SPN LEGAL Missivespnlegal.com/Missive/MISSIVE_JAN_ FEB_ MARCH 2020.pdf · worker (including nurses,...

Edition – January, February & March 2020

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Mca

SPN LEGAL Missive Edition – January, February & March 2020


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TABLE OF CONTENTS

Section Description Page Number

I. COMPANY LAW

3

II. RESERVE BANK OF INDIA (RBI) REGULATIONS 4

III. LABOUR LAWS

6

IV. SECURITIES EXCHANGE BOARD OF INDIA (SEBI) REGULATIONS

13

V. TELECOM REGULATORY AUTHORITY OF INDIA (TRAI) REGULATIONS

12

VI. CASE LAWS: i. KEY MATTERS ADJUDICATED BY THE HON’BLE

SUPREME COURT

ii. KEY MATTERS ADJUDICATED BY THE HON’BLE HIGH COURTS

10 16


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COMPANY LAW Commencement notification for Section 230 (11) and (12) Vide notification F. No. 2/31/CAA-2013-CL-V part, the following provisions have come into force with effect from February 03, 2020: • Section 230 (11) of the Companies

Act, 2013 (“the Act”), which stipulates that any compromise and arrangement of unlisted companies may include takeover. Provided, takeover of all listed companies shall be as per the regulations framed by the Securities and Exchange Board of India.

• Section 230 (12) of the Act, which

states that an application may be made to the Tribunal in the event of any grievances with respect to the takeover of an unlisted company.

Clarification on prosecution filed for internal adjudication proceedings initiated against Independent Directors (ID),Non-Promoters and Non-KMP, Non-Executive Directors (NED) Vide general circular no. 01/2020 dated March 02, 2020, the MCA has issued a clarification that in order to ascertain the officer in default for any violation committed under the Act, the following should be considered: • nature of the default; • time of the default; • involvement of concerned officer in

such case; and

• whether such default has occurred with his knowledge and consent.

Extension for filing NFRA-2 Vide general circular no. 07/2020 dated March 05, 2020, the time limit for filing Annual Return by the auditors in e-form no. NFRA-2 for the financial year 2018-19 has been extended to 150 days from the date of deployment of such form. Filing of forms in the Registry (MCA-21) by the Insolvency Professional (Interim Resolutlon Professional (IRP) or Resolution Professional (RP) or Liquidator) appointed under Insolvency Bankruptcy Code, 2016 (IBC) The general circular No. 08/2020 dated March 06, 2020 has superseded the erstwhile Circular No. 04 /2020 dated February 17, 2020 issued by the MCA, whereby a detailed clarification has been provided for undertaking statutory compliances for all the companies which are under the Corporate Insolvency Resolution Process. Further, Forms such as e-Form MGT-7 (Filing of Annual return) and e-Form AOC-4 (Filing of Financial statements) and other documents in compliance with provisions of the Act shall be filed as an attachment to e-Form GNL-2 by an IRP or RP or Liquidator in the capacity of CEO. Exemption to Banking Company from the application of the provisions of Sections 5 and 6 of the Competition Act, 2002 [Notification dated March 11, 2020]


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Vide notification bearing F. No. Comp-05/6/2020-Comp-MCA, Banking Companies have been exempted from the provisions of: • Section 5, which provides the criteria

where the acquisiton of one or more enterprises by one or more persons or mergers or amalgamation of enterprises shall be treated as a combination, and

• Section 6, which prohibits the combination of such persons or enterprises, which cause or is likely to cause appreciable adverse effect on competition,

for a period of 5 years. RESERVE BANK OF INDIA (RBI)

LAWS Guidelines on Regulation of Payment Aggregators and Payment Gateways (“Guidelines”) [Notification dated March 17, 2020] Vide Notification No. RBI/DPSS/2019-20/174, RBI has introduced new Guidelines for payment aggregators under the Payment and Settlement Systems Act, 2007 (“PSS Act”) which shall come into effect from April 01, 2020. The key highlights of the Guidelines are as under: 1. Definitions:

a. Payment Aggregators (“PAs”)

have been defined as entities which facilitate e-commerce sites and merchants to accept various payment instruments from the

customers for completion of their payment commitments. They receive payments from customers, pool and transfer them on to the merchant after a period of time.

b. Payment Gateways (“PGs”) are entities that provide technology infrastructure to route and facilitate processing of an online payment transaction without any involvement in handling of funds.

2. Applicability:

It is mandatory for the PAs to adhere to the guidelines and technology related recommendations, whereas it is suggested that PGs adhere to the technology related recommendations as a measure of good practice. Further, cash on delivery (COD) based e-commerce transactions have been exempted while bringing in the domestic leg of import and export related payments facilitated by PAs under the ambit of the Guidelines.

