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Regulation of VC funding in India: A critical analysis

This blog post has been authored by Ms. Prerna Kashyap


The venture capital industry evolved in the late 1980s in India. Back in 1973, a committee on Development of Small and Medium Enterprises highlighted the need to foster venture capital as a source of funding new entrepreneurs and technology. The Government of India took a policy initiative and announced guidelines for venture capital funds (VCFs) in 1988 on the basis of a study undertaken by the World Bank. Slowly and gradually various rules and regulations were made to deal with the venture capital funding in India.[1]


Venture capital (VC) funds start-ups and early-stage emerging companies having significant potential for growth[2] but involves high risk.

Section 2(z) and 2(za) of the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012 (“AIF Regulations”) defines “venture capital fund” as an “Alternative Investment Fund which invests primarily in unlisted securities of start-ups, emerging or early-stage venture capital undertakings mainly involved in new products, new services, technology or intellectual property right based activities or a new business model and shall include an angel fund as defined under Chapter III-A” and “venture capital undertaking” as “a domestic company which is not listed on a recognised stock exchange at the time of making investments” respectively.


Securities and Exchange Board of India (SEBI) is the nodal regulator for VCFs to provide a uniform, hassle free, single window regulatory framework. Various regulations such as the SEBI (Venture Capital Funds) Regulations, 1996 (“VCF Regulations”) and the SEBI (Foreign Venture Capital Investor) Regulations, 2000 have been issued on the recommendation of the Chandrasekhar committee fostering growth in the industry. As per the SEBI report relating to activities of VCFs until June this year, a total of Rs. 22,563.88 crores VCF has been raised.[3]


AIF Regulations has been brought in order to replace the VCF Regulations and has been notified vide PR no. 62/2012[4] dated May 12, 2012. As per the AIF regulations, the funds registered as VCF under VCF Regulations shall continue to be regulated by the same till the existing fund or scheme managed by the fund is wound up and such funds shall not launch any new scheme after notification of these regulations. VCF may seek re-registration, subject to approval of their investors.[5]

Registration of Venture Capital Fund

VCFs are included in “Category I Alternative Investment Fund”[6]. No entity or person shall act as a VCF unless it has obtained a certificate of registration from the SEBI. Form ‘A’ lays down the instructions for the application for the grant of the certificate. Eligibility criteria are prescribed for the purpose of the grant of certificate to an applicant. Vide Explanation[7] of sub- clause (a) of sub- regulation (4) of regulation 3 of the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012, states that a VCF can be organized in the form of a trust or a company.

Investment Conditions and Restrictions

The AIF Regulations specify that VCFs shall state investment strategy and any material alteration to the fund strategy shall be made with the consent of unit holders; they shall raise funds through private placement by issue of placement memorandum and may launch schemes subject to filing of placement memorandum. The minimum tenure is prescribed as 3 years. Units of close- ended VCFs may be listed on the stock exchange.[8]

VCFs may invest in securities of companies incorporated outside India subject to conditions issued by the Reserve Bank of India and the SEBI. They shall invest not more than 25% of investable funds in an investee company whereas a large value fund for an accredited investor may invest up to 50% of investable funds in an investee company. They shall not offer their units to other VCFs if they are investing in units of other VCFs.

If a VCF is investing in associates/ units of VCFs managed by manager/ sponsor/by associates, approval of 75% of investors by value for investment is required. The terms of co-investment by a manager/ sponsor/ co-investor, shall not be more favourable than the terms of investment of the VCF. Un-invested portion of investable funds and divestment proceeds pending for distribution to investors shall be invested as prescribed in regulations.

Investment by VCFs in the shares of entities listed on institutional trading platforms shall be deemed to be investment in ‘unlisted securities’ for the purpose of these regulations. They shall invest in investee companies, venture capital undertaking (VCUs), special purpose vehicles, limited liability partnerships (LLPs) in units of other Category I AIFs of the same sub category or in units of Category II AIFs as specified in this regulation. They shall not borrow funds & shall not engage in leverage except for meeting temporary requirements. They shall invest at least 75% of the investable funds in unlisted equity shares or equity linked instruments of VCU or in companies listed or proposed to be listed on SME exchange and this shall be achieved by the VCFs by the end of its life cycle. For the purpose of market making, the VCF is required to enter an agreement with a merchant banker.[9]

Angel fund is a sub-category of VCF that raises funds from angel investors and invests in accordance with the prescribed provisions[10].

VCFs are exempted from certain provisions of Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 in respect of companies listed or proposed to be listed on SME exchange.[11]

Registration of Foreign Venture Capital Investors

The applicant shall make an application to the Board in Form A along with the application fee.[12] The applicant should be granted the necessary permission by the RBI to make investments in India. Eligibility criteria are prescribed for the purpose of the grant of certificate to an applicant.[13]

Investment Conditions and Restrictions for a Foreign Venture Capital Investor

Investor shall disclose his investment strategy and it can invest all his funds in one VCF.

A Foreign Venture Capital Investor (FVCI) shall make investment in at least 66.67% of the investible funds in unlisted equity shares or equity linked instruments of VCUs or make an investment in not more than 33.33% of the investible funds by way of:

  • subscription to initial public offer of a VCU proposed to be listed;
  • debt instrument of a VCU in which the FVCI already has equity investment;
  • preferential allotment of equity shares of a listed company subject to 1 year lock-in period.[14]
Obligations of a Foreign Venture Capital Investor

FVCI shall maintain books of account and records for a period of 8 years. It shall appoint a custodian for custody of the securities who shall monitor the investment. It shall furnish periodic reports to the SEBI and information as required/ called for by the SEBI.  It shall appoint a branch of a bank approved as designated bank by the RBI for opening of the foreign currency denominated account.[15]


The SEBI master circular and circulars ensure an effective regulatory framework for VCFs and the SEBI. The SEBI specified guidelines stating that AIFs may invest in securities of companies incorporated outside India subject to the condition that they may invest in equity and equity linked instruments only of off-shore VCUs, subject to overall limit of USD 1500 million and mandating benchmarking of the performance of the VCFs which will help investors in assessing the performance of the VCF industry.[16]

In regard to the validity period of approval granted by the SEBI to VCFs for overseas investment, on recommendation of the Alternative Investments Policy Advisory Committee, it has been decided to reduce the time limit from 6 months to 4 months.[17]

VCFs are required to file an application to SEBI for allocation of overseas investment limit. In relation to an overseas investee company a VCF shall:[18]

  • Invest in such a company, which is incorporated in a country whose securities market regulator is a signatory to the International Organization of Securities Commission’s Multilateral Memorandum of Understanding (MoU) or a signatory to the bilateral MoU with the SEBI.
  • Not invest in a company, which is incorporated in a country identified in the public statement of the Financial Action Task Force.

VCFs shall furnish the sale/divestment details of the overseas investments to the SEBI in the format prescribed and an undertaking for the proposed investment shall be submitted to the SEBI by the trustee/board/designated partners of the VCFs.[19]


The regulations provide that FVCIs may contribute to meet the shortfall in promoters’ minimum contribution, subject to a maximum of 10% of the post-issue capital without being identified as promoter(s)[20] and contributions made by FVCIs in specified securities shall be locked-in for a period of 18 months from the date of allotment of the further public offer.[21]

Exemption in case of substantial acquisition of shares or voting rights

A VCF or a FVCI registered with the SEBI, by promoters of the target company pursuant to an agreement between such VCF or FVCI and such promoters, who has acquired and holds shares or voting rights(VRs) and exercises 25% or more of the VRs in the target company but less than the maximum permissible non-public shareholding[22], shall be exempt from the obligation to make an open offer[23] to acquire within any financial year additional shares or VRs in the company and exercise more than 5% of the VRs.

A VCF established in the form of a trust/ company/ body corporate and registered under the VCF Regulations is not considered as an investment vehicle for the purpose of the Foreign Exchange Management (Non-debt Instruments) Rules, 2019.[24]

Applicability of Angel Tax

Recently, the Central Board of Direct Taxes has issued an amended Rule 11UA (2) of the Income Tax Rules and it provides that for Section 56(2)(viib) of the IT Act, where a taxpayer is a VCU who has received consideration from the issue of unquoted equity shares to a VCF, the price of such equity shares corresponding to such consideration be taken as the fair market value (FMV) of the equity shares for resident and non-resident investors provided that:

  • the consideration from such FMV does not exceed the aggregate consideration received from a VCF; and
  • the consideration received by the undertaking from a VCF, within 90 days before or after the date of share issuance.[25]

Intimation of the winding up of the VCF should be given to the SEBI. VCF can be wound up in the following circumstances:[26]

If the VCF is set up as a trust, it shall be wound up:

  • When the tenure of the VCF or the scheme launched by the VCF, as mentioned in the placement memorandum is over; or
  • If in the opinion of the trustees and in the interest of the investors the VCF should be wound up; or
  • If 75% of the investors in the VCF pass a resolution at a meeting that the VCF should be wound up.

If the VCF is set up as a LLP, it shall be wound up as per the Limited Liability Partnership Act, 2008. If the VCF is set up as a company, it shall be wound up in accordance with the provisions of the Companies Act, 1956. If the VCF is set up as a body corporate, it shall be wound up as per the statute under which it is constituted.


India has come a long way in the journey of venture capital. With the increase in the number of start-ups, more and more investment opportunities are coming up in the sectors such as biopharmaceuticals, software, financial institutions and investors and so on. This shows the significance of flexible and up-to-date regulations incorporating latest developments. The Securities and Exchange Board of India issues various circulars and directions supplementing the current regulations and this helps in regulating and facilitating the influx of venture capital investments made by residents and non- residents in India.

[1] Report of Advisory Committee on Venture Capital.PDF (

[2] Rebecca Baldridge, Understanding Venture Capital, dated 8 June, 2023; accessed on 17 October, 2023.

[3] SEBI | Data relating to activities of Alternative Investment Funds (AIFs), accessed on 14 October, 2023.

[4] SEBI | SEBI notifies SEBI (Alternative Investment Funds) Regulations 2012, accessed on 14 October, 2023.

[5] Sub- regulation (2) of regulation 3 of the SEBI (Alternative Investment Funds) Regulations, 2012.

[6] Clause (a) of sub- regulation (4) of regulation 3 of the SEBI (Alternative Investment Funds) Regulations, 2012.

[7] Explanation.─” For the purpose of this clause, Alternative Investment Funds which are generally perceived to have positive spillover effects on economy and for which the Board or Government of India or other regulators in India might consider providing incentives or concessions shall be included and such funds which are formed as trusts or companies shall be construed as “venture capital company” or “venture capital fund” as specified under sub-section (23FB) of Section 10 of the Income Tax Act, 1961.”

[8] Chapter II, Registration of Alternative Investment Funds of the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012.


[9] Ibid.

[10] Sub- regulation (1) of Regulation 19A of the SEBI (Alternative Investment Funds) Regulations, 2012.

[11] Sub- clause (c) of sub- regulation (3) of regulation 16 of the SEBI (Alternative Investment Funds) Regulations, 2012.

[12] Regulation 3 of the SEBI (Foreign Venture Capital Investors) Regulations, 2000.

[13] Regulation 4 of the SEBI (Foreign Venture Capital Investors) Regulations, 2000.

[14] Regulation 11 of the SEBI (Foreign Venture Capital Investors) Regulations, 2000.

[15] Chapter IV of the General Obligations and Responsibilities of the SEBI (Foreign Venture Capital Investors) Regulations, 2000.

[16] SEBI Master Circular No. SEBI/HO/AFD/PoD1/P/CIR/2023/130 dated July 31, 2023, available at:, accessed on 13 October, 2023.

[17] SEBI Circular No. SEBI/HO/AFD/PoD/CIR/P/2023/137 dated August 04, 2023, available at:, accessed on 17 October, 2023.

[18] SEBI Circular No. SEBI/HO/AFD-1/PoD/CIR/P/2022/108 dated August 17, 2023, available at: SEBI | Guidelines for overseas investment by Alternative Investment Funds (AIFs) / Venture Capital Funds (VCFs), accessed on 14 October, 2023.

[19] Ibid.

[20] Sub-regulation (1) of regulation 14 of the SEBI (Issue of Capital and Disclosure Requirements) Regulations 2018.

[21] Clause (a) of regulation 115 of the SEBI (Issue of Capital and Disclosure Requirements) Regulations 2018.

[22] Sub- regulation (2) of regulation 3 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.

[23] Sub- clause (f) of sub- regulation (4) of regulation 10 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.


[24] Reserve Bank of India – Master Directions (

[25] Alerts: Direct Tax Alert – CBDT notifies amended Valuation Rules in respect of Angel tax, available on Direct Tax Alert – CBDT notifies amended Valuation Rules in respect of Angel tax – BDO, accessed on 18 October, 2023.

[26] Regulation 29 of the SEBI (Alternative Investment Funds) Regulations, 2012.


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Regulation of anti-trust practices of big tech companies in India – A critical analysis

This blog post has been authored by Ms. Saumya Mishra


Big digital corporations have grown and become more influential in the 21st century in an unprecedented way, and this tendency is not just present in the West. Companies like Google, Amazon, Facebook (now Meta), and others have greatly increased in importance in India as well, altering businesses and sectors all throughout the country. These businesses have revolutionised how Indians interact with trade, connectivity, entertainment, and other areas by leveraging technology and innovation.[1] Big IT businesses’ rise in a variety of industries has not been without controversy and cause for worry. Several important challenges, including anti-trust practices, violations of data privacy, and the formation of unchallengeable market domination, have emerged as a result of these corporations’ substantial impact and market dominance.[2]

India has structured a regulatory framework to promote fair competition, safeguard consumers, and solve new concerns in the digital sphere in response to the large IT companies’ rapid expansion and impact. The Competition Act of 2002 and other relevant rules serve as the primary regulatory foundation for this system.[3] Due to their significant market power and propensity for anti-competitive behaviour, huge tech businesses are particularly important under the Competition Act.[4] Due to their considerable influence and wealth, these corporations could use tactics to discourage innovation and restrict competition. When analysing how large IT businesses behave in India’s fast changing digital environment, the act’s prohibitions against anti-competitive agreements and abuse of power are especially important.

