RESEARCH REPORT:

FIRM ENGAGED IN
NEWSPAPER BUSINESS
Business Law

IIM Shillong
October 24, 2015
Section 2
Group 8
Rohit Agarwal_2014PGP085
Rohit Kumar_2014PGP086
Saurabh Raina_2014PGP087
Saurav Narjinary_2014PGP088
Shubhabh_2014PGP089

Table of Contents
Corporate Structure..................................................................1
State for starting the business...............................................1
Governing Legislations.............................................................1
Legal Structure of Newspaper Firm........................................3
Material Contract....................................................................... 4
Regulatory Body........................................................................4
Potential Liabilities...................................................................5
Major Caselaws in the Sector..................................................5
Precautionary Measures & Conclusion...................................5

Corporate Structure
The Newspaper firm will be formed under the Limited Liability Partnership Act 2008
and act as a LLP (Limited Liability Partnership) between the partners. This is done as
the firm is started as a venture between the partners so LLP will help in providing

the flexibility of the partnership and also the advantage of limited liability of a
company at a much lower compliance cost, which is desirable for the firm to take
off.

State for starting the business

The main focus for us to decide the state of business was to keep the target
audience in mind and the scope of serving the customers. Uttarakhand is a state
which has high potential and has emerging target audience but is still underserved.
Majority of people in Uttarakhand prefer Hindi newspaper and want it in print form.
As per the Census 2011 survey, the population in Uttarakhand was 1,01,16,752 and
the registered newspapers and periodicals included 332 dailies as on March 31,
20141. If we compare the stats of Uttarakhand and Uttar Pradesh, we find that about
77,749 people are served by a single daily in Uttar Pradesh as compared to just
30,472 per daily in Uttarakhand. This shows that the Uttarakhand market is
underserved and has a scope for business for us. Adding to this analysis, the high
literacy rate of 79.63% makes it a good place to start our newspaper business.

Governing Legislations
Following will be critical for us to analyse for our newspaper business:
1. The Press and Registration of Books Act, 1867
This was enacted to regulate printing presses and newspapers, for preservation
of copies of books and newspapers which are printed in India and registration of
these with the authority.
Legal risks and Penalty: Starting the business without prior approval from
Registrar of Newspapers of India can land us in legal troubles. Declaration has to
be provided to the SDM before starting to print the newspaper and it is the
responsibility of the owner to see that the copy of each newspaper is kept as
required. Non-compliance results in fine upto Rs. 2000 or imprisonment not
exceeding 6 months or both.
2. Delivery of Books and Newspapers (Public Libraries) Act, 1954
The act says that every publisher has to compulsorily deliver a copy of
newspaper and book free of cost to the National library in Calcutta and each of
the 3 public libraries specified by the Central Government.
Legal risks and Penalty: Only the officer empowered on behalf of Central
Government can take action and present it in court. Non-compliance leads to a
fine upto Rs. 50 and shall also be punishable with fine upto the value of the
book.
3. The Working Journalists and other Newspaper Employees Act, 1955
This act makes sure that every publication maintains and increases the wages of
the working journalists and non-journalist newspaper employees in accordance
to the basic wage and rate fixed by the Wage Board constituted by the Central
Government. Separate wage board is formed for journalist employees and non1 Press in India 2013-14,58th Annual report: The Registrar of Newspapers for India
Pg. 323-327

