible to stop such activities then the Law Commission of India has recommended legalization of gambling deeply rooted in Indian society and may further become difficult to cease such operations, therefore, the Law Commission of India has made the aforesaid recommendations to rather legalize and regulate the same in an effective manner.

 

Harini Daliparthy,

Senior Legal Associate

with

Shubham Mongia

Law College Dehradun, Uttaranchal University

Intern,

The Indian Lawyer

CENTRAL INFORMATION COMMISSION TAKES STEPS TOWARDS BETTER TRANSPARENCY UNDER RIGHT TO INFORMATION ACT

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The Central Information Commission (CIC), a body constituted under the Right to Information (RTI) Act of 2005 (the Act), has recently passed an order dated 18.06.2018 and declared that in the event of death of a complainant/appellant, the CIC would continue to examine the pending RTI applications as a complaint/appeal, as the case may be and further order the concerned department(s) to suo moto publish the decision on its website. By virtue of Section 18 of the Act, CIC has to inquire into complaints against refusal of access to information under the Act, incomplete or false information provided under the Act, to impose penalties, etc.

The order dated 18.06.2018 was passed after it was observed that there were series of mysterious deaths of whistle blowers and RTI activists who had filed applications/appeals under RTI.

Earlier, Regulation 24 of the CIC (Management) Regulations 2007 provided for abatement of pending proceedings before CIC, in case of death of the complainant or appellant. But the Delhi High Court in Delhi Development Authority v. Central Information Commission and Another 2010 SCC OnLine Del 2058 quashed the CIC (Management) Regulations 2007 on the grounds of being ultra vires to the RTI Act.

Further CIC has reportedly ruled that the account details of a deceased could not be denied to legal heirs on the grounds of personal information. In this case a son had sought for information from the Department of Posts about the policies taken by his deceased father. The CIC ruled that a son, being a class I legal heir of a deceased male person under the Hindu Succession Act, is entitled to know about the policies of his deceased father. Thus, CIC held that the Department of Posts was wrong in not furnishing the information to the Applicant and further, imposed penalty of a sum of Rs. 25,000 on the concerned officer.

This may be an encouraging step towards transparency and may also help to curb attacks on RTI activists and whistleblowers.

 

Harini Daliparthy,

Senior Legal Associate

with

Srishti Banerjee

Faculty of Law, ICFAI Foundation for Higher Education (IFHE), Hyderabad

Intern,

The Indian Lawyer

THE RESERVE BANK OF INDIA BANS ALL DEALINGS IN CRYPTOCURRENCIES IN INDIA

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In the recent times, there has been a huge uproar about the ban, issued by the Reserve Bank of India (RBI), on the use of virtual currencies (VCs) and cryptocurrencies such as bitcoins, etc in India. Post demonetization in 2016, it was observed that there was a steep rise in the use of such virtual currencies for making payments of transactions instead of using safer modes of payments such as cash, debit/credit card, online banking, digital wallets, etc in India.

Cryptocurrencies generally mean virtual currencies that are secured using cryptography, i.e., techniques of encryption to secure and verify the transfer of transactions. All such transactions are recorded and verified chronologically in a public ledger known as blockchain. According to RBI, virtual currencies which are in digital form are stored in digital/electronic media that are called e-wallets.

RBI has issued circulars stating that entities using or trading in virtual currencies in India have not taken any approval/license/authorization from RBI or any other governmental authority to operate such schemes or deal with virtual currencies. Thus, the RBI has been cautioning the users, holders, traders and/or investors of the virtual currencies about the following risks:

Virtual currencies may be lost owing to hacking, loss of password, compromise of access credentials, malware attack

As virtual currencies are not created or traded through any central/authorized agency/registry, once the e-wallet is lost, all virtual currencies are also permanently lost and further, there is no framework/mechanism to address and resolve consumer disputes.

Trading of virtual currencies at the international platform exposes greater risk to the use of virtual currencies for illegal or terrorist activities, etc, as there is no genuine information available about the counterparts.