Overview of Competition Act (2002):

The Act was passed in 2002 to guarantee commercial freedom and to provide guidelines for how enterprises should operate on the market. The Act primarily deals with and governs three things: anti-competitive agreements, a company’ dominating position and misuse of that position, and combinations of different enterprises through mergers, acquisitions, amalgamations, etc.[5]

The Competition Commission of India (CCI), India’s top antitrust watchdog, is essential to fostering fair competition and defending consumer interests in the nation’s marketplaces.[6]

Anti-Competitive Agreements: 

Horizontal Agreements: These agreements between rival businesses or entities with equivalent stages of manufacturing are anti-competitive. In India, some horizontal agreements are thought to have a significant adverse effect on competition (AAEC). If the parties can demonstrate that their agreement doesn’t hurt competition, this supposition can be refuted.[7]

Vertical Agreements: These agreements between organisations with various output levels are anti-competitive. Vertical agreements are typically permitted unless they result in or are likely to result in an AAEC in India. The Act includes a comprehensive list of vertical agreements that may be prohibited based on their effects on India’s competitive circumstances as well as a comprehensive list of horizontal agreements that are considered to cause AAEC.[8]

Cartel Conduct:

A cartel is essentially an arrangement among two or more businesses or partners involved in the public provision of goods and services for the purpose of regulating deceptive price arrangements.[9]

Section 3 of the act certainly “prohibits and renders the agreement void when the business partners enter into an agreement with respect to the production of supply, distribution, storage, goods or provisions of the services which are likely to cause an ample amount of adverse effect to the competition in India.”[10]

Additionally, Section 3 has a clause that essentially forbids cartel firms from reaching anti-competitive agreements, including: –

  • Deciding on the acquisition and sale of products, both implicitly and explicitly.
  • limiting control over service sales, investment, and manufacturing.
  • the regional market’s distribution.
  • participating in collusive bidding.
  • Therefore, such agreements must be regarded as invalid.[11]
 Abuse of Dominance Position:
  • This is given under Section 4 of the Act.[12] A business or corporation is considered to be in a dominating position if it exploits its position to take autonomous control of the market or if it has an impact on the competitors. No firm is forbidden from holding a dominating position, but the Act forbids misuse of such position when it is used for improper purposes. The Act specifies a number of actions that constitute abuse of a dominating position. As follows:
  • If a position is taken advantage of to impose any unjust pricing or conditions, including predatory prices,
  • If it’s applied to restrict development or production,
  • restricts market entry,
  • To end the contract due to unneeded conditions,
  • to improve one’s position in other markets.[13]
Combination Regulation: Merger, Acquisition & Amalgamation

The Act forbids combinations that create or are likely to cause an AAEC and defines combination as the purchase of one or more businesses by one or more people, or the merger or amalgamation of businesses where the combining parties meet certain asset or revenue requirements in India and overseas.[14]

In this regard, Big Tech corporations have acquired over 400 companies worldwide in the past ten years, but in India, they have invested heavily in Reliance’s Jio Platform and have also acquired startups like Google-Halli and Where’s My Train. Killer purchases, which effectively replace innovation and eliminate competition as a result, have not yet been subject to regulatory review by the CCI.[15]


Antitrust authorities have been closely monitoring monopolistic IT firms and their business operations in recent years, checking them for any signs of potential anti-competitive behaviour. Concerns regarding the market dominance and possibly unfair activities of dominant tech corporations in key areas have been sparked by their emergence. The biggest internet firms, including Amazon, Apple, Facebook, Google, and Microsoft, have been the subject of several inquiries, legal actions, and penalties for antitrust infractions.[16]

  1. Data control and Privacy: Control over data is one of the main problems motivating the crackdown on major technological businesses. Numerous personal data are available to businesses like Facebook and Google, which they may use to focus advertising and gain a competitive edge. Antitrust regulations worry that these businesses may be utilising their data control to monopolise the market unfairly and restrict competition.[17]

In Competition Commission of India v. Google LLC and Ors, in order to force its partners to utilise its search services under unfair terms, such as compelling them to share their data only with Google and forbidding them from utilising relatively similar info with other web pages, Google had exploited its dominating position. The CCI held that “this practice had resulted in a significant barrier to entry for competing search engines, as they were unable to access the data necessary to improve the quality of their search results.”[18]

WhatsApp Inc. v. Competition Commission of India, the court “acknowledged the importance of individual autonomy and control over personal data, and emphasized the need for transparency and informed consent in data processing. The court held that WhatsApp’s new privacy policy, which required users to agree to share their data with Facebook, violated the right to privacy of Indian citizens.”[19]

  1. Predatory Pricing: While cutting prices and making losses to attract consumers can be parts of good competition, doing so in an effort to drive out rivals is referred to as predatory pricing, which is often prohibited. Similarly, although entrance restrictions are lawful, they might result in an unlicensed monopoly.[20] For example, in order to gradually shorten shipping times in 2015, Amazon suffered a net loss of $5 billion on shipping costs, yet this was nonetheless a success for the corporation because other merchants lacked the resources to compete. Customers turned to Amazon in search of lightning-fast shipping speeds.[21]
  2. Self-Preferencing: When a business advertises its very own services or that of its affiliates on its network while also competes with other service suppliers on the same site, this practise is known as self-preferencing.[22] In the Alphabet Inc. case, “it was alleged that Google unfairly privileges ‘Google Pay’ by prominent placement on the play store, Android OS and Android based smartphones by skewing the search results on the play store in favour of Google Pay and pre-installing it on android smartphones. It was held in contravention of Section 4 i.e., abuse of Dominance position.” [23]
  3. Search and Ranking Preferences: On every platform, users may search using keywords to get data based on algorithms. Search engine algorithms should show the best-selling or most highly rated items or services at the top, without any prejudice. If any other products, such as promoted products or orders that the marketplace itself fills, supersede, it suggests search bias in favour of those items. The CCI had remarked that the question of preferential ranking should also be regarded in connection with the aforementioned in the same 2019 case involving Amazon and Flipkart (exclusive tie-ups). Through greater discounts and preferred listing, competition on the platforms may be impacted in behalf of the exclusive brands and merchants. Because of this, it is necessary to do a thorough analysis to determine how vertical agreements function, what their main clauses are, and how they affect competition.[24]

There are various other challenges like restricting third party applications, deep discounting done by big tech companies which make it difficult for the present regulatory framework to deal with it.


New laws and regulations for the digital marketplace are required immediately, and suitable ex ante legislation should be used to create new requirements. Through the Digital Markets Act, the EU has already acknowledged this requirement. It is time for India to enact similar legislation.[25] A legislative panel in India has suggested that the government create a law governing digital competition to control Big Tech firms’ anti-competitive business activities on their platforms.[26]

Prior to a merger or acquisition, a country’s anti-trust watchdog will exercise tougher oversight in addition to the financial requirements. This will require a thorough study, including extensive due diligence on a proposed deal, by the regulator.[27]

Need for Ex-ante regulation in India: Despite the fact that the competition rules address that oddity, they are just too slow to act in highly technological industries. By the time an order is passed, the dominant player, in Google’s instance, has acquired an advantage. To avert market failures and reduce potential anti-competitive behaviour, ex-ante legislation is urgently needed in this situation.[28]

The Competition Amendment Bill, 2022 contains the government’s proposed changes to the competition legislation.[29] In April 2023, the Bill wins presidential assent. The CCI must create regulations that specify the criteria for determining whether an organisation has significant commercial activities in India. The Commission’s assessment process will be strengthened, especially in the digital and infrastructure sectors, where the bulk of transactions were not previously notified because the asset or turnover amounts fell below the jurisdictional requirements.[30]

In conclusion, the fast rise of Big Tech companies in India has presented the digital environment with never-before-seen difficulties. In tackling anti-competitive behaviour and defending consumer interests, the current regulatory structure, particularly the Competition Act of 2002, has achieved progress. However, it has shown to be ineffective in tackling the complex issues of the digital era, such as search bias, self-preferencing, predatory pricing, and data privacy. Ex-ante regulation and new legislation designed for the digital market must be adopted by India in order to overcome these obstacles, following worldwide best practises. Although the proposed Competition Amendment Bill of 2022 is a positive beginning, strong and progressive legislation is essential to guarantee fair competition, innovation, and consumer protection in the developing digital economy.

To learn more about the Competition Act, 2002, enrol for Diploma in Competition Law.

[1] West India Company: The Rise of New Imperialists in Digital World, OUTLOOK, (Sept. 8, 2023),

[2] Anti-Competitive Practices by Big Tech Companies, DRISHTI IAS, (Sept. 8, 2023),

[3] Why big tech companies are increasingly worried about Competition Law in India, IPLEADERS, (Sept. 8, 2023),

[4] Id.

[5] India’s Antitrust Problem with Big Tech, THE RMLNLU LAW REVIEW BLOG, (Sept. 8, 2023),

[6] Competition Commission of India’s Actions Against Big Tech Companies for Antitrust Violations, KSK ADVOCATES AND ATTORNEYS, (Sept. 8, 2023),

[7] Antitrust Law In India: Big Tech Regulation & Fair Digital Competition, PARKER & PARKER, (Sept. 8, 2023),

[8] Id.

[9] Understanding the legality of cartels in India, IPLEADERS, (Sept. 8, 2023),

[10] The Competition Act 2002, § 3, No. 12, Acts of Parliament, 2002 (India).

[11] Id.

[12] The Competition Act 2002, § 4, No. 12, Acts of Parliament, 2002 (India).

[13] Id.

[14] Supra note 7

[15] Supra note 5

[16] Competition Commission of India’s Actions Against Big Tech Companies for Antitrust Violations, KSK ADVOCATES AND ATTORNEYS, (Sept. 8, 2023),

[17] Id.

[18] Google LLC and Another v. Competition Commission of India Through its Secretary, 2023 SCC OnLine NCLAT 147.

[19] WhatsApp Inc. v. Competition Commission of India, 2020 SCC OnLine CCI 32.

[20] Big Tech Monopolies: The Four’s Efforts to Eliminate Competition, SHORTFORM, (Sept. 8, 2023),

[21] Id.

[22] Supra Note. 2

[23] XYZ v. Alphabet Inc., 2020 SCC OnLine CCI 41

[24] Anti-Competitive Practices by Big Tech Companies, MINISTRY OF CORPORATE AFFAIRS, (Sept. 8, 2023),

[25] Regulating The Big Techs and Competition in The Market, CIVILS DAILY, (Sept. 8, 2023),

[26] India panel recommends digital competition act to rein in Big Tech, REUTERS, (Sept. 8, 2023),

[27] Big, Bigger Tech: Trust and Anti-Trust, GATEWAY HOUSE INDIAN COUNCIL ON GLOBAL RELATIONS, (Sept. 8, 2023),

[28] Big Tech And The Need In India For Ex-Ante Regulation, THE HINDU, (Sept. 8, 2023),

[29] Supra note 2

[30] Id.


Regulation of Cross-Border Mergers and Acquisitions in India, UK and USA

This Blog has been written by S. Vishal Varma


The words “mergers” and “acquisitions” refer to the combination of businesses or assets via different kinds of transactions. Mergers and acquisitions are mostly used interchangeably in practice but they have their own set of differences. A merger refers to the consolidation of two or more entities into a single entity where the ownership and control of the previous entities will be transferred to the new entity. The recent consolidation of Vodafone India and Idea Cellular Network into a new company ‘Vi’ is a recent example of merges[1]. On the other hand, acquisitions refer to the takeover of one or more companies by a company and confirm itself as the new owner. The purchase of one by another company is called an acquisition. Unlike mergers, an acquisition does not give rise to a new entity. In acquisition, the transferee is acquired by the transferor company.


Cross-border Mergers and acquisitions are a concept where the companies of different countries will get merged or acquired into one. In essence, these cross-border mergers and acquisitions include agreements between both domestic and foreign companies in the target nation. The trend of Cross- border mergers and acquisitions has raised with the globalization of the world economy.[2]

The concept of cross-border merger has been raised in its numbers as the time passes and currently, Indian companies are more common to cross-border mergers and acquisitions than other countries. TATA Steel acquiring the US based company Corus is an example of cross-border merger.[3]

  1. Inbound Merger: A cross-border merger where the resultant company is an Indian Company and where the foreign company is considered as a branch office of the Indian Company is called an Inbound Merger.
  2. Outbound Merger: A cross-border merger where the foreign company becomes the resultant company as a result of the merger is called an outbound merger.


  1. Foster Entry Growth: When an Indian company is merging with any foreign company then this Indian company is also entering the foreign markets where the merged company resides or operates. Thus, cross-border mergers will smooth entry into other markets.
  2. Increase in Market Share: A merger increases the scale of the company which in turn raises its value in the market. As the proportion of the share of the company in the market will be increased as a result of merger or acquisition, its share price may also increase and also helps the merged companies to reduce their costs and achieve a better position in the competition, thus it increases the market share of the company.
  3. Resource Sharing: A company can use the resources of the merged company based on the proportion of their merger agreement. Also, an acquired company, when it acquires a company it is also deemed to acquire the resources of the target company. Thus, sharing of resources helps the companies to have greater force in their operations.
  4. Increased economies of scale: Cross-border mergers or acquisition leads to mass production thus leading to the operation on a larger scale. The size of the company raises the market share of the company and also has an advantageous position in the market.


  1. Cultural Differences: Every country has its own set of cultures and different behaviour toward different products. It is necessary to cope with such differences and should operate in markets of merged or target companies keeping in view the interest of the customers and workforce. Failure to maintain proper balance on the cultural differences leads to the losses of the company.
  2. Complexities due to bankers, lawyers, regulations etc.: In cross-border mergers and acquisitions there involves a lot of documentation and compliance. Any failure of such regulations leads to hefty penalties. In such mergers and acquisitions, the currency and banks of the countries vary and have their own set of laws and thus it becomes a hindrance to the acquirer company or the merging company.
  3. Legal and Regulatory differences: cross-border M&A transactions involve navigating different legal and regulatory systems, which can be complex and time consuming. Companies must ensure compliance with local laws, regulations and tax policies which can vary significantly across borders.

A merger strategy is a business term that refers to the strategies and tactics that companies or firms use to align their interests in which the ownership or control of two or more entities was not previously under a single ownership. It is a special type of acquisition in which two or more entities join together to form a larger entity. Mergers can take place in different contexts with varying degrees of intensity. The term merger is not defined in the Companies Act, 2013 but in the general sense it is used to define the consolidation of companies into a single entity to carry on business. Mergers can be done in various ways.

