Clarification with regard to section 185 and 186 of the Companies Act, 2013 – loans and advances to employees

SECTION 185

LOANS TO DIRECTORS ETC.

Section 185 states that no Company shall, directly or indirectly, advance any loan, to any of its directors or to any other person in whom the director is interested or give any guarantee or provide any security in connection with any loan taken by him or such other person. One of the exemptions to this section is giving of any loan to a Managing or Whole-time Director as a part of the conditions of service extended by the Company to all its employees or pursuant to any scheme approved by the members by a special resolution.

 

SECTION 186

LOANS AND INVESTMENT BY COMPANY

Section 186 enables a company to give any loan, guarantee or provide security in connection with a loan to any person or other body corporate and acquisition of securities of any other body corporate not exceeding sixty percent of its paid-up share capital, free reserves and securities premium account or one hundred percent of its free reserves and securities premium account, whichever is more and if any loan or guarantee or providing any security or the acquisition exceeds the above mentioned limits, prior approval by means of a special resolution passed at the general meeting shall be obtained.

 

The aforesaid Sections did not lay down any specific requirements for cases where any loans and/or advances granted by companies to its employees (other than Directors) in the ordinary course of business, which is usual and most common across all industries.

The subject of deliberation was whether provisions of Section 186 of the Companies Act, 2013 apply to loans and/or advances granted by the company to its employees and therefore, addressing this issue, MCA has vide General Circular No. 04/2015[1] dated 10 March, 2015 clarified that loans and/or advances made by the companies to their employees, other than the Managing Director or Whole Time Directors (which is governed by Section 185) are not governed by the requirements of Section 186 of the Companies Act, 2013. This clarification will, however, be applicable if such loans and/or advances to employees are in accordance with the conditions of service applicable to employees and are also in accordance with the remuneration policy, in cases where such policy is required to be formulated.

[1]http://www.mca.gov.in/Ministry/pdf/Circular_04_10032015.pdf

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Business Transaction Disputes cannot be tried in Consumer Courts

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Business Transaction Disputes cannot be tried in Consumer Courts

Tamil Nadu State Consumer Disputes Redressal Commission, setting aside the order of the district forum held that-

Disputes over business transactions – where goods are purchased and services availed for commercial purposes – can’t be tried in a consumer court.”

It also said matters relating to criminal activities, breach of trust and cheating can only be filed before a criminal court.

Facts:-

Mrinal Spinning Mills, Coimbatore, a yarn manufacturer, had supplied goods worth Rs, 9.31 lakh to Sri Ambika Textile and Ramashankar Surgical in Chatrapti town of Virudhunagar district. Lakshmi Traders, the consignee, ordered the goods which were transported by Bannari Amman Transport. However, the goods were not delivered and the investigating report of the insurance company said they had been offloaded at some other place.

A case was filed against the transport company for cheating and against the two firms in Chatrapati town for “instigating the delivery of goods at their desired place.”

He also moved the district forum in Coimbatore asking the parties involved to refund the value of goods.

The district forum, in its verdict, held the transport company responsible and asked it to pay Rs. 9.31 lakh and a compensation of Rs. 50,000/-.

Verdict:-

In appeal, the Tamil Nadu State Consumer Dispute Redressal Commissionheld that on the basis of the insurance company’s report it was clear goods had been offloaded at another place at the instructions of the consignee.

Relying upon the decisions of the Supreme Court in Birla Technologies Ltd. versus Neutral Glass and Allied Industries Ltd.[1], in which it is observed as follows: “In case of goods purchased and services hired or availed of for commercial purposes, complaint before Consumer Disputes Redressal Forum is not maintainable”.

Again in Prahlad Sharma Vs. ICICI Lombard General Insurance Co. &Anr.[2]reported in, Supreme Court observed that: “such controversy would require voluminous oral and documentary evidence including cross examination of witnesses and also determination of inter-se liability of OPs to indemnify complainant- Complainant should be relegated to work out his remedy before Civil Court”.

The Forum observed that:-

  1. Disputes over the business transactions involving sale and purchase of good and provision of services cannot be tried in consumer courts.
  2. The matter relating to criminal activities regarding breach of trust, cheating etc., this complaint cannot be tried before the consumer commission.

