Middle East

Terminating Employees Not Easy Anymore for Schools

With strict regulations being implemented on schools from time to time, the Delhi schools have been saddled with another compliance to be followed before terminating services of their employees as has been clarified by the Supreme Court of India (“SC”) in its recent judgment passed in the matter of Raj Kumar vs. Director of Education & Others (“Judgment”). While considering in detail the provisions of the Industrial Disputes Act, 1947 (“ID Act”) and the Delhi School Education Act, 1973 (“DSE Act”) relating to termination of services of employees by schools, the SC interpreted Section 8(2)1 of the DSE Act which requires obtaining prior approval of the Director of Education (“DoE”) before passing any order of dismissal or termination of services of its employees by school. The SC in its Judgment has, inter alia, observed that Section 8(2) of the DSE Act is a procedural safeguard in favour of an employee to ensure that an order of termination or dismissal is not passed without the prior approval of DoE. 

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India Proposes New Guidelines for Biosimilars/Vaccines

The Central Drugs Standard Control Organization (“CDSCO”) has released draft guidelines in an effort to streamline the regulatory process for granting marketing permission to similar vaccines and other biosimilars in India. The proposed revised Guidelines on Similar Biologics, 2016 (“Draft Guidelines”) seek to supplement the earlier “Guidelines on Similar Biologics: Regulatory Requirements for Marketing Authorization in India” (“2012 Guidelines”). 

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Foreign Exchange Management Act (“FEMA”)/Foreign Investment

Acceptance of deposits by Indian companies from a person resident outside India for nomination as Director

The Reserve Bank of India (“RBI”) has clarified that keeping deposits with an Indian company by persons resident outside India, in accordance with section 160 of the Companies Act, 2013, is a current account (payment) transaction and, as such, does not require any approval from the RBI. Refunds of such deposits, arising in the event of selection of the person as director or getting more than twenty-five (25) percent votes, will be accorded the same treatment. (Reference: A.P. (DIR Series) Circular No.59 of April 13, 2016). 

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Trai’s Regulations for Compensation to Consumers for Call Drops Upheld

Call drops can be simply explained as the service provider’s ineptitude in maintaining a call between users and providing continued service once a call has been correctly established. Inadequate infrastructure, overloaded networks and fast paced expansion with poor investment by Telecom Service Providers (“TSPs”) to match the expansion are some of the reasons behind this occurrence. With the Indian Prime Minister stepping in last year and demanding that a solution be found, the Delhi High Court has expressed agreement with the Telecom Regulatory Authority of India (“TRAI”) for allowing compensation for call drops.

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Position of Power for Women as Karta

For long, devolution of interest of co-parcenery property was restricted to the male members of the family and only the male members had a right to the ancestral property by birth and demand partition of the Hindu Undivided Family (‘HUF’) property. Hindu women were excluded from these very basic inheritance rights for the obvious vested reasons.

A HUF is a separate entity that is created by members of a family wherein the members are lineal ascendants or descendants. In relation to HUF, a co-parcener is a person who acquires a right in the ancestral property of the HUF by virtue of his birth in the family and has the right to demand partition of HUF property. Prior to the amendment made to the Hindu Succession Act, 1956 (‘Act’), this devolution of interest of property was restricted to the male members of the family.

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Offset Policy in Defence Procurement: Recent Developments

To ensure flow of benefits to the domestic industry either by way of transfer of technology to the buyer country or in the form of investments or an obligation on the supplier/vendor to promote local manufacturing, many countries impose conditions of offset while entering into significant defence contracts with suppliers. Following the same rationale, India too adopted an offset policy in 2005. Revised over the years on various counts, the current offset policy (“Offset Policy”) is contained in the Defence Procurement Procedure (“DPP”) 2013.

With a view to boost the domestic defence industry, the Government has since 2015 introduced certain critical amendments to the Offset Policy. A snapshot of the same is given below:

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Keeping pace with changing times

The continued logjam on the effective working of the Parliament and the conflicting self-interest of political parties (at the cost of the nation) ensures that the legislature is unable to perform its key function of legislating new enactments to meet the needs of the changing times. One such important legislation awaiting enactment is the new Consumer Protection Bill, 2015 (“Bill”) in place of the extant The Consumer Protection Act, 1986 (“Consumer ProtectionAct”), which was introduced on the floors of the Lok Sabha in 2015 by the Minister of Consumer Affairs, Food and Public Distribution, Mr. Ram Vilas Paswan.

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LexCounsel Regulatory Update – February 25

Capital Markets/Financial Services:

  • SEBI offers exit route to dissenting shareholders

The Securities and Exchange Board of India (SEBI) has amended the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, to provide an exit opportunity to dissenting shareholders (being at least 10% of the shareholders who voted in the general meeting), who have voted against a resolution for a change in objects or variation in terms of a contract, referred to in the prospectus. Also, the amount to be utilized for the objects for which the prospectus was issued should be less than 75% of the amount raised (including the amount earmarked for general corporate purposes as disclosed in the offer document). Such an exit offer is to be made by the promoters or shareholders in control in control of an issuer making an offer of specified securities. To this end, SEBI has also amended the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2016, to exclude an acquisition of shares or voting rights of a company under the exit route to dissenting shareholders.

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Is Imparting of ‘Education’ by Private Educational Institutions a ‘Public Function’ and its Implications

India has seen an exponential growth in the education sector and it holds an important place in the global education market. With 1.3 plus billion population, a market size of US$ 100 billion plus, more than 36,000 higher education institutions contributing 59.7 per cent of the market size, India has one of the largest higher education systems in the world*. With private sector taking a larger share of student enrolments every year, there is a huge potential for private equity participation in the education sector for sustained growth and delivery of quality education. However, this participation has also created unique challenges and one of such challenges is the amenability of educational institutions to the wider writ jurisdiction of the High Courts under Article 226 of the Constitution of India (“COI”) in its capacity of being an ‘authority’. 

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Sorry Mark, no “Free Basics” here – says India

The Telecom Regulatory Authority of India (“TRAI”), the Indian regulator for telecom services has on February 8, 2016 effectively said ‘NO’ to operation of “Free Basics” and similar platforms in India. TRAI has proposed the soon to be notified “Prohibition of Discriminatory Tariffs for Data Services Regulations, 2016” (“the Regulations”) along with an Explanatory Memorandum, which without naming, prohibit operation in India of platforms such as “Free Basics”, that may interfere with the principles of “net neutrality”.

“Free Basics”, a platform by Facebook, advocated fervently by its CEO, Mark Zuckerberg has faced vehement opposition by net neutrality supporters in India. The social media backlash earlier forced an Indian e-tailing giant Flipkart, to pull out of its participation in “Airtel Zero”, a platform by Airtel, the leading telecom service provider (“TSP”) in India. Zuckerberg also met the Indian Prime Minister in India and abroad, and conducted a Townhall meeting at Facebook Headquarters in San Jose in September 2015. No, there is no official confirmation that they ever discussed “Free Basics”! 

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