  1. Horizontal Mergers: When two or more competing companies or any companies that are in same line of the market, merge into one company to get the benefit over the competition is considered as horizontal merger.
  2. Vertical Mergers: It is a consolidation of two or more companies that are not competing but are involved in the same line of transactions in their respective markets. The entities merging are involved in different levels of the same transaction or market. Such a merger reduces the operations transportation warehouse and other related costs and can also achieve an advantageous position in the market.
  3. Roll-up Mergers: It’s a type of horizontal or vertical merger. Roll-up Merger’s legitimate definition is consolidating or joining different small organizations into an enormous element that is better situated for economies of scale or the upper hand. Rollup strategy involves the process of acquiring small organizations in the market and consolidating them into a single larger organisation.[4]

Acquisition by definition is the acquisition of one company by another company with different owners. The Acquisition means direct investment to purchase an existing company.

There are 2 types of acquisition:

  1. Friendly acquisition: It is a type of acquisition where the acquisition of the company will be done by the consent of its members, shareholders, creditors etc. The transferor company will provide an offer to the target company to acquire it and merge the transferee company in it.
  2. Hostile Acquisition: In this acquisition the transferor company will acquire the ownership or control of the company without the will of the target company.

In order to encourage cross-border mergers and acquisitions, India has put certain rules and regulations into place. Cross-border mergers and acquisitions are primarily regulated under Corporate Laws, Tax Laws, Foreign Exchange laws and any other laws that apply to merger structures:


a) Companies Act, 2013:

Sections 230 to 232 of the Companies Act, 2013 include the requirements for domestic mergers, while Section 234 of the Act, along with Rule 25A of the Companies (Compromises, Arrangements and Amalgamations) Rules of 2016, covers cross-border mergers and acquisitions.

Section 234 of the Companies Act states that domestic mergers shall apply mutatis mutandis to cross-border mergers and acquisitions between Indian companies and Foreign Companies as notified by the Central Government. According to this provision, a foreign company can merge with an Indian Company registered under this Act with the prior approval of RBI and the companies are obligated to provide the terms and considerations of the merger or acquisition.[5]

Rule 25A of Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 states that an Indian Company may merge with a foreign company subject to compliance under Sections 230 to 232 along with the prior approval of RBI provided that such foreign companies must be incorporated under the jurisdictions specified in Annexure B.

b) SEBI (SAST) Regulations, 2011:

The SEBI (SAST) Regulations on cross-border mergers and acquisitions aim to provide a level playing field for Indian companies and protect the interests of Indian shareholders. The regulations also provide clarity and transparency in the process of cross-border mergers and acquisitions in India.

  • The regulations apply to all acquisitions of shares, control or voting rights in a listed Indian company by a foreign company, including a merger or amalgamation with a foreign company.[6]
  • The regulations prescribe different thresholds for open offers for different categories of companies. The acquirer is required to make an open offer for 26% of the share capital but can increase its shareholding up to 75% without making any further open offers. Additionally, when the acquirer buys more than 5%, compulsory disclosure of the total ownership is required.[7]
  • The regulations require prior approval from SEBI for any acquisition of shares or control in a listed Indian company by a foreign company.
  • The regulations also require the acquirer to make certain disclosures, such as the details of the acquisition, the acquirer’s shareholding, and the purpose of the acquisition, among others.

c) Competition Act, 2002:

The regulatory body responsible for outlawing anti-competitive agreements, abusing dominant positions, and fostering market competition is the Competition Commission of India (CCI). The CCI has the power to regulate combinations and prescribe necessary changes in their proposed combinations.

  • Section 2(a) defines the term acquisition as an agreement to buy shares, voting rights or other assets of the target company.
  • Section 5 empowers the CCI to make an investigation on whether the combination has any appreciable adverse effect on competition and section 20 of the Act deals with the mode of inquiry
  • The restriction on combinations that have or are expected to have a appreciable adverse effect on competition is covered under Section 6(1).
  • Section 6(2) mandates the companies to provide prior notice along with relevant information to the CCI regarding the combination within 30 days
  • Section 31 empowers the CCI to provide necessary orders on combinations either to approve the combinations or reject the proposed combination or may suggest modifications to prevent the combination from the adverse effect on competition in the market.


a) Foreign Exchange Management Act (FEMA), 1999:

Using the powers granted under Section 234(1) of the Companies Act, 2013, the Central Government has issued the FEMA Cross-border Merger Regulation, 2018, to regulate the process of cross-border mergers. The regulations that are involved are as follows:

  • FEM (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2017,
  • FEM (Transfer or issue of any foreign security) Regulations, 2004,
  • FEMA (Establishment in India of a branch office or a liaison office or a project office or any other place of business) Regulations, 2016 etc.

b) RBI Act:

RBI has also proposed cross-border merger transactions under Companies (Compromises, Arrangements and Amalgamation) Amendment Rules, 2017 to address the issues that arise from the merger or acquisition between Indian and Foreign Companies.[8]


Income Tax Act, 1961 deals with the concept of amalgamation and demerger. The Income Tax Act’s Section 2(1B) defines amalgamation as the joining of two or more companies to create a single company. Mergers and acquisitions have been provided exemption under the head of Income from Capital Gains under section 47 of the Act, arising under indirect transfer of shares due to the merger or demerger of foreign companies. However, this benefit is applies only to an inbound merger.

Subject to the requirements of Section 72A (4) of the IT Act, cross-border demerger occurs when one or more undertakings of a company are transferred to a different entity overseas as a going concern, either to establish a new business or to merge with the current entity.


The Companies Act of 2006 is one of the primary laws controlling M&A transactions in the UK. This act sets out the legal framework for mergers and acquisitions in the UK and applies to both domestic and cross-border transactions.

a) UK Companies Act, 2006:

Under the Companies Act 2006, cross-border mergers can take place between companies registered in different EU member states, or between UK companies and companies registered in EEA countries. The act outlines the requirements for such mergers, including the need for a cross-border merger plan, approved by the shareholders of both companies and the appointment of an independent expert to prepare a report on the merger.

Chapter 2 Part 27 of the Act deals with the concept of mergers and its requirements. [9]Section 1113 of the Act deals with the Enforcement of the Company’s filing obligations.[10]

After Brexit, UK revoked the Companies (Cross-border mergers) Regulations, 2007 along with its amendments of 2008 and 2015 are revoked.

b) Competition Act, 1998:

Competition Law: Cross-border mergers and acquisitions in the UK are subject to the provisions of the Competition Act 1998, which prohibits anti-competitive practices such as abuse of market dominance, price fixing, and collusion. Section 3 of Part I Chapter I of the act expressly exempts mergers from prohibitions. [11]The UK Competition and Markets Authority (CMA) is responsible for enforcing these laws and may intervene in mergers and acquisitions to prevent anti-competitive behavior.[12]

Schedule 2 of the Competition Act states that when a merger takes place for the purpose of Part V of Fair Trading Act or Part 3 of Enterprises Act, then prohibitions under Chapter I do not apply to such mergers. The word ‘any two enterprises’ under this schedule is wider and thus it applies to cross-border mergers.

c) Takeover Code:

The Code’s main focus is on controlling takeover offers and merger transactions of the relevant corporations, regardless of the way they are carried out, including through statutory mergers or schemes of arrangement (as specified in the Definitions Section). In accordance with Article 2 of the Companies (Takeovers and Mergers Panel) (Jersey) Law 2009 (the “Jersey Law”), a Panel has been established to carry out specific regulatory duties relating to takeovers and mergers under Jersey law.[13]

d) National Security and Investment Act:

Chapter 3 states that any acquisition made without the approval of the Secretary of State is considered void. [14]The Secretary of State is empowered with the power to give notice in cases of suspicion that might trigger the national security. [15]Thus, the UK government has increased its scrutiny of mergers and acquisitions involving companies in certain sectors that are deemed to be of strategic importance to the national security. To safeguard national security interests, the government has the authority to prohibit or place restrictions on such transactions.

e) Tax Laws:

Cross-border mergers and acquisitions may also be subject to UK tax regulations, including rules governing the taxation of capital gains, the transfer of intellectual property, and the use of tax havens.


Cross-border mergers and acquisitions (M&A) in the United States are subject to various laws and regulations that govern the process. Cross-border M&A is subject to a number of important rules and regulations in the United States, including:

a) Clayton Act:

The Sherman Act’s basic restrictions are expanded upon by the Clayton Act, 15 U.S.C. 12 et seq., which also targets early-stage anti-competitive issues. Section 7 of the Clayton Act forbids mergers and asset purchases where “the effect of such acquisition may be used to reduce competition or to attempt towards establishing a monopoly, in any line of commerce or anything affecting it in any part of the country.[16]

b) Hart–Scott–Rodino Antitrust Improvements Act (premerger notification):

It is a set of amendments in antitrust laws of the state. For specific mergers and acquisitions, it requires that the corporations notify the Federal Trade Commission and the Justice Department’s Antitrust Division prior to the transaction. The Bureau of Competition is committed to the duty of preventing mergers or acquisitions that affects the competition in the market.[17]

c) Foreign Investment and National Security Act (FINSA):

The Committee on Foreign Investment in the United States (CFIUS) is empowered under the federal statute known as FINSA to assess and approve or disapprove foreign investments in US companies that might endanger national security[18]. The CFIUS may assess cross-border M&A deals involving foreign investors. The US government has passed certain legislations which empower federal agencies in foreign investments that pose risk to national security.[19]

d) Securities Exchange Act of 1934:

This federal law regulates securities transactions and requires companies to make various disclosures related to M&A transactions, such as tender offers, proxy solicitations, and disclosures of material information. Regarding both domestic and international mergers and acquisitions, the Securities and Exchange Commission has established two regulations. “Cross-border Release” facilitates participation in cross-border tenders and exchange offers, mergers and equivalent transactions, and rights offerings for holders of U.S. securities of foreign businesses. The regulation M-A Release governs the tender offer.[20]

Final Rule: The SEC issued exemptive rules on cross-border tender and exchange offers, business combinations, and rights issues involving the stocks of foreign corporations from the Securities Act’s registration requirements. The exemptions’ main goal is to make it easier for American investors to participate in these kinds of transactions.[21]

e) Tax laws:

Cross-border M&A transactions may have significant tax implications, including issues related to the tax treatment of assets, income, and gains, as well as transfer pricing and other international tax considerations. Companies engaged in cross-border M&A transactions in the US need to comply with federal and state tax laws, including the Internal Revenue Code and relevant tax treaties.

f) Foreign Corrupt Practices Act (FCPA):

The FCPA is a federal law that prohibits US companies from engaging in bribery and other corrupt practices when conducting business abroad, including in the context of cross-border M&A transactions. US companies engaged in cross-border M&A transactions need to ensure compliance with the FCPA, which includes anti-bribery and accounting provisions.[22]

g) State laws:

In addition to federal laws, cross-border M&A transactions in the US may also be subject to state laws. Each state has its own laws and regulations governing corporations, limited liability companies, and other business entities, which may impact the process and requirements for M&A transactions.


India’s regulations for cross-border M&A are governed by RBI and the Companies Act. The RBI governs foreign exchange regulations while companies act deals with the process of mergers and acquisitions. Whereas the UK’s regulations on cross-border M&A are enforced by Financial Conduct Authority (FCA) and Takeover Panel. The FCA deals with the conduct of companies and the Takeover panel regulates M&A activities. The USA’s regulations are enforced by the Securities and Exchange Commission (SEC), Department of Justice and the Federal Trade Commission, where the SEC regulates financial disclosures and the DOJ and FTC regulate antitrust and competition issues.

The process of regulatory approval for cross-border mergers and acquisitions also differs across these countries. In India, the approval is granted by the National Company Law Tribunal (NCLT) and RBI. The approval in UK granted by the Financial Conduct Authority and the Competition and Markets Authority. On the other hand, the SEC and the Department of Justice’s Antitrust Division approve transactions in the USA.

The tax implications of cross-border mergers and acquisitions are different in each of these countries. In India, there are specific tax rules that apply to cross-border deals. Her Majesty’s Revenue and Customs (HMRC) takes charge of the tax repercussions in the UK. While in the USA, the Internal Revenue Service (IRS) is in charge of overseeing the tax ramifications.

The practice of doing due diligence is crucial to cross-border mergers and acquisitions. In India, the acquirer usually undertakes the due diligence procedure. In the USA, the due diligence process is more detailed, with the target company required to provide detailed financial and other information. In the UK, the due diligence process is also thorough, with the acquirer required to carry out extensive checks.

The disclosure requirements for cross-border mergers and acquisitions also vary in these three countries. In India, the Companies Act, 2013 mandates companies to disclose all material information related to the merger or acquisition to their shareholders. The Securities Exchange Act of 1934 and the Securities Act of 1933, both of which apply in the USA, impose obligations on businesses to disclose certain significant information to shareholders and to register securities offerings with the Securities and Exchange Commission. In the UK, the Takeover Code sets out rules regarding the disclosure of information to shareholders.

Cross border mergers and acquisitions are complex transactions that require careful consideration of the regulations in each jurisdiction. Companies must be aware of the legal and regulatory requirements in India, UK, and USA to ensure compliance with the relevant laws and regulations. One key consideration is the protection of national security interests, which can lead to restrictions on foreign ownership or control of certain industries or assets. Another important factor is competition law, which aims to prevent anti-competitive behavior and maintain a level playing field in the market. Overall, the regulations surrounding cross-border M&A are multifaceted, but they play an important role in promoting fairness, transparency, and accountability in the global business environment.

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Use of AI in civil cases in India – An analysis of possible implications

This blog has been authored by Gandham Lavanya


The advancement of technology is changing many facets of people’s life. In the legal profession, disruptive technology is also fostering improved accountability and reducing the length of litigation. The digitalization of the legal system was also greatly accelerated by the Covid-19 epidemic. Court sessions were held through video conferencing, and India’s top courts converted to electronic filing. However, the pandemic did not cause all of these breakthroughs. When the “e-Court Project,” a project under the National e-Governance Plan, was announced in 2007, the process of digitizing Indian courts got under way.[1]

All District and Subordinate Court complexes are intended to be completely computerized and ICT-enabled as part of the e-courts Mission Mode Project, which is being carried out by the Department of Justice in close collaboration with the e-committee of the Supreme Court of India[2]. The Artificial Intelligence Committee was created by the Indian Supreme Court to examine how AI is used in the legal system. The three primary applications for AI technology that this committee has identified are process automation, assistance with legal research, and translation of legal documents. Despite the second phase of the e-courts having been under development since 2015, AI technology has not been applied there.[3]

The use of artificial intelligence (AI) in the legal system has been the subject of extensive discussion in recent years. Artificial intelligence (AI) may be used to carry out a range of legal tasks, including document analysis, legal research, and case outcome prediction. Artificial intelligence (AI) has the potential to increase accuracy and efficiency in the legal business, lowering costs and enhancing access to justice.


