CS EXECUTIVE PROGRAMME

ECONOMIC, COMMERCIAL &

INTELLECTUAL PROPERT Y LAWS

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 LESSON 1:LAW RELATING FOREIGN EXCHANGE MANAGEMENT

Authorised The term ‘authorised Currency

Export means (i) the taking
Person person’ is defined to include Notes means and includes cash in
the form of coins and bank out of India to a
an authorised dealer,
notes. In fact, it means place outside India
money changer, offshore
money and such bank notes any goods (ii)
banking unit
or other paper money as are provision of
or any other person for the authorised by law and services from India
time being authorised to circulate from hand to hand to any person
deal in foreign exchange or as a medium of exchange. outside India.
foreign securities.
‘foreign exchange’ has been defined to mean

foreign currency

‘foreign security’

and includes deposits, credits, balance payable in

foreign currency, drafts, travelers cheques, letters of
credit, bills of exchange expressed or drawn in Indian
currency but payable in any foreign currency.
includes securities
any security, in the form expressed in foreign
of shares, stocks, bonds, currency but where
Any draft, travelers cheque, letters of credit or bills of debentures or any other redemption or any form of
exchange drawn by banks, institutions or persons instrument denominated return such as interest or
outside India but payable in Indian currency has also or expressed in foreign dividend is payable in
been included in the definition of foreign exchange. currency and Indian
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 Person Resident in
India

a person residing in India for an office, branch or agency an office, branch or agency
any person or body
more than 182 days during outside India owned or in India owned or controlled
corporate registered or
the course of the preceding controlled by a person by a person resident out of
incorporated in India.
financial year. resident in India. India.

Execption

The definition of the term ‘person’ includes,

any person who A person who has come to stay or
has gone out of stays in India, in either case
India or who otherwise than— (a) for or taking
stays outside up employment in India; or (b)
India for or on for carrying on in India a business
taking up or vocation in India; or (c) for any an individual, a Hindu Undivided Family, a company, a
employment other purpose, in such firm, an association of persons or body of individuals
outside India, or circumstances as would indicate whether incorporated or not; any agency, office or
for carrying on his intention to stay in India for branch owned or controlled by such persons.
outside India a an uncertain period. Even every artificial juridical person not falling within
business or the above definition has been treated as person.
vocation.

REPATRIATE TO INDIA

and includes use of the realised

(ii) the holding of realised
(i) the selling of such foreign amount for discharge of a debt
amount in an account with an
means bringing into India the exchange to an authorised or liability denominated in
authorised person in India to
realised foreign exchange and person in India in exchange for foreign exchange and the
the extent notified by the
rupees, or expression “repatriation” shall
Reserve Bank,
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 • a transaction other than a capital account transaction and includes payments due in connection with foreign trade, other current
business, services and short term banking and credit facilities in the ordinary course of business; payments due as interest on loan and
CURRENT as net income from investments; remittances for living expenses of parents, spouse and children residing abroad and expenses in
ACCOUNT connection with foreign travel, education and medical care of parents, spouse and children.
TRANSACTI
ONS

• Section 5 of the Act allows any person to sell or draw foreign exchange to or from an authorised person if such sale or drawal is a current
account transaction
.

• mean drawal of foreign exchange from an authorised person and includes opening of Letter of Credit or use of International Credit Card or
International Debit Card or ATM Card or any other thing by whatever name called which has the effect of creating foreign exchange liability.’
‘Drawal'

Prohibition on drawal of
foreign exchange for
certain transactions

transactions a transaction with a

or a travel to Nepal
specified in the person resident in
and/or Bhutan
Schedule I Nepal or Bhutan.

Payment of
Remittance for commission on
Remittance of
purchase of exports made
interest
Remittance of lottery tickets, towards equity Payment of
Payment income on
Remittance income from banned/proscr investment in commission on
related to 'Call funds held in
out of lottery racing/riding ibed Joint Ventures/ exports under
Back Services' Non-Resident
winnings. etc. or any magazines, Wholly Owned Rupee State
of telephones. Special Rupee(
other hobby. football pools, Subsidiaries Credit Route.
Account)
sweepstakes, abroad of
Scheme.
etc. Indian
CS companies.
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 does not apply to those
Prior approval of Reserve Bank for certain transaction cases where the
payment is made out of
funds held in Resident
Foreign Currency (RFC)
1. Facilities for individuals 2. Facilities for persons other than individual Account of the remitter.

Individuals can avail of foreign

exchange facility for the following The following remittances by persons other than individuals require prior
purposes within the limit of USD approval of the Reserve Bank of India.
2,50,000
only. Any additional remittance in (i) Donations
excess thereof requires prior exceeding one per
approval of the Reserve Bank of cent. of their
India. foreign exchange
(i) Private visits to any country earnings during the
(except Nepal and Bhutan). previous three
financial years or
(ii) Gift or donation. (iii) Remittances
USD 5,000,000,
(ii) Commission, exceeding USD (iv) Remittances
(iii) Going abroad for employment. whichever is less,
per transaction, to 10,000,000 per exceeding five per
(iv) Emigration. for- (a) creation of
agents abroad for project for any cent of investment
Chairs in reputed
(v) Maintenance of close relatives sale of residential consultancy brought into India
educational
abroad. flats or commercial services in respect or USD 100,000
institutes; (b)
plots in India of infrastructure whichever is
(vi) Travel for business, or attending contribution to
exceeding USD projects and USD higher, by an entity
a conference or specialised training funds (not being an
25,000 or five 1,000,000 per in India by way of
or for meeting expenses for investment fund)
percent of the project, for other reimbursement of
promoted by
meeting medical expenses, or inward remittance consultancy pre-incorporation
educational
check-up abroad, or for whichever is more. services procured expenses.
institutes; and (c)
accompanying as attendant to a from outside India.
contribution to a
patient going
technical
abroad for medical treatment/ institution or body
check-up. or association in
(vii) Expenses in connection with the field of activity
medical treatment abroad. of the donor
Company.
(viii) Studies abroad.
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transaction.
 Liberalised Remittance Scheme (LRS) of USD 2, 50,000 for resident individuals. Under the Liberalised Remittance Scheme, Authorised Dealers may freely
allow remittances by resident individuals up to USD 2, 50,000 per Financial Year (April-March) for any permitted current or capital account transaction or a
combination of both. The Scheme is not available to corporates, partnership firms, HUF, Trusts, etc.
Release of foreign exchange exceeding USD 2,50,000, requires prior permission from the Reserve Bank of India.
f. Business trip Visits by
individuals in
connection with
attending of an
d. Emigration A
international
person wanting to
conference, seminar,
emigrate can draw
a. Private visits specialised training,
foreign exchange from
apprentice training,
For private visits abroad, other AD Category I bank
etc., are treated as
than to Nepal and Bhutan, any and AD Category II up
business visits. For
resident individual can obtain to the amount
business trips to foreign
foreign exchange up to an prescribed by the
countries, resident
aggregate amount of USD 2,50,000 b. Gift/donation country of emigration e. Maintenance of
c. Going abroad on individuals can avail of
from an Authorised Dealer or or USD 250,000. relatives abroad A
Any resident employment foreign exchange up to
FFMC, in any one financial year, Remittance of any resident individual
individual may remit USD 2,50,000 in a FY
irrespective of the number of visits up-to USD 2,50,000 in A person going abroad amount of foreign can remit up-to USD
irrespective of the
undertaken during the year. for employment can exchange outside 2,50,000 per FY
one FY as gift to a number of visits
Further, all tour related expenses draw foreign exchange India in excess of this towards maintenance
person residing undertaken during the
including cost of rail/road/water up to USD 2,50,000 limit may be allowed of relatives ‘relative’
outside India or as year. However, if an
transportation; cost of Euro Rail; per FY from any only towards meeting as defined in Section
donation to an employee is being
passes/ tickets, etc. outside India; Authorised Dealer in incidental expenses in 2(77) of the
deputed by an entity
and overseas hotel/lodging organization outside the country of Companies Act, 2013
India. for any of the above
expenses shall be subsumed under India. immigration and not abroad.
and the expenses are
the LRS limit. The tour operator for earning points or
borne by the latter,
can collect this amount either in credits to become
such expenses shall be
Indian rupees or in foreign eligible for
treated as residual
currency from the resident immigration by way of
current account
traveller. overseas investments
transactions outside
in government bonds;
LRS and may be
land; commercial
permitted by the AD
enterprise; etc.
without any limit,
subject to verifying the
bonafides of the
transaction.
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 g. Medical treatment abroad:
Authorised Dealers may release foreign exchange up to an amount of USD 2,50,000 or its equivalent per FY without insisting on any estimate from a
hospital/doctor. For amount exceeding the above limit, Authorised Dealers may release foreign exchange under general permission based on the
estimate from the doctor in India or hospital/ doctor abroad. A person who has fallen sick after proceeding abroad may also be released foreign
exchange by an Authorised Dealer (without seeking prior approval of the Reserve Bank of India) for medical treatment outside India. In addition to
the above, an amount up to USD 250,000 per financial year is allowed to a person for accompanying as attendant to a patient going abroad for
medical treatment/check-up.

h. Facilities available to students for pursuing their studies abroad.:

AD Category I banks and AD Category II, may release foreign exchange up to USD 2,50,000 or its equivalent to resident individuals for studies abroad
without insisting on any estimate from the foreign university. However, AD Category I bank and AD Category II may allow remittances (without
seeking prior approval of the Reserve Bank of India) exceeding USD 2,50,000 based on the estimate received from the institution abroad.

The permissible capital account transactions by an individual under LRS are:

i. opening of foreign currency account abroad with CAPITAL

a bank;
ACCOUNT mean any transaction which
ii. acquisition of immovable property abroad, Overseas Direct
TRANSACTIONS alters the assets or liabilities
including contingent liabilities,
Investment (ODI) and Overseas Portfolio Investment (OPI), in
outside India of persons resident
accordance with the provisions contained in Foreign Exchange
Management (Overseas Investment) Rules, 2022, Foreign Exchange in India or assets or liabilities in
Management (Overseas Investment) Regulations, 2022 and Foreign India of person resident outside
Exchange Management (Overseas Investment) Directions, 2022; India and includes the
transactions specified in Sub-
iii. extending loans including loans in Indian Rupees section (3) of Section 6 of the
to Non-resident Indians (NRIs) who are relatives as
defined in Companies Act, 2013.

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 Classes of Capital Account Transactions by Persons Resident in India

d) g)
f) Loans and h) Taking out
Guarantees Maintenanc i) Loans and j)
b) Foreign c) Transfer of overdrafts of insurance
a) issued by a e of foreign overdrafts Remittance
currency immovable e) Export, (borrowings) policy by a
Investment person currency by a person outside
loans raised property import and by a person person
by a person resident in accounts in resident in India of k) Undertake
in India and outside holding of resident in resident in
resident in India in India and India to a capital derivative
abroad by a India by a currency / India from a India from
India in favour of a outside person assets of a contracts
person person currency person an insurance
foreign person India by a resident person
resident in resident in notes. resident company
securities. resident person outside resident in
India. India. outside outside
outside resident in India. India.
India. India.
India. India.

Classes of Capital Account Transactions of Persons resident Outside India

a) Investment in India by a person

resident outside India, that is to say,
c) Guarantee by d) Import and
i) issue of security by a body b) Acquisition
a person export of e) Deposits f) Foreign g) Remittance
corporate or an entity in India and and transfer of
resident currency / between a currency outside India of
investment therein by a person immovable h) Undertake
outside India in currency notes person resident accounts in capital assets in
resident outside India; and ii) property in derivative
favour of, or on into / from in India and a India of a India of a
investment by way of contribution India by a contracts
behalf of, a India by a person resident person resident person resident
by a person resident outside India to person resident
person resident person resident outside India. outside India. outside India.
the capital of a firm or a outside India.
in India. outside India.
proprietorship concern or an
association of persons in India.
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 REALISATION, REPATRIATION AND SURRENDER OF FOREIGN
CURRENCY
Unless otherwise provided in the Act, rules or regulations made
thereunder, no PROI shall make investment in India in any entity which
is engaged in any of the following activities A person resident in India to whom any amount of foreign
exchange is due or has accrued shall take all reasonable steps
to realize and to repatriate to India such foreign exchange.
3. Real ‘Foreign exchange due’ means the amount which a person has
2. 4. Trading
estate
Agricultural in a right to receive or claim.
1. Nidhi business or 5. Atomic
and transferable
Company constructio energy in foreign exchange.
Plantation Developme
n of farm
activity nt Rights
house
Period for surrender of realised foreign exchange

On realisation of foreign exchange due, a person shall repatriate the - Foreign exchange
same to India, namely bring into, or receive in, India and – due or accrued as
remuneration for
services rendered,
A person not being
whether in or outside
an individual resident
India, or in
a) sell it to an authorised person in India in India shall sell the - in all other cases
settlement of any
in exchange for rupees; or realised foreign within a period of
lawful obligation, or
exchange to an ninety days from the
an income on assets
authorised person date of its receipt
held outside India, or
within the period
b) retain or hold it in account with an as inheritance,
specified below: -
authorised dealer in India to the extent settlement or gift,
specified by the Reserve Bank; or within seven days
from the date of its
receipt;
c) use it for discharge of a debt or liability
denominated in foreign exchange to the
extent and in the manner specified by the
Reserve

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 Period for surrender in certain cases Period for surrender in certain cases

A person being an individual resident in India shall surrender

In case the foreign the received/ realised/ unspent/ unused foreign exchange
exchange acquired was for whether in the form of currency notes, coins and travelers
travel abroad the unspent cheques, etc. to an authorised person within a period of 180
amount must be days from the date of such receipt/ realisation/ purchase/
surrendered to an acquisition or date of his return to India, as the case may be.
authorized person in the
following manner:

Remittance of Assets

‘Remittance of assets’ means remittance outside India of funds

Within 90 days from the Within 180 days from the in a deposit with a bank/ firm/ company, provident fund
date of return to India date of return to India
balance or superannuation benefits, amount of claim or
when the unspent foreign when the unspent foreign
maturity proceeds of insurance policy, sale proceeds of shares,
exchange is in the form of exchange is in the form of
currency notes and coins ; traveller's cheque. securities, immovable property or any other asset held in India
in accordance with the provisions of the FEMA or rules/
regulations made there
under.
• ADs may allow remittance of assets by a foreign national where:
• i. the person has retired from employment in India;
• ii. the person has inherited from a person referred to in section 6(5) of the Act;
• iii. the person is a non-resident widow/widower and has inherited assets from
• her/his deceased spouse who was an Indian national resident in India.
• iv. the remittance is in respect of balances held in a bank account by a foreign student who has
Remittances by individuals not completed his/ her studies, provided such balance represents proceeds of remittances received
being NRIs/ PIOs from abroad through normal banking channels or rupee proceeds of foreign exchange brought by
such person and sold to an authorised dealer or out of stipend/ scholarship received from the
Government or any organisation in India.
• The remittance should not exceed USD one million per financial year. This limit, however, will
not cover sale proceeds of assets held on repatriation basis. In case the remittance is made in
more than one instalment, the remittance of all instalments should be made through the same
AD on submission of documentary evidence.
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 Remittances by NRIs/ PIOs

Remittances by companies/ entities

ADs may allow NRIs/ PIOs, on submission of documentary evidence, to remit up to USD
one million, per financial year:

iii. in case settlement is done

without retaining any life
ii. in respect of assets acquired interest in the property i.e.
i. out of balances in their non- under a deed of settlement during the lifetime of the
resident (ordinary) (NRO) made by either of his/ her owner/ parent, it would ADs may allow remittances by Indian
accounts/ sale proceeds of parents or a relative as tantamount to regular transfer companies under liquidation on directions
assets/ assets acquired in defined in Companies Act, by way of gift and the issued by a Court in India/ orders issued
India by way of inheritance/ 2013. The settlement should remittance of sale proceeds of by official liquidator in case of voluntary
legacy; take effect on the death of the such property would be winding up on submission of:
settler; guided by the extant
instructions on remittance of
balance in the NRO account;

Remittances/ winding up proceeds of branch/ office

ADs may permit remittance of assets on closure or remittance of winding up proceeds of branch
office/ liaison office (other than project office) on submission of the following documents: (i) Auditor’s certificate confirming that all
liabilities in India have been either fully
(i) A copy of the Reserve Bank’s permission for establishing the branch/ office in India. (ii) Auditor’s paid or adequately provided for.
certificate: (a) indicating the manner in which the remittable amount has been arrived and supported (ii) Auditor’s certificate to the effect that
by a statement of assets and liabilities of the applicant, and indicating the manner of disposal of the winding up is in accordance with the
assets; provisions of the Companies Act.
(iii) In case of winding up otherwise than
(b) confirming that all liabilities in India including arrears of gratuity and other benefits to the
by a court, an auditor’s certificate to the
employees etc., of the branch/ office have been either fully met or adequately provided for; effect that there are no legal proceedings
pending in any court in India against the
(c) confirming that no income accruing from sources outside India (including proceeds of exports) has
applicant or the company under
remained un-repatriated to India; liquidation and there is no legal
impediment in permitting the
(d) confirming that the branch/office has complied with all regulatory requirements stipulated by the remittance.
Reserve Bank of India from time to time regarding functioning of such offices in India; (iii) a
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confirmation from the applicant that no legal proceedings are pending in any Court in India and there
is no legal impediment to the remittance; and (iv) a report from the Registrar of Companies regarding
compliance with the provisions of the Companies Act, 2013, in case of winding up of the office in
 Remittance of assets requiring RBI
approval Possession and Retention of
Foreign currency or coins

Prior approval of the Reserve Bank is necessary for

remittance of assets where:

(a) Remittance is in excess of USD

1,000,000 (US Dollar One million
only) per financial year (i) on following limits for possession or retention of foreign
account of legacy, bequest or currency or foreign coins, namely:
inheritance to a citizen of foreign (b) Hardship will be caused to a
state, resident outside India; (ii) by person if remittance from India is
NRIs/ PIOs out of the balances not made to such a person.
held in NRO accounts/ sale
proceeds of assets/ the assets
acquired by way of inheritance/ i. possession without limit of foreign currency and
legacy. coins by an authorised person within the scope of his
authority;
ii. possession without limit of foreign coins by any
person;
iii. retention by a person resident in India of foreign
currency notes, bank notes and foreign currency
travellers cheques not exceeding US $ 2000 or its
equivalent in aggregate, provided that such foreign
exchange in the form of currency notes, bank notes
and travellers cheques acquired during a visit to any
place outside India by way of payment for services
not arising from any business in or anything done in
India; or from any person not resident in India and
also who is on a visit to India, or as honorarium or
gift or for services rendered or in settlement of any
lawful obligation; or as a honorarium or gift while on
a visit to any place outside India; or represents
unspent amount of foreign exchange acquired from
an authorised person for travel abroad.

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 MANNER OF RECEIPT AND PAYMENT

The receipt and payment between a person resident in India and a person resident
outside India shall, unless provided otherwise, be made through an Authorised
Bank or Authorised Person and in the manner as specified below:

receipt and payment between a person

resident in India and a person resident
outside India

I. Trade transactions – II. Transactions

other than trade
transactions
(a) receipt/payment for export to or import (b) Notwithstanding anything
from the countries given below of eligible contained in this sub-regulation,
goods and services shall be made as under: receipts and payments may also be (i) Nepal
made in a manner as may be and
(iii) Countries provided in the extant Foreign Trade Bhutan -
(i) Nepal and Bhutan - (ii) Member countries of In Indian (ii) Other
in Indian Rupees other than Policy framed by the Central
ACU, other than Nepal Rupees Countrie
provided that in case member Government.
and Bhutan - through provided s – In
of exports from India countries of
ACU mechanism or as that in Indian
where the importer in ACU - In
per the directions issued case of Rupees
Nepal has been Indian
by the Reserve Bank to overseas or any
permitted by the Rupees or in
authorised dealer from investme foreign
Nepal Rashtra Bank to any foreign
time to time: Provided nt in currency.
make payment in currency.
that in case of imports Bhutan,
foreign currency, such where the goods are
receipts towards the shipped to India from a payment
amount of the export member country of the may also
may be in foreign ACU (other than Nepal be made
currency; and Bhutan) but the in
supplier is resident of a foreign
country other than a currency
member country of the ;
ACU, the payment may
be made in a manner as
specified at (iii) below.

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 ACQUISITION OR TRANSFER OF IMMOVABLE PROPERTY IN INDIA

An NRI or an OCI An NRI or an OCI

An NRI or an OCI
can acquire by way may transfer any
can acquire any
of gift any immovable
immovable
immovable property (other
property in India by
An NRI or an OCI property (other than agricultural
way of inheritance
can acquire by way than agricultural An NRI or an OCI land or plantation
from a person An NRI or an OCI
of purchase any land/ plantation can acquire any property or
resident outside may transfer any
immovable property/ farm immovable farmhouse) to an
India who had immovable
property (other house) in India property in India by NRI or an OCI. In
acquired the property in India to
than agricultural from person way of inheritance case the transfer is
property in a person resident in
land/ plantation resident in India or from a person by way of gift, the
accordance with India.
property/ farm from an NRI or an resident in India. transferee should
the provisions of
house) in India. OCI who is a be a relative as
the foreign
relative as defined defined in section
exchange law in
in section 2(77) of 2(77) of the
force at the time of
the Companies Act, Companies Act,
acquisition.
2013. 2013.

NRIs or OCIs may make payment, if any,

for transfer of immovable property out
Such payments cannot be made either
of funds received in India through
Payment for Acquisition of Immovable by traveller’s cheque or by foreign
banking channels by way of inward
Property currency notes or by other mode except
remittance from any place outside India
those specifically mentioned above.
or by debit to their NRE/ FCNR (B)/ NRO
account.

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 Acquisition of Immovable Property by Person Resident outside
AUTHORISED PERSON
India for Carrying on a Permitted Activity

A branch or office or any other place of business in India, other than a

liaison office, established by a person resident outside India, may acquire
immovable property in India which is necessary for or incidental to the Under Section 10, any person who has made an application to
activity carried on in India by such branch or office. the RBI may be authorised by it to act as an authorised person
to deal in foreign exchange or in
foreign securities as an authorised dealer, money changer or
Such a person is required to file with the Reserve Bank a declaration in the offshore banking unit or in any other manner as the RBI deem
form IPI (as given in the Master Direction on Reporting), not later than fit. This authorisation is in writing and subject to the conditions
ninety days from the date of such acquisition. laid down by the RBI.

The immovable property so acquired can be mortgaged to an Authorised

Dealer as a security for any borrowing.

RBI has been empowered to revoke the authorisation granted

to any person at any time in the public interest. It may also
However, acquisition of immovable property in India by a branch, office or revoke the authorisation after giving an opportunity, if the
other place of business of persons of Pakistan or Bangladesh or Sri Lanka or authorised person failed to comply with the conditions subject
Afghanistan or China or Iran or Hong Kong or Macau or Nepal or Bhutan or to which the authorisation was granted or contravened any of
Democratic People’s Republic of Korea origin/ nationality/ ownership the provisions of the Act, rules, notifications or directions
requires the prior approval of the Reserve Bank.

Any person, other than an authorised person who has acquired

Appointment of Adjudicating Authority or purchased foreign exchange for any purpose mentioned in
the declaration made by him to the authorised person does not
CG to appoint by notification in the Official Gazette as many AA as it may think fit for use it for such purpose, or does not surrender it to authorised
person within the specified period, or uses the foreign
holding enquiries under Section 13.
exchange for any other purpose, which is not permitted under
The Adjudicating Authority (AA) has been empowered to hold any enquiry on a the provisions of the Act, such person shall be deemed to have
committed contravention of the provisions of the Act.
complaint made in writing by an officer authorised by a general or special order by
the Central Government.
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 Appeal to
Special TIME Appeal to
TIME Every appeal shall
Director PERIOD Appellate
The appeal against any person PERIOD
(Appeals) Tribunal be filed within 45
to hear appeals the order of AA aggrieved by an
days from the
against the orders of within 45 days from order made by an
date of the
the Adjudicating the date of the AA , other than
receipt of the
Authorities receipt of the order those referred to order by
by aggrieved person. in section 17(1),
aggrieved person.
or the Special
The Special Director Director
An appeal to the (Appeals) has (Appeals), may
Special Director however, been prefer an appeal
(Appeals) may be empowered to to the Appellate
made against the entertain appeal Tribunal
orders of the after the expiry of
Assistant Director or the said period of 45
Deputy Director of days.
enforcement, acting
as Adjudicating
Authority.

Adjudicating Authority
Appeal to TIME
High Court PERIOD Such appeal must
be filed within 60
right to appeal to days from the Appeal to Special Director (Appeals)
High Court lies date of
with the communication
appellant who is of the decision or
aggrieved by order of the
Tribunal. Appeal to Appellate Tribunal
the decision of
the Tribunal.

