The Information Technology Act, 2000

Introduction
The Information Technology Act was passed as a response to the developments in the IT
Sector, to facilitate e-commerce and e-governance, and to control cybercrimes. Internet has
become a necessity today and with its increased penetration, clarity was needed in the
domain, IT Act was an attempt to provide much needed clarity and direction.

The Information Technology Act, 2000 provides legal recognition for transactions carried out
by means of electronic data interchange and other means of electronic communication,
commonly referred to as "electronic commerce”, which involve the use of alternatives to
paper-based methods of communication and storage of information, to facilitate electronic
filing of documents with the Government agencies and further to amend The Indian Penal
Code, The Indian Evidence Act, 1872, The Banker’s Books Evidence Act, 1891 and The
Reserve Bank of India Act, 1934 and for matters connected therewith or incidental thereto.
The Information Technology Act, 2000 extend to the whole of India and it applies also to any
offence or contravention there under committed outside India by any person.

The Information Technology Act, 2000 is the law pertaining to information technology. IT
Act, 2000 was the result of passing of the IT the Bill by both the houses of Parliament. The
Act is grounded on the United Nations Commission on International Trade Law (UNCITRAL).
It deals with E- commerce and cybercrimes. It is, “An Act to provide legal recognition for
transactions carried out by means of electronic data interchange and other means of
electronic communication, commonly referred to as electronic commerce". The Act came
into force on 17.10. 2000.

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 Features of Information Technology Act, 2000
Following are the features of the Act:

 The Act is based on the Model Law on e-commerce adopted by UNCITRAL.

 It has extra-territorial jurisdiction.

 It defines various terminologies used in the Act like cyber cafes, computer systems, digital
signatures, electronic records, data, asymmetric cryptosystems, etc under Section 2(1).

 It protects all the transactions and contracts made through electronic means and says that
all such contracts are valid. (Section 10A)

 It also gives recognition to digital signatures and provides methods of authentication.

 It contains provisions related to the appointment of the Controller and its powers.

 It recognises foreign certifying authorities (Section 19).

 It also provides various penalties in case a computer system is damaged by anyone other
than the owner of the system.

 The Act also provides provisions for an Appellate Tribunal to be established under the Act.
All the appeals from the decisions of the Controller or other Adjudicating officers lie to the
Appellate tribunal.

 Further, an appeal from the tribunal lies with the High Court.

 The Act describes various offences related to data and defines their punishment.

 It provides circumstances where the intermediaries are not held liable even if the privacy of
data is breached.

 A cyber regulation advisory committee is set up under the Act to advise the Central
Government on all matters related to e-commerce or digital signatures.

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Formulation of IT ACT 2000
The advent of internet and then the growth in internet-based business transactions
necessitated the formulation and implementation of law to regulate the field. The digital
technology has transformed our lives, more and more individuals and businesses are
adopting it and are conducting several activities with help of it.

Before the formulation of IT Act 2000, the overall environment was of apprehension.
Individuals and businesses were aware of the advantages this digitalisation brought along,
but at the same time they were hesitant to conduct activities, especially monetary
transactions owing to the lack of a legal framework which would protect them from some
untoward incidents. To match steps with the strides being taken in digital world, the
UNCITRAL adopted the Model Law on Electronic commerce in the year 1996.

India was also a signatory to this and hence was expected to introduce laws as per the Model
Law. Keeping in view, these factors the IT Bill was introduced to facilitate E-commerce as
well as E-governance. The IT Bill was drafted in the year 1998. Then the bill was then put in
front of Parliamentary standing committee wherein, certain modifications were suggested.

Finally, the IT Ministry suggested some changes and the approved modifications were
retained in the bill and the rest were discarded. The bill was approved by the Union cabinet
and then both the houses of Parliament. The President of India also provided his assent to
the Bill and it became an Act that came into force on 17th October, 2000. The IT Act, 2000
brought in amendments into the Indian Penal Code 1860, the Indian Evidence Act 1872,
Bankers Book Evidence Act 1891 and the Reserve Bank of India Act 1934, thereby
incorporating the issues related to crimes and evidences based on electronic mode and to
address the need for regulations pertaining to electronic transfer of funds.

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 Applicability of The Information Technology Act, 2000
According to Section 1, the Act applies to the whole country, including the state of Jammu
and Kashmir. The application of this Act also extends to extra-territorial jurisdiction, which
means it applies to a person committing such an offence outside the country as well. If the
source of the offence, i.e., a computer or any such device, lies in India, then the person will
be punished according to the Act irrespective of his/her nationality.

The Act, however, does not apply to documents given under Schedule 1. These are:

 Any negotiable instrument other than a cheque as given under Section 13 of the Negotiable
Instruments Act, 1881.

 Any power of attorney according to Section 1A of the Powers of Attorney Act, 1882.

 Any sort of trust according to Section 3 of the Indian Trusts Act, 1882.

 Any will including testamentary disposition given under the Indian Succession Act, 1925.

 Any contract or sale deed of any immovable property.

Objectives of Information Technology Act, 2000

The Act was passed to deal with e-commerce and all the intricacies involved with digital
signatures and fulfill the following objectives:

 The Act seeks to protect all transactions done through electronic means.

 E-commerce has reduced paperwork used for communication purposes. It also gives legal
protection to communication and the exchange of information through electronic means.

 It protects the digital signatures that are used for any sort of legal authentication.

 It regulates the activities of intermediaries by keeping a check on their powers.

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 It defines various offences related to data privacy of citizens and hence protects their data.

 It also regulates and protects the sensitive data stored by social media and other electronic
intermediaries.

 It provides recognition to books of accounts kept in electronic form regulated by the Reserve
Bank of India Act, 1934.

Overview of Information Technology Act, 2000

The Act deals with e-commerce and all the transactions done through it. It gives provisions
for the validity and recognition of electronic records along with a license that is necessary
to issue any digital or electronic signatures. The article further gives an overview of the Act.

Electronic records and signatures

The Act defines electronic records under Section 2(1)(t), which includes any data, image,
record, or file sent through an electronic mode. According to Section 2(1)(ta), any signature
used to authenticate any electronic record that is in the form of a digital signature is called
an electronic signature. However, such authentication will be affected by asymmetric
cryptosystems and hash functions as given under Section 3 of the Act.

Section 3A further gives the conditions of a reliable electronic signature. These are:

 If the signatures are linked to the signatory or authenticator, they are considered reliable.

 If the signatures are under the control of the signatory at the time of signing.

 Any alteration to such a signature must be detectable after fixation or alteration.

 The alteration done to any information which is authenticated by the signature must be
detectable.

 It must also fulfill any other conditions as specified by the Central Government.

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 The government can anytime make rules for electronic signatures according to Section 10 of
the Act. The attribution of an electronic record is given under Section 11 of the Act. An
electronic record is attributed if it is sent by the originator or any other person on his behalf.
The person receiving the electronic record must acknowledge the receipt of receiving the
record in any manner if the originator has not specified any particular manner. (Section 12).
According to Section 13, an electronic record is said to be dispatched if it enters another
computer source that is outside the control of the originator. The time of receipt is
determined in the following ways:

 When the addressee has given any computer resource,

o Receipt occurs on the entry of an electronic record into the designated computer resource.

o In case the record is sent to any other computer system, the receipt occurs when it is
retrieved by the addressee.

 When the addressee has not specified any computer resource, the receipt occurs when the
record enters any computer source of the addressee.

License for electronic signatures

It is necessary to obtain a license certificate in order to issue an electronic signature. Section
21 of the Act provides that any such license can be obtained by making an application to the
controller who, after considering all the documents, decides either to accept or reject the
application. The license issued is valid for the term as prescribed by the central government
and is transferable and heritable. It is regulated by terms and conditions provided by the
government.

According to Section 22 of the Act, an application must fulfill the following requirements:

 A certificate of practice statement.

 Identity proof of the applicant.

 Fees of Rupees 25,000 must be paid.

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 Any other document as specified by the central government.

The license can be renewed by making an application before 45 days from the expiry of the
license along with payment of fees, i.e., Rupees 25000. (Section 23)

Any license can be suspended on the grounds specified in Section 24 of the Act. However,
no certifying authority can suspend the license without giving the applicant a reasonable
opportunity to be heard. The grounds of suspension are:

 The applicant makes a false application for renewal with false and fabricated information.

 Failure to comply with the terms and conditions of the license.

 A person fails to comply with the provisions of the Act.

 He did not follow the procedure given in Section 30 of the Act.

The notice of suspension of any such license must be published by the Controller in his
maintained records and data.

Penalties under Information Technology Act, 2000

The Act provides penalties and compensation in the following cases:

Penalty for damaging a computer system

If a person other than the owner uses the computer system and damages it, he shall have
to pay all such damages by way of compensation (Section 43). Other reasons for penalties
and compensation are:

 If he downloads or copies any information stored in the system.

 Introduces any virus to the computer system.

 Disrupts the system.

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 Denies access to the owner or person authorised to use the computer.

 Tampers or manipulates the computer system.

 Destroys, deletes or makes any alteration to the information stored in the system.

 Steals the information stored therein.

Compensation in the case of failure to protect data

According to Section 43A, if any corporation or company has stored the data of its
employees or other citizens or any sensitive data in its computer system but fails to protect
it from hackers and other such activities, it shall be liable to pay compensation.

Failure to furnish the required information

If any person who is asked to furnish any information or a particular document or maintain
books of accounts fails to do so, he shall be liable to pay the penalty. In the case of reports
and documents, the penalty ranges from Rupees one lakh to Rupees fifty thousand. For
books of accounts or records, the penalty is Rs. 5000. (Section 44)

Residuary Penalty

If any person contravenes any provision of this Act and no penalty or compensation is
specified, he shall be liable to pay compensation or a penalty of Rs. 25000.

Offences and their punishments

Section Offence Punishment
Section Tampering with Imprisonment up to three years, or
65 computer source with fine which may extend up to two
documents lakh rupees, or with both.

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Section Computer related Imprisonment for a term which may
66 offences extend to three years or with fine
which may extend to five lakh rupees
or with both.

Section Punishment for imprisonment of either description for

66 B dishonestly receiving a term which may extend to three
stolen computer years or with fine which may extend to
resource or rupees one lakh or with both.
communication
device

Section Punishment for Imprisonment of either description for

66 C identity theft a term which may extend to three
years and shall also be liable to fine
which may extend to rupees one lakh.

Section Punishment for Imprisonment of either description for

66 D cheating by a term which may extend to three
personation by using years and shall also be liable to fine
computer resource which may extend to one lakh rupees.

Section Punishment for Imprisonment which may extend to

66 E violation of privacy three years or with fine not exceeding
two lakh rupees, or with both.

Section Punishment for Imprisonment which may extend to

66 F cyber terrorism imprisonment for life

Section Punishment for Imprisonment of either description for

67 publishing or a term which may extend to five years
transmitting obscene

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 material in electronic and also with fine which may extend to
form ten lakh rupees.

Section Punishment for Imprisonment of either description for

67 A publishing or a term which may extend to seven
transmitting of years and also with fine which may
material containing extend to ten lakh rupees.
sexually explicit act,
etc., in electronic
form

Section Punishment for Punished on first conviction with

67 B publishing or imprisonment of either description for
transmitting of a term which may extend to five years
material depicting and with fine which may extend to ten
children in sexually lakh rupees and in the event of second
explicit act, etc., in or subsequent conviction with
electronic form imprisonment of either description for
a term which may extend to seven
years and also with fine which may
extend to ten lakh rupees.

Section Preservation and Punished with an imprisonment for a

67 C retention of term which may extend to three years
information by and also be liable to fine.
intermediaries

Section Power of Controller Imprisonment for a term not

68 to give directions exceeding two years or a fine not

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 exceeding one lakh rupees or with
both.

Section Power to issue Imprisonment for a term which may

69 directions for extend to seven years and shall also be
interception or liable to fine.
monitoring or
decryption of any
information through
any computer
resource

Section Power to authorize Imprisonment for a term which any

69 B to monitor and extend to three years and shall also be
collect traffic data or liable to fine.
information through
any computer
resource for cyber
security
Section Protected system: Imprisonment of either description for
70 Any person who a term which may extend to ten years
secures access or and shall also be liable to fine.
attempts to secure
access to the
protected system in
contravention of
provision of Sec. 70
Section Indian Computer Imprisonment for a term which may
70 B Emergency Response extend to one year or with fine which
Team to serve as
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 national agency for may extend to one lakh rupees or with
incident response both.
Section Penalty for Imprisonment for a term which may
71 misrepresentation extend to two years, or with fine which
may extend to one lakh rupees, or with
both.
Section Penalty for Breach of Imprisonment for a term which may
72 confidentiality and extend to two years, or with fine which
privacy may extend to one lakh rupees, or with
both.
Section Punishment for Imprisonment for a term which may
72 A disclosure of extend to three years, or with fine
information in which may extend to five lakh rupees,
breach of lawful or with both.
contract
Section Penalty for Imprisonment for a term which may
73 publishing[electronic extend to two years, or with fine which
signature] Certificate may extend to one lakh rupees, or with
false in certain both.
particulars
Section Publication for Imprisonment for a term which may
74 fraudulent purpose extend to two years, or with fine which
may extend to one lakh rupees, or with
both

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Amendments to Information Technology Act, 2000
With the advancement of time and technology, it was necessary to bring some changes to
the Act to meet the needs of society, and so it was amended.

Amendment of 2008
The amendment in 2008 brought changes to Section 66A of the Act. This was the most
controversial section as it provided the punishment for sending any offensive messages
through electronic mode. Any message or information that created hatred or hampered the
integrity and security of the country was prohibited. However, it had not defined the word
‘offensive’ and what constitutes such messages, because of which many people were
arrested on this ground. This section was further struck down by the Supreme Court in the
case of Shreya Singhal v. Union of India (2015).