The use of AI in civil proceedings, however, is particularly challenging in India. India’s legal system is complicated and varied, with a vast variety of laws, courts, and legal procedures. It is important to carefully weigh the potential benefits and challenges of utilizing AI in this situation. Beyond attorneys and judges, the general public may increase its participation with and comprehension of the law by using research and analytics technologies that are widely available. The goal of this participation is to develop more informed, pro-government citizens.[4]

By assisting judges with their decision-making, relieving the strain on attorneys, and improving public access to justice, artificial intelligence (AI) technology has the potential to change the legal system. AI can help with case prediction, document appraisal, contract analysis, and legal research. AI may assist in resolving disputes by providing mediation and arbitration services.

AI can assist in reducing case backlogs and improve judicial efficiency[5]The large number of instances could appear to be reduced with the help of AI, but like any machine, it has its limitations. Only a small portion of the Indian legal system may be automated using artificial intelligence (AI) because of the complexity of the Indian judicial framework, which is composed of several laws, including civil, consumer, and criminal laws. Criminal law may employ AI to detect crime tendencies. But it is impossible to generalize AI to all criminal laws since every criminal case has a different set of circumstances. Therefore, it is difficult for AI robots to collect every piece of data. Although there are several applications of AI for assisting lawyers and judges with comprehension, such as expert systems, natural language processing, and language translation. It’s crucial to thoroughly consider the possible advantages and difficulties of applying AI in this case[6].

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Artificial intelligence (AI) has the power to profoundly alter the legal system by automating time-consuming, repetitive operations, enhancing decision-making, and increasing efficiency. Several examples of how AI is already being used in the legal industry are provided below, legal investigation AI-powered tools can analyze enormous amounts of legal data, including case law, legislation, and regulations, to help attorneys identify essential information more quickly and correctly. In addition to saving time and costs, this can improve the quality of legal research[7].

The overwhelming amount of cases that are still outstanding across India, where the same information has been made available on the National Judicial Data Grid (NJDG) website[8], is the system’s fundamental issue. The question that now arises is: Can artificial intelligence be utilized to expedite the legal system by lowering the backlog of cases? The answer might be somewhat yes or partially no.

To examine the use of AI in the judicial sector, the Supreme Court of India formed the Artificial Intelligence Committee and has offered a wide variety of prospective applications. The second phase of the e-courts projects, which have been operational since 2015, is being implemented, and law minister Kiren Rijiju stated that it was necessary to use new, cutting-edge technologies like machine learning and artificial intelligence to improve the effectiveness of the justice delivery system[9].


SUPACE: Supreme Court portal for aiding court efficiency; includes measures being made in the Indian judicial system as part of adopting ML-based applications. It may prepare a legal brief. Judgments are translated using a programme for language learning called the Supreme Court Vidhik Anuvaad Software (SUVAS). An AI-based technique to automate the reading of court judgments was published in 2020 by researchers at IIT Kharagpur. Software called SCI-Interact is used to make SC benches paperless.

  • Improvements in Access to Justice:

AI can help cut down on the amount of cases that are waiting in Indian courts. Judges and solicitors can more easily analyze, evaluate, and interpret data thanks to the technologies’ ability to quickly locate critical information from vast quantities of legal documents. As a consequence, disputes may be settled more rapidly, cutting down on the amount of time needed to resolve cases, which can save the court money and lower the expense of litigation for the public.

  • Making Decisions More Efficiently:

AI can look at a lot of data and analyze trends that human specialists occasionally overlook. Judges and solicitors can provide more accurate outcomes by making clear and informed decisions.

  • Efficiency gains:

AI-powered systems can analyses massive volumes of data quickly and accurately, saving time and effort on legal tasks. As a result, everyone may have better access to the court system and the legal system may function more effectively.

  • Savings:

Litigation expenses can be lowered by automating routine legal tasks like document examination and analysis. As a result, both litigants and the court system may see significant cost savings.

  • Bias:

Artificial intelligence (AI) systems may reinforce prejudicial attitudes already present in the legal system, producing biased outcomes. This is especially true in India, where the legal system already treats marginalized communities unfairly. Analysing the training data and techniques employed by AI systems in detail is crucial to lowering this risk.

  • Lack of Transparency:

AI systems are frequently secretive, making it challenging to comprehend how judgements are made. The judicial system may become less trusted as a result of this lack of openness.

  • Limited Data Availability:

In order for AI systems to function properly, they need a lot of data. It is difficult to adopt AI-powered systems successfully in India since there is a dearth of digital data in the judicial system.

  • Ethical Issues:

The employment of artificial intelligence in civil disputes poses ethical issues related to privacy, autonomy, and accountability. To guarantee that AI is utilized in a responsible and ethical manner, careful examination of these issues is required.

  • Job Losses:

Lawyers and paralegals may lose their jobs as a result of the use of AI in civil trials, as these professionals may be replaced by AI systems. The legal industry, as well as the general economy, may suffer as a result.


By enhancing the speed, accuracy, and efficiency of numerous legal operations including contract review, legal research, and document analysis, artificial intelligence (AI) has the potential to completely change the legal sector[10]. AI won’t likely completely replace attorneys, though.

While AI is capable of carrying out a variety of legal duties, such as document assessment, it is yet unable to give legal advice or make strategic judgements based on intricate legal and ethical issues[11]. Additionally, legal issues sometimes include complex events and human emotions that AI might not be able to manage well.

A human touch is also necessary in the legal profession since tasks like client counseling, bargaining, and courtroom representation cannot be performed by AI. It’s doubtful that AI will ever entirely replace attorneys in the foreseeable future. Although artificial intelligence (AI) technology has advanced significantly in recent years and can be used to automate some operations, such as legal research, document review, and contract analysis, it lacks the human judgement, creativity, and interpersonal skills that are required for many legal duties.

There are around 47 million pending cases in the courts and more cases are added every year[12]. A wide range of duties that need legal expertise, analytical prowess, and judgement are also included in the legal profession. These activities frequently need attorneys to apply legal concepts to particular and complicated factual situations, which can be challenging for AI to execute properly and efficiently. Although AI can be a beneficial tool for attorneys to boost productivity and efficiency, it is doubtful that AI will totally replace lawyers. On the other hand, as AI technology develops, it may be more fully incorporated into the legal industry and alter the way attorneys practice


By enhancing productivity, accuracy, and justice access, the application of AI in civil matters in India has the potential to completely alter the way the judicial system operates. However, there are certain moral and legal issues that must be resolved, such as prejudice and discrimination, a lack of openness, issues with privacy, job losses, and access to justice. To make sure that AI systems are created and used in a way that supports fairness, accountability, and social justice, the legal community, legislators, and technologists must collaborate.

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Recent trends in IP infringement in the fashion industry

This blog has been authored by Vivek J. Vashi


Fashion has become an integral part of the modern Indian society.  People have developed a general affinity towards fashion trends to showcase their fashion sense by purchasing various products from brand names. Everyone wants to associate themselves with the latest fashion trends. Sometimes money becomes a constraint, so contrabands and copies of the original creations are purchased.

Fashion has become an essential part of people’s lives as it sets the tone for people to present themselves. Wearing or owning products of a particular brand corresponds with status, eminence, and desirability of an individual. Brands such as Louis Vuitton, Bulgari, Gucci, Prada, Hermes, Rolex, etc. are examples of brands known as ‘luxury brands’ that claim to bestow the wearer with a sense of power and prestige owing to their massive reputation. In the process of self-expression, many a times a design becomes famous and others start copying it resulting in a loss for maker of the original design. Counterfeiting is one of the most significant problems faced by the fashion industry. There are two types of counterfeiting prevalent in the fashion industry. Firstly, Deceptive, where the consumers are under the impression that the product is a genuine product, and secondly, Non-Deceptive, where the consumers are aware that they are buying a knock off product.[1]

One may find counterfeit products of famous brands selling counterfeit products through various trade channels including online portals or branded companies taking advantage of loopholes in law to copy and create products belonging to some other brand. E.g. On 8th December 2017, Nike (the famous brand) was awarded damages and a permanent injunction against a trader selling counterfeit goods using their Nike and Swoosh trademark. The damages were compensatory and punitive.[2] Also, the “Indian media was abuzz with the news of High Fashion brand, Christian Dior having allegedly plagiarised certain designs from a small, Indian art collective and store known as ‘People Tree’. According to reports – which carried allegations raised by the collective – Dior’s Cruise 2018 collection contained a dress that contained exact reproductions of the Block Printing designs created, and sold by ‘People Tree’ in India.”[3]

India is the second-largest market in the Asia Pacific, with retail e-commerce sales growth of 25.5 percent in 2022. Most consumers prefer to continue shopping online even after the COVID-19 pandemic due to an overall positive experience and convenience of online shopping.[4] The counterfeiters deceive the consumers by domain name squatting as the consumers shopping online are increasing. They make the shopping experience look original and professional so that the consumer does not question the counterfeiter’s authenticity. The counterfeiters also make fake reviews and manipulate the buying decisions of consumers while shopping online.[5] Apart from e-commerce portals, social media portals like Instagram, Facebook, WhatsApp and Telegram are utilised to sell counterfeit products. To limit the counterfeit products from appearing on online retail platforms, measures must be taken by the platform to destroy counterfeit products appearing on its online marketplace for the sake of law makers, brands, and consumers.[6]

Counterfeit industry poses a huge threat to the economy too (due to government’s loss of revenue), apart from posing huge challenges to the profits and brand values of the popular brands. The counterfeiting industry is colossal and has had a strong impact of about one lakh crore on the Indian economy.[7] Counterfeiting can have severe legal and economic consequences for the brand owners, as well as the consumers who unknowingly purchase counterfeit goods. This is called as wilful counterfeiting where buyers are aware of the counterfeit products and buy the same. For the brand owners in the fashion industry counterfeiting attributes to a large gap in the price between the original and the counterfeit products.  Thus, counterfeiting is the offence of manufacturing or distributing lower quality imitating goods under someone else’s name without their consent or permission.[8] A person is said to “counterfeit” who causes one thing to resemble another thing, intending by means of that resemblance to practise deception, or knowing it to be likely that deception will thereby be practised.[9]

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Counterfeiting in the fashion industry can lead to several legal implications for both brand owners and consumers. Some of the legal implications of counterfeiting in fashion include:

  1. Infringement of Intellectual Property Rights: Counterfeiting in the fashion industry involves the unauthorized use of trademarks, designs, and copyrights, which infringes the intellectual property rights of the legitimate owner of the brand. Under Indian intellectual property law, trademark infringement can result in civil and criminal liability, including damages and imprisonment.
  2. Unfair Competition: Counterfeiting in the fashion industry can lead to unfair competition, as counterfeiters can sell their products at lower prices, taking away market share from legitimate brands. This can lead to a loss of revenue and reputation for legitimate brand owners.
  3. Consumer Health and Safety: Counterfeit products in the fashion industry are often of poor quality and can pose a health and safety risk to consumers. Example: Counterfeit cosmetics can contain harmful chemicals that can cause skin and other health related problems. [10].

The Indian judiciary has dealt with several cases related to counterfeiting in the fashion industry. In the case of Christian Louboutin SAS vs. Nakul Bajaj And Ors.[11] the Delhi High Court has clarified the responsibility and liability of online intermediaries for infringement of trademark. The judgement has shed light on India’s intermediary liability regime as it relates to infringement of trademark. The Plaintiff is Christian Louboutin, the owner of the registered trademarks, including the single colour mark for its distinctive ‘red sole’. According to the plaintiff the products are sold in India only by authorized dealerships. The defendant is “”, a website marketing itself as a ‘luxury brands marketplace’. The plaintiff in this case alleged trademark infringement against the defendant, by selling counterfeit products. The defendant argued that the goods which were sold were genuine and there was no infringement on its part because it was mere intermediary and is entitled to be protected by “Safe harbour” provision of Section 79 of the Information Technology Act, 2000.

In this case the Delhi High Court examined ‘intermediary’ under section 2(w) of the Information Technology Act, 2000 and discussed intermediary position in the European Union, the United States and in India. The court analysis was based on whether the role played by the defendant was neutral i.e., if the conduct was merely technical, automatic, and passive, pointing to a lack of knowledge or control of the data that it stored. The court examined various judgements and concluded that knowledge of infringement by intermediaries makes the liability shift. This was also stated in the Indian judgement of MySpace Inc. v. Super Cassettes Industries Ltd. [12]

The concept of constructive knowledge and the active knowledge was discussed. In the MySpace judgement, it was declared that even if the intermediary has a knowledge of the illegality happening in their website, then the intermediary does not need a court order to stop the counterfeited product or infringing product from using their intermediary service. The activities that happen even after a minimum knowledge of the infringement can be claimed to be of a sort of abiding by the infringement done by the third party and it would amount to the intermediary becoming liable. The defendant was exercising complete control over the products and identified the sellers, which enabled them actively, promoted them and sold the products in India. When an e-commerce website is conspiring, abetting, aiding, or inducing, or contributing to selling counterfeit products, it could be said to cross the line from being an intermediary to an active participant. In such a case, the website would be liable for infringement in view of its active participation. The position in MySpace judgement is in line with the position on intermediary liability in cases of copyright infringement adopted by leading international jurisdictions such as United States, particularly in the case of A&M Records, Inc v. Napster, relating to reasonable knowledge of infringement.[13]

At last, the court in Christian Louboutin case concluded that the defendant is more than an intermediary and exercised complete control over product being sold. Therefore, the conduct of intermediaries in failing to observe ‘due diligence’ with respect to Intellectual Property could amount to conspiring, aiding, abetting, or inducing unlawful conduct would disqualify it from the safe harbour exemption, as per Section 79(3)(a). Finally, the Court ordered that the intermediary must require its sellers to honour the warranties and guarantees provided by the plaintiff and must also remove all meta-tags containing the plaintiff’s mark.