Appeal to High Court

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 Contravention by Companies
Investigation

where the person committing the contravention of the Act or Rules

In addition, the Central happened to be a company, every person who at the time the
Government may also contravention was committed, was in charge of and was
The officers so appointed
authorise any officer or responsible to the company for the conduct of the business of the
Director of Enforcement shall exercise the like
class of officers in the company shall be deemed to be guilty of the contravention and
and other officers below powers which are
Central Government, State liable to be proceeded against and punished accordingly.
the rank of an Assistant conferred on income tax
Government, Reserve Bank
Director to take up for authorities under the
of India, not below the
investigation the Income Tax Act, 1961,
rank of Under Secretary to
contravention referred to subject to such conditions
Government of India, to However, no such persons shall be deemed to be guilty of
in Section 13 of the Act. and limitations as laid
investigate any committing any offence if he proves that such contravention took
down under that Act.
contravention under place without his knowledge or that he exercised adequate steps
Section 13 of the Act. to prevent such contravention

COMPOUNDING OF CONTRAVENTIONS Central Board of Director

Compounding refers to the process of voluntarily admitting the 1) RBI- governed by a Central Board of Directors
contravention, pleading guilty and seeking redressal.
2) The board is appointed by the Government of India in
keeping with the Reserve Bank of India Act.
Reserve Bank is empowered to compound any contraventions
3) Appointed/nominated for a period of four years.
Willful, malafide and fraudulent transactions are, however, viewed Constitution of Central Board of Directors are as under:
seriously, which will not be compounded by the Reserve Bank.
Official Directors: Full-time: Governor and not more than
Any person who contravenes any provision of the FEMA, 1999 [except four Deputy Governors.
section 3(a)] or contravenes any rule, regulation, notification, direction or
Non-Official Directors:
order issued in exercise of the powers under this Act or contravenes any
condition subject to which an authorization is issued by the Reserve Bank, Nominated by Government: ten Directors from various
can apply for compounding to the Reserve Bank.
fields and two government Official

Applications seeking compounding of contraventions under section 3(a) of Others: four Directors - one each from four local boards
17 FEMA, 1999 may be submitted to the Directorate of Enforcement CS ANOOP JAIN
 Organisation Structure Board for Financial Supervision

Reserve Bank of India performs the supervisory

Central Board of Directors
function under the guidance of the Board for Financial
Supervision (BFS).
Governor

The primary objective of BFS is to undertake

Deputy Governor consolidated supervision of the financial sector
comprising Scheduled Commercial and Co-operative
Executive Directors Banks, All India Financial Institutions, Local Area
Banks, Small Finance Banks, Payments Banks, Credit
Information Companies, Non-Banking Finance
Principal Chief General Managers Companies and Primary Dealers.

Chief General Managers

Main Functions Reserve Bank of India

General Managers

Monetary Authority
Asstt. General Managers

Regulator and Supervisor of the Financial System

Managers

Manager of Foreign Exchange

Asstt. Managers
Regulator and Supervisor of Payment and Settlement
Systems
Support Staff
Developmental Role

CS ANOOP JAIN Issuer of Currency

18
 LESSON 2: FOREIGN DIRECT INVESTMENTS – REGULATIONS & POLICY
ELIGIBLE INVESTEE ENTITIES
investment through equity
instruments by a person resident
outside India in an unlisted Indian
India Company
company; or in 10% or more of the
post issue paid-up equity capital on a Partnership Firm/Proprietary
fully diluted basis of a listed Indian Concern
company.
Trust
‘Fully diluted ‘Investment’
basis’ means the means to Limited Liability Partnerships
Foreign Direct total number of subscribe, (LLPs)
Investment (‘FDI’) shares that acquire, hold or
means would be transfer any Investment Vehicle
outstanding if all security or unit
possible sources issued by a Start-up Companies
of conversion person resident
ENTRY ROUTE are exercised. in India. Other Entities

Automatic
Route
Government Route: It means the entry route
Automatic Route: It means the entry route
through which investment by person resident
through which investment by a person resident
outside India requires prior Government approval
outside India does not require the prior approval
and foreign investment received under this route
of the Reserve Bank of India or the Central
shall be in accordance with the conditions
Government.
stipulated by the Government in its approval.

Government
Route
CS ANOOP JAIN
19
 ELIGIBLE INVESTORS

An NRI or an
A non-resident A company,
OCI may
entity can invest trust and
subscribe to Foreign
in India, subject Registered partnership
NRIs resident in National Portfolio
to the FDI Policy FPIs and firm
Nepal and Pension Investors
except in those System NRIs can incorporated
Bhutan as well as (FPI) may
sectors/activities invest/trade outside India
citizens of Nepal provided make
which are through a and owned
and Bhutan are such investments
prohibited. A Foreign registered and
permitted to subscription in the
invest in the s are made Venture broker in the manner and controlled by
capital of Indian through Capital capital of subject to NRIs can
companies on normal Investor Indian the terms invest in
Further, a repatriation banking Companies and India with
However, an on the special
citizen of basis, subject to channels and conditions
entity of a recognised dispensation
Pakistan or an the condition the person is specified in
country, Indian Stock as available
entity that the amount eligible to Schedule II
which shares Exchanges to NRIs
incorporated of consideration invest as per of Foreign
land border under the
with India or in Pakistan for such the Exchange
can invest, investment shall provisions of Managemen FDI Policy.
where
only under be paid only by the PFRDA t (Non-Debt
the beneficial the way of inward Act. The Instruments)
owner of an Government remittance in annuity/ Rules, 2019.
investment route, in free foreign accumulated
into India is sectors/activit exchange saving will
situated in or ies other than through normal be
is a citizen of defence, banking repatriable.
any such space, atomic channels.
country, can energy and ‘Foreign Investment’ means any investment made by a
invest only sectors/activit person resident outside India on a repatriable basis in
under the ies prohibited capital instruments of an Indian company or to the
Government for foreign
route capital of a LLP.
investment.

CS ANOOP JAIN
20
 Foreign investment in sectors/activities under government approval route will be subject to government approval where:

(v) It is clarified that foreign

(iii) The control of (iv) The ownership investment shall include all (vii) A company,
an existing Indian of an existing types of foreign investments, trust and
company, currently Indian company, direct and indirect, regardless (vi) partnership firm
owned or currently owned or of whether the said Investment incorporated
controlled by controlled by investments have been made by NRIs outside India and
(i) An (ii) An resident Indian resident Indian under Schedule I (FDI), II (FPI), under owned and
Indian Indian citizens and Indian citizens and Indian III (NRI), VI (LLPs), VII (FVCI), Schedule IV controlled by
company company companies, which companies, which VIII(Investment Vehicles) and of Foreign nonresident
is being is being are owned or are owned or IX (DRs) of Foreign Exchange Exchange Indians will be
establish establish controlled by controlled by Management (Non-Debt Managemen eligible for
ed with ed with resident Indian resident Indian Instruments) Rules, 2019. t (Non-Debt investments under
foreign foreign citizens, will be/is citizens, will be/is FCCBs and DRs having Instruments Schedule IV of
investme investme being transferred/ being transferred/ underlying of instruments ) Rules, Foreign Exchange
nt and is nt and is passed on to a passed on to a non- which can be issued under 2019 will be \ Management
not not non-resident entity resident entity as a Schedule IX, being in the deemed to (Non-Debt
owned controlle as a consequence consequence of nature of debt, shall not be be domestic Instruments)
by a d by a of transfer of transfer of shares treated as foreign investment. investment Rules, 2019 and
resident resident shares and/or fresh and/or fresh issue However, any equity holding at par with such investment
entity; or entity; or issue of shares to of shares to non- by a person resident outside the will also be
non- resident resident entities India resulting from investment deemed domestic
entities through through conversion of any debt made by investment at par
amalgamation, amalgamation, instrument under any residents; with the
merger/demerger, merger/demerger, arrangement shall be investment made
acquisition etc.; or acquisition etc.; reckoned as foreign by residents.
investment;

CS ANOOP JAIN
21
FOREIGN INVESTMENT INTO/DOWNSTREAM INVESTMENT “Indirect foreign investment” means
BY ELIGIBLE INDIAN ENTITIES downstream investment received by an
Indian entity from,-
Downstream investment means investment made by an
Indian entity which has total foreign investment in it, or
an Investment Vehicle in the capital instruments or the
(B) an investment
capital, as the case may be, of another Indian entity. (A) another Indian Entity
vehicle whose sponsor
(IE) which has received
or manager or
It means indirect foreign investment, by an eligible foreign investment and
investment manager
Indian entity, into another Indian Company/LLP, by way
of subscription or acquisition.

(i) the IE is not (ii) is owned or (i) is not owned (ii) is owned or
owned and not controlled by and not controlled by
controlled by persons controlled by persons
Foreign investment into an Indian company engaged resident Indian resident outside resident Indian resident outside
only in the activity of investing in the capital of other citizens; or India. citizens; or India.
Indian company(ies) (regardless of its ownership or
control)

3. For undertaking activities which are under

automatic route and without foreign
investment linked performance conditions,
Indian company which does not have any
operations and also does not have any
2. Foreign Investment in Core Investment downstream investments, will be permitted to
1. Foreign Investment in Investing Companies Companies (CICs) and other investing have infusion of foreign investment under
registered as Non-Banking Financial companies, engaged in the activity of investing automatic route. However, approval of the
Companies in the capital of other Indian Government will be required for such
company(ies)/LLPs, is permitted under companies for infusion of foreign investment
(NBFC) with the RBI, being overall regulated, Government approval route. CICs will have to for undertaking activities which are under
would be under 100% automatic route. additionally follow RBI’s regulatory framework Government route, regardless of the amount
for CICs. or extent of foreign investment. Further, as
and when such a company commences
business(s) or makes downstream investment,
it will have to comply with the relevant
sectoral conditions on entry route,
conditionalities and caps.
CS ANOOP JAIN
22
 Guidelines for calculation of total foreign investment i.e. direct and indirect foreign investment

(i) Counting of
All investment directly by a non-resident entity into the Indian company/ LLP
direct foreign
would be counted towards foreign investment.
investment

(a) The foreign investment through the investing Indian company/LLP would not be
considered for calculation of the indirect foreign investment in case of Indian
companies/LLPs which are ‘owned and controlled’ by resident Indian citizens
calculation of and/or Indian Companies/LLPs which are owned and controlled by resident Indian
total foreign citizens.
investment
(aa) Indian ‘owned and controlled’ as defined in Regulation 14 of the principal
Regulations as defined in RBI Notification No.362/2015-RB dated February 15,
2016. Provided that for sponsors or managers or investment managers organized
in a form other than companies or LLPs, SEBI shall determine whether the sponsor
or manager or investment manager is foreign owned and controlled.
(ii) Counting of
indirect foreign
investment b) For cases where condition (a) above is not satisfied or if the investing company
is owned or controlled by ‘non-resident entities’, the entire investment by the
investing company/LLP into the subject Indian Company would be considered as
indirect foreign investment, provided that, as an exception, the indirect foreign
investment in only the 100% owned subsidiaries of operatingcum-
investing/investing companies, will be limited to the foreign investment in the
operating-cuminvesting/ investing company. This exception is made since the
downstream investment of a 100% owned subsidiary of the holding company is
akin to investment made by the holding company and the downstream
investment should be a mirror image of the holding company. This exception,
however, is strictly for those cases where the entire capital of the downstream
subsidiary is owned by the holding company.

CS ANOOP JAIN
23
 Downstream investment by an eligible Indian entity which is not owned and/or controlled by resident entity(ies)

1. Downstream investment by an eligible Indian

entity, which is not owned and/or controlled by
2. Downstream investments by
resident entity(ies), into another Indian company,
eligible Indian entities/LLPs will
would be in accordance/compliance with the
be subject to the following
relevant sectoral conditions on entry route,
conditions:
conditionalities and caps, with regard to the sectors
in which the latter Indian company is operating.

(i) Such an entity is (ii) Downstream (iv) For the purpose of downstream
required to notify its investment by way of investment, the eligible Indian
downstream investment (iii) entities making the downstream
induction of foreign
to RBI in Form DI as well Issue/transfer/prici investments would have to bring in
investment in an
as on Foreign ng/valuation of requisite funds from abroad and not
existing Indian
Investment Facilitation capital shall be in leverage funds from the domestic
Company to be duly
Portal in the form accordance with market. This would, however, not
supported by a
available at applicable preclude downstream
resolution of the
www.fifp.gov.in within FEMA/SEBI companies/LLPs, with operations,
Board of Directors as
30 days of such guidelines; from raising debt in the domestic
also a shareholders
investment, even if agreement, if any; market. Downstream investments
capital instruments have through internal accruals are
not been allotted along permissible, subject to the
with the modality of applicable provisions. For the
investment in purposes of foreign investment
new/existing ventures policy, internal accruals will mean as
(with/without profits transferred to reserve
expansion programme); account after payment of taxes.

CS ANOOP JAIN
24
 PROHIBITED SECTORS

FDI is prohibited in:

CASES WHICH DO NOT REQUIRE FRESH APPROVAL
Companies may not require fresh approval of the Government for bringing in additional a) Lottery Business including Government/private
foreign investment into the same entity, in the following cases: lottery, online lotteries, etc.

b) Gambling and Betting including casinos etc.

(ii) Entities, the c) Chit funds

activities of which
had sectoral caps
(i) Entities, the earlier and which (iii) Additional foreign d) Nidhi company
activities of which had, accordingly, investment into the
had earlier required earlier obtained the same entity where
the prior approval of prior approval of the the prior approval of e) Trading in Transferable Development Rights (TDRs)
the Government and Government for their the Government had (iv) Additional foreign
which had, initial foreign been obtained earlier investment up to f) Real Estate Business or Construction of Farm
accordingly, earlier investment but for the initial/original cumulative amount of Houses
obtained the prior subsequently such foreign investment Rs 5000 crore into the
approval of the caps were removed/ due to requirements same entity within an
Government for their increased and the of Press Note 18of approved foreign ‘Real estate business’ shall not include development
initial foreign activities placed 1998 or Press Note 1 equity percentage/or of townships, construction of residential /
investment but under the automatic of 2005 and the prior into a wholly owned commercial premises, roads or bridges and Real
subsequently such route; provided that approval of the subsidiary. Estate Investment Trusts (REITs) registered and
activities/sectors such additional Government under regulated under the SEBI (REITs) Regulations, 2014.
have been placed investment along the FDI policy is not
under automatic with the required for any other g) Manufacturing of cigars, cheroots, cigarillos and
route; initial/original reason/purpose; and cigarettes, of tobacco or of tobacco substitutes
investment does not
exceed the sectoral
caps; h) Activities/ sectors not open to private sector
investment e.g. (I) Atomic Energy and (II) Railway
operations (other than permitted activities).

Foreign technology collaboration in any form

including licensing for franchise, trademark, brand
CS ANOOP JAIN name, management contract is also prohibited for
25
Lottery Business, Gambling and Betting activities.
 equity shares, fully, compulsorily and mandatorily convertible debentures and fully,
compulsorily and mandatorily convertible preference shares subject to pricing guidelines/
valuation norms prescribed under FEMA Regulations.
The inward remittance received by the Indian company vide
issuance of DRs and FCCBs are treated as FDI and counted
towards FDI.

Optionality
clauses are
allowed in equity
(a) There is a minimum lock-in period of one year which shall be effective from
shares, fully,
the date of allotment of such capital instruments.
compulsorily and
mandatorily
convertibledeben
tures and fully,
compulsorily and (b) After the lock-in period and subject to FDI Policy provisions, if any, the non-
mandatorily resident investor exercising option/right shall be eligible to exit without any
convertible assured return, as per pricing/valuation guidelines issued under FEMA from
preference shares time to time.
under FDI
TYPES OF scheme,subject
INSTRUMENTS to the following An Indian company can also sponsor an issue of ADR/GDR. Under this
conditions: mechanism, the company offers its resident shareholders a choice to submit their
shares back to the company so that on the basis of such shares, ADRs/GDRs can
(ii) Sponsored be issued abroad. The proceeds of the ADR/GDR issue are remitted back to India
ADR/GDR issue: and distributed among the resident investors who had offered their Rupee
denominated shares for conversion. These proceeds can be kept in Resident
Foreign Currency (Domestic) accounts in India by the resident shareholders who
have tendered such shares for conversion into ADRs/GDRs.
(i) Two-way A limited two-way Fungibility scheme has been put in place by the Government
Fungibility of India for ADRs/GDRs. Under this Scheme, a stock broker in India, registered
Scheme: with SEBI, can purchase shares of an Indian company from the market for
conversion into ADRs/GDRs based on instructions received from overseas
investors. Re-issuance of ADRs/GDRs would be permitted to the extent of
ADRs/GDRs which have been redeemed into underlying shares and sold in the
Indian market.
Issue of Foreign Currency
Convertible Bonds (FCCBs)
and Depository Receipts (DRs
CS ANOOP JAIN
26 Acquisition of Warrants and Partly Paid Shares
-
 LESSON 3: OVERSEAS DIRECT INVESTMENT

Overseas Direct
Investment (ODI)
means:
“Overseas
Investment”
means financial commitment and
Overseas Portfolio Investment
(i) Acquisition of any by a person
(iii) Investment with
unlisted equity resident in India.
ii) Investment in control where
capital or
10% or more of the investment is less
subscription as a
paid-up equity than 10% of the
part of the
capital of a listed paid-up equity
Memorandum of
foreign entity, or capital of a listed
Association of a
foreign entity
foreign entity, or

A person resident in India making Overseas Investment may make payment –

(iv) by using the proceeds of American

Depository Receipts or Global
Depositary Receipts or stock swap of
(ii) from funds held in an account
such receipts or external commercial
(i) by remittance made through maintained in accordance with the
(iii) by swap of securities; borrowings raised in accordance with
banking channels; provisions of the Foreign Exchange
the provisions of the Act and the rules
Management Act;
and regulations made thereunder for
making ODI or financial commitment by
CS ANOOP JAIN way of debt by an Indian entity.
27
 Procedure for Making Overseas Investment

The following documents shall

be submitted along with the
In respect of any case under the
proposal: Background and
approval route, the applicant
The person intending to The designated AD bank brief details of the transaction.
shall approach their designated
make any financial before forwarding the Reason(s) for seeking
AD bank who shall forward the
commitment shall fill proposal shall submit the approval mentioning the extant
proposal to the Reserve Bank
up the Form FC duly relevant sections of the FEMA provisions.
after due scrutiny and with its
supported by the Form FC in the online OID Observations of the designated
specific recommendations. The
requisite documents application and the AD bank with respect to the
application for overseas
and approach the transaction number following: l Prima facie viability
investment under the approval
designated Authorised generated by the of the foreign entity; l Benefits
route would continue to be
Dealer (AD) bank for application shall be which may accrue to India
submitted to the Reserve Bank
making the mentioned in their through such investment; l
in physical/electronic form
investment/remittance. reference. Financial position and business
through email as hitherto, in
track record of the Indian
addition to the online reporting.
entity and the foreign entity; l
Any other material observation

Diagrammatic
representation of
the organisational Recommendations of the
structure indicating designated AD bank with
The proposal shall be Other relevant all the subsidiaries confirmation that the
Valuation certificate
submitted to the documents properly of the Indian entity applicant’s board resolution
for the foreign entity
Reserve Bank of numbered, indexed horizontally and or resolution from an
(if applicable).
India. and flagged. vertically with their equivalent body, as
stake (direct and applicable, for the proposed
indirect) and status transaction(s) is in place.
(whether operating
company or SPV).

CS ANOOP JAIN
28
 An Indian entity may lend or invest in
any debt instruments issued by a
foreign entity or extend non-fund • (i) the Indian entity is eligible to make ODI;
based commitment to or on behalf of • (ii) the Indian entity has made ODI in the foreign entity;
a foreign entity, including overseas • (iii) the Indian entity has acquired control in the foreign entity on or before the date of
SDSs of such Indian entity, subject to making such financial commitment.
the following conditions:

Indian Entity
Overseas Portfolio Investment (OPI)

A Company defined under the Companies Act, means investment, other than ODI, in foreign securities, but not in any unlisted debt
2013. instruments or any security issued by a person resident in India who is not in an IFSC:
Provided that OPI by a person resident in India in the equity capital of a listed entity,
A Body corporate incorporated by any law for the
even after its delisting shall continue to be treated as OPI until any further investment
time being in force.
is made in the entity.

A Limited Liability Partnership formed under the

Limited Liability Partnership Act, 2008.

Debt instruments are :

A Partnership firm registered under the Indian
Partnership Act, 1932. • (i) Government bonds;
• (ii) corporate bonds;
• (iii) all tranches of
securitisation structure which
are not equity tranche;
• (iv) borrowings by firms
through loans; and
• (v) depository receipts whose
underlying securities are debt
securities.

CS ANOOP JAIN
29
 Approval from the Central Government
Approval from the Reserve Bank

• The applications for overseas investment/financial commitment in

Pakistan/other jurisdiction as may be advised by the Central Government from Financial commitment by an Indian entity, exceeding USD 1 (one)
time to time or in strategic sectors/specific geographies shall be forwarded by billion (or its equivalent) in a financial year shall require prior
the AD banks from their constituents to the Reserve Bank as per the laid down approval of the Reserve Bank even when the total financial
procedure for onward submission to the Central Government. commitment of the Indian entity is within the eligible limit under
• It may be noted that strategic sector shall include energy and natural resources the automatic route.
sectors such as Oil, Gas, Coal, Mineral Ores, submarine cable system and start-
ups and any other sector or sub-sector as deemed fit by the Central Government.
Opening of Foreign Currency Account abroad by
The restriction of limited liability structure of foreign entity shall not be
mandatory for entities with core activity in any strategic sector. an Indian entity
• Accordingly, Overseas Direct Investment (ODI) can be made in such sectors in
unincorporated entities as well. An Indian entity is also permitted to participate An Indian entity may open, hold and maintain Foreign Currency
in a consortium with other international operators to construct and maintain Account (FCA) abroad for the purpose of making ODI in accordance
submarine cable systems on co-ownership basis. with the provisions contained in Foreign Exchange Management
• AD banks may allow remittances for ODI in strategic sector after ensuring that (Foreign Currency Accounts by a resident in India) Regulations,
Indian entity has obtained necessary permission from the competent authority, 2015.
wherever applicable.

Obligations of the Person Resident in India

5 Any 6 The
1 A person resident in India 3 Form FC shall
2 The evidence of remittance allotment of
acquiring equity capital in a be submitted 4 The AD bank
investment shall be retained towards a UIN does not 7 The issue of
foreign entity, which is along with after due
by the designated AD bank, foreign entity constitute an UIN only
reckoned as ODI, shall submit requisite verification
who shall monitor the shall be approval from signifies taking
the evidence of investment to documents to shall report the
receipt of required facilitated by the Reserve on record of
the AD bank within six months, AD bank for details in the
documents and satisfy the AD bank Bank for the the investment
failing which the funds obtaining UIN OID application
themselves about the bona only after investment for maintaining
remitted overseas shall be on or before for allotment
fides of the documents so obtaining the made/to be the database.
repatriated within the said making initial of UIN.
received. necessary UIN made in the
period of six months. ODI.
for such entity. foreign entity.
CS ANOOP JAIN
30
 Manner of making Overseas Direct Investment by Indian entity
Manner of making ODI
An Indian entity may make ODI by way of investment in equity capital for the purpose of undertaking bonafide
business activity in the manner and subject to the limits and prescribed conditions.
The ODI may be made or held by way of,–

(iv) capitalisation,
within the time
period, if any,
specified for
realisation under the
Act, of any amount
due towards the (vi) merger,
Indian entity from demerger,
(i) subscription as
amalgamation or any
part of (iii) acquisition of the foreign entity,
scheme of
memorandum of (ii) acquisition equity capital by way the remittance of
which is permitted (v) the swap of arrangement as per
association or through bidding or of rights issue or
securities the applicable laws
purchase of equity tender procedure; allotment of bonus under the Act or
does not require in India or laws of
capital, listed or shares;
prior permission of the host country or
unlisted;
the Central the host jurisdiction,
Government or the as the case may be.
Reserve Bank under
the Act or any rules
or regulations made
or directions issued
thereunder;

CS ANOOP JAIN
31
 Unless otherwise provided in the FEMA or these ODI Rules, no person
resident in India shall make ODI in a foreign entity engaged in:-

(c) dealing with

financial
products linked
(a) real estate (b) gambling in to the Indian
activity; any form; and rupee without
specific approval
of the Reserve
Bank.