3. Authorisation: A non-bank PA has to be a company incorporated under the Companies Act 1956/ 2013 wherein the Memorandum of Association of such entity must cover PA related activities. Banks carrying on PA activities do not need a separate authorisation. The existing non-bank PAs will need to apply for an authorisation under the PSS Act before June 30, 2021 and are allowed to operate till the time a


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communication from RBI on the status of their authorisation application is recieved.

4. Capital Requirements:

All existing PAs need to achieve a net worth of Rs. 15,00,000,00/- (Rupees Fifteen Crores) by March 31, 2021 and Rs. 25,00,000,00/- (Rupees Twenty Five Crores) by March 31, 2023, which is to be maintained at all times. However, the new PAs are required to have a net worth of Rs. 15,00,000,00/- (Rupees Fifteen Crores) when submitting an authorisation application and have to achieve a net worth of Rs. 25,00,000,00/- (Rupees Twenty Five Crores) by the 3rd (third) financial year i.e., by March 31, 2023, which is then required to be maintained at all times.

5. Governance:

PAs are to be professionally managed and the promoters will be required to satisfy the ‘fit and proper criteria’, as prescribed by RBI. Any takeover or acquisition of control or change in management of a non-bank PA shall be communicated to the RBI.

6. Merchant On-Boarding: PA shall ensure that:

a. It shall have a board-approved

policy for merchant on-boarding;

b. It shall undertake background and antecedent checks of merchant;

c. The merchant’s website shall clearly indicate the terms and conditions of the service and timeline for processing returns and refunds;

d. Merchant’s infrastructure complies with the data security standards (PCI-DSS and PA-DSS) and does not store customer data.

7. Settlement and Escrow:

Non-bank PAs shall maintain the amount collected by them in an escrow account with only one scheduled commercial bank at any point in time. The Guidelines prescribe the permissible credits/debits to the escrow account and also permit settlements into any other account, which is linked to the date of intimation or confirmation provided by the merchants to the PAs on the shipment or delivery respectively, depending on whether or not the PA is responsible for the delivery of goods or services. Escrow accounts are not be operated for COD transactions.

8. Consumer Grievance Redressal

and Dispute Management Framework: PAs must have a formal customer grievance redressal and dispute management framework while appointing a nodal officer to handle customer complaints/ grievances and the escalation matrix.

9. Risk Management Framework:


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PAs are not allowed to store the customer card credentials within their database or in the server accessed by any merchant. Further, PAs shall put in place Board approved information security policy for the safety and security of the payment systems operated by them and implement security measures in accordance with the Guidelines to mitigate identified risks.

Investment by Foreign Portfolio Investors (FPI) in Debt [Notification dated January 23, 2020] Vide Notification No. RBI/2019-20/150, RBI has amended the directions on Investment by Foreign Portfolio Investors (FPIs) in Debt, dated June 15, 2018, whereby the limits of short-term investments by an FPI have been revised as follows: 1. The limit on short-term investment

by an FPI has been increased from 20% (twenty per cent) to 30% (thirty per cent) of the total investment of that FPI in:

a. Central Government Securities (including Treasury Bills) or State Development Loans;

b. Corporate bonds.

2. FPI investments in security receipts are exempted from any short-term investment limit. This exemption has now further been extended to debt instruments issued by (i) Asset Reconstruction Companies; and (ii) an entity under the Corporate Insolvency Resolution Process, as

per the resolution plan approved by the National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016.

‘Voluntary Retention Route’ (VRR) for Foreign Portfolio Investors (FPIs) investment in debt – Relaxations [Notification dated January 23, 2020] Vide Notification No. RBI/2019-20/151, RBI has amended the directions on VRR for FPIs investment in debt. VRR is a channel of investment available to FPIs to encourage them to invest in debt markets in India over and above their investments through the regular route. Following changes have been made to the provisions related to investment through VRR: 1. The investment cap for FPIs through

VRR has now been increased from Rs. 75,000 crores to Rs. 1,50,000 crores; and

2. FPIs that have been allotted investment limits under VRR may, at their discretion, transfer their investments made under the General Investment Limit to VRR.

LABOUR LAWS

Coronavirus Relief Package under Pradhan Mantri Garib Kalyan Yojana (“PM Yojana”) [Press Release dated March 26, 2020] The Finance Minister announced the PM Yojana under which the following reliefs will be given to the under-priviliged, poor and migrant workers, amid the outbreak of the Covid-19 pandemic, which inter alia includes:


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1. Insurance cover of Rs. 50,00,000/- (Rupees Fifty Lacs) per health worker (including nurses, doctors, cleaners, etc.) fighting Covid-19 in Government Hospitals and Health Care Centres.

2. Food, including wheat/rice/pulses for free, for the next 3 (three) months.

3. The Pradhan Mantri Jan-Dhan

Yojana women account holders will be given an ex-gratia of Rs. 500 (Rupees Five Hundred) per month for the next 3 (three) months.