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In the recent years online platforms play an important role in facilitating the exchange of information at a scale. This allows spreading of all types of content, legal and illegal. The role of online platforms sometimes expands from hosting information to governing how content is shown and shared which raises pressing questions on role and responsibility of platforms in preventing criminals and other persons involved in infringing activities online from exploiting their services. Some platforms have self-regulation of the content however, arbitrary actions by online platforms could affect freedom of speech and expression. The challenge of regulatory framework for online platforms is to find the correct balance between enhancing the role of online platforms and government in detection, moderation and the need to ensure protection for users and their fundamental rights and freedoms.[14]

The Government of India has brought reforms to effectively curtail the trade of counterfeit products in the country. On 23 July 2021, the Department-related Parliamentary Standing Committee on Commerce presented the 161st report on “Review of the Intellectual Property Rights Regime in India” in the upper house (Rajya Sabha) of Parliament.[15] It acknowledged that counterfeiting and piracy are rising threats to IP rights and recommended specific legislation to curb counterfeiting and piracy in India. A separate Central Coordination Body on IP Enforcement was also recommended to facilitate coordinated efforts involving various ministries, departments and government agencies. The Government has formulated due diligence requirements for intermediaries to adhere to under the Information Technology Act, 2000 and the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 to safeguard itself for the information it holds or transmits. The intermediaries remain immune from liability unless they are aware of the illegality and are not acting adequately to stop it.  They are subject to ‘duties of care’ and ‘notice and take down’ obligations to remove illegal content.[16]

Approved on 12th Match 2016, the Government of India has formulated the National IPR policy which is reviewed every 5 years for a vibrant IP regime. The National IPR Policy was formulated after intensive stakeholder consultation with nearly 300 organisations and individuals by an IPR Think Tank, as also 31 departments of the Government of India.[17]

Also, the courts in India are taking strict view on online intermediaries thereby narrowing the scope of safe harbour to prevent online infringement. One effective legal framework to resolve issues relating to domain names in India is the .IN Domain Name Dispute Resolution Policy (INDRP). It was drafted in accordance with international guidelines (of the WIPO) and the provisions of the Information technology Act, 2000. The INDRP governs disputes regarding domain names containing the .IN or .Bharat code at the end. Any person aggrieved by the registration of a ‘.in’ domain on the grounds that it is identical or confusingly similar to his or her name or trademark may file a complaint before the National Internet Exchange of India, an administrative body for resolving issues under INDRP. It provides a quick and effective grievance redressal mechanism.

As Import of infringing goods is prohibited under the Customs Act 1962 and the Intellectual Property Rights (Imported Goods) Enforcement Rules 2007, the brand owners can record their trademarks with Customs so that the import of any products that infringe the trademarks is stopped. Further, the laws empower the enforcement authorities to seize misbranded and spurious goods and to suspend manufacturing licenses of businesses involved in such counterfeiting activities. Freedom to do business should not be an excuse to perform acts of counterfeiting and trademark infringement. In this regard, Sections 102, 103 and 135 of the Trademarks Act, 1999, can be employed as remedies against infringement and counterfeiting as they deal with falsification and false application of a trademark. Notably, Section 103 mandates imprisonment of three (3) years and a fine up to two lakh rupees as penalties for counterfeiting. The Courts have also stepped in by compensating brand owners who are the victims of widespread counterfeiting in India.

With an increase in awareness of intellectual property rights among the consuming public and brand owners taking actions on counterfeiters, the end to this epidemic may be possible soon.


[1] Kala, S. and Ghosh, R., 2019. Faking It In Fashion – Intellectual Property – India. [online] Available at: <> [Accessed 30 March 2023].

[2] Nike Innovate C.V vs. Ashok Kumar on 8 December 2017 suit no. 23/17.

[3] People tree v. Dior: IP Infringement, Cultural Appropriation or Both? [online] Available at:       <https://www.spicyipcom/2018/02/people-tree-v-dior-ip-infringement-cultural-appropriation-or-both.html> [Accessed 30 March 2023].

[4] Number of Digital Buyers in India [online] Available at: <> [Accessed 31 March 2023].

[5] A case over sale of counterfeits on Amazon may have implications for fashion [online] <> [Accessed 31 March 2023].

[6] Amazon destroyed more than 2 million counterfeit products last year [online] <https://edition.cnn.come/2021/05/11/business/amazon-counterfeits/index.html> [Accessed 31 March 2023]

[7] The Economic Times. 2020. Counterfeit products create Rs 1-lakh-cr hole in economy, incidents up 24% in 2019: Report. [online]

Available at: <> [Accessed 31 March 2023].

[8] International Anticounterfeiting Coalition. n.d. What is Counterfeiting | International Anticounterfeiting Coalition. [online]

Available at:  [Accessed 3 April 2023].

[9] The Indian Penal Code, 28 (1860)

[10] Combating Counterfeiting in Fashion: Legal Implications and Strategies for Brand Protection in India. [online].

Available at: <>

[Accessed 3 April 2023].

[11] (2018) 253 DLT 728.

[12] (2017) 236 DLT 478.

[13] 239 F.3d 1004 (2001).

[14] Liability of online platforms- European Parliamentary Research Service, February 2021 [online] Available at:  < > [Accessed on 5 April 2023].

[15] Recommendations/observations at a glance- Rajya Sabha press release [online],

Available at: < > [Accessed 6 April 2023].

Available at: < > [Accessed 6 April 2023].

[16] European Parliamentary Research Service, May 2020 [online] Available at: < > [Accessed on: 6 April 2023]

[17] National IPR Policy [online]

Available at: < > [Accessed 6 April 2023].

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Regulation of cross-border mergers in India – A critical analysis

This blog has been authored by Lohitaksh Shively 


Over the past few decades, with the expansion of the Indian economy in a threefold manner, namely, Liberalisation, Globalization and Privatisation; the need for collaborations and strategic alliances have risen immensely. A principal tool used is that of merging two entities. Mergers are when two entities come together to amalgamate their business operations and become one single entity to defeat the competition, achieve economies of scale, and attain positive synergies. Mergers are synonymous with amalgamation, falling under the ‘corporate restructuring’ umbrella. Other such methods of corporate restructuring include – Acquisitions, Takeovers, and Absorptions; wherein acquisitions are when the acquirer entity ends up acquiring controlling power in the target entity. The acquirer can be termed as the ‘big fish’ and the target entity would naturally be the ‘small fish’. The motive for such restructuring is essentially growth; and growth in such abovementioned scenarios is always termed ‘inorganic’, wherein the entities choose external mechanisms to grow their business, customer base, operations etc. This should be juxtaposed with organic growth which is the antithesis of inorganic; it is when the entity reforms its internal working, like, pricing options, among others.

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Mergers and Acquisitions (“M&As”) when spoken about can be classified into various sub-types based on industry, financing options, and territorial limits. In this article, the author will comment upon M&As w.r.t. Territorial limits and the regulations governing such transactions. Such M&As are termed as Cross Border Merger and Acquisitions (“CBMAs”) or ‘transnational’ M&As due to the fact that one entity to such a transaction is always a foreign entity. Any Indian entity in the backdrop of globalization may prefer expanding overseas by acquiring or merging with foreign entities. CBMAs are generally Inbound and Outbound, wherein the former is characterised with a foreign entity merging with or acquiring an entity in India, whereas the latter is when an Indian entity expands overseas. One such example of an inbound acquisition is Walmart’s majority acquisition of Flipkart’s 77% stake for a whopping USD 16 billion. It is evident from the above cross border transaction, that the inflow of USD 16 billion was in fact Foreign Direct Investment (“FDI”) into the Indian economy, and that it opened the doors for Walmart (foreign entities) to enter the Indian market and strengthen their presence. A simple continent wise distribution of inbound M&As shows that North America has accounted for the largest percentage of M&As and Europe running to a close second. This is because for the MNCs (Multi-National Corporations) India has the world’s best resources with cheap but talented labour, largest markets in terms of size, capital markets, technologies, low cost suppliers etc.[1] Similarly on the outbound front, India has mainly targeted the IT, Telecom and pharmaceutical sectors. A continent wise distribution would portray that, maximum of deals entered into are in North America and Europe followed by Asia, as Indian companies have targeted at the developed capital markets for better growth and expansion opportunities.[2] Some landmark examples of outbound CBMAs are Tata-Chorus, Tata-JLR, Tata Tea-Tetley, DIS-Ranbaxy etc.

Motivations for CBMAs

Corporate restructuring transactions mainly aim at enhancing economies of scale and achieving high levels of efficiency. This metamorphosed corporate structure ensures that the newly formed entities focus on their core strengths, efficient allocation of resources, reduction in costs, synergies, corporate performance, R&D (research and development) among others. Apart from the above mentioned rational motives to merger, there are various developed theories to merge, them being the Hubris Hypothesis theory (executives being overconfident and they overestimate their ability to manage the target firm) and the Free Cash-flow theory (utilization of idle cash surplus by the acquirer). A major motive to enter into CBMAs is to overcome restrictions from limited home market growth i.e. the location of acquisition. Thusly, a country must strategically choose from various jurisdictions across the world where it wishes to do ‘business by integration’. Howsoever, while choosing the relevant jurisdiction, business rules, market regulatory mechanism, taxation risks all must be taken into consideration.

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Legal Framework

Cross border M&A deals have been the key consideration of the overwhelming FDI inflow in India. In order to tighten the ties between the boundaries it was essential to create an environment for cross border merger transactions between the countries.[3] For this very reason, CBMA in the Indian realm is strictly regulated by a catena of rules under various laws such as Companies Act, 2013, Foreign Exchange Management Regulations, Competition Act, 2002 and various other related statutes. In short, the Indian corporate laws, foreign exchange laws, capital market laws and merger control regulations govern CBMAs. These laws govern entry routes, deal value thresholds, combinations, sectoral caps, mandatory approvals of authorities (like the RBI), investment limits, disclosures etc. A glimpse into a few of the statutory regulations is given below –

1. Companies Act, 2013 (“CA, 2013”)

The CA, 2013 has been brought in order to replace the 1956 act so as to cater to the ‘newer’ needs. Chapter XV of the CA, 2013 lays down guidelines for Compromise, Arrangement and Amalgamations. § 230-240 expressly deal with the such alliances. The Ministry of Corporate Affairs of the Government of India (“MCA”) by way of a notification[4] has notified § 234 of the CA, 2013 enabling cross-border mergers with effect from April 13, 2017. Our focus would thus be on § 234 which governs ‘merger or amalgamation of company with foreign company’[5]. Vide Explanation[6] of § 234 the ambit of the provision is explained by making it such a situation applicable only in cases wherein one entity is a ‘foreign company’. In addition to this internal aid of interpretation, such mergers or amalgamations may only be done pursuant to the prior approval of the RBI and that the terms and conditions of the scheme of merger may provide for payment of consideration to shareholders of merging company in case, DRs (depository receipts) or a combination of both. Vide another notification[7], Rule 25A[8] of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 (“CAA Rules”), ‘merger or amalgamation of a foreign company with a Company and vice versa’, states that, the prior approval of RBI along with compliance of §230-232 of the CA, 2013 is a mandate[9]. Such rule read with Annexure B enlists various jurisdictions in which such mergers are possible.[10]

2. Foreign EXCHANGE Management Regulations

The Foreign Exchange Management (Cross Border Merger) Regulations, 2018 have been notified vide notification no. FEMA 389/ 2018-RB dated 20 March, 2018[11] and are effective from the date of notification. As per the Regulations, any merger transactions in compliance with these regulations shall be deemed to have been approved by RBI, and hence, no separate approval should be required[12]. In other cases, merger transactions should require prior RBI approval.[13] The Merger Regulations allow an Indian company to issue or trans­fer any security to a person resi­dent outside India subject to ad­herence to pricing norms, sectoral caps on foreign investment and other applicable conditions pro­vided under the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017.[14] The Merger Regulations allows a resident person in India to hold securities of the foreign company in accordance with the Foreign Ex­change Management (Transfer or Issue of Any Foreign Security) Re­gu­lations, 2004.[15] In the realm of foreign investments into India, there exists two routes, i.e. Automatic Route and the Approval Route; which means that, if an investment is being made into a particular sector, for instance pharmaceuticals,[16] which does not need any approvals, then the same is said to fall under the Automatic route of investment.

3. Competition Act, 2002 (“CA, 2002”)

A replacement to the Monopolistic Restrictive Trade Practices Act, 1969, the CA, 2002 tackled the issue of combinations and various other arrangements in a methodological manner with detailed and economically sane provisions. §5 and 6 of the CA, 2002,  the key provisions to regulate combinations, prevent such mergers if it leads to AAEC (Appreciable Adverse Effect on Competition).  As per the scheme of the CA, 2002, enterprises that propose to enter into combinations have to notify the CCI (competition commission of India) prior to entering into any such arrangements. If the proposed transaction crosses the thresholds given under §5, then it amounts to ‘combination’.[17] The Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011 (“Combination Regulations”)[18] must be referred to whilst entering into any such transaction as they govern the procedural aspects of combinations.

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Analysis and Conclusion

The detailed provisions must be complied with in strict accordance as well as various sectoral approvals must be acquired. The companies would also need to carefully evaluate the regulations of the jurisdiction of the foreign company with which a merger is intended and may have to comply with additional requirements that may be specified by the foreign jurisdictions.[19] Since there exists an obvious jurisdictional difference, the question(s) that comes to our mind is the likely contradictions betwixt the different nation’s regulators. For instance, the CCI has extra-territorial jurisdiction as per §32[20] which provides for the CCI to have power to inquire into such arrangements o/s India effecting India. This provision gives life to the ‘effects doctrine’[21]. The CA, 2002 also encapsulates within its ambit the Principle of Attributability, wherein if assets are transferred to an enterprise (Special Purpose Acquisition Companies, Special Purpose Entities, Special Purpose Vehicles) for entering into arrangements, the value of assets/ turnover of transferor entity shall be attributed to the value of assets/ turnover of the transferee entity for calculation of thresholds.[22] This ensures that there is no contravention of law by investor entities who want to escape cognizance by the regulators by way of incorporating shell companies. Coming to approvals by quasi-judicial bodies, the NCLT (National Company Law Tribunal) and NCLAT (National Company Law Appellate Tribunal) cannot be forgotten. However, due to the number of pending cases, the same has led to a continuous delay in merger approvals. Thusly, the benefit of fast-track mergers (green channel)[23] could be made available in the cases of a merger of a wholly-owned foreign subsidiary or small company with its Indian parent company or vice versa.[24] Nevertheless, the existing regulations on CBMAs is an open door for FDI (Foreign Direct Investment) in the form of FPIs (Foreign Portfolio Investment) and FIIs (Foreign Institutional Investment). It may also provide for an impetus to ‘bailout takeovers’ under the Insolvency code. In short, CBMAs would provide for growth and recognition to  Indian Companies. One mustn’t forget that India is still in the stage of developing its economy, thusly any harsh or stringent statement made at the current stage would not do justice to the legal and policy developments that might occur in the future in the realm of transnational transactions.