Another amendment was made in Section 69A of the Act, which empowered the
government to block internet sites for national security and integrity. The authorities or
intermediaries could monitor or decrypt the personal information stored with them.

The 2015 Amendment Bill

The bill was initiated to make amendments to the Act for the protection of fundamental
rights guaranteed by the Constitution of the country to its citizens. The bill made an attempt
to make changes to Section 66A, which provides the punishment for sending offensive
messages through electronic means. The section did not define what amounts to offensive
messages and what acts would constitute the offence. It was further struck down by the
Supreme Court in the case of Shreya Singhal declaring it as violative of Article 19.

Information Technology Intermediaries Guidelines (Amendment) Rules, 2018

The government in 2018 issued some guidelines for the intermediaries in order to make
them accountable and regulate their activities. Some of these are:

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 The intermediaries were required to publish and amend their privacy policies so that citizens
could be protected from unethical activities like pornography, objectionable messages and
images, messages spreading hatred, etc.

 They must provide the information to the government as and when it is sought within 72
hours for national security.

 It is mandatory for every intermediary to appoint a ‘nodal person of contact’ for 24×7
service.

 They must have technologies that could help in reducing unlawful activities done online.

 The rules also break end-to-end encryption if needed to determine the origin of harmful
messages.

Information Technology (Intermediaries Guidelines and

Digital Media Ethics Code) Rules 2021
The government of India in 2021 drafted certain rules to be followed by the intermediaries.
The rules made it mandatory for intermediaries to work with due diligence and appoint a
grievance officer. They were also required to form a Grievance Appellate Tribunal. All
complaints from users must be acknowledged within 24 hours and resolved within 15 days.
It also provides a “Code of Ethics” for the people publishing news and current affairs, which
makes it controversial. Many believe that the rules curtail freedom of speech and expression
and freedom of the press.

The intermediaries were also required to share the information and details of a suspicious
user with the government if there was any threat to the security and integrity of the country.
As a result of this, writ petitions were filed in various high courts against the rules. Recently,
the Bombay High Court stayed in the case of Agij Promotion of Nineteenonea Media Pvt. Ltd.
vs. Union of India (2021) and Nikhil Mangesg Wagle vs. Union of India (2021) the two
provisions of the rules related to the Code of Ethics for digital media and publishers.

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Landmark judgments on Information Technology Act, 2000

Christian Louboutin SAS v. Nakul Bajaj and Ors (2018)

Facts
In this case, a suit was filed by a shoe company to seek an order of injunction against the
defendants for using its trademarks and logo.

Issue
Whether the protection of “safe harbour” under Section 79 of the Act be applied in this
case?

Judgment
The Court in this case observed that the defendant was not an intermediary as their website
was a platform for the supply of various products. It used third-party information and
promoted vendors in order to attract consumers for them. The Court held that e-commerce
platforms are different from the intermediaries and the rights granted to them in Section 79
of the Act. It ordered the intermediaries to work with due diligence and not infringe the
rights of the trademark owner. They must take steps to recognise the authenticity and
genuineness of the products while dealing with any merchant or dealer.

Conclusion
The Act is a step toward protecting the data and sensitive information stored with the
intermediaries online. It gives various provisions which benefit the citizens and protect their
data from being misused or lost. However, with the advancement of e-commerce and online
transactions, it is necessary to deal with problems like internet speed and security,
transactions that are struck, the safety of passwords, cookies, etc.

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 Foreign Exchange Management Act (1999)

Introduction
The Foreign Exchange Management Act, 1999, provides the legal framework for the proper
management and administration of the foreign exchange transactions in the country. The
Act came into force from June 1, 2000 and since then, has been amended from time to time
according to the changing economic policies and objectives of the government. There are
approximately six Rules framed by the Central Government and twenty three Regulations
notified by the Reserve Bank of India (RBI) under the FEMA Act.

The Act extends to the whole of India and also applies to all branches, offices and agencies
outside India owned or controlled by a person resident in India and also to any contravention
thereunder committed outside India by any person to whom this Act applies. The statutory
power under this Act empowers the RBI as well as the Central Government to frame and
pass regulations and the rules from time to time, which are consistent with the foreign trade
policy of the country. The Act provides for a legislative and regulatory framework, for
inbound and outbound investments, and facilitates trade and business opportunity between
Indian and other countries.

FEMA lays down provisions for current account and capital account transactions. The RBI is
the regulatory body and plays a controlling role in the management of the foreign exchange.
The Act also makes provisions for enforcement, penalties, adjudication and appeal. FEMA
along with the various rules and regulation applies to different practical aspects of the
management of foreign exchange in India.

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Background of FEMA
The Defence of India Act, 1939, was temporary yet the first legislative attempt to regulate
and control the foreign exchange in India. With an aim to settle the foreign exchange crisis
in the country, the Foreign Exchange Regulation Act was first enacted in 1947; however, it
was further replaced by the FERA 1957.

The immediate predecessor of FEMA was the Foreign Exchange Regulation Act, 1973. It was
enacted with an objective to regulate the foreign exchange rather than managing it. FERA
aimed to regulate the foreign exchange by preventing the outflow of Indian currency,
regulating dealings in foreign exchange and securities, by imposing several kinds of
restrictions on transactions involving foreign exchange and on persons dealing with foreign
exchange. FERA also aimed to only conserve the foreign exchange and regulate the use of
it. FERA provided for number of criminal offences with mens rea and had provision for easy
arrest by the Enforcement Directorate, even without an arrest warrant. In the light of the
economic liberalisation policy adopted by the Government of India in 1991-92, and the
changing economic and financial landscape in the country, there was a need to modify the
foreign exchange regulation also. Hence, with an aim to modify the FERA and adopt more
liberal policy and approach towards foreign exchange, the FERA was replaced by the Foreign
Exchange Management Act, 1999.

The FEMA 1999 was also formulated to encourage and attract more foreign investments in
the country; hence the regulations related to the foreign investments were also simplified.
Many provisions under FERA were liberalised or removed to facilitate foreign exchange;
however, few others were still included under the FEMA. The FEMA is more transparent in
its approach and implementation than its predecessor. It marks and very clearly identifies
those areas and situations which require specific approval by the RBI or the Central
Government for acquiring or holding foreign exchange. The philosophical approach was
shifted from that of conservation of foreign exchange to one of facilitating trade and
payments as well as developing orderly foreign exchange market.

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 FEMA came into effect on the 1st of June, 2000, replacing the Foreign Exchange Regulation
Act (FERA). The intentions of the Foreign Exchange Management Act are to perhaps, revise
and unite laws that relate to transactions of foreign exchange and encourage an orderly
maintenance and development, of the foreign exchange markets in India. FEMA is not as
restrictive as some of the FERA regulations, and in line with India's economic liberalization
policies.

 consolidate and amend the law relating to foreign exchange

 facilitating external trade and payments

 promoting the orderly development and maintenance of foreign exchange market in India

 49 sections (with sub sections) divided into 7 chapters in the Act

Objectives of FEMA
 To reinforce and amend the law relating to foreign exchange.

 To simplify and ease the external trade and payments.

 To promote the systematized development and maintenance of a healthy foreign exchange

market in India.

 To remove disparity of payments.

 To control and direct the employment business and investment of the non-residents.

 To utilise the foreign exchange resources effectively for the country.

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 Features of FEMA
 FEMA does not apply to the Indian citizens who resides outside India. This criteria is checked
by the number of days a person stays in India for more than 182 days in the preceding
financial year.

 Central Government has the authority given by FEMA to impose restrictions on and
supervise three things which are- payments made to any person outside India or receipts
from them, forex and foreign security deals.

 It specified the areas for holding of forex that required specific permission of the Reserve
Bank of India (RBI) or the government.

 FEMA classified the transaction into a current and capital account.

Applicability of FEMA
 It is applicable to the whole of India.

 Any branch, office, and agency, which is situated outside India, but it is owned or
controlled by a person resident in India. Any violation by these entities committed
outside India will be covered under this Act.

In general, FEMA includes three different types of categories and deals separately which
are:-

1. Person

2. A person resident in India

3. Person resident outside India

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Person

For the object of the Act, a person includes the following:-

 An individual,

 A Hindu undivided family,

 A company,

 A firm,

 An association of persons or a body of individuals whether incorporated or not,

 Any artificial judicial person not falling any of the preceding sub-clauses and,

 Any agency office or branch owned or controlled by such person.

Person resident in India

A. A person residing in India for more than 182 days during the course of a preceding
financial year but it does not include-

a. A person who has gone out of India or stays outside India, in any one of the cases-

 for taking up employment outside India, or

 for carrying on outside India a business or vocation, or

 for any other purpose, in such circumstances as would indicate his intention
to stay outside India for an uncertain period.

b. A person who has come to or stays in India, in any of the following cases-

 for taking up employment in India, or

 for carrying on in India a business or vocation, or

 for any other purpose, in such circumstances, as would indicate his intention to stay
in India for an uncertain period.
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B. Any person or body corporate registered or incorporated in India.

C. An office, branch or agency in India owned or controlled by a person resident outside

India.

D. An office, branch or agency outside India owned or controlled by a person resident in

India.

Person resident outside India

It means a person who is not an Indian resident or not a resident in Indian.

Foreign currency

It means any currency but other than Indian currency.

Foreign Exchange

It means foreign currency and it also includes deposits, credits, and balances which are
payable in foreign currency. Also the drafts, travellers cheques, letters of credit or bills of
exchange which are expressed or drawn in Indian currency but is payable in any foreign
currency.

Also, the drafts, travellers cheques, letters of credit or bills of exchange drawn by banks, or
any institutions or person outside India but are payable in Indian currency.

Foreign Security

It means any security which is in the form of shares, stocks, bonds, debentures or any other
instrument denominated or expressed in foreign currency. It also includes foreign securities
which are denominated or expressed in foreign currency, but where the redemption or any
form of return on these securities such as interest or dividends should be payable in Indian
currency.

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Authorised Person

Section 2(c) of the Foreign Exchange Management Act,1999 defines Authorised person. An
authorised person is a person who has given the authority for the conversion of the foreign
exchange.

For example, if an Indian resident wants to visit the USA and requires their currency which
is dollars so for the exchange he/she will only go to the authorised person or if a person
residing abroad wants to visit India and requires Indian currency then similarly he/she will
approach an authorised person for the foreign exchange.

The Reserve Bank on an application made on this behalf may authorise any person to deal
in foreign exchange or in foreign securities. So, an authorised person is governed under this
section which states 4 persons as an authorised person-

 Authorised dealer, or

 Money changer, or

 Off-shore banking unit, or

 Any other person for the time being authorised to deal in foreign exchange or foreign
securities under Section 10 (1) of FEMA.

Section 10 of the Act in brief

 Authorisation under this Section should be in writing and should be subjected to the
regulations mentioned in that. –

 Any authorised person made, the reserve bank at any time can revoke such person
if it is satisfied that-

 It is in the public interest to do so; or

 An authorised person has failed to comply with the conditions on the grounds for
which the authorisation was granted; or

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  the authorised person has violated any of the provisions, rules, regulations
mentioned in this Act.

The Reserve Bank may order an authorised person to comply with a general or special
direction to deal with the foreign exchange or foreign securities.

And also if any transaction which involves any foreign exchange or foreign currency which is
not in compliance with the terms of this provision then an authorised person without any
prior permission from the Reserve Bank must not engage in any type of this transaction.

Before undertaking any transaction in foreign exchange on behalf of any person an

authorised person shall require the declaration or information of that person that the
transaction is not designed for the purpose of contravention of this Act, rule or regulation
etc.

If the person refuses to undertake the declaration, then an authorised person shall refuse
in writing to undertake the transaction and also if the authorised person believes that a
person contravenes the provision of the Act can report the matter to the Reserve Bank.

Other than the authorised person, if any person acquires or purchases the foreign exchange
and use it for any other purpose which is not permissible under the provisions of this Act or
does not surrender within a specified time to the authorised person shall be considered to
have committed the violation under the provisions of this Act.

How Inflow and Outflow of Foreign Exchange affects

the Current and Capital Account Transaction?
So accounts are broadly classified into: -

 Capital account transaction

 Current account transaction

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Capital account transactions- defined under Section 2(e).

It means the transactions which alter or changes the asset or liabilities, including contingent
liabilities, outside India of a person resident in India, or

Alters or changes the asset or liabilities, including contingent liabilities in India of a person
resident outside India.

And also includes those transactions which are referred to in Section 6(3).

The permissible capital account transactions are defined under the following two categories:

1. For person resident in India

2. For person resident outside India

For example, Nim, a person resident in India purchases a property in India. Is FEMA
applicable to him? The answer to this question is no because there is no involvement of
foreign exchange.

To apply FEMA in any transaction the involvement of one person should be from India and
the other person should not be a resident in India.

Let’s understand this with another example, Mr. Lucas, a person resident outside India
purchases shares of an Indian company. Is FEMA applicable on this transaction? The answer
is yes because Mr. Lucas is a person resident outside India and asset and liability is altered
of an Indian company then FEMA is applicable.

Current account transaction- defined under Section 2(j).

It means transaction other than a capital account transaction and includes:-

 payments due in connection with foreign trade, other current business, services, and
short-term banking and credit facilities in the ordinary course of business,

 payments due as interest on loans and as net income from investments,

24
  remittances for living expenses of parents, spouse and children residing abroad, and

 expenses in connection with foreign travel, education and medical care of parents,
spouse and children.

And any expenditure which is not covered under capital account transaction that will be
considered in current account transaction even though it is not mentioned in the above
points.

Under this Act, freedom has been provided for selling and drawing of foreign exchange to
or from an authorized person for undertaking current account transactions.

However, the Central Government has been vested with powers in consultation with
Reserve Bank to impose reasonable restrictions on current account transactions. The Central
Government has framed Foreign Exchange Management (Current Account Transactions)
Rules, 2000 dealing with various aspects of current account transactions

Restricted transactions include the remittance of lottery winnings, income from

racing/riding, purchase of lottery tickets, banned/proscribed magazines, football pools etc.