Owing to the rise in use of virtual currencies in India, RBI had issued a circular dated 06.04.2018 thereby prohibiting all entities that are regulated by RBI from dealing in virtual currencies, or from providing services to any person or entity dealing in virtual currencies. Such services include maintaining accounts, registering, trading, settling, clearing, giving loans against virtual tokens, accepting them as collateral, opening accounts of exchanges dealing with them and transfer / receipt of money in accounts relating to purchase/ sale of VCs. Further, RBI has also directed the entities regulated by RBI, which already provide such services, to exit the relationship within three months from the date of this circular, i.e. by 06.07.2018.

A number of cryptocurrency trading platforms and entities have moved the Supreme Court seeking a stay on the RBI Circular dated 06.04.2018 that has banned the use or trade of cryptocurrencies. But a few days ago, the Supreme Court has reportedly refused to provide interim relief of stay on the operation of the RBI Circular dated 06.04.2018. The case is still pending in the Supreme Court for its final orders.

 

 

Harini Daliparthy

Senior Legal Associate

TEACHER NOT LIABLE FOR ABETMENT OF SUICIDE OF STUDENT

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The High Court of Madhya Pradesh at Jabalpur has, in a case decided by it on 20th June, 2018, taken a protectionist view towards the teachers imparting education in schools. A petition was filed by the real uncle of the deceased, a minor girl of 15 years, against the Principal of the Government Excellence Higher Secondary School, Kotma, Annuppur, Madhya Pradesh, alleging that humiliation was caused to the deceased due to the scolding and slapping by the Principal, leading the deceased to commit suicide.

The question that came up before the Court was whether the act of slapping and scolding of the deceased by the Principal in front of her friends can prima facie be appreciated as being an abetment to commit suicide.

The counsel for the Petitioner placed reliance on section 107 (Abetment of a thing) of the Indian Penal Code, 1860 to call the act of the Principal as falling under the category of abetment by incitement. However, the Court held a different view and observed that “An act which constitutes a distinct offence by itself (an offence u/s. 323 (Punishment for voluntarily causing hurt) in this case, if at all), cannot be construed as an act inciting another offence, which was never contemplated by the person to whom the original act is attributed to. Only such acts would be deemed to be an incitement, which by their very nature, whether by way of words spoken or otherwise, convey a clear and unambiguous direction to the person so incited, to act in a particular manner. Incitement, in the facts and circumstances of a case, may also mean the creation of such an environment around the person so abetted, that he is compelled to act in a particular manner and no other, which the person so inciting/abetting intended or had the knowledge that the person so incited/abetted would act in that particular manner.”

The Court held that the act of the Principal in humiliating the deceased was not done with the intention of inciting the deceased to commit suicide. The Court hence ruled that at the most the act of the Principal would only amount to an offence under section 323 of the Indian Penal Code, 1860, which is a non-cognizable offence, and no case can be said to be made out under section 306 of the Indian Penal Code, 1860. On this count, the High Court dismissed the petition giving its reason for the same as below:

“The relief sought by the Petitioner has dangerous portents which could have wide ranging ramifications in the manner in which, education is imparted in this country. The Principal and teachers in a school don the mantle of a parent, during the time the child is in school. Like a parent, who would, and is expected to admonish and chastise the child when the child errs with the intention of correcting the child, so is a Principal and teachers at school expected to admonish and chastise students when they transgress the discipline of the school. Of course, it goes without saying that the days of “spare the rod and spoil the child” are long gone by, the same does not mean that the Principal and teachers at school, languidly watch and ignore the acts of indiscipline and indiscretions of a child. Correction by way of admonishment and chastisement, as and when required, still remains a sacred duty of those imparting education. Good education falls miserably short of meeting its avowed aims if the system of education fails to give back to the society, citizens of sterling quality who are law abiding in every manner and disciplined. Behind every person languishing in prison as a convict, are a man and woman who have failed as parents and a system of education that could not transcend the three “R’s”. Far more important than ensuring that students do well in the material world and arrive at important stations in life, is to ensure that contemporary mores and values are dinned into the students consistently. Brilliance without integrity and character is a social and national liability rather than an asset. It is this that schools must emphasize on and in doing so, admonishment and chastisement may form an integral part of that exercise. Yes, in the process, it may be natural for the child to feel a sense of embarrassment and perhaps humiliation, but it is these very emotions that would prevent the child from repeating its mistake. If upon such chastisement, a child is extra ordinarily sensitive and takes the drastic step of committing suicide and if the Principal is expected to be prosecuted for an offence under Section 306 of IPC, nothing can imperil education more. If students are expected to grow up in an environment, where they know that they shall not be chastised or spoken harshly to for any and every transgression of theirs, which has the propensity of breaking the discipline of the school, the society may wind up having young delinquents who ultimately grow up without having fear of the law on account of the free hand that they received during the schooling years.”