journalist newspaper employees and also separate tribunal is constituted for

both.
Legal risks and Penalty: Under section 17B of the act, an inspector is
appointed and all employers need to furnish all information which he wants.
Every publication need to fix wages as stated by the wage board. Noncompliance may lead to a fine upto Rs. 200 and in case of 2 nd conviction the fine
may extend upto Rs. 500.
4. The Newspaper (Prices and Pages) Act, 1956
This act empowers the Central Government to fix the minimum price for a
newspaper in order to eliminate unfair competition and allow new and small
players to survive. It fixes a Price Page Schedule and also restricts the total
space allotted to the advertisements in newspapers to a specified proportion.
Both these changes after regular periods as decided by the Government.
Legal risks and Penalty: The act empowers the Press Registrar to verify the
compliance and non-compliance may lead to a fine upto Rs. 1000 and in case of
2nd conviction may extend upto Rs. 2000.
5. The Copyright Act, 1957
This act empowers the publisher the rights to have a copyright on pieces
published in the newspaper such that the author assigns the publisher the rights
against some loyalty or license fees. This act also has provisions for the authors
for their moral rights.
Legal risks and Penalty: In case a copyright violation case takes place and
criminal proceedings are instituted against the infringer, it leads to imprisonment
of minimum 6 months and maximum 3 years and fine upto Rs. 2 lakhs but
minimum Rs. 50,000.
6. The Defense of India Act, 1962
This act was enacted during Emergency in 1962. It provides for special measures
like prohibition to publish to ensure public safety, defense of India, civil defense,
and matters concerned.
Legal risks and Penalty: If a person having any intent to wage war against
India or assist any country in external aggression, he shall be punishable with
death or imprisonment for life or imprisonment upto 10 years and fine.
7. The Civil Defense Act, 1968
This act enables the Central Government to prohibit publishing of newspaper for
civil defense and other related matters.
Legal risks and Penalty: Non-compliance may lead to a fine upto Rs. 500 and
if it continues then fine may rise upto Rs. 50,000 daily.
8. The Press Council Act, 1978
The Press Council of India was first constituted in 1966 which was abolished
during internal emergency from January 1, 1976. Thus, revised Press Council of
India was set up in 1979 under this Act. The objective was to preserve the
freedom of press and improving standards of newspapers and news agencies in
India.

Legal risks and Penalty: This Act empowers the PCI to warn, admonish or
censure the newspaper, newspaper agency, editor or journalist if it finds that one
of them have offended the journalism ethics or public taste or professional
misconduct.

Legal Structure of Newspaper Firm

A legal structure of a firm is the legal definition of the business, in our case we have
decided it to be a LLP (Limited Liability Partnership) between the partners. There is
certain procedure to be followed to incorporate a firm as an LLP under the
guidelines of MCA (Ministry of Corporate Affairs). Below is the mentioned procedure
for the legal formation of an LLP2.
Step 1: Application for DIN or DPIN
The minimum number of partners to incorporate a LLP is two, they may be
individuals or body corporate who may be acting through their representatives.
There is no upper limit on the maximum number of partners of LLP. Out of the
partners two shall be designated partners one whom shall be resident in India. All
the designated partners shall obtain Designated Partner Identification Number
(DPIN), DPIN is an eight digit numeric number allotted by the Central Government in
order to identify a particular partner.
Step 2: Acquire/ Register DSC
As all the documents in relation to LLP whether they may relate to incorporation,
filing etc. are filed online and are required to be digitally signed by atleast one
Designated Partner to obtain the digital signature certificates from government
recognized DSAs.
Step 3: New User Registration
Step 4: Incorporate a LLP
The name with which LLP is to be incorporated is to be decided. The registrar will
approve the name applied for provided the name is not either undesirable in the
opinion of the Central Government or that is identical with or that which too nearly
resembles to the name of any existing partnership firm or a LLP or a body corporate
or a trade mark registered or pending registration under the Trade Marks Act, 1999.
The name approved shall be available for adoption for a period of 3 months.
Thereafter Limited Liability Partnership Agreement governing the mutual rights and
duties among the partners and among the LLP and its partners is to be prepared
which contains:
Name of the LLP; Name of Partners & Designated Partners; Manner of
contribution; Profit/Loss Sharing ratio between partners; Rights & Duties and
obligations of Partners; Proposed Business of LLP; Rules for governing the
conduct of operations of LLP.
2 Ministry of Corporate Affairs; http://www.mca.gov.in/LLP/RegisterNewComp.html

Step 5: File LLP Agreement

After incorporation of LLP, an initial LLP agreement is to be filed within 30 days of
incorporation of LLP.
After the LLP has been incorporated, as a Newspaper firm we have to register with
the Registrar of Newspapers of India. Printing and publishing of newspapers and
periodicals within India are governed by the Press and Registration of Books Act,
1867 and the Registration of Newspapers (Central) Rules, 1956 3.According to the
Act, no newspaper or periodical should bear a title which is the same or similar to
any other newspaper or periodical already being published, either in the same
language or in the same State, unless the latter is also owned by the same person.
The following forms are required to be submitted to the Registrar of Newspapers for
India in New Delhi head office in order to start a newspaper in India:
Title Verification; Title Registration; Declaration; Ownership Statement; Ownership
Change; Annual Statement; Foreign Direct Investment; Import of Printing Machinery;
Import of Newsprint; Daily press newspapers; Exemption under FCRA; Return for
Imported Newsprint; No Foreign Tie-up Affidavit and Indigenous Newsprint.