Restriction on Acquisition or Transfer of Immovable Property Outside India

1. A person resident in India shall not acquire or transfer any immovable property situated outside India without general or special permission of
the Reserve Bank. However, following property excluded–
a) held by a person resident in India who is a national of a foreign State;
b) acquired by a person resident in India on or before the 8th day of July, 1947 and continued to be held by such person with the permission
of the Reserve Bank;
c) acquired by a person resident in India on a lease not exceeding five years.
2. A person resident in India may acquire immovable property outside India by way of inheritance or gift or purchase from a person resident in
India who has acquired such property as per the foreign exchange provisions in force at the time of such acquisition. Further, a person resident
in India may acquire immovable property outside India from a person resident outside India–
a) by way of inheritance;
b) by way of purchase out of foreign exchange held in RFC account;

CS ANOOP JAIN
32
 c) by way of purchase out of the remittances sent under the Liberalised Remittance Scheme instituted by the Reserve Bank. Provided that
such remittances under the Liberalised Remittance Scheme may be consolidated in respect of relatives if such relatives, being persons
resident in India, comply with the terms and conditions of the Scheme;
d) jointly with a relative who is a person resident outside India;
e) out of the income or sale proceeds of the assets, other than ODI, acquired overseas under the provisions of the Act.
3. An Indian entity having an overseas office may acquire immovable property outside India for the business and residential purposes of its staff,
as per the directions issued by the Reserve Bank from time to time.
4. A person resident in India who has acquired any immovable property outside India in accordance with the foreign exchange provisions in force
at the time of such acquisition may–
a transfer such property by way of gift to a person resident in India who is eligible to acquire such property under these rules or by way
of sale;
v create a charge on such property in accordance with the Act or the rules or regulations made thereunder or directions issued by the
Reserve Bank from time to time.
5. The holding of any investment in immovable property or transfer thereof in any manner shall not be permitted if the initial investment in
immovable property was not permitted under the Foreign Exchange Management Act.

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33
 LESSON 4: EXTERNAL COMMERCIAL BORROWINGS (ECB)
Recognised Lenders

The lender should be resident of Financial Action Task Force (FATF) or International
Organisation of Securities Commission’s IOSCO compliant country, including on
External ECB are commercial loans transfer of ECB. However,
Commercial raised by eligible resident
entities from recognised non- (a) Multilateral and Regional Financial Institutions where India is a member country
Borrowings (ECB) will also be considered as recognised lenders;
resident entities and should
conform to parameters such (b) Individuals as lenders can only be permitted if they are foreign equity holders or
as minimum maturity, for subscription to bonds/ debentures listed abroad; and
permitted and nonpermitted
(c) Foreign branches / subsidiaries of Indian banks are permitted as recognised
end- uses, maximum all-in-
lenders only for Foreign Currency ECB (except FCCBs and FCEBs). Foreign branches /
cost ceiling, etc.
subsidiaries of Indian banks, subject to applicable prudential norms, can participate
as arrangers/underwriters/market-makers/traders for Rupee denominated Bonds
Minimum Average Maturity Period (MAMP) issued overseas. However, underwriting by foreign branches/subsidiaries of Indian
banks for issuances by Indian banks will not be allowed.

1 year 5 years 10 years 7 years 10 years

• A) ECB raised by • B) ECB raised from • C) ECB raised for (i) • D) ECB raised for (i) • E) ECB raised for (i)
manufacturing foreign equity holder Working capital repayment of Rupee repayment of Rupee
companies up to USD for working capital purposes or general loans availed loans availed
50 million or its purposes, general corporate purposes. domestically for domestically for
equivalent per corporate purposes or • (ii) on-lending by capital expenditure. purposes other than
financial year. for repayment of NBFCs for working (ii) on-lending by capital expenditure.
Rupee loans. It capital purposes or NBFCs for the same (ii) on-lending by
general corporate purpose. NBFCs for the same
purposes. purpose.

It may be noted that for the categories mentioned at (B) to (E) – (i) ECB cannot be raised from foreign branches / subsidiaries of Indian banks.
(ii) the prescribed MAMP will have to be strictly complied with under all circumstances.
CS ANOOP JAIN
34
 framework for raising loans through ECB
comprises the following two options:

Foreign Currency Indian Rupee

denominated ECB denominated ECB

Forms of ECB: Eligible

Currency of
Borrowing: Loans including bank loans; floating/ Borrowers:
All entities Currency of Forms of ECB:
fixed rate notes/ bonds/ debentures Loans including bank Eligible
Any freely eligible to Borrowing:
(other than fully and compulsorily loans; floating/ fixed rate Borrowers:
convertible receive
convertible instruments); Trade credits Indian notes/bonds/ debentures/ (a) All entities
Foreign Foreign
beyond 3 years; Foreign Currency Rupee (INR) preference shares (other eligible to raise
Currency Direct
Convertible Bonds; Foreign Currency than fully and Foreign Currency
Exchangeable Bonds and Financial Investment
compulsorily convertible ECB; and (b)
Lease. It may be noted that Foreign (FDI).
instruments); Trade credits Registered entities
Currency Convertible Bonds (FCCBs) Further, the
beyond 3 years; and engaged in micro-
refers to foreign currency denominated following
Financial Lease. Also, plain finance activities,
instruments which are issued in entities are
vanilla Rupee viz., registered
accordance with the Issue of Foreign also eligible
denominated bonds issued Not for Profit
Currency Convertible Bonds and to raise ECB:
overseas, which can be companies,
Ordinary Shares (Through Depositary i. Port
either placed privately or registered
Receipt Mechanism) Scheme, 1993, as Trusts; ii.
listed on exchanges as per societies/trusts/
amended from time to time. Issuance of Units in SEZ;
host country regulations. cooperatives and
FCCBs shall also conform to other iii. SIDBI; Non- Government
applicable regulations. Further, FCCBs and iv. EXIM Organisations.
should be without any warrants Bank of
attached. India.

CS ANOOP JAIN
35
 End-uses (Negative list)
Exchange rate
Real estate activities.
Change of currency of Foreign
Investment in capital market. Currency ECB into Indian Rupee ECB
can be at the exchange rate prevailing
Equity investment on the date of the agreement for such
change between the parties
Working capital purposes, except ECB raised from foreign equity holder for working capital concerned or at an exchange rate,
purposes, general corporate purposes or for repayment of Rupee loans and except ECB raised for which is less than the rate prevailing
(i) working capital purposes or general corporate purposes (ii) on-lending by NBFCs for working on the date of the agreement, if
capital purposes or general corporate purposes. consented to by the ECB lender.
General corporate purposes, except in case of ECB raised from foreign equity holder for working For conversion to Rupee, the
capital purposes, general corporate purposes or for repayment of Rupee loans and except ECB exchange rate shall be the rate
raised for (i) working capital purposes or general corporate purposes (ii) on-lending by NBFCs for prevailing on the date of settlement.
working capital purposes or general corporate purposes.
Repayment of Rupee loans, except in case of ECB raised for (i) repayment of Rupee loans availed
domestically for capital expenditure (ii) on-lending by NBFCs for the same purpose and except ECB Limit and Leverage
raised for (i) repayment of Rupee loans availed domestically for purposes other than capital
expenditure (ii) on-lending by NBFCs for the same purpose. All eligible borrowers can raise ECB
up to USD 750 million or equivalent
On-lending to entities for the above activities, except in case of ECB raised by NBFCs for (i) per financial year under the
working capital purposes or general corporate purposes (ii) on-lending by NBFCs for working
automatic route. Further, in case of
capital purposes or general corporate purposes and (i) repayment of Rupee loans availed
domestically for capital expenditure (ii) on- lending by NBFCs for the same purpose and except Foreign Currency denominated ECB
ECB raised for (i) repayment of Rupee loans availed domestically for purposes other than capital raised from direct foreign equity
expenditure (ii) on-lending by NBFCs for the same purpose. holder, ECB liability- equity ratio for
ECB raised under the automatic route
Issuance of Guarantee, etc. by Indian cannot exceed 7:1.
banks and Financial Institutions However, this ratio will not be
Issuance of any type of guarantee by Indian banks, All India Financial Institutions and applicable if the outstanding amount
NBFCs relating to ECB is not permitted. of all ECB, including the proposed
one, is up to USD 5 million or its
Further, financial intermediaries (viz., Indian banks, All India Financial Institutions, or equivalent. Further, the borrowing
Non-Banking Financial Companies) shall not invest in Foreign Currency Convertible entities will also be governed by the
Bonds/ Foreign Currency Exchangeable Bonds in any manner whatsoever. guidelines on debt equity ratio,
CS ANOOP JAIN issued, if any, by the sectoral or
36
prudential regulator concerned.
 Procedure of raising ECB

For approval route cases, the borrowers

may approach the RBI with an application
in prescribed format (Form ECB) for ECB proposals received in the Reserve
All ECB can be raised under the automatic examination through their AD Category I Bank above certain threshold limit
route if they conform to the parameters bank. (refixed from time to time) would be
prescribed under this framework. Such cases shall be considered keeping in placed before the Empowered Committee
view the overall guidelines, set up by the Reserve Bank.
macroeconomic situation and merits of
the specific proposals.

ECB facility for Oil Marketing

Companies
Public Sector Oil Marketing Companies (OMCs)
The Empowered Committee will have can raise ECB for working capital purposes with
external as well as internal members and Entities desirous to raise ECB under the minimum average maturity period of 3 years
the Reserve Bank will take a final decision automatic route may approach an AD
from all recognised lenders under the
in the cases taking into account Category I bank with their proposal along
recommendation of the Empowered with duly filled in Form ECB. automatic route without mandatory hedging
Committee. and individual limit requirements. The overall
ceiling for such ECB shall be USD 10 billion or
equivalent.

Conversion of ECB into Equity:

Conversion of ECB, including those which are matured but unpaid, into equity is permitted subject to the following conditions:

For full conversion, the

Foreign Equity Holding Pricing of shares is as per For part conversion, it is to entire portion is to be
The activity is under
after such conversion is fair value applicable on the be reported in Monthly reported in Form FC-GPR,
Automatic Route
within sectoral cap and date of conversion ECB-2 Return ECB 2 Return should be
done

CS ANOOP JAIN
37
 Reporting Requirements

• Any draw-down in respect of an ECB should happen only after obtaining the LRN from the Reserve Bank. To obtain
the LRN, borrowers are required to submit duly certified Form ECB, which also contains terms and conditions of the
Loan ECB, in duplicate to the designated AD Category I bank. In turn, the AD Category I bank will forward one copy to the
Registration Director, Reserve Bank of India, Department of Statistics and Information Management, External Commercial
Number Borrowings Division, Bandra-Kurla Complex, Mumbai – 400 051. Copies of loan agreement for raising ECB are not
(LRN): required to be submitted to the Reserve Bank.

• Changes in ECB parameters in consonance with the ECB norms, including reduced repayment by mutual agreement between the
Changes in lender and borrower, should be reported to the Department of Statistics and Information Management through revised Form ECB
terms and at the earliest, in any case not later than 7 days from the changes effected. While submitting revised Form ECB the changes should
conditions be specifically mentioned in the communication.
of ECB:

Monthly • The borrowers are required to report actual ECB transactions through Form ECB 2 Return through the AD Category I bank on
Reporting of monthly basis so as to reach Department of Statistics and Information Management within seven working days from the close of
actual month to which it relates. Changes, if any, in ECB parameters should also be incorporated in Form ECB 2 Return.
transactions
:

Late • Any borrower, who is otherwise in compliance of ECB guidelines, can regularise the delay in reporting of drawdown of ECB
Submission proceeds before obtaining LRN or delay in submission of Form ECB 2 returns, by payment of prescribed late submission fees.
Fee (LSF) for
delay in
reporting:
• The following SOP has to be followed by designated AD Category-I banks in case of untraceable entities who are found to be in
contravention of reporting provisions for ECB by failing to submit prescribed return(s) under the ECB framework, either physically
Standard or electronically, for past eight quarters or more. Any borrower who has raised ECB will be treated as ‘untraceable entity’, if
Operating entity/auditor(s)/director(s)/ promoter(s) of entity are not reachable/responsive/reply in negative over email/letters/phone for a
Procedure period of not less than two quarters with documented communication/ reminders numbering 6 or more and it fulfills both of the
(SOP) for following conditions: l Entity not found to be operative at the registered office address as per records available with the AD Bank
Untraceable or not found to be operative during the visit by the officials of the AD Bank or any other agencies authorised by the AD bank for
Entities: the purpose; l Entities have not submitted Statutory Auditor’s Certificate for last two years or more;

CS ANOOP JAIN
38
 ECB facility for Startups

Eligibility: • An entity recognised as a Startup by the Central Government as on date of raising ECB.

Maturity: • Minimum average maturity period will be 3 years.

• Lender / investor shall be a resident of a FATF compliant country. However, foreign branches/subsidiaries of
Recognised lender: Indian banks and overseas entity in which Indian entity has made overseas direct investment as per the
extant Overseas Direct Investment Policy will not be considered as recognised lenders under this framework.

Forms: • The borrowing can be in form of loans or non-convertible, optionally convertible or partially convertible
preference shares.

Currency: • The borrowing should be denominated in any freely convertible currency or in Indian Rupees (INR) or a
combination thereof. In case of borrowing in INR, the non-resident lender, should mobilise INR through
swaps/outright sale undertaken through an AD Category-I bank in India.
• The borrowing per Startup will be limited to USD 3 million or equivalent per financial year either in INR or
Amount: any convertible foreign currency or a combination of both.

All-in-cost: • Shall be mutually agreed between the borrower and the lender.

End uses: • For any expenditure in connection with the business of the borrower.

• Conversion into equity is freely permitted subject to Regulations applicable for foreign investment in
Conversion into equity Startups.

• The choice of security to be provided to the lender is left to the borrowing entity. Security can be in the
nature of movable, immovable, intangible assets (including patents, intellectual property rights), financial
Security: securities, etc. and shall comply with foreign direct investment / foreign portfolio investment / or any other
norms applicable for foreign lenders / entities holding such securities. Further, issuance of corporate or
personal guarantee is allowed. Guarantee issued by a non-resident(s) is allowed only if such parties qualify as
lender under ECB for Startups. However, issuance of guarantee, standby letter of credit, letter of undertaking
39 or letter of comfort by IndianCSbanks,
ANOOP allJAIN
India Financial Institutions and NBFCs is not permitted.
 LESSON 5: FOREIGN TRADE POLICY & PROCEDURE
Duty Free Entitlements to Select Sectors
Transparency: focus on improved access to accurate and complete With a view to expand employment opportunities, certain
informaton.
special focus initiatives for Marine Products and Sports
Foreign Trade Policy & Procedure

Goods & Toys sectors are required. These sectors are

being provided the following duty free entitlements (only
Technology: development and use of digital and detecon basic customs duty is exempted) as per the relevant
technologies to ease out trade bottlenecks and improve efficiency.
Customs Notifications:

Simplificaon of Procedures and Risk based Assessments: simplified, Marine Sector Sports Goods and Toys
uniform and harmonised procedures with increased adopon of a risk
based management approach. • Duty free import of • Duty free import of
specified specialized specified inputs not
Infrastructure Augmentaton: enhancement of infrastructure, inputs/ chemicals and exceeding 3% of FOB
partcularly the road and rail infrastructure leading to ports and the flavoring oils not value of sports goods
infrastructure within ports, airports, ICDs, Land Customs Staons is a exceeding 1% of FOB exports during the
major enabler for growth in trade that cuts across all stakeholders. value of seafood preceding financial
exports during the year.
preceding financial
year.
Duration of FTP

Issue of e-IEC (Electronic-Importer Exporter Code)

The Foreign Trade Policy (FTP) 2023
incorporating provisions relating to export and
import of goods and services, shall come into
force with effect from 1st April, 2023 and shall DGFT issues Importer Exporter
continue to be in operation unless otherwise Code in electronic form (e-IEC). For
specified or amended. All exports and imports issuance of e-IEC, application can be
made up to 31.03.2023 shall, accordingly, CS
be ANOOP JAIN made on DGFT website
40 (https://dgft.gov.in).
governed by the relevant FTP, unless otherwise
specified.
 Status Holder Certification

b. All exporters of goods, services and technology

having an import-export code (IEC) number, on
the date of application, shall be eligible for
a. The objective behind certifying certain recognition as a status holder based on export c. For deemed d. For granting
exporter firms as “Status Holder” is to performance. An applicant may be categorized as export, FOR value of status, an export
recognize such exporter firms as status holder on achieving the threshold export exports in Indian performance would
business leaders who have excelled in performance in the current and preceding three Rupees shall be be necessary in all
international trade and have successfully financial years as indicated in para 1.26 of converted in USD at the three preceding
contributed to country’s foreign trade. Foreign Trade Policy. However, for Gems & the exchange rate financial years (and
Status Holders are expected to not only Jewelry Sector above export performance notified by CBIC, as in all the two
contribute towards India’s exports but threshold during the current and preceding two applicable on 1st preceding financial
also provide guidance and handholding financial years shall be required. The export April of each years for Gems &
to new entrepreneurs. performance shall be counted on the basis of Financial Year. Jewelry Sector).
FOB of export earnings in freely convertible
foreign currencies or in Indian Rupees as per para
2.53of the FTP.

A Status Holder shall be eligible for privileges as under:

Status Holder Categories
a. Authorisation and Customs Clearances for both imports and exports may be
Status Category Export Performance Threshold granted on self-declaration basis;
In USD Million
b. Input-Output norms may be fixed on priority within 60 days by the Norms
One Star Export House 3 Committee; Special scheme in respect of Input Output Norms to be notified
by DGFT from time to time, for specified status holder
Two Star Export House 15
c. Exemption from furnishing of Bank Guarantee for Schemes under FTP,
Three Star Export House 50 unless specified otherwise anywhere in FTP or HBP;
Four Star Export House 200 d. Exemption from compulsory negotiation of documents through banks.
Five Star Export House 800 Remittance / receipts, however, would be received through banking
channels;
e. Two star and above Export houses shall be permitted to establish Export
Warehouses as per Department of Revenue guidelines.
CS ANOOP JAIN
41 f. The status holders would be entitled to preferential treatment and priority in
handling of their consignments by the concerned agencies.
 Grant of Double Weightage

Grant of Double a. Double Weightage shall be available for grant of One Star Export House Status category only. Such benefit of double
Weightage weightage shall not be admissible for grant of status recognition of other categories namely Two Star Export House, Three
Star Export House, Four Star export House and Five Star Export House. The exports by IEC holders under the following
categories shall be granted double weightage for calculation of export performance for grant of status: i. Micro and Small
Enterprises as defined in Micro, Small & Medium Enterprises Development (MSMED) Act, 2006. ii. Manufacturing units
having ISO/BIS Certification. iii. Units located in North Eastern States including Sikkim, and Union Territories of Jammu ,
Kashmir and Ladakh. iv. Export of fruits and vegetables falling under Chapters 7 and 8 of ITC HS.

b. A merchandise shipment/ service rendered can get double weightage only once in any one of above categories.

Importer-Exporter Code (IEC)

An IEC is a 10-character alpha-numeric number allotted to an entity (firm/company/LLP etc.) and is mandatory for undertaking any
export/import activities. With a view to maintain the unique identity of an entity, consequent upon introduction / implementation of GST, IEC
shall be same as Permanent Account Number(PAN) and shall be separately issued by DGFT based on an online application.

(a) No export or import of goods shall be made by any person without obtaining an IEC unless specifically exempted. For export of services or
technology, IEC shall be necessary on the date of rendering services for availing benefits under the Foreign Trade Policy.

(b) Exempt categories and corresponding permanent IECs are given in Para 2.07 of Handbook of Procedures.

(c) Application process for IEC and updation in IEC is completely online and IEC can be generated by the applicant as per the procedure detailed in
the Handbook of Procedures.

(d) An IEC holder has to ensure that details in its IEC is updated electronically every year, during the April- June period. In cases where there are no
changes in IEC details same also needs to be confirmed online.

(e) An IEC shall be de-activated, if it is not updated within the prescribed period. An IEC so de-activated may be activated, on its successful
updation. This would however be without prejudice to any other action taken for violation of any other provisions of the FTP.

(f) An IEC may also be flagged for scrutiny. IEC holder(s) are required to ensure that any risks flagged by the system are timely addressed; failing
which the IEC shall be de-activated. CS ANOOP JAIN
42
 Mandatory documents for export/ import of goods from/into India

• i. Bill of Lading/ Airway Bill/ Lorry Receipt/ Railway Receipt/Postal Receipt

a. Mandatory documents required • ii. Commercial Invoice cum Packing List*
for export of goods from India: • iii. Shipping Bill/Bill of Export/ Postal Bill of Export

• i. Bill of Lading/Airway Bill/Lorry Receipt/ Railway Receipt/Postal Receipt in form CN-22 or CN 23 as

b. Mandatory documents required the case may be.
for import of goods into India • ii. Commercial Invoice cum Packing List**
• iii. Bill of Entry

• [Note: *(i) As per CBIC Circulars issued under the Customs Act, 1962 (ii) **Separate
Commercial Invoice
• and Packing List would also be accepted.]
• c. For export or import of specific goods or category of goods, which are subject to any
Others restrictions/ policy conditions or require NOC or product specific compliances under any
statute, the regulatory authority concerned may notify additional documents for purposes of
export or import. d. In specific cases of export or import, the regulatory authority concerned
may electronically or in writing seek additional documents or information, as deemed
necessary to ensure legal compliance.

Principles of Restrictions

c) on imports of fisheries
b) on imports and exports
a) on export of product, imported in any d) on import to
DGFT may, through a necessary for the application
foodstuffs or other form, for enforcement of safeguard country’s
Notification, impose of standards or regulations for
essential products for governmental measures to external financial
‘Prohibition’ or the classification, grading or
preventing or relieving restrict production of the position and to ensure a
‘Restriction’: marketing of commodities in
critical shortages; domestic product or for level of reserves;
international trade;
certain other purposes;

CS ANOOP JAIN
43
 f) for preventing sudden
increases in imports from
e) on imports to promote g) for protection of public h) for protection of human, i) relating to the
causing serious injury to
establishment of a particular morals or to maintain public animal or plant life or importations or exportations
domestic producers or to
industry; order; health; of gold or silver;
relieve producers who have
suffered such injury;

j) necessary to secure
compliance with laws and
regulations including those l) for the protection of
m) for the conservation of n) for ensuring essential
relating to the protection of k) relating to the products of national treasures of artistic,
exhaustible natural quantities for the domestic
patents, trademarks and prison labour; historic or archaeological
resources; processing industry;
copyrights, and the value;
prevention of deceptive
practices;

p) for the protection of country’s

essential security interests i.
q) in pursuance of country’s
relating to fissionable materials or
o) essential to the obligations under the United
the materials from which they are
acquisition or distribution of Nations Charter for the
derived; ii. relating to the traffic in
products in general or local maintenance of
arms, ammunition and
short supply; international peace and
implements of war; iii. taken in
security.
time of war or other emergency in
international relations; or
Export/Import of Restricted Goods/ Services

Any goods /service, the export or import of which is

‘Restricted’ may be exported or imported only in
accordance with an Authorisation / Permission or in
accordance with the Procedures prescribed in a
Notification / Public Notice issued in this regard.

CS ANOOP JAIN
44
Terms and Conditions of an Authorisation

Every Authorisation shall, inter alia, include either all or some of the
following terms and conditions (as applicable in terms of the para under
which the Authorisation has been issued), in addition to such other
conditions as may be specified:

Description, quantity and value of goods;

Actual User ;

Export Obligation;

Minimum Value addition to be achieved;

Minimum export/import price; Bank guarantee/ Legal undertaking /

Bond with Customs Authority/RA (as in para 2.35 of FTP).

Validity period of import/export as specified in Handbook of Procedures

CS ANOOP JAIN
45
 LESSON 6: LAW RELATING TO SPECIAL ECONOMIC ZONES

What is
What is
Special Infrastructure facilities
Who can Infrastructur
Economic Special Economic Zone (SEZ) is means industrial,
set up e Facilities?
Zone? a specifically delineated duty Any private/public/joint commercial or social
SEZs?
free enclave and shall be sector or State infrastructure or other
deemed to be foreign territory Government or its facilities necessary
for the purposes of trade agencies can set up for the development of a
operations and duties and Special Economic Zone Special Economic Zone or
tariffs. (SEZ). such other facilities which
may be prescribed.

Guidelines for notifying Special Economic Zone

Section 5 stipulates broader guidelines to be considered by the Central Government,

Establishment, Approval and Authorization to Operate Special while notifying any area as a Special Economic Zone or an area to be included in the
Economic Zone SEZ and in discharging its functions under the Act. These include:
(a) generation of additional economic activity;

(b) promotion of exports of goods and services;

According to sec 4 of SEZ Act, after the grant of approval, the

(c) promotion of investment from domestic and foreign sources;
Developer has to submit the exact particulars of the identified area
to the central Govt. which after satisfying that the specified
requirements are fulfilled, notify the specifically identified area in (d) creation of employment opportunities;
the state as SEZ.
(e) development of infrastructure facilities; and
CS ANOOP JAIN
46
(f) maintenance of sovereignty and integrity of India, the security of the State and
friendly relations with foreign States..
 Suspension of letter of approval and transfer of SEZ in
The Processing and Non-Processing areas certain cases

Section 6 empowers the Central Government or any specified authority According to Section 10 the Board has a power to suspend the letter of
to demarcate the areas falling within the Special Economic Zones as – approval granted to the Developer In the following Circumstances the
Board may order the suspension

a) The processing area for setting up Units for activities, a) The developer is unable to discharge the functions or perform the
being the manufacture of goods, or rendering of services. duties imposed on him;

b) The area exclusively for trading or warehousing b) The developer has persistently defaulted in complying with the
purposes; or directions of the board;

c) The financial position of the developer is such that he is unable to

c) The non- processing areas for activities other than those discharge the duties and obligation imposed on him by the letter of
specified under (a) or (b) above. approval.

