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A prudent approach to ed-tech: Regulatory prism for the sector

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“Invention, it must be humbly admitted, does not consist in creating out of void, but out of chaos” — Mary Shelley (in ‘Frankenstein’)

A Brief Introduction 

Technology is the greatest disruptive phenomenon that has occurred to mankind. The internet which started for sovereign purposes in the 1960’s has reached our bedrooms today. The advanced technology like Artificial Intelligence (AI), deep learning, Internet of Things (IoT), cloud computing and big data are the propellant of change in the whole dynamics of societal and organisational conduct. To bring in the context here, ‘Education Technology’ (“EdTech”) is one of the by-products of such technological advancement which has disrupted the way of imparting knowledge and the method of teaching and learning by transcending all geographical limitations, and has gained more relevance in time of this unhappening pandemic. 

Ed-Tech and its Application: Insights 

‘Education Technology’ or ‘Instructional Technology’ can be understood as a mutation of technology and conventional education system to transform the whole learning and teaching experience. What was limited to the four walls of a classroom has flipped to an e-learning mode. Now learning and imparting knowledge is not confined to a physical location, rather the mode of accessibility has gone global. You can access your learning modules on your digital devices anytime and anywhere. A course offered by a university in USA can be accessed by a person at any location in India, such is the impact and transition. If you are an entrepreneur and want to work in the education sector, you need not necessarily establish an educational institution backed by huge capital, technology can be the aid for you. This mix of internet and education has also been addressed by Kerala High Court, holding right to internet access as part of right to education under Article 21 of the Constitution of India. 

EdTech is an ecosystem where technology is used to enhance the academic experience, method of teaching and learning, increased accessibility of resources. The technology deployed is not only a hardware or a software, but most often as the future will be, an AI Teacher, an online library on cloud servers, a synced collaborative learning process through the mechanism of IoT, advanced predictive assessment and guidance process through big data analytics and the development will be manifold. The whole conception of education might change. 

The present example, in the time of corona crisis, the educational institutions have adopted technology to provide e-learning facility. The different models of EdTech have been plied, like the flipped classroom, synchronous and asynchronous mode of teaching, online tutorials, computer-based training or linear learning, collaborative learning, students enrolling for online certificate courses, the credit transfer courses from foreign universities, gamification of education, dish tv operators like Tata Sky collaborating to provide classroom teaching on your television, web based knowledge sharing platforms and mediums like Unacademy, Byjus, ebooks, online library etc.

 Questions to ponder But few realistic and ethical questions might also occur. Whether AI will replace human teachers completely? What about the machine bias and how to get rid of it? Whether classrooms will go flipped, completely? Whether e-learning will suffice the human touch of physical interface? How to address the concern of digital accessibility of financially weaker class, if EdTech is the future? Whether the future beholds a blended learning of pen and paper complimented with technology or will it act in isolation? Whether we have to do away with physical space of learning? Whether the change will be for good or will it deteriorate the education system? What about false profiling of teachers, online defamation and child privacy violations? Whether the Internet Service Providers (ISPs) will have to face any intermediary liability for an independent EdTech entrepreneur’s mischief over internet?

 Regulatory Laws: Opportunities and challenges 

a) Education Policy and UGC regulation With a lot many questions, debates, speculations and curiosity, the sector has gained a lot of traction and hence is being brought into the regulatory arena. In India, the New Education Policy, 2020 (“NEP Policy/ Policy”) has brought in sweeping changes in school and higher education. The Policy has revised the curriculum structure with focus on more practical learning and skill training. The higher education has been opened to foreign universities, selective course reading has been introduced, colleges and universities will be multidisciplinary, changing the whole thrust of education system. The EdTech will play a major role here for achieving the visionary Policy goals. However, they will have to operate as per applicable University Grants Commission (UGC) rules. The UGC introduced the University Grants Commission (Online Courses or Programmes) Regulations, 2018 regulating the online courses offered by University in India. But the NEP Policy, has proposed to dismantle the UGC, so it has to be seen in the long run how the regulatory construct will be.

 b) E-commerce rules and Foreign Direct Investment On the economic front, EdTech companies have seen exponential buyouts for this year. Byju’s, Vedantu and Unacademy, the Indian EdTech companies have been diversifying uniformly and their valuations have grown significantly. EdTech has become a medium of exchange of services and products and has attracted electronic transactions, thereby inviting ECommerce regulations. The new Consumer Protection (E-Commerce) Rules, 2020 will have a significant role to play here. The scope and applicability of this rule is wide enough to cover all goods and services bought or sold over digital or electronic network including digital products and all models of e-commerce, including marketplace and inventory models of ecommerce. The definition of an ‘e-commerce entity’ includes any person who owns, operates or manages digital or electronic facility or platform for electronic commerce.