Material Contract
There are various individual or group of individual identified with whom a
newspaper firm has to enter into a contract for the efficient functioning of the
business but not limited to Distribution agencies/agents, various news agencies,
columnist, journalist and employees.
Contract with Distribution agencies/agents: The distribution agencies/agents
are associated with Newspaper firm in the capacity of Independent contractors. The
contract to be termed as independent contractors required meeting of following two
requirements:
1. The person is free from control and direction in the performance of work
and
2. The person is customarily engaged in an independent trade or business.
As it can be sufficiently proved in case of distribution agencies/agents because of
their nature of work which does not oblige them to exclusive distribute newspaper
from single publication house.
Contract
with
other
news
agencies/freelance
columnists/photographers/journalists: Sometimes there is a requirement of
sourcing of news from other news agencies or freelance columnists/ photographers/
journalists. The contract clearly defines the term, fee to be paid (acknowledging
that not all content attracts a fee to be paid), allowable expenses, deadline and
respective rights acquired.

3 Registrar of Newspaper of India; www.rni.nic.in

The terms are provided in written either by email or letter but the delivery and
commission agreement can be verbal also by the respective editor.
Each of the contribution is subject to copyright laws and is under the Moral rights
provision. The contributors are subjected to have a right to be identified as the
author of their contribution.
They are generally under the above agreement as an Independent contractors as to
limit the liability of the firm in case of vicarious liability.

Regulatory Body
Media in India is mostly self-regulated, still there are some existing bodies for this
purpose. The News Broadcasting Standards Authority (NBST) is a self-regulatory
organisation which issues standards in the nature of guidelines. The Press Council of
India (PCI) is a statutory, quasi-judicial body which governs the conduct of the print
media and acts as a watchdog. Press Council is a mechanism for the press to
regulate itself4. It will not be good for Government to control press in order to
maintain the freedom of press hence a body consisting of few discerning laymen act
as watchdog for its smooth functioning. The council consists of men/women who
command general confidence and respect of the profession and has 25 members
and a Chairman. Chairman should be or had been a judge of High Court and is
nominated by the Chief Justice of India. The councils action may not be questioned
unless it is proved to be in violation of the Constitution of India. PCI has the power to
censure a newspaper, newspaper agency, journalist or an editor.

Potential Liabilities
Various potential liabilities are identified while operating a Newspaper firm. They are
listed as below:
Accuracy and fairness; Pre-publication verification; Caution against
defamatory writings
Parameters of the right of the press to comment on the acts and conduct of
public officials
Criticism of public figures/music reviews; Right to privacy
Recording interviews and phone conversation
Conjecture, comment and fact
Reporting-proceedings of legislature; Caution in criticizing judicial acts
Corrections; Right of reply; Letters to editor; Editors discretion
Obscenity and vulgarity; Glorification/encouragement of social evil or
Violence
Covering communal disputes/clashes; Caste, religion or community
references
Paramount national interest; Foreign relations
Plagiarism; Unauthorized lifting of news; Illegal reproduction; Non-return of
unsolicited material; Advertisements; Astrological Prediction
Reporting on Natural Calamities; Trial by Media
4 PCI official website: http://presscouncil.nic.in/index.aspx

Major Caselaws in the Sector

1. Presumption as to awareness of contents of newspapers can be raised only
against the editor whose name appears in declaration published in newspaper(S. Nihal Singh & others vs Arjan Das, 1983 CriL 777)5.
2. In Sakal Papers Ltd. vs Union of India, 1962 AIR 305 6, the fixing of
minimum rate for newspaper was termed unconstitutional. The state justified the
law as a reasonable restriction on a business activity of a citizen whereas the
Supreme Court rejected the states argument and opined that right of freedom of
speech and expression cant be taken away from the citizens placing some
restrictions on their business activity.
3. In S. Ameenul Hasan Rizvi vs Press Council of India and Another, 91
(2001) DLT 4927, Justice Anil Dev Singh of the Delhi High Court decided that in
order to maintain freedom of press, no one can direct the editor or owner of a
newspaper to publish any news, article or correspondence as it will jeopardize
the liberty of press.

Precautionary Measures & Conclusion

It is very important for us to be aware of all the legislations governing our business.
However, even complete knowledge may not be suffice thus we will definitely opt
for 3 liability insurance policies namely Crime Insurance policy, Professional
Indemnity policy and Director & Officer policy to curb liabilities.

5 Details of the case: http://indiankanoon.org/doc/492605/

6 Details of the case: http://indiankanoon.org/doc/243002/
7 Details of the case: http://indiankanoon.org/doc/182244/