 

[1]2011 (1) CPR (SC)

[2]2012 (2) CPR 293 (NC)

Supreme Court: Temporary Employees cannot claim their jobs to be made permanent

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Legal Position on Temporary Employees

Reiterating its view that daily wage workers or those employed on contract have no legal right to be absorbed in service, the Supreme Court in the case of Secretary to Government, School Education Department, Chennai (Appellants) vs. Thiru R. Govindaswamy and Ors.(Respondents)[1]yet again said that unless they are working against a sanctioned post, temporary employees cannot demand regularization of their services.

Theappeals were preferred against the impugned judgments and orders passed by the High Court of Madras, by which the High Court hadregularized the services of part-time sweepers. The bench consisting of Justice B. S. Chauhan and Justice A K Sikri, said that temporary service for a certain number of years cannot entitle an employee to claim regularization of his services.

Facts

The facts and circumstances giving rise to these appeals are:-

The Respondentswere appointed as part-time sweepers by School Education Department of Chennai (Appellant) from 1987 till 1993. As the Respondents had been working for more than 10 years, they filed several Writ Petitions before the High Court of Madras for seeking regularization of their services.

The said Writ Petitions were allowed by the common judgment and order dated 23.7.2012 with the direction to regularize the services of the Respondents on full time basis.

Anappeal was preferred in the Supreme Court by the School Education Department of Chennai.

While deciding the issues involved, the Court cited the judgment State of Karnataka and Ors. v. Umadevi and Ors.[2], wherein the court held as under:-

“There is no fundamental right in those who have been employed on daily wages or temporarily or on contractual basis, to claim that they have a right to be absorbed in service. Theycannot be said to be holders of a post, since, a regular appointment could be made only by making appointments consistent with the requirements of Articles 14 and 16 of the Constitution. The right to be treated equally with the other employees employed on daily wages, cannot be extended to a claim for equal treatment with those who were regularly employed. That would be treating unequal’s as equals.“

Position on Part-time Employees

Further the court in the case ofUnion of India and Ors. v. A.S. Pillai and Ors.[3], dealt with the issue of regularization of part-time employees and the court refused the relief on the ground that part-timers are free to get themselves engaged elsewhere and they are not restrained from working elsewhere when they are not working for the authority/employer. Being the part-time employees, they are not subject to service rules or other Regulations which govern and control the regularly appointed staff of the department. Therefore, the question of giving them equal pay for equal work or considering their case for regularization would not arise.

Further the Court also cited the judgment in State of Rajasthan and Ors. Vs. Daya Lal and Ors[4].wherein the Courthad considered the scope of regularisation of irregular or part-time appointments in all possible eventualities and laid down well-settled principles relating to regularisation and parity in pay as under:

  1. i.        Mere continuation of service by an temporary or ad hoc or daily-wage employee, under cover of some interim orders of the court, would not confer upon him any right to be absorbed into service, as such service would be ‘litigious employment’. Even temporary, ad hoc or daily- wage service for a long number of years, let alone service for one or two years, will not entitle such employee to claim regularization, if he is not working against a sanctioned post. Sympathy and sentiment cannot be grounds for passing any order of regularization in the absence of a legal right.
  2. ii.      Part-time employees are not entitled to seek regularization as they are not working against any sanctioned posts. There cannot be a direction for absorption, regularization or permanent continuance of part time temporary employees.

 

  1. Part time temporary employees in government run institutions cannot claim parity in salary with regular employees of the government on the principle of equal pay for equal work. Nor can employees in private employment, even if serving full time, seek parity in salary with government employees. The right to claim a particular salary against the State must arise under a contract or under a statute.

Relying upon the said judgments the Supreme Court allowed the appeal preferred by the Schools Education Department, Chennai. The court though did not want to disturb the services of the Respondents;hence the services of the Respondents which stood regularized were not to be affected.


[1] Decided on 21.01.2014

[2] AIR 2006 SC 1806

[3] (2010) 13 SCC 448

[4]AIR2011SC1193, [2011]1SCR707

THE RIGHT TO FAIR COMPENSATION AND TRANSPARENCY IN LAND ACQUISITION ACT, 2013

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In the sphere of land acquisition, where private property shifts hands, the Land Acquisition Act, 1894 continued to be the applicable law till very recently. With the enactment of the Right to Fair Compensation and Transparency in Land Acquisition Act, 2013 (hereinafter “the Act”), the earlier master Act was repealed by s. 114 of the Act. The new Act received Presidential assent on the 26th of September, 2013 and came into force with the coming into force of a new year, on the 1st of January, 2014.