 An EdTech is most likely to fall within the domain of this definition, as it is being offered in consideration of some fee, and hence the regulatory obligations and liabilities will apply directly. However, free services by platforms will fall outside this regulatory ambit. At the same time, it will be critical to analyse whether the EdTech model is falling under ‘marketplace e-commerce entity’ or ‘inventory e-commerce entity’ under the E-Commerce Rules to determine the subsequent foreign direct investment (FDI) norms, as applicable. As the FDI Policy of India stands, in ecommerce although 100% FDI is allowed, but it varies depending upon the business model. While for a B2B (Business to Business) model, 100% FDI is allowed, the Government of India has been reluctant to allow the same for a B2C (Business to Consumer) model. This would impact the EdTech sector bifurcation based on ‘marketplace e-commerce entity’ (alike B2B model) or ‘inventory e-commerce entity’ (alike B2C model).

 It is also to be given a thought, reconciling the past apparent conflicting views of courts and tribunals, whether education is a ‘service’ and students are ‘consumer’ under the Consumer Protection Act, 1986. Recently the National Consumer Disputes Redressal Commission in a reference answered that educational institutions don’t fall within the ambit of Consumer Protection Act; however, coaching institutions are rendering ‘service’ and needs to be distinguished. So, it needs to be finally settled by the authorities how the construct of law has to be in this regard, to give more clarity.

 d) The IP rights, AI ecosystem and Data Sanctity The challenge for an EdTech company is also to protect its intellectual property rights. The contents that are generated, the algorithms being used, software, brand name, domain name, know-how, protection of these is a robust task. Simultaneously, the seamless interaction of persons through technological interface is observing huge flow of data, contents and has invited privacy concerns. Since the whole EdTech architecture is backed by AI, the recent draft framework of the Indian Artificial Intelligence Stack will have a pivotal role to play. The questions of AI bias and its training, the emerging privacy concerns and sanctity of data principles can be addressed in a more comprehensive manner, when it comes to EdTech. The Information Technology Act, 2000 (IT Act) and compliance of Section 43A, 72, 72A along with the Information Technology (Reasonable security practices and procedures and sensitive personal data or information) Rules, 2011 is a key aspect for addressing privacy and security concerns. The intermediary regulations under section 79A of the IT Act along with intermediary guidelines will also come into motion.

 Read the conclusion on TheDailyGuardian.com.

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Legally Speaking

TELANGANA HIGH COURT: PLACE OF RESIDENCE OF THE ARBITRATOR WOULD NOT BE THE SEAT OF ARBITRATION

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The High Court of Telangana in the case M/s S. Square Infra v. Garneni Chalapathi Rao observed and held that the place of residence of the arbitrator would not determine the seat of arbitration.

The Single bench comprising of Justice P. Sree Sudha observed and held that merely because an arbitrator residing in Hyderabad has been appointed, it does not mean that only the Courts at Hyderabad would have the jurisdiction to decide all the matters arising out of arbitration agreement.

Facts of the Case:

In the present case, after the dispute arouse between the parties, the respondent sent a letter to the petitioner for nomination an arbitrator who is residing in Hyderabad. To its said notice, petitioner replied and declined the appointment of the arbitrator for the reason that there was no dispute which required the appointment of an arbitrator.

A suit was filled by the respondent before the VII Additional District Judge Sangareddy, seeking for relief of permanent injunction. An application was filled by the petitioner under Section 8 of the Arbitration & Conciliation Act and the parties referred to the arbitration.

An application was filled by the respondent under section 9 of the Arbitration & Conciliation Act before the Principal District Judge, Sangareddy, Subsequently, an application was filled by the petitioner for transferring the application from the Court at Sangareddy to Court at Hyderabad.

Contentions made by Parties:

On the following grounds, the petitioner sought the transfer of application.

An arbitrator residing in Hyderabad was nominated to respondent. However, only the courts in Hyderabad would have the jurisdiction to decide all the matters arising out of the arbitration.

It was stated that the nomination of an arbitrator residing in Hyderabad amounted to designating Hyderabad as the Seat of Arbitration.

