STAMP DUTY NOT NECESSARY FOR ENFORCEMENT OF FOREIGN ARBITRATION AWARDS IN INDIA: SUPREME COURT

Picture1

The Supreme Court Bench of Justice RF Nariman and Justice Indu Malhotra has, in the case of M/s. Shriram EPC Limited v. Rioglass Solar SA dated 13.09.2018, settled a long standing contentious issue by holding that the payment of stamp duty under the Indian Stamp Act, 1899 (the Act) is not necessary for the enforcement of foreign arbitration awards in India.

The main bone of contention in the aforesaid Appeal was whether the expression “award” would include a foreign award or not. The issue arose out of a Madras High Court Judgment dated 09.02.2017, in which a petition filed to enforce a foreign award was allowed. The Judgment overruled the objections to an International Chamber of Commerce (ICC) award (Award) delivered in London dated February 12, 2015.

The counsel for the appellant, Sri KV Vishwanathan, argued before the Apex Court that the Award cannot be enforced as per Section 47 of the Indian Arbitration and Conciliation Act 1996 as amended thereof unless it is stamped in accordance with the Act. He submitted that given the provisions of the Act, it is clear that a foreign award would be covered by the said Act. That being so, and stamp duty not being paid, the said foreign Award could not be enforced.

On the contrary, learned counsel for the Respondent argued that the expression “award” which occurs in Item 12 of Schedule I of the Act applies only to a domestic award and not a foreign award. He relied on the fact that the Act was enacted in 1899, in which “award” has never been enlarged so as to include foreign awards and the only requirement for the enforcement of a foreign award is laid down in Section 47 of the Arbitration and Conciliation Act, 1956, which does not require the award to be stamped.

Tracing the history of the Act and the erstwhile provisions of the Code of Civil Procedure, 1882 which dealt with arbitration, the Apex Court concluded that the Act originally dealt with awards made in British India. It also noted that there were several princely states in India governed by sovereign rulers which had their own laws. The arbitration laws, if any, in the aforesaid princely states, if they were to culminate in awards, would not be “awards” under either the Code of Civil Procedure, 1882 or the Indian Arbitration Act, 1899. They would, therefore, be foreign awards in so far as British India is concerned.

The main reason behind the verdict is the reasoning that a foreign award is not covered by the term “award” mentioned in Item 12 of Schedule I of the Act. The Supreme Court, thus, held as follows:

“It will thus be seen that “award” under Item 12 of Schedule I of the Indian Stamp Act, 1899 has remained unchanged till date. As has been held by us hereinabove, in 1899, this “award” would refer only to a decision in writing by an arbitrator or umpire in a reference not made by an order of the Court in the course of a suit. This would apply only to such award made at the time in British India, and today, after the amendment of Section 1(2) of the Indian Stamp Act, 1899 by Act 43 of 1955, to awards made in the whole of India, except the State of Jammu and Kashmir. This being the case, we are of the view that the expression “award” has never included a foreign award from the very inception to date. Consequently, a foreign award, not being includible in Schedule I of the Indian Stamp Act, 1899, is not liable for stamp duty.”

Thus, the Supreme Court in this case held that the foreign Award not bearing the stamp duty under the Act would not be rendered unenforceable.

Surabhi Aggarwal

Senior Associate

The Indian Lawyer

THE SUPREME COURT DECRIMINALIZED CONSENSUAL SEXUAL RELATION BETWEEN ADULTS OF THE SAME GENDER

LGBT3-ie

Recently, a 5 Judge Constitution Bench of the Supreme Court of India, in Navtej Singh Johar and others vs. Union of India 2016, has passed a judgment dated 06.09.2018 (Judgment) whereby it decriminalized the act of consensual sexual relationship between adults, whether of the same gender or otherwise, in private and that it would not fall under the category of an unnatural offence under Section 377 Indian Penal Code 1860 as amended thereof (IPC). The Supreme Court in this Judgment overruled its earlier judgment in Suresh Kumar Koushal & Anr. v. Naz Foundation & Ors. 2014, where it held that Section 377 IPC is not unconstitutional as it does not violate the right to privacy, autonomy and dignity of a miniscule population comprising of lesbian, gay, bisexual and trans (LGBT) communities.

