The times, they are a changing’. There is no better way to describe the Covid-19 pandemic than this famous song by Bob Dylan, which had become an anthem back in the day. For line it is drawn, the curse it is cast… resonate as the tremors of the pandemic are felt everywhere. With over 3/4th of the world population under some form of lockdown, there is hardly any economic activity that has not suffered at the hands of the ruthless Covid-19.
To contain the pandemic, like many nations, the Government of India has also imposed a lockdown, currently until 31 May 2020, impeding the movement of the people and the hustle of businesses. Recently, the Government of Delhi announced that the revenue collection in April 2020 is merely Rs 300 crore, down from about Rs 3500 crore in the same month last year. This is not a standalone case. The world economies are suffering, alas small businesses, and individuals are paying a heavier price. Business survival and job cuts are the sad realities of Covid-19’s newly created world. Although, the Indian Government has partially lifted the lockdown and some of the business activities have begun to hum again, albeit, with caution, many businesses are still under lockdown.
There are multiple negative consequences of the lockdown, which will further add to the woes of businesses after the lockdown is lifted like reverse migration, disruption of supply chains, drop in discretionary spending, amongst others. With the world being shut, disputes on account of delayed performance and/or non-fulfilment of contractual obligations would rise, so would legal wrangles for businesses post lifting of the current restrictions. Below are some of the common legal issues that business in India may face in the world overrun by the pandemic.
Non-fulfilment of contractual obligations
Although contracts vary in their nature and purpose, most contracts specify the time for completion of obligations therein and/or expressly state that time is the essence of the contract. However, the onset of pandemic and the preventive response of the national government have made it impossible for most of the contracting parties to meet their obligations. Such non-performance of contractual terms has made the defaulting party vulnerable to legal action and/or termination of the contact leading to more losses.
In a contract where time is of the essence, Section 55 of the Indian Contract Act, 1872 (Contract Act) governs, as it provides for the effect of failure to meet the specified timeline. However, the intention of the parties has to be looked at and not the letter of the clause. The time is generally considered to be of the essence of the contract: 1. Where the parties have expressly agreed to treat time as the essence of the contract; 2. Where any delay would operate as an injury to the opposite party; & 3.
Where the nature and necessity of the contract require it to be so construed. However, the law in certain situations permits an extension of time to the defaulting party. Such conditions are generally subject to damages for loss incurred due to the delay. However, in case of failure to perform, even in the extended period(s), the aforementioned rigours of Section 55 of the Contract Act would be invoked against the defaulting party. In a contract where time is not the essence, upon delay in performance, the innocent party may sue the defaulting party for any loss that may be caused due to the delay. Thus, each agreement has to be looked into carefully to study the cause and effect and the remedy available to a party for non-performance.
Force majeure is a legal doctrine that gives refuge to a party to escape the consequences of failure in the performance of contractual obligations, due to reasons and circumstances beyond its control. Although not defined under the Contract Act, the essence of the doctrine of Force Majeure is imbibed in Section 56, which, interalia, provides for the effect of an unforeseen event(s)/ circumstance(s) that may prevent a party to a contract from performing its obligations thereunder.
Since the Contract Act does not provide for any particular form or condition for a force majeure clause, parties are free to define the events and conditions that may be covered by the force majeure clause. Thus, it is imperative that each force majeure clause or in the absence of the same, the entire contract is understood distinctly to define the parameters of force majeure under each agreement and to test if the travesties of Covid-19 would be included or not.
In any event, if a party is unable to perform its contractual obligations, it must take immediate steps; by first and foremost, notify the other party of the force majeure event. Delay in notifying the force majeure clause robs the efficacy of the same, as the opposite party may allege afterthought on part of the non-performing party. The onus of proving that the contract has fundamentally altered due to the occurrence of the Force Majeure event(s) is on the party invoking the doctrine. The defaulting party is under an obligation to mitigate damages, wherever possible, during the entire Force Majeure event(s).
Government Order – Covid-19 is Force Majeure
In the melee of orders/directions passed by the Central and the state governments to give urgent reliefs to businesses, an Office Memorandum dated 19 February 2020 by the Department of Expenditure, Procurement Policy Division, Ministry of Finance has been quoted extensively, as the same provides that Covid-19 would be covered in the force majeure clause of the Manual for Procurement of Goods, 2017 issued by the Department and serves as a guideline for procurements by the Government.