On the following grounds, the respondent countered the submissions of the petitioner:

An application was filled by the petitioner under Section 8 of the A&C Act before the Court at Sangareddy. However, in terms of Section 42 of the A&C Act, only the court at Sangareddy would have the jurisdiction to decide all the matters arising out of arbitration.

Court Analysis:

The Court held that the seat of arbitration would not be decide by the place of residence of the arbitrator.

The argument of the petitioner was rejected by the court that since the respondent had initially nominated an arbitrator residing in Hyderabad, the Hyderabad Court would have the jurisdiction.

The court stated that merely because a party has nominated an arbitrator who resides in Hyderabad, the same would not designate Hyderabad as the Seat of arbitration in absence of any designation of the seat under the arbitration agreement.

It was further stated by the court that the application filled by the petitioner filled under Section 8 application before the Court at Sangareddy consequent to which the parties were referred to arbitration. Therefore, the Court would have the jurisdiction, in terms of Section 42 of the A&C Act.

The Transfer petition was dismissed by the Court.

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DELHI HIGH COURT REMANDS IN THE MATTER BACK TO ASSESSING OFFICER AFTER SETTING ASIDE: JUST 3 DAYS’ TIME GRANTED TO RESPOND TO THE INCOME TAX NOTICE

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plea in Delhi High Court seeking repatriation of 56 pregnant nurses

The Delhi High Court in the case Shubham Thakral Vs ITO, the Delhi bench comprising of Justice Manmohan and Justice Manmeet Pritam Singh Arora observed and remanded the matter back to the assessing officer as just 3 days’ time was granted to respond to the income tax notice.

In the present case, the petitioner/assessee assailed the notice under Section 148A (b) of the Income Tax Act, 1961 and the order passed under Section 148A (d) for the Assessment Year 2018–19.

It was contended by the assessee that only three days’ time was granted to the assessee to respond, as against the mandatory statutory period of at least seven days. However, despite of the fact that the annexure attached to the notice gave the petitioner eight days to respond, the e-filing submission portal was closed earlier, in violation of Section 148A (b) of the Income Tax Act.

Furthermore, the petitioner relied on the decision of Delhi High Court, in the case of Shri Sai Co-operative Thrift and Credit Society Ltd versus ITO, the Delhi High Court in the case held that under Section 148A (b), a minimum time of seven days has to be granted to the assessee to file its reply to the show cause notice.

No objections were raised by the department/respondent to the matter being returned to the Assessing Officer for a fresh decision in accordance with the law. Accordingly, the court set aside the order passed under Section 148A (d) for the Assessment Year 2018-19. The Assessing officer was directed by the court to pass a fresh reasoned order in accordance with the law after considering the reply of the petitioner, which was directed to be filed within a week.

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ALLAHABAD HIGH COURT: ADVOCATES SHOULDN’T ADVISE CLIENTS TO REAGITATE MATTERS IF THERE IS NO ERROR APPARENT ON FACE OF RECORD

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The Allahabad High Court in the case Malhan and 17 Others Vs. State Of U.P. And Another observed and stated that an advocate should be given such a piece of advice when there is no error apparent on the face of the record nor was there any reason why the matter be re-agitated it was finally decided.

The bench comprising of Justice Dr. Kaushal Jayendra Thaker and Justice Vivek Varma observed while dealing with the civil review application wherein the bench observed the concerned advised his client to make a chance by filling the instant review application after a period of six year.

In the present case, a civil review petition was filled along with the application under section 5 of the Limitation Act, 1963., the application was filled for seeking condonation of delay in filling the application, the application was filled with a delay of six years i.e., 1900 days.

It was stated by the applicant that the review application could not be filled due to the blockage of public transportation on account of the COVID-19 guidelines.

Moreover, the court observed that the appeals were disposed of by the Apex Court in the year 2016 and only in 2020-2021, the pandemic struck India and furthermore, it cannot be said that due to the COVID guidelines the public transportation was blocked and however, the applicant could not come to Allahabad Court to file review.

Further, it was stated that the court asked the counsel for the review applicants to explain the delay in filling the review application, to which the council gave a strange reply that the counsel had advised the clients that they must take a chance by filling this review application after a period of six years.

Following this, the Court observed:

The court noted that an advocate should not give such an advice when there is no error apparent on the face of record nor was there any other reason that when the matter was finally decided, why the matter be re-agitated.

It was stated that the court has no reason to condone the delay of six years as the same was not explained as to why this review application is filed after such an inordinate delay.