To learn more about mergers and acquisitions, enrol for Diploma in Mergers and Acquisitions certified by Corp Comm Legal.

[1] Dr. Rabi Narayan Kar and Dr. Minakshi, Mergers Acquisitions & Corporate Restructuring Strategies & Practices, pg. 328, Taxmann’s, 3rd Edition, 2017.

[2] Ibid.




[6]Explanation.— For the purposes of sub-section (2), the expression foreign company means any company or body corporate incorporated outside India whether having a place of business in India or not.”



[9] Rule 25A(1) of CAA Rules.

[10] Rule 25A(2) of CAA Rules.


[12] Rule 9 of Foreign Exchange Management (Cross Border Merger) Regulations, 2018.



[15] Ibid.


[17] Adv. Gautam Shahi and Dr. Sudhanshu Kumar, Indian Competition law A Comprehensive Section-wise Commentary on Competition Act 2002, pg. 206-207, Taxmann’s, July 2021.




[21] Empowers competition regulators to extend jurisdiction beyond the ‘principle of territoriality’; See case Ms. Vijayachitra Kamlesh v. RCI India (P.) Ltd. 2021, CCI Case No. 29 of 2019.

[22] Regulation 5(9) of Combination Regulations; Etihad Airways/ Jet Airways Deal.




Evolution of basic structure doctrine in India

This post has been authored by Hiral Chandrakant Jadhav- Panchal

1.    A.K. Gopalan v. State of Madras (1950)

In the A.K. Gopalan v. State of Madras (1950) case, the Supreme Court interpreted the Fundamental Rights under Part III of Indian Constitution.

In this case, it held that the protection under Article 21 is available only against arbitrary executive action and not from arbitrary legislative action.

This means that the State can deprive the right to life and personal liberty of a person based on a law.

This is because of the expression ‘procedure established by law’ in Article 21, which is different from the expression ‘due process of law’ contained in the American Constitution.

Hence, the validity of a law that has prescribed a procedure cannot be questioned on the ground that the law is unreasonable, unfair, or unjust.

Secondly, the Supreme Court held that ‘personal liberty’ means only liberty relating to the person or body of the individual.

2.     Shankari Prasad v. Union of India (1951)

In this case, the constitutional validity of the First Amendment Act (1951), was challenged.

The Supreme Court ruled that the power of the Parliament to amend the Constitution under Article 368 also includes the power to amend Fundamental Rights.

The word ‘law’ in Article 13 includes only ordinary laws and not constitutional amendment acts (constituent laws).

Therefore, the Parliament can abridge or take away any of the Fundamental Rights by enacting a constitutional amendment act and such a law will not be void under Article 13.

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  1. Berubari Union Case (1960)

In this case, the issue was resolved about whether the Preamble is part of the Constitution or not.

According to the Supreme Court, in the Berubari Union case (1960), the Preamble shows the general purposes behind the several provisions in the Constitution and is thus a key to the minds of the makers of the Constitution.

Further, where the terms used in any article are ambiguous or capable of more than one meaning, some assistance at interpretation may be taken from the objectives enshrined in the Preamble.

Despite this recognition of the significance of the Preamble, the Supreme Court specifically opined that the Preamble is not a part of the Constitution.

Therefore, it is not enforceable in a court of law.

  1. Golaknath v. State of Punjab (1967)

In that case, the Supreme Court ruled that the Parliament cannot take away or abridge any of the Fundamental Rights.

The Court held that the Fundamental Rights cannot be amended for the implementation of the Directive Principles.

The Parliament reacted to the Supreme Court’s judgement in the Golaknath Case (1967) by enacting the 24th Amendment Act (1971) and the 25th Amendment Act (1971).

  • The 24th Amendment Act declared that the Parliament has the power to abridge or take away any of the Fundamental Rights by enacting Constitutional Amendment Acts.
  • The 25th Amendment Act inserted a new Article 31C which contained the following two provisions: No law which seeks to implement the socialistic Directive Principles specified in Article 39 (b) and (c) shall be void on the ground of contravention of the Fundamental Rights conferred by Article 14, Article 19, or Article 31.

No law containing a declaration for giving effect to such a policy shall be questioned in any court on the ground that it does not give effect to such a policy.

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5. Indira Nehru Gandhi v. Raj Narain case (1975)

The doctrine of basic structure of the constitution was reaffirmed and applied by the Supreme Court in the Indira Nehru Gandhi case (1975).

In this case, the Supreme Court invalidated a provision of the 39th Amendment Act (1975) which kept the election disputes involving the Prime Minister and the Speaker of Lok Sabha outside the jurisdiction of all courts.

As per the court, this provision was beyond the amending power of Parliament as it affected the basic structure of the constitution.

The Parliament reacted to this judicially innovated doctrine of ‘basic structure’ by enacting the 42nd Amendment Act (1976).

This Act amended Article 368 and declared that there is no limitation on the constituent power of Parliament and no amendment can be questioned in any court on any ground including that of the contravention of any of the Fundamental Rights.

  1. Minerva Mills v. Union of India (1980)

The Supreme Court reiterated that Parliament can amend any part of the Constitution but it cannot change the “Basic Structure” of the Constitution.

In the Minerva Mills case, the Supreme Court held that ‘the Indian Constitution is founded on the bedrock of the balance between the Fundamental Rights and the Directive Principles.

They together constitute the core of the commitment to social revolution.

The goals set out by the Directive Principles have to be achieved without the abrogation of the means provided by the Fundamental Rights.

Therefore, the present position is that Fundamental Rights enjoy supremacy over Directive Principles.

Yet, this does not mean that the Directive Principles cannot be implemented.

The Parliament can amend the Fundamental Rights for implementing the Directive Principles, so long as the amendment does not damage or destroy the basic structure of the Constitution.

7.  S. R. Bommai v. Union of India (1994)

In this case, the Supreme Court laid down that the Constitution is federal and characterised federalism as its ‘basic feature’.

It observed the fact that under the scheme of our Constitution, greater power is conferred upon the Centre vis-a-vis the states does not mean that the states are mere appendages of the Centre.

The states have an independent constitutional existence. They are not satellites or agents of the Centre. Within the sphere allotted to them, the states are supreme.

The fact that during an emergency and in certain other eventualities their powers are overridden or invaded by the Centre is not destructive of the essential federal feature of the Constitution.

They are exceptions and an exception is not a rule. Let it be said that the federalism in the Indian Constitution is not a matter of administrative convenience, but one of principle–the outcome of our own process and a recognition of the ground realities.

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  1. Keshavanda Bharti v. State of Kerala (1973)

It was the Kesavananda Bharati case that brought this doctrine into the limelight. It held that the “basic structure of the Indian Constitution could not be abrogated even by a constitutional amendment”. The judgement listed some basic structures of the constitution as:

  • Supremacy of the Constitution
  • Unity and sovereignty of India
  • Democratic and republican form of government
  • Federal character of the Constitution
  • Secular character of the Constitution
  • Separation of power
  • Individual freedom

Over time, many other features have also been added to this list of basic structural features. Some of them are:

  • Rule of law
  • Judicial review
  • Parliamentary system
  • Rule of equality
  • Harmony and balance between the Fundamental Rights and DPSP
  • Free and fair elections
  • Limited power of the parliament to amend the Constitution
  • Power of the Indian Supreme Court under Articles 32, 136, 142 and 147
  • Power of the High Court under Articles 226 and 227

Any law or amendment that violates these principles can be struck down by the SC on the grounds that they distort the basic structure of the Constitution.

9. Waman Rao Case (1981)
  • The SC again reiterated the Basic Structure doctrine.
  • It also drew a line of demarcation as April 24th, 1973 i.e., the date of the Kesavananda Bharati judgement, and held that it should not be applied retrospectively to reopen the validity of any amendment to the Constitution which took place prior to that date.
  • In the Kesavananda Bharati case, the petitioner had challenged the Constitution (29th Amendment) Act, 1972, which placed the Kerala Land Reforms Act, 1963 and its amending Act into the 9th Schedule of the Constitution.
    • The 9th Schedule was added to the Constitution by the First Amendment in 1951 along with Article 31-B to provide a “protective umbrella” to land reforms laws.
    • This was done in order to prevent them from being challenged in court.
    • Article 13(2) says that the state shall not make any law inconsistent with fundamental rights and any law made in contravention of fundamental rights shall be void.
    • Now, Article 31-B protects laws from the above scrutiny. Laws enacted under it and placed in the 9th Schedule are immune to challenge in a court, even if they go against fundamental rights.
  • The Waman Rao case held that amendments made to the 9th Schedule until the Kesavananda judgement are valid, and those passed after that date can be subject to scrutiny.

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  1. Indra Sawhney and Union of India (1992)

SC examined the scope and extent of Article 16(4), which provides for the reservation of jobs in favour of backward classes. It upheld the constitutional validity of 27% reservation for the OBCs with certain conditions (like creamy layer exclusion, no reservation in promotion, total reserved quota should not exceed 50%, etc.)

  • Here, ‘Rule of Law’ was added to the list of basic features of the constitution.

Role of Indian Coast Guard in Maritime Security

This blog post has been authored by Jay Maniyar


As a maritime nation-state, maritime security is critical to India. With a large coastline of 7516 km, India has much to worry about as far as its maritime safety and security are concerned. Challenged by a panoply of traditional and non-traditional security threats to its survival, India employs the Indian Coast Guard (ICG) to guard its waters. Official statements describe the Indian Coast Guard as a “multi-mission, round-the-year” organization tasked with monitoring India’s massive coastline every day. The ICG is headed by a Director-General while its headquarters are based in New Delhi. Five Coast Guard regions have been devised for effective command and control.

As a coastal security force, the ICG is concerned with the overall maritime security of the country. The ICG governs India’s territorial waters and its contiguous and exclusive economic zones which extend up to a total of 200 nautical miles from the maritime baseline of the country. The ICG is a maritime law enforcement agency and is concerned with illicit activities such as human smuggling, drug trafficking, potential terrorism, and other forms of maritime crime at sea. The ICG has 15,714 personnel within its ranks, 175 vessels for duty, and 44 aircrafts. The ICG was established through the Coast Guard Act of 1978.[1] It was devised and set on course for duty on February 1, 1977. The Act officialised its operations and legalized the ICG as an armed force of the Union of India.

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The ICG plays a pivotal role in India’s overall coastal security because it is an agency that is concerned with everything to do with the coastal waters. Moreover, its duties now extend to preserving India’s blue economy, which is an area which has emerged as an engine of growth for the country. The ICG is the foremost, first-rate force which provides coastal security to the country and is even involved in humanitarian assistance and disaster relief (HADR).

The ICG also assumes a key and central role in the overall maritime security of India because it is the second-most important agency of security after the Indian Navy (IN). The ICG, in particular, does not play second fiddle to IN and is actively involved in maritime-naval exercises, seabed security, security to the untapped energy reserves in the EEZ and other activities which have to take place across the EEZ. These further emphasize the importance of the Indian Coast Guard in India’s maritime security regimen.

Within the inventory of the ICG are several offshore patrol vessels (OPVs), pollution control vessels (which pertain to the health of the maritime ecosystem), fast patrol boats, hovercrafts, intelligence survey ships, and many others. The ICG has a strong inventory which can be expected to officiate duties that would otherwise pose hindrances and problems to India’s maritime security. The ICG is a stand-alone force and it is not merely a force which is to play second fiddle to the Indian Navy. It is to be a coastal and maritime security mechanism by itself through its well-arranged hierarchy.

The Indian Coast Guard undertakes duties ranging from the safety of islands, offshore terminals, installations, etc. to the protection of fishermen who are facing distress at sea.[2] As far as legal responsibilities are concerned, the ICG is responsible for enforcing the Maritime Zones of India Act 1981 which governs the fishing regulation by foreign vessels. The ICG also assists customs and other authorities in anti-smuggling operations.

As far as foreign Coast Guards are concerned, coast guard-to-coast guard cooperation takes place in the form of joint maritime-naval exercises, joint patrols called Coordinated Patrols (CORPATs), and cooperation and collaboration at the officers’ level (training, education, sharing of best practices, etc.).  Coast Guards cooperate much like navies do because maritime security has largely become an area dominated by common security concerns and the need for joint missions and better interoperability during crises.

The Indian Coast Guard is no different. The Indian and regional Coast Guards have agreed to cooperate by signing Memoranda of Understanding (MoUs). India cooperates chiefly with Coast Guards in its immediate proximity such as those of Thailand and Indonesia. Thus, it can be seen that the Indian Coast Guard takes ample interest in the larger maritime security affairs of India and is keen on linking up with regional bodies that serve their nations in a similar way to the ICG.

The technology used by the Indian Coast Guard includes a Coastal Radar Surveillance System, Automatic Identification System (AIS), and various cameras and sensors. These ensure technological adeptness and provide for better surveillance and improve upon the manual abilities of Coast Guard personnel. As can be understood from the above, the ICG is a high-tech force and continues to upscale its technologies to achieve maritime-naval dexterity and fight maritime crime and other such problems at sea.

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Maritime security is a continual process which requires that there should be round-the-year observance, surveillance, and response mechanisms in place. The Indian Coast Guard is a state-of-the-art coastal security force that is responsible for the coastal security of the country. The Indian Coast Guard battles traditional and non-traditional threats in an insecure environment around the Indian maritime zones. The Mumbai 26/11 attacks which shocked the nation were initiated through the maritime routes from Pakistan to India. Such destruction has catalyzed an improved Coast Guard and the accompanying security apparatuses.