4. Wage earners receiving below Rs.

15,000/- (Rupees Fifteen Thousand) a month, in an establishment employing less than 100 (hundred) workers, are at the risk of losing their employment, and will, thus, receive 24% (twenty four per cent) of their monthly wages in their PF account for the next 3 (three) months.

5. Employees’ Provident Fund

Regulations will be amended to include “pandemic” as the reason to allow non-refundable advance of 75% (seventy five per cent) of the amount or 3 (three) months of the wages, whichever is lower, from their accounts.

6. The funds in the Building and Construction Workers’ Welfare Fund will be utilized to support construction workers against economic disruptions due to the lockdown.

No Reduction of Salary or Termination of Employees In the wake of the outbreak of Covid-19, the Ministry of Labour & Employment, Government of India has issued advisory dated dated March 24, 2020, advising employers not to terminate employees or reduce/ deduct wages during lockdown post which various State Governments have come up with an advisory that the employers of Public/Private Establishments should not terminate the employment of their employees, particularly casual or contractual workers or reduce their wages, if any worker takes leave or if the place of employment is to be made non-operational in the wake of the Covid-19 pandemic. It is also noteworthy that apart from the advisories issued by various State Governments, the Ministry of Home Affairs has issued directions, dated March 29, 2020, directing all employers to make payment of wages, on the due date, without any deductions for the period during lockdown. Outlined below are some state specific advisories: 1. Vide Notification No.09/2020/446/

xxxvi-03-2020-30(sa)/2020 dated March 20, 2020, the Uttar Pradesh State Government prescribed that: i) those who are suspected to be affected by Covid-19 and kept in isolation will be entitled to paid leave of 28 (twenty eight) days by their employers, on the submission of medical certificate; ii) shops/commercial establishment /factories closed temporarily by


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the order of the Government, shall provide holiday with wages to their employees.

2. Vide Order No. F.51/DGHS/PH-

IV/COVID-19/2020/prsecyhfw/ dated March 22, 2020, the Government of Delhi announced the lockdown and imposed restrictions on the operations of shops, commercial establishments, factories, workshops, offices, godowns, weekly bazaars, inter-state metro, trains, domestic/ international flights. However, the government had listed out certain establishments which are exempted from the aforementioned restrictions including police, health, fire, prisons, electricity, water, milk plants, e-commerce of all essential goods including food, essential pharmaceuticals, etc.

3. The Government of Karnataka,

vide Notification No. 170 dated March 24, 2020, directed that all private and public establishments will not reduce the wages of their employees.

4. Vide Notification No. 7047-7127

dated March 23, 2020, the Government of Haryana issued a similar advisory for all private and public establishments for treating employees as “on duty” during the lockdown period. Vide Order dated 22.03.2020, the Government of Haryana excluded certain establishments from the restriction including: Banks/ATMs, Postal services, telecom and internet services including IT & ITES, etc.

Extension of time for Labour Law Returns Filing due to the outbreak of COVID-19 1. Vide Notification dated March 20,

2020, the Ministry of Labour & Employment has extended the last date of filing of unified online Annual Returns for the year 2019 uptil April 30, 2020.

2. Vide Notification No. P-

11/14/Misc./1/2019-Rev dated March 16, 2020, the ESIC has extended the date for ESI contribution and ESIC contribution for the months of February and March 2020, which can now be filed and paid up to April 15, 2020 and May 15, 2020, respectively.

Relaxation to Employers who did not file ESIC/ ESI contribution from April 2019 to September 2019 [Notification dated March 18, 2020] In view of the difficulty faced by the employers in filing ESIC contribution from April 2019 to September 2019, within the prescribed time period, the ESIC has granted another opportunity to the employers to file the contribution by May 15, 2020. Registration of New Public & Private Limited Companies for EPFO & ESIC now on MCA Portal [Press Release dated March 06, 2020] An initiative has been taken to improve India’s ranking in the Doing Business Report 2021 by making the registration of new Public, Private and One Person Companies for ESIC and EPFO mandatory through the Spice+ and AGILE-PRO e-forms of MCA w.e.f.,


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February 15, 2020. Also, the registration of the above-mentioned companies has been stopped on Shram Suvidha Portal from February 15, 2020. Year End Review – 2019: Ministry of Labour and Employment [Press Release dated December 30, 2019] The Ministry of Labour and Employment has taken steps to simplify, amalgamate & rationalize the provisions of the existing Central labour laws into 4 (four) Labour Codes: 1. Labour Code on Wages: It collates

4 (four) statutes, viz. the Minimum Wages Act, 1948; the Payment of Wages Act, 1936; the Payment of Bonus Act, 1965; and the Equal Remuneration Act, 1976. It has been passed by both the Houses of Parliament and received the presidential assent on August 08, 2019.

2. Labour Code on Industrial Relations: It collates the statutes governing industrial relations, viz., the Trade Union Act, 1926; the Industrial Employment (Standing Orders) Act, 1946; the Industrial Disputes Act, 1947. The Code was introduced in the Lok Sabha on November 28, 2019.