 

Surabhi Aggarwal

Senior Associate

The Indian Lawyer

ACCESS TO AADHAAR DATA FOR CRIME INVESTIGATIONS IS STRICTLY RESTRICTED IN INDIA

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The Unique Identification Authority of India (UIDAI) has recently reported that Aadhaar biometric data cannot be shared with third parties for any purpose other than for generating Aadhaar and for authentication of identity of the Aadhaar holders.

 

This comment of UIDAI had come in response to a proposal of Mr. Ish Kumar, the chief of the National Crime Records Bureau (NCRB) that stated that limited access to Aadhaar data is required for identifying and catching first time offenders and for identifying unidentified bodies. Mr. Ish Kumar further stated that firstly, most of the first time offenders, whose details are not available in the police records, leave their fingerprints at the crime scene and secondly, that every year thousands of unidentified bodies are recovered. Thus, with access to a limited extent to the Aadhaar data, they could be easily identified.

 

But the UIDAI has strictly restricted sharing and giving access to Aadhaar biometric data to the police department or the crime investigating agency for any reason whatsoever other than that mentioned in Section 29 of the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act 2016 (the Act). Section 29 of the Act states that core biometric information, collected or created under this Act shall not be shared or used for any purpose other than for generation of Aadhaar numbers and authentication under this Act. Although Section 33 of the Act allows disclosure of biometric and identity information or authentication records in exceptional cases:

 

Pursuant to an order of a court (not inferior to that of a District Judge);

 

In the interest of national security in pursuance of a direction of an officer not below the rank of Joint Secretary to the Government of India specially authorized in this behalf by an order of the Central Government. But before such a direction can be brought into effect, it shall be reviewed by an Oversight Committee consisting of the Cabinet Secretary and the Secretaries to the Government of India in the Department of Legal Affairs and the Department of Electronics and Information Technology.

 

The UIDAI, in Unique Identification Auth. of India and Anr. v. Central Bureau of Investigation 2014 SCC OnLine Bom 4753, has sought to challenge the Order of the Magistrate dated 22.10.2013 before the Bombay High Court. The Magistrate’s Order provided for sharing certain data to the Central Bureau of Investigation (CBI) upon an application of the CBI for summoning to produce document or other things for the purposes of any investigation, or inquiry, etc under Section 91 of the Criminal Procedure Code 1973. But the Bombay High Court had reserved its order until any final orders are passed by the Supreme Court in this regard.

 

The Supreme Court had passed an interim order in Unique Identification Auth. of India and Anr. v. Central Bureau of Investigation dated 24.03.2014 and restrained the UIDAI from transferring any biometric information of any person who has been allotted the Aadhaar number to any other agency without his consent in writing. The matter is still pending before the Supreme Court for the final orders.

 

Harini Daliparthy

Senior Legal Associate

The Indian Lawyer

TIME IS THE ESSENCE OF A CONTRACT

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Time is the essence of a contract is an expression in a contract which means that the performance by one party at or within the period specified in a contract is necessary to enable that party to require performance by the other party.

The meaning of time is essence is that the parties have agreed to perform at a given time agreed in a contract and shall not extend the specified time in a contract. In case a contract does not expressly provide this phrase then in that case time is not the essence of a contract.