The Land Acquisition Act, 1894 which was in force for more than a century, was a colonial piece of legislation, originally designed for British India. This Act was later on adopted for the rest of the nation, after independence.[1]With changing times and scenarios, the applicability of this Act assumed the form of a monstrous problem, as the provisions modeled according to the times gone by were exploitative of the farmers and the landowners.

The new Act purports to bring about transparency in the domain of land acquisition along with providing fair and just compensation to the families affected by the acquisition of their land. This objective of the new Act is evident from the Preamble to the Act,[2] which is starkly different from the Preamble of the Land Acquisition Act, 1894.[3] The new Act has expansive provisions which attempt to clarify the large ambiguous segments in the old Act.

  1. 1.                  PUBLIC PURPOSE

Land may be considered to be a scarce commodity with limited supply, making the ownership rights sacrosanct. The acquisition of private land for public purposes is a well established power of the sovereign.[4] The concept of land acquisition is referred to as eminent domain in America, but although the terminology used might be different, the essential requirement of the existence of a public purpose is common.One of the most debatable issues under the Land acquisition Act 1894 was the interpretation of ‘public purpose’ around which disputes concerning acquisition revolve. A conjoint reading of s. 3(za) and s. 2(1) displays the manner in which the Act elaborately defines “public purpose”.

This may be considered to be an attempt to perform a clean-up act of the mess created by the old Act, as a large number of cases related to the old Act revolved around the interpretation accorded to this ambiguous phrase. The Standing Committee stated that the definition in the old Act was scattered and the new Act attempts to streamline it.

1.1       Open issues

The gaping flaw which still remains is the non-exhaustive nature of the definition of public purpose. By making the definition inclusive in nature, the State has been given a wide window to exercise discretion regarding the definition. The State continues to be the intermediary in this field, exercising its discretion and in effect, the Act does not bring about any major improvement over the Act of 1894 in the interpretation accorded to public purpose. The use of phrases such as “for planned development or improvement” to lay down a definition of public purpose can be twisted and moulded in a manner which suits the State, and leaves a lot to be desired. A narrow and restrictive definition as contemplated in the Land Acquisition (Amendment) Bill, 2007 would have served the purpose better.

  1. 2.      SOCIAL IMPACT ASSESSMENT

The Act attempts to minimize the social backlashes by conducting a social impact assessment before the act of acquiring land. The possible effects of such acquirement can thus be gauged. The involvement of the local bodies such as Panchayats and Gram Sabhas is a new development. The Preamble itself lays down this objective of the Act to bring about transparency and to provide fair and just compensation, by developing a consultation mechanism with the members of these local bodies. Section 4 of the Act uses the word ‘shall’. Thus, it mandates that the social impact assessment be conducted in consultation with the Panchayat, Municipality or the Municipal Corporation. The report is also supposed to be presented before these bodies in accordance with the provisions of the Act. The members of these bodies are also to find representation in the Expert Group which shall be constituted for the review of this report.

2.1       Open Issues

As is the case with every step, there also exists the possibility of a negative impact of giving this power to the members of local bodies. The scope for corruption in the form of bribery and influence over the members of the local bodies is a serious possibility, for not only getting an assessment in favour of land acquisition, but also against it.The Act also stops short of laying down the procedure to be followed in case the local bodies do not approve of the project. This raises a question over whether this representation and consultation of the local bodies is a mere formality or can they actually make their voice and grievances heard. The fact that the State can go on with the acquisition despite a negative report of the Expert Committee clearly indicates that the final say lies with the State itself.

  1. 3.      LAND ACQUISITION AND FOOD SECURITY

A major problem related to the Land Acquisition Act, 1894 was the reckless manner in which the urgency clause of the Act was used by the Government to acquire agricultural land for non-agricultural purposes. The Apex Court relied on the report of the National Commission on Farmers in the case of Raghbir Singh Sehrawat v. State of Haryana,[5] to observe that such recklessness could imperil the food security of the nation. The new Act has special provisions to prevent the land acquisitions from turning into a threat to the food security of the nation. The Act specifically prohibits the acquiring of irrigated multi-cropped agricultural land. Though exceptional circumstances may justify such acquirement, s. 10(3) requires that an equivalent area of cultivable wasteland be developed for agricultural purposes.

3.1       Open issues

Although, these special provisions do exist, the exclusion of single crop lands does not bode well for the food security. The Apex Court’s fear seems real as the land acquisitions threaten to circumvent the mandate of s. 31 read with Schedule III of the Food Security Act, 2013, prohibiting the transfer of agricultural land for non-agricultural purposes.