3. Labour Code on Social Security &

Welfare: It subsumes 9 (nine) labour laws, including, the Employees’ Compensation Act, 1923, the Maternity Benefit Act, 1961, the Payment of Gratuity Act, 1972, the Unorganized Workers’ Social Security Act, 2008, etc. The Code

was introduced in the Lok Sabha on December 11, 2019.

4. Labour Code on Occupational Safety, Health & Working Conditions: It subsumes 13 (thirteen) labour laws, including, the Factories Act, 1948, the Plantation Labour Act, 1951, the Mines Act, 1952, the Building and Other Constructions Workers’ (Regulation of Employment and Conditions of Service) Act, 1996, etc. The Code of 2019 was introduced in the Lok Sabha on July 23, 2019. Presently, the Code has been referred to the Parliamentary Standing Committee on Labour for examination.

5. Online Return: Unified Online Annual Returns have been made mandatory in respect of eight Central Labour Acts, namely, the Payment of Wages Act, 1936, the Minimum Wages Act, 1948, the Maternity Benefit Act, 1961, the Payment of Bonus Act, 1965, the Industrial Disputes Act, 1947, the Contract Labour (Regulation and Abolition) Act, 1970, the Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979 and the Building and Other Construction Workers (Regulation of Employment and Condition of Service) (BOCW) Act, 1996. These Returns, which were half yearly/annually earlier, now need to be filed by all employers annually only and are to be filed online. Unified monthly Electronic Challan-cum-Return (ECR) for EPFO and ESIC has been made operational.


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6. Start Up India: State/UT Governments have been advised to regulate the inspections for the Start-Ups under 4 (four) labour laws, viz. the Building & Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996, the Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979,the Payment of Gratuity Act, 1972 and the Contract Labour (Regulation and Abolition) Act, 1970, wherever applicable and extend the self-certification compliance regime from 3 (three) years to 5 (five) years.

SECURITIES EXCHANGE BOARD OF INDIA (SEBI) REGULATIONS

Reduce Compliance Burden on Market Participants [Press Release Dated March 23, 2020] Due to the Covid-19 outbreak, Security and Exchange Board of India (SEBI) has reduced compliance burden on the Market Participants, which inter alia includes:

1. The implementation of SEBI circular

dated October 01, 2019 pertaining to investment in debt and money market instruments by mutual funds schemes to comply with the revised limits for sector exposure, has been extended by 1 (one) month, i.e. up to May 01, 2020.

2. The half yearly disclosures of

unaudited financial results mandated under Regulation 59 of

SEBI (Mutual Funds) Regulations, 1996 has been extended by one month, i.e. up to May 31, 2020.

3. The yearly disclosure of investor

complaints with respect to Mutual Funds, as mandated in SEBI circular dated May 13, 2010, has been extended by one month, i.e. up to June 30, 2020.

Reduce Compliance Burden under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR”) [Press Release dated March 19, 2020] In view of the Covid-19 pandemic, SEBI has reduced compliances for listed entities under LODR, including: 1. Submission of half yearly

compliance certificate on share transfer facility and annual secretariat report has been extended further for a period of 1 (one) month from the prescribed due date;

2. Submission of quarterly statement of Investor complaints and shareholding pattern can now be submitted after 3 (three) weeks of the prescribed due date.

Mobile Application for Lodging Investor Grievances [Press Release Dated March 5, 2020] In furtherance of ensuring ease of business, SEBI has launched a mobile application for the investors to lodge their grievances in SEBI Complaints Redressal Systems (SCORES).


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Online System for Detecting Misuse of Clients’ Securities by Brokers [Press Release Dated February 13, 2020] SEBI has, in wake of the ongoing misuse by brokers of clients’ securities received as collaterals to meet their own settlement obligation, introduced an online system whereby SEBI will collect the details of the clients’ securities submitted in weekly report filed by brokers with the Exchanges and update the same with trades conducted in the accounts of the said clients using the data available with SEBI in DWBIS as well as data provided by Exchanges, Clearing Corporations and Depositories pertaining to auction trades, corporate actions, SLBM transfers, off market trades, etc. The securities holding balance computed is matched with the actual clients’ securities holding in the demat account and submission made by the broker for the next day. Any mismatch in data is flagged as an alert for Exchanges. Guidelines for the rights issue of units by a listed real estate investment trust (REIT) [Circular dated January 17, 2020] Vide Circular No. SEBI/HO/DDHS/ DDHS/CIR/P/2020/09, SEBI has issued guidelines in respect of a rights issue of units by a listed REIT: 1. Conditions for issuance: No REIT

shall make a rights issue of units unless the following conditions are satisfied, which inter alia include:

a. Units of the same class, proposed to be allotted, are already listed on the stock exchange;

b. Approval of stock exchanges for listing of units, has been obtained;

c. It is in compliance with continuous listing and disclosure obligations under the prescribed REIT Regulations and circulars issued; and

d. Resolution of the board of directors of the manager approving the rights issue of units and determining the record date has been passed; and

e. No promoters, partners, etc. of the REIT is an offender under the Fugitive Economic Offender Act, 2018.