• (i) taking goods, or providing services, out of India, from a Special Economic Zone, by land, sea
or air or by any other mode, whether physical or otherwise; or
• (ii) supplying goods, or providing services, from the Domestic Tariff Area to a Unit or Developer;
“Export” means–
or
• (iii) supplying goods, or providing services, from one Unit to another Unit or Developer, in the
same or different Special Economic Zone.

• (i) bringing goods or receiving services, in a Special Economic Zone, by a Unit or Developer from
a place outside India by land, sea or air or by any other mode, whether physical or otherwise;
“Import” means– or
• (ii) receiving goods, or services by a Unit or Developer from another Unit or Developer of the
same Special Economic Zone or a different Special Economic Zone.

• (i) are covered under the General Agreement on Trade in Services annexed as IB to the
Agreement establishing the World Trade Organisation concluded at Marrakesh on the 15th day
“Services” means such tradable services of April, 1994;
which.–
• (ii) may be prescribed by the JAIN
CS ANOOP Central Government for the purposes of this Act; and (iii) earn
47 foreign exchange.
 The functions of the Development Commissioner include :

(a) guide the entrepreneurs for setting up of Units in the Special Constitution of To exercise the specified power and
Economic Zone; Approval functions, the C.G. may constitute by
Committee notification, a committee for every SEZ,
to be known as Approval Committee.
For existing SEZ, the approval
(b) ensure and take suitable steps for effective promotion of exports Committee has to be constituted within
from the Special Economic Zone; 6 months from the date of
commencement of the Act and in case
(c) ensure proper coordination with the Central Government or State of other SEZs established after the
Government Departments concerned or agencies with respect to, or for commencement of the Act the
above purposes; committee should be constituted within
6 months from the date of
establishment of such SEZ.
(d) monitor the performance of the Developer and the Units in SEZ;
(a) approve, the import or procurement of goods from the Domestic Tariff
Area, for carrying on the authorised operations by a Developer in the Special
(e) discharge such other functions as may be assigned to him by the Economic Zone;
Central Government under this Actor any other law for the time being in (b) approve providing of services by a service provider from outside India or
force; and from the Domestic Tariff Area for carrying on the authorised operations by the
Developer, in the Special Economic Zone;
(f) any other functions as may be delegated to him by the Board of (c) monitor the utilisation of goods or services or warehousing or trading in the
approval. Special Economic Zone; (d) approve, modify or reject proposals for setting up
Units for manufacturing or rendering of services or warehousing or trading in
SEZ in accordance with the provisions of Section 15(8) of the Act;
(e) allow on receipt of approval foreign collaborations and foreign direct
investments, including investments by a person outside India for setting up a
Powers and Functions of Approval Committee Unit;
(f) monitor and supervise compliance of conditions subject to which the letter
of approval or permission, if any, is granted to the Developer or entrepreneur;
and

(g) perform any other functions as may be entrusted to it by the Central

Government or the State Government concerned, as the case may be.

CS ANOOPIn
JAIN
case the developer is Central Government, the approval committee has been
48
empowered to exercise all powers of the approval committee, until the
constitution of Approval Committee.
 Cancellation of letter of approval granted to
Setting up of Unit entrepreneur (Section 16)

Any person, who intends to set up a Unit for carrying on the authorised operations The approval committee may cancel the letter of Approval of an
in SEZ, should submit a proposal to the concerned Development Commissioner. entrepreneur after giving reasonable opportunity of being
heard.

The development commissioner then forwards the proposal to Approval Committee

for its approval.
Approval committee can cancel the letter of approval at any
time, if it has any reason to believe that the entrepreneur has
The Approval Committee can, approve the proposal with or with out modification, contravened any of the term and conditions or its obligation
and subject to such term and conditions as it may deem fit, or reject the same. subject to which the letter of Approval was granted to the
entrepreneur.

Before modification or rejection of proposal, the Approval Committee should give

an opportunity of being heard to the concerned person.
Provided further that from the date of cancellation the Unit shall
not be entitled to any exemption, concession, benefit or
Person aggrieved by an order of Approval Committee may make an appeal to the deduction available to it as such.
Board of Approvals within the prescribed time and specified manner

Any person aggrieved from an order of Approval Committee can

make an appeal to the Board of Approval within the prescribed
What do you time.
mean by “Offshore Banking Unit”
Offshore means a branch of a bank
Banking Unit? located in a Special Economic What is
Zone and which has obtained International
the permission under clause Financial
An application for setting up and
(a) of sub-section (1) of Services “International Financial
Section 23 of the Banking operation of an Offshore Banking
Centre? Services Centre” means an
Regulation Act, Unit in SEZ can be made to
International Financial
Reserve Bank in the prescribed Services Centre which has
1949.
form and manner. been approved by the Central
Government under Section
18(1).
CS ANOOP JAIN
49
 Single Application form, return etc

C.G. may prescribe single application form for obtaining any licence,
permission or registration or approval by a Developer or an entrepreneur
under one or more Central Acts.

According to section 19(b), C.G. may authorize the board, the Development
Commissioner and the approval Committee to exercise its power on matters
relating to the development of SEZ or setting up or operation or units.

Section 19(c) allows the C.G. to prescribe single form for furnishing returns
or information by a developer or an entrepreneur under one or more Central
Acts.

CS ANOOP JAIN
50
 LESSON 7: LAW RELATING TO FOREIGN CONTRIBUTION REGULATION

What is foreign contribution?

The Foreign Contribution (Regulation) Act, 2010 was enacted to

“Foreign Contribution” means the donation, delivery or transfer made

by any foreign source, –
regulate the acceptance and utilisation of foreign
contribution or foreign hospitality by certain individuals or (i) of any article, not being an article given to a person as a gift for his
associations or companies and to prohibit acceptance; and personal use, if the market value, in India, of such article, on the date
of such gift, is not more than such sum as may be specified from time
to time, by the Central Government by the rules made by it in this
behalf;
utilisation of foreign contribution or foreign hospitality for
any activities detrimental to the national interest and for
matters connected therewith or incidental thereto. (ii) of any currency, whether Indian or foreign;

(iii) of any security as defined in clause (h) of section 2 of the Securities

What is a foreign company? Contracts (Regulation) Act, 1956 and includes any foreign security as
defined in clause (o) of section 2 of` the Foreign Exchange
Management Act, 1999.

“Foreign Company” means any company or association or body of individuals

incorporated outside India and includes—
(i) a foreign company within the meaning of section 591 of the Companies Act,
1956 ;
(ii) a company which is a subsidiary of a foreign company;
(iii) the registered office or principal place of business of a foreign company
referred to in sub-clause (i) or company referred to in sub-clause (ii);
CS ANOOP JAIN
(iv) a multi-national corporation.
51
 What is foreign source?

ii. any international

agency, not being the
United Nations or any of
iv. a corporation,
i. the Government its specialised agencies, v. a multi-national
not being a foreign
of any foreign the World Bank, corporation
“Foreign Source” iii. a foreign company,
country or territory International Monetary referred to in sub-
includes,— company; incorporated in a
and any agency of Fund or such other clause (iv) of clause
foreign country or
such Government; agency as the Central (g);
territory;
Government may, by
notification, specify in
this behalf;

vi. a company within the meaning of the Companies

Act, 1956 , and more than one-half of the nominal viii. a foreign trust
value of its share capital is held, either singly or in vii. a trade union in or a foreign
the aggregate, by one or more of the following, any foreign country foundation, by ix. a society, club or
namely:— a) the Government of a foreign country or or territory, whatever name other association of
x. a citizen of a
territory; b) the citizens of a foreign country or whether or not called, or such trust individuals formed
foreign country.
territory; c) corporations incorporated in a foreign registered in such or foundation or registered
country or territory; d) trusts, societies or other foreign country or mainly financed by outside India;
associations of individuals (whether incorporated or territory; a foreign country or
not), formed or registered in a foreign country or territory;
territory;

“Person” includes –
Who can receive Foreign Contribution?
(i) an individual;
• It must have a definite cultural, economic, educational, religious or social programme.
Any “Person” can • It must obtain the FCRA registration/prior permission from the Central Government
(ii) a Hindu undivided family;
receive foreign • It must not be prohibited under Section 3 of FCRA, 2010.
contribution subject
to the following
conditions:- (iii) an association;

52 CS ANOOP JAIN (iv) a company registered under CA

Act
 Who cannot receive Foreign Contribution?

Section 3(1) prohibits following person to accept foreign contribution:

(g) association or company

(c) public engaged in the production
(h)
(b) servant, Judge, or broadcast of audio news
(f) organisation correspondent
correspondent, Government or audio visual news or
of a political or columnist,
columnist, servant or current affairs programmes
nature as may cartoonist,
cartoonist, employee of (e) political through any electronic
(a) candidate (d) member of be specified editor, owner
editor, owner, any party or office- mode, or any other
for election; any Legislature; under section of the
printer or corporation or bearer thereof; electronic form as defined
5(1) by the association or
publisher of a any other body in section 2(1)(r) of the
Central company
registered controlled or Information Technology
Government; referred to in
newspaper; owned by the Act, 2000 or any other
clause (g).
Government; mode of mass
communication;

Persons to Whom Section 3 Shall Not Apply

According to Section 4 of the Act, nothing (a) by way of salary, wages or other
contained in section 3 shall apply to the remuneration due to him or to any group of (b) by way of payment, in the course of
acceptance, by any person specified in that persons working under him, from any foreign international trade or commerce, or in the
section, of any foreign contribution where source or by way of payment in the ordinary ordinary course of business transacted by him
such contribution is accepted by him, subject course of business transacted in India by such outside India; or
to the provisions of section 10, – foreign source; or

CS ANOOP JAIN
53
 (d) by way of a gift or presentation made
to him as a member of any Indian
(c) as an agent of a foreign source in delegation, provided that such gift or
relation to any transaction made by such present was accepted in accordance with
(e) from his relative; or
foreign source with the Central the rules made by the Central
Government or State Government; or Government with regard to the
acceptance or retention of such gift or
presentation; or

(f) by way of remittance received, in the

ordinary course of business through any
official channel, post office, or any (g) by way of any scholarship, stipend or
authorised person in foreign exchange any payment of like nature.
under the Foreign Exchange
Management Act, 1999; or

Procedure to notify an organization of a political nature “Political Party” means—

Section 5(1) provides that the CG may, having regard to the activities of the an association or body of individual citizens of India—
organisation or the ideology propagated by the organisation or the
programme of the organisation or the association of the organisations with
the activities of any political party, by an order published in the Official
Gazette, specify such organisation as an organisation of a political nature
not being a political party, referred to in section 3(1)(f). Further, the CG (a) to be registered with the Election Commission of India as a
may, frame the guidelines specifying the ground or grounds on which an political party under section 29A of the Representation of the
organisation shall be specified as an organisation of a political nature. People Act, 1951; or

(b) which has set up candidates for election to any Legislature,

but is not so registered or deemed to be registered under the
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54 Election Symbols (Reservation and Allotment) Order, 1968;
 Restriction on acceptance of foreign hospitality What is foreign hospitality?

Foreign Hospitality means any offer, not being a purely casual

Section 6 prohibits No member of a However, it shall But, where such one, made in cash or kind by a foreign source for providing a
acceptance of Legislature or not be necessary foreign hospitality
person with the costs of travel to any foreign country or territory
foreign hospitality office-bearer of a to obtain any such has been received,
political party or the person or with free board, lodging, transport or medical treatment.
by certain persons permission for an
except with the Judge or emergent medical receiving such
prior permission of Government aid needed on hospitality shall
CG. servant or account of sudden give, within one State the categories of persons requires prior approval
employee of any illness contracted month from the
corporation or any during a visit date of receipt of from Ministry of Home Affairs before accepting Foreign
other body owned outside India such hospitality an Hospitality?
or controlled by intimation to the
the Government CG as to the
shall, while visiting receipt of such The following categories of persons require prior approval
any country or hospitality, and from Ministry of Home Affairs before accepting Foreign
territory outside the source from Hospitality:-
India, accept, which, and the
except with the manner in which,
prior permission of such hospitality Members of a Legislature
CG, any foreign was received by
hospitality. him.

Office bearers of political parties

Prohibition to Transfer Foreign Contribution to Other Person

Judges

(a) is registered and

granted a shall not transfer
Section 7 of the Act b) receives any
certificate or has such foreign Government servants, Public Servants
provides that foreign
obtained prior contribution to any
person who:- contribution,
permission under other person.
the Act; and (
Employees of any corporation or any other body owned or
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55
 Restriction to Utilise Foreign Contribution for Administrative Purpose
There are two modes of
obtaining permission to accept
foreign contribution according
to FCRA, 2010:
(a) shall utilise such
contribution for the
purposes for which
the contribution
has been received:
Provided that any
foreign contribution i. Registration ii. Prior Permission
According to (b) shall not defray
or any income Provided that
Section 8 of the Act, as far as possible
arising out of it administrative
every person, who such sum, not
shall not be used expenses exceeding
is registered and exceeding twenty
for speculative twenty percent of Eligibility Criteria for Grant of
granted a certificate percent of such
business: Provided such contribution
or given prior contribution, Registration
further that the may be defrayed
permission under received in a
Central with prior approval
the Act and financial year, to
Government shall, of the Central
receives any foreign meet administrative
by rules, specify the Government. For grant of registration under FCRA,
contribution, – expenses:
activities or 2010, the association should:
business which
shall be construed i. be registered under an existing statute
as speculative like the Societies Registration Act, 1860 or
business for the
purpose of this the Indian Trusts Act, 1882 or section 25
section; of the Companies Act, 1956 (Now Section
8 of Companies Act, 2013) etc;

ii. be in existence for at least three years and has undertaken reasonable activity in its chosen field for the benefit of the society for which the
foreign contribution is proposed to be utilised. The applicant NGO/ association will be free to choose its items of expenditure (excluding the
administrative expenditure as defined in Rule 5 of FCRR, 2011) to become eligible for the minimum threshold of Rs. 15.00 lakh spent during the
last three years. If the association wants inclusion of its capital investment in assets like land, building, other permanent structures, vehicles,
equipments etc, then the Chief Functionary shall have to give an undertaking that these assets shall be utilized only for the FCRA activities and
they will not be diverted for any other purpose till FCRA registration of the NGO holds.
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56
 Eligibility Criteria for Grant of Prior Permission

An organization in formative stage is not eligible for certificate of registration. Such organization may apply for grant of prior permission under
FCRA, 2010. Prior permission is granted for receipt of a specific amount from specific donor/donors for carrying out specific activities/projects.
For this purpose, the association should meet following criteria:
i. be registered under an existing statute like the Societies Registration Act, 1860 or the Indian Trusts Act, 1882 or section 25 of the Companies
Act, 1956 (Now Section 8 of Companies Act, 2013) etc;
ii. submit a specific commitment letter from the donor indicating the amount of foreign contribution and the purpose for which it is proposed to
be given; and
iii. For Indian recipient organizations and foreign donor organizations having common members.

FCRA Prior Permission shall be granted to the Indian recipient organizations subject to its satisfying the following:
i. The Chief Functionary of the recipient Indian organization should not be a part of the donor organization.
ii. At least 75% of the office-bearers/ members of the Governing body of the Indian recipient organization should not be members/employees of
the foreign donor organization.
iii. In case of foreign donor organization being a single person/individual that person should not be the Chief Functionary or office bearer of the
recipient Indian organization.
iv. In case of a single foreign donor, at least 75% office bearers/members of the governing body of the recipient organization should not be the
family members and close relatives of the donor.

Suspension of certificate

Section 13 (1) provides that where the CG, for reasons to be recorded in writing, is satisfied that pending consideration of the question of cancelling
the, it is necessary so to do, it may, by order in writing, suspend the certificate for such period not exceeding 180 days may be specified in the order.
Further every person whose certificate has been suspended shall not receive any foreign contribution during the period of suspension of certificate.

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57
 Conditions for the Grant of Registration and Prior Permission

a) The ‘person’ making an application for registration or grant of prior permission.

i. is not fictitious or benami;

ii. has not been prosecuted or convicted for indulging in activities aimed at conversion through inducement or force, either directly
or indirectly, from one religious faith to another;

iii. has not been prosecuted or convicted for creating communal tension or disharmony in any specified district or any other part of
the country;

iv. has not been found guilty of diversion or mis-utilisation of its funds;

v. is not engaged or likely to engage in propagation of sedition or advocate violent methods to achieve its ends;

vi. is not likely to use the foreign contribution for personal gains or divert it for undesirable purposes;

vii. has not contravened any of the provisions of this Act;

viii. has not been prohibited from accepting foreign contribution;

ix. the person being an individual, such individual has neither been convicted under any law for the time being in force nor any
prosecution for any offence is pending against him;

x. the person being other than an individual, any of its directors or office bearers has neither been convicted under any law for the
CS ANOOP JAIN
58 time being in force nor any prosecution for any offence is pending against him.
 b) the acceptance of foreign contribution by the association/ person is not likely to affect prejudicially–

i. the sovereignty and integrity of India;

ii. the security, strategic, scientific or economic interest of the State;

iii. the public interest;

iv. freedom or fairness of election to any Legislature;

v. friendly relation with any foreign State;

vi. harmony between religious, racial, social, linguistic, regional groups, castes or communities.

c) the acceptance of foreign contribution

i. shall not lead to incitement of an offence;

ii. shall not endanger the life or physical safety of any person.

Cancellation of Certificate

(iv) if the holder of

(1) the holder of the
Section 14 provides the certificate has
certificate has made (i) the holder of the (ii) in the opinion of (iii) the holder of
that the Central not been engaged in
a statement in, or in certificate has the Central certificate has
Government may, if any reasonable
relation to, the violated any of the Government, it is violated any of the
it is satisfied after activity in its chosen
application for the terms and necessary in the provisions of this
making such inquiry field for the benefit
grant of registration conditions of the public interest to Act or rules or order
as it may deem fit, of the society for
or renewal thereof, certificate or cancel the made thereunder;
by an order, cancel two consecutive
which is incorrect or renewal thereof; or certificate; or or
the certificate if – years or has
false; or
CS ANOOP JAIN become defunct.
59
 (3) Any person whose certificate has been
(2) No order of cancellation of certificate under
cancelled under this section shall not be eligible for
this section shall be made unless the person
registration or grant of prior permission for a
concerned has been given a reasonable
period of three years from the date of cancellation
opportunity of being heard.
of such certificate.

Surrender of Certificate Management of

Foreign Renewal of
Section 14A states that on a request being contribution of Section 15 provides that certificate
person whose the foreign contribution Every person who has been
made in this behalf, the Central and assets created out of granted a certificate, shall
certificate has
Government may permit any person to been cancelled the foreign contribution in have such certificate renewed
surrender the certificate granted under this the custody of every within six months before the
Act, if, after making such inquiry as it deems person whose certificate expiry of the period of the
has been cancelled under certificate
fit, it is satisfied that such person has not
section 14 shall vest in
contravened any of the provisions of this such authority as may be
Act, and the management of foreign prescribed.
contribution and asset, if any, created out of
such contribution has been vested in the
authority as provided in section 15(1).

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60
 LESSON 8: PREVENTION OF MONEY LAUNDERING
Process of Money Laundering What is the
connection of
money The possible social and political costs of money laundering,
laundering if left unchecked or dealt with ineffectively, are serious.
Integration
with society at Organised crime can infiltrate financial institutions, acquire
i.e. making the large? control of large sectors of the economy through investment,
Layering money available or offer bribes to public officials and indeed governments.
i.e. disguising to the criminal The economic and political influence of criminal
Placement the trail to foil from what seem organisations can weaken the social fabric, collective ethical
i.e. moving the pursuit to be legitimate standards, and ultimately the democratic institutions of
funds from direct sources society. In countries transitioning to democratic systems,
association with this criminal influence can undermine the transition. Most
the crime fundamentally, money laundering is inextricably linked to
the underlying criminal activity that generated it.
Important Definitions Laundering enables criminal activity to continue.

• as to mean any property derived or obtained, directly or indirectly by any person as a result of criminal activity relating to a scheduled
offence or the value of any such property or where such property is taken or held outside the country, then the property equivalent
Proceeds of in value held within the country or abroad.
Crime

• means any property or assets of every description, whether, corporeal or incorporeal, movable or immovable, tangible or intangible
and includes, deeds and instruments evidencing title to, or interest in such property or assets wherever located.
Property

• means an individual who ultimately owns or controls a client of a reporting entity or the person on whose behalf a transaction is
Beneficial being conducted and includes a person who exercises ultimate effective control over a juridical person.
Owner
CS ANOOP JAIN
61
 Money
Laundering Section 3 of the Act states that whosoever directly or indirectly attempts to indulge or knowingly
assists or knowingly is a party or actually involved in any process or activity connected with the
proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming
it is an untainted property shall be guilty of offence of money laundering.
Section 4 provides that any person who commits the offence of money laundering shall be punishable
with rigorous imprisonment for a term which shall not be less than three years but which may extend
to seven yearsand also liable to fine. However, where the proceeds of crime involved in money
laundering relates to any offence specified under the Narcotic Drugs and Psychotropic Substances Act,
the punishment may extend to rigorous imprisonment for ten years.

Attachment of property involved in money laundering

Where the Director or any officer not below the rank of Deputy
Director authorized by him, has reason to believe on the basis of
material in his possession that any person is in possession of any
proceeds of money laundering, such person has been charged of
The Director or any other officer who provisionally
having committed a scheduled offence and such proceeds of crime
attaches any property shall, within a period of 30 days
are likely to be concealed, transferred or dealt with in any manner
from such attachment file a complaint, stating the facts of
which may result in frustrating any proceedings relating to
such attachment before the Adjudicating Authority.
confiscation of such proceeds of crime, such officer may by order in
writing, provisionally attach such property for a period not exceeding
180 days from the date of the order, in the manner provided in the
Second Schedule of the Income Tax Act,1961.

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 Vesting of Property in Central Government (Section 9)

The Adjudicating Authority after giving

an opportunity of being heard to any
other person interested in the property
Section 9 provides that an order of attached or seized is of the opinion that
However, this provision shall not
confiscation made, in respect of any any encumbrances on the property or
discharge any person from any liability in
property of a person, vests in the Central lease hold interest has been created with
respect of such encumbrances which may
Government all the rights and title in a view to defeat the provisions of the
be enforced against such person for a suit
such property free from all Act, it may, by order declare such
of damages.
encumbrances. encumbrance or lease hold interest to be
void and thereupon the property shall
vest in the Central Government free from
such encumbrances or lease hold.

Obligation of Banking Companies, Financial Institutions and Intermediaries

Chapter IV of the Act deals with obligations of Banking companies, financial institutions and intermediaries.

According to Section 12(1) requires every reporting entity shall—

(a) maintain a record of all transactions, including information relating to transactions covered under clause (b), in such manner as
to enable it to reconstruct individual transactions;

(b) furnish to the Director within such time as may be prescribed, information relating to such transactions, whether attempted or
executed, the nature and value of which may be prescribed;

(c) maintain record of documents evidencing identity of its clients and beneficial owners as well as account files and business
correspondence relating to its clients.
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63
 LESSON 9: LAW RELATING TO FUGITIVE ECONOMIC OFFENDERS

FUGITIVE
ECONOMIC
OFFENDER
Any individual against whom a warrant for
arrest in relation to a Scheduled Offence
has been issued by any Court in India,
who – (i) has left India so as to avoid
criminal prosecution; or (ii) being abroad,
refuses to return to India to face criminal
prosecution is a fugitive economic
offender.

Procedure for Declaration of Fugitive Economic Offender

(1) Where the Director appointed for the purposes of the Prevention of Money-laundering Act, 2002 or any other officer not below the rank
of Deputy Director authorised by the Director, has reason to believe (the reasons for such belief to be recorded in writing), on the basis of
material in his possession, that any individual is a fugitive economic offender, he may file an application in such form and prescribed manner
in the Special Court that such individual may be declared as a fugitive economic offender.

CS ANOOP JAIN
64
 (2) The application shall contain— (a) reasons for the belief that an individual is a fugitive economic offender; (b) any information available as to the
whereabouts of the fugitive economic offender; (c) a list of properties or the value of such properties believed to be the proceeds of crime, including
any such property outside India for which confiscation is sought; (d) a list of properties or benami properties owned by the individual in India or
abroad for which confiscation is sought; and (e) a list of persons who may have an interest in any of the properties listed under clauses (c) and (d)
above.

