Indian Copyright Law

Ravi Singhania


22/08/2017  

LEGISLATION AND REGULATION
What are the main sources of copyright law?

 

The Copyright Act, 1957 (the “Act”), supported by the Copyright Rules, 1958 (the “Rules”), is the governing law for copyright protection in India. Substantial amendments were carried out to the Copyright Act, in May 2012.

 

India follows common law legal system thus relies on case laws to interpret and set precedents in law. As a result there are a number of judicial decisions that contribute to the sources of copyright law in the India.

 

India is a member of the Berne Conventions and Universal Copyright Convention. The Government of India has also passed the International Copyright Order, 1958. According to this Order, any work first published in any country – which is a member of any of the abov conventions – is granted the same treatment as if it was first published in India.

SUBSISTENCE OF COPYRIGHT

What type of works can be protected by copyright?

Copyright subsists throughout India in the following classes of works:

Original literary, dramatic, musical and artistic works; Cinematograph films; and Sound recordings.

These are the broad categories, and can be summarised as follows:

LITERARY WORKS

The term ‘Literary works’ covers works that are in print or writing, irrespective of the quality of style of the work. Literary work refers not only to works of prose and poetry, but anything that would be under the ambit of ‘literature’. However, there will be no copyright if the work is merely a collection of words, the collection of which involved no literary skill. In India, a computer programme is treated as a “literary work” and is protected as such.

DRAMATIC WORKS

A dramatic work includes any piece for recitation, choreographic work or entertainment in dumb show, the scenic arrangement or acting form of which is fixed in writing or otherwise but does not include a cinematograph film.

MUSICAL WORKS

Musical work means a work consisting of music and includes any graphical notation of such work but does not include any words or any action intended to be sung, spoken or performed with the music. A musical work need.

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Validity of invocation of bank guarantee to be judged on facts of each case: Supreme Court

Ravi Singhania


22/08/2017  

Legitimacy of invocation of bank guarantees has always been a bone of contention between the parties who have entered into commercial arrangements. While the general view of the courts in India has been that invocation of bank guarantee should generally be not interfered by the courts when challenged, as it will defeat the purpose of such guarantees in commercial contracts. However, there is no dearth of judicial pronouncements against invocation of bank guarantees albeit in exceptional circumstances.

A bank guarantee is a written contract given by a bank on behalf of its customer. By issuing this guarantee, a bank takes responsibility for payment of a sum of money in case, if it is not paid by the customer in performance of its contractual obligations.

There are two types of bank guarantees:

  • Unconditional bank guarantee- In anunconditional bank guarantee, the bank/guarantor has to pay the guarantee amount to the beneficiary in whose favour the bank guarantee has been issued on demand, irrespective of any pending disputes;
  • Conditional bank guarantee- In a conditional bank guarantee, the bank/guarantor has to pay the guarantee amount to the beneficiary in whose favour bank guarantee has been issued on demand, only after the specific conditions for invocation in the contract are fulfilled.

The law with respect to the grant of injunction against invocation of bank guarantee has been settled by catena of judicial pronouncements. Courts have consistently held that an unconditional bank guarantee, which is an independent agreement between beneficiary and the Bank, can be invoked by the beneficiary, regardless of the disputes between the beneficiary and principal obligation (i.e. the party on whose behalf the bank guarantee has been given).

It is a settled position that invocation of unconditional bank guarantee cannot be stayed by the courts except

  • In case of fraud which would destroy the very purpose for which such bank guarantee was issued
  • In a case where encashment of the bank guarantee would result in irreparable harm or injustice to one of the parties concerned. In view of the aforesaid settled position, a party seeking stay against invocation of the bank guarantee used to find it very difficult, nay impossible, to obtain favourable order.

However, in its recent pronouncement, the Hon’ble Supreme Court of India seems to have made a paradigm shift by holding that each case of injunction against invocation of the bank guarantee has to be decided with reference to the facts involved therein. The Apex Court in Gangotri Enterprises v. Union of India held that while there can be no quarrel to the proposition laid down in the cases pertaining to encashment of bank guarantees, the same would not be applied in every case. Holding that the in the case in hand, law laid down in the case of Union of India Vs. Raman Iron Foundry was applicable, the apex court reversed the judgment of Allahabad High Court which declined to grant injunction against invocation of bank guarantee by beneficiary party.

