Tag: law certificate courses

Categories
Blog

Insider Trading in view of the order by SEBI to ban Future group

By: Vatsal Mehrotra

Introduction

Insider trading can be defined as buying or selling of a public company stocks by a person who has non-public and material information about that company or the management decisions to be taken by that company. Depending on when the insider makes the trade, Insider Trading can be categorized as legal or illegal. Material non-public information is defined as any information that could substantially impact an investor’s decision to buy or sell the security that has not been made available to the public yet. This information is largely used in the stock market which engages in trade of shares and securities. The prices for which are subject to fluctuation if there is any important change in the management of the company. Apart from this the fluctuation in the prices of the shares of that company in the stock market, is also visible when important decisions pertaining to mergers, acquisitions or takeovers are undertaken in the company. Knowledge of these changes without the official public announcements is beneficial for the people engaging in such illegal transactions of stocks.

Learn about Criminal Laws with Enhelion’s Online Law firm certified Master Course!

It is considered one of the most serious crimes in the capital markets as the inside trader has traded undisclosed price sensitive information regarding the shares of that particular company.
However, if the said trade is done towards any regulatory authority or the prescribed authority then the same trade would not amount to any violation of law. In academic circles the idea of insider trading is still debatable as academicians under circumstances feel that insider trading is important for building the trust and confidence of the employees of the company towards the company. Therefore, one must be careful while treating a trade in securities of a company as insider trading. They must consider all the relevant factors like the nature of information, the existence of substantial connection with the company, etc.

Learn about Criminal Laws with Enhelion’s Online Law firm certified Master Course!

Insider Trading in India

The reason insider trading is considered illegal in law is that it gives a person an unfair advantage and persons not having that advantage cannot trade and will be under loss. Moreover, fair opportunity which shall be granted to everyone trading in the stock market to buy and sell the shares will be lost and the holder of the illegal information shall be creating unfair transactions. To counter such a situation, the legislature passed Securities and Exchange Board of India Act, 1992 (SEBI Act, 1992), in which, under section 15G, for insider trading was provided.

The penalty for such an offence was provided to be not less than ten lakh rupees which may extend to twenty-five crores rupees or three times the profit made on such trading. In fact, the SEBI regulations have been amended from time to time. After Hindustan Lever Ltd v. SEBI, (1998) 18 S.C.L. 311AA, the regulations were for the first time amended in 2002 after which the next set of amendments came in 2019 on the recommendations of the Fair Market Committee (FMC). While the most recent reform came after the meeting of the SEBI on 25th June, 2020, where maintaining a structured database containing the nature of unpublished price sensitive information (UPSI) along with the name of the person sharing such information was incorporated.

Learn about Criminal Laws with Enhelion’s Online Law firm certified Master Course!

Future Group and Insider Trading ban

SEBI on 3rd February, 2021, banned Kishore Biyani, founder of Future Retail Groups from buying, selling, or dealing in securities of Future Retail for two years. His brother Anil along with several other entities were also banned. This was done in relation to a case filed back in 2017 where enquiry was called in the use of UPSI to trade in Future Retail shares. The SEBI found out that several entities Future Corporate Resources Pvt. Ltd (FCRL), FCRL Employee Welfare Trust, etc., were acting in connivance with the Biyani family for insider trading.

The order stated that the Biyani-family controlled entities were in violation of the regulatory mechanism as they had indulged in insider trading in the shares of group flagship Future Retail Ltd (FRL) prior to an announcement about the consolidation of the group’s offline and online home retail business into a single entity. Following the announcement in April 2017, shares of Future Retail hit a record high. The price of the scrip of FRL increased 4.68% from Rest. 292.60/- per share (closing price on April 19, 2017) to Rs.306.30/- per share (closing price on April 20, 2017).

Learn about Criminal Laws with Enhelion’s Online Law firm certified Master Course!

The order had also clarified that “When a person who has traded in securities has been in possession of unpublished price sensitive information, his trades would be presumed to have been motivated by the knowledge and awareness of such information in his possession. The reasons for which he trades or the purposes to which he applies the proceeds of the transactions are not intended to be relevant for determining whether a person has violated the regulation. He traded when in possession of unpublished price sensitive information is what would need to be demonstrated at the outset to bring a charge.”

In April, 2017, the Future Retails Group consolidated its home retail business, offline operated by its HomeTown stores while online and ecommerce by Blue eServices which owns and manages fabfurnish. This was done to bring “greater visibility on the performance of the home retail business and e-commerce home retail business”. However, Biyani and other related entities started buying FRL shares from March 10th, 2017 when the decision was internally improved even though this was made public on April 20th, 2017 during market hours.
The funds for purchase of the FRL shares during the UPSI period was done on the written instructions and authorization by Kishore Biyani and Anil Biyani to their stockbroker Indiabulls. SEBI fined them heavily for this holding the entities guilty of the crime of insider trading.

Learn about Criminal Laws with Enhelion’s Online Law firm certified Master Course!
However, on 6th February, 2021, the ban by the SEBI was challenged and Kishore Biyani moved the Securities Appellate Tribunal (SAT) challenging the ban. In fact, the FRL spokesperson has said “On merits, the SEBI order is untenable since it treats a well-anticipated and publicly well-known impending reorganisation of the home furnishing businesses that the Future Group affected in 2017 to be unpublished information.”

Approach of the Courts in Insider Trading Matter

The juridical approach has always been such that inside traders have been dealt strictly in accordance with law. In Securities Exchange Commission v Rajat Gupta ,747 F.3d 111, the defendant had traded in confidential information worth in billions and he was convicted for a period of two years and fined five million dollars along with returning the profits gained from insider trading.
Gujarat NRE Mineral Resource Limited v. SEBI, (Appeal No. 207 of 2010 decided on 18.11.2011), the main issue was whether investment from one company and selling it to the other company affects the prices of shares. The Appellate Tribunal decided against it as it held that since an investment company’s primary objective is buying and selling of securities, such an act would not amount to price sensitive information. After Hindustan
Hindustan Lever Limited v. SEBI, (1998 SCL 311), the regulations were amended by the SEBI in such a manner that any speculative news published in the newspaper or in electronic media about a company would not amount to publication of price sensitive information.

Learn about Criminal Laws with Enhelion’s Online Law firm certified Master Course!

Recommendations to improve regulations against Insider trading

The harmful effects of insider trading is disruptive for the market and certain measures can be taken to prevent such incidents. To prevent such incidents the stock exchanges play a very important role and the proactive approach by them can help by duly monitoring the transactions by the insiders constantly and instantly reporting any suspicious activity by the insider to the SEBI. Furthermore, the regulations can be amended to impose liability on the person who receives the tip for trading in confidential information. Other than that the investors who are contemporaneously trading at the time of insider trading must be given the option to recover the losses suffered from the insider.
Rachana Panguluru, Vamsi Krishna Bodapati, Insider Trading- Comparative study with the UK and India, Manupatra.
This action might refrain the insiders from insider trading because many investors can exercise pressure on the insiders. The companies can also have qualified stock brokers who they make mandatory for all the insiders to purchase stocks only through that particular broker. The qualified broker will check whether the insider purchasing the stock satisfied all the conditions preceding the purchase or not and duly report them to the company.

Learn about Criminal Laws with Enhelion’s Online Law firm certified Master Course!
Nonetheless, the efforts undertaken by SEBI to prevent insider trading is commendable and has helped India emerge as a top player in the capital market and its insider trading prohibition laws are equally competing with such laws in the developed countries. SEBI time and again constituted committees to have the regulations and laws on the prohibition of insider trading updated. It is constantly on a run in updating all the laws to prevent insider trading. SEBI started observing the markets to get rid of the insider trading activities at the root level itself.

Learn about Criminal Laws with Enhelion’s Online Law firm certified Master Course!

Categories
Blog

Racism In Sports: International Laws & Rules From Various Jurisdictions

By: Umang Chaturvedi

 

“Why are all the angels white?

Why ain’t there no black angels?”

                                                        -Muhammad Ali

Abstract

Sports have acted as a medium to connect people beyond language, ethnicity, culture and boundaries. In its pure sense, it is a satisfying activity at the micro-level and nothing less than a war at the macro level. The scale of competition increases with the hierarchy and so does the complexities. Some athletes and sportspersons are revered equivalent to Gods in their respective fraternity by the public. This respect is gained by them because of the magnanimity of sports. The business that goes behind the curtains has resulted in this magnanimity. But these Gods within the ambit of their magnanimity have not been untouched to the social issues which normally go unnoticed. Issues like racism in sports are not done yet from the world let alone the sporting facility. This article elucidates the reasons of racism present in professional sports with an attempt to define the core and genesis of the problem.

Learn more about International Sports Law with Enhelion’s Online Law firm certified course by Krida Legal!

The author explains the legislations/law which helps to counter this problem at global level. Additionally, the author has tried to provide an analysis through the cases of international performers who were subjected to racism in their careers. Certainly, the issue of disparity on the basis of colour begins within the nations. The problems are much more than racism being a ground of discrimination. In a country like India the issues even extend to discrimination on the basis of caste, sub-caste, race, gender, sex, etc.

  1. Introduction

Racism is defined as “a belief that race is the primary determinant of human traits and capacities and that racial differences produce an inherent superiority of a particular race”[1] by the Merriam Webster dictionary. Senseless killings and instances of Eric Garner (2014), AhmaudArbery (February 2020), Breonna Taylor (March, 2020) and George Flyod (May 2020) have witnessed sports community coming together to support the right cause irrespective of differences. Such issues force athletes to speak effectively as they do not want to go unheard for the social cause. LeBron James, Stephen Curry, James Harden, etc. are some of the most vocal NBA players after the recent incidents occurred. Other figures from different sports that have been vocal are Lewis Hamilton, Colin Kaepernick etc. They have supported the cause too.

The problem has not been untouched to the fraternity of sports. Rather it is more rampant. Any act within the territorial boundary of a competitive sport can be disguised as an act in the heat of the momentby the offender. Calm and composure are expected the most out of an athlete and sportsperson. These acts from the coolpeople then cannot be covered under the garb of competition or heat of the moment.

Learn more about International Sports Law with Enhelion’s Online Law firm certified course by Krida Legal!

  1. Core Problem

With cricket being popular as the game of gentlemen, it upsets the fraternity when conflicting views are shared by somebody belonging to the game itself. In late June 2020, West Indies cricket team’s captain Jason Holder said, “it is time for the entire cricketing fraternity to treat racism as seriously as match-fixing or doping and to hand tougher bans on racial offenders.”[2] Such statements point fingers at the authorities and the incapability of sport-specific laws which need to get stricter.

The core of the problem is the chauvinism that a superior country’s men carry with them. Such stereotypes are broken easily when a deprived and dominated wins or creates his/her space in the sport bare minimum. In context, 2013’s Chadwick Boseman starrer sports-drama film, “42”[3] came in light. It highlighted the efforts of an African-American Major League Professional player Jackie Robinson who was subjected to racism in a then all-white baseball league by fellow players and fans. His jersey number was later retired in respect, on which the film’s name was based.To draw a parallel from the same, the core of the issue lies within the people of the sporting fraternity. Everybody associated with it especially the fans.

Learn more about International Sports Law with Enhelion’s Online Law firm certified course by Krida Legal!

  1. Laws, legislations and efforts

Issues raised through acts done by black athletes are certainly to bring into light the adversities they’ve faced over the course of history. These issues are political in nature which overlaps with sports. This overlap has its own interpretation where some define it to be right and other define it to be wrong. “Dissent in sports is usually understood as expressing dissatisfaction against an umpire’s decision. However, in the present context, dissent must be understood as a conscientious protest against a larger problem that has socio-political undertones.”[4] In this sub-heading, the author has tried to analyze various measure and steps taken by the way of local laws of different jurisdictions. The examples considered for study include and are categorized into Australian laws, European laws and initiatives, Conventions of United Nations, laws of USA and Indian laws.

  1. Australia

The provisions of the International Convention on the Elimination of All Forms of Racial Discrimination (“ICERD”)[5] are incorporated under Australian Law through its Racial Discriminations Act of 1975. It is a general legislation extending to sports and related organizations. Australian Football League (AFL) guidelines are strict regarding racism since the introduction of Rule 30 in 1995. Rule 30 is used to tackle racism and religious vilification. Even the laws of Australia are stringent regarding racism in general through Racial Discrimination Act, 1975 and Racial Hatred Act, 1995[6].

In 2008, Indian spinner (cricketer) Harbhajan Singh was penalized for allegedly expressing racial views on an Australian cricketer Andrew Symonds when the former called him ‘monkey’ during a test match in Australia. This embarrassing event was a confusing one. It was deliberated if the act was racial or not because the remark clearly did not qualify for the alleged violation but it was still derogatory. Eventually Justice John Hansen of Australian Appeal Court absolved the cricketer of liability and cleared the charges. What adds to the problem is that a spectator cannot be banned or fined for comments because that is the major revenue generation source for clubs. Australian local football has seen various instances where boys aged 12-14 who come from other countries to make their career face racism at a vulnerable stage.[7]

Learn more about International Sports Law with Enhelion’s Online Law firm certified course by Krida Legal!