Also, Nepal and Bhutan allowed the use of Indian currency for local transactions and the
citizens of these countries were considered at par with Indian citizens from a legal
standpoint. Because of these provisions allowing for a common currency market in India,
Nepal and Bhutan, use of forex for transactions in – or with the residents of – Nepal and
Bhutan were also prohibited.

Structure of FEMA-
The Act is divided into 7 chapters, which are further divided into 49 sections.

The following is the scheme of chapters under FEMACHAPTER I – Preliminary (Section 1&2)

CHAPTER II- Regulation and Management of Foreign Exchange (Section 3 –9)

25
 CHAPTER III – Authorised Person (Section 10 –12)

CHAPTER IV – Contravention and Penalties (Section 13-15)

CHAPTER V – Adjudication and Appeal (Section 16- 35)

CHAPTER VI – Directorate of Enforcement (Section 36-38)

CHAPTER VII- Miscellaneous (Section 39 – 49)

It also includes-

 Rules made by Ministry of Finance under Section 46 of FEMA (Subordinate or delegated

Legislations)

 Regulations made by RBI under Section 47 of FEMA (Subordinate or delegated Legislations)

 Master Direction issued by RBI every year

 Foreign Direct Investment policy issued by the Department for Promotion of Industry and
Internal Trade (DPIIT).

 Notifications and Circulars issued by Reserve Bank of India

Rules made under FEMA:

 FEM (Encashment of Draft, Cheque, Instrument and Payment of Interest) Rules, 2000

 FEM (Authentication of Documents) Rules, 2000

 FEM (Current Account Transaction) Rules, 2000

 FEM (Adjudication Proceedings and Appeal) Rules, 2000

 FEM (Compounding Proceedings) Rules, 2000

26
 The Appellate Tribunal for Foreign Exchange (Recruitment, Salary and Allowances and Other
Conditions of Service of Chairperson and Members) Rules, 2000.

Regulations made under FEMA:

 FEM (Acquisition and Transfer of Immovable Property outside India) Regulations, 2015

 FEM (Borrowing and Lending in Rupees) Regulations, 2000

 FEM (Borrowing or Lending in Foreign Exchange) Regulations, 2000

 FEM (Deposit) Regulations, 2016

 FEM (Export and Import of Currency) Regulations, 2015

 FEM (Guarantees) Regulations, 2000

 FEM (Acquisition and Transfer of Immovable Property in India) Regulations, 2000

 FEM (Establishment in India of Branch office or a Project office or any other Place of
Business) Regulations, 2016

 FEM (Export of Goods and Services) Regulations, 2015

 FEM (Foreign Currency Accounts by a Person Resident in India) Regulations, 2015

 FEM (Insurance) Regulations, 2015

 FEM (Investment in Firm or Proprietary Concern in India) Regulations, 2000

 FEM (Manner of Receipt and Payment) Regulations, 2016

 FEM (Permissible Capital Account Transactions) Regulations, 2000

 FEM (Possession and Retention of Foreign Currency) Regulations, 2015

 FEM (Realization, Repatriation and Surrender of Foreign Exchange) Regulations, 2015

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 FEM (Remittance of Assets) Regulations, 2016

 FEM (Transfer or Issue of Security by a person Resident outside India) Regulations, 2017

 FEM (Foreign Exchange Derivative Contracts) Regulations, 2000

 FEM (Transfer or Issue of any Foreign Security) Regulations, 2004

 FEM (Crystallization of inoperative Foreign Currency Deposits) Regulations, 2014

 FEM (Transfer or Issue of any foreign Security) Regulations, 2004

 FEM (International Financial Services Centre) Regulations, 2015

 FEM (Regularization of Assets Held Abroad by a Person Resident in India) Regulations, 2015.

Conclusion
FEMA only permits an authorized person to deal in Foreign exchange or foreign security
(shares, stocks, bonds etc). FEMA became the need of an hour to be replaced by an old act
which was FERA as FERA was stringent and FEMA is liberal and also more flexible than FERA.

Any person who wants to do business in a foreign country or to buy foreign securities he/she
needs an authorised person to do that and also to understand this Act in order to avoid
penalties and he/she should also be aware of the restrictions on it.

The main objective of FEMA was to consolidate and amend the laws relating to the foreign
exchange with the reason to facilitate the external trade and payments and for the
maintenance of the foreign exchange market in India. FEMA’s replacement with FERA to an
extent has boosted the Indian economy as it is flexible and also a civil offence in comparison
with FERA.

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 The Competition Act, 2002

Introduction
The Competition Act, 2002 was enacted by the Parliament of India and governs Indian
competition law. It replaced the archaic The Monopolies and Restrictive Trade Practices Act,
1969. Under this legislation, the Competition Commission of India was established to
prevent the activities that have an adverse effect on competition in India. This act extends
to whole of India.

It is a tool to implement and enforce competition policy and to prevent and punish anti-
competitive business practices by firms and unnecessary Government interference in the
market. Competition law is equally applicable on written as well as oral agreement,
arrangements between the enterprises or persons.

The Competition Act, 2002 was amended by the Competition (Amendment) Act, 2007 and
again by the Competition (Amendment) Act, 2009.

The Act establishes a Commission which is duty bound to protect the interests of free and
fair competition (including the process of competition), and as a consequence, protect the
interests of consumers. Broadly, the commission's duty is: -

 To prohibit the agreements or practices that have or are likely to have an appreciable
adverse effect on competition in a market in India, (horizontal and vertical agreements /
conduct);

 To prohibit the abuse of dominance in a market;

 To prohibit acquisitions, mergers, amalgamations etc. between enterprises which have or

are likely to have an appreciable adverse effect on competition in market(s) in India.

In addition to this, the Competition Act envisages its enforcement with the aid of mutual
international support and enforcement network across the world.
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History
The Government of India in April 1964 appointed the Monopolies Inquiry Commission under
the Chairmanship of Justice K. C Das Gupta, a judge of the Supreme Court, to inquire into
the extent and effect of concentration of economic power in private hands and prevalence
of monopolistic and restrictive trade practices in important sectors of economic activity
other than agriculture.

To regulate advertising, in 1984, Parliament inserted a chapter on unfair trade practices in

the Monopolies and Restrictive Trade Practices Act, 1969.

The Monopolies and Restrictive Trade Practices Commission was constituted in the year
1970.

The Monopolies and Restrictive Trade Practices Act, 1969 had its genesis in the Directive
Principles of State Policy embodied in the Constitution of India. It received the assent of the
President of India on 27 December 1969.[7] The Monopolies and Restrictive Trade Practices
Act was intended to curb the rise of concentration of wealth in a few hands and of
monopolistic practices. It was repealed in September 2009. The Act has been succeeded by
The Competition Act, 2002.

The Competition Bill, 2001 was introduced in Lok Sabha by Finance Minister Arun Jaitley on
6 August 2001.

Objective of the Competition Act, 2002

An Act, keeping in view of the economic development of the country, was laid

down to provide for an establishment of a commission with the following object:

-to prevent practices having adverse effect on competition,

30
 -to promote and sustain competition in markets,

-to protect the interests of consumers,

-to ensure freedom of trade carried on by other participants in markets in India and

-for matters connected therewith or incidental thereto.

Key concept of Competition Act, 2002

Anti-Competitive Agreements: Enterprises, persons or associations of enterprises or
persons, including cartels, shall not enter into agreements in respect of production, supply,
distribution, storage, acquisition or control of goods or provision of services, which cause or
are likely to cause an "appreciable adverse impact" on competition in India. Such
agreements would consequently be considered void. Agreements which would be
considered to have an appreciable adverse impact would be those agreements which-

 Directly or indirectly determine sale or purchase prices,

 Limit or control production, supply, markets, technical development, investment or

provision of services,

 Share the market or source of production or provision of services by allocation of inter alia
geographical area of market, nature of goods or number of customers or any other similar
way,

 Directly or indirectly result in bid rigging or collusive bidding.

Types of agreement: A 'horizontal agreement' is an agreement for co-operation between

two or more competing businesses operating at the same level in the market. A vertical
agreement is an agreement between firms at different levels of the supply chain. For
instance, a manufacturer of consumer electronics might have a vertical agreement with a

31
 retailer according to which the latter would promote their products in return for lower
prices.

Abuse of dominant position: There shall be an abuse of dominant position if an enterprise

imposes directly or indirectly unfair or discriminatory conditions in purchase or sale of goods
or services or restricts production or technical development or create hindrance in entry of
new operators to the prejudice of consumers. The provisions relating to abuse of dominant
position require determination of dominance in the relevant market. Dominant position
enables an enterprise to operate independently or affect competitors by action

Combinations: The Act is designed to regulate the operation and activities of combinations,
a term, which contemplates acquisition, mergers or amalgamations. Combination that
exceeds the threshold limits specified in the Act in terms of assets or turnover, which causes
or is likely to cause adverse impact on competition within the relevant market in India, can
be scrutinized by the commission.

Competition Commission of India: Competition Commission of India is a body corporate

and independent entity possessing a common seal with the power to enter into contracts
and to sue in its name. It is to consist of a chairperson, who is to be assisted by a minimum
of two, and a maximum of six, other members.[16][17] It is the duty of the commission to
eliminate practices having adverse effect on competition, promote and sustain competition,
protect the interests of consumers and ensure freedom of trade in the markets of India. The
commission is also required to give opinion on competition issues on a reference received
from a statutory authority established under any law and to undertake competition
advocacy, create public awareness and impart training on competition issues.

Commission has the power to inquire into unfair agreements or abuse of dominant position
or combinations taking place outside India but having adverse effect on competition in India,
if any of the circumstances exists:

 An agreement has been executed outside India

 Any contracting party resides outside India

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 Any enterprise abusing dominant position is outside India

 A combination has been established outside India

 A party to a combination is located abroad.

 Any other matter or practice or action arising out of such agreement or dominant position
or combination is outside India.

To deal with cross border issues, Commission is empowered to enter into any Memorandum
of Understanding or arrangement with any foreign agency of any foreign country with the
prior approval of Central Government.

Review of orders of Commission: Any person aggrieved by an order of the commission can
apply to the commission for review of its order within thirty days from the date of the order.
Commission may entertain a review application after the expiry of thirty days, if it is satisfied
that the applicant was prevented by sufficient cause from preferring the application in time.
No order shall be modified or set aside without giving an opportunity of being heard to the
person in whose favour the order is given and the Director General where he was a party to
the proceedings.

Appeal: Any person aggrieved by any decision or order of the Commission may file an appeal
to the Supreme Court within sixty days from the date of communication of the decision or
order of the commission. No appeal shall lie against any decision or order of the commission
made with the consent of the parties.

Penalty: If any person fails to comply with the orders or directions of the Commission shall
be punishable with fine which may extend to ₹ 1 lakh for each day during which such non
compliance occurs, subject to a maximum of ₹ 10 crore.

If any person does not comply with the orders or directions issued, or fails to pay the fine
imposed under this section, he shall be punishable with imprisonment for a term which will
extend to three years, or with fine which may extend to ₹ 25 crores or with both.

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 Three stage transition that The Competition Act, 2002 went through

The Act calls for a three-stage transition that will replace the MRTP Commission with the CCI
over the first three years following the date of announcement of the Act.

First stage

1. The MRTP Commission will cease to function at the beginning of the first year, and CCI will
take over as an advising body.

2. The Consumer Protection Act of 1986 provides for the transfer of the Consumer Protection
Commission’s open unfair trade conduct proceedings to the relevant consumer courts.

3. The CCI must take up the pending cases involving monopolistic and restrictive trade
practises for adjudication.

Second stage

During the second year, CCI would scrutinise the anti-competitive practices.

Third stage

The CCI would start regulating mergers and acquisitions that would have a negative impact
on competition during the third year.

Regulatory framework under The Competition Act, 2002

Any law must be successfully implemented within an institutional structure, and
competition law is no exception. The Raghavan Committee’s mandate included, among
other things, the requirement to suggest both the legislative framework and the
administrative setup for the modernised competition regime in India. This was done in
recognition of the need for an appropriate legislative as well as administrative set up to
implement the law. While the judiciary is frequently tasked with enforcing competition laws,
the Raghavan Committee believed that placing this responsibility in a specialised agency and
34
 naming it the “Competition Commission of India” would improve the administration of
competition law and consumer welfare in an era of specialisation. Additionally, it was
suggested that the CCI should be a body with multiple members.

1. Independent and unaffected by political and financial restraints.

2. Should have independent prosecutorial, adjudicative, and investigative functions.

3. Should follow rules and be transparent, non-discriminatory, and

4. Should engage in constructive advocacy for laws that influence competitiveness.

The Competition (Amendment) Bill, 2006 was referred to the Parliamentary Standing
Committee for review and report, and, as a result, recommendations made by that
committee were taken into consideration. In the latter half of 2007, the Act of 2002 was
extensively changed. Beginning on May 20, 2002, the law’s two enforcement facets, “anti-
competitive agreements” and “abuse of dominance”, began to be put into operation. This
coincided with the installation of a new government at the centre. The third area, titled
“regulation of combination,” was brought into force soon during that time as well. The MRTP
Act, 1969 was repealed as of the first of September 2009, according to a notification from
the government. As a result, CCI is currently the only national authority to handle
competition-relLoopholes in The Competition Act, 2002

To improve the effectiveness of India’s competition regime, several factors still need to be
taken into account by the government and the Commission. Being a late arrival, Indian
competition law had the benefit of absorbing a few aspects of other nations’ competition
laws.

1. Experts believe that the present Act might have included a number of significant issues of
competition law that Indian law has overlooked. For instance, settlement and plea
agreement provisions, which are present in other nations, speed up and improve the
regulatory and adjudicative process. India chose not to adopt such a measure, which is one
of the causes of delays in receiving a final decision.