At the time, India had accorded the responsibilities for coastal security to the State Marine Police. However, following the ghastly terror that was unleashed in Mumbai, the Indian Coast Guard was made responsible for the security of the Indian coastline of 7516 km. This was approved by the central government in February 2009. The Coast Guard has also been made responsible, in the wake of the Mumbai attacks, to ensure synergy and coordination between coastal and state maritime security agencies. This further entrusts it with a major role in the holistic maritime security of India. Today, the Indian Coast Guard provides much much more than ordinary coastal security and is integral to the entire maritime security of India.

The many forms of surveillance provided by the Indian Coast Guard[3] are the following:

1) On the Beat: This covers the ICG’s mere presence at sea. The ICG will also be expected to provide first response to maritime crime or natural disasters. The presence of the ICG is akin to a maritime policeman.

2) Exclusive Economic Zone (EEZ) Surveillance: The ICG is expected to provide surveillance to the 2 million square kilometres (sq. km.) of India’s EEZ. This surveillance is expected to preserve resources, sustain the maritime environment, and secure communication between ships and oil platforms (for example).

3) Aerial Surveillance: Shore-based aircrafts and helicopters in the Indian Coast Guard are supposed to provide for rescue operations and options to assist the Indian Navy’s maritime-naval arm, too. High technologies are also provided to the aircrafts and they are also expected to respond to oil spills or other ecological disasters.

4) Extended EEZ Surveillance: The ICG is also expected to assist its partners with surveillance of their EEZs owing to low coastal security capacities within their navies or the absence of Coast Guards in their entirety.

5) Coastal Security: Coastal security is the fundamental and foremost duty of the Indian Coast Guard. Contingency plans created by various maritime-naval agencies are conducted by the ICG as part of its coastal security operations.

6) Offshore Security: Offshore security is akin to coastal security but envisages a broader plan and perspective for the maritime domain. Anti-terrorism, anti-piracy, and port security are undertaken by the Coast Guard as part of its offshore security mechanisms.

7) Boarding Operations: The ICG is also entrusted with searching vessels and other merchant ships such as oil tankers for nefarious activities such as maritime crime, smuggling, trafficking, etc. ICG officers board suspect ships to inspect them and then initiate the necessary mechanisms to ensure that the maritime domain remains crime free.

As can be seen from the above, the ambit of operations of the Coast Guard is quite exhaustive and extensive. The Coast Guard is expected to conduct duties such as surveillance, initiate first responses to contingencies such as disasters and pirate attacks, combat maritime criminals and bring them to the jurisdiction of law, and be responsible for the overall coastal security of the country.

The Coast Guard can be further expected to expand its duties. They can provide coastal escort for merchant ships to de-burden navies while they can also be expected to take up some of the duties of the navies themselves. The Coast Guard is a foremost coastal security force and it will serve the force well to continue to broaden the ambit and scope of its duties. The Coast Guard is presently India’s second most important maritime security force in comparison to the Indian Navy.

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A continually improving Indian Coast Guard will secure India better

The Indian Coast Guard remains a strongly vigilant force that continues to upgrade its capabilities and capacities in an urgent manner. With upgraded technologies, a broader scope and vision, and expanded duties, the ICG is a force to reckon with and remains at the helm of the maritime security affairs of the nation. A strong and capable Coast Guard provides for a safe and secure coastline and, effectively, a safe and secure India. Only such a worthy coastal and maritime security body will secure India in the short, medium, and long terms.

For a country that is now an aspirant to atmanirbharta (self-reliance in defence production and procurement), India must have a strong and capable Coast Guard in place to ensure that it achieves the goal of SAGAR or Security And Growth for All in the Region. This coupled with uniquely Indian initiatives such as the Indo-Pacific Oceans’ Initiative (IPOI) or SAGARMALA (a chain of ports and coastal community-led development in India) will have to be secured by the Coast Guard and only then will they achieve their maritime security goals.

India’s maritime security has traditionally been weak since maritime security agencies have always been given no importance in the hierarchy. The Indian Army remains the most important instrument for securing the country. The Indian Navy is third even after the Indian Air Force. Thus, the Coast Guard suffers from a similar predicament and was only founded several decades after India’s independence. It is hoped that such negligence will become a relic of history and the ICG will be a prominent force for Indian national security.

To learn more about maritime law and security, enrol for Diploma in Maritime Law and Security. 

[1] Source:

[2] Source:

[3] Source:


Intellectual Property in Fashion Industry

This blog post has been written by Akanksha Sudhakar


As long as there have been fashion houses-and almost as long as there have been people making clothes- there are countless occasions where there has been a need to consult lawyers. Some years ago, the words “fashion” and “law” were not linked, and fashion law wasn’t a specialised area of law practice. Today, a few short years later, there is a legal field made to measure for the business of fashion. Many law students [and even practicing lawyers] equate fashion law with intellectual property laws. One might reasonably consider intellectual property to be at the core of fashion law, since the value of fashion-as opposed to clothing-rests in large part on the fascination of a brand, and that fascination is protected primarily by intellectual property law.

The term intellectual property, conventionally understood, includes, on a federal level, utility and design patents and copyrights; on a federal and state level, trademark and trade dress protection; and on a state level, trade secret protection, the right of publicity, the right against misappropriation, and other causes of action that vary by state.[1]

This article discusses in detail, the role played by intellectual property in fashion industry.


Intellectual property, especially in the form of trademark protection is often one of the most valuable assets owned by a fashion enterprise. Indeed, in today’s fashion world, many companies are little more than vendors of licenses to use well-known brand names in connection with particular categories of apparel and accessories.[2] Trade marks do not directly protect textiles or fashion garments but the way in which designers can use their trade marks in their designs can enable their creations to come under the remit of trade mark law. This central emphasis on trademark protection is arguably the result of the fashion’s function as an indicator of social status[3] and the lack of copyright protection for fashion design which largely shifts the emphasis from what is being sold to who is selling it. Whatever the explanation, trademark protection tends to eclipse other forms of intellectual property protection in the fashion world.

To learn more about Fashion Law, enrol for Diploma in Fashion Law.


On the other hand, the laws of copyright is often described as “bundle of rights” that are granted to the creator of an original work of authorship that is fixed in tangible form.[4] The Supreme Court of the United States has explained that the word “original” has a special meaning in the context of copyright; a work may be “original”, even if it is not entirely novel, provided that it was “independently created by the authors opposed to copied from other works- and that it possesses at least some minimal degree of creativity”.[5] This is a low threshold, however, while evaluating protection for the copyright-eligible categories of fashion design, we might reasonable come to an inference that the otherwise lax originality requirement may have more “teeth” when it comes to clothing and jewellery.

A lot of such instances in the fashion law not only has determined whether a party has infringed on one’s copyright, but it must first assess the validity of the copyright and then evaluates whether ‘substantial similarity’ exists between the plaintiff’s work to that of the defendant’s. The validity of one’s copyright in a fashion article relies on a number of factors, including the “idea/expression dichotomy” and, particularly important for fashion design, the “separability” test. In determining whether substantial similarity exists between the plaintiff’s and the defendant’s works that could potentially give rise to a copyright infringement, federal courts typically ask whether

  1. a non-trivial amount of the original work was used[6], and if the amount used was more than de minimis
  2. whether the ordinary observer [unless is set out to detect the disparities] would be disposed to overlook them, and regard their aesthetic appeal as the same.[7]

Even where drawings or photographs of garments are protected by copyright, the garments themselves have long been considered ‘useful articles. Since, majority of the copyright legislations around the world excludes ‘useful articles’ from federally copyrightable subject matter, clothing generally receives no protection under the copyright law. Newcomers and many long-established designers are also surprised by this situation and many have argued that ‘useful article’ bar to protection makes little sense in an age where much of fashion is more ornamental than functional.[8] However, garments along with other types of fashion accessories, are eligible for copyright protection to the extent that their design “incorporates pictorial, graphic, or sculpture features that can be identified separately from, and are capable of existing independently of, the utilitarian aspects of the article”.[9]

The common case of infringement that takes place in the fashion industry is that of the large high-street chain copying a smaller fashion designer. The way that Issa is copied is indicative of this. Issa deals with copycats and takes action, but many designers do not have access to advice, nor funds to deal with copycats in the same way. It is true that to an extent the designers accept that being copied is recognition for success; however, this does not mean that they are flattered by it, nor does it stop them from taking action where action is available. Today, copying is easier than ever, with the ease of access of information and liberalised trade in textiles and clothing, the often-cheaper copies being imported from a low-wage developing country especially now that the trade has been liberalised.

The rampant copying has caused high fashion designers to accept that being copied is part of the process and there is too much copying and different degrees of it to stop it all. Thus the only way to deal with this as designers is to keep innovating. As Miuccia Prada puts it, “The highstreet, actually is a kind of good. The only thing is that you’re always forced to do something new, something more. You are never allowed to enjoy anything because it’s always everywhere and then it’s over, over, over in a very short time.”[10]

In this context, copyright does not play that much of a role, as it only bites when copying has taken place and the rightful owner chooses to take action. This does not support the Piracy Paradox but highlights the reality of the industry and how IP protection is not just about action taken afterwards but equally about protection before as well as innovation and creativity. Taking action is not always seen as an option for designers not only for cost and time expenses but also for lack of information and availability of IP services.


On the other hand, protecting valuable information as a trade secret always comes into play when one discloses information on a new project, novel technologies or solutions in the context of potential research or business collaborations. One might share sensitive information, expertise, and specific plans on how a project should be carried out during meetings with possible business, research, or financial partners. To safeguard all confidential information shared during the meeting, one needs to make sure that they have their partners sign a non-disclosure agreement (NDA), either one-way or mutual. This gives a legal foundation on which one can defend their rights if one of the prospective partners violates its confidentiality.

But one thing that needs to be taken in account is that trade secret protection is only useful for inventions that rivals won’t be able to deduce from looking at your product and company’s public elements which is another difficulty that is face while protecting their inventions. This is because one the information comes in the public knowledge, the trade secret protection automatically ceases to exist.

To learn more about Fashion Law, enrol for Diploma in Fashion Law.


The inventive component of a design in the fashion business can also be protected under the patent law. But, in order to do so, there are two considerations that must be taken in order for a design to be patented. They are novelty and originality. A design needs to be novel and Original. It should have been made for the first time because of its nature. The design must also be feasible from a scientific standpoint. However, the fashion business does not use patent law very frequently. The technical sector has a greater prevalence of them. A patent registration is an expensive and time-consuming process. The fashion industry has little value in this sector because it is so dynamic.[11]


Louis Vuitton Malletier, S.A. v. My Other Bag, Inc.,[12]

This case of copyright violation is very well-known. In this instance, the company ‘My Other Bag’ created a parody tote bag with a print of a Louis Vuitton image. My other bag was the target of a lawsuit by Louis Vuitton for its design and copyright theft. In this case, the hon’ble court ruled that the parody accounts could convey two concurrent, and contradictory meanings. Louis Vuitton, the petitioner, complained that the defendant had attempted to imitate their copyrighted design. The petitioner added that it is attempting to defend its IP rights in its defence. The court rejected the accusations since the defendant’s offering was a parody.

Puma SE v. Forever 21, Inc.[13]

Infringement of copyright and design were issues in this case. Puma filed a lawsuit against forever 21 for allegedly copying the limited-edition shoes that the well-known singer Rihanna created for the company known as puma. The singer Rihanna personally developed the Creeper Sneaker, Fur Slide, and Bow Slide for the Fenty line. The court in this case decided that a product does not automatically fall under the umbrella of copyright production merely because a particular celebrity is associated with it or has supported it. Copyright is issued based on the originality and novelty of a particular design as well as the design’s individuality. The lawsuit and this case made no mention of Rihanna.

To learn more about Fashion Law, enrol for Diploma in Fashion Law.


First of all, the consumers need to be informed and made aware that the sale of fake goods not only damages the brand but can also directly harm them, such as when it comes to the quality and safety of the products they buy or the absence of warranties. In addition to the negative effects fake fashion has on the economy and the environment (mass production, low-quality chemicals used, annual disposal of tonnes of clothing), this uncontrolled sector frequently uses sweatshops, with all the negative effects and ramifications these have on people. Additionally, it is well known that many counterfeit businesses are linked to organised crime, and fake currency has also emerged as a go-to source of funding for terrorist organisations.

Competing with counterfeiters may be difficult, discouraging, and dangerous for a brand. However, the majority of internet players are developing tools to help brand owners efficiently combat counterfeits online. For instance, Amazon recently debuted “Project Zero.” Automated protections will continuously monitor the website and proactively delete suspected counterfeits after receiving from the brand the logo, trademark, and other essential information from Amazon. Additionally, without having to first get in touch with Amazon, this solution enables marketers to easily regulate and remove listings from the Amazon shop.


Technology can therefore, be your best ally when it comes to safeguarding a fashion brand’s intellectual property online. Artificial intelligence (AI), like Project Zero and other such programmes, has demonstrated effectiveness in the fight against counterfeits, cutting down on the time that businesses must devote to a manual search for prospective infringers. One can now rely on software and AI to attempt to remove counterfeiters effectively because there are so many platforms and counterfeiters. But keep in mind that any IPR asset must be successfully protected through the use of conventional methods like customs or legal procedures in the battle against counterfeits. This is because IP and fashion are interconnected. They both co-exist, and neither can survive without the other. IP law is required to increase any fashion design’s monopoly and serves as a shield against the ills of duplication and plagiarism.

To learn more about Fashion Law, enrol for Diploma in Fashion Law.

[1] Charles E. Coleman, ‘An Overview of Intellectual Property Issues Relevant to Fashion Industry’ (Navigating Fashion Law), Aspatore (2012).

[2] Vicki M. Young, ‘JA Apparel Said to Favor Licensing Model’ (Women’s Wear Daily, 21 July 2011), <>  accessed on 30 August 2022.

[3] Barton Beebe, ‘Intellectual Property and the Sumptuary Code’ 123 Harvard Law Review (2010) at p. 809.

[4] Feist Pubs v. Rural Telephone Service Co., 499 US 340, 355 (1991).

[5] Ibid.

[6] Ringgold v. Black Entertainment TV, 126 F.3d 70 (2nd Circuit).

[7] Peter Pan Fabrics Inc. v. Martin Weiner Corp., 274 F.2d 487 (2nd Circuit).

[8] Amy M. Spindler, ‘COMPANY NEWS; A Ruling by French Court Finds Copyright in a Design’ (The New York Times, 19 May 1994), <> accessed on 30 August 2022.

[9] Section 101, US Copyright Act.