  1. Europe

Europe has been the center stage for football with record breaking viewership every year. Multiple local leagues are supported due to interest and large fan base. As a cherry on the top, UEFA Europa League and UEFA Champions League have dominated global football in all terms. There are multiple organizations and legislations which help in tackling the problem in Europe. FARE (Football Against Racism in Europe) Network is one such organization which has received backing from governing bodies like UEFA, FIFA and European Commission for the common objective of eradicating the social issue. Headquartered in London, it was set up in the year 1999 at Vienna (Austria). It gained relevance in the contemporary scenario when it began to work as a network of enthusiasts, players, associations, etc. as members to stand strong against the discrimination.

A similar initiative as a 3 day campaign was launched in 2006 by the Romanian Football Federation in association with National Council for Combating Discrimination (a society-institute based in Romania). It was named Racism Breaks the Game which was organized to combat discrimination against the Romani minority and to promote fair play in football. Even UEFA DR Article 14[8] prohibits racism of any form and prescribes ways to tackle it through guidelines. Article 165 of Treaty on the Functioning of the European Union (TFEU) also acts in the same regard. It deals with all such issues arising out of sports. Lisbon Treaty though allows the Union for minimal interference but acts strictly through courts for cases arising out of racism.

Learn more about International Sports Law with Enhelion’s Online Law firm certified course by Krida Legal!

  1. United Nations and United States of America (USA)

United Nations has time and again used sports as a mode to end racism at global level. It was reiterated by then Secretary-General Ban Ki-moon that, “Sport is a universal activity that can reaffirm our fundamental human rights.”[9]He urged to “use the power of sport to end the blight of racism” as it marked the annual International Day for the Elimination of Racial Discrimination in 2013.Additionally, The Durban Programme of Action 2001 in paragraph 128, 129 and 218 urges international and national sports bodies to tackle racism effectively. Inter-American Convention against Racism, Racial Discrimination and Related Forms of Intolerance, 2013[10] is another internationally signed document.

In USA, the Patsy Mink Equal Opportunity in Education Federal Act, 1972 complements the Civil Rights Act, 1964 “in the area of public education and federally assisted programmes (enacted to end discrimination in various fields)”[11]. The legislation has ensured equal access to sports for all active programmes that receive federal funding in USA[12]. Even after attaining peak of success in sports, public and spectators disregard such facts and direct racist comments in NBA, Pro Baseball and NFL. In early 2019 Oklahoma’s basketball star Russell Westbrook faced racist remarks in an away game at Utah.

  1. India

India is a home to multiple sports and professional leagues like IPL, ISL, IHL, Pro-Kabaddi etc. The country is more special due to its diversity. Additionally the essence of regional representation varies. There are sub-divisions and regions within regions. Even a whole north-east is described into 7 sisters further. South, in itself is divided in historical kingdoms now states. This division is interesting but when people from different backgrounds face each other in state/national camps, there are conflicts of opinions, likes, dislikes which might be detrimental in the longer run for a team representing at the international level.

The best example can be drawn from 2007’s Indian film Chak De! India. Shah Rukh Khan embodied the role of hockey coach Maharaj Krishan Kaushik mixed with the background of Indian player Mir Ranjan Negi. The film was based on a real story where Indian Women’s Hockey Team won 2002 Commonwealth Games. It showed the reality of internal conflicts (due to colour, region, state, racial and religious bigotry[13] etc.) between players during the camp.

Learn more about International Sports Law with Enhelion’s Online Law firm certified course by Krida Legal!

India introduced the Anti-Discrimination and Equality Bill 2016 (ADE Bill) in the Lok Sabha to tackle any form of discrimination. Other than broad discussions under Article 14, 15, 16 of the Constitution of India, federations are entrusted with the duty to handle all issues relating to sports. Additionally, Section 153A of the Indian Penal Code, 1860 deals with the punitive measure related to racist acts or comments.

  1. Conclusion – Solution and Criticism

In all, the issue of racism has proven to be detrimental to the development of some athletes but there are many amazingly great sportspersons who have defeated all odds and reached the top in their respective sports. The problem is deep rooted in the social system which comprises of humans, which is a much broader aspect than society. It includes athletes, sportspersons and all other people related to the fraternity of sports in one way or other. To eradicate the issue of racism from sports, the primary need is to make people realise that there are no differences in reality, they are essentially in the mind of individuals and their beliefs, which is prima facie incorrect.

Learn more about International Sports Law with Enhelion’s Online Law firm certified course by Krida Legal!

Until the mentality of important organizations like IOC does not change, no substantial change can be found. The controversial Rule 50 of the Olympic Charter prohibits any “kind of demonstration or political, religious or racial propaganda…in any Olympic sites, venues or other areas”. It was clarified by the authorities in January 2020 in preparation of scheduled Olympics that any gesture or kneeling (like past incidents of Gwen Berry’s fist on podium and Colin Kaepernick’s kneeling) will not be entertained at the events.

Until IOC resolves issues like these where the anti-racist demonstration are looked at from a perspective of political overlap, there won’t be a solution. The international sports guidelines in context with racism are soft but strict. Still there is a requirement for spectators, fellow players and organizations to be careful specifically around the young representatives of respective sports. A negative impression is made for a second inside the court/field which stays and impacts a vulnerable young player for his whole life. Sports should be used as a medium for the primary purpose of leisure and shall only be associated with the efforts, hard-work, dedication and sweet success involved.

[1]Racism, Merriam-Webster Dictionary (Jan. 23, 2009).

[2]Sportstar, Jason Holder: Racism Should be Treated as Seriously as Match-Fixing and Doping, (June 28, 2020), https://sportstar.thehindu.com/cricket/england-vs-west-indies-racism-sammy-jason-holder-gayle-icc-ipl/article31 937748.ece.

[3]History.com, Jackie Robinson Breaks Color Barrier, (April 13, 2020), https://www.history.com/this-day-in-history/jackie-robinson-breaks-colorbarrier#:~:text=On%20April%2015%2C%201947%2C%20Jackie,for%20more% 20than%2050%20years.

[4]Shivam Singh, When Sports Align With Dissent, The Indian Express, (June 26, 2020), https://indianexpress.com/article/opinion/black-lives-matter-when-sports-aligns-with-dissent-6477907/.

[5]Australian Human Rights and Equal Opportunity Commission, What’s the Score?A Survey of Cultural Diversity and Racism in Australian Sport, (2006), p. 8, https://www.humanrights.gov.au/publications/whats-score.

[6]Id.

[7]Sophie Kesteven, Kids are Being Subjected to Racist Abuse at Junior Sports Games, ABC Radio National, (Nov 1, 2019), https://www.abc.net.au/news/2019-11-01/racism-in-junior-sport-australia-talks/11636174.

[8]UEFA Disciplinary Regulation, 2019 Edition, https://editorial.uefa.com/resources/0257-0ddf58550d23-3b55809 3983e-1000/disciplinary_regs.pdf.

[9]UN News, No Place for Racism in Sports, UN Declares on International Day, (March 21, 2013), https://news.un.org/en/story/2013/03/435072-no-place-racism-sports-un-declares-international-day.

[10]Organisation of American States, Inter-American Convention Against Racism, Racial Discrimination an Related Forms of Intolerance, http://www.oas.org/en/sla/dil/inter_american_treaties_A-68_racism.asp.

[11]ACLU, Gender Equity in Education, https://www.aclu.org/title-ix-gender-equity-education.

[12]U.N. GAOR, 69th Sess., A/69/340, Combating Racism, Racial Discrimination, Xenophobia and related intolerance, (Aug. 22, 2014), https://www.ohchr.org/Documents/Issues/Racism/A-69-340.pdf.

[13]Jaspreet Pandohar, Chak De India! BBC, (August 1, 2007), http://www.bbc.co.uk/films/2007/08/06/chak_ de_india_2007_review.shtml.

Learn more about International Sports Law with Enhelion’s Online Law firm certified course by Krida Legal!

Categories
Blog

Comparative Study of Drugs and Cosmetics Law In U.K., U.S.A And Germany

By: Vanshika Tewari

ABSTRACT

Human culture is formulated on the basis of ethical society, honesty, integrity, respect, pursuit of excellence, civic duty, accountability and loyalty. Since the dawn of civilization , by trial or error, it has been established that a society and more so it’s medical profession, can survive and thrive only by observance and practice  of certain rules of conduct guided by ethical, moral, legal and social values of land. Medicine has been a field of utmost diligence and even though so many centuries have passed, this profession still holds its merit and authenticity. Further, the need for certain rules and legislative statutes governing the establishment and working of hospitals and its manpower was aggrieved at the time of the colonial regime and the World War scenario. Presently,  there are various other laws pertaining to the governing of hospitals, practitioners/ other employees, sale and storage of the drugs, license and permissions , public and environmental health ,etc.

Learn more about Drugs and Cosmetics Law with Enhelion’s Online Law firm certified course by Legaleye Advocates and Legal Consultants!

Every nation has certain laws that help them in maintaining the standard quality of its drugs and cosmetics and as well as regulates its manufacturing, labelling, export,etc.

In this report we shall further talk about how countries like USA, Germany and United Kingdom regulate their medicines and also compare the methodology they have applied in maintaining and meeting the global health standards for their own produced drugs and cosmetics.

BRIEF OVERVIEW OF THE PREVALENT DRUGS AND COSMETICS LAWS IN THE U.K., U.S.A AND GERMANY

  • UNITED KINGDOM

In spite of the fact that planned to happen from March 29, 2019, the Brexit has now deferred to October 31, 2019. The choice is expected to give more opportunity to the United Kingdom (UK) and the European Union (EU) to concur upon the provisions of the UK leaving the EU.

Learn more about Drugs and Cosmetics Law with Enhelion’s Online Law firm certified course by Legaleye Advocates and Legal Consultants!

Up to this point, the EU guidelines straightforwardly influenced the restorative items that are appropriated in the UK. In any case, with the Brexit in situation, they are not, at this point expected to be appropriate in the UK locale as the UK is required to be treated as a third nation. In basic words, the UK won’t need to conform to the guidelines pertinent to the EU part states. Consequently, to line up with the Brexit changes, for Cosmetic items, some new laws have been laid before the UK parliament.[1]

United Kingdom has for ages been a part of the European Union and therefore the gudlines laid down by the EU for the working and regulation of this sector was to be followed and obligated too but earlier in 2019 after the BREXIT happened U.K. has given up with the E.U’s guidelines and framing their own laws pertaining to this, like –

The UK Cosmetic Regulations Draft, The Cosmetic, Toiletry and Perfumery Association (CTPA) has proposed the UK Cosmetic Products Statutory Instrument to the UK parliament to guarantee that post the Brexit just safe corrective items are circulated in the UK. The new draft will be in accordance with that of the EU’s including the rundown of prohibited and confined fixings.

Learn more about Drugs and Cosmetics Law with Enhelion’s Online Law firm certified course by Legaleye Advocates and Legal Consultants!

To enter the UK beautifiers showcase, organizations will be required to delegate a UK-based Responsible Person (RP), who is relied upon to tell the item to the capable position. To ensure the notice procedure smoothed out, the CTPA is by all accounts during the time spent structure the necessary item notice entrance for the UK like that of the Cosmetic Product Notification Portal (CPNP) of the EU.[2]

Once Brexit happens, all the corrective items told to the EU through CPNP are required to be informed to the UK notice framework inside ninety (90) days. Following are the pre-necessities for informing an item in the UK-

The name and category of the cosmetic product

The name and address of the responsible person

The content and ingredients of the product

What more! – the name of a restorative item should likewise bear the name and address of the Responsible Person. Post Brexit, restorative items marked with an EU-27 location and consistent with the EU naming guideline will be viewed as agreeable for a long time in the UK. If there should be an occurrence of imports additionally, the UK should consent to the import guidelines of the EU.

But still the restorative guidelines of both the districts are as of now muddled!

Learn more about Drugs and Cosmetics Law with Enhelion’s Online Law firm certified course by Legaleye Advocates and Legal Consultants!

  • UNITED STATES OF AMERICA

In the United States, all drugs and cosmetics are regulated by the Food and Drug Administration (FDA) under authority granted by the Federal Food, Drug, and Cosmetic Act of 1938.

The extent of FDA’s administrative authority is wide. FDA’s duties are firmly identified with those of a few other government organizations. Regularly disappointing and mistaking for customers is deciding the proper administrative organization to contact.

As a rule, FDA controls:[3]

  • Medications,

Including: doctor prescribed medications (both brand-name and conventional) ,non-solution (over-the-counter) drugs ,Biologics, including:  immunizations for people ,blood and blood items ,cell and quality treatment items tissue ,and tissue items allergenics

  • Clinical Devices,

Including:  basic things like tongue depressors and chamber pots  complex advances, for example, heart pacemakers dental gadgets ,careful inserts and prosthetics.

Learn more about Drugs and Cosmetics Law with Enhelion’s Online Law firm certified course by Legaleye Advocates and Legal Consultants!

FDA’s legitimate authority over makeup is not the same as our position over different items we manage, for example, drugs, biologics, and clinical gadgets. Under the law, corrective items and fixings needn’t bother with FDA premarket endorsement, except for shading added substances. In any case, FDA can seek after implementation activity against items available that are not in consistence with the law, or against firms or people who abuse the law.