35
2. The ambiguity in the powers of commission is another issue that has recently come up. A
number of cases that were heard by the Competition Appellate Tribunal have been
dismissed because the Commission did not follow the rules of natural justice or committed
other procedural blunders.

3. Another issue that needs to be addressed by the government is the growing backlog of cases
as a result of staff shortages. The Commission needs to reconsider the role that competition
laws play in the overlap between intellectual property laws and competition rules, which is
another area. To accomplish the desired goals for which the Competition Act was adopted,
such matters must be seriously considered by the relevant authorities.

4. If the Director-report General identifies a violation of the Act, there is no provision in the
present Competition Act, 2002, for the Competition Commission of India (CCI) to close a
case. Even if the DG claimed otherwise, the Commission has closed the majority of cases.
Although Section 26 of the 2002 Act makes reference to a number of circumstances, it does
not cover the situation in which the Commission can disagree with the DG after discovering
a violation. It appears that the present Act’s authors did not consider this possibility while
they were writing it.

When a case is submitted, the Commission instructs the Director-General to launch an

inquiry into the claims, following which the DG is required to deliver a report within a given
timeframe. The Commission begins hearing from the affected parties based on the report.
The CCI only passes a final order after concluding its own proceedings in the manner it sees
suitable. The Act, however, makes no provision for the CCI to close a matter if the DG
identifies a violation in its report.

A situation where the aggrieved party is left without the ability to appeal to higher
authorities such as the Competition Appellate Tribunal (COMPAT) or the Supreme Court
once the case is overturned by the commission results from the absence of such a vital
provision.

36
5. The business environment has seen significant change both internationally and in India since
the passage of the Competition Act, 2002. More and more companies are now operating
online, and there are novel business models that were unthinkable ten years ago.

Due to the rapid rate of innovation in high-tech disruptive marketplaces, traditional

understandings of terms like “market,” “monopoly,” “dominance,” and “agreement” have
become problematic for competition law. Another reason to be concerned is the present
tendency in India of regulators to create their own silos and try to control businesses in their
own fields unilaterally, whether it be the Telecom Regulatory Authority of India (TRAI) or
the Competition Commission of India.

ated issues.

Landmark judgments on Competition Law

Vinod Kumar Gupta v. WhatsApp Inc (2016)
The Competition Commission of India joined an exclusive group of competition law
authorities on January 24, 2021, and began taking steps to address privacy and competition
law. In accordance with the Competition Act, 2002, the CCI issued a suo
motu decision directing an investigation into Whatsapp for alleged abuse of dominance in
relation to its newly amended privacy policy as of 2021. This was a significant improvement
over the earlier case of Vinod Kumar Gupta v. WhatsApp Inc. (2016)., in which the CCI
decided not to address privacy issues since they were covered by other laws governing
information technology.

In its market assessment of the telecom sector, released on January 22, 2021, CCI recently
demonstrated a significant shift in attitude by noting that privacy can take the shape of non-
price competition. It was then swiftly put into practise through this suo motu investigation
order against Whatsapp, wherein CCI acknowledged its departure from the prior ruling in

37
the Vinod Kumar Gupta case, stating that unreasonable data collection and sharing could
give dominant players a competitive advantage, potentially leading to abuse of dominance.
For the sake of this study, it will be limited to critically analysing CCI’s methodology and
domain while identifying Whatsapp’s ostensibly exploitative behaviour at the intersection
of privacy and competition law.

Conclusion
The Competition Act of 2002 was passed by the government as a measure to keep up with
the rapidly evolving economic conditions and is consistent with the new economic
paradigms of globalisation, privatisation, and liberalisation. It shows the country’s readiness
to transition from a planned economy to one with a free market but with sufficient checks
and controls. Market rivalry that is healthy is crucial for innovation and economic
expansion. Injurious trade practices, including the formation of cartels and monopolies, are
against public policy, even though the Indian economy has advanced from its protective
position regarding domestic sectors.

In addition to emphasising regulation, the Act also adopted the idea of “Competition
Advocacy” to advance competition, raise awareness, etc. By imposing severe penalties on
the parties involved in anti-competitive acts, the Commission occasionally makes its
presence felt in the market. The consumer now benefits from healthy market competition
and has the opportunity to choose the most affordable and advantageous choice available
to him, which is the main advantage of such acts. Because the general population is now
required to accept the ludicrous terms and conditions imposed by the major participants in
the market, it hurts not only the little manufacturers but also them. The ideal of economic
equity is undermined when the wealthy increase their wealth at the expense of the poor.
To monitor such tactics, a body like the Competition Commission of India is necessary.

38
 Limited Liability Partnership Act, 2008

Introduction
A partnership is usually perceived to be a contract between two individuals for carrying out
a business with the objective of profit where the partners have unlimited liability for the
acts and omissions of the firm and the other partners. The partnership model was prominent
during the medieval period. However, with the advent of the concept of limited liability, the
partnership model was regarded as risky and uncertain by businesses. Thus, it became
necessary to introduce the concept of limited liability partnerships.

A limited liability partnership (hereafter LLP) confers limited liability on the partners while
at the same time providing them with the flexibility associated with partnership-based
business models. The flexible character of an LLP has made it one of the most preferred
forms of business in modern times.

The Limited Liability Partnership Act, 2008 (hereinafter “the Act” provides the provisions
relating to the regulation of limited liability partnerships in India. This article highlights the
salient features and the amendments to the Act and provides a critical analysis of its
effectiveness.

Limited liability partnership

Section 25 of the Indian Partnership Act, 1932 provides that every partner will be jointly and
severally liable for the acts done by the other partners in their capacity as partners. Section
9 of the British Partnership Act, 1890 provides that every partner will be jointly liable for the
firm’s contract and jointly and severally liable for the firm’s wrongs. Thus, we see that the
position of liability of partners in India is quite different from the liability of partners in
England. Businesses involving unlimited and personal liability are usually perceived to be
risky, and therefore, the need arises to provide an alternative with limited liability.

39
 A limited liability partnership is a form of business organisation in which the partners can
structure their business in the traditional partnership form and enjoy limited liability at the
same time. An LLP is a hybrid between a partnership firm and a company.

As per Section 2(m) of the LLP Act, an LLP which is found, incorporated or registered in a
foreign country and which sets up business in India is known as a foreign limited liability
company. Section 59 of the Act empowers the Central Government to frame rules for
regulating the conduct of business by foreign limited liability companies in India.

Nature and Characteristics of LLP

• The LLP is a body corporate having separate entity from its partners and perpetual
succession.

• An LLP in India is governed by the Limited Liability Partnership Act, 2008 and, therefore, the
provisions of Indian Partnership Act, 1932 are not applicable to it.

• Every Limited Liability Partnership shall use the words “Limited Liability Partnership” or its
acronym “LLP” as the last words of its name.

• An LLP is a result of an agreement between the partners, and the mutual rights and duties
of partners of an LLP are determined by the said agreement subject to the provisions of LLP
Act, 2008.

• The LLP being a separate legal entity is liable for all its assets, with the liability of the partners
limited only to the amount of contributed by them just like a company. No partner will be
individually liable for any wrongful acts of other partners. However if the LLP was formed
for the purpose of defrauding creditors or for any fraudulent purpose, then the liability of
the partners who had the knowledge will be unlimited.

40
• There must be at least two designated partners in every LLP of whom one shall be resident
in India.

• Every LLP shall maintain annual accounts to show its true state of affairs. It must prepare a
statement of accounts and solvency every year and file with the Registrar.

The Central Government may, whenever it thinks fit, investigate into the affairs of an LLP by
appointing a competent Inspector.

• A firm, private company or an unlisted public company have the option to convert itself into
LLP as per the provisions of the Act. Upon such conversion, the Registrar will issue a
certificate to that effect. After issuance of a certificate of registration, all the property of the
firm or the company, all assets, rights, obligations relating to the company shall be vested
in the LLP so formed, and the firm or the company stands dissolved. The name of the firm
or the company is then removed from the Registrar of Firms or Registrar of Companies, as
the case may be.

• Like the company, an LLP can be wound up either voluntary or by the Tribunal established
under The Companies Act, 2013

The LLP Act 2008 also enables the Central Government to apply the provisions of the
Companies Act whenever it thinks appropriate.

Advantages of LLP
1. Easy to form: Forming an LLP is an easy process. It is less complicated and time consuming
unlike the process of formation of a company.

41
2. Liability: The partners of the LLP is having limited liability which means partners are not
liable to pay the debts of the company from their personal assets. No partner is
responsible for any other partner’s misconduct.

3. Perpetual succession: The life of the Limited Liability Partnership is not affected by
death, retirement or insolvency of the partner. The LLP will get wound up only as per
provisions of the LLP Act.

4. Management of the company: An LLP has partners, who own and manage the business.
This is different from a private limited company, whose directors may be different from
shareholders.

5. Easy transferability of ownership: There is no restriction upon joining and leaving the
LLP. It is easy to admit as a partner and to leave the firm or to easily transfer the
ownership to others.

6. Taxation: an LLP is not subject to Dividend Distribution Tax. (DDT). Distributed profits in
the hands of the partners is not taxable. For Income Tax purposes, LLP is treated on par
with partnership firms.

7. No compulsory audit required: Every business has to appoint an auditor for checking the
internal management of the company and its accounts. However, in the case of LLP,
there is no mandatory audit required. The audit is required only in those cases where
the turnover of the company exceeds Rs 40 lakhs and where the contribution exceeds Rs
25 lakhs.

8. Fewer compliance requirements: An LLP is much easier and cheaper to run than a
private limited company as there are just three compliances per year. On the other hand,
a private limited company has a lot of compliances to fulfil and has to compulsorily
conduct an audit of its books of accounts.

9. Flexible agreement: The partners are free to draft the agreement as they please, with
regard to their rights and duties.

10. Easy to wind-up: Not only is it easy to start, it is also easier to wind-up an LLP, as
compared to a private limited company.

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 Disadvantages of LLP
1. Restricted Access to Capital Markets: LLPs are small form of business and cannot get its
shares listed in any stock exchange through initial public offerings. With this restriction,
limited liability partnerships may find it difficult to attract outside investors to buy the
shares.

2. Rights of partners: An LLP can be structured in such a way that one partner has more
rights than another. So it isn’t a one vote per share system. So, some lesser partners may
feel compromised if higher shareholders choose to move the business in a direction that
affects their interests.

3. Public Disclosure of LLP Information: A LLP must file its Annual Returns, Financial
Statements etc to the Registrar of LLPs annually. Which become public document once
filed with Registrar of LLPs and may be inspected by general public including competitors
by paying some fees to the Registrar of LLPs. Information disclosure can make an entity
competitively disadvantaged. Competitors — especially those not required to disclose
any documents — can access that information and use it to improve their own business.

4. Limitations in Formation of LLP: LLP cannot be formed by a single person. A non —

resident Indian and a Foreign National willing to form a LLP in India must have one person
resident in India to act as Designated Partner. Further FDI in LLP is allowed only through
government route only and that too in those sectors only where 100% FDI is allowed
under automatic route under the FDI Policy. This limitation makes LLP an unattractive
form of business.

5. Exit Options are Not Easy for LLPs in default of Filings: A LLP who has defaulted in filings
its statement of accounts and annual return with the Registrar of LLPs, willing to shut
down its operations and wind up, will have to make its default good first by filing
necessary e-forms with late filing fee. This provision is making LLP an unattractive form
of business as in India there are many businesses that are ignorant about compliances.

43
6. Limitation in External Commercial Borrowings (ECB): Limited Liability Partnerships are
not allowed to raise ECB. Therefore, a LLP cannot avail commercial loans from its foreign
partners, FIIs, Foreign Banks, and any financial institution located outside India.

Procedure for Incorporation of LLP

The incorporation document shall be filed in Form FiLLiP (Form for incorporation of
Limited Liability Partnership) with the Registrar having jurisdiction over the State in
which the registered office of the limited liability partnership is to be situated. if an
individual required to be appointed as designated partner does not have a DPIN or DIN,
application for allotment of DPIN shall be made in Form FiLLiP The application for
allotment of DPIN shall not be made by more than two individuals in Form FiLLiP: an
application for reservation of name may be made through Form FiLLiP: Provided also
that where an applicant had applied for reservation of name under rule 18 in Form RUN-
LLP (Reserve Unique Name-Limited Liability Partnership) and which has been approved,
he may fill the reserved name as the proposed name of limited liability partnership. The
Summaries procedure for incorporation of LLP is as under:

Procure DSC and DIN: Procure DSC and DIN for the individuals acting as Designated
Partners of LLP. A person, who already has a DIN, is not require to obtain any new DIN.
Existing DIN to be used for Designated Partner (However, DIN should have all latest
details such as resident of India, name, address etc.).

Any person proposed to become the Designated Partner in a new LLP shall have to make
an application through eform FiLLiP. An application for allotment of DIN up to two
Designated Partners, shall be filed in eform FiLLiP with the Registrar, in case of proposed
Designated Partners not having approved DIN.

Name reservation: The first step in incorporation of an LLP is reservation of name of the
proposed LLP. There are two ways of reserving name of the proposed LLP.

 File an application under LLP-RUN for ascertaining availability and

reservation of the name of an LLP
44
  Name can be proposed in eform FiLLiP, an application for incorporation of
LLP
Incorporate LLP: After reserving a name under LLP-RUN, applicant should file eform
FiLLiP for incorporating a new LLP. eform FiLLiP contains the details of LLP proposed to
be incorporated, Partners’/ Designated Partners’ details and consent of the Partner/
Designated Partners to act as Partners/ Designated Partners. On approval of the form,
the RoC will issue the certificate of incorporation.

Where the Registrar, on examining Form FiLLiP, finds that it is necessary to call for further
information or finds such application or document to be defective or incomplete in any
respect, he shall give intimation to the applicant to remove the defects and re-submit
the e-form within fifteen days from the date of such intimation given by the Registrar.