(3) Where an application has been duly filed, the Special Court shall issue a notice to an individual who is alleged to be a fugitive economic offender.

(4) The notice shall also be issued to any other person who has any interest in the property mentioned in the application.

(5) A notice of Special Court shall— (a) require the individual to appear at a specified place and time not less than six weeks from the date of issue of
such notice; and (b) state that failure to appear on the specified place and time shall result in a declaration of the individual as a fugitive economic
offender and confiscation of property under the Act.

(6) A notice shall also be forwarded to such authority, as the Central Government may notify, for effecting service in a contracting State. The authority
shall make efforts to serve the notice within a period of two weeks in such prescribed manner

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65
 (7) A notice may also be served to the individual alleged to be a fugitive economic offender by electronic means to– (a) his electronic mail address
submitted in connection with an application for allotment of Permanent Account Number under section 139A of the Income-tax Act, 1961; (b) his
electronic mail address submitted in connection with an application for enrolment under section 3 of the Aadhaar ; or (c) any other electronic account
as may be prescribed, belonging to the individual which is accessed by him over the internet, subject to the satisfaction of the Special Court that such
account has been recently accessed by the individual and constitutes a reasonable method for communication of the notice to the individual.

(8) Where any individual to whom notice has been issued by the Special Court shall appears in person at the place and time specified in the notice, the
Special Court may terminate the proceedings under the Act.

(9) Where any individual to whom notice has been issued fails to appear at the place and time specified in the notice, but enters appearance through
counsel, the Special Court may in its discretion give a period of one week to file a reply to the application.

(1) After hearing the application, if the Special Court is satisfied that an individual is a fugitive economic offender, it may, by an order, declare the individual
as a fugitive economic offender for reasons to be recorded in writing.
(2) (10)
OnWhere any individual
a declaration, to Court
the Special whommay notice
orderhas
thatbeen issued
any of fails to properties
the following enter appearance either intoperson
stand confiscated or through
the Central counsel, and the Special Court is
Government—
satisfied—
(a) the(a) that service
proceeds of innotice
of crime India has been effected
or abroad, onnot
whether or such
suchparty; or (b)
property that notice
is owned by thecould not
fugitive be served
economic in spite
offender; andof best efforts because such
individual has evaded service of notice, it may, after recording reasons in writing, proceed to hear the application.
(b) any other property or benami property in India or abroad, owned by the fugitive economic offender.
(3) The confiscation order of the Special Court shall, to the extent possible, identify the properties in India or abroad that constitute proceeds of crime which
are to be confiscated and in case such properties cannot be identified, quantify the value of the proceeds of crime.
(10) Where any individual to whom notice has been issuedof
Declaration fails to enterEconomic
Fugitive appearanceOffender
either in person or through counsel, and the Special Court is
(4) The confiscation order of the Special Court shall separately list any other property owned by the fugitive economic offender in India which is to be
satisfied— (a) that service of notice has been effected on such party; or (b) that notice could not be served in spite of best efforts because such
confiscated.
individual has evaded service of notice, it may, after recording reasons in writing, proceed to hear the application.
(5) Where the Special Court has made an order for confiscation of any property and such property is in a contracting State, the Special Court may issue a
(1) of request
letter After hearing theorapplication,
to a Court authority in if
thethe Special Court
contracting State is
forsatisfied
executionthat an individual
of such order. is a fugitive economic offender, it may, by an order, declare
(6)
the individual as a fugitive economic offender for reasons to be recorded in writing.
Every letter of request to be transmitted to a contracting State shall be transmitted in such form and manner as the Central Government may, by
notification, specify in this behalf.
(7) The Special Court may, while making the confiscation order, exempt from confiscation any property which is a proceed of crime in which any other person,
other than the fugitive economic offender, has an interest if it is satisfied that such interest was acquired bona fide and without knowledge of the fact that
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66
(8) All the rights and title in the confiscated property shall, from the date of the confiscation order, vest in the Central Government, free from all encumbrances.
(9) Where any individual to whom notice has been issued fails to appear at the place and time specified in the notice, but enters appearance through
 (2) On a declaration, the Special Court may order that any of the following properties stand confiscated to the Central Government—
(a) the proceeds of crime in India or abroad, whether or not such property is owned by the fugitive economic offender; and
(b) any other property or benami property in India or abroad, owned by the fugitive economic offender.
(3) The confiscation order of the Special Court shall, to the extent possible, identify the properties in India or abroad that constitute proceeds
of crime which are to be confiscated and in case such properties cannot be identified, quantify the value of the proceeds of crime.
(4) The confiscation order of the Special Court shall separately list any other property owned by the fugitive economic offender in India which
is to be confiscated.
(5) Where the Special Court has made an order for confiscation of any property and such property is in a contracting State, the Special Court
may issue a letter of request to a Court or authority in the contracting State for execution of such order.
(6) Every letter of request to be transmitted to a contracting State shall be transmitted in such form and manner as the Central Government
may, by notification, specify in this behalf.
(7) The Special Court may, while making the confiscation order, exempt from confiscation any property which is a proceed of crime in which
any other person, other than the fugitive economic offender, has an interest if it is satisfied that such interest was acquired bona fide
and without knowledge of the fact that the property was proceeds of crime.
(8) All the rights and title in the confiscated property shall, from the date of the confiscation order, vest in the Central Government, free
from all encumbrances.
(9) Where on the conclusion of the proceedings, the Special Court finds that the individual is not a fugitive economic offender, the Special
Court shall order release of property or record attached or seized under this Act to the person entitled to receive it.
(10) Where an order releasing the property has been made by the Special Court, the Director or any other officer authorised by him in this
behalf may withhold the release of any such property or record for a period of ninety days from the date of receipt of such order, if he is
of the opinion that such property is relevant for the appeal proceedings under the Act.

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 Power to Disallow Civil Claims

(b) any Court or tribunal in India in any

civil proceeding before it, may, disallow
any company or limited liability
partnership from putting forward or
(a) on a declaration of an individual as a defending any civil claim, if an
fugitive economic offender, any Court individual filing the claim on behalf of
Notwithstanding anything contained in
or tribunal in India, in any civil the company or the limited liability
any other law for the time being in
proceeding before it, may, disallow such partnership, or any promoter or key
force,
individual from putting forward or managerial personnel or majority
defending any civil claim; and shareholder of the company or an
individual having a controlling interest
in the limited liability partnership has
been declared as a fugitive economic
offender.

Appeal

(1) An appeal shall lie from any judgment or order, not being an interlocutory order, of a Special Court to the High
Court both on facts and on law.
(2) Every appeal shall be preferred within a period of thirty days from the date of the judgment or order appealed
from.
(3) High Court may entertain an appeal after the expiry of the said period of thirty days, if it is satisfied that the
appellant had sufficient cause for not preferring the appeal within the period of thirty days.
(4) No appeal shall be entertained after the expiry of period of ninety days.

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68
 LESSON 10: LAW RELATING TO BENAMI TRANSACTIONS & PROHIBITION
Salient Features of the Benami Transactions (Prohibition) Act, 1988
Attachment
It defines a benami transaction and benami property and also provides for exclusions and transactions
which shall not be construed benami. means the prohibition of
transfer, conversion,
disposition or movement
It provides the consequences of entering into a prohibited benami transactions. of property, by an order
issued under the Act.
It lays down the procedure for determination and related penal consequences in the case of a
prohibited benami transaction.
Benami
It also provides that the powers of civil court shall be available to authorities under the said Act. Property
means any property
which is the subject
matter of a benami
Miscellaneous Provisions have been provided for service of notice, protection of action taken in good
transaction and also
faith, etc.
includes the
proceeds from such
Central Government empowers to make rules for the implementation of the provisions of the Act. property.

It enables the Central Government in consultation with the Chief Justice of the High Court to
designate one or more Courts of Session as Special Court or Special Courts for the purpose of the Act. Benamidar
means a person or a
fictitious person, as the
It provides penalty for entering into benami transactions and for furnishing any false documents in
case may be, in whose
any proceeding under the Act.
name the benami
property is transferred or
It provides for transfer of any suit or proceeding in respect of a benami transaction pending in any held and includes a
court (other than High Court) or Tribunal or before any authority to the Appellate Tribunal. person who lends his
CS ANOOP JAIN
69 name.
 Benami Transaction

B) a transaction or an (C) a transaction or an

(A) a transaction or an arrangement in respect of a arrangement in respect of
arrangement – property carried out or (D) a transaction or an
a property where the arrangement in respect of
made in a fictitious name owner of the property is a property where the
not aware of, or, denies person providing the
knowledge of, such consideration is not
(a) where a property is (b) the property is held for ownership traceable or is fictitious
transferred to, or is held by, the immediate or future
a person, and the benefit, direct or indirect, of
consideration for such the person who has
property has been provided the consideration,
provided, or paid by,
another person; and

Except when the property is held by –

(i) a Karta, or a member of a Hindu undivided family, as the case may be, and the property is held for his benefit or benefit of other members
in the family and the consideration for such property has been provided or paid out of the known sources of the Hindu undivided family;
(ii) a person standing in a fiduciary capacity for the benefit of another person towards whom he stands in such capacity and includes a trustee,
executor, partner, director of a company, a depository or a participant as an agent of a depository under the Depositories Act, 1996 and any
other person as may be notified by the Central Government for this purpose;
(iii) any person being an individual in the name of his spouse or in the name of any child of such individual and the consideration for such
property has been provided or paid out of the known sources of the individual;
(iv) any person in the name of his brother or sister or lineal ascendant or descendant, where the names of brother or sister or lineal ascendant
or descendant and the individual appear as joint owners in any document, and the consideration for such property has been provided or paid
out of the known sources of the individual;

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 Prohibition of benami transactions Prohibition of the right to recover property held
benami
• provides that no suit, claim or action to
enforce any right in respect of any property
• no person shall enter into any benami transaction.
held benami against the person in whose
Section 3(1) name the property is held or against any
other person shall lie by or on behalf of a
Section 4(1) person claiming to be the real owner of
• whoever enters into any benami transaction shall be punishable with such property.
imprisonment for a term which may extend to three years or with
Section 3(2) fine or with both. • provides that no defense based on any right
in respect of any property held benami,
whether against the person in whose name
• where any person enters into any benami transaction on and after the property is held or against any other
the date of commencement of the Benami Transactions (Prohibition) person, shall be allowed in any suit, claim or
Amendment Act, 2016, shall be punishable in accordance with the Section 4(2) action by or on behalf of a person claiming
Section 3(3) provisions contained in Chapter VII. to be the real owner of such property.

Property held benami liable Authorities and Jurisdiction

Prohibition on re-transfer of
to confiscation property by benamidar
The following shall be the Authorities for the
As per section 5 of the Act any property, Section 6 provides that a person, being a purposes of Benami Transactions Prohibition Act
which is subject matter of benami benamidar shall not re-transfer the
transaction, shall be liable to be benami property held by him to the
beneficial owner or any other person (a) The Initiating Officer;
confiscated by the Central Government.
acting on his behalf. Where any property
is re-transferred in contravention of the
above the transaction of such property (b) The Approving Authority;
shall be deemed to be null and void.

(c) The Administrator; and

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 Notice and attachment of property involved in benami transaction

where the Initiating

the Initiating Officer, after making such inquires and calling for
where the Initiating Officer is of the opinion
such reports or evidence as he deems fit and taking into account
Officer, on the basis of that the person in
all relevant materials, shall, within a period of ninety days from
material in his possession of the
the date of issue of notice under sub-section (1), - (a) where the
possession, has reason property held benami
provisional attachment has been made under sub-section (3), -
to believe that any may alienate such
(i) pass an order continuing the provisional attachment of the
person is a benamidar in property during the
property with the prior approval of the Approving Authority, till
respect of a property, he a copy of the notice may period specified in the
the passing of the order by the Adjudicating Authority under
may, after recording also be served upon such notice, he may, with the
subsection (3) of section 26; or (ii) revoke the provisional
reasons in writing, issue other person who is a previous approval of the
attachment of the property with the prior approval of the
a notice to such person beneficial owner. Approving Authority, by
Approving Authority; (b) where provisional attachment has not
to show cause within order in writing, attach
been made under sub-section (3), - (i) pass an order provisionally
such time as may be provisionally such
attaching the property with the prior approval of the Approving
specified in the notice property in the manner
Authority, till the passing of the order made by the Adjudicating
why the property should as may be prescribed, for
Authority under sub-clause (3) of section 26; or (ii) decide not to
not be treated as benami a period not exceeding
attach the property as specified in the notice, with the prior
property. ninety days from the
approval of the Approving Authority.
date of issue of notice

Manner of service of notice:

Notice may be served on the person named therein either by post or as if it were a summons issued by a Court under the Code of Civil Procedure,
1908. Any notice referred to above may be addressed-

in the case of any in the case of any

in the case of a
in case of an in the case of a in the case of a other association other person (not
Hindu undivided
individual firm, company or body of being an
family
individuals individual),

to the to the principal to the person

to karta or any
to such managing to the principal officer or any who manages
member of
individual; partner or the officer thereof; member or controls his
such family;
manager of the thereof; affairs.
firm;

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 Adjudication of benami property on receipt
However, the Adjudicating Authority shall issue notice within a period
of a reference under sub-section (5) of section 24, the Adjudicating Authority shall of thirty days from the date on which a reference has been received.
issue notice, to furnish such documents, particulars or evidence as is considered
Further, the notice shall provide a period of time of not less than thirty
necessary on a date to be specified therein, on the following persons:-
days to the person to whom such notice is issued to furnish the
information sought.
Any person
The person referred to as Any interested
Any person who has
specified as the beneficial party, including made a claim in
a benamidar owner therein a banking respect of the Possession of the property
property
therein or identified as company
such

• where an order of confiscation in respect of a property

Management of properties confiscated under subsection (1) of section 27 has been made, the
Administrator shall proceed to take the possession of
Sub- such property.
• the Administrator shall have the power to receive and manage the section (1)
property, in relation to which an order of confiscation under sub-
Sub-section section (1) of section 27 has been made, in such manner and subject
(1) to such conditions, as may be prescribed.
• the Administrator shall, - (a) by notice in writing, order
within seven days of the date of the service of notice
• the Central Government may, by order published in the Official any person, who may be in possession of the benami
Gazette, notify as many of its officers as it thinks fit, to perform the property, to surrender or deliver possession thereof to
Sub-section functions of Administrators.
(2) the Administrator or any other person duly authorised
in writing by him in this behalf; (b) in the event of non-
compliance of the order referred to in clause (a), or if in
• the Administrator shall also take such measures, as the Central Sub- his opinion, taking over of immediate possession is
Government may direct, to dispose of the property which is vested in section (2) warranted, for the purpose of forcibly taking over
Sub-section the Central Government under subsection (2) of section 27 in such possession, requisition the service of any police officer
(3) manner and subject to such conditions as may be prescribed. to assist him and it shall be the duty such officer to
comply with the requisition.

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 Appeals Special Courts

- Central Government, in consultation with

any party aggrieved the Chief Justice of the High Court, shall for
by any decision or trial of an offence punishable under this
order of the Act, by notification, designate one or more
Appellate Tribunal
Courts of Session as Special Court or Special
may file an appeal
to the High Court Courts for such area or areas or for such
appeals against the within sixty days case or class or group of cases as may be
orders of the from the date of specified in the notification.
Appellate Tribunal
Adjudicating communication of - that while trying an offence under this Act,
Authority the decision or
a Special Court shall also try an offence
order of the
Appellate Tribunal other than an offence referred to in sub-
to him on any section (1), with which the accused may,
question of law under the Code of Criminal Procedure,
arising out of such 1973, be charged at the same trial.
order.
- the Special Court shall not take cognizance
of any offence punishable under this Act
except upon a complaint in writing made by
- (i) the authority; or (ii) any officer of the
Central Government or State Government
authorised in writing by that Government
by a general or special order made in this
behalf.
- every trial under this section shall be
conducted as expeditiously as possible and
an endeavour shall be made by the Special
Court to conclude the trial within six
months from the date of filing of the
complaint.

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 LESSON 11: COMPETITION LAW
Some of the conditions that are conducive to cartelization are:
principal
objectives of high concentration - few competitors
the Act
high entry and exit barriers

homogeneity of the products (similar products)

prevention of Control of Prohibition of Prohibition of
concentration monoploies monopolistic restrictive similar production costs
of economic trade practice trade practices
power to the excess capacity
common
detriment high dependence of the consumers on the product

history of collusion

• means, directly or indirectly, acquiring or agreeing to acquire—

Acquisition • i. shares, voting rights or assets of any enterprise; or
• ii. control over management or control over assets of any enterprise.

• includes any arrangement or understanding or action in concert, —

• i. whether or not, such arrangement, understanding or action is formal or in writing; or
Agreement
• ii. whether or not such arrangement, understanding or action is intended to be
enforceable by legal proceedings.

• includes an association of producers, sellers, distributors, traders or service providers

Cartel who, by agreement amongst themselves, limit, control or attempt to control the
production, distribution, sale or price of, or, trade in goods or provision of services
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 Enterprise
means –
Types of Cartel –

including units,
Department of
A person OR divisions,
government
subsidiaries,

international cartel import cartel export cartel

who or which is, or has been, engaged in any economic activity,

relating to the production, storage, supply, distribution, acquisition
An international An import cartel
cartel is said to comprises or control of articles or goods, or the provision of services, of any
An export cartel is kind, or in investment, or in the business of acquiring, holding,
exist, when not all enterprises
made up of
of the enterprises (including an underwriting or dealing with shares, debentures or other securities
enterprises based
in a cartel are association of of any other body corporate, either directly or through one or more
in one country with
based in the same enterprises) that
an agreement to of its units or divisions or subsidiaries,
country or when get together for
cartelize markets in
the cartel affects the purpose of
other countries.
markets of more imports into the
than one country. country. but does not include any activity of the Government relatable
to the sovereign functions of the Government including all
activities carried on by the departments of the Central
Government dealing with atomic energy, currency, defence
and space.

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 Anti-competitive agreements

No person or no enterprise shall enter into any agreement in respect Types of Anti-
of supply, distribution, acquisition or control of goods or provision of Competitive
services, which causes or is likely to cause an appreciable adverse Agreements
effect on competition.

If the agreement is anti-competitive it will be wholly void. Vertical Agreements - Vertical

Horizontal Agreements -
agreements are those
Horizontal agreements are
agreements which are entered
arrangements between
into between two or more
enterprises at the same stage of
enterprises operating at
production
different levels of production

Cartel is a form of entering into anti-competitive agreements.

1.Such agreements includes
cartels, engaged in identical or
similar trade of goods or •Examples of anti-competitive
provision of services, which2.a) vertical agreements include: •a)
What is Bid Rigging / Collusive Bidding? Directly or indirectly determines Exclusive supply agreement &
purchase or sale prices 3.b) refusal to deal •b) Resale price
Limits or controls production, maintenance •c) Tie-in-
supply 4.c) Shares the market or arrangements •d) Exclusive
source of production 5.d) distribution agreement
Collusive bidding or Bid rigging means Directly or indirectly results in
any agreement between enterprises or bid rigging or collusive bidding
persons which has the effect of
eliminating orreducing competition for
bids or adversely affecting or
it is presumed that it It is not presumed but
manipulating the process for bidding. causes AAE on the prosecutors will
competition and have to prove that it
burden of proving will causes AAE on
be on defendant competition

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 Examples of Collusive bidding or Bid rigging are –

agreements
designating bid
agreements on winners in advance
agreements to agreements as to agreements for the agreements not to agreements to
common norms to on a rotational
submit identical who shall submit submission of cover bid against each squeeze out outside
calculate prices or basis, or on a
bids the lowest bid bids other bidders
terms of bids geographical or
customer allocation
basis

Terms under Vertical Agreements –

“Exclusive Dealing
“Resale Price
Agreement” includes
Maintenance”
any agreement
“Refusal to Deal” includes, in case of any
restricting in any “Exclusive Distribution
“Tie-In Arrangement” includes any agreement to sell
manner the purchaser Agreement” includes
includes any agreement which goods or provide
or the seller, as the any agreement to limit,
agreement requiring a restricts, or is likely to services, any direct or
case may be, in the restrict or withhold the
purchaser of goods or restrict, by any method indirect restriction that
course of his trade output or supply of any
services, as a condition the persons or classes the prices to be
from acquiring or goods or services or
of such purchase, to of persons to whom charged on the resale
selling or otherwise allocate any area or
purchase some other goods or services; are by the purchaser shall
dealing in any goods or market for the disposal
distinct goods or sold or from whom be the prices stipulated
services other than or sale of the goods or
services; goods or services are by the seller unless it is
those of the seller or services;
bought; clearly stated that
the purchaser or any
prices lower than those
other person, as the
prices may be charged.
case may be;

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 Important Note –
However, it has to be kept in mind that a person’s right to stop any infringement of his product is not restricted under this section.
A person can protect his rights which have been given to him under –
a) Copyright Act, 1957
b) Patents Act, 1970
c) Designs Act, 2000 d) Geographical Indications of Goods (Registration and Protection) Act, 1999
e) Semi-conductor Integrated Circuits Layout-Design Act, 2000
f) Trade Marks Act, 1999, etc.
The export business in which the person exports any goods from India under an agreement to fulfill the export contracts is not restricted under the
Act.

Summary –
When an agreement is said to have Appreciable Adverse Effect on Competition
WHAT IS AN ANTI-COMPETITIVE AGREEMENT?
(AAEC)?
An anti-competitive agreement is an agreement having
For determining whether an agreement has appreciable adverse effect on
appreciable adverse effect on competition.
competition, the Commission shall consider the following factors –
Anti-competitive agreements include, but are not limited to:-
• creation of barriers to new entrants in the market;
• agreement to limit production and/or supply; • driving existing competitors out of the market;
• agreement to allocate markets; • foreclosure of competition by hindering entry into the market; accrual of
• agreement to fix price; benefits to consumers;
• bid rigging or collusive bidding • improvements in production or distribution of goods or provision of
• conditional purchase/ sale (tie-in arrangement); services;
• exclusive supply / distribution arrangement; • promotion of technical, scientific and economic development by means of
• resale price maintenance; and production or distribution of goods or provision of services.
• refusal to deal

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 PROHIBITION OF ABUSE OF DOMINANT POSITION

there shall be an abuse of dominant position under sub-section (1), if

an enterprise or a group, —

d. makes conclusion of
a. directly or indirectly, contracts subject to
b. limits or restricts— i.
imposes unfair or acceptance by other
production of goods or
discriminatory— i. parties of
provision of services or e. uses its dominant
condition in purchase c. indulges in practice supplementary
market therefor; or ii. position in one relevant
or sale of goods or or practices resulting in obligations which, by
technical or scientific market to enter into, or
service; or ii. price in denial of market access their nature or
development relating protect, other relevant
purchase or sale in any manner; or according to
to goods or services to market.
(including predatory commercial usage, have
the prejudice of
price) of goods or no connection with the
consumers; or
service. subject of such
contracts; or

• WHAT CONSTITUTES ABUSE OF DOMINANCE? Combination under the Act

Dominance refers to a position of strength which enables an enterprise to operate means
independently of competitive forces or to affect its competitors or consumers or the
market in its favour. Abuse of dominant position impedes fair competition between
firms, exploits consumers and makes it difficult for the other players to compete with where such mergers and
the dominant undertaking on merit. Abuse of dominant position includes: acquisition of person has amalgamation
• imposing unfair conditions or price, control, direct or s between or
shares, voting indirect amongst
• predatory pricing,
rights or control over enterprises
• limiting production/market or technical development, assets, another when the
• creating barriers to entry, acquisition of enterprise combining
• applying dissimilar conditions to similar transactions, control by a engaged in parties
person over competing exceed the
• denying market access, and
CS ANOOP JAIN market. an enterprise businesses, thresholds set
80 • using dominant position in one market to gain advantages in another and in the Act
 THRESHOLDS FOR FILING NOTICE De Minimis Exemption/ Target
Assets Turnover Exemption
Enterprise Level India >2000 INR crore OR >6000 INR crore A target enterprise that is an enterprise
World >USD 1 bn with >USD 3 bn with whose control, shares, voting rights or
wide at least > 1000 at least assets are being acquired have assets of
with INR crore in India not more than Rs. 350 crore in India or
> 3000 INR crore
India turnover of not more than Rs. 1000
in India
Leg crore in India, are exempt from Section 5
OR of the Act for a period of 5 years.

Group Level India >8000 INR crore OR >24000 INR crore

World >USD 4 bn with >USD 12 bn with
wide at least >1000 at least
with INR crore in India > 3000 INR crore
India in India
leg

REGULATION OF COMBINATIONS

Section 6(1) provides that no person or enterprise shall enter into a combination which causes or is likely to cause an appreciable adverse
effect on competition within the relevant market in India and such a combination shall be void.