FDA has reliably exhorted makers to utilize whatever testing is important to guarantee the security of their items and fixings. Firms may prove security in various manners. FDA has expressed that “the security of an item can be enough validated through (a) dependence on effectively accessible toxicological test information on singular fixings and on item plans that are comparable in structure to the specific corrective, and (b) execution of any extra toxicological and different tests that are proper considering such existing information and data.”[4]

FDA may make administrative move in the event that we have solid data demonstrating that a restorative is tainted or misbranded. For instance, FDA can seek after activity through the Department of Justice in the government court framework to expel defiled and misbranded beautifying agents from the market. To forestall further shipment of a defiled or misbranded item, FDA may demand a government area court to give a limiting request against the producer or merchant of the violative restorative. Beautifying agents that are not in consistence with the law might be dependent upon seizure. “Seizure” implies that the administration claims property from somebody who has disregarded the law, or is associated with doing as such. FDA additionally may start criminal activity against an individual abusing the law.

Learn more about Drugs and Cosmetics Law with Enhelion’s Online Law firm certified course by Legaleye Advocates and Legal Consultants!

  • GERMANY (EU)

Germany is an integral part of the European Union and this is why the medical manufacturing sector here is ruled by the guidelines laid by the EU itself, following are some of the guidelines being put to use so far-

  • Corrective/Cosmetics/Drugstore items are dependent upon EU wide wellbeing guidelines. They should not be obligated to make harm human wellbeing, when applied under ordinary states of utilization or under sensibly predictable states of utilization.
  • It is a criminal offense to flexibly restorative items which don’t consent to the guidelines or neglect to agree to other related prerequisites.
  • All organizations managing in beautifying agents, including retailers, wholesalers, shippers and producers, are dependent upon the guidelines,etc.

Learn more about Drugs and Cosmetics Law with Enhelion’s Online Law firm certified course by Legaleye Advocates and Legal Consultants!

The guidelines place various commitments relying upon whether you are a ‘merchant’ (which incorporates retailers and wholesalers) or you import items from outside the EU / Germany and makers.

On the off chance that you are a maker in the EU, or you import products into the EU from a third nation, at that point you are considered to be a mindful individual and more prominent obligations will concern you. A maker outside the EU may assign somebody inside the EU as a mindful individual.

Organizations managing in skin lighteners, and certain germicidal cleanser items, ought to be especially cautious as there are loads of illicit variants of these items. Further direction on these is accessible.

Primary lawful prerequisites

Corrective items must follow point by point compositional and naming prerequisites.

You should track where you acquired your beautifying agents from and, in the event that you offer them to different organizations, who you provided them as well. These must be accessible for review for a long time from when you were provided with them or, if material, when you provided them

Learn more about Drugs and Cosmetics Law with Enhelion’s Online Law firm certified course by Legaleye Advocates and Legal Consultants!

Distributors must act with due consideration including guaranteeing items are not obsolete. Specifically, you should watch that beautifying agents are named with;

o The name and address of a responsible person in the EU

o A batch or manufacture reference number

o An ingredients list. This must be headed ‘ingredients’

More than 1,300 substances are precluded from being utilized in corrective items. For instance, chlorine, cyanides, iodine, mercury and mercury mixes, for example, mercuric iodide. Note that skin helping creams contain hydroquinone are likewise illicit.

Any items with Corticosteroid substances like Clobetasol Propionate, Bethamethasone or Bethamethosone Dipropionate must not be at a bargain in corrective shops. Flexibly of such items may likewise be an offense under medications enactment.

Learn more about Drugs and Cosmetics Law with Enhelion’s Online Law firm certified course by Legaleye Advocates and Legal Consultants!

COMPARATIVE CONCLUSION

The guidelines pertaining to the drugs and cosmetics regulations in these three different countries appear to be quite similar but however, there were discrepancies for certain recommendations relating to the labelling, circulation, offender liability, permitted chemicals, etc.

Updates for these guidelines are being worked upon in almost all these countries , although United Kingdom would be framing its own and new set of medicinal guidelines and acts ,it can be said that all these countries are primary contributors in the field of medicine and as of now they all have strong legislations to backbone their Drugs and Cosmetic standards and regulation but there is enough evidence that may lead them to stronger statutes and will enable the future guidelines to become even more concordant. As with the intensive research done and developments being made , a slight moderation of the acts maybe needed.[5]

At the end we can say that these three countries have almost similar provisions for the regulation of drugs within their territory but unlike Germany (EU), U.S.A. may be a step behind as it is majorly functioning on only one statute ,whereas there should be different acts dealing with the different sections of the drugs and cosmetics field. It will in a way improve the efficiency in terms of the proper vigilance that this sector needs.

Learn more about Drugs and Cosmetics Law with Enhelion’s Online Law firm certified course by Legaleye Advocates and Legal Consultants!

Presently, United Kingdom is witnessing its post- BREXIT era and therefore trying to not really comply with the European Union guidelines it is laying down its own provisions. As the Brexit happened in 2019, it would not really be this quick and easy to formulate strong medicinal laws, therefore no comparison can be drawn with regards to U.K. but it is sure that the U.K.  Parliament will soon frame a law which would meet all the perimeters  required for a stronger Medical (Drugs and Cosmetics) regulating sector.

[1] https://www.freyrsolutions.com/blog/uks-new-cosmetic-regulations-in-the-light-of-brexit

[2] https://www.freyrsolutions.com/blog/uks-new-cosmetic-regulations-in-the-light-of-brexit

[3] https://www.fda.gov/cosmetics/cosmetics-laws-regulations/fda-authority-over-cosmetics-how-cosmetics-are-not-fda-approved-are-fda-regulated

[4] The Safety and Regulatory Status of Food, Drug and Cosmetics Colour Additives Exempt from Certification

  1. B. HALLAGAN*, D. C. ALLEN* and J. F. BORZELLECAt

*International Association of Color Manufacturers, 1620 1 Street, NW, Suite 925, Washington, DC 20006, 10 January 1995

[5] APA Koes, Bart W., PhD*; van Tulder, Maurits W., PhD†; Ostelo, Raymond, MSc‡; Kim Burton, A., PhD, DO§; Waddell, Gordon, DSc, MD, FRCS∥ Clinical Guidelines for the Management of Low Back Pain in Primary Care: An International Comparison, Spine: November 15, 2001 – Volume 26 – Issue 22 – p 2504-2513

Categories
Blog

Joinder/Ms-Joinder/Non-Joinder of Parties In Civil Suits

By: Umme Ruman

Civil suit usually involves private disputes between persons or organisations. A civil case begins when a person or organisation, claims that another person or organisation, has failed to carry out a legal duty owed to them. The aggrieved party may ask the court to tell the other party to fulfil the duty, or make compensation for the harm done, or both. Legal duties include respecting rights established under the Constitution or under any other statute. Civil disputes are dealt under the Civil Procedure Code, 1908.

The parties in a civil suit are classified as Plaintiffs and Defendants. Plaintiff is the aggrieved party who files the civil suit, against the wrongdoer who becomes the defendant. There may be more than one plaintiff or defendant in any suit. Order 1 of Civil Procedure Code, 1908 contains provisions which deal with the parties to a suit.

Learn more about Drafting, Pleading and Conveyance with Enhelion’s Online Law firm certified course by Legajoist Advocates and Solicitors!

JOINDER OF PARTIES TO A CIVIL SUIT

Joinder of parties means to add all persons concerned in a particular dispute to the suit. Parties can be joined at anytime, subjected to the conditions laid down in the Code. Order 1 Rule 1 of the Code states when a person may be joined as plaintiff:

“1. Who may be joined as plaintiffs. — All persons may be joined in one suit as plaintiffs where—

(a) any right to relief in respect of, or arising out of, the same act or transaction or series of acts or transactions is alleged to exist in such persons, whether jointly, severally or in the alternative; and

(b) if such persons brought separate suits, any common question of law or fact would arise”[1]

Learn more about Drafting, Pleading and Conveyance with Enhelion’s Online Law firm certified course by Legajoist Advocates and Solicitors!

The Code clearly provides that, a party may be joined at any time as a plaintiff provided that they must have right to claim a relief, either rising from the same act(s) or same transaction(s) based on which the suit was filed. When a separate suit is filed by the parties, there should exist a common question of law or fact, for them to be joined as plaintiffs.

The first landmark case which discussed this provision was the case of Haru Bepari and Ors. vs. Roy Kshitish Bhusan Roy Bahadur and Ors.[2], where it was held that, “The conditions which rendered the joinder of several plaintiffs permissible under Order I, Rule 1. C. P. C. do not necessarily imply that there can be only one cause of action in the suit in which the several plaintiffs join”.

This view was accepted by many other judgments that followed this case. It is key to note the decision given by the Bombay High Court in the case of Paikanna Vithoba Mamidwar and Anr. vs. Laxminarayan Sukhdeo Dalya and Anr.[3], where the Court decreed that, “It is not, therefore, necessary any more that there must be identity of interest or identity of causes of action. What is necessary is the involvement of common question of law or fact.”

Learn more about Drafting, Pleading and Conveyance with Enhelion’s Online Law firm certified course by Legajoist Advocates and Solicitors!

Similar provision was provided to the defendants within the Code prescribed in Order 1 Rule 3, which states that:

“3. Who may be joined as defendants. — All persons may be joined in one suit as defendants where—

(a) any right to relief in respect of, or arising out of, the same act or transaction or series of acts or transactions is alleged to exist against such persons, whether jointly, severally or in the alternative; and

(b) if separate suits were brought against such persons, any common question of law or fact would arise.”

Thus, the condition for joinder of defendant is the same as the conditions laid down for the joinder plaintiffs. This was provision explained by the Supreme Court in Bachu Bhai Patel vs. Harihar Behera & Anr.[4], where it seen that: “This Rule requires all persons to be joined as defendants in a suit against whom any right to relief exists provided that such right is based on the same act or transaction or series of acts or transactions against those persons whether jointly, severally or in the alternative. The additional factor is that if separate suits were brought against such persons, common questions of law or fact would arise. The purpose of the Rule is to avoid multiplicity of suits.”

Learn more about Drafting, Pleading and Conveyance with Enhelion’s Online Law firm certified course by Legajoist Advocates and Solicitors!

It was further observed in this case that when Order 1 Rule 3 and Order 2 Rule 3 are read together, it signifies that the question of joinder of parties also includes the joinder of causes of action. The basic principle is that when causes of action are joined, the parties are also joined, since the cause of action is raised against the party. Order 2 Rule 3 states:

“3. Joinder of causes of action.—(1) Save as otherwise provided, a plaintiff may unite in the same suit several causes of action against the same defendant, or the same defendants jointly; and any plaintiffs having causes of action in which they are jointly interested against the same defendant or the same defendants jointly may unite such causes of action in the same suit.

(2) Where causes of action are united, the jurisdiction of the Court as regards the suit shall depend on the amount or value of the aggregate subject-matters at the date of instituting the suit.”

Thus, in cases where parties are involved in the same transaction or where they are moving for the same cause of action, they can be joined within the same suit, either as plaintiffs or defendants. However, this action depends on the discretion of the Court.

MISJOINDER OF PARTIES TO A CIVIL SUIT

According to the Merriam- Webster Dictionary, misjoinder means, “an improper union of parties or of causes of action in a single legal proceeding.” Thus, when those parties who have no relevant connection to the suit or when those causes of action are pleaded which bear no correlation with the facts of the case are joined, it becomes misjoinder of parties or causes of action.

When two or more persons are joined as plaintiffs or defendants in a particular suit in breach of order 1, Rules 1 or 3 respectively and they are neither necessary nor are proper parties, it is a case of misjoinder of parties. Additionally, when persons having different causes of action file a suit together, it would also be considered as misjoinder of parties.

Learn more about Drafting, Pleading and Conveyance with Enhelion’s Online Law firm certified course by Legajoist Advocates and Solicitors!

Where in a suit there are more than two defendants and more than two causes of action, the suit will be deemed as bad for misjoinder of defendants and cause of action, when different causes of action are combined against various defendants separately. Such a misjoinder is technically known as multifariousness.

The objection to the misjoinder of parties should be raised at the earliest stage possible. If the parties fail to do so, they are considered to have waived this right. The decision whether or not there is misjoinder of parties has to be made in consideration of the averments made in the plaint and both the written statement and the evidence led by the parties should not be taken into consideration for the purpose.

However, as serious misjoinder of parties seems to be, it is not as important. Order 1 Rule 9 states that no suit is liable to be dismissed by reason of misjoinder of parties. It is deemed to be a mere irregularity which is covered by sections 99 and 99-A of the Code. Section 99 of the Code states that:

“99. No decree to be reversed or modified for error or irregularity not affecting merits or jurisdiction.—No decree shall be reversed or substantially varied, nor shall any case be remanded, in appeal on account of any misjoinder [or non-joinder] of parties or causes of action or any error, defect or irregularity in any proceedings in the suit, not affecting the merits of the case or the jurisdiction of the Court.”