2. Appointment of merchant

banker(s) and other intermediaries: The manager on behalf of the REIT, shall appoint one or more merchant bankers, who shall prepare the application form.

3. Draft Letter of Offer: The manager, on behalf of the REIT shall file a draft letter of offer with the Board through the lead merchant banker, along with the prescribed fees.

4. Pricing of Units: The manager, on

behalf of the REIT, in consultation with the lead merchant banker(s), shall decide the issue price before determining the record date.

5. Manner of issuance of units: The

rights entitlements shall be credited to the demat account of the


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unitholders before the date of opening of the issue. The minimum subscription to be received in the rights issue shall be 90% of the issue size through the letter of offer.

6. Restriction on further Capital Issues:

The REIT shall not make any further issue of units in any manner whether by way of public issue, rights issue, preferential issue, qualified institutions placement, institutional placement, issue of bonus shares or otherwise during the period between the date of filing the draft letter of offer with the Board and the listing of the units offered through the letter of offer or refund of application monies.

TELECOM REGULATORY

AUTHORITY OF INDIA (TRAI) Consumer to use Data Networks Reasonably during the Lockdown [Economic Times News dated March 24, 2020] Owing to lockdown, work from home and social distancing amidst the outbreak of the Covid-19 pandemic, data usage has surged over 30% (thirty per cent). The Cellular Operators Association of India (COAI) have requested the consumers to take various measures in furtherance of using internet data responsibly. Video steaming platforms like Netflix, Amazon Prime Videos and Facebook have proposed to reduce bit rates for videos, while maintaining the quality of it services.

Free Access to Critical Websites during Lockdown [Economic Times News Dated March 24, 2020] Mobile phone operators have requested the Department of Telecommunication and TRAI to allow free access of all critical websites to government services, e-commerce, digital payments such as Bhim app, during the lockdown period as the same fall under the ambit of essential services. Telecommunication Tariff (65th Amendment) Order, 2020: Reduction in the cost of SMS [Press Release dated February 18, 2020] The TRAI has proposed to do away with a fixed rate of 50 (fifty) paise for each SMS sent beyond a daily limit of 100 (hundred) messages per SIM. The proposal is still pending before the stakeholders. The Telecommunication (Broadcasting and Cable) Services (Eighth) (Addressable Systems) Tariff (Second Amendment) Order, 2020 (“Tariff Order”) [Notification dated January 01, 2020] With a view to regulate arbitrary cap on the discounts offered by the broadcasters to its consumers on the MRP of channels, Tariff Orders were amended to ensure reasonable relationship between the a-la-carte prices of pay channels and bouquet prices, declared by broadcasters. The amendment includes the following:


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1. The broadcaster has to comply with the following, while forming bouquet:

a) the sum of the a-la-carte rates of the pay channels (MRP) forming part of a bouquet shall in no case exceed one and half times the rate of the bouquet of which such pay channels are a part; and

b) the a-la-carte rates of each pay channel (MRP), forming part of a bouquet, shall in no case exceed three times the average rate of a pay channel of the bouquet of which such pay channel is a part.

2. Reduction in the ceiling price of pay channel for inclusion in bouquet from Rs. 19/- (Rupees Nineteen) to Rs. 12/- (Rupees Twelve).

3. Number of bouquets of pay channels shall not be more than the number of pay channels offered by a broadcaster.

4. Increasing the number of HD channels that can be provided within the Network Capacity Fee (NCF) of Rs. 130/- (Rupees One Hundred and Thirty only) per month.

5. No restrictions to be imposed on

multi TV home subscriber to choose different set of channels for each TV connection.

KEY MATTERS ADJUDICATED BY THE HON’BLE SUPREME COURT

i. Taking suo motu cognizance

of overcrowding of prisons,

the Supreme Court issued

directives to States/ UTs to

contain the spread of COVID-

19 pandemic in prisons and

remand homes

In Re: Contagion of COVID 19 virus in prisons Coram: The Chief Justice, L. Nageswara Rao & Surya Kant, JJ. Dated: March 23, 2020 The issue of overcrowding of prisons being a matter of serious concern in view of the pandemic of Covid-19, and having regard to the provisions of Article 21 (protection of life and personal liberty) of the Constitution, the Court considered it imperative to ensure that the spread of the virus in prisons is controlled. Accordingly, the Apex Court, vide Order dated March 16, 2020, issued notice to all States and UTs to show cause as to why directions should not be issued with regard to prisons and remand homes, for dealing with the ongoing health crisis arising out of the outbreak of Covid-19. An overview of the responses submitted by various States/ UTs reflected the various measures being taken for protection of prisoners to contain the spread of the virus, including creation of isolation wards, quarantine of new prisoners, preliminary examination,