[10] D Llewelyn, Invisible Gold in Asia: Creating Wealth Through Intellectual Property (Marshall Cavendish Business 2010) at p. 36.

[11] Beebe, B. (2010). INTELLECTUAL PROPERTY LAW AND THE SUMPTUARY CODE. Harvard Law Review, 123(4), 810–889.

[12] 18-293-cv (2d Cir. Mar. 15, 2019).

[13] No. CV17-2523 PSG Ex, 2017 U.S. Dist. LEXIS 211140 (C.D. Cal. June 29, 2017).



Role of Intellectual Property in Cyber Law

This blog post has been written by Dr. Apoorva Dixit


The Intellectual Property Rights[1] protect the original work in fields of art, literature, photography, writing, paintings, even choreography in written format, and audio, or video files. The IPR protects these works both in tangible and intangible form. Patent, Copyright, Trademarks, Trade Secrets, Industrial and Layout Designs, Geographical Indications are intellectual property rights for which legal remedies are available even for online infringements.

With the technological advancements and innovations in cyber world the global markets have benefitted the copyright or patent owners. However, every good innovation has its own pitfalls as violation of IPR has become one of the major concerns because of the growth of cyber technology. The IPR and Cyber law go hand in hand and cannot be kept in different compartments and the online content needs to be protected.

The ever-increasing and evolving cybercrimes are not confined to cyberstalking, frauds, cyberbullying, phishing, or spamming but are also infringement of IPR- copyright, trademark, trade secrets of businesses carried online, audios, videos, service marks by illegal practices like hyperlinking, framing, meta-tagging, and many more.

What are Intellectual Property Rights in Cyberspace

IPR can be defined as – “Intellectual property rights are the legal rights that cover the privileges given to individuals who are the owners and inventors of a work and have created something with their intellectual creativity. Individuals related to areas such as literature, music, invention, can be granted such rights, which can then be used in the business practices by them.”[2]

Types of Intellectual Property Rights[3]

Intellectual Property Rights can be further classified into the following categories −

  • Copyright
  • Patent
  • Trade Secrets, to name a few[4]

Every innovation in technological zone becomes prone to threats. The cyberspace on one hand has facilitated e-commerce, connecting with friends and family, publishing the literary works, and sharing knowledge but at the same time these personal data or copyrighted or patented data become vulnerable to various cyber-attacks.

It is best suited to have an effective intellectual property management strategy for all the e-businesses encompassing a considerable number in cyberspace.

There are various laws nationally and internally to safeguard intellectual property against cyber-threats, but it becomes the moral duty of the owner of IPRs to take all the required protective measures to negate and reduce illegitimate virtual attacks.

Intellectual Property Rights in India

For the protection, the IPRs in Indian soil, various constitutional, administrative, and judicial rules have been defined whether it is copyright, patent, trademark, or other IPRs.

Legislations Enacted to Protect IPR[5]

In the year 1999, the government passed an important legislation based on international practices to safeguard the intellectual property rights. The same are described below−

  1. The Patents (Amendment) Act, 1999, facilitates the establishment of the mailbox system for filing patents. It offers exclusive marketing rights for a time of five years.
  2. The Trademarks Bill, 1999.
  3. The Copyright (Amendment) Act, 1999.
  4. Geographical Indications of Goods (Registration and Protection) Bill, 1999.
  5. The Industrial Designs Bill, 1999, replaced the Designs Act, 1911.
  6. The Patents (Second Amendment) Bill, 1999, for further amending the Patents Act of 1970 in compliance with the TRIPS.

Learn more about the IP regime in India with Enhelion’s Diploma in Intellectual Property: Law and Management.


A. Copyright Infringement:[6]

“Copyright protection is given to the owner of any published artistic, literary, dramatic, or scientific work over his work to exclude everyone else from using that work on his own name and thereby gain profit from it.”

The infringement of these copyrights includes the usage without the permission of the owner, making and distributing copies of software and unauthorized sale of the same, and illegitimate copying from websites or blogs.

  • Linking:

Linking refers to directing a user of a website to another webpage by action of clicking on a text or image without leaving the current page. It poses a threat to rights and interests of the owner of the website and the owner can lose the income as it related to the number of users visiting the websites. It may lead users to believe that the two websites are linked and are under same domain and ownership.

In Shetland Times, Ltd. v. Jonathan Wills and Another[7], it was held to be an act of copyright infringement under British law and an injunction was issued as the Shetland News’s deep link was supposed to be with the embedded pages of the Shetland Times’s web site, but they were also linked to the Times’ website.

With digitisation there is a threat to copyright ownership and rights over their own innovation as it has become easy to mould various components of copyright elements into variety of forms by the process of linking, in-linking, and framing. This requires no permissions to be accorded.

Deep linking is challenging to manage as there are no clear-cut laws at both national and international level and this ambiguity becomes advantageous for cybercriminals who try to breach the copyrights. The rights of the owner of copyrights on one hand and free availability of information on another is needed to be balanced to ensure smooth working of online resources and businesses. Reading Sections 14 and 51, Indian Copyright Act, 1957, a legal issue emerges whereby it is not clear as to the exact stage when the reproduction of the copyrighted work is being committed[8]. The ambiguity lies in tracing the copyright infringement that is it at the stage of formation of deep link without the disclaimer of accessing a link which needs no approval or at the time when a user accesses the link at his will.

Another challenge is with the in-linking links. On a browser visited by a user accessing the link is created with map to navigate and fetch images from various sources, these images are copied by final user who is clueless that he is retrieving those from different websites. Like deep linking, the problem of tracing the infringement remains the same as it is difficult to track the exact phase of reproduction of the copyrighted images. The in-line link creator is guilty of copyright infringement though not directly distributing it but giving way to facilitate making of unauthorized copies of the original website content thereby falling under the purview of Section 14 Copyright Act, 1957. However, the final user has no mens rea or knowledge of any violation of copyright and is thus caught off-guard.

  • Framing:

Framing is another challenge and becomes a legal issue and debate subject over the interpretation of derivation and adaptation under Section 14 Copyrights Act, 1957. The framer only provides users the modus operandi to access copyrighted content which is retrieved from a website to browser the user is accessing so they cannot be held responsible for copying, communicating, or distributing the copyrighted content. The question arises whether getting the copyrighted content from a website and combining with some more to create one’s own will amount to adaptation or interpretation under law or not.

B. Software Piracy:

Software piracy refers to making unauthorized copies of computer software which are protected under the Copyright Act, 1957.

Piracy can be of following types:[9]

  • Soft lifting – this means that sharing a program with an unauthorized person without a licence agreement to use it.
  • Software Counterfeiting – Counterfeiting means producing fake copies of a software, imitating the original and is priced less than the original software. This involves providing the box, CDs, and manuals, all tailored to look as close to original as possible.
  • Renting – it involves someone renting a copy of software for temporary use, without the permission of the copyright holder which violates the license agreement of software.

C. Cybersquatting And Trademark Infringement:

Trademark means a unique identifier mark which can be represented by a graph and main idea is to differentiate the goods or services of one person from those of others and may include shape of goods, their packaging and combination of colours.

Cybersquatting is a cybercrime which involves imitation of a domain name in such a manner that the resultant domain name can dupe the users of the famous one with an intention to make profit out of that. This is executed by registering, selling, or trafficking of a famous domain name to encash a popular domain name’s goodwill.

When two or more people claim over the right to register the same domain name then the domain name dispute arises when a trademark already registered is registered by another individual or organization who is not the owner of trademark that is registered. All domain name registrars must follow the ICANN‘s[10] policy.

Meta tagging is a technique to increase the number of users accessing a site by including a word in the keyword section so that the search engine picks up the word and direct the users to the site despite the site having nothing to do with that word. This may result in trademark infringement when a website contains meta tags of other websites thereby affecting their business.

There are certain conditions which need to be fulfilled for a domain name to be abusive:

  1. The domain name can be said to be abusive if it gives the impression to the users of being same as another popular trademark which is a registered one and users mistakenly access the fake one made with mal intention of gaining profit by diverting users of popular trademark domain.
  2. The registrant has no legal rights or interests in the domain name.
  3. The registered domain name is being used in bad faith.

Learn more about the cyber law regime in India with Enhelion’s Diploma in Cyber Laws. 


The various international conventions treaties and agreements for protection of intellectual property in cyberspace are : “Berne Convention (1886), Madrid Agreement Concerning the International Registration of Trademarks (1891), Hague Agreement Concerning the Registration of International Designs (1925), Rome Convention for Protection of Performers, Producers of Phonograms and Broadcasting Organizations (1961), Patent Cooperation Treaty (1970) Agreement on the Trade-Related Aspects of Intellectual Property Rights (1994), World Intellectual Property Organization Copyright Treaty (1996), World Intellectual Property Organization Performances and Phonograms Treaty (1996), and Uniform Domain Name Dispute Resolution Policy (1999), in consolidation form the international instruments that govern Intellectual Property Rights.”[11]

Berne Convention (1886) protects the IPRs in Literary and Artistic Works and for the developing countries specialised provisions are provided.

Rome Convention (1961) covers creative works of authors and owners of physical indicators of intellectual property. It permits the implementation at domestic level by member countries where the dispute falls within purview of adjudication by International Court of Justice unless resorted to arbitration.

TRIPS (1994) is a multilateral agreement on intellectual property that has the widest coverage of IPRs like copyrights and related rights.

UDRP (1999) is for the resolution of disputes on registration and use of internet domain names.

Learn more about the IP regime in India with Enhelion’s Diploma in Intellectual Property: Law and Management.


Section 51 of Copyrights Act, 1957 is noticeably clear that exclusive rights are vested in the copyright owner and anything to the contrary constitutes copyright infringement thereof[12]. Since there is no express legislation to determine the liability of Internet Service Provider (ISP), Section 51 can be interpreted to fall within the ambit with respect to the facilitation of server facilities By ISPs for stockpiling user data at their business locations and which is broadcasted for making profit through charging for services and advertisements. However, to interpret in such a way the other ingredients are to be fulfilled in a cumulative manner, these ingredients are ‘knowledge’ and ‘due diligence’ to hold ISP liable in abetment of infringement of copyright.

Information Technology (Intermediaries Guidelines) Rules 2021 and Section 79 IT Act, 2000 provide conditional safeguard from liability of the online intermediaries, but at the same time its open for interpretation under any other civil or criminal Act. IT Act 2000 makes an intermediary non-liable for any third-party content hosted on its site. The 2021 Guidelines entail following of diligent approach by the intermediaries to avail protection or exemption under Section 79 IT Act, 2000. Therefore, it becomes crucial for initiative-taking judicial interpretation depending on the facts of each case.


Cyberspace has no borders and Intellectual Property disputes have become a global concern with mixed infringements and cross border disputes. For prescription, adjudication, and enforcement of law the legal disputes will come under jurisdiction of a Court or not becomes a worrying concern as there is no clear-cut rule of law. A country as a sovereign power has powers to adopt a criminal law for to an offensive act was committed outside its borders may but which has an impact within its territory. Following the international law, Courts can assume universal jurisdiction to prosecute a cybercriminal.

Evolution of various of theories and legal concepts has been witnessed to deal with this much anxiety of jurisdictional issues with respect to adjudicating the infringements of intellectual property in cyberspace. The most significant of these are the Minimum Contacts Test, the Effects Test, and the Sliding Scale Test or ‘Zippo Test’ taken from US Courts. The Minimum contacts test is applicable where one or both parties are out of territorial jurisdiction of the Court but there is a contact with the State in which the Court is located. The Effects test is applicable at the territory of the Court the effects or injury of any cyber-crime is experienced. The Sliding Test is related to personal jurisdiction regarding the interactions with commercial information over the internet between the non-resident operators.

Section 75 IT Act, 2000 is applicable to cybercrimes committed outside India if the offence involving a computer, computer system, or computer network placed in India. Section 4 IPC, 1860 extends its jurisdiction to offences committed in any place outside India targeting a computer resource located in India. The courts in India can adjudicate against the intellectual property infringements in cyberspace and they protect the intellectual property owners by means of judicial activism and effective jurisprudence.

Learn more about the cyber law regime in India with Enhelion’s Diploma in Cyber Laws. 


Along with the technological advancements and innovations it becomes imperative to protect the sensitive data and information and the intellectual property online by resorting to stricter legal measures. As newer types of cybercrimes affecting intellectual property are cropping up, so it becomes essential to enact new laws as traditional regulations are not sufficient to render justice as the challenges faced in protection or tracing the infringers of intellectual property in cyber world is quite challenging.

For smooth sail and facilitation of global trade and e-commerce and various businesses conducted online the import and export are necessarily provided a secured atmosphere to protect IPRs. Novice and updated technological practices to protect copyrighted content is absolute necessity like encryption, cryptography, digital signatures, and digital watermarks. It is important to keep a record of all the work with ownership of IPRs to identify the author, numbers or codes involved with such works. Taking the route of legal redressal of dispute is not the only solution but it is very much required on part of copyright, patent, trademark, and various other intellectual property rights owners to be initiative-taking and take all necessary precautions in protecting their works and be updated with the current technological measures of protection for IPRs. Social engineering attacks are generated or started by people, and the answers and solutions to these problems would come from people only.

[1] Hereinafter referred to as IPR

[2] 2022. Intellectual Property Right. [online] Available at: <> [Accessed 14 June 2022].

[3] Ibid

[4] Ibid

[5] Ibid

[6] 2022. Intellectual Property Issues in Cyberspace. [online] Available at: <> [Accessed 14 June 2022].

[7] Shetland Times Ltd. v. Dr. Jonathan Wills and Zetnews Ltd. [1996] (Court of Session, Edinburgh).

[8] Banerjee, S., 2021. Intellectual property rights law in cyberspace. [Blog], Available at: <> [Accessed 15 June 2022].

[9] 2022. Intellectual Property Issues in Cyberspace. [online] Available at: <> [Accessed 14 June 2022].

[10] ICANN (Internet Corporation for Assigned Names and Numbers) is the private, non-government, non-profit corporation with responsibility for Internet Protocol (IP) address space allocation, protocol parameter assignment, domain name system (DNS) management and root server system management functions. The Internet Assigned Numbers Authority (IANA) previously performed these services.

[11] Banerjee, S., 2021. Intellectual property rights law in cyberspace. [Blog], Available at: <> [Accessed 15 June 2022].

[12] Ibid