Under Order 1 Rule 10, when there seems to be misjoinder of parties, the name of the improperly joined plaintiff or the defendant may be struck-out and the case may be proceeded as usual.

In Ramdhan Puri v. Chaudhury Lachmi Narain[5], it has been held that parties and causes of action, when once joined in the suit, there is no absolute right to have them struck out but it is discretionary with the Court to do so it thinks right. The mere fact of misjoinder is not by itself sufficient to entitle the defendant to have the proceedings set aside or action dismissed.

Learn more about Drafting, Pleading and Conveyance with Enhelion’s Online Law firm certified course by Legajoist Advocates and Solicitors!

The Privy Council in Muhammad Hussain Khan v. Kishva Nandan Sahai[6], held that the rule embodied in Section 99 of Civil P. C. proceeds upon a sound principle and is calculated to promote justice, it can be applied.

In Assembly of God Church v. Ivan Kapper and Anr.[7], the learned judge has held that a defect of misjoinder of parties and causes of action is a defect that can be waived and it is not such a one as to lead to the rejection of the plaint under Order VII Rule 11(d) of the Code.

NONJOINDER OF PARTIES TO A CIVIL SUIT

When a necessary party to the suit has not been joined to the suit, it is deemed to be a case of non-joinder. It is a situation where certain persons are missing from the suit without whom no effective conclusion can be reached in the case. The non-joinder of parties can be classified as, nonjoinder of necessary parties and, nonjoinder of persons who make the court’s job convenient, that is necessary parties and proper parties respectively.

Nonjoinder of parties cannot be deemed as a ground for dismissing a suit, as any party missing from the suit can be later joined according to Order 1 Rule 1 or 3, as per the discretion of the court. The absence of necessary parties means those parties from whom the cause of action against are not included in the proceedings, due to which the court cannot decree effectively. In such situations, the court may dismiss the suit but it is not necessary.

Learn more about Drafting, Pleading and Conveyance with Enhelion’s Online Law firm certified course by Legajoist Advocates and Solicitors!

Order 1 Rule 9 states that no suit shall be dismissed in case nonjoinder:

“9. Misjoinder and nonjoinder. —No suit shall be defeated by reason of the misjoinder or nonjoinder of parties, and the Court may in every suit deal with the matter in controversy so far as regards the rights and interests of the parties actually before it:

[Provided that nothing in this rule shall apply to non-joinder of a necessary party.]”

Thus, where the non-joined party is merely a proper party and not necessary, the suit is not eligible to be dismissed, however where the party in question is absolutely necessary to ensure that justice is delivered effectively, such a case may be dismissed according to the discretion of the court.

The plea of non-joinder, however, should be raised at the earliest possible stage. Where such a plea is raised by the defendant at the earliest stage, and the plaintiff refuses to include the missing party, he cannot later on file to amend his mistake.

In the case of Mohan Raj v. Surendra Kumar Taparia and Ors.[8], the Supreme Court stated that, “No doubt the power of amendment is preserved to the Court and Order 1, Rule 10 enables the Court to strike out parties but the Court cannot use Order 6, Rule 17 or Order 1, Rule 10 to avoid the consequences of non-joinder for which a special provision is to be found in the Act. The Court can order an amendment and even strike out a party who is not necessary. But when the Act makes a person a necessary party and provides that the petition shall be dismissed if such a party is not joined, the power of amendment or to strike out parties cannot be used at all. The Civil Procedure Code applied subject to the provisions of the Representation of the People Act and any rules made thereunder. When the Act enjoins the penalty of dismissal of the petition for non-joinder of a party the provisions of the Civil Procedure Code cannot be used as curative means to save the Petition.”

In Narendra Singh v. Oriental Fire and General Insurance Co. Ltd.[9], the benefit of Section 39 of the Motor Vehicles Act was extended to the plaintiff where the suit was found bad from a non-joinder of parties. Consequently, non-joinder should not be interpreted too freely; otherwise the parties shall stand to lose. If a partnership firm against another firm files a suit, all the partners have to be impleaded as plaintiffs but not their legal representatives.

Learn more about Drafting, Pleading and Conveyance with Enhelion’s Online Law firm certified course by Legajoist Advocates and Solicitors!

Subsequently, in Brij Kishore Sharma v. Ram Singh[10], the Supreme Court, reversing the decision of the trial court, held that the suit is not maintainable. During the pendency of the suit, one of the parties died and his legal representatives were neither notified now were added to the suit. In the opinion of the court, the legal representatives should have been brought on record.

Thus, provided the parties not necessary to the suit, the suit cannot be dismissed merely on the basis of nonjoinder of parties.

[1] Legislative.gov.in. 2020. [online] Available at: <http://legislative.gov.in/sites/default/files/A1908-05.pdf>

[2] AIR 1935 Cal 573

[3] AIR1979Bom298

[4] AIR 1999 SC 1341

[5] AIR 1937 PC 42

[6] AIR 1937 PC 233

[7] 2004(4)CHN360

[8] AIR 1969 SC 677

[9] AIR 1987 Raj 77

[10] 1996VIIIAD(SC)562

Learn more about Drafting, Pleading and Conveyance with Enhelion’s Online Law firm certified course by Legajoist Advocates and Solicitors!

Categories
Online legal courses

Employment Contracts

By: Arundathi Mandyam 

In India, there is not much light thrown on the agreements which bind the Employer-Employee relationship. There have always been issues regarding the relationship between the Employer and the Employee, to which resolve is found only through legal discussions. The laws hold within themselves various areas in their scope which not only discusses the contractual relation of an Employer and his Employee but also other various clauses. In this article we will discuss all the contracts an employer and employee are bound by and the various other clauses that are covered under.

Contract as defined in the Indian Contract Act, 1872 is a contract of employment for the exchange of remuneration for a period of time. Employment contract is a form of contract recognized by court as the social relationship of the employer and employee as opposed to other contracts.

Like any other contract in India, Employment contract too contains Offer, Acceptance, Consideration, Competent Parties, Legal Object and Free Consent as the essentials of the contract.

As the complexities increase in the field of employment, the various matters such as breach of fiduciary responsibilities, corporate law non-compliance, corporate defamation took distinction between White Collar jobs (deals with the administration and board) and the Blue Collar Jobs (which deal with the manual labor.)

Learn more about Contracts and Drafting with Enhelion’s Online Law firm certified Master Course! 

The employment related issues can be grouped as under,

  1. Pre-Hire
  2. During Employment
  • Termination
  1. Post- Termination
  • PRE-HIRE

As the title suggests, any dispute which arises before the hiring of the employee amounts to Pre-Hire disputes between the Employer and the Employee. This kind of disputes arises when an employee falsely represents himself and fraudulently tries to win a position in the employment. When the employer learns about the fraud of the employee he loses trust and there will not be a friendly relation between the employer and the employee hence giving rise to dispute. This dispute can only be resolved through litigation and not through any other medium.

From the employer’s end the dispute arises when the employer takes back the notice of offer from the employee before the employer starts his employment.

Learn more about Contracts and Drafting with Enhelion’s Online Law firm certified Master Course! 

  • DURING EMPLOYMENT

The dispute arising out of the misconduct of the employee or dissatisfactory performance in the employment is the dispute during the employment. These disputes are classified under two heads, they are:  (a) Employment Related Disputes and (b) Disputes Relating to Restrictive Covenants during Employment.

Employment related Disputes cover under them the misconduct of the employees, disciplinary actions of the employees to guard the interest of the organization, under performance, breach of terms, insider trading, and criminal indulgence and so on.

Restrictive Covenants during Employment which are non-compete result dispute between the employer and employee whereas Restrictive Covenants during Employment which are non-disclosure do not.

  • TERMINATION

Basically there are two types of Termination- Voluntary Termination and Involuntary Termination.

There are lesser chances of disputes when in case of termination (in the form of resignation or retirement) by the employee. Dispute arises when an employer involuntarily terminates the contract of employment with the employee on the basis of the misconduct or indiscipline of the employee. In such cases, the matters shall be resolved in the courts and the burden of proof to prove the misconduct of the employee and evidence for his termination of the employee lies on the employer.

  • POST-TERMINATION

Modern day employment contracts give place to restrictive covenants restraining employees from joining new employment even after the termination of the previous employment. This gives rise to the dispute between the employer and the employee post the termination.

These disputes too shall resort in the courts and nowhere else.

Learn more about Contracts and Drafting with Enhelion’s Online Law firm certified Master Course! 

STATUS OF RESTRICTIVE COVENANTS IN INDIA

In India, the employment contract of restrictive covenants which is operative post the termination of the employee is unenforceable and void. It is against the public policy since it is prohibited by the law of the Indian Courts.

In Pepsi food Ltd and Ors Vs. Bharat Coca-Cola Holdings Pvt. Ltd and Ors[1] (1991) it has been held that, “post termination restraint on an employee is in violation of Section 27 of the Indian Contract Act, 1872. A contract containing such a clause is unenforceable, void and against public policy and since it is prohibited by law it cannot be allowed by the Courts injunction. If such injunction was to be granted, it would directly curtail the freedom of employees for improving their future prospects by changing their employment and such a right cannot be restricted by an injunction. It would almost be a situation of “economic terrorism creating a situation alike to that of bonded labor”.

POSSIBLE WAYS TO ENFORCE RESTRICTIVE COVENANTS[2]

  1. Serving the employee with a legal notice.
  2. Seeking enforcement of undertaking or encashment of cheque based on clauses of the agreement.
  3. Initiating civil suit seeking injunction or specific performance of contract as well as damages.
  4. While damages are a remedy that an employer may seek for the breach of confidential agreements, the same requires trial and evidence. Therefore the employer would only require injunction under the Civil Procedure Code, 1908 at the interim stage or initial if they apprehend that premature departure of an employee could cause injury to the employer.
  5. Filing suit for declaration that the acts of the employee amount to tortious interference in the business of the employer and injunction therefrom.

Learn more about Contracts and Drafting with Enhelion’s Online Law firm certified Master Course! 

MISCELENEOUS

MINIMUM REQUIREMENTS

Employment Contracts in India are generally considered to be of unlimited term contracts, I.e. the Contracts that are valid until the termination or superannuation unless specifically specified as a fixed term contract. While Labour legislations do not need agreements in writing it is a predominant market practice to have all terms and conditions of the employment agreed and signed by both the employer and the employee.

FIXED TERM CONTRACTS

Until recently government of India, Had not given a go to all the sectors of the government to make permanent employees. Only the apparel manufacturing sector had the advantage of making their employees permanent workers.

TRIAL PERIODS

It is permitted by Indian law to place new employees on a trial or probation period. The Industrial Employment Standing Order envisages a 3 month to 6 month probation period which is also followed by other sectors which do not fall under the IESO Act. This Probation works best in the Industrial and Technology oriented sectors in India.

NOTICE PERIODS

In terms of labor legislation in India, “workmen” who have undertaken the least of 1 year of employment of continuous service are entitled to a notice period of 1 month or equivalent wages in lieu thereof. In addition, the employer is required to pay retrenchment compensation to the workmen. However no retrenchment or notice period is required if the employee is being dismissed for misconduct from the employee end.

CONCLUSION

The concept of Employment contract is like any other Contract. The Comprehensive Employment contract provides for the key duties and responsibilities of the employee that help him understand his job better. The main objective of an Employee Contract is to prevent disclosure of information, non-solicitation, non-competition, as well as protection of confidential information so it is always advisable to have an executed written form of Employment Contract. In practice, the employer signs the letter of appointment with the proposed employee prior entering into the contract. An appointment letter is executed in order to cover the probation period of the said employee till that employee is made permanent in the employment.

Learn more about Contracts and Drafting with Enhelion’s Online Law firm certified Master Course! 

[1] Suneeth Katharki and Mini Kapoor, India: Employment contracts- Enforcement of Restrictive Covenants under Various Jurisdictions, INDUS LAW (April 26,2016) https://www.mondaq.com/india/employee-rights-labour-relations/486496/employment-contracts–enforcement-of-restrictive-covenants-under-various-jurisdictions#:~:text=In%20India%2C%20an%20employment%20contract%20containing%20restrictive%20covenants,it%20cannot%20be%20allowed%20by%20the%20Indian%20courts.

[2] Archita Mohapatra, Preetha Soman, Ajay Singh Solanki and Vikram Shroff, Employment Contracts in India- Enforceability of Restrictive Covenants, Pg.No 14 (2019)

Categories
Blog

Trademark and Competition Law

By: Ishika Gautam

COMPETITION LAW
The Indian Government in pursuit of increasing the economic efficiency of our country acknowledged the Liberalization, Privatization, and globalization era by liberalizing the country’s economy and reducing governmental control. Currently, the Indian economy is facing aggressive competition in every field. Fair competition has proven to be an effective mechanism which enhances the efficiency of the economy. Therefore the primary purpose of implementing the competition law was to control monopolies and encourage competition.
The objective behind the formulation of competition law, Intellectual property laws is to protect the research and development inventions which are carried out by the inventor firm from being used by other companies producing the same kind of products and making a profit from the same. Therefore, on the one hand, IP laws work towards creating monopolistic rights, whereas, on the other hand, competition law battles with it. From this, there seems to be a clash between the objectives of both these laws.
The competition laws involve the formulation of policies that promote competition in the local markets and aim to prevent anti-competitive business practices and unwanted interference of Government. The competition law seeks to eliminate monopolization of the production process so that new firms can enter the market. The maximization of consumer welfare and increased production value are a few primary objectives of competition law. On the other hand, IP Laws are monopolistic legal rights granted to owners resulting from human intellectual creativity.

