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Monthly Archives:

Delhi HC Refuses To Consider Johnson &Johnson’s Plea

New Delhi, December 15: The Delhi High Court has refused any interim relief to Johnson and Johnson, which has, on the basis of reports of the two Committees, challenged the formula approved by the Union government to determine compensation for the patients who had received faulty hip implants. The Court further said that the plea is neither important nor urgent.

India’s top advisory board in its meeting on 29 November constituted a sub-committee of ten experts to deliberate on the issue of amendment of Medical Devices Rules, 2017, to include provisions for compensation by the manufacturer and importer in case of injury or death due to device malfunction.

In a press release, the government informed the general public about the formula worked out by the expert committee to compensate patients. According to the committee report, compensation payable to patients would be determined in terms of the disability by the faulty hip implants in relation to their age. According to the press release,  Indian patients suffering because of the hip implants sold by Johnson and Johnson would get as much as ₹1.2 crore each and an additional ₹10 lakh for nonpecuniary losses. The minimum compensation according to the formula in case of a disability would be ₹33 lakh.

US-based pharmaceutical giant in a statement said that the formula for compensation needs to be reformulated after proper hearing of the facts and positions of all the parties. As reported by Bloomberg,  Johnson & Johnson has begun settling consumers’ claims and has settled about 3,300 of 10,000, marking the first settlements in the seven-year-old litigation.

Another PIL in the same matter is pending before the Supreme Court. According to a report by the mint, with no specific legal provisions in the existing Drugs and Cosmetics (D&C) Act, 1940, or rules to provide compensation to patients in such cases, there is thought to be no way for the government to force the company to pay up.

The company had used a lacuna in the law because of which the government cannot compel it to compensate. For now, to put down this prolonged fire, the government is traversing all legal angles to make the company pay up to the patients affected by the faulty acetabular surface replacement hip implants.

 

 

SC stalls Sale Of Fortis To IHH Over Daiichi’s Plea

New Delhi, December 15: IHH Healthcare Berhad, a Malaysian-Singaporean private healthcare group, which had earlier this year won the bidding war for India’s second-largest hospital chain, fortis, will have to wait now. A three-judge bench headed by Justice Ranjan Gogoi maintained a Status Quo on the sale of Fortis Healthcare to IHH Healthcare.

This came after a contempt plea was filed by Daiichi Sankyo against Fortis’ former promoters.

BACKGROUND
Earlier this year this year, IHH was shortlisted to take control of Fortis. A bidding war kicked off after its founders, brothers Malvinder and Shivinder Singh, lost their shareholding due to debt, and allegations that they had improperly taken funds from the company. Soon after IHH won the bidding war, Daiichi-Sankyo of Japan approached the Delhi High Court to block the sale and enforced an arbitration award against the Singh brothers.

The Japanese Company alleged that the brothers concealed information of their generic drug firm, Ranbaxy laboratory while selling its shares to Daiichi back in 2008. In January this year, the Delhi High Court ruled that the Singh brothers must pay Daiichi $550 million awarded in an arbitration. As the case proceeded, it sought an injunction preventing the Singh brothers from selling assets to ensure the brothers have the funds to fulfill their potential liability, as reported by the BloombergQuint.

WHAT DID THE PETITION SAY?
According to a report by the Business Standard, Japanese drugmaker Daiichi-Sankyo had moved a contempt plea against Malvinder and Shivinder Singh (Singh brothers) and Indiabulls, alleging that the two had pledged 1.7 million shares of Fortis Healthcare held by Fortis Healthcare despite the Supreme Courts order of February 15, in which it forbade any fresh encumbrances unless it decides on Daiichi’s petition.

Daiichi alleged that the Singhs and their holding company, RHC, were in violation of their undertakings to the court that they had sufficient unencumbered assets to satisfy the award.

According to a report by moneycontrol, shares of Fortis uproared as the news hit the streets.

 

 

 

 

TDSAT Set Asides TRAI’s Predatory Pricing Norms

New Delhi, December 14: In a major relief to Bharti Airtel Ltd and Vodafone Idea Ltd, Telecom Disputes Settlement and Appellate Tribunal (TDSAT) today set aside telecom regulator TRAI’s rule on predatory pricing for lack of transparency in the guidelines over determining market share and rates of services.