In this Judgment, the Supreme Court made the following observations:

That there is a need to move forward from the deeply embedded stereotypes, prejudiced notions and dogmatic social norms in our society so that there is no discrimination and social exclusion of any individual, community, etc.

That the natural identity of individuals and their inherent personality have to be respected and not belittled.

That a 2-Judge Bench of the Supreme Court in National Legal Services Authority v. Union of India and others 2014 recognized the transgender as a third gender, thereby recognizing their right to equality under Article 14 of the Constitution of India 1950 as amended thereof (the Constitution of India) and their right to life with dignity under Article 21 of the Constitution of India. It further observed that gender identification is very essential for enjoying civil rights by the LGBT community including their right to vote, right to own property, right to marry, right to claim a formal identity through a passport and a ration card, a driver’s license, right to education, employment, health so on.

That it is a constitutional duty to allow individuals/partners to behave and express themselves in a sexual relationship, with the consent of the other partner.

That it does not matter whether the concerned LGBT community comprises a miniscule of the entire population and that the Constitutional framers did not intend to protect the fundamental rights of only a majority population.

Further, the Supreme Court in Justice K S Puttaswamy (Retd.), and Anr vs. Union of India and Ors 2017, has held that right to privacy is a fundamental right under Article 21 of the Constitution of India.

Right to privacy and liberty:

Sexual orientation is an essential and innate facet of privacy and the right to privacy includes right of every individual including that of the LGBT to express their choices in terms of sexual inclination without the fear of persecution or criminal prosecution.

Further, sexual autonomy of individuals to choose their sexual partner is an important facet of liberty.

Therefore, to prevent or oppose the exercise of such right to privacy and/or liberty would mean to deprive them of their right to life and personal liberty under Article 21 of the Constitution of India.

That the discrimination and unequal treatment meted out to the LGBT community as a separate class of citizens indulging in carnal intercourse (alleged to be against the order of the nature) does not have reasonable nexus with the object it (classification) sought to achieve, i.e. protection of women and children from being subjected to carnal intercourse. Therefore, such a classification has been held to be unconstitutional for being violative of Article 14 of the Constitution of India.

Further, Section 377 IPC, to the extent that it criminalizes consensual sexual acts of whatever nature between competent adults, has a chilling effect on an individual’s freedom of choice. Therefore, it amounts to an unreasonable restriction on the fundamental right of freedom of expression including the right to choose a sexual partner under Article 19 of the Constitution of India. Moreover, Section 377 IPC has been used as a weapon to seclude and harass the LGBT community by the majority population.

Therefore, Section 377 IPC, to the extent that it penalizes consensual sexual activity between homosexuals, heterosexuals, lesbians, etc who are competent adults, has been held to be unconstitutional on the grounds that it is violative of the right to dignity and the right to privacy of such individuals. This may enable eradication of the prejudice and oppression caused to the discriminated class of people.

Therefore, the Supreme Court in this Judgment held Section 377 IPC, to the extent that it criminalizes consensual sexual acts between competent adults in private, as violative of Articles 14, 15, 19, and 21 of the Constitution of India.

Harini Daliparthy

Senior Legal Associate

The Indian Lawyer

INDIA POST PAYMENTS BANK- A STEP TOWARDS DIGITAL INDIA

Picture3

The Government of India led by Prime Minister Shri. Narendra Modi has recently inaugurated the India Post Payments Bank (IPPB) on 01.09.2018, set up as a public sector company under the Department of Posts, Ministry of Communication, with 100% equity held by the Government. IPPB aims to provide every household in India access to efficient banking and financial services so that they become financially secure and empowered. IPPB would be set up across all parts of the country covering all post offices. In the first phase of its launch, around 650 branches of IPPB have been planned to be set up, i.e. with one IPPB in each district, and around 3,250 existing post offices have been planned to be activated as banking access points. It also aims to provide doorstep banking services (at a nominal price) by deploying more than 10,000 postmen for that purpose. This would become possible because of the vast network of the Department of Posts in India.