Learn more about Intellectual Property with Enhelion’s Online Law firm certified Master Course! 

Case law-
Arun Chopra v. Kaka-Ka Dhaba Pvt. Ltd. and Ors.
The famous restaurant named Kake Da Hotel has now attained it’s secured rights in its name and trademarks against another Nashik-based food outlets namely ‘Kaka-ka Dhaba’, ‘Kaka-Ka Restaurant ‘Kaka-Ka Garden’. The Court has observed that even though there isn’t a doubt that the user is long and extensive. The question arises whether the word ‘Kaka’ or ‘Kake’ can be a monopoly of any party and could be adjudicated on trial. Till now, the interim order is granted in favour of the plaintiff and the defendants are prohibited from using words ‘Kaka-ka’ with any new outlet during the period, it has allowed that the defendants can continue to use the names Kaka-ka Dhaba’, ‘Kaka-Ka Restaurant’ and ‘Kaka-Ka Garden’.

Under the Competition law of IPR, the market’s unavailability can establish some dominance in markets. Similarly, the comparison of market shares between a dominant firm and its competitors is advantageous in determining the power and monopoly. It seems complicated to decide on the minimum percentage of market share that could attain dominance or monopoly of a particular firm in the market. Various judgments dominance cannot establish a minimum rate that points to the firm’s authority.

Learn more about Intellectual Property with Enhelion’s Online Law firm certified Master Course! 

The anti-competition laws to tackle the monopolies of IPR often include two measures: compulsory licensing and parallel imports. The compulsory license is when the state has authorized an IPR holder to surrender their exclusive rights over intellectual property, under article 31 of Trade-Related aspects of Intellectual Property Rights. The compulsory licenses are granted only under specific circumstance such as the interest of public health, in national emergencies, in nil or inadequate exploitation of any patent in any country, and also for the overall national interest. On the other hand, Parallel imports include all goods brought in the country without authorization of an appropriate IP holder and are placed legitimately into the market.

In addition to all these provisions, provisions like Section 3 of the new Competition Act, 2002, deals with more anti-competitive agreements that cannot be used by the IPR holders as they conflict with competition policies. Firstly, the patent pooling is a restrictive practice where the firms of particular manufacturing industry decide, to pool their patents and then agree to not grant the licenses to third parties, then simultaneously fix quotas and prices. Secondly, one more clause that restricts the competition concerning research and development or prohibits a licensee from using other rival technology is considered to be anti-competitive under this law. Thirdly, the licensor under this law is not permitted to fix the price at which the licensee would sell his goods.

Learn more about Intellectual Property with Enhelion’s Online Law firm certified Master Course! 

The above examples are not exhaustive, but a few examples demonstrate the anti-competitive provisions applicable to the IPR under this Act. Moreover, under Section 27 of this Act, India’s Competition Commission had the authority to penalize the IPR holders who abuse their dominant position. Furthermore, under Section 4 of this Act, the Commission is authorized to punish the parties of an anti-competitive agreement, it is in the contradiction of this section.

TRADEMARK LAW
Search
To search for a mark before filling the application is the most fundamental part of applying for a trademark. Even though it is not a procedural pre-requisite for the application, it finds its utmost importance in the fact that acceptance of a mark for registration as a trade mark relies on the vividness of the mark. It is a crucial step to carry a detailed search in the Trade Marks Registry, to check for the mark’s uniqueness and deduct all possibilities of duplication. It also needs to be checked that the proposed mark is not the same or even similar to any other existing mark registered or pending for registration. A detailed prior search is also a proof of honesty and good faith in accepting the mark, during opposition and the infringement proceedings.

Classification
The application for the trademark needs to be specified by the appropriate class or classes of the goods or services, concerning which the application is filed. The applicant for trademark needs to be extremely careful in ascertaining the type of goods or services in their application as the tester needs to be convinced about the proper use of goods and services from a particular class or across all classes to the application, and a broad declaration can also prolong the process of the examination.

Learn more about Intellectual Property with Enhelion’s Online Law firm certified Master Course! 

Selection
The selection of a mark is an important part of any application. The mark selected needs to meet the qualifications that are enlisted in the Trade Mark Act, and it has to fall within the parameters of its presence as a device, brand, a heading, label, a ticket, name, signature, word, letter, a numeral, shape of goods, packaging or any combination of colours, or any combination of these distinct elements that are capable of being ‘graphically represented’ and indicates a trade connection with the proprietor. Now, it essentially needs to have a proper distinctive character capable of constructively distinguishing all the applicant’s goods and services from others. The denial of the presence of uniqueness of the mark may result in the refusal of the application.

Filing of Application
The application for the mark can be filed by a person or his respective IP Lawyer or any other person who is authorized in this respect at the designated Head office (at Mumbai) or any branch offices (at Ahmedabad, Chennai, Delhi, Kolkata) of Registry by a delivery at the front office either personally or by post, it can also be submitted electronically through the gateway being provided at ipindia.nic.in. The application for this has to be generally filed at the office which is within the territorial jurisdiction of the principal place of business of that applicant in India is situated. There are many applications which need to be filed directly at Head Office.
Special care needs to be taken of the fees, and as non-payment results in regarding the application as not-filed.

Numbering and Examination of Application
On receipt of the application, it is appropriately dated and numbered. A copy of it is returned to the applicant/attorney—a number assigned to the mark, which is the registration number post-registration. The proprietor is only allowed to use the trademark symbol after their application has been completed and numbered. The application is adequately examined for accuracy of the class in which the mark has been filed, all the necessary documents that need to be attached depending on the type of application- registration of the mark for goods or services being included in one class/different classes/with priority claim etc., details of the applicant and the proprietor.

Learn more about Intellectual Property with Enhelion’s Online Law firm certified Master Course! 

Hearing
After the proper completion of the examination, the Trademarks Registry sends an “Official Examination Report” to that applicant. The applicant may sometimes be required to reply to the objections raised by the Examiner under Section 9 and Section 11 of Trade Marks Act and the clarifications regarding the content of the application. The reply being insufficient to satisfy the Examiner, the applicant is then granted a hearing to overcome his objections.

Publication in the Trade Mark Journal
The mark’s application is then published in the “Trade Marks Journal,” after a proper post-examination hearing with the applicant. The journal is also published by the Trademarks Registry and is a publication by the Government of India. The application is then granted registration if it stands being unopposed after the proper publication in the journal for a stipulated period of four months.
If the publication is challenged in any case, then the opposition proceedings commence, and the registration is granted freely only if the proceedings conclude in favour of the applicant.

Opposition Proceedings
Anyone can file a notice of opposition against any application published in the journal, within that period of four months from the date of that mark being published in the journal. Any supporting evidence can accompany the notice for the opposition.
An application can then be opposed to the primary grounds that are provided in the Trade Mark Act. This is the Registrar’s task to serve a copy of the opposition to the applicant, inside two months of receipt of resistance. The applicant must then reply within two months; failure to do so will result in the applicant’s application being treated as abandoned. The counter-statement is given to the opponent, and usually, the parties are being heard along with the consideration of proper evidence provided by both parties.
The Registrar is given the authority to decide the acceptance of trademark application based on the hearing’s judgment. The aggrieved party is given the right to challenge the ruling by filing an appeal in front of the Intellectual Property Appellate Board.

Registration
The mark’s application is registered if it has been accepted and not opposed, or opposed but has been decided in favour of the applicant. The applicant is also issued the Certificate of Registration and is further allowed to use the symbol R and the registered trademark. The registered trademark given is valid for the next ten years from the date of that application is received for the mark.

Learn more about Intellectual Property with Enhelion’s Online Law firm certified Master Course! 

Renewal
A registered trademark can be renewed after every ten years for an unlimited period on payment of that particular renewal fee. The renewal request should ideally be filed in the Trade Marks Registry within only six months before the expiry of the trademark. The application can also be filed up to six months after the trademark expiry, with the payment of the late renewal fees being prescribed.

Litigation
1) To obtain John Doe Orders and ex parte injunctions.
2) To accept search and seizure orders.
3) To conduct market raids.
4) To check for the accounts of the infringer.
5) To medicate for amicable settlement of disputes.
6) Do Arbitration and also Conciliation.

Enforcement through constructions
The Customs Act of 1962, enables Commissioner of Customs, on behalf of Central Government, prohibits importing the goods on absolute or conditional terms, used for the protection of patents, trademarks, and copyrights. In contrast to this, the authorities came up with Intellectual Property Rights (Imported Goods) Enforcement Rules in 2007 which correctly specifies the process of protection of these intellectual property rights (Copyright, Trade Mark, Patent, Design and Geographical Indication) from getting violated in the course of these import into the country.

Licensing of Trademarks
The trademark’s license is an agreement between a registered proprietor of the trademark (licenser) and another person (licensee), giving authority to the licensee to use the trademark in the course of trade, against a particular payment of royalty to the licenser. The word here used “license” is not mentioned anywhere in the Trade Marks Act, 1999. The Act says about the words “registered user” and “permitted use.”

Revocation of Trade Mark
An application for the cancellation or rectification of a trademark registration can be made only by the aggrieved person. Such type of application must be filed with Registrar of Trade Marks or the Appellate Board.
Some of the grounds on which the registration can be removed or cancelled:
The trademark being registered was done without any bona fide intention, and there was no bona fide use of the trademark for the time up to date of three months before the date of the application for removal.
Three months before the application for removal, a regular period of five years from the date on which the trademark has entered on the register or longer has elapsed during which brand was registered and in which no bona fide use.
Trademark was registered without any sufficient cause.

 

Learn more about Intellectual Property with Enhelion’s Online Law firm certified Master Course! 

Categories
Blog Online law courses in India

Are the existing Maritime Laws in India sufficient enough to safeguard Maritime Security?

By: Kunjan Makwana

Introduction

India can be deemed to be regarded as a maritime state which has a long coastline that is 7500 kilometres long. Since India is a maritime nation, it has 274 islands that are surrounding the Indian territory in close consonance to the Bay of Bengal and the Arabian Sea, which can also be deemed to be regarded as the top most point of the Indian Ocean. The Indian subcontinent is spread across a massive area comprising 1000 kilometres venturing into the northern part of the Indian Ocean in the form of a wedge and this part can be said to have two distinct subregions.

Mr. K.M. Panikkar once opined that, “It is the geographical position of India that brings about the multitude of changes in the character of the Indian Ocean.”[1]  It is highly imperative to understand that the Indian Ocean plays a very significant role when it comes to the sovereignty of India and it is worthy to note that whenever India has neglected the Indian Ocean, it has had a tough time dealing with its sovereignty and this was quite evident even during the time when the European Powers had a standing in India. The Indian Ocean can be deemed to be regarded as a crucial water body for India as it has enabled India to carry out foreign trade activities and there exists innumerable evidence to support the fact that India has majorly relied upon the Indian Ocean when it came to trading and these evidences can be traced way back to the 9th Century BCE.[2]  In fact, Maritime Trade still plays a significant role in contributing to the economy of India despite there being innumerable geographical shifts when it comes to dealing with India’s patterns of trading with other countries via the sea route. However, it is quite pertinent to consider that a huge number of these commodities that India imports, enter the Indian Territory via sea route and therefore it is quite pertinent for India to take extreme measures when it comes to developing its maritime security as in the coming years it is ought to play a very prominent role which would enable India to develop itself globally. It can be said that the maritime laws in India are their nascent stage and the legislation needs to work towards making maritime laws in India much more comprehensive and robust.

Learn more about Maritime Law and Security with Enhelion’s Online Law firm certified Diploma course by Scriboard Advocates and Legal Consultants!

It is imperative to note that the Government is taking initiatives when it comes to developing the maritime regime in India. Certain initiatives by the Prime Minister, like the Prime Minister’s vision with regards to the Security and the Growth for All in the Region (SAGAR) along with a clear emphasis on the advancements made in maritime infrastructure is something which has received tremendous accolades and these initiatives have thoroughly enabled India to achieve greater milestones when it comes to developing its Maritime infrastructure which needs to be focused upon if India wishes to emerge as an all-round winner in its immediate neighbourhood. India needs to primarily focus on the issues and security concerns that are hovering in the Indian Ocean region, (hereinafter referred to as, “IOR”). It should be India’s primary concern to focus upon its maritime security framework because the current pieces of legislation governing the Maritime Laws regime in India are sadly not robust enough. India needs to bolster its resources when it comes to developing its maritime security in the IOR.