Section 6(2) states that subject to the provisions contained in sub-section (1), any person or enterprise, who or which proposes to enter into
a combination, shall give notice to the Commission, in the form as may be specified, and the fee which may be determined, by regulations,
disclosing the details of the proposed combination, after any of the following, but before consummation of the combination of—

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 a. approval of the proposal relating to merger or amalgamation, referred to in clause (c) and clause (d) of section 5, by the board of directors
of the enterprises concerned with such merger or amalgamation, as the case may be;
b. execution of any agreement or other document for acquisition referred to in clause (a) and clause (d) of section 5 or acquiring of control
referred to in clause (b) of that section.

Section 6(2A), no combination shall come into effect until one hundred and fifty days have passed from the day on which the notice has been
given to the Commission under sub-section (2) or the Commission has passed orders under section 31, whichever is earlier.

Section 6(3) provides that the Commission shall, after receipt of notice under sub-section (2), deal with such notice in accordance with the
provisions contained in sections 29, 29A, 30 and 31.

Section 6(4) states that notwithstanding anything contained in sub-sections (2A) and (3) and section 43A, if a combination fulfils such criteria
as may be prescribed and is not otherwise exempted under this Act from the requirement to give notice to the Commission under sub-section
(2), then notice for such combination may be given to the Commission in such form and on payment of such fee as may be specified by
regulations, disclosing the details of the proposed combination and thereupon a separate notice under sub-section (2) shall not be required
to be given for such combination.

As per Section 6(5) upon filing of a notice under sub-section (4) and acknowledgement thereof by the Commission, the proposed combination
shall be deemed to have been approved by the Commission under sub-section (1) of section 31 and no other approval shall be required under
sub-section (2) or sub-section (2A).

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 Section 6(6) provides that if within the period referred to in sub-section (1) of section 20, the Commission finds that the combination notified
under sub-section (4) does not fulfil the requirements specified under that sub-section or the information or declarations provided are
materially incorrect or incomplete, the approval under sub-section (5) shall be void ab initio and the Commission may pass such order as it
may deem fit:

Section 6(7) states that notwithstanding anything contained in this section and section 43A, upon fulfilment of such criteria as may be
prescribed, certain categories of combinations shall be exempted from the requirement to comply with sub-sections (2), (2A) and (4).

EXEMPTION – Public financial institution, foreign institutional investor, bank or venture capital fund, have been given exemption so as to
facilitate raising of funds by an enterprise in the course of its normal business. However, they have to file the prescribed form within 7 days
from the date of acquisition or entering into an agreement providing the details of the control, the circumstances for exercise of such
control and the consequences of default arising out of acquisitions or loan/ investment agreement

Competition Commission of India –

Particulars Explanation
Establishment – Section 7 • Central Government has been empowered to establish a Commission to be called “Competition Commission of
India” by issuing a Notification.
• The Commission is a body corporate having perpetual succession and a common seal.
• The Commission has power to acquire, hold movable or immovable property and to enter into contract in its
name and by the said name, sue or be sued.

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 • The Head Office of the Commission shall be at such place as the Central Government may decide from time to
time and has Head Office at New Delhi.
• The Commission has also been authorized to establish its office at other places in India. Thus, the law provides
for setting up of CCI’s offices at places other than that of its Headquarter.
Composition – Section 8 • The Commission shall consist of –
• Chairperson and
• 2 ≤ Other Members ≤ 6 (Not less than 2 and not more than 6) to be appointed by the Central Government.
Qualification • The Chairperson and every other Member shall be a person of ability, integrity and standing and who has special
knowledge of, and such professional experience of ≥ 15 years, in, international trade, economics, business,
commerce, law, finance, accountancy, management, industry, public affairs or competition matters, including
competition law and policy, which in the opinion of the Central Government, may be useful to the Commission.
Selection of Chairperson • The Chairperson and other Members of the Commission shall be appointed by the Central Government from a
and members – Section 9 panel of names recommended by a Selection Committee consisting of—
• a. the Chief Justice of India or his nominee ------------------------------Chairperson;
• b. the Secretary in the Ministry of Corporate Affairs---------------------Member;
• c. the Secretary in the Ministry of Law and Justice------------------------Member;
• d. two experts of repute who have special knowledge of, and professional experience in international trade,
economics, business, commerce, law, finance, accountancy, management, industry, public affairs or competition
matters including competition law and policy-------------------------------Members.
Term of office of • The Chairperson and every other Member shall hold office as such for a term of 5 years up to the age of 65
Chairperson and other years and shall be eligible for reappointment.
Members
Vacancy by resignation or • A vacancy caused by the resignation or removal of the Chairperson or any other Member shall be filled by fresh
removal appointment in accordance with the provisions of sections 8 and 9. (provisions stated above)
Vacancy in the office of • In the event of the occurrence of a vacancy in the office of the Chairperson by reason of his death, resignation
Chairperson or otherwise, the senior-most Member shall act as the Chairperson, until the date on which a new Chairperson
enters upon his office.

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 • When the Chairperson is unable to discharge his functions owing to absence, illness or any other cause, the
senior-most Member shall discharge the functions of the Chairperson until the date on which the Chairperson
resumes the charge of his functions.
Resignation – Section • The Chairperson or any other Member may, by notice in writing under his hand addressed to the Central
Government, resign his office: Provided that the Chairperson or a Member shall, unless he is permitted by the
Central Government to relinquish his office sooner, continue to hold office -
• 1. until the expiry of 3 months from the date of receipt of such notice or
• 2. until a person duly appointed his successor enters upon his office or
• 3. until the expiry of his term of office, whichever is the earliest.
Removal – Section • Central Government may remove the Chairperson or any other Member from his office if such Chairperson or
Member —
• 1. is, or at any time has been, adjudged as an insolvent; or
• 2. has engaged at any time, during his term of office, in any paid employment; or
• 3. has been convicted of an offence which, in the opinion of the Central Government, involves moral turpitude;
or
• 4. has acquired such financial or other interest as is likely to affect prejudicially his functions as a Member; or
• 5. has so abused his position as to render his continuance in office prejudicial to the public interest; or 6. has
become physically or mentally incapable of acting as a Member.
• For clause (4) or (5) the Supreme Court, on a reference being made to it in this behalf by the Central
Government, has, on an inquiry, held by it in accordance with such procedure as may be prescribed in this behalf
by the Supreme Court, reported that the Member, ought on such ground or grounds to be removed.
Restriction on • The Chairperson and other Members shall not accept any employment in any enterprise which has been a party
Employment to a proceeding before the Commission under this Act, for a period of 2 years from the date on which they
cease to hold office. Provided that the above shall not apply to any employment under
• a) the Central Government or a State Government or local authority or in
• b) any statutory authority or any corporation established by or under any Central, State or Provincial Act or
• c) a Government company

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 Director General (DG) – When commission will make inquiry?

Commission with the prior approval of

The Commission may inquire into any alleged
the Central Government appoint a
contravention of the section 3 and 4 –
Director General for the purposes of
assisting the Commission in conducting a) on its own motion; or
inquiry into contravention of any of the b) on receipt of any information from any person,
provisions of this Act and for consumer or their associations or trade association;or
performing such other functions as are,
or may be, provided by or under this c) on reference made to it by the Central Government or
Act. a State Government or a statutory authority.

Procedure for inquiry

1) If the Commission, on receipt of information has an opinion that investigation is needed, it shall direct the Director General to cause an
investigation to be made into the matter.

2) The Director General shall investigate into the matter and submit a report of its findings within the period as may be specified by the Commission

CS ANOOP JAIN
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 3) It is not binding on the Commission to accept the report of the Director General.

4) Upon receipt of a report from the Director General, the Commission shall forward a copy thereof to a) the parties concerned or b) Central
Government or c) State Government or d) statutory authority as the case may be and shall invite their comments on the same.

5) If the Director General recommends that there is no contravention, an opportunity of being heard shall be given to the informant by the
Commission.

6) If the Commission agrees with the recommendation of the Director General, it shall dismiss the information and if does not agree, it shall direct
the enquiry to proceed further.

7) If any information or reference comes to the knowledge of the Commission regarding alleged violation of the provisions of the Act, must be
referred to the Director General for an investigation in the matter.

8) A copy of the report of the Director General is required to be sent to the information provider or to the Central Government or State Government
or a statutory authority, as the case may be, for their comments and an opportunity of hearing is required to be given to the parties.

9) The Commission, after an inquiry into the matter shall pass a reasoned order.

10) It is not compulsory for the Commission to follow the recommendations of the Director General.

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 Orders by Commission after inquiry into agreements or abuse of dominant position – Section 27

The Commission after any inquiry into

agreement or an inquiry into abuse of
dominant position may pass all or any of the
following orders: -

Impose such penalty

Direct to – Impose such penalty
(for Non – Cartel) –
(for Cartel) – Higher
a) discontinue and not exceeding 10% of may direct the
of – a. penalty of up Direct that the
not to re-enter such the average turnover enterprises
to 3 times of its agreements shall
agreement or for the last three concerned to comply
profit for each year stand modified to
b) discontinue such preceding financial with such other
of the continuance of the extent and in the
abuse of dominant years, upon each of orders and
such agreement or b. manner as may be
position, as the case such person or directions, including
10% of its turnover specified by the
may be (This order is enterprises which payment of cost, if
for each year of the Commission.
called as “Cease & are parties to such any, as it deems fit.
continuance of such
Desist order”) agreements or
agreement
abuse.

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 Division of enterprise enjoying dominant position –

The Commission, may, notwithstanding anything contained in any other law for the time being in force, by order in writing, direct
division of an enterprise enjoying dominant position to ensure that such enterprise does not abuse its dominant position. The order
may provide for all or any of the following matters, namely—

The transfer or vesting of property, rights, liabilities or obligations;

The adjustment of contracts either by discharge or reduction of any liability or obligation or otherwise;

The creation, allotment, surrender or cancellation of any shares, stocks or securities;

The formation or winding up of an enterprise or the amendment of the memorandum of association or articles of
association or any other instruments regulating the business of any enterprise;

The extent to which, and the circumstances in which, provisions of the order affecting an enterprise may be altered by the
enterprise and the registration thereof;

Any other matter which may be necessary to give effect to the division of the enterprise.

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 Inquiry into Combination by Commission – Section 20 C) Factors to be considered – While determining whether the combination
would have the effect of or is likely to have an appreciable adverse effect on
A) When commission will inquire into AAE caused on competition in the relevant market, namely –
competition? a) actual and potential level of competition through imports in the market;
The Commission may inquire into the AAE caused or likely to be b) extent of barriers to entry into the market;
caused on competition in India as a result of combination –
c) level of combination in the market;
a) On suomotu; or
d) degree of power in the market;
b) upon receipt of notice under relating to acquisition or
acquiring of control or e) likelihood that the combination would result in the parties to the
combination being able to significantly and sustainably increase prices or
c) merger or amalgamation referred in of the Act. profit margins;
f) extent of effective competition likely to sustain in a market;
B) Period within which enquiry shall be made –
g) extent to which substitutes are available or are likely to be available in the
An enquiry shall be initiated by the Commission within one year
market;
from the date on which such combination has taken effect.
h) market share, in the relevant market, of the persons or enterprise in a
combination, individually and as a combination;
i) likelihood that the combination would result in the removal of a vigorous
and effective competitor or competitors in the market;
j) nature and extent of vertical integration in the market;
k) possibility of a failing business;
l) nature and extent of innovation;
m) relative advantage, by way of the contribution to the economic
development, by any combination having or likely to have appreciable
adverse effect on competition;
n) whether the benefits of the combination outweigh the adverse impact of
the combination, ifany.
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 Procedure for investigation of combination – Section 29

1) If the Commission is of the opinion that the combination will cause or has caused an appreciable adverse effect on competition
within the relevant market in India.

2) Further, when the Commission has come to such a conclusion then it shall proceed to issue a notice to the parties to the
combination, calling upon them to show cause why an investigation in respect of such combination should not be conducted;

3) After receipt of the response of the parties to the combination Commission may call for the report of the Director General.

4) After the response, the Commission may call for the report of the Director General.

5) The Commission shall, if decides that, the Combination is likely to cause an appreciable adverse effect on competition in relevant
market, it shall, within 7 days direct the parties to the combination to publish within 10 working days, the details of the combination,
in such manner as it directs so as to bring to the information of public and persons likely to be affected by such combination.

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 6) The person affected can file his written objections within 15 working days of the publishing of the public notice, with the
Commission.

7) The Commission may, within 15 working days of the filing of written objections, call for such additional or other information as it
deem fit from the parties.

8) The information shall be furnished by the parties above referred within 15 days from the expiry of the period notified by the
Commission.

9) After receipt of all the information and within 45 days from expiry of period for filing further information, the Commission shall
proceed to deal with the case

Orders of Commission on Certain Combinations – Section 31

The Commission may pass any of the following written orders:-

Approve the combination –
if–combination does not, or is not likely to, have an appreciable adverse effect on the Competition in relevant market in India.

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 Disapprove the combination –
if–combination does, or is likely to, have an appreciable adverse effect on the Competition in relevant market in India.

If the Commission thinks that the adverse effect can be removed by modification –
a) it–shall direct the parties to carry out that modification and the parties shall carry out that modification within the time
limit prescribed.
b) The parties accepted the modification but did not carry out, such combination shall be deemed to have an appreciable
adverse effect on competition and shall be dealt with by the Commission.
c) The parties did not accept the modification, the parties can submit their view within 30 days of the modification proposed
by the Commission.
d) If the Commission agrees with the view submitted by the parties it shall, by an order approve the combination.

If the Commission does not accept the amendment then –

parties shall be allowed a further period of thirty days for accepting the amendment proposed by the Commission.

Where the parties to the combination fail to accept the modification within thirty days –
Then it shall be deemed that the combination has an appreciable adverse effect on Competition.

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 Acts taking place outside India but having an effect
on Competition in India – Section 32

The Commission shall have jurisdiction in the following cases as well;

Penalties prescribed by the Competition
Act, 2002 for contravention of orders of the
a) an agreement referred to in Section 3 has been entered into outside India; CCI –
or

3) If any person
b) any party to such agreement is outside India; or 2) If any person,
does not comply
withoutreasonab
with the orders
le clause, failsto
or directions
comply with the
c) any enterprise abusing the dominant position is outside India; or issued, or fails to
orders or
pay the fine
directions ofthe
1) The imposed above,
Commission
d) a combination has taken place outside India; or Competition he shall, without
issued of the
Commission of prejudice to any
Competition Act,
India may cause proceeding, be
he shall be
an inquiry to be punishable with
e) any party to combination is outside India; or punishable with
made into imprisonment
fine which may
compliance of its for a term which
extend to rupees
orders or may extend to
f) any other matter or practice or action arising out of such agreement or one lakh for each
directions made three years, or
dominant position or combination is outside India. day during which
in exercise of its with fine which
such non-
powers under may extend to
compliance
the Act. rupees twenty-
occurs, subject
five crore, or
to a maximum of
with both, as the
rupees ten crore,
Chief
as the
Metropolitan
Commission may
Magistrate, Delhi
determine.
may deem fit.

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 Penalty for failure to comply
Power to impose penalty for
with directions of Penalty for making false
non-furnishing of
Commission and Director statement – Section 44
information on combination
General – Section 43
–

if any person fails to comply, without If any person, being a party to a

reasonable cause, with a direction if any person or enterprise who fails combination, makes a statement
given by the Commission or the to give notice to the Commission which is false in any material
Director General, such person shall under sub section (2) of section 6, particular, or knowing it to be false;
be punishable with fine which may the Commission shall impose on or omits to state any material
extend to rupees one lakh for each such person or enterprise a penalty particular knowing it to be material,
day during which such failure which may extend to one per cent of such person shall be liable to a
continues subject to a maximum of the total turnover or the assets, penalty which shall not be less than
rupees one crore, as may be whichever is higher, of such a rupees fifty lakhs but which may
determined by the Commission combination. extend to rupees one crore, as may
be determined by the Commission.

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 LESSON 12: LAW RELATING TO CONSUMER PROTECTION

Complainant
means –

(v) one or more (vi) in case of

(ii) any voluntary (iii) the Central death of a (vii) in case of a
consumer consumers,
Government or (iv) the Central where there are consumer, his consumer being a
(i) a consumer; or association any State Authority; or numerous legal heir or legal minor, his parent
registered under Government; or representative; or legal guardian.
any law for the consumers
having the same or
time being in
force; or interest; or

How to Make the Complaint?

Accompanied by a fee as
specified, in the form of
crossed Demand Draft Name, description
Every complaint
drawn on a nationalized and address of the
filed before
bank or through a crossed opposite party or
District Name, description Documents, if any
Indian Postal Order drawn in parties. Facts
Commission/ State and address of the in support of
favour of the Registrar of relating the
Commission/ complainant. allegations.
the State Commission and complaint and
National
payable at the respective when and where it
Commission.
place where the State arose.
Commission or the National
Commission is situated.

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 Complaint means any allegation in writing, made by a complainant for obtaining any relief provided by or under
this Act, that –

(v) the goods, which

are hazardous to life
(iv) a trader or a
and safety when
service
used, are being
provider, as the
offered for sale to the
case may be,
public – (a) in
has charged for
contravention of
the goods or for
standards relating to
the services
safety of such goods
mentioned in
as required to be (vi) the services
the complaint,
complied with, by or which are
a price in excess
under any law for the hazardous or (vii) a claim for
(i) an unfair of the price –
time being in force; likely to be product liability
contract or (a) fixed by or
(ii) the goods (iii) the services (b) where the trader hazardous to action lies
unfair trade under any law
bought by him hired or availed knows that the goods life and safety against the
practice or a for the time
or agreed to be of or agreed to so offered are unsafe of the public product
restrictive trade being in force;
bought by him be hired or to the public.(v) the when used, are manufacturer,
practice has or (b) displayed
suffer from one availed of by goods, which are being offered product seller
been adopted on the goods or
or more him suffer from hazardous to life and by a person or product
by any trader or any package
defects; any deficiency; safety when used, who provides service
service containing such
are being offered for any service and provider, as the
provider; goods; or (c)
sale to the public – who knows it to case may be.
displayed on
(a) in contravention be injurious to
the price list
of standards relating life and safety;
exhibited by
to safety of such
him by or under
goods as required to
any law for the
be complied with, by
time being in
or under any law for
force; or (d)
the time being in
agreed
force; (b) where the
between the
trader knows that the
parties.
goods so offered are
unsafe to the public.
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 (i) buys any goods for a consideration which has been paid or
promised or partly paid and partly promised, or under any system of
deferred payment and includes any user of such goods other than
the person who buys such goods for consideration paid or promised
or partly paid or partly promised, or under any system of deferred
payment, when such use is made with the approval of such person,
but does not include a person who obtains such goods for resale or
for any commercial purpose; or
Consumer means any person who –
(ii) hires or avails of any service for a consideration which has been
paid or promised or partly paid and partly promised, or under any
system of deferred payment and includes any beneficiary of such
service other than the person who hires or avails of the services for
consideration paid or promised, or partly paid and partly promised,
or under any system of deferred payment, when such services are
availed of with the approval of the first mentioned person, but does
not include a person who avails of such service for any commercial
purpose.

– obtains goods free of charge. Defect Deficiency

Defect means any fault, Deficiency means any fault, imperfection,

Who is a not a Consumer?

– obtains avails services free of charge. imperfection or shortcoming shortcoming or inadequacy in the quality,
in the quality, quantity,
A person who :–

nature and manner of performance which

potency, purity or standard is required to be maintained by or under
which is required to be any law for the time being in force or has
– obtains goods for resale or for any commercial
maintained by or under any been undertaken to be performed by a
purposes.
law for the time being in person in pursuance of a contract or
force or under any contract, otherwise in relation to any service and
– who avails services for any commercial express or implied or as is includes – (i) any act of negligence or
purposes. claimed by the trader in any omission or commission by such person
manner whatsoever in which causes loss or injury to the
relation to any goods or consumer; and (ii) deliberate withholding
product and the expression of relevant information by such person to
– who avails services under contract of service. “defective” shall be the consumer.
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 CONSUMER PROTECTION COUNCIL COMMISSIONS DISPUTE REDRESSAL
COMMISSION
District Consumer Protection Council District Consumer Dispute Redressal
Commission
State Consumer Protection Council State Consumer Dispute Redressal Commission
Central Consumer Protection Council National Consumer Dispute Redressal
Commission

Central Consumer Protection Council

The objects of the Central Council shall be to render advice on promotion and protection of the consumers’ rights under
the Act.

The Central Government is empowered to establish the Central Consumer Protection Council to be known as the Central Council. The
Central Council shall be an advisory council and consist of the Minister-in-charge of the Department of Consumer Affairs in the Central
Government, who shall be the Chairperson; and such number of other official or non-official members representing such interests as
may be prescribed.

The Central Council shall meet as and when necessary, but at least one meeting of the Council shall be held every year. The Central
Council shall meet at such time and place as the Chairperson may think fit and shall observe such procedure in regard to the transaction
of its business as may be prescribed.

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 State Consumer Protection Councils

• Every State Government is empowered to establish a State Consumer Protection Council for such State to be known as the
State Council.
• The State Council shall be an advisory council and consist of the Minister-in-charge of Consumer Affairs in the State
Government who shall be the Chairperson; such number of other official or non- official members representing such interests
as may be prescribed and such number of other official or non- official members, not exceeding ten, as may be nominated by
the Central Government.
• The State Council shall meet as and when necessary but not less than two meetings shall be held every year. The State Council
shall meet at such time and place as the Chairperson may think fit and shall observe such procedure in regard to the
transaction of its business, as may be prescribed.
• The objects of every State Council shall be to render advice on promotion and protection of consumer rights under the Act
within the State.

District Consumer Protection Council

• The State Government is empowered to establish for every District with effect from such date as it may specify in such
notification, a District Consumer Protection Council to be known as the District Council. The District Council shall be an
advisory council and consist the Collector of the district (by whatever name called), who shall be the Chairperson; and such
number of other official and non-official members representing such interests as may be prescribed.

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 Establishment of Central Consumer Protection Authority

Section 10 empowers the Central Government to

establish a Central Consumer Protection Authority to
The Central Authority shall consist of a Chief
be known as the Central Authority to regulate
Commissioner and such number of other
matters relating to violation of rights of consumers,
Commissioners as may be prescribed, to be appointed
unfair trade practices and false or misleading
by the Central Government to exercise the powers
advertisements which are prejudicial to the interests
and discharge the functions under the Act.
of public and consumers and to promote, protect and
enforce the rights of consumers as a class.

The headquarters of the Central Authority shall be at

such place in the National Capital Region of Delhi,
and it shall have regional and other offices in any
other place in India as the Central Government may
decide.

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 Qualifications, method of recruitment, etc., of Chief Commissioner and
Commissioners

The Central Government may, by notification, make rules to provide for the qualifications for
appointment, method of recruitment, procedure for appointment, term of office, salaries and allowances,
resignation, removal and other terms and conditions of the service of the Chief Commissioner and
Commissioners of the Central Authority.

Vacancy, etc., not to invalidate proceedings of Central Authority

No act or proceeding of the Central Authority shall be invalid merely by reason of –

(a) any vacancy in, or any defect in the constitution of, the Central Authority; or

(b) any defect in the appointment of a person acting as the Chief Commissioner or as a Commissioner; or

(c) any irregularity in the procedure of the Central Authority not affecting the merits of the case.

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 While determining the (a) the population and
(b) the frequency and
penalty, regard shall be the area impacted or
duration of such
had to the following, affected by such
offence;
namely:– offence;

(c) the vulnerability of

(d) the gross revenue
the class of persons
from the sales effected
likely to be adversely
by virtue of such
affected by such
offence.
offence; and

Vexatious Search

The Director General or any other officer, exercising powers under section 22, who knows that there are no
reasonable grounds for so doing, and yet–
(a) Searches, or causes to be searched any premises; or
(b) Seizes any record, register or other document or article, shall, for every such offence, be punished with
imprisonment for a term which may extend to one year, or with fine which may extend to ten thousand rupees
or with both.
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 What is the Procedure for Filing the Complaint before Consumer
Commission?

A complaint:
Should be in writing
Can be filed in a regular way (offline)
be filed online – http://edaakhil.nic.in/
A complaint can be presented by the complainant in person or by his agent. It can even be sent by registered
post along with the court fee.
Normally three copies of the complaint are required to be submitted out of which one retained for the official
purpose, one is forwarded to the opposite party and one is the for the complainant. In case the number of
opposite parties is more correspondingly more copies of the complaint are required.

Composition of National Commission

Section 54 provides that the National Commission

shall consist of–

(b) not less than four and not more than such
(a) a President; and
number of members as may be prescribed.