  1. 4.      CONSENT

The concept of acquiring the consent of the affected families is also new in the field of land acquisition. The Act of 2013 requires the consent of eighty percent of the affected families in the cases of acquisition for private companies and seventy percent in the case of public private partnership projects.

4.1       Open issues

The importance being given to the voice of the land owners is a positive step, but the requirement of such a high percentage of affirmative responses is unreasonable. This requirement may end up making the land acquisition process lengthy and may jeopardise projects of strategic importance.

  1. 5.      COMPENSATION

While the old Act left the calculation of compensation to the discretion of the Collector based upon certain factors provided in ss. 23 and 24 of the old Act, the new Act has well marked out guidelines for compensation calculation. While the amount of compensation under the new Act is much more than the old Act due to the multiplication factor provided for in the Schedule to the Act, it also provides for a solatium fund under s. 30. The Act further looks towards the welfare of the people who have been displaced twice, by providing additional compensation in cases of double displacement.

5.1       Open issues

The hype regarding the compensation to be paid is well founded. The sliding scale provided for in Schedule I of the Act, a determination to be made by the appropriate Government again ends up creating an ambiguous situation where State discretion trumps again.

  1. 6.      REHABILITATION AND RESETTLEMENT

Finally, the most important and major difference between the two Acts are the provisions related to Rehabilitation and Resettlement which have also been incorporated in the new Act. The Act links the land acquisition and the obligations that arise out of it in the form of the need for resettlement and rehabilitation of the affected people. The 2013 Act contains five detailed chapters and two Schedules explaining the processes related to the Rehabilitation and Resettlement of people.

6.1       Open issues

The major flaw in the attempted rehabilitation and resettlement of the affected families is that the Act only makes provisions for monetary compensation and has no provisions for providing the individuals with employment opportunities.[6] In such a scenario, the Act cannot be considered to be bringing rehabilitation in its ambit. It is only restricted to resettlement.[7]

  1. 7.      CONCLUSION

The Act can be considered to be an attempt to end the exploitative regime of the Act of 1894. Though the Act has made an attempt to bring about certain welcome changes, it continues to have loopholes and its proper implementation is imperative. Presently, the Act is like an arrow which has just been shot. Whether or not it will hit the bull’s eye remains to be seen.


[1]Government of India, 10th Law Commission Report on the Law of Acquisition and Requisitioning of Land, p. 3, 1958.

[2]An Act to ensure, in consultation with institutions of local self-government and Gram Sabhas established under the Constitution, a humane, participative, informed and transparent process for land acquisition for industrialisation, development of essential infrastructural facilities and urbanisation with the least disturbance to the owners of the land and other affected families and provide just and fair compensation to the affected families whose land has been acquired or proposed to be acquired or are affected by such acquisition and make adequate provisions for such affected persons for their rehabilitation and resettlement and for ensuring that the cumulative outcome of compulsory acquisition should be that affected persons become partners in development leading to an improvement in their post acquisition social and economic status and for matters connected therewith or incidental thereto.

[3]An Act to amend the law for the Acquisition of Land for public purposes and for the companies.

[4]Supra note 1atp. 1.

[5](2012) 1 SCC 792.

[7]Ibid.

Minimum Monthly Pension Plan approved by Finance Ministry

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Minimum Monthly Pension Plan approved by Finance Ministry

The Finance Ministry has approved a proposal for providing a minimum monthly pension of Rs 1,000/-(Rupees one thousand only) to workers in the organised sector under the Employees’ Pension Scheme 1995 (“EPS-95”) run by The Employee Provident Fund Organisation (EPFO).1 The proposal by the Labour Ministry had been pending for long and was finally approved by the Ministry on 23rd January, 2014.

The Central Government formulated an Employees’ Pension Scheme, 1995 in exercise of the powers conferred by Section 6A of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952),. The Employee Pension Scheme is a publicly managed scheme carved with the objective to pay the workers’ defined benefits on their retirement.

In order to facilitate the implementation of the monthly pension plan the government will provide an additional subsidy of Rs. 1,217 crore starting 2014-15. Hence the pensioners may get the benefit of the said plan with effect from April, 2014.

Prior to this plan the Labour Ministry had proposed to the government that the government should increase subsidy for the Employee Pensions Scheme from 1.16% of basic wage to 1.79% in order to ensure the minimum pension. However, the said plan was not favoured by the Finance Ministry as this would have resulted in a permanent increase in subsidy.