India’s Maritime Interest

In order to understand India’s maritime interests, it is imperative to primarily understand whether the maritime security in India is in place or not. First, it is quite necessary to understand what is meant by maritime interests. Maritime Interests can be deemed to be regarded as those interests which take under its ambit crucial aspects pertaining to a country’s ability to claim its maritime realm, which is extremely imperative when it comes to a country’s survival and development. It is highly recommended that a country takes measures and fosters its resources in order to preserve these interests as these interests could be deemed to be regarded as key interests of a country and they play a major role in securing the national security of any country. India, primarily undertakes its business activities via the sea route and therefore it is extremely necessary for a country like India to closely delve into making military and nationalistic strategies when it comes to its maritime interests.

Learn more about Maritime Law and Security with Enhelion’s Online Law firm certified Diploma course by Scriboard Advocates and Legal Consultants!

Maritime Territory

India is deemed to have a large coastline which extends to 7517 Kilometres and takes under its umbrella, 1200 islands. A lot of these islands can be said to be extremely distant from the main coastline of India, for instance, the Andaman & Nicobar Islands can be deemed to be regarded as those islands which are approximately 1600 Kilometres away from the closest coastline of India. India’s territorial sea occupies approximately 1,93,834 square kilometres and the Exclusive Economic Zone (hereinafter referred to as, “EEZ”) takes under its scope approximately 2.02 million square kilometres (sqkm). The living and the non-living resources that reside in this zone, amount to two-thirds of the landmass that India occupies and these resources, whether living or nonliving, exclusively fall under the ownership of India and they can be deemed to be regarded as a part of India, which also enables India to carry out its transportation activities and this has clearly opened innumerable opportunities for India to carry out its trade activities through this area. This part can also be deemed to be regarded as a part which is home to 51% of India’s oil resources and 66% of natural gas reserves. It is imperative to note that the protection and preservation of these natural resources not only deals with the territorial integrity of the nation but also takes into consideration the safety, which is a highly important factor. These routes act as a safety border which enables India to maintain its territorial integrity and at the same time secures India from potential external threats.

Learn more about Maritime Law and Security with Enhelion’s Online Law firm certified Diploma course by Scriboard Advocates and Legal Consultants!

Sea Lines of Communication (SLOCs)

It is quite imperative to understand the need for Sea Lines as they can be gauged from the fact that the oceans supported about four fifths of the total world merchandise trade pertaining to the year 2014.[3] In a period spanning 10 years, India has diversified itself and has stepped foot in sea trade and its trading activities have multiplied at a constant rate of 3.3 percent. India’s maritime container trading figures have also significantly risen and there has been a steady growth of 6.5 percent which can be deemed to be regarded as a significant growth when compared to the world average of 5.4 percent over the period spanning ten years. On the other hand, the cargo traffic at the ports in India has also seen a massive bull run and it has touched a milestone of 1 billion tonnes per year as compared to the last decade (Financial Year 2005-2015) and it can surely reach the 1.7 billion tonnes per year mark in the next two years, i.e. by the year 2022.[4] These numbers depict that over 95 percent of India’s trading activities lie in the SLOCs and International waters play a major role when it comes to India excelling in the field of trade and commerce via sea routes. The International Shipping Lanes of the Indian Ocean which is used by India requires dire attention and the security needs to be worked upon in order for India to sufficiently continue its trading activities overseas.

Learn more about Maritime Law and Security with Enhelion’s Online Law firm certified Diploma course by Scriboard Advocates and Legal Consultants!

Maritime Economy

Needless to say, the Indian economy is majorly dependent on the energy imports that it has indulged into. Apart from this, the Indian economy also relies on the total domestic oil consumption and it imports oil from other countries and these import activities are eased since India has the Indian Ocean passage when it comes to importing oil. These import activities are undertaken by vessels which travel by the sea and offshore oil gas production can be said to be accounting for almost 80 percent of all domestic gas that is produced. Approximately, 95 percent of the trade that India undertakes internationally by volume and over 70 percent of its value is carried over by the sea routes.[5] India can also be deemed to be regarded as the world’s fourth largest producer of fish and majority of these fishes are imported and come from the sea.[6] The maritime economy of India includes a prominent network of 13 major and approximately 200 minor ports all along the coast. It is imperative at this conjecture to throw light upon the Sagarmala project which has delved into the development of a port and has also significantly contributed towards the quick and efficient transportation of goods and services to and from the ports. It is therefore quite imperative for the Government to build this nascent maritime economy and take initiatives in order to ensure that it is free from impediments and potential external threats.

Maritime Investments

India has contributed in a number of industries such as the infrastructure, energy and services industry in a lot of countries which can be deemed to be regarded as its immediate maritime neighbours. India has also established a research station in Antarctica which enables India to carry out research activities in a wide variety of areas, however, India has majorly worked towards the development of the technology which would enable India to deal with the global climate change issues. India has shown tremendous potential when it comes to venturing into deep sea mining activities and is working in close consonance with the International Seabed Authority, which has accorded it a pioneer status and at the same time has provided 75000 square kilometres of seabed area in the Central part of the Indian Ocean. ONGC Videsh Ltd has ventured into oil exploration activities and has set up its oil exploration plant in the Exclusive Economic Zone (EEZ) of Vietnam. ONGC Videsh Ltd is carrying out these activities within the two blocks which the Vietnamese Government has allocated to it and because of this the Chinese Government is causing disruptions and China has made claims alleging that the activities carried out by ONGC Videsh Ltd along with the Vietnamese Government are illegal and are jeopardising the status of the already in dispute South China Sea. However, India is still in its nascent stages and is taking innumerable efforts when it comes to developing its economy in the maritime sector, however, it is important for India to ensure that it is secure from external threats which could severely jeopardise the inimical interests.

Learn more about Maritime Law and Security with Enhelion’s Online Law firm certified Diploma course by Scriboard Advocates and Legal Consultants!

India’s Maritime Security Concerns

India’s maritime security has been a crucial issue and these issues arise from the threats, which have majorly occurred in the interest of the Indian Ocean and this is in direct consonance to India’s varied maritime interests. It is crucial to understand that a number of these potential maritime threats which are lurking over India have a direct influence on the other stakeholders in the Indian region and this may have a significant impact on India, since India is, “already assuming her responsibilities when it comes to securing the Indian Ocean region.[7]  India faces immense potential threats from its neighbours and these potential threats could seriously harm the national interests of the country during times of war and hostilities which are never taken into consideration since they fall under the scope and the ambit of war fighting, however, what is important at this conjecture is to ensure that the legislature gets out of its lethargy and establishes a robust and comprehensive piece of legislation which governs the maritime activities. There lurks a constant threat to the SLOCs as the SLOCs in the IOR are extremely susceptible to being disrupted by a wide variety of traditional and non-traditional threats over the years. However, India has constantly depended upon the seas when it comes to carrying out trading activities and these threats which are constantly lurking over the SLOCs in the IOR could be resolved if a comprehensive legislation is enacted and put in force. The Legislature needs to enact a law which may act as a shield over all the nefarious activities that could be deemed to be regarded as a potential harm to the maritime security of India. For instance, Piracy, Regional Instability, Trafficking of Goods and Humans, Terrorism, et. Cetera could all be controlled if a proper and a comprehensive law is enacted by the legislature. There have even been instances of illegal unreported and unregulated fishing, which has proven to be a severe issue for the marine communities around the globe and the governments of a number of coastal states are constantly endeavouring towards enforcing international and national maritime laws which are robust and control these aforementioned activities.

Regional Security Architecture in the IOR

India has always been cooperative and has taken a very positive approach when it comes to bolstering maritime security in the IOR. This is evident from PM Narendra Modi’s aim of SAGAR, also known as the Security And Growth for All in the Region.[8] The IOR has innumerable arrangements in this particular area and this area can be said to be restricted for other countries. India has taken innumerable efforts and has developed the IORA which is the Indian Ocean Rim Association, which was launched in the year 1997 and its goal is to promote the growth of intra-regional economy. However, maritime security and safety has not been given much emphasis, but the Indian Ocean Naval Symposium is another initiative which was founded in the year 2008 and it works in the direction of improving the maritime co-operation between the navies of various littoral states surrounding the Indian Ocean Region. However, again this is an initiative by the Navy and there is a clear absence of the government’s participation.

Learn more about Maritime Law and Security with Enhelion’s Online Law firm certified Diploma course by Scriboard Advocates and Legal Consultants!

In a nutshell, a comprehensive and an overarching security framework for the Indian Ocean Region is extremely crucial for the government to develop considering the current geopolitical status and the developmental activities being carried out by the various littoral states. The Legislature needs to emphasize on how important it is for India to have a responsibility of regional states when it comes to maintaining peace, stability and prosperity in the Indian ocean. India needs to make a concerted effort in the form of a robust piece of legislation if it aims to mitigate the innumerable threats lurking over it.

[1] KM Panikkar, “India and the Indian Ocean: An Essay on the Influence of Sea Power on Indian History.”

[2] “The Periplus of the Erythraean Sea”, Longmans Green & Co, 1912.

[3] UNCTAD Review of Maritime Transport 2015, Page 5.

[4] Facts & Figures, Maritime India Summit 2016.

[5] Facts & Figures, Maritime India Summit 2016.

[6] FAO yearbook 2012, Page 9.

[7] ICC IMB Piracy and Armed Robbery against Ships, 01st January-31st December, 2015.

[8] PM Modi’s Speech Commissioning of Mauritius CG Ship Barracuda, 12th March, 2015.

Learn more about Maritime Law and Security with Enhelion’s Online Law firm certified Diploma course by Scriboard Advocates and Legal Consultants!

Categories
Blog

Impact Of Covid-19 on Insolvency and Bankruptcy Laws of India and the World at Large

By: Anjan Bhandari 

INTRODUCTION:

In the past few months, India has witnessed unprecedent changes being made in almost every sphere; whether it be something as simple as a lifestyle change or something as complex as amending various legislations to safeguard and protect the interests of both the parties. To give you a better perspective, the Central Government on 24th March declared a nationwide lockdown as a preventive step to limit the spread of the infectious coronavirus. In doing so, everyone was required to restrict themselves to their homes thereby bringing our economic structure to a standstill. Nobody knew for how long the lockdown would ensue when it began, but now we do have adequate data that informs us about the manner in which the lockdown was imposed and in how many phases –

  • PHASE 1 : 25th March – 14th April [Nationwide lockdown]
  • PHASE 2 : 15th April – 3rd May [Further extended]
  • PHASE 3 : 4th May – 17th May [Further extended]
  • PHASE 4 : 18th May – 31st May [Further extended]
  • PHASE 5 : 1st June – 30th June [Considerable relaxations from 8th June]

According to the above-mentioned data, it is clear that COVID-19 is the primary reason for all business uncertainties and the economic stabilities at large since the lockdown was continued for so long. All industrial activities came to a standstill because of which the Companies suffered huge losses which either resulted in salary reduction or laying off a major chunk of their employees in order to manage their sustainability. And not just the industrial sector, the outbreak of COVID-19 has caused massive difficulties for all sectors globally, such as the Micro Small Medium Enterprises (MSME’s), healthcare, tourism, automobile, etc. Courts all across the country has prohibited physical hearing to maintain social distancing except a few important cases and has instead resorted to virtual court proceedings. The only thing that can be said with absolute surety is that the brunt of this economic meltdown will be faced by all the financial institutions since its difficult to comment on the overall impact of the lockdown.

Learn more about Insolvency and Bankruptcy Laws with Enhelion’s Online Law firm certified Master course!

IMPACT OF COVID-19 ON IBC LAWS IN INDIA:

The All India Association of Industries estimated a loss of 2lakh crore by 31st March due to the nationwide lockdown. The Central government has been trying to minimise such drastic blows by bringing in numerous reforms. The virus has indisputably disrupted the performance of contracts and payments consequently creating problems for the financial and operational creditors. It will have a devastating impact on economy if the creditors wish to initiate insolvency proceeding against the corporate debtors at a mass scale amidst this pandemic.

What’s important to notice is that the value of the stocks is declining at a startling rate since the demand has decreased at a global level. It wouldn’t be too far-fetched to suspect that at this point, the financial and operational creditors would move to the National Company Law Tribunal (NCLT) to avail remedies available to them under the Insolvency and Bankruptcy Code, 2016. After approaching the NCLT, initiation of the insolvency proceeding will have a negative impact because then the management of the company would shift from the hands of the corporate debtor to the insolvency resolution professional and as a result, the value adding mechanism by the corporate to the economy gets highly stunted.

Learn more about Insolvency and Bankruptcy Laws with Enhelion’s Online Law firm certified Master course!

It is imperative to safeguard the interests of the MSME’s because if insolvency proceedings are initiated against them, it would further lead to rise in unemployment in the country. Pre-empting such an impact, our Finance Minister Nirmala Sitaraman had announced that if the current state of affairs continued beyond 30th April, the Central government may suspend a few relevant sections of the IBC for 6 months in order to protect companies from being forced into insolvency proceedings in such force majeure causes of default. Due to these reasons, the Government of India decided that they need to adopt a pragmatic approach in dealing with this problem and came up with the following amendments to the IBC, 2016 –

  • Application under Sections 7, 9 and 10 can only be filed when the default is of Rs. 1 crore or more.[1] Earlier U/S 4(1) of IBC, the minimum amount of default was Rs. 1 lakh which has now been officially increased by the Ministry of Corporate Affairs (MCA).
  • Section 7 : Initiation of insolvency proceedings by financial creditor

Section 9 : Initiation of insolvency proceedings by operational creditor

Section 10 : Initiation of insolvency proceedings by corporate applicant

According to the MCA Notification No. S.O. 1205(E) dated 24th March 2020 the Finance Minister as a relief to the affected industry announced that no petitions would be entertained unless the minimum amount of default is Rs. 1 crore or more.