After re-submission of the document, if the Registrar still finds that the document is
defective or incomplete in any respect, he shall give one more opportunity of fifteen
days time to remove such defects or deficiencies: Provided that the total period for re-
submission of documents shall not exceed thirty days.

Documents to be attached with form:

1. FiLLiP: Consent of partners;

2. In case of partners are body corporates, certified true copy of board resolution passed
by such body corporate partners;

3. Proof of address of registered office of LLP;

4. Subscribers’ sheet including consent;

5. Detail of LLP(s) and/ or company(s) in which partner/ designated partner is a director/

partner;

6. Copy of approval obtained from any sectoral regulator/in-principle approval;

7. Identity and address proof of individuals acting as Partner and/or Designated Partner;

8. List of main objects of an LLP;

9. If the name proposed is liked to registered trademark, NoC from the trade mark owner;
45
10. NOC of foreign body corporate for usage of name (In case of foreign entities intending
to incorporate LLPs in India)

LLP Agreement
After incorporation of LLP, the partners should execute LLP Agreement and a copy of
executed agreement is required to be filed with the RoC in e-form 3 within 30 (thirty)
days from the date of incorporation of LLP. Section 2(1)(O) of the Limited Liability
Partnership Act, 2008 defines it as under:

“Limited liability LLP Agreements mean any written agreement between the partners of
the Limited Liability Partnership or between the Limited Liability Partnership and its
partners which determines mutual rights and duties of the partners and their rights and
duties in relation to that limited liability partnership [section 2(1)(0)].”

It is compulsory to make and execute a LLP agreement within 30 days of the

incorporation of LLP.

The value of stamp paper on which the LLP agreement must be printed or stamp duty to
be paid on the LLP agreement is dependent on the state of incorporation and amount of
capital contribution from the partners

How to draft LLP agreement

LLP agreement defines the roles, responsibilities, rights, and powers of the partners to
LLP and to each other. Hence, it creates the foundation for the smooth running of LLP.
LLP agreement clarifies the managerial, operational as well administrative
responsibilities and sets clear methodologies for decision making, adding a new partner
and disassociation of existing partner.

How to prepare LLP agreement

• Draft the agreement and print it on a Stamp paper of requisite value. Value of Non-
judicial Stamp Paper depends on the state in which Registration of LLP is done and on
the amount of capital contribution.
46
 All partners should sign the agreement at the bottom of all pages

• Two witnesses should sign the agreement at the end of the document

• Each partner should be provided a copy of the agreement

Essential Clauses to be included in the LLP agreement

S. Section no Clauses to be included in the LLP Agreement

No along with
the
relevant
rules

1 Section INTERPRETATION / DEFINITIONS

23(4)
This clause is the essence of any LLP agreement. An LLP
Agreement must provide for various definitions such as
the definition of designated partners, the accounting
period, business of LLP and the name with which the LLP
will be known. The agreement must also provide with full
address of the registered office of the LLP as well as the
address of all the partner.

2 Section DESIGNATED PARTNERS

7(1) and
LLP agreement shall clearly mention the name, age and
7(2) r.w.
address of each of the Designated Partners correctly.
rules 7 to 9
of the LLP
Rules 2009

3 Section NAME OF THE LLP AND CHANGES TO IT

5,16,19
This clause shall state that business of the LLP shall be
read with
carried on in the name and style of [Name of LLP]. Any
47
 Rule 18 of change in the name of the LLP shall be notified to the
LLP Rules Registrar by the Designated Partner(s) in accordance
with the provisions of the LLP Act and the Rules.

4 Section 13 REGISTERED OFFICE OF THE LLP

read with
LLP agreement shall state that partnership business shall
Rule 17 of
be carried on at the under mentioned address, which
LLP rules
shall also be its registered office The business shall also
be carried from such other places as may be mutually
decided by the partners from time to time.

5 Section BUSINESS OF THE LLP

23(4)
This clause must clearly specify the nature of the
r.w. the business that the LLP will be carrying on.. The LLP may
First engage in any and all activities necessary, desirable or
schedule incidental to the accomplishment of the conduct of such
to the LLP business of the LLP including but not limited to such
Act 2008 ancillary business. It may also include any other business
conducted in such manner as may be decided by the
majority of Partners

from time to time.

6 Section CAPITAL CONTRIBUTION

3(3),32
Total contribution of the LLP and the contribution by
and 33
each partner along with the percentage of contribution
r.w. rule 2
to be mentioned in this clause. .If any partner is
in the First
contributing in non-monetary form, that is, he / she is
schedule
going to render services instead of monetary
to the LLP
contribution, add the same. Manner of Additional capital
Act 2008
contribution by partner during the course of agreement
to be included as well

48
 .Manner in which contribution can be withdrawn by the
partners shall also be

stated in this clause.

7 Section PROFIT SHARING RATIO

42(1) of
An ideal LLP Agreement must also mention the ratio in
the LLP Act
which the profits and the losses of the business will be
2008
shared among the partners. The partners must clearly
state the amount of profit that each member receives, or
the amount of the loss that they’re liable for will be set
out in the agreement.

8 Section RIGHTS AND DUTIES OF DESIGNATED PARTNERS

23(4) read
The LLP Agreement must specify the various rights and
with the
duties of the Designated Partners as may be mutually
First
agreed by them. In the absence of such separate
schedule
agreement between the partners about such rights and
of LLP Act
duties, etc., the provisions of Schedule I of the Limited
2008
Liability Act, 2008 will apply as given in Section 23(4) of
the said act.

9 Section ADMISSION OF PARTNER, RETIREMENT RESIGNATION

22,23read AND EXPULSION
with the
OF PARTNERS
First
LLP agreement must include the provisions regarding
schedule
admission of new partners, retirement as well as the
of LLP Act
death of a partner, etc. The agreement must provide
2008
guidelines for the expulsion of partners as well.

10 Section REMUNERATION & INTEREST TO BE PAID TO PARTNERS

23(4)

49
 The LLP agreement shall contain a clause regarding the
amount of remuneration to the Designated Partner(s),
for rendering the services as such. This clause shall
contain the rate of interest to be paid to the partners on
their capital contribution

11 Section BANK ACCOUNT

23(4)
This clause shall set out the modus operandi of the Bank
account transactions of the LLP

12 Section BOOKS OF ACCOUNTS AND ACCOUNTING YEAR

34(1)
The LLP agreement shall contain clause relating to
maintenance of books of accounts and other documents,
method of accounting and the details relating to the
Accounting year of the LLP.

Landmark judgments on Limited Liability Partnership Act,2000

Jayamma Xavier v. Registrar of Firms (2021)

Facts

In the case of Jayama Xavier v. Registrar of Firms (2021), an LLP had entered into a
partnership with an individual. Subsequently, the registrar of forms refused to register
the partnership on the ground that an LLP cannot be a partner.

The issue before the Court

Whether an LLP can be treated as a person or enter into a partnership with an individual.

Judgment

50
The Court held that a partnership can be created by two individual persons and, as per
the definition of person under Section 3(42) of the General Clauses Act, 1897, a body
corporate is regarded as a person in the eyes of the law. Since an LLP is a body corporate
as per the provisions of the LLP Act, 2008, there is no inconsistency in permitting an LLP
to be a partner in a partnership firm.

The Court held that when an LLP enters into a partnership, it would be covered by the
provisions of the Partnership Act and, therefore, the liabilities of the partners of the LLP
under the LLP Act, 2008 would be irrelevant. The liability of the LLP would be
independent of the liability of its individual partners.

Based on this analogy, the Court set aside the order of the registrar of firms and held
that there is no express prohibition for an LLP to enter into a partnership with an
individual.

Conclusion
The applicability of the LLP Act is not only limited to professional enterprises, and thus,
it can be held that the Act gives primacy to the suggestions of the Irani Committee over
the Naresh Chandra Committee.

The 2021 Amendment brings the Act up to par with contemporary economic conditions.
The introduction of concepts such as start-up LLP and small LLP is in line with the
government’s economic policy of promoting and incentivising small enterprises and
startups. The setting up of special courts will result in the speedy disposal of cases and
will improve the ease of doing business in India.

There is an urgent need for the Supreme Court to clarify its judicial stand on the issue of
whether an LLP can enter into a partnership or not.

51
 The SEBI Act, 1992

Introduction
The SEBI Act,1992 provides for the establishment of a Board to protect the interests of
investors in securities and to promote the development of, and to regulate, the securities
market and for matters connected therewith or incidental thereto. Securities and
Exchange Board of India (“Board”) inter-alia implements various measures to regulate
the business in stock exchanges and any other securities markets, prohibit fraudulent
and unfair trade practices relating to securities markets including insider trading in
securities and promoting investors’ education and training of intermediaries of securities
markets.

SEBI is also known as the Security and Exchange Board of India was established on 12
April 1992 through the SEBI Act, 1992. It was a non-statutory body established to
regulate the securities market. The headquarters of the board is situated in Bandra Kurla
Complex, Mumbai. SEBI helps in regulating the Indian Capital Market by protecting the
interest of investors and establishing the rules and regulations for the development of
the capital market.

The SEBI Act, 1992 was enacted to empower SEBI with statutory powers for (a)
protecting the interests of investors in securities, (b) promoting the development of the
securities market, and (c) regulating the securities market. Its regulatory jurisdiction
extends over corporates in the issuance of capital and transfer of securities, in addition
to all intermediaries and persons associated with securities market. The SEBI — can
specify the matters to be disclosed and the standards of disclosure required for the
protection of investors in respect of issues; — can issue directions to all intermediaries
and other persons associated with the securities market in the interest of investors or of
orderly development for securities market; and — can conduct enquiries, audits and
inspection of all concerned and adjudicate offences under the Act. In short, it has been
given necessary autonomy and authority to regulate and develop an orderly securities
market. As per Section 1 of the Act, this Act may be called the Securities and Exchange

52
 Board of India Act, 1992. It extends to the whole of India. It shall be deemed to have
come into force on the 30th day of January, 1992.

Features and Regulations of the Act

Sebi is an organization that is responsible for maintaining an environment that is free
from malpractices to restore the confidence of the general public who invest their hard-
earned money in the market. SEBI controls the bylaws of every stock exchange in the
country. SEBI keeps an eye on all the books of accounts related to the stock exchange
and financial intermediaries to check their irregularities. SEBI Act defines and gives
powers to the body. The SEBI Act is divided into seven chapters that provide the rules
and regulations associated with the capital market.

 The First Chapter is an introductory or preliminary chapter of the Act which provides the
title, extent, and definitions of the terms used in the Act.

 The Second Chapter is the establishment of the Securities and Exchange Board of India.
This chapter deals with management, employees, meetings, and the office of the board.
This provides the necessary details of the board established by this Act.

 The Third Chapter is the transfer of assets, liabilities, etc. of the existing Security and
Exchange Board to the Board, which means it declares the provisions to be used to
transfer the assets in the case of the formation of a new board.

 The Fourth Chapter is the powers and functions of the Board. This chapter helps in
mentioning the powers and functions of the board which are given by the Act. The Board
is bound to follow the instructions given by the act and is not allowed to exploit their
powers.

 The Fifth Chapter is the Registration Certificate. It deals with the documentation involved
in the registration of the stockbrokers, sub-brokers, and share transfer agents, etc.

53
 The Sixth Chapter is finance, accounts, and audits. This chapter controls all the grants
given by the Central Government, funds and accounts, to ensure the productivity of the
board as well as the capital market.

 The Seventh Chapter miscellaneous, which discusses other topics that are relevant to
the board and the market. To help the board from avoiding mistakes.

The laws and regulations of the Security and Exchange Board of India are very important
and must be followed seriously by the people who are entitled or registered with the
stock exchange and capital market of India. The SEBI Act, 1992 is the supreme power of
the securities market of India and has the authority to make laws and regulations. And
these rules and regulations are applied to all the listed companies, their board of
directors, key managerial personnel of such companies, investors, and all the other
companies who are associated with the security market sector.

The most valuable regulations promoted by SEBI are:

 Regulations on the Issue of Capital and Disclosure Requirements, 2009

These regulations helped with the issues related to capital and disclosure by improving
the trading in securities of the listed companies and investors in India.

 Regulations on Substantial Acquisition of Shares and Takeovers, 2011

These regulations of SEBI were established to solve difficulties related to the legal and
fair acquisition of shares and takeovers.

 Regulations on Prohibition of Insider Training, 2015

These regulations introduced new provisions for prohibiting the insider training of
securities and tries to protect the laws for lawful and fair trading in India.

 The Equity Listing Agreement

These provisions were a reminder of the clauses which mainly dealt with the mandatory
compliances to be made between the stock exchange of India and the listed companies.

54
 Objectives of SEBI Protection of investors:
Protection of investors: The primary objective of SEBI is to protect the rights and
interests of the people in the stock market by guiding them to a healthy environment
and protecting the money involved in the market.

Prevention of malpractices: The main objective for the formation of SEBI was to prevent
fraud and malpractices related to trading and to regulate the activities of the stock
exchange.

Promoting fair and proper functioning: SEBI was established to maintain the functioning
of the capital market and to promote functioning of the stock exchange. They are
ordered to keep eyes on the activities of the financial intermediaries and regulate the
securities industry efficiently.

Establishing Balance: SEBI has to maintain a balance between the statutory regulation
and self-regulation of the securities industry.

Establishing a code of conduct: SEBI is required to develop and regulate a code of

conduct to avoid frauds and malpractices caused by intermediaries such as brokers,
underwriters and other people.

Composition of SEBI:
The members of the Security and Exchange Board of India are:

 The Chairman who is appointed by the Central Government of India.

 Two members from amongst the officials of the Ministry of Central Government dealing
with Finance and administration of the Companies Act, 2013.

 One member from amongst the officials of the Reserve Bank of India.

 Five other members from amongst the Central Government of India, out of five three
must be whole-time members.