The Court opined that the lapse in approaching the court within the time is understandable but a total inaction for long period of delay without any explanation whatsoever and that too in absence of showing any sincere attempt on the part of suiter, this would add to his negligence and the relevant factor going against him.

The court observed that careless and reckless is shown by the review applicant in approaching the court and due to the condemnation of delay in the application with a token cost of Rs.10,000/, the court dismissed the application.

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SUPREME COURT CRITICISES HIGH COURT: POSTING ANTICIPATORY BAIL PLEA AFTER TWO MONTHS CAN’T BE APPRECIATED

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The Supreme Court in the case Sanjay versus The State (NCT of Delhi) & ANR observed and stated that in the case where personal liberty is involved, the court is expected to pass orders at the earliest while taking into account the merits of the matter in one way or other. Further, the top court observed that posting of an application for anticipatory bail after a couple of months cannot be appreciated by the court.

The bench comprising of Justice C. T. Ravikumar and the Justice Sudhanshu Dhulia was hearing a June 2 SLP against the Delhi High Court in a petition filed under section 420, 467, 468, 471, 120-B, 34 of the Indian Penal Code, 1860 for seeking anticipatory bail in a 2022 FIR, a notice is issued. It was stated that the learned APP for the state is present and accepts the notice and seeks time to file status report. The High Court in the impugned order stated that Let the status report be filed by the state prior to the next date with an advance copy to the learned counsel for the petitioner. The matter is to be list on 31.08.2022.

It was noted by the bench comprising of Justice Ravikumar and the Justice Dhulia that in the captioned Special Leave Petition, the grievance of the petitioner is that the application for anticipatory bail moved by the petitioner, being Crl. M.A. No. 11480 of 2022 in Bail Application No. 1751 of 2022 without granting any interim protection, was posted to 31.08.2022. on 24.05.2022, the bail application was moved on.

However, the bench asserted that the bench is of the considered view that in a matter involving personal liberty, the Court is expected to to pass orders at the earliest while taking into account the merits of the matter in one way or other.

It was declared by the bench that at any rate posting an application for anticipatory bail after a couple of months cannot be appreciated by the court.

Further, the bench requested to the High Court to dispose off the application for anticipatory bail on its own merits and in accordance with law expeditiously, preferably within a period of three weeks after reopening of the Court. Adding to it, the bench stated that if the main application could not be disposed off, for any reason, within the stipulated time, relief sought for in the interlocutory and on and on its own merits, the application shall be considered.

While disposing of the SLP, the bench directed in its order that we grant interim protection from arrest to the petitioner herein, Till such time.

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IN THE CIRP OF BOMBAY RAYON FASHIONS LTD, NATIONAL COMPANY APPELLATE TRIBUNAL (NCLT) STAYS THE CONSTITUTION OF COC

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The National Company Appellate Tribunal (NCLT) in the case National Company Appellate Tribunal (NCLT), comprising of the bench of Justice M. Venugopal (Judicial Member) and the technical member, Shri Kanthi Narahari observed while adjudicating an appeal filed in Prashant Agarwal v Vikash Parasprampuria, has stayed in the Corporate Insolvency Resolution Process (CIRP) the constitution of the Committee of Creditors (COC) of Bombay Rayon Fashions Ltd. on 15.06.2022, the order was passed.

FACTS OF THE CASE:

The Operational Creditor or the Respondent, Vikash Parasprampuria is the sole Proprietor of Chiranjilal Yarn Traders and the respondent had supplied goods to a public listed company i.e., Bombay Rayon Fashions Limited (“Corporate Debtor”). The Operational Creditor raised nine invoices which was accepted by the Corporate Debtor without any demur and it was noted that the dispute, protest and part payments were also made towards certain invoices.

The reminder letter was sent by the Operational Creditor when the Corporate Debtor failed to release balance payments letters followed by a Demand Notice under Section 8 of the IBC dated 05.11.2020, which was delivered to the Corporate Debtor but no response was received from the Corporate Debtor.

MUMBAI NCLT PROCEEDINGS

An application under section 9 of the Insolvency & Bankruptcy Code, 2016 was filled by the Operational Creditor before the NCLT Mumbai Bench, seeking to initiation of CIRP against the Corporate Debtor, for defaulting in payment of Rs.1,60,87,838/-, wherein the principal amount was Rs. 97,87,220/- and remaining was interest. 01.11.2020, was the default date.

the Operational Creditor placed reliance so as to justify the compliance of Rs. 1 Crore threshold for initiating CIRP of the NCLT judgement in the case Pavan Enterprises v. Gammon India, it was held in the case that interest is payable to the Operational of Financial Creditor then the debt will include interest, in terms of any agreement. However, by including the interest component the threshold of Rs. 1 Crore was being me and no reply has been filled by the Corporate Debtor.