The Labour Ministry in its revised proposal had asked the Finance Ministry to provide for around Rs 1,217 crore additional amount every year, and indicated that this amount can come down over a period of time with more members subscribing to EPS-95. The said proposal finally got approved by the Finance Ministry as minimum monthly pension plan.

However, the Labour Ministry is yet to decide whether this proposal requires the approval of the Cabinet.

1 The EPS and EPF Scheme under the EPFO is mandatory for private firms with over 20 employees. This is a blend of a defined contribution (DC) system called the Employee Provident Fund (EPF), and a defined benefit (DB) system called the Employee Pension Scheme (EPS)

Aside

Minimum Monthly Pension Plan approved by the Finance Ministry

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Minimum Monthly Pension Plan approved by Finance Ministry

The Finance Ministry has approved a proposal for providing a minimum monthly pension of Rs 1,000/-(Rupees one thousand only) to workers in the organised sector under the Employees’ Pension Scheme 1995 (“EPS-95”) run by The Employee Provident Fund Organisation (EPFO).1 The proposal by the Labour Ministry had been pending for long and was finally approved by the Ministry on 23rd January, 2014.

The Central Government formulated an Employees’ Pension Scheme, 1995 in exercise of the powers conferred by Section 6A of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952),. The Employee Pension Scheme is a publicly managed scheme carved with the objective to pay the workers’ defined benefits on their retirement.

In order to facilitate the implementation of the monthly pension plan the government will provide an additional subsidy of Rs. 1,217 crore starting 2014-15. Hence the pensioners may get the benefit of the said plan with effect from April, 2014.

Prior to this plan the Labour Ministry had proposed to the government that the government should increase subsidy for the Employee Pensions Scheme from 1.16% of basic wage to 1.79% in order to ensure the minimum pension. However, the said plan was not favoured by the Finance Ministry as this would have resulted in a permanent increase in subsidy.

The Labour Ministry in its revised proposal had asked the Finance Ministry to provide for around Rs 1,217 crore additional amount every year, and indicated that this amount can come down over a period of time with more members subscribing to EPS-95. The said proposal finally got approved by the Finance Ministry as minimum monthly pension plan.

However, the Labour Ministry is yet to decide whether this proposal requires the approval of the Cabinet.

1 The EPS and EPF Scheme under the EPFO is mandatory for private firms with over 20 employees. This is a blend of a defined contribution (DC) system called the Employee Provident Fund (EPF), and a defined benefit (DB) system called the Employee Pension Scheme (EPS)

Sexual Harassment of Women at Workplace- Rules

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Sexual Harassment of Women at Workplace- Rules

After the Sexual Harassment of Women at Workplace (Prevention, Prohibition And Redressal) Act, 2013 received presidential assent on 23rd April, 2013, the Sexual Harassment of Women at Workplace (Prevention, Prohibition And Redressal) Rules, 2013 have  finally been notified in the Gazette of India, Extra ordinary on 9th December, 2013 and the same has come into force on 9th December, 2013.

The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 is a legislative act in India that seeks to protect women from sexual harassment at their place of work. This act was introduced in furtherance of the guidelines and norms laid by the Hon’ble Supreme Court in the case of Vishaka Vs. State of Rajasthan.[1]In the absence of any law in India, the court had formulated effective measures to check the evil of sexual harassment of working women at all work places.

As per the Act, it is compulsory for each employer of a workplace to have an Internal Complaints Committee. This Internal Committee would consist of the following members:

  1. A presiding officer who shall be a woman employed at the senior level at the work place;
  2. Two members from amongst the employees preferably committed to the cause of women or have experience in social work or have legal knowledge and
  3. One member from amongst non-governmental organizations or associations committed to the cause of women or a person familiar with the issues relating to sexual harassment.

The Committee shall be responsible for conducting an inquiry into complaints made by the aggrieved woman and arrive at a conclusion as to whether the allegation against whom the complaint has been filed is proved or not. The Committee shall also make recommendations with respect to the actions that can be taken against the accused person.

By virtue of introducing the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Rules, 2013, the Central Government has inter alia laid down the mechanism for the redressal of complaints in an organization.

With respect to the constitution of the Internal Complaint Committee, the rules provides that a person familiar with the issues relating to sexual harassment shall be a person who has expertise on issues relating to sexual harassment and includes a social worker with an experience of at least 5 (five) years in the field of social work or a person who is familiar with labour, service, civil or criminal laws.