The said Office Memorandum is in relation to the procurement contracts of the Government of India for goods and services and is not applicable to the interpretation of the force majeure clauses under private contracts. As stated, each contract has to be examined independently to determine if Covid-19 is a force majeure event under its ambit. However, the effect of the Government, administrative, and legislative actions have to be considered, even if not expressly stated in the contract. Thus, the effect of lockdown should be considered, while evaluating any default/breach of contract on account of Covid-19.
Doctrine of Frustration
In contracts where there is no Force Majeure clause, a party may rely on Section 56 of the Contract Act which provides for the frustration of contract, if: 1. Performance of the obligations under the contract becomes impossible or unlawful due to change of circumstances beyond the control of the parties after the contract has been executed; 2. The object of the contract is lost.
The courts in India have time and again held that the Doctrine of Frustration is applicable only in cases where the contract has altered materially due to the occurrence of an event(s) and cannot be applied merely because of the performance under a contract has become onerous or costly. It is impossible to lay down an exhaustive list of situations on which the doctrine of frustration can be applied. However, destruction of subject matter, non-occurrence of the contemplated event, death or incapacity of a party, etc. could be certain grounds for invoking the doctrine of frustration of a contract.
Here again, in order to claim that a contract is frustrated, it must be established by the party claiming frustration that the performance of the contractual obligation(s) has become impossible by reason of an event(s) which the parties had not anticipated at the time of entering into the agreement.
To sum up
At present, it is impossible to comprehensively assess the consequences of Covid-19 on contracts, but it would not be incorrect to state that the performance of contractual obligations has been delayed and, in most instances, have also become onerous, if not impossible. Thus, all the businesses preparing to restart in the world marred with pandemic must safeguard against the inevitable legal wrangles by taking timely positions under their contract(s).
The first step is to evaluate the contract clauses to ascertain the rights and liabilities and secondly, while proactively adopting all measures to mitigate the liability, in time invoke the correct legal doctrine of either seeking extension by claiming Force Majeure or complete pardon from the performance by invoking Doctrine of Frustration. The preventive measures to control the march of the virus have caused an existential crisis for businesses and contraction in consumption demand should be the least of the worries.
However, as the saying goes, there’s always light at the end of the tunnel. Here’s hoping that the light shines sooner and shows us the path to a better and more promising future.
Pankaj Vasani, Chartered Accountant (India, England & Wales), CPA (Australia) and lawyer, has served as Executive President & Group CFO, South Asia, Publicis Groupe & member, Board of Directors, Vodafone. KPS Kohli is a Partner with Dhir & Dhir Associates.
‘Honour killing’ offenders must be tried as violators of fundamental rights
“We don’t live in a world in which there exists a single definition of honour anymore, and it’s a fool that hangs on to the traditional standards and hopes that the world will come around him.” – Joseph J. Ellis
To begin with, the fabric which binds and protects the integrity of this nation as a whole has been tested time and again and one being on the abrupt practice of ‘Honour Killings’. The terms «honour killings» and «honorable crimes» have been used interchangeably to describe the incidents involving the brutality and badgering caused primarily to young couples who intend to marry someone of their own choice including those who dare to ceasefire the boundaries of “whom to love” set by their family members. Murders like these which are the acts of retribution, usually death, performed generally by the patriarch›s mind as a response to protect and maintain the dignity and pride of the family. The element which gives rise to such abrupt and feudal practices are the perception or apprehension of bringing dishonor to the society/family by one of their own family members. These barbaric practices have now taken a front pew in our society, resulting in the suppression of inalienable rights, enshrined under Article 21 of the Constitution of India.
Democracy in Quarantine
The COVID- 19 pandemic needs no introduction and description now. In India, amid lockdown, an unprecedented event of honour killing was reported from the southern part of India where, M. Sudhakar, 24, was killed by his wife’s father for marrying outside of his caste. Cases surrounding feudal practices in the name of gender, caste, and religion; have demolished the hailed findings and verdicts of the Supreme Court on what we call as the basic feature of the Constitution of India ‘The Rule of Law’. Supreme Court recently delivered another notable judgment wherein the court said that the law will not come to guard any person who in the name ‘honour’ takes a life of another person.
Another, odd practice which has locked the still has a pew especially in rural sectors of the country is the informal system of ‘Khap Panchayats’; wherein the society and especially the men who consider themselves as the protectors of their culture and family issue severe orders or ‘dikats’ to restrict and remind the realm of love. In the case of Shakti Vahani the apex court of the country categorically laid down stringent guidelines, thereby ensuring protection to young couples against the feudal orders of the Khap panchayats. It further ensured an immediate registration of FIR against such orders andx extended to provide safety, if needed. The ghost which has confined the system of democracy into the four walls is the hinge of traditions vs modernity.