The various banking and financial services to be provided by IPPB are as follows:

Savings and current account deposits,

Money transfer,

Government social welfare benefit schemes,

Loans, insurance, investments, post office saving schemes,

Utility and bill payments including mobile recharge, electricity bill payment, etc

Digital mode of payment during e-commerce transactions, etc.

The Reserve Bank of India (RBI) had issued licence in 2017 to IPPB Limited to commence its operations in India as a payments bank.

The launch of IPPB aims to create transparency, remove corruption and contribute to a cashless or less-cash economy. This is the main object of the Digital India campaign launched by the Government in 2015 i.e. to widen the network of internet connectivity in India and make available electronic mode of delivery of Government services in India. Since after the demonetization phase in 2016, people have been increasingly resorting to electronic transactions, online transfer of money and thereby, limiting the use of paper money. In this way there is lesser scope of generation of black money in the economy as there is transparency in the transactions being executed.

IPPB aims to reach every corner of the country by providing banking services at their doorstep and through its digital and mobile platforms. This would facilitate easy and convenient banking across urban as well as rural regions of India and help to revolutionalize banking and payment system in India.

Harini Daliparthy

Senior Legal Associate

The Indian Lawyer

THE SUPREME COURT ON ARRESTS MADE UNDER UNLAWFUL ACTIVITIES (PREVENTION) LAWS OF INDIA

Picture1

A few months ago, the Pune City Police had arrested five suspected members of the banned Communist Party of India [CPI] (Maoist) in January 2018, who had allegedly organized an event called Elgaar Parishad in Koregaon-Bhima village near Pune (Event) in order to mark the 200th year of Battle of Koregaon, which is said to have been won by the Mahar community, who formed a majority of the British troops, over the then Peshwa rulers in 1818. The Event was allegedly organized to incite the Dalit community against the Government of India. But another group of people had opposed the celebrations stating that it was a victory of British rulers over Indians. These clashes led to violence and public disorder in Koregaon-Bhima village. The police have further alleged that the arrested activists had sourced funds from banned Maoist groups to organize the Event.

The accused persons had been booked under various provisions of the Unlawful Activities (Prevention) Act 1967 as amended thereof (the Act) and the Indian Penal Code 1860 as amended thereof. The arrests have been reportedly made after having conducted nationwide raids on the basis of forensic analysis of electronic and other evidence obtained during the search operations. The Supreme Court has granted interim relief vide Order dated 29.08.2018 of house arrest of the accused persons.

Further, the Supreme Court had passed an order dated 03.02.2011 in Arup Bhuyan vs. State of Assam where it held that mere membership of a banned organisation will not make a person a criminal unless he resorts to violence or incites people to violence or creates public disorder by violence or incitement to violence. The Supreme Court had, thus, acquitted the accused person on the ground that he was only a member of the United Liberation Front of Assam (ULFA), which was classified as a terrorist organization by the Government of India and thus, banned under the Act, and also there was no evidence to show that he had participated in any act of violence or had incited violence.

The Centre had sought for a review of this Order dated 03.02.2011 in 2016 on the grounds that it may hamper the law enforcement agencies’ attempts to curb and/or prevent potential terrorist activities in the country. A review of this Order dated 03.02.2011 is still pending in the Supreme Court. Also, the Order dated 03.02.2011 may have an impact on the outcome in the Bhima-Koregaon case as arrests may have been made merely on the grounds that the five accused are suspected members of the CPI (Maoist) organization, which has been classified as a terrorist organization by the Government of India and thus, banned under the Act.

Harini Daliparthy

Senior Legal Associate

The Indian Lawyer

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

Picture1

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

B

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

A

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

Picture2

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

Picture6

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

Picture4

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