Bharti Airtel Ltd and Vodafone Idea Ltd had complained that the rules benefit rival Reliance Jio Infocomm Ltd.

TDSAT has also ruled that the Telecom Regulatory Authority of India (TRAI) had issued the new rules arbitrarily and without deliberation or effective consultation and had changed the definition of ‘significant market power’ (SMP) to identify predatory pricing.

Another issue that was raised by old telecom companies during the hearing was that the disclosure of confidential information on segmented offers was a trade secret and, hence, can not be asked to be disclosed. On this, TDSAT said that instead of reporting all segmented offers/discounts, TRAI may call for details of any segmented offer about which it receives complaints.

BACKGROUND
Predatory pricing has always been the center of a bitter tussle between the older telecom companies and TRAI and Jio. On February 16, TRAI changed the definition of SMP (significant market player) to identify predatory pricing, a strategy aimed at driving competitors out of the market or creating entry barriers for potential new competitors. Under the new rules,  a tariff would be considered predatory if a telecom operator with over 30 percent market share offers services at a price below the average cost. On violation, up to Rs 50 lakh fine would be levied on the operators. It framed out four parameters to identify a significant market player. While it retained subscriber base and gross revenue, it dropped capacity and traffic share which gave an undue advantage to Reliance Jio which has the highest monthly data consumption and traffic.

Moreover, it asked telecom companies to disclose offers within seven days from the date of implementation to ensure the tariffs are transparent, non-discriminatory and non-predatory.

Citing an unfair advantage to Jio, Bharti Airtel and Vodafone Idea moved TDSAT in March.

Keeping this in mind, the TDSAT Bench comprising Justice SK Singh and member AK Bhargava said in an order,

“The yardsticks must be objective and known to all the TSPs (Telecom Service Providers) or else the task must be left to be dealt with by a complete code such as under the Competition Laws so that the competent authority can decide on a complaint alleging predation.”

It also added that TRAI had exceeded its role and powers by developing a complex concept of SMP and has asked the TRAI to rework the predatory pricing rule within six months.

 

 

 

 

Rights Of Elderly Persons Must Be Recognized And Implemented: Supreme Court

New Delhi, December 14: Calling the rights of elderly persons an ’emerging situation’ not foreseen even by the constitution, the Supreme Court on Thursday directed the government to provide information about the number of old age homes in each district of the country and file a status report in the same regard on or before 31st August 2019.

The bench of Justices Madan Lokur and Deepak Gupta also issued a set of directions ordering the Centre to obtain details from the States about the medical and geriatric care facilities available to senior citizens in each district.

This came after a writ petition was filed by  former Law Minister Dr. Ashwini Kumar seeking enforcement of the
rights of elderly persons under Article 21 of the Constitution. The petitioner made several prayers in the writ
petition including pension, shelter, geriatric care and medical facilities for the elderly and effective implementation of the Maintenance and Welfare of Parents and Senior Citizens Act, 2007 (‘MWP Act’).

Even though the MWP Act came into force in 2007 and more than a decade has passed since then, serious efforts have not been made by the Government of India or by the State Governments to ensure that medical facilities for the elderly and geriatric care are made available.

The bench was of the view that it is pertinent to issue some initial directions to enable recognition and enforcement of rights of the elderly. It also entrusted the Central Government to exercise its power in the regard and issue appropriate directions to the State Governments for the effective implementation of the provisions of the MWP Act.

On the issue of inadequate welfare provided to senior citizens, it directed the Government of India and the State Governments to revisit the grant of pension to the elderly so that it is more realistic, depending upon the availability of finances and the economic capacity. It also submitted that linking pension to the index of inflation may not be
appropriate since the pension provided is a welfare measure.

It also directed that on the basis of the information gathered by the Union of India, a plan of action should be prepared for giving publicity to the provisions of the MWP Act to make senior citizens aware of the provisions of the  Act and the constitutional and statutory rights of senior citizens.