The present ruling of the Supreme Court has widened the so far restrictive parameters with which a case of grant of injunction against bank guarantees were being consider by the courts. The Apex Court has held that facts and circumstances of the case have to be considered and the court has not to apply or follow the general propositions relating to bank guarantee cases, regardless of the facts peculiar to each case. The judgement suggests that invocation of bank guarantee is not justified merely because the party invoking the bank guarantee has some claim of damages against the party who furnished the bank guarantee. It has been held that a claim for damages is not a crystallised or ascertained amount or a sum due and payable in praesenti( meaning ‘at present’), therefore invocation of bank guarantee would not be justified on the basis of such claim which are yet to the decided by the competent forum. The court further held that bank guarantee given for searching the performance of one contract cannot be invoked for claims or disputes in another contract between the same parties. This judgment has to some extent diluted the position that an unconditional bank guarantee can be invoked regardless of the dispute between the beneficiary and the principal obligation. The Supreme Court in some ways has supplemented to the line of authority of judgments against invocation of bank guarantee by beneficiary like the Hindustan Construction Co. Ltd. v. State of Bihar, which held that the invocation of bank guarantee will have to be strictly in accordance with the terms of the contract/Bank guarantee deed.

This judgement of Gangotri Enterprises will certainly come to the rescue of litigants, primarily contractors executing work under contracts awarded by government agencies and the said agencies were exercising unbridled discretion in the matter of encashment of bank guarantees furnished by the contractor. A general belief that bank guarantees can beencashed irrespective of the main dispute between the contractor and the department, or for covering the claims for damage, which are yet to be crystallized, has been set right but this judgement. Therefore, whenever any party would seek to encash the bank guarantees provided by other party to the contract on the basis of their claims of damages, such an attempt would not be successful as a claim of damages is not a sum due and payable in present. Similarly, bank guarantee given for one contract cannot be encashed for breaches/disputes concerning to another contract.

Comments on Indian GST Reform 2016

Ravi Singhania


22/08/2017  

  1. Undoubtedly the passing of the GST Constitutional Amendment Bill by Rajya Sabha is a landmark in the annals of India’s fiscal reform after independence. It is bigger than the tax reform by Raja Chelliah and Manmohan Singh, and the introduction of VAT in 2004. The Goods and Services tax unifies the Indian market for goods and services into a single market with a common tax code and hopefully a single rate (18 % RNR) on a pan India basis. It removes the barriers to the movement of goods and services within India.
  2. The tax system and administration will also be based on a superior tax design and uniform threshold limits for covering the maximum units of tax payers in the system to expand the tax base to support lower and moderate tax than an extortionate tax system. Hopefully India will hold fast to a moderate tax regime to curb the inflationary impact of a higher GST rate. To make the Indian export in the global market competitive this is a must. This has been a selling point for the GST reform which can be a game changer only if it makes our export internationally competitive.
  3. Services which constitute over 50 % of the GDP are bound to become more expensive with a higher rate of GST and this is a forbidding thought for consumers of services both at an industry and individual level. The actual impact is difficult to express at this stage.
  4. On the contra side, a poorly administered GST with the state-machinery working at cross- purposes would defeat the purpose of a single code and single rate and uniform interpretation. The dual system of GST which means a two tier Central and State assessments and collection and initiation of audits and refund processes, is fraught with the risk of local distortion in individual States and the tax payer may yet suffer from an inefficient, untrained and corrupt tax administrators. The pain of transition to a new system has been felt in Malaysia which also adopted GST recently, and the Indian experience may be hit by our own unique set of problems.
  5. The GST operates through an IT Infrastructure which is likely to be implemented and go through trial runs only after the legislations have been finally passed by the States. This is a critical component and how quickly the tax paying companies and other entities doing business can mesh their own systems into GSTN is a question of adopting new systems all across the country. One can only be optimistic and hope for the best at least in the short to medium term.
  6. Finally, the entire ecosystem in the manufacturing and service supply chain has also to fit into the requirements of GST and how quickly this is done by all the stakeholders will be a challenge that should not be underestimated for the smooth transition and implementation of the GST.
  7. It is best to avoid euphoria and to prepare for a checklist of what can go wrong so that all the players, and above all the Central and State governments, are willing and ready to intervene when bottlenecks and hurdles are encountered. This is a huge experiment on a huge scale and tax administration must be prepared to assist tax payers without the old suspicions of the past and in a genuine spirit of understanding. Remember, implementation is the key as industry and business would need a period of trial and error to adapt their systems and unless approached in the right sprit, businesses may suffer.

Legal Due Diligence In Real Estate Transactions

Ravi Singhania


22/08/2017  

Introduction

Legal Due Diligence in a real estate transaction is an investigation of real estate property records and anything else deemed relevant to the sale, purchase, lease or mortgage of the property. In other words, it refers to the reasonable measures which every individual shall adapt before executing an agreement in relation to the real estate/ immoveable property. This is for the purpose of making them aware of the risks involved in the transaction and minimizing them in consonance with the parties’ requirements.

In the current scenario, legal due diligence is an important component of a transaction involving sale, purchase or mortgaging the immoveable property to any Financing Institutions (“FI’s”). However, in India, the procedure of property acquisition and land due diligence is extremely time consuming and complicated, due to the involvement of various regulatory authorities, State specific laws and judicial precedents. It is pertinent to analyze certain issues in relation to the real estate property such as ownership title, legality of development & construction, permitted use, easements and encumbrances which have the potential to influence the essential attributes of the real estate property and its suitability to the transaction.