The Rules further provide that if the aggrieved person is unable to file the complaint directly on account of mental or physical incapacity a complaint may be filed by a relative, friend, co-worker, officer of the National Commission of Women or State Women Commission or any other person who may have knowledge of the incident as mentioned in the rules in the event of any mental. For any other reason, the complaint may be filed by a person who has knowledge of the incident with her written consent. In the event of death of the aggrieved woman, any other person can file the complaint with the consent of her legal heir.

The Rules further provide the manner in which the inquiry is to be conducted by the Internal Complaints Committee.

During the pendency of the inquiry, the Internal Complaint Committee may on the request of the aggrieved woman recommend the employer to restrain the respondent from reporting or supervising the work performance of the aggrieved woman.

The Committee is also required to prepare an annual report containing details pertaining to:

  • the number of complaints of sexual harassment in the year, number of complaints disposed off or pending in a year;
  • number of workshop conducted by the Employer; and
  • nature of action taken by the employer.

The rules further provide the manner in which workshops and awareness programs are to be organized by an employer of an organization.

If there is any publication or disclosure of the contents of the complaint and the enquiry proceedings by any person, a sum of Rs. 5,000/- shall be imposed as a penalty upon such person

How can Patanjali Associates service you?

In view of the above, we can service you by providing:

  1. Assistance in constituting an Internal Complaint Committee (ICC);
  2. A lady lawyer as member of the Committee;
  3. Assistance in conducting the meetings of ICC to hear the complaints of women employees;
  4. Assistance in creation of documentation/minutes of the meetings etc.;
  5. Assistance in forming inquiry committees to investigate/enquiry of sexual harassment;
  6. Assistance in coordinating and interacting to formulate monitoring mechanisms on the functioning of the ICC;
  7. Assistance in bringing out the final reports concerning sexual harassment issues brought before ICC;
  8. Assistance in preparation of Annual Reports;
  9. Creating a friendly atmosphere at workplace where employees irrespective of genders can work together.

[1] (1997) 6 SCC 241

DISSOLUTION OF DISTANCE EDUCATION COUNCIL

INTRODUCTION                                                                                                                

The Ministry of Human Resource Development (MHRD) dissolved the Distance Education Council (DEC)[1] of IGNOU[2] and entrusted University Grants Commission (UGC) with the responsibility of managing and regulating the operations of Open and Distance Learning (ODL)[3] as notified by MRHD vide a notice dated 28th May, 2013.

BACKGROUND

The DEC under Indira Gandhi National Open University (IGNOU), was the apex regulatory body for distance education offered by universities across the country. It regulated the affairs related to the Distance Learning such as giving affiliations and approvals to the Distance Education Centers or Courses. The Notification[4] dated 4th May, 2013 repealed Section 28 of the IGNOU Act, 1985 under which the DEC was established, thereby dissolving DEC with immediate effect.

DEC[5] was constituted for the purpose of co-coordinating and promoting the open universities and the system of distance education and maintaining its standards in the country. It was empowered to take all the steps necessary to promote the open and distance learning. DEC had its head quarters at New Delhi[6].

However in the year 2009 a tripartite committee was set up by the MHRD comprising of DEC-UGC and AICTE (All India Council for Technical Education). All the distance learning programs and courses offered by the universities were required to be approved by the committee. The confusion prevailed among the Universities regarding whether the approval granted by DEC amounted to the approval by the Committee.

The Ministry of HRD, government of India has now entrusted all the responsibilities of Open and Distance Learning (ODL) education system in the country upon UGC. UGC is now the sole authority governing and regulating the Distance Education system in the country. UGC in the meantime is working on development of appropriate regulations for maintaining standards in ODL programs and has asked the Universities to abstain from giving further approvals or affiliations to the ODL centers or courses unless the regulations made by UGC are notified and are in full effect.

IMPACT

The move has been appreciated as a good move in the interest of the Distance Learning and Education. UGC[7] is being considered as the suitable statutory body and being appropriately empowered to regulate and maintain the Distance Education and the approvals and affiliations related to distance learning centers and courses. DEC was a toothless tiger with limited power to regulate the Distance Learning Courses and Universities. It could only issue guidelines or give advice to the State Government.[8] It had no power to take any necessary action in case any university commits default. The guidelines issued were not binding upon the parties. On the other hand UGC has a unique distinction of being only grant giving agency in the country. It has been empowered to grant[9] or withhold grants to be awarded to any University on the grounds of it being not fit to receive grants.[10] It has the power to make regulations and the Universities.