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ensuring availability of medical assistance, sanitization of the prison campus and wards, scanning staff at entry points, barring/ limiting personal visits of visitors to prisoners, decongesting prisons by transferring prisoners to non-congested prisons, practising social distancing amongst prinsoners, etc. Taking into consideration the possibility of transmission from outside, the Court directed that physical presence of all undertrial prisoners be dispensed with and recourse be had to video conferencing. The Court further directed that there should not be any delay in shifting an ill prisoner to a nodal medical institution in case the possibility of any infection is witnessed. Prison specific readiness and response plans be developed in consultation with medical experts, and a monitoring team be set up at state level to ensure that the directives issued with regard to prison and remand homes are complied with scrupulously. The Court directed each State/ UT to constitute a High Powered Committee to determine which class of prisoners can be released on parole or interim bail for such period as may be thought appropriate, especially prisoners who have been convicted or are undertrial for offences punishable upto a maximum of 7 years. The Court also directed the Undertrial Review Committee, contemplated In Re Inhuman Conditions in 1382 Prisons, (2016) 3 SCC 700, to meet on a weekly basis and take decisions in consultation with the concerned authority.

ii. The Supreme Court observed

that the writ jurisdiction of

the High Court cannot be

invoked to adjudicate upon

the correctness of the

allegations in a FIR

Padma Mishra vs. State of Uttarakhand & Anr. Coram: Indira Banerjee & Anirudhha Bose, JJ. Dated: February 13, 2020 Brief Facts: This appeal was preferred against an Order dated June 09, 2009 passed by the High Court of Uttarakhand at Nainital, dismissing a writ petition filed under Article 226 of the Constitution for quashing an FIR instituted against the Appellant under Sections 2/ 3 of the Uttar Pradesh Gangsters and Anti-Social Activities (Prevention) Act, 1986. At the relevant time, the Appellant had various other cases pending against him, including offences under Section 323 (voluntarily causing hurt), 506 (criminal intimidation), 504 (provoking breach of peace), 307 (attempt to murder) of the Indian Penal Code. Observations of the Court: In view of the various cases pending against the Appellant, it could not be said that the allegations in the FIR did not disclose any act warranting penalization under the Gangsters Act.


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The Court further observed that in proceedings under Article 226 of the Constitution, the High Court does not adjudicate upon the correctness of the allegations in the FIR. The Court may only intervene in exceptional cases if the allegations made in the FIR ex facie do not disclose any offence at all. Held: The High Court rightly refused to quash the FIR under Article 226 of the Constitution by dismissing the writ petition. iii. The Apex Court expounded

that curtailment of internet

services tantamounts to

restriction on freedom of

speech and expression,

which should be exercised

only sparingly and

responsibly Anuradha Bhasin vs. Union of India & Ors.

& Ghulam Nabi Azad vs. Union of India & Anr. Coram: N.V. Ramana, S.A. Bobde, S. Abdul Nazeer, JJ. Dated: January 10, 2020 Brief Facts: Pursuant to the abrogation of Article 370 of the Constitution and division of the state of Jammu and Kashmir into two Union Territories, restriction on freedom of speech and expression was

imposed by inter alia shutting down the internet for a period of about 145 days under Section 144 of the Code of Criminal Procedure (Cr.P.C.), with a view to ensure national security and mitigate problems of infiltration, violence and terrorism from across the border. Contentions of the Parties: It was contended by the Petitioner that curtailment of internet amounts to restriction on the right to free speech, which should be tested on the basis of reasonableness and proportionality. It was further contended that a distinction should be drawn while imposing restrictions on social media/ mass communication and the general internet. The least restrictive orders should be put in place instead of a blanket ban. Such restrictions not only impact the right to free speech but also impinges on the right to trade. The State must ensure that measures are in place that allow people to continue with their life, such as public transportation for work and school, to facilitate businesses, etc. The Union of India, on the other hand, argued that considering the cross-border terrorism and internal militancy in the State, it would be imperative that preventive measures under Section 144 of the Cr.P.C. be taken. The State of Jammu & Kashmir supplemented that the abrogation of Article 370 of the Constitution did not result in taking away the rights of the citizens, but conferred upon them the rights which they never had. Further,


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the restrictions which had initially been placed, were now being relaxed gradually. The purpose of limited/ restricted use of internet was to ensure that the situation is not aggravated by means of targeted messages from outside the country. There was complete application of mind while imposing restrictions as there was no general clampdown. It was also brought to fore that all newspapers, television and radio channels were functioning, including from Srinagar, where the Petitioner is situated. Issues: The issues which arose for consideration before the Cout were: 1. Whether the freedom of speech

and expression and freedom to practise any profession, or to carry on any occupation, trade or business over the internet is a part of the fundamental rights enshrined in Part III of the Constitution?