The process of legal due diligence involves preparing a checklist in accordance with various state jurisdictions and legislations, scrutinizing litigations pending against the immovable property, encumbrances/ charges, easements and registrations/ authorizations with the competent government authorities. This due diligence exercise is to be categorically conducted to procure a crystal clear vision on the preceding title of ownerships of the real estate property with all permitted uses, encumbrances/ charges, compliance of statutory requirements, restrictions vested in the property and modus operandi to overcome obstructions, if any.

The Legal Due Diligence of a real estate property can be performed in two ways i.e. Full Search or Limited Search. Both methods furnish a comprehensive and complete search of all components of a real estate property such as the chain of preceding title ownerships, encumbrances/ charges (mortgage or lien), statutory compliance or authorizations, easement rights, pending judicial proceedings, if any, and the course of action to resolve such disputes. The only variation between the two searches is the tenure of search carried out in Full Search is usually between 30 (thirty) years to 99 (ninety nine) years or as prescribed by the FI’s. In contrast, the tenure of search for Limited Search is restricted to 15 (fifteen) years.

Key components of Legal Due Diligence

The due diligence normally involves tracing of the title verification of the present and preceding owners, any encumbrance/ charges and state specific legislations impacting the transfer of the real estate property. For accomplishing this purpose, the following components are required to be examined in conjunction with the real estate property requirements-

  1. Derivation of Ownership: The title ownership of a real estate property can be derived in the following manner:

1.1 If the title of ownership of real estate property is obtained by virtue of sale or purchase, the beneficiary shall verify the registered sale deeds and the title documents of the preceding title ownership holders. Further, all the vested rights over the real estate property shall be alienated to the beneficiary.

1.2  If the title of ownership of a real estate property is obtained by virtue of gift, one shall scrutinize the registered gift deed or any other relevant document to give effect to the transferability of the real estate property.

1.3  If the title of ownership of a real estate property is obtained by virtue of a will or inheritance, the executors shall examine the will document as its conditions doesn’t violate the statutory law in any manner and the order of a competent court authorizing legality of the will.

1.4  If the title of ownership of a real estate property is obtained by virtue of lease, the transferee shall examine the lease deed, parties’ rights and compliance of all the obligations in regard to transferability of such property.

  1. Authority to transfer the title of real estate property – It is incumbent upon the vendor to examine the flow of rights or authority in the executed instrument to legally transfer the title of property to the beneficiary or new owner. For this purpose, one has to examine the link documents, mutation and jamabandi records or khatiyan as the case may be. Further, the transferor shall be legally capable (not minor or unsound mind) to execute a binding contract in regard to sale or purchase of the property.
  2. Charges or Encumbrances over the real estate property – It is necessary to inspect the encumbrances/ charges (mortgage or lien), over the property to any bank or FI’s from the office of the Registrar of Charges of that particular jurisdiction by procuring an encumbrance or non-encumbrance certificate as the case may be, providing details of all the registered charges, depending upon the transaction. Further, if any charge over property is created by company, CHG-1 form filed with Registrar of Companies shall be inspected and encumbrance certificate shall be procured accordingly.

In case of equitable mortgage or mortgage by deposit of title deeds, the FI’s requires delivery (actual or constructive) of sale deed or conveyance deed. This is to verify the authenticity of the original title deeds and to safeguard FI’s interest by assuring non-existence of such unregistered mortgage.

  1. Transfer within a particular category – In some States by virtue of their local state legislations, if the real estate property belongs to the ST’s, SC’s or other backward classes, it shall be transferred only to the similar tribes and not to general class. Additionally, while conducting due diligence exercise, the preceding title records of the property shall be examined in this regard and if any preceding title owner is found to be SC, ST or of other backward class, that real estate property shall be transferred to the Government at the very first instance.
  2. Sub-lease for a specific purpose – In India, the Government provides the property to the lease holders specifically for agricultural purposes which can further be sub leased specifically for agriculture purpose. While performing due diligence exercise of the agriculture land, it is pertinent to verify the sub leases made in the transaction are not for any other commercial or residential purposes.
  3. Development/ Construction over the property – While conducting the due diligence process, it is necessary to verify the legality of the construction/ development of the property in accordance with the state specific laws in their particular jurisdiction and the development agreement shall be executed. Further, the nature of property shall also be examined i.e. (agricultural or non-agricultural) and if the property is agricultural land, the Change of Land Use is required by that particular State Government.
  4. Government approvals and authorizations – While performing due diligence process, it is pertinent to inspect and verify that all the approvals and authorization in relation to the transaction have been procured by the competent government authorities for building & industrial approvals, insurance policies, taxes, environment compliance etc.
  5. Acquisition process – In India, the law of Land Acquisition restricts the alienation rights of the original owner. While conducting due diligence, it is pertinent to ensure that the real estate property is not under any acquisition process because if any transaction is executed on the property which has been acquired by the government, the transaction shall be treated as void ab initio and cannot be enforced legally.
  6. Publication – To be on the safer side and to prevent himself from any unregistered transactions, the beneficiary may publish a notice in atleast two local newspapers, which will endorse the beneficiary’s bonafide title ownership, if any dispute is raised later.
Conclusion