55
 Functions of SEBI:
SEBI basically protects the interest of the investors in the security market, promotes the
development of the security market and regulates the business. The functions of the
Security and Exchange Board of India can primarily be categorized into three parts:

Protective Function

Protective functions are used to protect the interest of investors and other financial
participants. These functions are:

 Prevent Insider Trading: When the people working in the market like director, promoters
or employees working in the company starts to buy or sell the securities because they
have access to the confidential price which results in affecting the price of the security is
known as insider trading. SEBI restricted companies to buy their own shares from the
secondary market and SEBI also regulates regular check-ups to prevent insider trading
and avoid malpractices.

 Checks price rigging: The malpractices which create unreasonable fluctuations in the
price of the securities with the help of increasing or decreasing the market price of stocks
which results in an immense loss for the investors or traders are known as price rigging.
To prevent price rigging, SEBI keeps active surveillance on the factors which can promote
price rigging.

 Promotes fair trade practices: SEBI established rules and regulations and a certain code
of conduct in the securities market to restrict fraudulent and unfair trade practices.

 Providing awareness/financial education for investors: SEBI conducts seminars both

online and offline to educate the investors about insights into the financial market and
money management.

Regulatory Function

Regulatory functions are generally used to check the functioning of the financial business
in the market. They establish rules to regulate the financial intermediaries and
corporates for the efficiency of the market. These functions are:

56
 SEBI designed guidelines and code of conduct for efficient working of financial
intermediaries and corporate.

 Established rules for taking over a company.

 Conducts regular inquiries and audits of stock exchanges.

 Regulates the process of mutual funds.

 Registration of brokers, sub-brokers, and merchant bankers is controlled by SEBI.

 Levying of fees is regulated by SEBI.

 Restrictions on private placement.

Development Function

The development functions are the steps taken by SEBI to improve the security of the
market through technology. The functions are:

 By providing training sessions to the intermediaries of the market.

 By promoting fair trading and restrictions on malpractices of any kind.

 By introducing the DEMAT format.

 By promoting self-regulating organizations.

 By introducing online trading through registered stock brokers.

 By providing discount brokerage.

Power of SEBI
 Quasi-Judicial

SEBI is allowed to conduct hearings and can pass judgments on unethical cases and
fraudulent trade practices. This feature of SEBI helps to protect transparency,
accountability, reliability, and fairness in the capital market.

57
 Quasi-Legislative

SEBI is allowed to draft legislatures with respect to the capital market. SEBI drafts rules
and regulations to protect the interests of the investors. For eg: SEBI LODR or Listing
Obligation and Disclosure Requirements. This helps in consolidating and streamlining the
provisions of existing listing agreements for several segments of the financial market like
equity shares. This helps in protecting the market from malpractices and fraudulent
trading activities happening at the bay.

 Quasi-Executive

SEBI covers the implementation of the legislation. They are allowed to file a complaint
against any person who violates their rules and regulations. They also have the power to
inspect all the books and records to check for wrongdoings.

Conclusion
So, SEBI strongly believes that the investors are the soul of the securities market and
they need to protect the interests of investors for the development of the capital market.
SEBI deals with all the policies and regulations of the market. SEBI also signed a contract
with the International Organization of Securities Commission and allowed its members
to maintain a regular check for cross border misconduct in their respective jurisdictions.
This case is considered as the landmark judgment in India’s Corporate Landscape as it
helped in preventing war between MCA and SEBI.

58
 Laws relating to Intellectual Property

Introduction
Intellectual property (IP) is an intangible property that comes into existence through
human intellect. It refers to the creations of the mind or the products of human intellect
such as inventions; designs; literary and artistic works; symbols, names and images used
in commerce.

The “Convention Establishing the World Intellectual Property Organisation” states

that “intellectual property” shall include the rights relating to: —

1. literary, artistic, and scientific works,

2. performances of performing artists, phonograms, and broadcasts,

3. inventions in all fields of human endeavour,

4. scientific discoveries,

5. industrial designs,

6. trademarks, service marks, commercial names and designations,

7. protection against unfair competition, and

8. all other rights resulting from intellectual activity in the industrial, scientific, literary, or
artistic fields.

Other categories of intellectual property include geographical indications, rights in

respect of know-how or undisclosed information, and layout designs of integrated
circuits.

Intellectual Property Rights

The term “Intellectual Property Rights (IPR)” is used to refer to the bundle of rights
conferred by law on a creator/owner of intellectual property. These are the rights that a
59
 person has over the creations of his mind. They seek to protect the interests of the
creators by rewarding their mental labour and allowing them to retain property rights
over their creations. The creators and inventors are thus allowed to benefit from their
creations. IP rights are the legal rights governing the use of intellectual property.

Need for legal protection of intellectual property

The various reasons behind granting protection to intellectual property through the
enactment of suitable Intellectual Property (IP) laws are as follows:

1. To encourage inventions and creations that promote the social, economic, scientific, and
cultural development of society by incentivising the creators and allowing them to make
economic gains out of their creations.

2. To provide legal protection to intellectual creations.

3. To prevent third parties from enjoying the fruits of someone else’s creativity.

4. To facilitate fair trading.

5. To promote creativity and its dissemination.

6. Giving recognition to the efforts of creators.

7. Preventing the infringement of proprietary rights of creators in their creations from

unauthorised use.

8. To encourage investment of skill, time, finance, and other resources into innovation
activities in a manner that is beneficial to society.

Advantages of Intellectual Property Rights

1. IPR protection gives your business a competitive advantage over other similar
businesses.

60
2. IPR protection allows you to prevent unauthorised use of your intellectual property and
works.

3. IPR enhances the value of your company and also opens avenues for collaborations and
opportunities for generating income such as by entering into licensing agreements to
exploit/work the invention/work.

4. IPR helps to attract clients and creates your brand value. For example, the consumers
start identifying your products with the unique logo or registered trademark.

Disadvantages of Intellectual Property Rights

1. You have to incur additional costs for getting IPR protection including legal costs and
other fees.

2. Even after getting the intellectual property right, you might still face a lot of difficulties
in curbing the copying and unauthorised use of your work. Moreover, sometimes an
attempt to enforce IP rights could lead to a reduction in the consumer base.

3. IP rights aren’t absolute. There are certain limitations and conditions imposed by law on
the exercise of these rights (such as a limited period of protection and compulsory
licensing provisions) in the interests of the general public.

Components of Intellectual Property Rights

Copyright
The term ‘copyright’ concerns the rights of the creators/authors of literary and artistic
works. A copyright is also called a ‘literary right’ or ‘author’s right’. Copyright gives an
author exclusive rights to his creation and prevents the copying and unauthorised
publishing of his work. Copyright protection begins at the very moment a work is created
and expressed in some tangible form. Copyright protection is granted to a work that is

61
 an original creation. Also, the protection extends only to expressions. Mere ideas
without any tangible expression are not granted legal protection and do not form the
subject matter of copyright. Copyright protects the following two rights of the author:

1. Economic rights i.e., the right of the owner to derive financial benefit from the use of
their works by others. For instance, the right to prohibit or authorise reproduction of the
work in various forms, the right to prohibit unauthorised translation of the work, etc.

2. Moral rights i.e., protection of non-economic interests of the author. For instance, the
right to oppose changes to work and the right to claim authorship, etc.

What kind of works can be protected under copyright

The following categories of works typically come under copyright protection:

 Literary works such as novels, plays, poems, and newspaper articles;

 Computer programs and databases;

 Films, musical compositions, and choreography;

 Artistic works such as photographs, paintings, drawings, and sculpture;

 Architecture and advertisements, maps, and technical drawings.

In India, the term of copyright protection extends throughout the lifetime of the author
and then 60 years after his death.

Law relating to copyright in India: the Copyright Act, 1957

The Copyright Act, 1957 is a comprehensive legislation dealing with copyrights in India.
The Act regulates the various aspects relating to copyright regime in India such as:

 Registration of copyright

 Publication, term of copyright

 Assignment, and licence of copyright

62
 Special rights of broadcasting organisation and performer’s rights

 Infringement of copyright and remedies thereof

 Establishment of copyright authorities and copyright societies

 International Copyright

The term of copyright protection provided under the Act for the various categories of
works is given below:

1. Literary, dramatic, musical and artistic works: Life of the author plus 60 years after death.

2. Anonymous and pseudonymous works: 60 years from the date of publication. However,
if the identity of the author is disclosed before the expiry of that 60 years, then the term
of protection shall be life of the author plus 60 years after death.

3. Posthumous works: 60 years from publication.

4. Cinematograph films: 60 years from publication.

5. Sound recordings: 60 years from publication.

6. Government work: 60 years from publication.

7. Works of public undertakings: 60 years from publication.

8. Works of international organisations: 60 years from the publication of the work.

Salient features of the Copyright Act, 1957

The salient features of the Copyright Act, 1957 are herein mentioned below:

Scope of rights conferred to the author

Literary works, musical works, theatrical works, creative works, sound recordings, and
cinematographic films are all protected by copyright under Section 13 of the Copyright
Act of 1957. Literary works, for instance, books, manuscripts, poetry, and theses are
safeguarded by the Act. Original literary, dramatic, musical, and artistic works as well as

63
 cinematographic and sound recordings are shielded from illegal access under the
Copyright Act of 1957. In contrast to patents, copyright safeguards expressions rather
than ideas.

Provisions to assert the ownership

The original owner of the copyright is the creator of the work itself, as stated in Section
17 of the Copyrights Act of 1957. The one exception to this rule is when an employee
creates work while performing duties as part of their employment, in which case the
employer assumes ownership of the copyright.

Civil and criminal remedies

Section 55 of the Copyright Act of 1957 addresses civil remedies for copyright
infringement. These civil remedies encompass restitution, injunctions, account
interpretation, deletion and surrender of copies made infringing, as well as conversion
damages. Section 63 of the Copyright Act of 1957 specifies criminal penalties for
copyright infringement. These criminal penalties can take the form of jail time, fines,
searches, the seizure of contraband, etc. The maximum sentence for imprisonment is 3
years, but it cannot be less than 6, and the maximum fine is between 50,000 and
2,00,000 rupees.

Establishment of copyright boards and offices

The Copyright Act of 1957 also makes provisions for the establishment of a copyright
board to assist in resolving copyright-related issues and a copyright office, which comes
under the jurisdiction of the Registrar of the Copyright, for the registration of books and
other “works” of art. The establishment of an office to be known as the Copyright Office
for Act purposes is provided for under Section 9 of the Copyright Act, 1957. The
Copyright Board was established under Section 11 of the Copyright Act of 1957.

Important sections of the Copyright Act, 1957

The following are the important sections of the Copyright Act of 1957:

 Section 2 deals with various definitions of the work which can be covered under the
definition of copyright. For example, Section 2(o) deals with literary works, Section 2(h)
64
 includes all dramatic works under the definition of copyright protection, and Section (p)
deals with musical and graphical works.

 Section 13 of the Copyright Act, 1957, is the most requisite Section as it deals with the
subject matter of copyright protection. According to Section 13(1), all of India is under
the purview of the Copyright, and the following classifications of works are protected by
the Copyright:

1. Original artistic, musical, dramatic, and literary works

2. Sound recording

3. Cinematograph films

The published and unpublished works of architecture are discussed in Section 13(2). If
the work is published, it must be published in India. If the work is published outside of
India, the author must be an Indian citizen at the time of publication or at the time of his
death. Except for works of architecture, the authors of unpublished works must be Indian
citizens or have a place of residence in India. When it comes to architectural works, only
the work itself must be from India and not the architect, because architectural works can
also be done in written form. The copyright in an architectural work shall only apply to
the creative character and design and shall not include the construction process or
processes.

 A few rights are protected under copyright legislation. These three types of rights are
common or economic, moral, and neighbouring. According to Section 14, moral rights
are granted under Section 57, economic rights are granted under Section 14 and
neighbouring rights are granted under Sections 37A and 378.

Copyright infringement
Section 51 of the Copyright Act, 1957 provides for ‘What constitutes copyright
infringement’. Copyright is said to be infringed:

65
1. when a person does something that the owner of the copyright has the exclusive right
to do, or permits for profit the use of any place for the purpose of the communication of
the work to the public, where such communication constitutes an infringement of the
copyright in the work, without a licence or in violation of the conditions of the licence.

2. When any person makes for sale or hire, sells or lets for hire, or displays or offers for sale
or hire, or distributes either for the purpose of trade or to such an extent as to prejudice
the owner of the copyright, or exhibits in public, or imports into India any infringing
copies of the work.

Section 52 enlists the acts which do not constitute an infringement of copyright such as
fair dealing in any work for personal, private use or for research, reproducing any work
for the purpose of a judicial proceeding or replication by a teacher or a pupil in the course
of teaching etc.

It is pertinent to note that the Copyright Act provides for both civil and criminal remedies
against infringement of copyright.

How to register a copyright in India

The Registrar of Copyrights maintains a Register of Copyrights wherein he enters the
names or titles of works and the names and addresses of authors, publishers and owners
of the copyright. This entering or recording of names and other particulars of the
copyright owners in the register of copyrights is called Registration of copyright.

The procedure for registration of copyright in India is provided under Section 45 of the
Copyright Act, 1957 read with Chapter XIII of the Copyright Rules, 2013.

Steps to register copyright

1. Filing of application: The author/publisher/owner or any other person interested in the

copyright can make an application (Form-XIV of Copyright Rules) for registration of
copyright to the Registrar of Copyrights. Such application must be accompanied by the
prescribed fee for entering particulars of the work in the Register of Copyrights.

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 Also, an application for registration of copyright shall be in respect of one work only. It
should be signed only by the applicant, who may be the owner or author of the right. In
case, the application is made by the owner of the copyright, an original copy of a no-
objection certificate issued by the author in the favour of the owner has to be submitted.

2. Application for registration of copyright in an unpublished work: An application for

registration of an unpublished work should be accompanied by two copies of the work.