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 Appeal

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 Pecuniary Jurisdiction under Consumer Protection (Jurisdiction of the District
Commission, the State
Commission and the National Commission) Rules, 2021

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 LESSON 13: LEGAL METROLOGY

The International Organization of Legal Metrology is an intergovernmental

treaty organization which:

means that part of metrology which

develops model regulations, standards and related documents for use by Legal Metrology treats units of weighment and
legal metrology authorities and industry;
measurement, methods of
weighment and measurement and
weighing and measuring
provides mutual recognition systems which reduce trade barriers and costs in instruments, in relation to the
a global market; mandatory technical and legal
requirements which have the object
of ensuring public guarantee from
represents the interests of the legal metrology community within the point of view of security and
international organizations and forums concerned with metrology, accuracy of the weighments and
standardization, testing, certification and accreditation; measurements.

promotes and facilitates the exchange of knowledge and competencies

within the legal metrology community worldwide;

Pre-packed
cooperates with other metrology bodies to raise awareness of the Commodity
contribution that a sound legal metrology infrastructure can make to a
modern economy. mean a commodity which without
the purchaser being present is
placed in a package of whatever
nature, whether sealed or not, so
that the product contained therein
has a pre-determined quantity.

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 THE ESSENTIAL COMMODITIES ACT, 1955 Section 4 Section 5
units of weights
the base unit of
and measures to
weights and
be based on
measures
Schedule to the Act lists out following commodities: metric system

(1) drugs: The explanation clarifies that for the purposes of this
Schedule, “drugs” has the meaning assigned to it in clause (b) of Section
3 of the Drugs and Cosmetics Act, 1940; Section 6 Section 7
standard units of
base unit of
weights and
(2) fertilizer, whether inorganic, organic or mixed; numeration
measures.

(3) foodstuffs, including edible oilseeds and oils;

(4) hank yarn made wholly from cotton; Section 8 Section 9

reference,
standard weight,
secondary and
measure or
working
(5) petroleum and petroleum products; numeral
standard.

(6) raw jute and jute textiles;

Section
11 contains
Section 10 prohibition of
(7) (i) seeds of food-crops and seeds of fruits and vegetables; (ii) seeds quotation, etc.,
of cattle fodder; and (iii) jute seeds. use of weight or otherwise than in
measure for terms of standard
particular purpose units of weight,
measure or
numeration.

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 Power of inspection, seizure

Section 15 of the Act confer powers of inspection on the Director, Controller or any legal metrology officer may, if he has any reason to believe, whether
from any information given to him by any person and taken down in writing or from personal knowledge or otherwise, that any weight or measure or
other goods in relation to which any trade and commerce has taken place or is intended to take place and in respect of which an offence punishable
under this Act appears to have been, or is likely to be, committed are either kept or concealed in any premises or are in the course of transportation.

The powers include entry at any reasonable time into any such premises and search for and inspect any weight, measure or other goods in relation to
which trade and commerce has taken place, or is intended to take place and any record, register or other document relating thereto. The power also
include seizure of any weight, measure or other goods and any record, register or other document or article which he has reason to believe may furnish
evidence indicating that an offence punishable under the Act has been, or is likely to be, committed in the course of or in relation to, any trade and
commerce.

Where any goods seized are subject to speedy or natural decay, the Director, Controller or legal metrology officer may dispose of such goods in such
manner as may be prescribed. Every search or seizure made under this section shall be carried out in accordance with the provisions of the Code of
Criminal Procedure, 1973, relating to searches and seizures.

Forfeiture

Every non-standard or unverified weight or measure and every package used in the course of, or in relation to, any trade and commerce and
seized under section 15, shall be liable to be forfeited, to the State Government. However, such unverified weight or measure shall not be
forfeited to the State Government if the person from whom such weight or measure was seized gets the same verified and stamped within such
time as may be prescribed. Every weight, measure or other goods seized under section 15 but not forfeited shall be disposed of by such authority
and in such manner as may be prescribed.
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 Declarations on Pre- Packaged Commodities Manner in which Declaration Shall be Made
Section 18 states that no person shall Rule 9 of the Legal Metrology (Packaged Commodities) Rules, 2011 deals with manner in which
manufacture, pack, sell, import, distribute, declaration shall be made. It provides that:
deliver, offer, expose or possess for sale (1) Every declaration which is required to be made on a package under these rules shall be:
any pre-packaged commodity unless such
package is in such standard quantities or (a) legible and prominent;
number and bears thereon such (b) numerals of the retail sale price and net quantity declaration shall be printed, painted or
declarations and particulars in such inscribed on the package in a colour that contrasts conspicuously with the background of the
manner as may be prescribed. Any label.
advertisement mentioning the retail sale It may be noted that (i) where any label information is blown, formed or molded on a glass or
price of a pre-packaged commodity shall plastic surface such information need not be required to be presented in a contrasting colour; (ii)
contain a declaration as to the net quantity where any declaration on a package is printed either in the form of hand-writing or hand-script,
or number of the commodity contained in such declaration shall be clear, unambiguous and legible.
the package in such form and manner as
may be prescribed. (2) No declaration shall be made so as to require it to be read through any liquid commodity
contained in the package.
(3) Where a package is provided with an outside container or wrapper such container or wrapper
shall also contain all the declarations which are required to appear on the package except where
such container or wrapper itself is transparent and the declarations on the package itself are
easily readable through such outside wrapper. Provided that no such declarations on the inner
package is required if the inner package does not contain any declaration on its outer cover.
(4) The particulars of the declarations required to be specified under this rule on a package shall
either be in Hindi in Devnagri script or in English.
It may be noted that nothing contained in this sub-rule shall prevent the use of any other
language in addition to Hindi or English language.

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 What is Principal Display Panel?
In relation to a package means the total surface area of package where the information required under these rules are to be given in the following
manner:
(i) All the information could be grouped together and given at one place; or
(ii) The pre-printed information could be grouped together and given in one place and on-line information grouped together in other place.

What is the Area prescribed for Principal Display Panel for Declaration?
The area not including the top, bottom, flange at top and bottom of cans, and shoulders and neck of bottle and jar shall be determined as follows:
(i) In the case of a rectangular package, where one entire side can properly be considered to be the principal display panel side, the product of
the height multiplies by the width of that side.
(ii) In the case of a cylindrical or nearly cylindrical package, prescribed percent of the product of the height of the package multiplied by the
circumference.
(iii) In the case of any other shaped package, prescribed percent of the total surface of the package, or an area considered to be a principle display
panel of the package.

Counterfeit
“Counterfeit” shall have the meaning assigned to it in section 28 of the Indian Penal Code. A
person is said to “counterfeit” who causes one thing to resemble another thing, intending by
means of that resemblance to practice deception, or knowing it to be likely that deception
will thereby be practiced.

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 LESSON 14: REAL ESTATE REGULATION AND DEVELOPMENT LAW
Establish the Real Estate Regulatory Authority for regulation and promotion of the real
objectives estate sector.

Ensure sale of plot, apartment of building, as the case may be, or sale of real estate
project, in an efficient and transparent manner.

To regulate To enusre sale

and promote To protect thr Ensure protection the interest of consumers in the real estate sector.
of plot,
the real estate apartment or interest of
sector building as the consumers in Establish an adjudicating mechanism for speedy dispute redressal and also to establish
case may be the reasl the Appellate Tribunal to hear appeals from the decisions, directions or orders of the
of real estate estate sector Real Estate Regulatory Authority (RERA).
project, in an
efficient and
Regulates transactions between buyers and promoters of residential real estate projects.
transparent
manner
Establishes state level regulatory authorities called Real Estate Regulatory Authorities
(RERAs).

Residential real estate projects, with some exceptions, need to be registered with
RERAs.
SALIENT FEATURES OF
THE ACT Promoters cannot book or offer these projects for sale without registering them. Real
estate agents dealing in these projects also need to register with RERAs.

Registration of the project, the promoter must upload details of the project on the
website of the RERA.

These include the site and layout plan, and schedule for completion of the real estate
project.

Amount collected from buyers for a project must be maintained in a separate bank
account and must only be used for construction of that project.
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 Increase
d FDI
Custome
Reductio
r
n in
manage
litigation
Advantages of ment
RERA (Real Estate
Development and
Regulation Act) Timely
Transpar completi
ency on of the
project
Project
planning

Allottee in relation to a real estate project, means the person to whom a plot, apartment or building, as the case may be, has been
allotted, sold (whether as freehold or leasehold) or otherwise transferred by the promoter, and includes the person who
subsequently acquires the said allotment through sale, transfer or otherwise but does not include a person to whom such
plot, apartment or building, as the case may be, is given on rent.
Apartment whether called block, chamber, dwelling unit, flat, office, showroom, shop, godown, premises, suit, tenement, unit or by any
other name, means a separate and self-contained part of any immovable property, including one or more rooms or enclosed
spaces, located on one or more floors or any part thereof, in a building or on a plot of land, used or intended to be used for
any residential or commercial use such as residence, office, shop, showroom or godown or for carrying on any business,
occupation, profession or trade, or for any other type of use ancillary to the purpose specified
Carpet area means the net usable floor area of an apartment, excluding the area covered by the external walls, areas under services
shafts, exclusive balcony or verandah area and exclusive open terrace area, but includes the area covered by the internal
partition walls of the apartment
Common mean–
areas (i) the entire land for the real estate project or where the project is developed in phases and registration under this Act is
sought for a phase, the entire land for that phase;
(ii) the stair cases, lifts, staircase and lift lobbies, fire escapes, and common entrances and exits of buildings;
(iii) the common basements, terraces, parks, play areas, open parking areas and common storage spaces;

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 (iv) the premises for the lodging of persons employed for the management of the property including accommodation for
watch and ward staffs or for the lodging of community service personnel;
(v) installations of central services such as electricity, gas, water and sanitation, air-conditioning and incinerating, system for
water conservation and renewable energy;
(vi) the water tanks, sumps, motors, fans, compressors, ducts and all apparatus connected with installations for common use;
(vii) all community and commercial facilities as provided in the real estate project;
(viii) all other portion of the project necessary or convenient for its maintenance, safety, etc., and in common use.
Promoter means, –
(i) a person who constructs or causes to be constructed an independent building or a building consisting of apartments, or
converts an existing building or a part thereof into apartments, for the purpose of selling all or some of the apartments to
other persons and includes his assignees; or
(ii) a person who develops land into a project, whether or not the person also constructs structures on any of the plots, for
the purpose of selling to other persons all or some of the plots in the said project, whether with or without structures thereon;
or
(iii) any development authority or any other public body in respect of allottees of– (a) buildings or apartments, as the case
may be, constructed by such authority or body on lands owned by them or placed at their disposal by the Government; or
(b) plots owned by such authority or body or placed at their disposal by the Government, for the purpose of selling all or
some of the apartments or plots; or
(iv) an apex State level co-operative housing finance society and a primary co-operative housing society which constructs
apartments or buildings for its members or in respect of the allottees of such apartments or buildings; or
(v) any other person who acts himself as a builder, coloniser, contractor, developer, estate developer or by any other name
or claims to be acting as the holder of a power of attorney from the owner of the land on which the building or apartment is
constructed or plot is developed for sale; or
(vi) such other person who constructs any building or apartment for sale to the general public.
Real estate means the development of a building or a building consisting of apartments, or converting an existing building or a part
project thereof into apartments, or the development of land into plots or apartment, as the case may be, for the purpose of selling
all or some of the said apartments or plots or building, as the case may be, and includes the common areas, the development
works, all improvements and structures thereon, and all easement, rights and appurtenances belonging thereto.

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 Prior Registration of Real Estate project with Real Estate Regulatory
Authority –

1) A promoter shall not –

a) advertise,
b) market,
c) book,
d) sell or offer for sale, or
e) invite persons
to purchase any plot, apartment or building, in any real estate project or part of it, in any planning area, without registering the real estate
project with the Real Estate Regulatory Authority.
2) The projects that are ongoing on the date of commencement of this Act and for which the completion certificate has not been issued, the
promoter shall make an application to the Authority for registration of the said project within a period of three months from the date of
commencement of this Act.
3) For projects which are developed beyond the planning area but with the requisite permission of the local authority, it may, by order, direct
the promoter of such project to register with the Authority, and the provisions of this Act shall apply to such projects from that stage of
registration where the real estate project is to be developed in phases, every such phase shall be considered a stand alone real estate project,
and the promoter shall obtain registration under this Act for each phase separately.

Projects exempt from the ambit of the Act –

a) Area of land does not exceed 500 Sq. Meters
b) No. of apartments does not exceed 8
c) In case of renovation, where the area of land proposed to be developed does not exceed five hundred square meters or the number of
apartments proposed to be developed does not exceed eight
d) where the promoter has received completion certificate for a real estate project prior to commencement of this Act;
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 Application for Registration of Real Estate Projects

Granting of Registration
Step 2 Step 3
Step 1 by the Authority –
Application for On successful
Applicant has
registration registration, the
to file an
must be either promoter of the
application for
approved or project will be
registration
rejected within provided with a
with RERA in
a period of 30 registration
prescribed form
days number, a login
along with
from the date id and
prescribed fees 2) Rejection of registration
of application password for 1) Grant of registration –
and documents –
by the RERA the applicant

Note –
a) If the Authority fails to grant the registration or reject the
application within 30 days then the project shall be deemed to have a) On receipt of the a) On receipt of the
application, the Authority application, the Authority
been registered, and the Authority shall within a period of seven days shall grant registration may reject the
after the expiry of thirty days shall provide a registration number and within 30 days. b) A application for
a Login Id and password to the promoter for accessing the website of registration number, registration within 30
the Authority. including a Login Id and days. b) Application shall
password to the applicant not be rejected unless the
b) The registration granted shall be valid for a period declared by the shall be granted for applicant has been given
promoter for completion of the project or phase of the project. accessing the website of an opportunity of being
the Authority heard in the matter.

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 Documents required to be submitted by promoter for registration –

• brief details of his enterprise including its name, registered address, type of enterprise and the particulars of registration,
• names and photographs of the promoter;
• a brief detail of the projects launched by him, in the past five years.
• an authenticated copy of the approvals and commencement certificate from the competent authority.
• the sanctioned plan, layout plan and specifications of the proposed project or the phase thereof, and the whole project as sanctioned
by the competent authority;
• the location details of the project
• proforma of the allotment letter, agreement for sale, and the conveyance deed proposed to be signed with the allottees;
• the number and areas of garage for sale in the project;
• the names and addresses of his real estate agents, for the proposed project; the names and addresses of the contractors, architect,
structural engineer;
• a declaration, supported by an affidavit, which shall be signed by the promoter or any person authorised by the promoter, stating –
a) that he has a legal title to the land on which the development is proposed along with legally valid documents
b) that the land is free from all encumbrances
c) the time period within which he undertakes to complete the project or phase thereof
d) that 70% of the amounts realised for the real estate project from the allottees, from time to time, shall be deposited in a separate
account to be maintained in a scheduled bank to cover the cost of construction and the land cost and shall be used only for that
purpose

Extension of registration – Section 6

2) The registration granted may

1) An extension of registration 4) Application for extension of
be extended by the Authority on
may be granted at the sole registration shall not be rejected
an application made by the 3) Maximum extension granted
discretion of the regulator due to unless the applicant has been
promoter due to force majeure shall not exceed 1 year.
Force Majeure conditions or on given an opportunity of being
or on any other reasonable
any other reasonable grounds. heard in the matter.
grounds.

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 Revocation of
registration –

3) Effects of revocation of registration –

1) The Authority may – a) Authority shall debar the promoter
from accessing its website in relation to
a) on receipt of a complaint or b) suo that project and specify his name in the
moto or c) on the recommendation of list of defaulters
the competent authority, revoke the
registration granted, after being satisfied b) Authority shall display his photograph
2) Notice to be given before revocation –
that– on its website and also inform the other
a) The registration granted to the RERA in other States and Union
a) promoter makes default in doing promoter shall not be revoked unless the territories about such revocation or
anything required by or under this Act or Authority has given to the promoter not registration;
the rules or the regulations less than thirty days’ notice, in writing.
c) Facilitate the remaining development
b) the promoter violates any of the terms b) Grounds on which registration is to be works to be carried out in accordance
or conditions of the approval given by revoked shall also be specified. with the provisions of section 8;
the competent authority
d) Direct the bank holding the project
back account to freeze the account
c) the promoter is involved in any kind of e) To protect the interest of allottees or
unfair practice or irregularities. in the public interest, issue such
directions as it may deem necessary

Obligation of Authority consequent upon lapse of or on revocation

of registration – Section 8

Upon lapse of the registration or on revocation of the

registration under the Act, the authority, may consult the
In case of revocation of registration of a project
appropriate Government to take such action as it may
under the Act, the association of allottees shall
deem fit including the carrying out of the remaining
have the first right of refusal for carrying out of
development works by competent authority or by the
the remaining development works.
association of allottees or in any other manner, as may be
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 Registration of real estate agents – Section
9

3) Granting / rejection of
registration – The Authority
upon satisfying itself of the
1) Need for registration of fulfilment of such conditions
real estate agents – a) Real shall – a) grant a single 4) Revocation or suspension
estate broking is one of the registration to the real estate of registration – Grounds of
easiest business in India as agent for the entire State or which registration may be
there are no specific Union territory b) reject the revoked – a) Breach of any of
2) Compulsory registration
qualification or experience application for reasons to be the conditions specified
for real estate agents – a)
requirements. b) Hence, recorded in writing, if such under the Act, rules or
Real estate agent shall not act
there are thousands of non- application does not conform regulations; b) Where the
as an agent for the promoter
professional agents/ brokers to the provisions of the Act. registration has been secured
in any real estate project
in every city operating c) Application shall not be by the real estate agent
without obtaining
without any accountability. c) rejected unless the applicant through misrepresentation or
registration. b) Every real
Hence, to bring in has been given an fraud Note – No such
estate agent shall make an
transparency and opportunity of being heard in revocation or suspension
application to the Authority
accountability, agents have the matter. Note – If the shall be made by the
for registration.
also been covered under the applicant does not receive Authority unless an
ambit of RERA and any communication about opportunity of being heard
registration requirement has the deficiencies in his has been given to the real
been mandatory for them as application or the rejection of estate agent.
per section 9 of the Act. his application within the
period specified, he shall be
deemed to have been
registered.

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 Functions and
Duties of
Promoter –

3) Other important functions – a) To be

responsible for all the compliances under the
Act. b) Responsibility to obtain the
completion certificate or the occupancy
certificate; c) Responsibility to obtain the
lease certificate, where the real estate
1) Creating website – After receiving his Login project is developed on a leasehold land and
Id and password, promoter shall create his 2) Provide information to Allottee – make lease certificate available to the
web page on the website of the Authority The promoter at the time of the association of allottees; d) Responsibility for
and enter all details of the proposed project booking and issue of allotment letter providing and maintaining the essential
for public viewing. Information shall include – shall be responsible to make available services, on reasonable charges, till the
a) details of the registration granted by the to the allottee, the following taking over of the maintenance of the project
Authority; b) quarterly up-to-date the list of information – a) sanctioned plans, by the association of the allottees e) enable
number and types of apartments or plots, as layout plans, along with specifications, the formation of an association or society or
the case may be, booked; c) quarterly up-to- approved by the competent authority, co-operative society of the allottees. f) To
date the list of number of garages booked; d) by display at the site or such other execute a registered conveyance deed of the
quarterly up-to-date the list of approvals place as may be specified by the apartment, plot or building in favour of the
taken and the approvals which are pending regulations made by the Authority; b) allottee. g) To pay all outgoings until he
subsequent to commencement certificate; e) the stage wise time schedule of transfers the physical possession of the real
quarterly up-to-date status of the project; completion of the project, including estate project to the allottee or the
and f) such other information and documents the provisions for civic infrastructure associations of allottees which he has
as may be specified by the regulations made like water, sanitation and electricity. collected from the allottees, for the payment
by the Authority. of outgoings. h) Not to create mortgage after
the promoter executes an agreement for sale
for any apartment, plot or building. If any
such mortgage or charge is made or created
then notwithstanding anything contained in
any other law for the time being in force, it
shall not affect the right and interest of the
allottee who has taken or agreed to take such
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120
 No deposit or advance to be taken by promoter without first
The Real Estate Appellate Tribunal (REAT) –
entering into agreement for sale –
A promoter shall not accept a sum more than ten per cent of
• Any party aggrieved by the order of RERA may file appeal with REAT.
the cost of the apartment, plot, or building as an advance
• Appeal should be filed within 60 days. • Appeal may be entertained
payment or an application fee, from a person without first
even after 60 days if there is sufficient cause. • Before filing appeal,
entering into a written agreement for sale.
promoter should first deposit with the REAT atleast 30%. of the penalty
or the total amount of compensation. • Appeal shall be disposed of by
REAT within 60 days.
Appeal to High Court –

• Any person aggrieved by any decision of REAT may, file an appeal to

the High Court, within a period of 60 days. • The High Court may
entertain the appeal after the expiry of the said period of sixty days if
there was sufficient cause. • No appeal shall lie against any decision or
order made by the Appellate Tribunal with the consent of the parties.

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 LESSON 15: INTELLECTUAL PROPERTY RIGHTS
Patent Trade Mark

A patent is a monopoly award that gives the inventor control over the trade mark tries to safeguard both the interests of the trader
output and, up to a certain point in the demand curve, the price of the and the customer by differentiating the items of one
patented goods. The patent system’s primary economic and commercial manufacturer or trader from comparable goods of others. A
justification is that it encourages investment in industrial innovation. trademark can be any combination of words, characters,
The upkeep and expansion of a country’s stock of valuable, transferable, numbers, symbols, or devices showing images of people,
and industrial assets are both facilitated by innovative technologies. animals, or both. A trademark acts as an effective form of
advertising for the goods and their quality since it denotes the
relationship between the merchant and the items during the
course of commerce.

Copyright
Industrial Designs
The idea of Copyright protection only began to emerge with the
invention of printing, which made it for literary works to be duplicated
Industrial designs belong to the aesthetic field, but are at the
by mechanical processes instead of being copied by hand. This led to
same time intended to serve as pattern for the manufacture of
the grant of privileges, by authorities and kings, entitling beneficiaries
products of industry or handicraft. An industrial design is the
exclusive rights of reproduction and distribution, for limited period,
ornamental or aesthetic aspect of a useful article, which must
with remedies in the form of fines, seizure, confiscation of infringing
appeal to the sense of sight and may consist of the shape
copies and possibly damages. Copyright is a well recognised form of
and/or pattern and/or colour of article. An industrial design to
property right which had its roots in the common law system and
be protectable, must be new and origin. Industrial designs are
subsequently came to be governed by the national laws in each
protected against unauthorised copying or limitation, for a
country.
period which usually lasts for five, ten or fifteen years.

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 Geographical Indication (GI) IPR Awareness: Outreach and Promotion –
To create public awareness about the
economic, social and cultural benefits of
Geographical Indicator is that part of industrial property that
IPRs among all sections of society.
designates a nation or a location within it as the nation or place
of origin of that product. Such a name typically carries a
guarantee of quality and individuality, which is mostly due to
the fact that it originated in the specified geographical place, Generation of IPRs - To stimulate the
region, or nation. Signs that identify a product’s exact generation of IPR.
geographic origin are known as geographic indicators. A GI
identifies a product’s origin, which could be a village or town,
a region, or a nation, and identifies the product’s unique traits. Legal and Legislative Framework - To have
strong and effective IPR laws, which
balance the interests of rights owners with
larger public interest.
The Policy outlines seven
goals that are further
defined with actions that
Administration and Management - To
IPR Policy focus on: must be taken by the
modernize and strengthen service oriented
designated nodal
IPR administration.
Ministry or Department.
The goals are briefly
discussed below:-

Commercialization of IPR - Get value for

IPRs through commercialization.
Improving access to
fostering creativity and
healthcare, food security,
innovation and thereby
and environmental
promote entrepreneurship
protection, among other Enforcement and Adjudication - To
and enhance socio-
areas of critical social, strengthen the enforcement and
economic and cultural
economic, and adjudicatory mechanisms for combating
development.
technological importance. IPR infringements.

Human Capital Development - To

strengthen and expand human resources,
institutions and capacities for teaching,
CS ANOOP JAIN
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 LESSON 16: LAW RELATING TO PATENTS
What are the Criteria of Patentability?

An invention relating either An invention is patentable subject matter if it meets the following criteria –
PATENTS to a product or process that
is new, involving inventive It should be novel.
step and capable of
industrial application can be It should have inventive step or it must be non-obvious.
patented. However, it must
not fall into the categories of It should be capable of Industrial application.
inventions that are non-
patentable under sections 3 It should not attract the provisions of section 3 and 4 of the Patents Act, 1970.
and 4 of the Act.