NCLT DECISION:

An order dated 07.06.2022, the NCLT Mumbai Bench observed that the Corporate Debtor had time and again by its letter, invoices and by making part payment acknowledged its liability.

It was stated by the bench that the application under Section 9 was complete in all respects as required by law and there was a default in the payment of debt amount by the Corporate Debtor. The bench accepted the application and the CIRP was initiated against the Corporate Debtor, Mr. Santanu T Ray, Interim Resolution Professional was appointed.

NCLT PROCEEDINGS:

An application was filled by the appellant, Prashant Agarwal before the NCLT against the order dated 07.06.2022.

The settlement was proposed by the Respondent by submitting that if it would be satisfied if the Appellant pays the principal amount along with the CIRP cost towards settlement and on the settlement proposal, the appellant is yet to seek instructions.

Accordingly, the bench in the CIRP of the Corporate Debtor stayed the constitution of CoC and the CIRP process would otherwise continue.

The Appellant to accept or reject the settlement proposal of the Respondent, the bench listed the matter on 07.07.2022.

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ESTOPPEL CANNOT OVERRIDE LAW: SUPREME COURT ACCEPTS UNSUCCESSFUL CANDIDATES’ CHALLENGES TO SELECTION PROCESS HELD AGAINST REGULATIONS

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The Supreme Court in the case Krishna Rai (Dead) Through LRs versus The Benarus Hindu University & Others observed and held that the principle of estoppel or acquiescence would not be applied in a selection process when the principle of estoppel is held contrary to the relevant rules.

The bench comprising of Justices Dinesh Maheshwari and Justice Vikram Nath observed and reiterated that that the procedure in the relevant service manual will prevail over the principle of estoppel and the principle of estoppel cannot override in the eye of law.

An appeal was considered by bench relating to the filling up of 14 posts in Class III (Junior Clerk) in the Benarus Hindu University by way of promotion. However, the notification inviting the applications from Class IV employees for promotion to Class III had not prescribed that interview will be conducted in addition to the typing test. It was also stated that the The service rules also did not mention interview for promotion to Class III. However, it finalized 14 candidates, the Board of Examiners conducted an interview as well.

Before the Allahabad High Court, some of the candidates challenged the selection process by some candidates, who did not get selected. The candidates alleging that through the manual did not prescribe an interview and the Board of Examiners conducted the interview by “changing the rules of the game”. The Selection process was set aside by the Single bench of the High Court by holding that a grave error was committed by preparing the merit list on the basis of the interview as well.

on appeal by the BHU, the division bench of the High Court set aside the judgement of the Single bench on the ground that the petitioners without protest after having participated in the interview, the petitioners are estopped from challenging the selection process after becoming unsuccessful. The appellants approached the Supreme Court challenging the order of division bench.

The Court noted that the Supreme Court held that the division bench fell in error by applying the principle of estoppel. the Manual duly approved by the Executive Council, According to para 6.4, all Class-IV employees who had put in five years’ service and passed matriculation examination or equivalent, those employees were eligible for the promotion to the post of Junior Clerk Grade.

the departmental written test of simple English, Hindi, and Arithmetic, but could not pass the typing test, was passed by the eligible candidates and still the candidates would be eligible for promotion.

It was observed by the Court that the Board on their own changed the criteria and by introducing an interview it made it purely merit based and the merit list was also prepared on the basis of marks awarded in the type test, the written test and interview.

The Top Court said that it is settled principle that the principle of estoppel cannot override the law and the manual duly approved by the Executive Council will prevail over any such principle of estoppel or acquiescence.

The Court remarked, while referring to the precents that If the law requires something to be done in a particular manner, there can be no estoppel against law, then it must be done in that particular manner, and if it is not done in that particular manner, then in the eye of the law, it would have no existence.

It was stated that the case laws relied upon by the Division bench had no application in the facts of the present case as none of those judgments laid down states that the principle of estoppel would be above in the eye of law.

Accordingly, The judgement of the Single bench was restored and the appeal was allowed, the judgement of the division bench was set aside.

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