3. Application for registration regarding an artistic work that is being used or could be used
in connection with any goods or services: In case the application for registration is
regarding an artistic work that is or can be used in relation to any goods or services, the
application must include a statement along with a Certificate from the Registrar of
Trademarks that no trademark identical to or deceptively similar to such artistic work
has been registered under the Trademarks Act, 1999 or no such application has been
made.

4. Application for registration in respect of an artistic work which is capable of being

registered as a design: In this case, the application must be supported by an affidavit
declaring that:

1. The design has not been registered under the Designs Act, 2000, and

2. That it has not been applied to an article through an industrial process and reproduced
more than 50 times.

3. Mode of filing the application: The application for registration of copyright can be filed
in following modes:

1. By visiting the Copyright Office in person; or

2. By post; or

3. By online facility
i.e., https://www.copyright.gov.in/UserRegistration/frmLoginPage.aspx.

6. Notice of application: The person applying for registration of copyright has to give the
notice of the application to every person who claims to have, or has any interest in the

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 subject matter of the copyright or who is disputing the rights of the applicant to the
copyright.

7. Entering of particulars in Register of Copyright: A thirty day period is given for filing of
objections and if no objections to the registration are received by the Registrar, and on
being satisfied that the particulars stated in the application are correct, the Registrar of
Copyright shall enter such particulars in the Register of Copyrights.

8. Completion of registration process: The registration process is complete when a copy of

the entries made in the register of copyrights is signed and issued by the Registrar of
Copyrights or by the Deputy Registrar of Copyrights. Also, every entry made by the
Registrar of Copyrights has to be published by him in the prescribed manner.

Patents
A patent is an exclusive right granted for an invention or innovation, which might be a
product, a method or a process, that introduces a novel way of doing something or offers
a new technical solution to a problem. In other words, it is a right of monopoly granted
to a person who has invented:

1. a new and useful article, or

2. improvement of an existing article, or

3. a new process of making an article.

A patent is granted for inventions having industrial and commercial value. It is the
exclusive right to manufacture the new article/manufacture the article with the invented
process for a limited period of time (usually 20 years from the filing date of the
application) in exchange for disclosure of the invention. A patent owner can sell his
patent or grant licence to others to exploit the same.

Criteria for patentability of an invention

1. It should be novel.

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2. It should have inventive steps or it must be non-obvious.

3. It should be capable of Industrial application.

What kind of protection is given by patents

 The patent owner possesses the exclusive right to prevent others from commercially
exploiting the patented invention.

 Third parties are prevented from manufacturing, using, distributing, selling etc. the
patented invention/product without the consent of the patent owner.

Patent law in India: the Patents Act, 1970

The invention of a person can be patented only if the procedure and other requirements
prescribed in the Patents Act, 1970 are fulfilled. The Patent Act, 1970 provides for a
detailed procedure for obtaining a patent, right from the filing of an application to the
grant of a patent. The Act also contains provisions for rights and obligations of the
patentee, term of the patent, transfer of patent, surrender, revocation, and restoration
of patent, infringement of patent, and remedies thereof. The Act provides for patent
protection for a period of 20 years after which the technology or invention goes to the
public domain.

Section 3 of the Act provides a list of non-patentable inventions for which no patent
could be granted. Under Section 4, the inventions relating to atomic energy are also
declared as non-patentable. They are:

 Patent subject: The most important consideration is to determine whether the Invention
relates to a patent subject matter. Sections 3 and 4 of the Patents Act list non-patentable
subject matter. Unless the Invention comes under any provision of Section 3 or 4, it
means that it consists of a subject for a patent.

 Novelty: Innovation is an important criterion in determining the patent potential of an

invention. Under Section 2(l) of the Patent Act, a novelty or new Invention is defined as
“no invention or technology published in any document before the date of filing of a
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 patent application, anywhere in the country or the world”. The complete specification,
that is, the subject matter has not fallen into the public domain or is not part of state of
the art”.

Simply, the novelty requirement basically states that an invention that should never have
been published in the public domain. It must be the newest which have no same or
similar prior arts.

 Inventive steps or non-clarity: Under Section 2(ja) of the Patents Act, an inventive step
is defined as “the characteristic of an invention that involves technological advancement
or is of economic importance or both, as compared to existing knowledge, and invention
not obvious to a person skilled in the art.” This means that the invention should not be
obvious to a person skilled in the same field where the invention is concerned. It should
not be inventive and obvious for a person skilled in the same field.

 Capable of industrial application: Industrial applicability is defined in Section 2 (ac) of

the Patents Act as “the invention is capable of being made or used in an industry”. This
basically means that the Invention cannot exist in the abstract. It must be capable of
being applied in any industry, which means that it must have practical utility in respect
of patent.

Patent infringement and remedies

Any violation of the rights of the patentee constitutes infringement of patent such as a
colorable imitation of your invention or taking of the essential features of your invention.
Under the Patents Act, Sections 47 and 107-A provides for the acts that shall not be
considered as an infringement of patent. For example, the import of any machine or
other articles by or on behalf of the government or the manufacturing or use of a
patented process by or on behalf of the government does not constitute patent
infringement. The various remedies available against patent infringement are as follows:

 Injunction

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 Damages or account of profits

 Delivery up or destruction of infringing goods

 Certificate of validity

Procedure of obtaining a patent in India

1. Filing of application

 Place of filing patent application: A patent application has to be filed at the head office
of the patent office or the branch office, within whose territorial limits:

o Applicant normally resides or has a domicile, or

o Applicant has a place of business, or

o At the place where the invention actually originated.

 Mode of filing application: You can submit the patent application through post or by
hand. You can also opt for e-filing
through https://ipindiaonline.gov.in/epatentfiling/user/frmLogin.aspx.

 Who can file the application: Following persons either alone or jointly can file the patent
application:

o Any person claiming to be the true and first inventor of the invention;

o Assignee of the above in respect of the right to make such an application;

o The legal representative of any deceased person who was entitled to make such
an application immediately before his death.

 Form of application: Every patent application shall be for one invention only.

 Every application must specify that the applicant possesses the invention and identify
the individual claiming to be the true and first inventor. If the individual claiming to be
the true and first inventor is not the applicant or one of the applicants, the application

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 must state that the applicant believes the person so listed/named to be the true and first
inventor.

 Application must be accompanied by a provisional or a complete specification.

2. Filing of provisional and complete specification

 What is patent specification: A patent specification is a technical document describing

the invention. The provisional specification gives the initial description of the invention
on the filing of the patent application. Whereas a complete specification gives full and
sufficient detail of an invention in such a manner that a person skilled in the art can use
the invention when he reads such a description.

 If the patent application is accompanied by a provisional specification, the complete

specification has to be filed within 12 months from the date of the filing of such
application. In case it is not filed within the said period, the application is deemed to
have been abandoned.

3. Claim of priority date: Priority date is the date on which the patentee claims his
invention. There shall be a priority date for each claim of a complete specification.
Generally, the priority date is the date of filing of the provisional specification provided
the claims contained therein are fairly based on the description of the invention as given
in the provisional specification. But when the patent application is accompanied by
complete specification or if any application is post-dated to the date of filing of complete
specification, in that case the priority date shall be the date of filing of the complete
specification.

4. Amendment of specification: The applicant may amend the application, the complete
specification and other documents before or after the grant of the patent. Such
amendment shall be in accordance with the procedure prescribed as regards to the
permission of the Controller and publication of the amendment.

5. Publication and Examination of application

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 The patent application shall not be open to the public until the expiry of 18 months from
the date of filing of the application or the date of the priority of the application. However,
applicants may request the Controller to publish the application at an earlier date.

 The application is published within one month after the expiry of the said period of 18
months.

 Thereafter, a request has to be made by the applicant or other interested persons for
examination of the application. Such a request shall be made within 48 months from the
date of priority of the application or from the date of filing of application, whichever is
earlier. If the request is not made within the prescribed period, the application is treated
as withdrawn.

6. Time for putting application in order for grant: The applicant must comply with all the
requirements imposed on him by or under the Act in relation to the application within
12 months from the date on which the Controller forwarded to the applicant the first
statement of objections to the application, complete specification, or other documents
related thereto.

7. Opposition to grant of patent

 Pre-grant opposition: Before the patent has been granted, any person may, in writing,
represent by way of opposition to the Controller against the grant of the patent.

 Post-grant opposition: After the grant of the patent but before the expiry of 1 year from
the date of publication of grant of patent, any interested person may give notice of
opposition to the Controller. Thereafter, the Controller constitutes the Opposition Board
and the patent may be revoked on the basis of the report of the Board.

8. Grant of patent

 If the application for patent is found to be in order for grant of patent, the patent shall
be granted.

 On the grant of patent, the Controller publishes the fact of such grant and thereupon the
application and other documents shall be open for public inspection.

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 Trademarks and service marks
A trademark is a symbol that is used to distinguish the goods of one enterprise from its
competitors. A trademark may consist of a single letter, logo, symbol, design, or
numerals and three-dimensional features such as shape and packaging, etc. Section
2(zb) of the Trademarks Act, 1999 defines “trademark” as a mark capable of graphical
representation and which can be used to distinguish the goods or services of one person
from those of others. A trademark may include the shape of goods, their packaging, and
a combination of colours. Hence, distinctiveness is the hallmark of a trademark.

Trademarks used in connection with services such as tourism, banking, etc., are called
Service Marks.

The owner has the exclusive right to the use of a registered trademark. There are 45
classes of trademarks, consisting of 34 classes of products and 11 classes for services.

What is the function/purpose of a trademark

 A trademark is a symbol that identifies a product and its source.

 It reflects the goodwill of a business.

 It assures the consumer about the established quality of the product.

 It serves as an advertisement for the product.

 A registered trademark provides legal protection to your brand.

 It helps to establish a dedicated consumer base by preventing others from imitating your
brand.

Law regulating to trademarks in India: the Trademarks Act, 1999

The Trademarks Act, 1999 was enacted to provide for the registration and better
protection of trademarks for goods and services, as well as to prevent the use of
fraudulent marks. The Act contains provisions regarding:

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1. Registration of trademarks

2. Effect of registration

3. Rights of the trademark holder

4. Special provisions relating to protection of trademarks through international registration

under the Madrid Protocol

5. Use of trademark and registered users

6. Collective marks

7. Certification of trademarks

8. Assignment and transmission of trademark

9. Infringement and passing off action in trademark and legal remedies thereof, etc.

A trademark is registered for 10 years but it can be periodically renewed and can be used
for an indefinite period.

Infringement of trademark
In order to constitute infringement of a registered trademark, following conditions are
required to be fulfilled:

1. The person is not authorised to use the trademark.

2. The infringing trademark is similar/identical/deceptively similar to the already registered

trademark.

3. The infringing trademark must be used in the course of regular trade in which the
registered proprietor or user is already engaged.

4. The infringing trademark must be printed represented usually in advertisement, invoices

or bills. Mere oral use of a trademark is not infringement.

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5. Using either the whole of the registered trademark or an adopted one by making a few
additions and alterations.

Section 29 of the Trademarks Act provides for the common forms of trademark
infringement. For instance, the advertisement of a registered trademark of another for
promotion of one’s trade amounts to infringement. Following remedies are available to
the trademark owner against infringement of his trademark:

1. Filing suit for infringement

2. Criminal remedies

Process of registration of trademark in India

The various steps involved in registration of trademark are as follows:

Application for registration

 A person claiming to be the proprietor of a trademark used or proposed to be used by

him, who desires to register it has to file an application with the Registrar for registration
of his trademark. Such an application shall be made in writing and must be accompanied
by prescribed fees.

 A single application may be made for registration of a trademark for different classes of
goods and services.

 The application has to be filed in the office of the Trade Marks Registry within whose
territorial limits the principal place of business in India of the applicant is situated.

Refusal, acceptance and withdrawal of acceptance

 The Registrar may accept or reject an application after it has been received. The
application may be accepted with or without amendments, modifications, conditions
and limitations.

 If after acceptance, but before registration, the Registrar discovers that the application
was erroneously accepted, he may withdraw the acceptance.
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 Advertisement of application

 The Registrar shall after acceptance of the application, cause the application to be
advertised in the prescribed manner.

 The application is advertised in the Trademark Journal for the purpose of inviting
objections from interested persons.

 The Registrar may cause the application to be advertised before acceptance in certain
cases.

Opposition to registration

 Any person may within 4 months from the date of the advertisement give a written
notice of his opposition to the registration. The notice of such registration is given to the
applicant and thereafter evidence is submitted to the Registrar. After hearing the parties,
the Registrar decides as to whether the registration is to be permitted or not.

Registration

 If the application for trademark registration is accepted and not opposed, or if opposed,
the objection is ruled in the applicant’s favour, the Registrar must register the trademark
within 18 months of the filing of the application.

 The date of registration of a trademark is the date of making of the said application.

 On registration of a trademark, the Registrar shall issue to the applicant a certificate in

the prescribed form of the registration thereof, sealed with the seal of the Trademarks
Registry.

Industrial designs
An industrial design means the ornamental or visual aspects of an article. It may consist
of three-dimensional features, for instance, the shape of an article, or two-dimensional
features, such as lines, patterns, or colour. An industrial design is purely aesthetic, non-

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functional, and has no utility. It is necessary to provide legal protection to the creative
originality of an industrial design to prevent others from copying it.

Type of protection provided by industrial design

The owner of registered industrial design reserves the right to prevent others from
manufacturing, selling, or importing articles bearing or embodying a design which is a
copy of or is substantially similar to the protected design.

Kinds of products that can come under Industrial design protection

 Products of industry and handicraft items

 Household goods

 Lighting equipment

 Jewellery

 Electronic devices

 Textiles, etc.

Law relating to designs in India: the Designs Act, 2000

The Designs Act, 2000 seeks to promote the creation of novel, original designs along with
balancing competing interests by granting the time-bound monopoly right to use
registered industrial design by the owner. The Act contains provisions regarding
registration of designs, copyright in registered designs, industrial and international
exhibitions, restoration of lapsed designs, the penalty for infringement of registered
designs, etc.