What are not inventions

b) an invention the primary or

intended use or commercial
a) an invention which is frivolous exploitation of which could be
The following are not inventions
or which claims anything contrary to public order or
within the meaning of Section 3 of
obviously contrary to well morality or which causes serious
the Act:
established natural laws; prejudice to human, animal or
plant life or health or to the
environment;

c) the mere discovery of a d) the mere discovery of a new form of a known substance which does
scientific principle or the not result in the enhancement of the known efficacy of that substance
formulation of an abstract theory or the mere discovery of any property or mere new use for a known
or discovery of any living thing or substance or of the mere use of a known process, machine or apparatus
non-living substances occurring in unless such known process results in a new product or employs at least
nature; CS ANOOP JAIN one new reactant;
124
 e) a substance obtained by a
f) the mere arrangement or
mere admixture resulting
re-arrangement or
only in the aggregation of
duplication of known g) a method of agriculture
the properties of the
devices each functioning or horticulture;
components thereof or a
independently of one
process for producing such
another in a known way;
substance;

i) plants and animals in

h) any process for the medicinal,
whole or any part thereof
surgical, curative, prophylactic
other than micro-organisms
diagnostic, therapeutic or other j) a mathematical or
but including seeds,
treatment of human beings or any business method or a
varieties and species and
process for a similar treatment of computer programme per se
essentially biological
animals to render them free of disease or algorithms;
processes for production or
or to increase their economic value or
propagation of plants and
that of their products;
animals;

k) a literary, dramatic,
musical or artistic work or l) a mere scheme or rule or
any other aesthetic creation method of performing m) a presentation of n) topography of integrated
whatsoever including mental act or method of information; circuits;
cinematographic works and playing game;
television productions;

o) an invention which in
effect, is traditional
knowledge or which is an
aggregation or duplication
of known properties of
traditionally known
component or components;

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 When is an Application for Patent Published? When should an Application for a Patent be Filed?

Every application for patent is published after expiry of 18 months from the date of its
An application for a patent can be filed at the earliest
filing or priority date whichever is earlier. However, following applications are not
possible date and should not be delayed. An application
published.
filed with provisional specification, disclosing the
(A) Application in which secrecy direction is imposed. essence of the nature of the invention helps to register
the priority of the invention. Delay in filing an
(B) Application which has been abandoned u/s 9(1) and i.e. when a provisional
application may entail some risks such as: (i) some other
application has been filed and the complete application has not been filed with 12
inventor might file a patent application on the said
months from the filing of the provisional application.
invention and (ii) there may be either an inadvertent
(C) Application which has been withdrawn 3 months prior to 18 months. publication of the invention by the inventor
himself/herself or by others independently of him/her.

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 LESSON 17: LAW RELATING TO TRADE MARKS

A trademark (popularly known

What is a as brand name) in layman’s Well Known
Trademark? well-known trade mark in relation to any goods or
language is a visual symbol Trade Mark services means a mark which has become so to
which may be a word signature,
the substantial segment of the public which uses
name, device, label, numerals or
such goods or services such that the use of such
combination of colours used by
mark in relation to other goods or services would
one undertaking on goods or
be likely to be taken as indicating a connection in
services or other articles of
the course of trade or rendering of services
commerce to distinguish it from
between those goods or services and a person
other similar goods or services
using the mark in relation to the first-mentioned
originating from a different goods or services.
undertaking.

Who can Apply for a Trademark and How?

Collective Any person, claiming to be the proprietor of a trademark used or proposed to be used
Mark mark means a trade mark by him, may apply in writing in prescribed manner for registration. The application
distinguishing the goods or should contain the trademark, the goods/ services, name and address of applicant and
services of members of an
agent (if any) with power of attorney, the period of use of the mark. The applications
association of persons (not
being a partnership within the can be submitted personally at the Front Office Counter of the respective office or can
meaning of the Indian be sent by post. These can also be filed on line through the e-filing gateway available
Partnership Act, 1932 which is at the official website.
the proprietor of the mark from
those of others.

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 What are different types of Trademarks that may be
Registered in India?

Any name (including personal or surname of the applicant or predecessor in business or the signature of the person), which is not
unusual for trade to adopt as a mark.

An invented word or any arbitrary dictionary word or words, not being directly descriptive of the character or quality of the
goods/service.

Letters or numerals or any combination thereof.

The right to proprietorship of a trademark may be acquired by either registration under the Act or by use in relation to particular
goods or service.

Devices, including fancy devices or symbols.

Monograms.

Combination of colors or even a single color in combination with a word or device.

Shape of goods or their packaging.

Marks constituting a three dimensional sign.

Sound marks when represented in conventional notation or described in words by being graphically represented.

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 Trade Mark Registration Workflow Chart

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 • If not capable of distinguishing the goods or services of one person from those of another person;
• consist exclusively of marks or indications which may serve in trade to designate the kind, quality, quantity, intended
Tm shall not be purpose, values, geographical origin or the time of production of the goods or rendering of the service or other
registered characteristics of the goods or service
• have become customary in the current language or in the bona fide and established practices of the trade
Section 9 (1)

• Provided that a trade mark shall not be refused registration if before the date of application for registration it has acquired a
distinctive character as a result of the use made of it or is a well-known trade mark.
Exception

• 1. If the trademark tends to deceive the public or cause any confusion;

Section 9(2) • 2. In any instance if the trademark hurts any religious sentiment of any demographic section of Indian citizens;
following • 3. It comprises or contains scandalous or obscene matter;
trademark shall • 4. Its use is prohibited under the Emblems and Names (Prevention of Improper Use) Act, 1950.
not be
registered:

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 Limitation as to Colour

TM may be limited wholly or in part to any combination of colours and any such limitation shall be
taken into consideration by the Registrar or the High Court, as the case may be having to decide on
the distinctive character of the trade mark.

So far as a trade mark is registered without limitation of colour, it shall be deemed to be registered
for all colours

Can a Registered Trademark be Removed from the Register?

It can be removed on application to the Registrar on prescribed form on the ground that
the mark is wrongly remaining on the register. The Registrar also can suo moto issue
Notice for removal of a registered trademark.

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 Proposed Use of Trade Mark by Company to be Formed

Section 46 empowers the Registrar to allow registration of a trademark, if he is satisfied that–

(i) a company is about to be formed and registered under the Companies Act and that the applicant intends to assign the trademark to that
company with a view to use thereof in relation to those goods and services by the company; or
(ii) the proprietor intends it to be used by a person, as a registered user after the registration of trademark.

Removal of Trade Mark for Non-use

Section 47 deals with removal of a trade mark from the register on the ground of non-use and provides that a trade mark which is not used within
five years of its registration, becomes liable for removal either completely or in respect of those goods or services for which the mark has not
been used. The five years period starts from the date on which the trade mark is actually entered on the register. However, Section 47(3) protects
a mark from being removed from the register on ground of non-use if such non-use is shown to have been due to special circumstances in the
trade which may include restriction imposed by any law or regulation on the use of trade mark in India.

Certificati
on Trade
Marks Certification trade mark as to mean a mark capable of
Collective
Collective Marks means a trades distinguishing the goods or services in connection with
Marks
mark distinguish the goods or which it is used in the course of trade which are certified by
services of members of an the proprietor of the mark in respect of origin, material,
association of person not being mode of manufacture of goods or performance of services,
a partnership within the quality, accuracy or other characteristics from goods or
meaning of the Indian services not so certified and registerable as such in respect
Partnership Act, 1932 which is of those goods or services in the name, as proprietor of the
the proprietor of the mark from certification trade mark, of that person.
those of others.

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 Qualifications for Registration

Application for
Rule 144 of the Trade Marks Rule states that subject to the provisions of Registration as
Rule 145, a person shall be qualified to be registered as a trademarks a Trademarks Every person desiring to be
agent if he— Agent registered as a trademarks
agent shall make an application
in Form TM-G. The applicant
shall furnish such further
information bearing on his
application as may be required
(i) is a citizen of India, of him at any time
by the Registrar.

(ii) is not less than 21 years of age;

(iii) is a graduate of any university in India or possesses an equivalent

qualification and has passed the examination prescribed in rule 148 or is
an Advocate within the meaning of the Advocates Act, 1961 or is a
member of the Institute of Company Secretaries of India;

(iv) is considered by the Registrar as a fit and proper person to be

registered as a trademark agent.

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 LESSON 18: LAW RELATING TO COPYRIGHT
Section 13(1) of the Act provides that
copyright shall subsist throughout India in
What is Copyright (or author’s right) is a the following classes of works,
Copyright? legal term used to describe the
rights that creators have over (a) original
their literary and artistic works. literary,
Works covered by copyright dramatic,
range from books, music, musical and
paintings, sculpture, and films, artistic works;
to computer programs,
databases, advertisements,
maps, and technical drawings. (b)
cinematograph
films; and

“Adaptation” means,-

(c) sound
recording
(iii) in relation to a literary
or dramatic work, any
(ii) in relation to a abridgement of the work or
(i) in relation to a literary work or an any version of the work in (iv) in relation to a (v) in relation to any
dramatic work, the artistic work, the which the story or action is musical work, any work, any use of such
conversion of the work conversion of the work conveyed wholly or mainly arrangement or work involving its re-
into a non-dramatic into a dramatic work by means of pictures in a transcription of the arrangement or
work; by way of performance form suitable for work; and alteration.
in public or otherwise; reproduction in a book, or
in a newspaper, magazine or
similar periodical;
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 Section 14 of the Act defines the term Copyright as to mean the exclusive right to do or authorise the doing of the
following acts in respect of a work or any substantial part thereof, namely:
(a) Copyright in the case of a (i) to reproduce the work in any material form including the storing of it in any medium by
Literary, Dramatic or Musical electronic means;
Work, not being a Computer (ii) to issue copies of the work to the public not being copies already in circulation;
Programme
(iii) to perform the work in public, or communicate it to the public;
(iv) to make any cinematograph film or sound recording in respect of the work;
(v) to make any translation of the work;
(vi) to make any adaptation of the work;
(vii) to do, in relation to a translation or an adaptation of the work, any of the acts specified in
relation to the work in sub-clauses (i) to (vi).
(b) Copyright in the case of a (i) to do any of the acts specified in specified in respect of a literary, dramatic or musical work;
Computer Programme (ii) to sell or give on commercial rental or offer for sale or for commercial rental any copy of the
computer programmer:
Provided that such commercial rental does not apply in respect of computer programmes
where the programme itself is not the essential object of the rental.
(c) Copyright in the case of an To reproduce the work in any material form including—
Artistic Work (A) the storing of it in any medium by electronic or other means; or
(B) depiction in three-dimensions of a two-dimensional work; or
(C) depiction in two-dimensions of a three-dimensional work.
(d) Copyright in the case of a (i) to make a copy of the film, including—
Cinematograph Film (A) a photograph of any image forming part thereof; or
(B) storing of it in any medium by electronic or other means.
(ii) to sell or give on commercial rental or offer for sale or for such rental, any copy of the film.

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 (iii) to communicate the film to the public.
(e) Copyright in the case of a (i) to make any other sound recording embodying it including storing of it in any medium by
Sound Recording electronic or other means;
(ii) to sell or give on commercial rental or offer for sale or for such rental, any copy of the sound
recording;
(iii) to communicate the sound recording to the public.
It may be noted that a copy which has been sold once shall be deemed to be a copy already
in circulation.

Term of Copyright in Copyright shall subsist in any literary, dramatic, musical or artistic work published within the
Published Literary, Dramatic, lifetime of the author until sixty years from the beginning of the calendar year next following the
Musical and Artistic Works year in which the author dies.
In the case of a work of joint authorship, be construed as a reference to the author who dies
last.
Term of Copyright in In the case of literary, dramatic, musical or artistic work (other than a photograph), which is
Anonymous and published anonymously or pseudonymously, copyright shall subsist until sixty years from the
Pseudonymous Works beginning of the calendar year next following the year in which the work is first published.
Provided that where the identity of the author is disclosed before the expiry of the said period,
copyright shall subsist until sixty years from the beginning of the calendar year next following
the year in which the author dies.
Term of Copyright in In the case of a literary, dramatic or musical work or an engraving, in which copyright subsists
Posthumous Work at the date of the death of the author or, in the case of any such work of joint authorship, at or
immediately before the date of the death of the author who dies last, but which, or any
adaptation of which, has not been published before that date, copyright shall subsist until sixty
years from the beginning of the calendar year next following the year in which the work is first
published or, where an adaptation of the work is published in any earlier year, from the
beginning of the calendar year next following that year.

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 A literary, dramatic or musical work or an adaptation of any such work shall be deemed to
have been published, if it has been performed in public or if any sound recordings made in
respect of the work have been sold to the public or have been offered for sale to the public.
Term of Copyright in In the case of a cinematograph film, copyright shall subsists until sixty years from the
Cinematograph Films beginning of the calendar year next following the year in which the film is published.

Term of Copyright in Sound In the case a sound recording copyright shall subsist until sixty years from the beginning of the
Recording calendar year next following the year in which the sound recording is published.
Term of Copyright In the case of Government work, where Government is the first owner of the copyright therein,
Government Works copyright shall subsist until sixty years from the beginning of the calendar year next following
the year in which the work is first published.

Term of Copyright in Works In the case of a work, where a public undertaking is the first owner of the copyright therein,
Of Public Undertakings copyright shall subsist until sixty years from the beginning of the calendar year next following
the year in which the work is first published.
Term of Copyright in Works of In the case of a work of an international organisation to which the provisions of section 41
International Organizations apply, copyright shall subsist until sixty years from the beginning of the calendar year next
following the year in which the work is first published.

ASSIGNMENT
OF COPYRIGHT the owner of the copyright in an
existing work or the prospective
owner of the copyright in a
future work may assign to any
person the copyright either
wholly or partially and either
generally or subject to limitations
and either for the whole term of
the copyright or any part thereof.

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 CS ANOOP JAIN
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 Which are the Common Copyright Infringements?
INFRINGEMENT OF COPYRIGHT

Copyright infringement refers to the unauthorized use of

The following are some of the commonly known acts involving
someone’s copyrighted work. Thus, it is the use of infringement of copyright:
someone’s copyrighted work without permission thereby
infringing certain rights of the copyright holder, such as the
right to reproduce, distribute, display or perform the
protected work. Copyright protection gives exclusive rights Making infringing copies for sale or hire or selling or letting them
for hire;
to the owners of the work to reproduce the work enabling
them to derive financial benefits by exercising such rights. If
any person without authorisation from the owner exercises
these rights in respect of the work which has copyright Permitting any place for the performance of works in public
where such performance constitutes infringement of copyright;
protection it constitutes an infringement of the copyright. If
the reproduction of the work is carried out after the expiry
of the copyright term it will not amount to an infringement.
Distributing infringing copies for the purpose of trade or to such
an extent so as to affect prejudicially the interest of the owner of
copyright;
The Copyright law in India provided for
remedies to be made available to the author
against a copyright infringer. The Copyright Public exhibition of infringing copies by way of trade; and Importation
Act, 1957 provides to an author both Civil, of infringing copies into India.
Criminal and border enforcement remedies.
They are:

Criminal Remedies:
Civil Remedies: provide Border Enforcement: also provides
provide for
for injunctions, damages, for prohibition of import and
imprisonment, fines,
interpretation of destruction of any imported goods
seizures of infringing
accounts, delivery and that infringe the copyright of a
copies and delivery of
destruction of infringing person with the assistance of the
copies and damages for infringing copies to customs authorities of India.
conversion. the owner. CS ANOOP JAIN
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 LESSON 19: LAW RELATING TO GEOGRAPHICAL INDICATIONS OF GOODS
Geographical Indication

Geographical
Indications of It is an indication.
The object of the Geographical
Goods
Indications of Goods (Registration and
(Registration and
Protection) Act, 1999 is three fold, It originates from a definite geographical territory.
Protection) Act,
firstly by specific law governing the
1999
geographical indications of goods in the
country which could adequately protect It is used to identify agricultural, natural or manufactured goods.
the interest of producers of such goods,
secondly, to exclude unauthorized
persons from misusing geographical The manufactured goods should be produced or processed or
indications and to protect consumers prepared in that territory.
from deception and thirdly, to promote
goods bearing Indian geographical It should have a special quality or reputation or other characteristics.
indications in the export market.

Prohibition of Registration of Certain Geographical Indications (shall Not Be Registered As A Geographical Indication)

(f) which are

(g) which, although
(d) which determined to be
literally true as to the
comprises or generic names or
territory, region or
(c) which contains any indications of
(a) the use of (b) the use of (e) which would locality in which the
comprises or matter likely to goods and are,
which would be which would be otherwise be goods originate, but
contains hurt the religious therefore, not or
likely to deceive contrary to any disentitled to falsely represent to the
scandalous or susceptibilities of ceased to be
or cause law for the time protection in a persons that the goods
obscene matter; any class or protected in their
confusion; or being in force; or court; or originate in another
or section of the country of origin,
territory, region or
citizens of India; or which have
locality, as the case
or JAIN
CS ANOOP fallen into disuse in
140 that country; or
may be;
 What is the benefit of registration of
Registration of Geographical Indication
Geographical Indications?

A geographical indication may be registered in respect of any or all of the It confers legal protection to Geographical
goods, comprised in such class of goods as may be classified by a region or Indications in India.
locality in that territory, as the case may be the Registrar and in respect of a
definite territory of a country.

The Registrar may also classify the goods under in accordance with the Prevents unauthorised use of a Registered
International classification of goods for the purposes of registration of Geographical Indication by others.
geographical indications and publish in the prescribed manner in an
alphabetical index of classification of goods.
Any question arising as to the class within which any goods fall or the It provides legal protection to Indian
definite area in respect of which the geographical indication is to be Geographical Indications which in turn boost
registered or where any goods are not specified in the alphabetical index of exports.
goods published shall be determined by the Registrar whose decision in the
matter shall be final.
It promotes economic prosperity of
producers of goods produced in a
geographical territory.

Duration of registration

Infringement of Registered Geographical

The following acts shall be deemed to be acts of unfair competition,
The registration of a geographical indication shall be for namely:
a period of ten years, but may be renewed from time
to time in accordance with the provisions of this
section. all acts of such a nature as to create confusion by any means
whatsoever with the establishment, the goods or the industrial or
Indications

The registration of an authorised user shall be for a commercial activities, of a competitor;

period of ten years or for the period till the date on
which the registration of the geographical indication in
respect of which the auhorised user is registered false allegations in the course of trade of such a nature as to
discredit the establishment, the goods or the industrial or
expires, whichever is earlier. commercial activities, of a competitor;

geographical indications, the use of which in the course of trade is liable

to mislead the persons as to the nature, the manufacturing process, the
CS ANOOP JAINcharacteristics, the suitability for their purpose, or the quantity, of the
141 goods.
 Geographical Indications Registration Workflow

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 Step by Step Guide on Geographical Indication of Goods Registration Process

Step 1 : Filing of application

check whether the indication comes within the ambit of the definition of a
Geographical Indication under
section 2(1)(e) of the Act. The association of persons or producers or any Step 2 & 3: Preliminary Scrutiny and
organization or authority should represent the interest of producers of the Examination l The Examiner will scrutinize the
concerned goods and should file an affidavit how the applicant claims to application for any deficiencies. l The applicant
represent their interest. l Application must be made in triplicate. l The should within one month of the communication
application shall be signed by the applicant or his agent and must be in this regard, remedy the same. l The content
accompanied by a statement of case. l Details of the special characteristics of statement of case is assessed by a
and how those standards are maintained. l Three certified copies of the consultative group of experts will versed on the
map of the region to which the GI relates. l Details of the inspection subject. l The will ascertain the correctness of
structure if any to regulate the use of the GI in the territory to which it particulars furnished. l Thereafter an
relates. l Give details of all the applicant together with address. If there is Examination Report would be issued.
a large number of producers a collective reference to all the producers of
the goods may be made in the application and the GI. If registered will be
indicated accordingly in the register.

Step 4: Show Cause Notice l If the Registrar has

any objection to the application, he will
communicate such objection. l The applicant
must respond within two months or apply for a
Step 5: Publication in the Geographical
hearing. l The decision will be duly
Indications Journal Every application, within
communicated. If the applicant wishes to
three month of acceptance shall be published in
appeal, he may within one month make a
the Geographical Indications Journal.
request. l The Registrar is also empowered to
withdraw an application, if it is accepted in
error, after giving on opportunity of being
heard.

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 Step 6: Opposition to Registration l Any person
can file a notice of opposition within three
Step 7: Registration l Where
months (extendable by another month on
an application for a GI has Step 8: Step 9:
request which has to be filed before three
been accepted, the registrar Renewal A Additional
months) opposing the GI application published in
shall register the registered Protection
the Journal. l The registrar shall serve a copy of
geographical indication. If GI shall be to Notified
the notice on the applicant. l Within two months
registered the date of filing valid for 10 Goods
the applicant shall sent a copy of the counter
of the application shall be years and Additional
statement. l If he does not do this be shall be
deemed to be the date of can be protection
deemed to have abandoned his application.
registration. l The registrar renewed on for notified
Where the counterstatement has been filed, the
shall issue to the applicant a payment of goods is
registrar shall serve a copy on the person giving
certificate with the seal of renewal provided in
the notice of opposition. l Thereafter, both sides
the Geographical indications fee. the Act.
will lead their respective evidences by way of
registry.
affidavit and supporting documents. l A date for
hearing of the case will be fixed thereafter.

Step 10: Appeal Any person aggrieved by an order or

decision may prefer an appeal .

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 LESSON 20: LAW RELATING TO DESIGNS

DESIGN Design means only the features of shape, configuration, pattern or ornament or
composition of lines or colour or combination thereof applied to any article
whether two dimensional or three dimensional or in both forms, by any
industrial process or means, whether manual, mechanical or chemical, separate
or combined, which in the finished article appeal to and are judged solely by the
eye, but does not include any mode or principle or construction or anything
which is in substance a mere mechanical device, and does not include any trade
mark, as define in clause (v) of sub-section of Section 2 of the Trade and
Merchandise Marks Act, 1958, property mark or artistic works as defined under
Section 2(c) of the Copyright Act, 1957.

“Artistic works”
means: -

A painting, a sculpture, a drawing (including a diagram, map, chart or plan) on

engraving or a photograph, whether or not such work possesses artistic quality;
An work of architecture; and
Any other work of artistic craftsmanship.

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 Application for Registration of Designs
Prohibition of Registration of Certain Designs (Section 5)
(1) The Controller may, on the application of any person
claiming to be the proprietor of any new or original design not
previously published in any country and which is not contrary to
design which prohibited of registration under Section 4 of the Design Act,
public order or morality, register the design under this Act.
2000 are as follows:

(2) Every application shall be in the prescribed form and shall be

filed in the patent office in the prescribed manner and shall be
accompanied by the prescribed fee.
is not new or original; or

(3) A design may be registered in not more than one class, and,
in case of doubt as to the class in which a design ought to be
registered, the Controller may decide the question.
has been disclosed to the public anywhere in India or in any other
country by publication in tangible form or by use or in any other way
prior to the filing date, or where applicable, the priority date of the
application for registration; or
(4) The Controller may, if he thinks fit, refuse to register any
design presented to him for registration; but any person
aggrieved by any such refusal may appeal to the High Court.

is not significantly distinguishable from known designs or combination of

known designs; or (5) An application which, owing to any default or neglect on the
part of the applicant, has not been completed so as to enable
registration to be effected within the prescribed time shall be
deemed to be abandoned.

comprises or contains scandalous or obscene matter, shall not be

registered.
(6) A design when registered shall be registered as of the date of
the application for registration.

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 Essential requirements for the registration of ‘Design’ under the Act

The design should be new or original, not

previously published or used in any The design should relate to features of
country before the date of application for shape, configuration, pattern or The design should be applied or applicable
registration. The novelty may reside in the ornamentation applied or applicable to an to any article by any industrial process.
application of a known shape or pattern to article.
new subject matter.

Any mode or principle of construction or operation or

anything which is in substance a mere mechanical device,
The features of the design in the finished would not be a registrable design. For instance a key
article should appeal to and are judged having its novelty only in the shape of its corrugation or
solely by the eye. This implies that the bent at the portion intended to engage with levers inside
design must appear and should be visible the lock associated with, cannot be registered as a design
on the finished article, for which it is under the Act.
meant. The design should not include any Trade Mark or property
mark or artistic works as defined under the Copyright Act,
1957.

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 What is the duration of the registration of a design? Can it be extended?
The duration of the registration of a design is initially ten years from the date of registration, but in cases where claim to priority has been
allowed the duration is ten years from the priority date. This initial period of registration may be extended by further period of 5 years on an
application made to the Controller before the expiry of the said initial period of ten years.

Can the Registration of a Design be cancelled?

According to Section 19 of the Act, the registration of a design may be cancelled at any time after the registration of design on a petition for
cancellation in prescribed form with fee to the Controller of Designs on the following grounds:

• That the design has been previously registered in India; or

• That it has been published in India or elsewhere prior to date of registration; or
• The design is not new or original; or
• Design is not registrable; or
• It is not a design under Clause (d) of Section 2.

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 Design Registration Process Workflow

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