According to the census report, the number of elderly people has increased from 1.98 crores in 1951 to 7.6 crore in 2001 and 10.38 crore in 2011. It is projected that the number of 60+ in India would increase to 14.3 crores in 2021 and 17.3 crores in 2026.

The Court has directed the Additional Solicitor General for India to file a status report with respect to the directions issued on Thursday by January 31, 2019.

Read the judgment below:

6532_2016_Judgement_13-Dec-2018

 

Govt seeks legal opinion on the validity of Aadhaar-based eSign Services

New Delhi, December 13: The Union Government has sought legal advice on the validity of eSign services from the Ministry Of Law and Justice.

To make the process of signing a document less cumbersome, in 2015, the government launched the eSign project. eSign is an online electronic signature service which facilitates an Aadhaar holder to digitally sign a document within seconds. Keeping that in mind, eMudra Limited, a leading certifying firm in the country launched eSign services. This service is legally valid under the Information and Technology (IT) Act, 2000.

A recent court order stated that even though eSigning comes under the purview of the law, it cannot be used for the contract by any private party. Keeping that in mind, the government has directed eSign service providers such as eMudhra, Capricorn Identity Services and (n)Code Solutions to explore alternative options to use offline Aadhaar system to verify customers’ credentials.

The Controller of Certifying Authorities (CCA) has asked the empanelled services to use offline Aadhaar to verify the identity of users. The two-factor authentication system includes the One Time Password (OTP) sent to the verified mobile and PIN set by the applicant. After the completion of KYC, the subscriber chooses a user ID and a provision is created for an eSign address. On the other hand, the offline Aadhaar system will be based on capturing demographics through offline Aadhaar and authenticating using OTP.

The Reserve Bank of India (RBI) is also looking at various alternative methods of enabling offline Know-your-Customer (KYC) verification. Two weeks ago, CCA also released guidelines on alternative ways to do e-KYC which included options for offline Aadhaar along with the use of different identity-based system hinging on two-factor authentication by the applicant.

According to signdesk.com, possible alternatives could be USB token-based signatures, offline Aadhar XML based signatures and bank KYC based eSign.

Industries like FMCG, Banking, Finance, Insurance, and even Human Resource departments in various companies have integrated eSign to digitize documentation workflows making them dependant on electronic signatures.

For now, eSign providers have halted their services to comply with the Supreme Court’s August ruling on Aadhaar data privacy.

The final decision on this matter is expected to come in a month’s time

Delhi High Court Restrains Sale Of Medicines Through e-Pharmacies

New Delhi, December 13: Selling medicines online is now illegal in India. India’s growing e-pharma industry has received a sickening blow.

The Delhi High court has ordered a complete ban on online pharmacies selling medicines across the country as the same it is not permitted under the Drugs and Cosmetics Act, 1940 and the Pharmacy Act, 1948.

A bench of Chief Justice Rajendra Menon and Justice V KRao also asked the Central Government to implement the same with immediate effect.

The order came after a petition filed by Delhi-based dermatologist Zaheer Ahmed through Advocate Nakul Mohta pointed out that the sale of drugs and prescription medicines online was illegal and without any mandate of law and, therefore, a health risk. Seeking Court’s intervention, the petition stated that,

“Unlike common items, drugs are highly potent and its misuse or abuse can have serious consequences on human health, not just for the one person consuming it but for humanity at large as some drugs can be addictive, habit-forming and harmful to the body. A large number of children/minor or people from uneducated rural background use the internet and can be victims of wrong medication while ordering medicines online.”

Zaheer Ahmed in his petition strongly asserted the fact that the Drug Controller General of India in 2015 had clearly directed all state drug controllers to protect public health by restraining such sale online. And yet, medicines continued to be traded online. Often, without prescriptions.

Blaming the government for not intervening at the right time, the petition further contended that Centre has always been aware of the risks involved in the sale of medicine on the internet. Earlier this year, for this purpose, a panel was also constituted which cautioned about the risks involved in the online sale of medicine, particularly, prescription, habit-forming and addictive medicines.