Geographical Indications (GI)

A geographical indication (GI) is used to identify goods having a specific geographical
origin. These indications denote quality, reputation, or other characteristics of such
goods essentially attributable to their geographical origin. Generally, geographical

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indications are used for foodstuffs, agricultural products, wine, industrial products and
handicrafts. Examples of GI include Basmati Rice, Darjeeling Tea etc.

Law relating to GI in India: the Geographical Indications of Goods

(Registration and Protection) Act, 1999

The Geographical Indications of Goods (Registration and Protection) Act, 1999 provides
for the registration and better protection of geographical indications relating to goods.
The Act contains provisions relating to the establishment of a Geographical Indications
Registry, registration of geographical indications of goods, rights conferred by
registration, registration of authorised users of registered geographical indications,
provisions for renewal, rectification and restoration of geographical indications, and
prohibition of registration of geographical indication as a trade mark, etc.

Trade Secrets
Trade Secrets are IP rights on confidential information which may be sold or licensed. A
trade secret refers to any confidential business information and may include designs,
drawings, plans, business strategies, R & D related information, etc. In order to qualify
as a trade secret, the information should be commercially valuable i.e. useful in a trade
or business, known to a small number of people, and subject to reasonable steps taken
by the rightful holder of the information to keep it secret.

Types of trade secrets

 Technical information such as information regarding manufacturing

processes, designs, drawings of computer programs, etc.

 Commercial information, such as distribution methods, advertising

strategies, etc.

 Financial information, formulas, recipes, secret combination of elements,

source codes, etc.

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Layout designs of integrated circuits
Integrated circuits are used in products such as television, radio, mobile, washing
machine, and data processing instruments. The layout designs of integrated circuits not
only reduce the space but also enhance the capacity and performance of the system. In
India, the Semiconductor Integrated Circuit Layout Design Act, 2000 regulates the
registration, use, and protection of original and distinct layout designs.

The Semiconductor Integrated Circuits Layout Designs Act, 2000

The Act deals with the protection of Semiconductor Integrated Circuits layout designs. It
has been enacted to give effect to Section 6 in Part II of the TRIPS Agreement relating to
Layout-Design (Topographies) of Integrated Circuits. The Act contains provisions relating
to registration of Semiconductor Integrated Circuits layout designs including the
procedure and duration of registration, the effect of registration, assignment and
transmission of registered layout-design, use of layout-design, and penalty for
infringement of layout-design, etc.

Conclusion
The importance of IP in a world of technological, scientific, and medical innovation
cannot be ignored at any cost. IP is a valuable asset since it provides a competitive
advantage to the owner over other entities. To make the most out of IPR, it is advisable
to get it registered. An intellectual property right is a proprietary right on the product of
one’s intellect. These rights support innovation and help the innovators at every stage of
the business development, competition, and expansion strategy. It is also noteworthy
that registered and enforced IP rights enable the consumers to make an informed choice
about the quality, safety, reliability of their purchase.

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 Environment Protection Laws

Introduction
Environment Protection is a much discussed topic and has dominated the debates in the
public fora, especially since the sixties. The quality of the environment has been
degrading for centuries, ever since the mankind decided to exploit nature for its own
good, but the degradation has escalated with the advent of the industrial revolution and
the dawn of the era of machines.

Increased human population, increase in demand, decline in vegetation to accommodate

the needs of the increased population, release of chemicals in the environment,
disruption of food chains due to Activities like fishing are very few examples of how the
environment is being exploited and abused. The result of all this is an increased concern
over the health and safety of the environment, for which time to time numerous piece
of legislations and treaties have resurfaced.

In the Indian context, many legislations have emerged specifically focusing on the kinds
of pollution, like The Air (Prevention and Control of Pollution) Act, 1981 or The Water
Prevention and Control of Pollution) Act, 1974. But the Environment Protection Act, 1986
is one of the most exhaustive legislation for the protection for the environment. It is a
general piece of legislation for the protection of environment. It was enacted under
Article 253 of the Constitution.

The world community’s resolve to protect and enhance the environment quality found
expression in the decisions taken at the United Nations Conference on the Human
Environment held in Stockholm June, 1972. India participated in the conference and
strongly voiced the environmental concerns. While several measures had been taken for
environmental protection, both before and after the conference, the need for general
legislation further to implement the decision of the Conference had become increasingly
evident. Therefore the Environment (Protection) Act, 1986 [hereinafter referred to as
The Act] was passed.

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 The Act came into force on November 19, 1986, the birth anniversary of our Late Prime
Minister Indira Gandhi, who was a pioneer of environmental protection issues in our
country. The Act extends to whole of India. The Constitution of India clearly states that
it is the duty of the state to ‘protect and improve the environment and to safeguard the
forests and wildlife of the country’.

As compared to all other previous laws on environment protection, the Environment

(Protection) Act, 1986 is a more effective and comprehensive measure to fight the
problem of pollution.

Background of the Environment Protection Act

The concern for the environment in India is nothing new. From ancient times we have
believed in ‘Vasudhaiva Kutumbakam’, i.e. the entire world is one family. Indians have
believed that all the creatures on the Earth are a family, including all the plants, animals,
and microorganisms.

Our present-day Constitution also provides testimony to our old principles. Some of
them are as follows:

1. By the 42nd Amendment Act, Article 48A was added as a part of the Directive Principles
of State Policy which stated that it was the state’s responsibility to make efforts in order
to “protect and improve the environment, and to safeguard the forests and wildlife of the
country.”

2. Article 51A(g) declares that it is the fundamental duty of each and every citizen of the
country to “protect and improve the natural environment including the forests, lakes,
rivers, and wildlife and to have compassion for living creatures.”

3. Our judiciary has outlined in a number of judgments that Article 21, which guarantees
the right to life and dignity, also encompasses the right to live in a healthy and safe
environment. In the case of Subhash Kumar v. the State of Bihar, it was observed that
the right to get pollution-free water and air is a fundamental right under Article 21.

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4. Article 253 of the Indian Constitution empowers the Parliament to bring any legislation
to give effect to any international treaty, agreement, convention, or decision taken at a
conference. It was with the help of Article 253 that the Indian Parliament enacted the
Environment (Protection) Act, 1986 to give effect to the decisions taken at the UN
Conference on the Human Environment held in Stockholm in 1972.

Objectives of the Environment Protection Act

The following are the main objectives behind bringing this legislation:

1. To implement the significant decisions taken, relating to environment safety and

protection, at the United Nations Conference on the Human Environment held in
Stockholm in June 1972.

2. India already had some legislation related to different aspects of the environment but
there was a need for comprehensive legislation that filled the gaps in the existing laws.
Thus, it was enacted to bring general legislation in environment protection and cover
other major areas of environmental hazards that were previously uncovered.

3. To create new authorities for the purpose of protecting and improving the environment
and also to coordinate the activities of already existing authorities constituted under
previous laws.

4. To provide for stringent and deterrent punishment to the offenders of the natural
environment who endanger its safety and health.

5. To facilitate the growth of subordinate and delegated legislation on ecologically sensitive

topics and environment protection.

6. To promote sustainable development, i.e. balance the overall development with

environmental protection.

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 Need for the Environment Protection Act in India
The need for stringent legislation for environment protection was felt in India because
of the following reasons:

1. The first was the Stockholm Conference which highlighted internationally, the impact
human activities were having on the environment. Development and the environment
were at crossroads with each other and the conference brought into focus the urgency
of their reconciliation for the benefit of humanity and the planet as a whole.

2. The second was the Bhopal Gas Tragedy. It was about the leak of Oleum gas from an
industry that proved to be fatal for the people around and the environment. This incident
underlined the importance of regulating the industries so that they do not get away
easily from the punishment of causing harm to the environment.

3. Also, the need was felt because India had some laws for protecting the environment like
the Air Act and Water Act but there was no comprehensive law that connected them and
coordinated their activities and functions.

Environment Protection Act in India

The concept of EIA reached India in 1976-77 with the Planning Commission asking the
Department of Science and Technology to assess the river valley projects for their impact
on the environment. Subsequently, it was expanded to include other projects as well.
They were subjected to the approval of the Public Investment Board. But these were
mainly administrative decisions and had no statutory backing. But it got support with the
coming of the Environment Protection Act, 1986. After EPA came into force,
a notification was issued under the Act which made EIA compulsory for 30 specified
activities. The responsibility for giving a clearance has been given to the Ministry of
Environment and Forest. The Notification was revised in 2006.

Section 2 of the Act defined various terms used in its provisions. These definitions are as
follows:
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1. Environment– Environment has been defined to include air, water, and land, and the
inter-relationship among and between air, water, land and human beings, other living
creatures, microorganisms, plants and property.

2. Environment pollutant- A pollutant is any substance in a solid, liquid, or gaseous state,

which when present in a certain concentration can be injurious to the environment.

3. Environment pollution– The presence of an environmental pollutant in the environment

is called environment pollution.

4. Handling– Handling, in respect of any substance, is deemed to imply its “manufacture,

processing, treatment, package, storage, transportation, use, collection, destruction,
conversion, offering for sale or its transfer.”

5. Hazardous substance– It refers to any substance or preparation which can cause harm
to humans, plants, other living creatures, property, or the environment due to its
chemical or physico-chemical properties or handling.

6. Occupier- In respect of any factory or premises, it refers to the person who is in control
over the affairs of the factory or premises, and in respect of any substance, it refers to
the person who is in possession of that substance.

Benefits of the Environment Protection Act

1. Protection of public health– It seeks to prevent, control and abate environment
pollution so as to keep the environment clean and safe. This ensures that we get a
healthy environment to live in, free from all sorts of pollutants harmful to our health.
Thus, the Act aims to protect public health.

2. Promotes sustainable development– It seeks to prevent the exploitation of natural

resources and preserve them for future generations.

3. Positively empowers the central government to take concrete steps to protect the
environment– The Central Government has been given immense powers to not only

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 appoint authorities to carry out various functions but also to take all the possible
measures to further the objectives of the Act.

4. Strict penal provisions– The Act contains penal provisions for the breach of its
provisions. It also lays down the liability of companies and government departments for
polluting the environment.

5. Protecting ecological integrity– By providing for penal provisions and laying down
various guidelines for the Central Government to take active steps for environment
protection, the Act aims at preserving the ecological integrity by maintaining it in its
unpolluted and natural form.

Drawbacks of the Environment Protection Act

Despite many effective provisions that the Act contains to protect the environment, it is
not free from some limitations and drawbacks that dilute its effectiveness. Some of them
are the following:

1. Too general in nature– The Act is a comprehensive legislation that tries to cover all the
aspects of the environment but it does so only superficially. It covers only the broad
aspects and leaves out the details.

2. Conflicting jurisdiction– Section 24 talks about the overriding effect of this Act. It
mentions that if an offence is punishable by both this Act and some other legislation,
then the offender is to be punished under the other law and not this. This provision
lessens the effectiveness of this Act as an offender can easily flout the rules and protect
himself from the penalty, prescribed under this Act.

3. Flexible penalty– The penal provisions prescribed under the Act are not adequately
stringent and deterrent. In most of the provisions, there is no minimum penalty
provided. Also, the offenders have been provided with a room to escape liability by
proving things like the offence was committed without knowledge or that due diligence
was exercised.

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4. Weak citizens’ suit provision- Common citizens are not allowed to file a suit against the
environmental offenders unless 60 days prior notice is given. Those 60 days could be
easily utilised by the offender to wipe out the evidence of his fault. Only the central
government or its authorised officers or authorities can file a complaint under this Act.
it is important that citizens are given the right to file complaints in cases where they see
the environment is being harmed.

5. Lack of coverage of certain specific aspects of environmental damage– The ambit of

environment pollution has widened with the march of time and technological
advancements. But the definitions under the Act have not kept up with the pace.
Specifically, the definition of ‘pollutant’ covers only the particulate aspects. Nowadays,
pollution caused by noise and radiation would fall out of this definition. It fails to cover
soil erosion, effects of flood and drought, and other important aspects related to
environmental degradation.

Case laws regarding the Environment Protection Act

Vellore Citizens’ Welfare Forum v. Union of India (1996)

Facts
River Palar is a river in the State of Tamil Nadu, which is also one of the main sources of
drinking and bathing water for the surrounding people. The petition was filed against
excessive pollution caused by tanneries and other industries in the State. The Tamil Nadu
Agricultural University Research Centre also revealed that a significant portion of
agricultural land had turned either partially or completely unsuitable for cultivation.

Issue
Should the tanneries and industries be allowed to operate at the expense of damage to
the surrounding environment?

Held
The Court highlighted that the main purpose of the Environment Protection Act is to
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create an authority under Section 3(3) with all the necessary powers and functions to
protect and improve the environment. However, it was disappointing that not enough
authorities were appointed for the same. Thus, it directed the Central Government to
appoint an authority within one month and confer on it all the adequate powers required
to deal with the situation created by tanneries and other polluting industries in Tamil
Nadu. It also directed the authority to implement the ‘precautionary principle’ and
‘polluter pays principle’. A fund called ‘Environment Protection Fund’ was also to be
constituted. The compensation received was to be employed for reversing the damage
done to the environment and to the victims of the damage.

Conclusion
Post the Stockholm Conference and the Oleum gas leak case, the concern for the
environment has magnified. The provisions of the Environment (Protection) Act, 1986
mark a positive step towards environment protection and improvement. It has stipulated
some stringent regulations for the prevention, control, and abatement of environment
pollution. The central government has been given a wide scope of powers to frame rules
and appoint authorities to further the purposes of this Act. Additionally, the Act has
facilitated the coming of several notifications for environment protection which have
introduced new protective principles like the Environment Impact Assessment. It has
also empowered the citizens to play a proactive role in environment protection by calling
out the pollution-causing industries under EPA which has led to a string of
environmentally sound judicial decisions. However, there are still some lacunas present
in the Act that need to be filled with subsequent amendments to update the Act with
changing times.

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