2. Whether the Government’s action of prohibiting internet access under Section 144 of the Cr.P.C. is valid?

3. Whether the freedom of press was violated due to the restrictions?

Observations of the Court: The freedom of speech and expression and the freedom to practice any profession or carry on any trade, business or occupation through the medium of internet enjoys constitutional protection under Articles 19(1)(a) and 19(1)(g). The restriction upon such fundamental rights should be in consonance with the mandate of

Article 19 (2) and (6) of the Constitution, inclusive of the test of proportionality. Only the least restrictive measure can be resorted to by the State. The power should be exercised in a bona fide and reasonable manner, by relying on the material facts, indicative of application of mind. The power under Section 144, Cr.P.C., being remedial as well as preventive, is exercisable not only where there exists present danger, but also when there is an apprehension of danger. However, the danger contemplated should be in the nature of an “emergency” and for preventing obstruction and annoyance or injury to any person lawfully employed. This power cannot be used to suppress legitimate expression of opinion or grievance or exercise of any democratic rights. Held: The State/ competent authorities were directed to review the continuance of all orders suspending internet services. The authorities were further directed to consider forthwith allowing government websites, localized/limited e-banking facilities, hospital services and other essential services in those regions wherein the internet services were not likely to be restored immediately.

KEY MATTERS ADJUDICATED BY THE HON’BLE HIGH COURTS

i. The High Court of Calcutta

has constituted a


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Monitoring Committee to

ensure access to justice to

the people of Andaman &

Nicobar Islands, also hit by

the COVID-19 pandemic

Court on its own motion: In Re: COVID19 – Relief and services at the Andaman and Nicobar Islands (Letter dated 27th March, 2020 received from Mr. D.C. Kabir, Advocate, treated as a petition) Coram: Hon’ble Chief Justice Mr. Thottathil B. Radhakrishnan & Hon’ble Mr. Justice Dipankar Dutta Dated: March 28, 2020 In the wake of the Covid-19 pandemic and the grim state of affairs in the UT of Andaman and Nicobar Islands, invoked its extraordinary jurisidiction and constituted a Monitoring Committee headed by the District Judge; with the Judicial Secretary, the Superintendent of Police (South Andamans), and the President of the Bar Association (Port Blair), as members to: 1. report the ground realities in so far as

the distribution of essential commodities and medicines to the island were concerned;

2. to make an overall assessment of all the relevant factors, including supply of essential commodities and essential articles, medicines, fuel and availability of other support mechanisms for the people of the Andaman and Nicobar Islands.

The District Judge, Adaman and Nicobar Islands has also been directed to notify the public that they may, in extremely urgent situations, file petitions before the Registry in soft copies. Immediately thereafter, the petitions may be registered and transmitted to the Registry in Kolkata via email or other available mode, for being placed before the Chief Justice. The Court has also sought reports over email from the Union of India and the UT of Andaman and Nicobar Islands in this regard, and considering the exigencies of the circumstances, the Court directed that the proceedings in the case be continued/ conducted through WhatsApp, e-conferencing, e-mails, etc. as modes of communication and judicial management till the situation continues to prevail. ii. The High Court of Delhi laid

down guidelines to be

followed for recording the

testimonies of victims/

witnesses residing abroad Court on its own motion vs. State Coram: Manmohan & Sangita Dhingra Sehgal, JJ. Dated: February 28, 2020 This criminal reference was made with regard to lack of any law/ guidelines whereby the courts can seek the intervention of the Ministry of Home Affairs (“MHA”) and/or concerned Embassy/ High Commission/ Consulate for making necessary arrangements for


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recording of testimony of victims/ witnesses who are foreign nationals in cases of sexual assault, even when the victim is very much available and has offered to get her testimony recorded, urging that the issue needs an urgent redressal so that such cases do not result in imminent acquittal for want of recording of testimony of the victims/ witnesses and further that the case does not remain pending in the system inordinately. The comprehensive Guidelines regarding service of summons/ notices/ judicial process on persons residing abroad’ (“Guidelines”) issued by the MHA were revised and updated by the MHA on Mutual Legal Assistance in Criminal Matters (“the 2019 Guidelines”) to include a gamut of issues, including issuance of Letters Rogatory, mutual legal assistance requests, service of summons, notices, judicial processes, including request for video conferencing, protection, preservation of data and extradition requests. The Court clarified that the concerned authority in the matter is the MHA and not the Ministry of External Affairs (MEA) or any Indian Embassy or Consulate Abroad and also clarified that the MHA does not facilitate the execution of non-bailable warrants of arrest on an individual residing abroad and such requests are in the nature of extradition proceedings which ought to be forwarded to the MEA. The Court also issued the following practice directions for the trial courts:

• The trial courts ought to follow the

2019 Guidelines issued by the MHA;

• At the time of issuance of summons on a person residing abroad, the order of the trial court should also indicate whether evidence is to be recorded through video-conferencing;

• Since the MHA requires a minimum of 10 weeks for transmission of summons/ notices/ judicial processes on persons residing abroad and the process of establishing video-conferencing link can be established only after service is complete, the trial courts should fix a date for recording of evidence at least 12-13 weeks after its order issuing summons to the witness. The trial court should separately fix an intermediary date between the date of issue of summons and the date of recording of evidence, to seek confirmation from the prosecuting agency about the service of summons, and to seek details of the technical Coordinator of the Requested Country, along with details about the technical link required for video-conferencing;

• Based on the information obtained on the intermediate date, the trial court should direct its own Coordinator to establish contact with its counterpart in the Requested Country, to conduct a mock-test of the video-conferencing link prior to the date fixed for recording of evidence, and submit a report in this regard at least three days prior to the date fixed for recording of evidence. Thereafter the documents relied upon by the prosecution and the


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defence should be identified, scanned and numbered, and sent to the Coordinator in the Requested Country, under strict instructions of confidentiality. An identical set of the documents should be made a part of the Court record;

• If, for some reason, the Presiding Officer is unable to hold the Court on the date fixed for recording of evidence, he/she should ensure that the evidence is recorded by the Link Judge.

iii. The High Court of Madras

held that Corporate

Insolvency Resolution

Process is no ground for

quashing a complaint under

Section 138 of the Negotiable

Instruments Act, 1881 Ajay Kumar Bishnoi vs. Tap Engineering Coram: G.R. Swaminathan, J. Pronounced on: January 09, 2020 Brief Facts: This petition was filed for quashing the complaints instituted by Tap Engineering under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881 (“NI Act”), and for consequently directing the Complainant to pursue remedies as per the provisions of the Insolvency and Bankruptcy Code, 2016 (“IBC”). The case of the Complainant was that the Petitioner failed to honour the

cheques issued by him towards the goods supplied to the company in which he was a Managing Director. During the pendency of the complaints for dishonour of cheques, the company came under the Corporate Insolvency Resolution Process (“CIRP”) and an Interim Resolution Professional (“IRP”) was appointed and moratorium was declared in terms of Section 14 of the IBC. Vide order dated May 15, 2019, the National Company Law Tribunal (“NCLT”) declared that the resolution plan submitted by the resolution-applicant is binding on the corporate debtor, its members, employees, creditors and other stakeholders involved in the resolution plan. The resolution plan provided for a change in the management, and the control of the corporate debtor was to vest in the resolution-applicant. Contentions of the Petitioner: The Petitioner contended that in view of the acceptance of the resolution plan, the impugned prosecution against the Petitioner under Section 138 of the NI Act is liable to be quashed. It was pointed out that the resolution plan clearly states that all the outstanding negotiable instruments issued by the company prior to the CIRP, including cheques, shall stand terminated and the liability of the company and its employees shall stand extinguished, and all legal proceedings relating thereto shall stand irrevocably and unconditionally abated.


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It was also contended that the IBC is a self-contained enactment which has an overriding effect over other laws. Therefore, continuation of legal proceedings would only amount to an abuse of the process of law. Observations of the Court: Under Section 14 of the IBC, institution of suits or continuation of pending suits or proceedings against the corporate debtor, including execution of any judgment, decree or order, is prohibited. The question that needs consideration is whether the word “proceedings” will include criminal prosecution. In Section 233 of the IBC, which protects action taken in good faith, the words “no suit, prosecution or other legal proceeding” are employed. However, in Section 14 of the Code, only the words “suits or proceedings” are found. The word “prosecution” is conspicuously absent from the ambit of Section 14. The omission is, therefore, deliberate and intentional since the legislature did not intend to bar criminal prosecution even if moratorium is declared. The Court further went on to observe that where the proceedings under Section 138 of the NI Act had already commenced and during the pendency, the company gets dissolved, the directors and the other accused cannot escape by citing its dissolution. What is dissolved is only the company, not the personal penal liability of the accused covered under Section 141 of the NI Act.

Further, it is always open to the Petitioner to file an application for causing production of any document or examination of any witness. Merely because a new management has taken over the company which he earlier headed, the Petitioner cannot be deprived of access to any document that may bolster or reinforce his defence. Section 243 read with Section 247 (evidence for defence) of the Code of Criminal Procedure (Cr.P.C.) completely redress the apprehension expressed by the Petitioner. This petition, filed by the erstwhile Managing Director, is maintainable only to the extent that he can confine the relief to himself. The approval of the resolution plan is of no avail to him. It will fit the corporate debtor alone. The protective shield will not fit the erstwhile director at all as it was never designed for him. Held:

The Court declined to invoke its inherent powers under Section 482 of the Cr.P.C. in favour of the Petitioner, and dismissed the petition.


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