Learn more about Insolvency and Bankruptcy Laws with Enhelion’s Online Law firm certified Master course!

  • The Supreme Court on 23.03.2020 opined that the lockdown period should be excludedfor the purpose of counting the timeline. Even the NCLAT ordered the same on 30.03.2020. The order states that “the period of lockdown imposed by the central government in the wake of Covid-19 outbreak shall not be counted for the purposes of the timeline for any activity that could not be completed due to such lockdown, in relation to a corporate insolvency resolution process.”[2]
  • The government may even consider scrapping Section 7, 9 and 10 of the IBC, 2016 so that no insolvency proceedings be initiated by the promoter, operational or financial creditor if the situation continues beyond 30th April, 2020 and if it does, it would be scrapped for a period of 6 months.

The first amendment that came in on 24th March which increased the minimum default vale from Rs. 1 lakh to Rs. 1 crore not only reduced the workload on the insolvency resolution professionals but also turned out to be beneficial for the MSME’s and corporate debtor. However, the fruit to such benefits is only enjoyed by one as opposed to safeguarding equal interest of the parties. Increasing the default value to such a higher threshold causes immense dissatisfaction to the operational and financial creditors. The operational creditor in particular would face hindrances as they won’t be able to utilise this remedy to regain the operational and corporate debt from the corporate debtor. Moreover, their operational debt isn’t generally this high to be able to initiate insolvency proceedings which further puts them on the backfoot. Under Section 9 of the IBC, 2016 the operational creditor cannot even jointly file for an application unlike as mentioned under Section 7 of the Insolvency Code, 2016. Kumar Saurabh Singh, Partner at Khaitan & Co. said that the Central Government shall also cover matters of liquidation in other courts and tribunals besides the IBC process. He said that “A similar approach would also be required to be followed by other courts/tribunals in the country to not allow enforcement and sale of assets of companies which are suffering from the impact of the pandemic situation so that the benefit of suspension of insolvency law is effectively given to the borrowers.”

Learn more about Insolvency and Bankruptcy Laws with Enhelion’s Online Law firm certified Master course!

After diving deep into the details of the impact of COVID-19 on the IBC laws in India, the question still remains whether the applicants who filed for the insolvency resolution before the pandemic should be affected or not. In my view if it does, then the applicants would rather prefer indulging themselves in outside settlements rather than utilising the provisions under the Insolvency and Bankruptcy Code thereby defying the very purpose of the said statute.

IMPACT OF COVID-19 ON IBC LAWS ACROSS THE WORLD:

  • UNITED STATES – On 19th February, the Small Business Reorganisation Act became effective which seeks to provide an economical and quicker option for reorganisation of businesses with total debts falling within the quantum of $2,725,625. On 28th March, Donald Trump gave a nod to the Coronavirus Aid, Relief, Economic Security (CARES) Act. Apparently, it is the largest emergency aid package ever provided in US history. It includes revised retirement account rules, student loan changes, and the unemployment coverage. There has also been an increment in the debt limit under the CARES Act to $7.5 million for a year in order to allow small business debtors to realign their affairs for a new start.

    Learn more about Insolvency and Bankruptcy Laws with             Enhelion’s Online Law firm certified Master course!

  • SINGAPORE – The Ministry of Law in Singapore had announced that they would introduce a bill in the Parliament aimed at finding a way for an organised moratorium so that the obligations that ensue are either suspended or deferred. A distinctive feature of the Bill is that the parties would not be allowed to be represented by lawyers in case of a dispute. Instead, an assessor would be appointed by the Ministry of Law who will decide on an equitable and just outcome without any legal fees. 
  • AUSTRALIA – On 23rd March, the Commonwealth government introduced the Coronavirus Economic Response Package Omnibus Bill 2020[3] which was passed by both Houses of Parliament and received the Royal Assent on 24th Certain temporary amendments were made to the Corporation Act, 2001 which are as follows:
  • Amendment relating to individual in financial distress
  • Amendment relating to businesses in financial distress
  • Temporary relief for directors from the duty to prevent insolvent trading

Learn more about Insolvency and Bankruptcy Laws with Enhelion’s Online Law firm certified Master course!

  • UNITED KINGDOM – Alok Sharma, Business Secretary announced a package of insolvency measures to be adopted in the future. The UK government has shown keen interest in bringing forward such legislation, but the timing still remains uncertain. It is evident that the government is building up on potential reforms announced in August 2018. The new structuring tools include –
  • To bring in measures safeguarding the suppliers and creditors, thereby ensuring timely payments until a more viable solution is reached.
  • Coming up with a new restructuring plan, and binding creditors to that plan.
  • To introduce a moratorium for companies allowing them a breather from creditors enforcing their debts for a while until they seek a restructure or rescue.
  • To protect their supplies thereby enabling them to continue with their trading activities during the moratorium period.

 Thus, on comparing the impact of COVID-19 on IBC laws in India with the rest of the world, we can deduce that almost similar precautionary steps were adopted by other countries. Some of them increased their minimum default limit required to file for insolvency proceedings, some have thought of implementing a moratorium period, while the others decided to put a bar on initiation of insolvency proceedings after a set particular date.

[1] https://www.ibbi.gov.in/uploads/legalframwork/48bf32150f5d6b30477b74f652964edc.pdf

[2] http://www.mca.gov.in/Ministry/pdf/Notification_30032020.pdf

[3] https://pinpoint.cch.com.au/document/legauUio3230299sl1133168580/regulation-5-4-01aa-temporary-increase-to-the-statutory-minimum-and-statutory-period

 

Learn more about Insolvency and Bankruptcy Laws with Enhelion’s Online Law firm certified Master course!

Categories
Blog

Contracts in the Sports Industry and the Clauses Covered Under it

By: Tanisha Yadav

INTRODUCTION:

Sport is that social phenomenon that has existed from a very long time in all levels of society. It represents the country’s culture and affects people’s lifestyle, health, values, social status, country’s relation, fashion trends, etc.

It is a type of game or contest where people get involved and perform physical activities to compete against each other following definite rules and regulations. Cricket, football, basketball, and volleyball are played by the number of people in different parts of the world.

The sport has now taken the industry’s shape from the last few decades to which we often called the Sports industry. It is a market with an economic dimension, which offers products, services, places and ideas related to sport, fitness or leisure time to its consumers[1] which also involves people, organizations and businesses who facilitate, promote, and organize activities and events based on sports.

Learn more about Sports Law with Enhelion’s Online Law firm certified Diploma course by Scriboard Advocates and Legal Consultants!

Contract in the Sports Industry:

Sports Contracts are similar to those contracts we come across in our everyday life; they are the mutual agreements that legally bind two or more parties.

Generally speaking, the sports industry’s Contract occurs between the sports organization/sports Agent and player/Athlete.

It defines the rights and responsibilities of the various participants in the business of professional sports.[2]

All the sports contracts are express in which parties give their consensus by words either spoken or written to enter into the Contract by way of offer, acceptance and consideration in Contract. Virtually, in sports contracts, implied contracts are not considered as a real contract as its very hard to prove the implied Sports contract.

Apart from offer, acceptance and consideration, an athlete’s capacity, mutual agreement, mutual obligation and subject matter are the essential ingredients in forming the sports contract. If the athlete is an adult, he can sign the contract, but his legal guardian must sign the Contract if the athlete is minor.

In India, Sports Contracts are governed by The Indian Contract Act, 1872, and The Industrial Disputes Act of 1947.

Learn more about Sports Law with Enhelion’s Online Law firm certified Diploma course by Scriboard Advocates and Legal Consultants!

Following are the considerable areas/ subject matter in which sports contracts takes place[3]:

  • Endorsement and merchandising Contract
  • Contract of Sponsorship Rights
  • Contracts between Player and managers or Agency contracts.
  • Deal of Membership rights in sporting clubs or organizations.
  • Contract of Image rights
  • The contract for appearances by players
  • Contract of Participation Rights and Obligations.
  • Presenter’s Contract
  • Contract of sale of media rights with event managers, Broadcasters and promoters.
  • Endorsement and merchandising Contract
  • Contract of Player transfer
  • Contract of Brand rights.

Player-Agent Relationship:

The player-Agent relationship is significant in sports contracts, as the player is sometimes so occupied in his sports that he doesn’t get time to negotiate Contract and handle everything. Sometimes the player faces difficulty in understanding terms of the contracts too. In that scenario, the player needs a person to trust, who can look and manage a player’s commercial relationships.

Player: Player is a person who actively participates in any sports requires endurance.

Agent: A agent is a person who carries a fiduciary relationship with the player in which he serves a significant role in negotiating contracts of the professional player and handles finances and public relations.

Learn more about Sports Law with Enhelion’s Online Law firm certified Diploma course by Scriboard Advocates and Legal Consultants!

TYPES OF SPORTS CONTRACT:

Professional Service Contracts: These contracts are also known as standard player’s contracts. These contracts are usually in a “boilerplate” form. The boilerplate form is the standardized forms in which standard or generic language is used.

These boilerplate forms are used where a state of Contract that can be reused in a new context without having any substantial changes in it.[4] Thus, the wording of these contracts can be used again and again without any alteration or reformation. If a professional athlete is part of a team, usually the athlete receives a standard player’s contract.[5] Hence, the professional service contracts are the same for all the athletes except the differences in salary and athletes’ bonus and involve an employer-employee relationship. Furthermore, these contracts also leave the scope of modification that can be modified by introducing collateral agreements.

Endorsement Contracts: Endorsement contracts are the independent contracts which do not require employer-employee relationship. An endorsement contract is one that grants the sponsor the right to use (i.e., license) the athlete’s name, image, or likeness in connection with advertising the sponsor’s products or services.[6]

Appearance Contracts: The appearance contracts are those contracts which pay the player/athlete for his/her appearance in any public event of any organization, institute or company by way of Contract. Thus, it is a contract between the venue and the athlete. It includes Sports camp, sports tournament etc. It sets out the time and dates for the appearance of an athlete on the venue location.

Learn more about Sports Law with Enhelion’s Online Law firm certified Diploma course by Scriboard Advocates and Legal Consultants!

Besides, if under any of the kind of contract, the contracting party extends beyond the scope of the terms of the Contract, under section 27 of the Indian Contract Act, 1872, i.e., restraint of trade, it would be void and not enforceable.[7]

CLAUSES COVERED UNDER THE CONTRACT:

Title: Its always essential that there should be a title of the Contract, through which one can identify the very nature of the Contract.

Information Clause: Under this clause, the information of the contracting parties is mentioned. Such as the name and address of the parties to the Contract. It also includes the information that on which date the Contract was made.

Player services Clause[8]: What type of service provided by the player is being discussed under this clause.

Player obligations Clause: This clause contains the obligations of contracting parties towards each other. It elucidates the rights, duties and responsibilities of the parties.

Term clause: This clause specifies the Contract’s duration—the time of Contract from the beginning to the end date. After completing the due date, the Contract automatically terminates, although it is subject to the renewal option of Contract to the parties.

Revenue-sharing Clause: If any organization or a company is hiring the player on the promise of sharing revenue, this clause discloses the information about the percentage and related details shared between the parties to the Contract.

Bonus Clause: This clause states that the player would get a bonus amount on his/her exceptional performance in sport.

Arbitration Clause: This clause expounds that if any dispute, controversy or any claim arises or if the issue related to breach of contract, non-performance or interpretation of Contract occurs then in that case, the matter will be resolved by the arbitrator on request of any of the parties. If parties do not agree on an arbitrator in any case, then in that scenario, both the parties will select one arbitrator. Then both the arbitrators shall select a third, and then the third arbitrator shall arbitrate the dispute.

Learn more about Sports Law with Enhelion’s Online Law firm certified Diploma course by Scriboard Advocates and Legal Consultants!

Board, lodging, and travel expenses Clause: 

This clause deals with the board, lodging and travel expenses of the player. It states that all the costs mentioned above will be borne by the club or organization hiring the player.

Choice of Forum Clause: Under this clause, the choice of law is mentioned through which contracting parties would like to govern, construe and enforce the Contract. As most of the sports contracts affect the parties belongs to different states, choosing a common law or jurisdiction can save parties from any further jurisdictional issues.

Remuneration and other benefits Clause: This clause states the player’s remuneration for his services.

No-Tempering Clause:  A no-tampering clause which avers that one player cannot attempt to entice another employee to enter negotiations with another club while under Contract to a different team.[9]

Confidentiality clause: Most contracts come with the confidentiality clause; certain things need to be confidential between the contracting parties only. Therefore, under this clause, contracting parties agree to keep the Contract’s contents and related matter confidential. This clause binds the parties to the Contract even after the termination of the Contract.

Learn more about Sports Law with Enhelion’s Online Law firm certified Diploma course by Scriboard Advocates and Legal Consultants!