In September, with an aim to regulate the online sale of drugs, the Union Health Ministry had also come out with draft rules on “sale of drugs by e-pharmacy”. The rules stated that no person should offer, exhibit or keep a stock of drugs and sell them through an unregistered online platform. According to the draft guidelines, e-pharmacies have to register for a license with the Drug Controller General of India (DCGI), which will be valid for three years.

The PIL also argued that unregulated sale of medicines online would increase the risk of spurious, misbranded and substandard drugs including psychotropic substance being sold.

As many as 250 online pharmacies have sprung up in India in recent years. To woo customer, these online platforms, just like any other e-commerce website sell medicines at discounted prices with free home delivery. To this, traditional pharmacists contended that if such websites remain unregulated, their business will be affected.

According to a report by the Quartz, funding saw a sharp fall, with just $28.45 million invested in the sector in 2016, compared to $62.20 million in 2015.

State-wise a lot has been done to regulate the sprouting online market.

In November this year, the Madras High Court granted an interim injunction restraining the online sale of medicines till further orders.  In 2015, two other states cracked down on online drug sales. Karnataka’s Drugs Control Department canceled the licenses of all online pharmacies, while Maharashtra Food and Drug Administration filed cases against several such e-retailers.

Nonetheless, a lot more has to be done to properly regulated the online market of medicines.

 

 

 

 

Government Proposes Changes To The Companies Act, 2013

New Delhi, December 11: The Government of India in its latest notification has proposed amendments to the Companies Act, 2013.  The Companies Act 2013 is an Act of the Parliament of India on Indian company law which regulates incorporation of a company, responsibilities of a company, directors, dissolution of a company. The following amendments have been made:

Shell companies

If any company fails to commence its business within one year of incorporation or fails to continue its business for preceding two financial years,  in such a case, Registrar of companies (RoC) has a right to dissolve the company. However, the law doesn’t spell out what happens to the assets of that company. Keeping this in mind, the amendments have been made to the Companies Act, 2013.  The proposed amendment puts forward that once a company is dissolved, the board of Administrators will be appointed to dispose of the assets and the proceeds from that will go to the Consolidated Fund of India.

Independent Directors

Based on the recommendation of the law committee, the government proposed that the sum total of the pecuniary relationship of an independent director with the company, it’s holding, associate or subsidiary company in a year, should not exceed more than 25 percent of her income. In addition to the proposed 25 percent cap, income from professional services cannot be more than 10 percent of the independent director’s income.

Corporate Social Responsibility (CSR)

As mandated under the Company law, Companies need to spend at least 2 percent of their average net profit for the immediately preceding three financial years on corporate social responsibility activities. If they fail to do so, the reasons for the same need to be specified. The government has proposed an amendment that will make CSR spends mandatory. It has proposed that the unspent amount will have to be transferred in a special account within 30 days from the end of a financial year. This amount will then have to be spent on CSR activities within three years from the date of transfer.

Since its notification in April 2014, the Companies Act has seen amendments almost every month. Last month, the law was amended via an ordinance. If passed, it will bring more transparency and clarity to the existing law.

Read the notification below:

NoticeAmendmentsCA2013_05112018

 

SC Issues Notice To Five States For Amending Land Acquisition Act

New Delhi, December 11:  The Supreme Court has issued a notice to five states in a PIL challenging amendments made by the State Government to the Right to Fair Compensation and Transparency in Land Acquisition Rehabilitation and Resettlement Act(Land Acquisition Act), 2013.

The bench comprising Justice Madan B. Lokur and Justice Deepak Gupta issued a notice to the state of Gujarat, Telangana,  Tamil Nadu, Andhra Pradesh, and Jharkhand to explain the validity of the amended act.

This came after a PIL was filed by Prashant Bhushan and Medha Patkar alleging these five states of tweaking and introducing the amendment to the Central Act of 2013 and hence altering the lives of farmers and landowners.  As per the tweaked Act, the state could acquire land for social development, industrial corridor and housing projects, even multi-cropped irrigated land without any social impact assessment.