In view of the above, Legal Due Diligence plays a significant role for an individual as well as the FI’s in any transaction related to real estate property for its sale, purchase, lease or mortgage. It is obligatory to probe and evaluate every such record or information about the real estate property which affects the nature and transactions of such property. Further, it is advisable before entering into any such transaction of a property, to determine and ensure that all chain deeds, title documents, encumbrance certificate, insurance policies and government authorizations are in accordance with the statutory requirements.

Indian Aviation Laws Update 2017

Ravi Singhania


22/08/2017  

I INTRODUCTION

The Indian civil aviation industry is a promising sector owing to increased demand from upper midde-class, higher disposable incomes, favourable demographics and rapid economic growth. It has the prospect of becoming the third-largest aviation market by 2020 and reaching the zenith by 2030. The industry is following a progressive trajectory, paving the way for a new wave of growth and expansion with a substantial focus on low cost carriers, modern airports, foreign direct investment (FDI) in domestic airlines, information technology developments and regional connectivity. The Indian civil aviation industry is among the top 10 in the world with a value of around US $16 billion[1], which only forms a fragment of the latent potential and capabilities of the industry. With the National Civil Aviation Policy 2016, which came into effect on 15th June, 2016 r, it is necessary to analyse the current framework of the aviation sector.

The Ministry of Civil Aviation (MoCA) is responsible for the administration of the aviation industry in India. It plays a significant role in the formulation of national policies and programmes for development and regulation of civilian aviation, and for devising and implementing schemes for methodical and efficient growth of civilian air transport. The MoCA also ensures the implementation of the Aircraft Act 1934.

The following are the principal regulatory authorities of the civil aviation industry functioning under the authority of the MoCA in India: Directorate General of Civil Aviation (DGCA); Airports Authority of India (AAI); and the Airport Economic Regulatory Authority (AERA).

The DGCA is the principal establishment tasked with the responsibility of regulating civil aviation in India, including air transport services, enforcement of civil air regulations, air safety and airworthiness standards. It also coordinates all regulatory functions with the International Civil Aviation Organisation (ICAO).[2]

The AAI is a nodal organisation entrusted with the responsibility of creating, upgrading, maintaining and managing civil aviation infrastructure, both on the ground and in the country’s air space. Its responsibilities include passenger services, air navigation services, security services and managing aerodrome facilities.[3]

AERA was established in 2008 to regulate the tariff for aeronautical services rendered at major airports in India. The authority also monitors the performance standards of the established airports as set out by the central government or any other body authorised by it.[4] Its primary responsibility is to set aeronautical charges on a five-year cycle, taking into account the economic viability of an airport, in line with ICAO principles of transparency, cost-relatedness, non-discrimination and user consultation.[5]

Some of the prominent features of the civil aviation sector in India include a large number of consumers (passengers and cargo), a relatively small number of airlines with significant market share, high cost barriers to market entry, differentiated services and competitive firms affecting each other’s business decisions. These market characteristics indicate that India’s civil aviation sector has an inherent oligopolistic market structure.[6] Read More…

[1] FICCI-KPMG, Hyderabad, ‘India Aviation Report 2016’, 5th International Exhibition & Conference on Civil Aviation; India Brand Equity Foundation. Available at: http://www.ibef. org/industry/indian-aviation.aspx

 

[2] For the functions of the DGCA, see the Organisation Manual of the Office of the Director General of Civil Aviation (8 December 2015); http://dgca.nic.in/dgca/func-ind.htm.

 

[3] Organisation, Airports Authority of India; www.aai.aero/public_notices/aaisite_test/orign.jsp.

 

[4] Objectives and Functions, The Airports Economic Regulatory Authority; http://aera.gov.in/content/innerpage/objective–and-functions.php.

 

[5] Vital Role for the Airports Economic Regulatory Authority, Centre for Asia Pacific Aviation (April 2009); www.capaindia.com/PDFs/AERA per cent20April per cent2009.pdf.

 

[6] Report of the Committee constituted for the examination of the recommendations made in the study report on the Competitive Framework of Civil Aviation Industry in India, MoCA (June 2012); http://civilaviation.gov.in/sites/default/files/moca_001870_0.pdf.