FUTURE EXPECTATIONS

There is a large proliferation of courses covered by distance mode without adequate infrastructure, both human and physical and it is difficult to regulate all the courses. There is a strong need to correct these imbalances. UGC being adequately empowered to maintain and regulate the functioning of the Universities in India is expected to correct the shortcomings in the distance education system. This step of dissolution of DEC will also make UGC the sole body granting the approvals thereby removing the confusion created due to establishment of tripartite committee.


[1] The Distance Education Council (DEC), was an authority of IGNOU co-coordinating 13 State Open Universities and 119 institutions of correspondence courses in conventional universities.

[2] At higher education level, Indira Gandhi National Open University (IGNOU) co-ordinates distance learning. It has a cumulative enrolment of about 15 lakhs, serviced through 53 regional centres and 1,400 study centres with 25,000 counsellors.

[3] First open university was started in 1982 and National Open University of India was started in 1985, then IGNOU Act was brought into effect in 1985

[4] The Section 40 (2) of the IGNOU Act states that – Every Statute, Ordinance or Regulation made under this Act shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or successive sessions aforesaid, both Houses agree in making any modification in the Statute, Ordinance or Regulation or both Houses agree that the Statute, Ordinance or Regulation should not be made, the Statute, Ordinance or Regulation shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that Statute, Ordinance or Regulation

[5] It was declared as an authority of IGNOU under Section-16 of the IGNOU Act, 1985.

[6] IGNOU Act was amended and the amendment came in force in 1997 regarding the headquarters of IGNOU.

[7] UNIVERSITY GRANTS COMMISSION is a recommendatory body set up by the central government to make suggestions for improvement in the higher education system in the country. It also disburses financial grants as per norms and benchmarks to Universities and Colleges. UGC maintains Universities and Colleges. UGC maintains a list of courses with eligibility and duration that are called “nomenclature”, this has to be adhered to by all Universities while conducting programs and awarding degrees.

[8] Statute 26 of IGNOU Act, 1985

[9] Section 12 (a) (b) (c) of the UGC Act, 1956.

[10] Section-12 A of the UGC Act, 1956.

CRACK DOWN ON FOREIGN FUNDING IN NGOs IN INDIA

The foreign contribution act, 2010 (FCRA, 2010) is a ratification that is rather unknown.

It was felt that the former act of 1976 (FCRA, 1976) required an absolute repair as it had been unsuccessful to maintain swiftness with the shifting visage of the Indian economic growth. In fact, there was a lobby that felt that the law had outlived its utility and needed to be scraped. Chiefly after the prologue of the Prevention of Money Laundering Act, 2002, it was considered that FCRA did not dole out any significant rationale.

In this article we will discuss the basic provisions of FCRA 2010 with particular spotlight on the alterations brought about and its effects on NGOs and resolutions.

The basic purpose of FCRA 2010 as mentioned in the preamble to the act is “to consolidate the law to regulate the acceptance and utilization of foreign contribution or foreign hospitality by certain individuals or associations or companies and to prohibit acceptance and utilization of foreign contribution or foreign hospitality for any activities detrimental to the national interest and for matters connected therewith or incidental thereto.”

The affirmed purpose of the Act is to control and proscribe recognition and employment of foreign involvement for any activities unfavorable to national interest. As such the provisions of FCRA 2010 can be largely classified in the subsequent three sorts:

(1) Prohibition on certain persons from accepting foreign contribution.

(2) Restriction on certain persons from accepting foreign hospitality.

(3) Regulating the acceptance of foreign contribution by persons having a definite cultural, economic, educational, religious or social program. NPOs are covered under this category.

Comportment of the Act

The organizations on the lookout for foreign backing are now required to acquire registration and aforementioned authorization from the Ministry of Home Affairs by making application in the set format and endowing details regarding the activities of the Organization and the financial records. This act has fetched the Foreign Funding of the NGOs registered in India under scrutiny by the Central Government. The Ministry of Home Affairs has been authorized under Section-9 of the Act to forbid any institution from receiving foreign funding on several grounds stated therein. The organizations are required to have a track record of three years of its activities prior to obtaining permission from the Ministry.

The brunt was felt when the endowment to several NGOs were inquired and even cancelled or barred under this Act by the bureau affirming the safeguarding of public interest as the rationale following such annulment. The government lately revoked permissions of more than a dozen NGO’s to obtain contributions from foreign sources and the request of about 4000 small NGOs were turned down on the argument of non realization of reporting requirements under FCRA.