The petition contended:

“The basic structure of the Original central Act and Rule has been changed to give exemption to large categories of projects from consent provisions, Social Impact Assessment, Objections by affected citizens and participation of local bodies etc, thereby violated Fundamental right guaranteed to citizens of India under Article 14, 19(1)(g) and 21 of the Constitution. Even though “land” is a matter in the State list, the “acquisition and requisitioning of property” finds a place in the Concurrent list. But the State Governments have passed Land Acquisition Acts and Rules for States by amending the provisions of the Central Act passed by Parliament and created conflict by violating the principle that the State Acts cannot overrides Central Acts.”

As per the Central Act, 70% consent of landowners is necessary for Public-Private Participation Project (PPP). PIL also contend that some amendments have removed the consent clause of PPP, paving way for many private projects running under the garb of PPP. In PPP Projects, taxpayers money is spent while acquiring land and creating infrastructure whereas in the profit-making stage private players take away the maximum share. They have also diluted the provision for the return of unutilized land.

The petition further stated,

“The Central Act of 2013 was brought to give effect to pre existing fundamental right to livelihood of citizens. It ensures that livelihood will not be taken away unless: 1) it is in public interest and that is seen by social impact assessment 2) The affected citizens are given rehabilitation. The amendments made without considering the above factors will take away fundamental rights of the citizens.”

Advocate Prashant Bhushan argued that no land could be taken away unless it is essential in public interest and that is to be seen by the social impact assessment.

Seeking to get the amendments made by the states quashed, the petition has also asked the SC to direct the state governments to enforce the original rules for the land acquisition made by the Central Government.

Read the SC order below:

42134_2018_Order_10-Dec-2018

DIPP Comes Out With Draft Patent Rules

NEW DELHI, DECEMBER 11: In order to fast-track the examination of patent applications, particularly for startups, the Ministry of Commerce and Industry has floated a new draft to amend the existing Patent Rules, 2003.

The department of industrial policy and promotion (DIPP) in its notification has suggested amendment in the rules pertaining to expedite examination of applications, opposition proceedings to grant of the patent, and fees for international application.

The department has sought objections and suggestions of stakeholders on the draft rules till January.

“The following draft rules to further amend the Patents Rules, 2003 which the Central Government proposes to make in exercise of the powers conferred by section 159 of the Patents Act, 1970, are hereby published as required by sub-section (3) of the said section for the information of all persons likely to be affected thereby, and notice is hereby given that the said draft rules will be taken into consideration after the expiry of a period of thirty days from the date on which copies of the Gazette of India, in which this notification is published, are made available to the public”, said the notification.
This move is significant as it will further streamline the examination of applications.
Read the notification below:

Merely Producing Evidence Of Sale Of Shares Insufficient To Prove Money Laundering: ITAT

Mumbai, December 7: The Mumbai bench of the Income Tax Appellate Tribunal (ITAT), quashing one of the first order issued by the Tax Department, held that merely producing evidence of purchase and sale of shares was insufficient to prove the allegations of Money Laundering.

In a twenty-page verdict, the tribunal t in the favor of Ramprasad Agarwal, who purchased shares of Rutron International Ltd in 2014 and sold them a year later. The assessing officer had declined to provide long-term capital gains (LTCG) exemption for the transaction and the defendant was asked to pay up Rs 83 lakh tax. The case was based on the evidence collected from trades and also a statement was given by two brokers.

“The Officer has not brought any material on record to show that the assessee has paid over and above the purchase consideration as claimed and evident from the bank account then, in the absence of any evidence it cannot be held that the assessee has introduced his own unaccounted money by way of bogus long-term capital gain”, the tribunal held.

Taking into consideration the decision made in the case of Meghraj Singh Shekhawat Vs. DCIT, the tribunal held that “the addition made by the AO is based on mere suspicion and surmises without any cogent material to show that the assessee has brought back his unaccounted income in the shape of long-term capital gain. On the other hand, the assessee has brought all the relevant material to substantiate its claim that transactions of the purchase and sale of shares are genuine. Even otherwise the holding of the shares by the assessee at the time of allotment subsequent to the amalgamation/merger is not in doubt, therefore, the transaction cannot be held as bogus. Accordingly, we delete the addition made by the AO on this account.”

As many as 200 entities are being probed for money laundering by multiple regulators including the Income Tax Department, Security Exchange Board of India and the Ministry of Corporate Affairs.