Player restrictions/Hazardous Activities Clause: Under this clause, the player agrees that during the duration of the Contract the player will not engage in any other sport or any activity which can involve the substantial risk of any personal injury or which can impair the skill of the player in his sport. Apart from that, this clause contains other restriction on the player by the organization or club for the effective enforcement of the Contract. If the player breaches any of the rules and regulation mentioned under the clause or if the player becomes injured as a direct result in taking part in the given activity, the team/organization can transfer the financial risk onto the player.[10]

Non-assignment Clause: Sports contracts are personal services contract, and therefore it cannot be assigned or transferred to any other person, firm, corporation, or other entity without the prior, express, and written consent of the other party.[11]

Termination Clause: A termination clause gives the right to the contracting parties to terminate the sports contract. Commonly, it is based on the failure of the parties’ performance, breach of any material condition, warranties, or the express agreement. Furthermore, in most cases, the contract is terminated because the player is no longer fit for the sport or cannot meet the team’s need.

Learn more about Sports Law with Enhelion’s Online Law firm certified Diploma course by Scriboard Advocates and Legal Consultants!

Usually, the party seeking to terminate the agreement must give the other advance written notice of his intention to terminate the Contract. As long as the party seeking to terminate the Contract complies with the notice provisions, termination of the Contract is permissible.[12]

Remedies Clause: A breach of Contract can be remedied through monetary damages, restitution or specific performance. Although, the parties seek for the remedial measures which were promised under the clause.

These were the few clauses present in almost every sports contract; there are some other clauses whose inclusion mainly depends on the nature of the sports contract.

CONCLUSION:

In India, the sports industry is at its boom. There are so many sports contracts that are signed every day in this industry. It is quintessential that the contract drafter should take exceptional care while drafting the policies, procedure and clauses under the Contract. Because it prevents the parties from any predicament.

But, it’s so sad that due to lack of proper sports law, Indian sports industry witnesses scandals and unfair dismissal of players. Today, there is a dire need for the introduction of sports legislation. Because it’s the only ray which can address this situation and bring fairness in this industry. Thus, for the Indian sports industry’s consistent growth, a healthy balance in the enforcement of Contract is required.

Learn more about Sports Law with Enhelion’s Online Law firm certified Diploma course by Scriboard Advocates and Legal Consultants!

[1] IGI Global, What is Sports Industry, IGI Global, https://www.igi-global.com/dictionary/concurrence-of-sports-and-entertainment-industries/43855 (last visited on Jul., 17, 2020).

[2] Avinandan Chattopadhyay, Regulation and Liabilities of Parties in Sports Contract, Social Science Research Network, file:///C:/Users/HP/Downloads/SSRN-id2145520.pdf (last visited on Jul., 17, 2020).

[3] Farleys: Solicitors LLP, Sports Contracts and Agreements, Farleys, https://www.farleys.com/solicitors-for-you/sports-law-for-individuals/sports-contracts-and-agreements/ (last visited on Jul., 19, 2020).

[4] James Chen, Boilerplate, Investopedia (Sep., 03, 2019), https://www.investopedia.com/terms/b/boilerplate.asp.

[5] US Legal, Sports Contracts – Basic Principles, US Legal, https://sportslaw.uslegal.com/sports-agents-and-contracts/sports-contracts-basic-principles/ (last visited on Jul., 19, 2020).

[6] Supra note 6.

[7] Supra note 3.

[8] Anirudh Rastogi and Vishak Ranjit, E-Sports Player Contracts: Common Clauses And Potential Legal Issues In India, Ikigai Law: Mondaq (Jun., 18, 2020), https://www.mondaq.com/india/gaming/955392/e-sports-player-contracts-common-clauses-and-potential-legal-issues-in-india.

[9] Supra note 2.

[10] Adam Epstein & Josh Benjamin, Unique Clauses in Sport Contracts, Sh10an: WordPress, https://sh10an.wordpress.com/2015/04/11/unique-clauses-in-sport-contracts/ (last visited on Jul., 19, 2020).

[11] US Legal, Drafting Suggestions for A Sports Contract, US Legal, https://sportslaw.uslegal.com/sports-agents-and-contracts/drafting-suggestions-for-a-sports-contract/ (last visited on Jul., 20, 2020).

[12] Roshan Gopalakrishna & Vidya Narayanaswamy, Sponsorship Contracts – Reasonableness of Contractual Restraints, The Sports Law and Policy Centre (Feb., 10, 2011), https://sportslaw.in/home/2011/02/10/sponsorship-contracts-reasonableness-of-contractual-restraints/.

Categories
Blog

Analysis of Insolvency and Bankruptcy Laws in USA, UK and UAE

By: Anant Tyagi

Earlier, the Insolvency and Bankruptcy law was not very clear in UAE and was very divided into various areas, resulting in complexity and confusion. After 2016 the new bankruptcy law has been created with the strong base to resolve any insolvency issues that the businesses face to protect. The bankruptcy law 2016 was established under commercial companies law to aid enterprises to which range under the small and medium-sized companies based in UAE and are facing economic challenges. The features of the bankruptcy law are as follows:

  1. Financial Recognition

The act aims to boost the concept of Financial restructuring by establishing a regulatory body known as the committee of financial reconstructing. A list will approve this particular committee’s role of experts who are well-versed in bankruptcy and financial reorganization to carry on the task.

  1. Composition

Under the new bankruptcy law, composition approaches are also available to assist the debtor in settling with the creditor. It is up to the creditors to accept the settlement or any part payment. For this arrangement to be possible, a condition must be fulfilled, stating that a debtor must not have stopped payment for more than 30 consecutive days. When the debtor makes an offer of composition, it is submitted to the court, which appoints an expert to analyze whether the composition of finance is sufficient or not.

If the offer of competition is accepted, the court will select an official in charge who will prepare a record of debtor’s creditors to submit to a court. Any composition has to be passed by most creators, which is equal to two-thirds of the debt and equally approved by the court.

Learn more about Insolvency and Bankruptcy with Enhelion’s Online Law firm certified Master Course!

  1. Restructuring and bankruptcy

This particular part of biography law 2016 deals with the restructuring process by aiding the debtors in applying for affection plan for a bankrupt business. It also provides for declaring the bankruptcy to fulfil the obligations. Either of debtor or creditor can request for the commencement of the bankruptcy process. It is required that bankruptcy should be declared within 30 days by the debtor.

When the court accepts the application, the official is selected for selling and reconstruction of business. Insolvency and bankruptcy code process of liquidation starts, the secured creditors are given more preference in the rank than ordinary creditors.

  1. Bounced cheques

Under the UAE law, any non-UAE national person signatory to a bounced cheque faces potential criminal liability. Similarly, in bankruptcy law penal provisions are to be stopped if it is proven that specified check was issued before the commencement of composition/ restructuring. The cheque amount will be added to the total debt of the debtor.

  1. Penalties

The complaint of the new bankruptcy law 2016 has to be backed by a variety of available penalties. The penalty aims to provide both imprisonment and substantial financial fines.

With the help of the new bankruptcy law that gives ample options to bypass bankruptcy, which earlier had a severe penalty for companies going through a bankruptcy is a welcome step in insolvency and bankruptcy. The new is debtor-friendly and provides a way for the companies to repay their debts while continuing the business instead of the older laws that forced companies to shut their operations completely whenever any financial difficulty arose. This law will encourage companies from around the world to enter the UAE market.

Learn more about Insolvency and Bankruptcy with Enhelion’s Online Law firm certified Master Course!

“A new law called corporate information insolvency, and governance act 2020 has been introduced by the United Kingdom with major reforms like “free-standing moratorium” and New Restructure plans. Under the new law, free-standing Moratorium will aid the companies to take shelter from creditor’s action. Under the insolvency and bankruptcy code 2016, whenever a company goes into the Moratorium period, distributor action save the company is not predetermined. Under the new law, free-standing Moratorium will ensure that a company can choose the company’s rescuing. The company is not forced to stick to the formal process, but if there is an informal process to rescue the company, it can even be used. Moratorium period is time-based to ensure that no misuse is taking place and the Moratorium is cancelled if it is final that a company cannot be rescued.” [1]

“Another form that has been introduced under the CIGA is the restructuring plan. The act had introduced a process in which the restructuring plan between the company and creditor required the creditors to vote and sanction the court. However, the cross-class cram-down method has been mentioned that states that the court has the power to give a plan sanction, it requires even if the majority of the class is against it.” [2]A restructuring plan can be approved by the court even if all the creditors are against it if the court feels that the creditors would not be worse off with the suggested Restructure plan than when no Restructure plan was approved.

Learn more about Insolvency and Bankruptcy with Enhelion’s Online Law firm certified Master Course!

The cross-class cram-down method’s possible effect is that the companies will have more flexibility whenever they are proceeding with the restructuring plan even in those situations where the consent of all creditor classes cannot be obtained. But this method also has its challenges because it is mentioned that the court can overrule the descending creditors and sanction the plan if they feel that under the proposed restructuring plan they would not be worse off if no restructuring plan was approved. It burdens court with the responsibility of doing valuations, which is very contentious because a market valuation keeps changing according to the market forces. With the new covid crisis, it will be very problematic for the courts to assume the economic market’s evaluation and outcomes.

One of the significant reforms is that earlier whenever the company was going through financial difficulties and bankruptcy process, the company’s supplier would always seek to get out of the contractual obligation and sever ties with the company rendering the company without any support. The present act will now prohibit the supplier from terminating the contract with the company when it goes into the restructuring plan. The company can focus on paying back their debts and keeping ongoing their business instead of just closing everything down.

Learn more about Insolvency and Bankruptcy with Enhelion’s Online Law firm certified Master Course!

The United States of America constitution has provided the US Congress with the power and authority to enact the laws of bankruptcy in the country. While exercising their power and discretion, the lawmakers passed the bankruptcy Reform Act of 1978 which has largely governed the country’s current bankruptcy law’s bankruptcy issues. The United States bankruptcy code is also referred to as tight 11. It contains the business and individuals’ procedure and practices to follow whenever they are filing for the bankruptcy under the United States Bankruptcy court. Under the US bankruptcy code, both companies and the individuals are allowed to file a bankruptcy petition and seek relief. The most common form of bankruptcy in the United States is mentioned in chapter 7, which also covers the liquidation process. The court appoints the trustee, and the trustee must collect all the non-exempt assets of the debtor.

When the creditors come to know about the company’s condition, it will force a company to file for bankruptcy. Still, apart from the UK and UAE law, the day the petition of bankruptcy is filed in the court, the business will cease to exist. It is up to the court-appointed trustee whether he allows certain operations of the company or not. When it comes to large companies, the trustee may decide to sell the company’s property loss-making division to another flourishing company. The preference is given to the secured creditors, usually the first ones to be paid back. As mentioned before, the US bankruptcy law provides for companies to file bankruptcy and offers individuals to file for liquidation in which they are allowed to keep specific exam properties, but it varies from state to state. The trustee will sell the other assets which are not under the exempt class to pay back the creditors. In the 2005 bankruptcy abuse prevention and Consumer Protection Act, an amendment was made that barred consumer debtors filing bankruptcy because it was felt that this provision would be misused by the credit card companies from losses, resulting in the customers going bankrupt. The act also provides for cross border insolvency state code incorporate with foreign courts to solve cross border insolvency cases. United States of America’s bankruptcy code is one of the oldest coats and is still prevalent without any new law being drafted in present time.

As we can see that the UAE bankruptcy laws for very old and had regressive laws with penal provisions which decided the companies from investing in UAE or any running companies in the UAE. Still, with the new law, they have provided a well-defined process to form restructure plans while running the business remove regressive penal punishments which is a welcome step and encourages the companies to continue their business while also returning the amount in debt instead of just punishing the people running the company and suffering Loss which is the ultimate goal of insolvency and bankruptcy laws.

“On the other hand, the United Kingdom has also introduced a new law for the information c and governance by giving major reforms like a free-standing moratorium that gives the company the freehand to determine the course of action which helps to rescue the company instead of just following the formal procedures and not getting any result. The UK has also given major power to the court to bypass the creditor’s Ascent for the restructure plan in case a court feels that this is the best records available for the company and is being blocked by the creditors for their greed of larger returns which will further worsen the situation.” [3] Meta reforms have also been provided by the act to ensure that the business does not close down and keep ongoing.

Learn more about Insolvency and Bankruptcy with Enhelion’s Online Law firm certified Master Course!

The bankruptcy code of The United States of America probably the oldest but the most reliable piece of legislation for dealing with insolvency but no significant amendments in the laws has made it behind the other laws. While the other laws understand the concept that that can only be paid when the company keeps on running the US law focuses on shutting down the company the day the petition of bankruptcy is filed which is a very regressive step because are not only the chances of getting the debt go down but also the economy suffers when the company closes down and incoming times the US government has to bring amendments to resolve this issue.

[1] corporate information insolvency and governance act 2020 by Andrew Mills and Paul Durban

[2] Pricewaterhouse coopers guide on UK Insolvency and Bankruptcy reforms

[3] Bankruptcy Reform Act of 1978

Learn more about Insolvency and Bankruptcy with Enhelion’s Online Law firm certified Master Course!