Denigration of the Act

Under the Rule 3(vi) of the FCRA the government can exclude any group which organizes bandhs, or strikes to support their demands. Under Section-13 of FCRA the government has got the power to suspend the certificate of registration by any NGO for any reasons in writing. Hence this section gives a blanket power to the government to suspend the registration of any NGO. Ironically Insaaf[1] an NGO which petitioned in Supreme Court against Section -13 for giving an unimpeded power to the Central Government was suspended under that very provision.

Solutions for the NGOs

The FCRA 2010 is on the whole an old wine in a new bottle. In a lot of respects the provisions have been made far more rigorous than what they were under FCRA 1976. Philanthropy is embedded in the Indian consciousness and a cosmic number of organizations do yeoman work, they serve the most indispensable problems of the neediest of the needy, where government tackle has mournfully failed. Such organizations need to be buoyant and endowed with a scaffold where they can function competently and successfully. Conversely the actuality is that charitable trusts have found themselves beleaguered from numerous sides in current years. It is ill-fated that for the misdemeanors of a few, all charitable entities have to covenant with castigatory legislation. The Foreign Contribution Regulation Act, 2010 is one more of such regulations that is only going to add to the already arduous burden that such trusts have to tolerate.

For healthy and a smooth execution, we hence suggest the NGOs to:

  • Keep a track record of the three years of its activities prior to obtaining approval from the ministry.
  • File annual returns before the authority under this Act.
  • Maintain all the regulatory requirements and compliances required under the Act.

[1] Insaaf is a coalition of 700 organizations active in anti-communal mobilizations, anti-displacement struggles, and campaigns against destructive projects such as Posco, Koodankulam Vedanta, and Special Economic Zones.

The potential impact of Apple’s Legal Victory over Samsung – An analysis -Intellectual Property

The last month witnessed Apple’s legal victory over Samsung in the high profile intellectual property infringement battle between the two technology giants. The US jury has awarded Apple damages of US $1.05 billion after it found that Samsung has copied critical features of the i-phone and i-pad.

The attorneys of Apple Inc by the use of demonstrative evidence (bearing in mind the complexity involved in intellectual property infringement cases) were able to prove that vast majority of Apple’s patents (both utility and design) were infringed. In addition, they were also able to prove that Samsung products has diluted also infringed the trade dress of i-phone 3G .They were able to convince the jury that trade dress of phone is distinctive and it that Apple has a  common law right over the unregistered trade dress of iphone -3G due to its continued use of it.

In the next hearing in December the jury might pass injunction orders preventing future sales and import of infringing products of Samsung if Apple is able to prove that it will suffer irreparable harm if permanent injunction is not granted.

The verdict  is not only a victory for Apple and defeat for Samsung , it is likely to affect Corporate world at large. The judgement is likely to make the Companies more cautious. Today even the smallest of innovation in smallest of the detail in the product can be patented. For eg.  in this case zooming on a picture by spreading two fingers was an Apple patent Samsung had infringed on.

In the near feature we could expect to see more companies filing patents for smallest  innovation. The value of intellectual property has gone up tremendously and this verdict demonstrates that even the smallest patent can have very large value.

Companies while strategizing will also have to consider how much they want their product to look like their competitor’s product in terms of shape and size. International IP protection has become a key component of the offensive and defensive strategy of big multinational companies and has become a matter of their corporate survival.

In a world where larger companies are laying their hands on every small innovation, the smaller companies find themselves to be trapped. The smaller companies are exposed to competition in the foreign market which this hampers their ability to grow large scale.

But it is the small companies and start-ups who are aspiring  to grow in international markets  and maximize the profits are bearing the brunt of this development in the corporate world as they do not have the resources to file patents internationally or hire international law firms as the procedures for filing patent application is complex. Since if there is no intellectual property protection there is no intellectual property infringement.

This problem can be solved if the smaller companies and start – ups strategies their intellectual property protection intelligently. The first step is that these companies should sit with expert IP counsels and identify all of their Companies intellectual property. Then they need to come up with an effective scheme for IP protection based on their budget.

An expert IP counsel can guide these companies on the kind of IP protection the company requires, they can make these companies identify which of their IP can be sold or licensed to a third party and thereby become a source of revenue for the company. They can also assist these companies in prioritizing the countries in which they need to file IP application and also educate them whether a foreign country has laws affecting their technology.

(Patanjali Associates is a full service law firm  with a strong team  of intellectual property  lawyers expert in making IPR schemes for clients in media , education , hospitality e-commerce and start ups in FMCG sector .)