Time is the essence is specified in Section 55 of The Indian Contract Act, 1872, “When a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before specified times, and fails to do any such thing at or before the specified time, the contract, or so much of it as has not been performed, becomes voidable at the option of the promisee, if the intention of the parties was that time should be of the essence of the contract.

When time is the essence in construction contracts the standard rule is that the parties have agreed to perform their obligation as per the time specified in a contract and there shall not be any extension of time. Whereas, if time is not the essence of the contract, the court allows the parties to a contract perform at some other time than agreed upon.

In real estate sector, time is the essence of a contract when the parties have expressly intended to include it in the terms of a contract. Thus, it shows the intention of the parties to contract to consider “time is the essence” a significant term of the contract.

Intention of parties to contract is imperative to signify whether time is the essence or not to a contract, therefore, as also held by the Supreme Court of India in M/S Citadel Fine Pharmaceuticals vs M/S Ramaniyam Real Estates Pvt. Ltd. and Ors. (2011) 9 SCC 147, 

the stipulation as time being of the essence of the contract was specifically mentioned in clause 10 and the consequences of non-completion are mentioned in clause 9. So, from the express terms of the contract and the commercial nature of the transaction and the surrounding circumstances make it clear that the parties intended time in this case was intended to be of the essence of the contract.

If it was not the intention of the parties that time should be of the essence of the contract, the contract does not become voidable by the failure to do such thing at or before the specified time; but the promisee is entitled to compensation from the promisor for any loss occasioned to him by such failure.

A contract becomes voidable if the promisor fails to perform within the specified time in a contract and the promisee is entitled to compensation from the promisor for any loss incurred by such failure.

However, in case a contract becomes voidable on account of the promisor’s failure to perform his promise at the time agreed, the promisee accepts performance of such promise at any time other than that agreed, the promisee cannot claim compensation for any loss suffered by the non-performance of the promise at the time agreed, unless, at the time of such acceptance he gives notice to the promisor of his intention to do so.

Thus, if the parties do not expressly illustrate any intention to make time is the essence of contract then the promisee is not entitled to claim compensation on loss incurred due to promisor’s failure to perform his obligations as per contract.

Taruna Verma

Senior Associate

 

AMAZON INDIA LENDING PLATFORM

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Amazon India, one of the ecommerce companies in India, has recently launched a platform whereby multiple lenders may offer loan to sellers registered with Amazon (Sellers) and the Sellers can select any particular lender based on the terms and conditions of the loan and get their loan disbursed. This program is known as Seller Lending Network (Program). Amazon has further clarified that it would only act as a facilitator for the Lenders and the Sellers.

The Program was launched with the object of assisting the Sellers at various stages of their business cycle. As per Amazon India, the primary reason behind the failure of a business or the incapacity to purchase raw material and inventory, etc is the lack of working capital.

Therefore, Amazon India has so far associated with six lenders under the Program, namely, Capital First, Capital Float, Bank of Baroda, Aditya Birla Finance, Yes Bank and FlexiLoans (Lenders).

Herein, Amazon India has planned to select only those profiles of Sellers which match the interest of the Lenders and thereafter, send the selected Sellers an invite, thereby giving details about the Program. Interested Sellers may then opt for the Program and apply for loan at Amazon’s Seller Central, a platform where the Sellers are registered with Amazon.

The Lenders may approve the loan of a Seller based on their performance, sales history and any other criteria. Upon approval of the loan, the amount would be lent directly to the Seller by the Lender. The entire procedure of disbursement of loan may take two to three days.

In order to ensure that Sellers make a timely repayment of loans to the Lenders, Amazon India has reportedly planned to provide for repayment of a percentage of amount earned by the Seller, through Amazon, directly to the Lender.

This Program may also prove to be beneficial to Amazon India as the Sellers who obtain loans under the Program, would utilize the loan amount to purchase raw materials and inventory to manufacture and sell products through Amazon or to develop their products and thereby improve their business.

This Program may prove to be a breakthrough as it takes into consideration the financial issues and obstacles that small and medium businesses face at various stages of business cycle and may help them to reestablish their business in this highly competitive market.

 

 

 

Harini Daliparthy

Senior Legal Associate

The Indian Lawyer