Pandemic of Caste
The impact of the caste system has been wide and varied across the country. It has burnt a family of Dalits including kids alive. It has beheaded a person who had ‘dared to contest’ in local body elections. Dalit women continue to be sexually harassed across the country. The list is endless. Honour killings perhaps have the most dreadful impact upon the caste systems in the country today. The Supreme Court judgment of 2006 delivered a notable finding on ‘Honour Killing’ and it stated that «There is nothing honorable in such killings, and in fact, they are nothing but barbaric and shameful acts of murder committed by brutal, feudal minded persons who deserve harsh punishment», but, it failed to incentivize the government to bring a new code on ‘honour killing’ thereby criminalizing such barbaric, feudal practices at large. Murder in its very name is a heinous crime. Murder in name of caste inevitably murders the principles of Dr. B.R. Ambedkar, who once remarked that if the practice of building and taking shelters in the temples of caste would continue then it will only deteriorate the integrity of this country. But in my notion, the Indian Laws have miserably failed to distinguish between a murder and a caste murder. Honour killings, thus, has proved to be at the top of the list of spate crimes across the country.
In the culture of patriarchal control and notions of feudal minds, where women are not free to fall in love with a man of their choice, particularly from different religion or caste, these egregious violations of inalienable rights need to be addressed with utmost caution which will not only provide rigorous punishment to those who consider ‘Honour’ in abysmal killings, but will also break the hornet’s- nest of queer notions. In the year 2018, the Apex court of the country refused to take note of brutal murder of a 23-year-old Delhi based photographer by the family members of his girlfriend. Another incident which imbalanced the bedrock of the Rule of Law was the reported murder of Shankar, a Dalit man from Coimbatore who daringly fell in love with Kawsalya, an upper-caste Hindu which resulted in an escalation of caste-based violence where a group of men hacked Shankar to death for daring to marry an uppercaste woman without the permission of her family. In 2018, the data available with the National Crime Records Bureau (NCRB) reported that 10,773 people eloped due to the familial denial upon marrying someone of their own choice, suggesting only the number of people who are at risk over distinction in their caste, class, or religion. These distressing instances of killings and feudal practices are only a few out of plethora that has taken place across our country.
In light of these blatant instances, one question that inevitably strikes down is, whether the government is shunning the desperate need of a stringent code on “honour killing” or is it the question of Who, as to who will take traditional values within the realm of judicial setup.
A RoadMap for Curbing Menace
Even if the local governments decide to step on the pedestal by introducing a separate regime on ‘Honour Killing’, it would require it to be enforced effectively. Police cooperation, in India, is yet another glaring issue, instances of outright refusal to register the complaint or perhaps officials harassing the complainant resulting in either withdrawing or not registering the complaint.
The foremost facet of honour killing which needs utmost consideration is the tracking of honour killing cases across the country. The killings which take place in the name of ‘honour’ are frequently reported by the family members as suicide, the relatives and family members destroy every shred of evidence by immediate cremation of the victim. In 2019, a similar incident of murder of a minor girl by her family members was reported. To control the exponential growth of such practices, one must start with the root cause. ‘Police’ and ‘Public Order’ being the subject matter of the State list, empowers them to make policies or laws on the same, as the case of the State of Rajasthan, in 2019 the Rajasthan Assembly introduced a bill mandating the death penalty for the crimes and practice of ‘Honour Killing’. Such dedicated regimes if gets introduced at the centric level, would not only bolster up the safety of young couples who wish to marry the person of their own choice but would also let us all know the depth of the cavity caused by the distinction in religion and caste.
The Tool of Amendments
To construct robust and stringent law on the subject of honour killing, amendments majorly in the areas of Indian Penal Code, 1862, Hindu Marriage Act, 1955, and Evidence Act, 1872 can help in achieving the same. To mention a few, amendment in the definition of Murder under Section 300 of the IPC, must be done with an inclusion of the term ‘Honour Killing’; doing the same would generate more clarity on classification of honour killing cases thereby it would be easy for the justices to punish the victim pursuant to the succinct definition of honour killing. Apart from this, an amendment must also be made under Section 34 of the IPC to the extent of inclusion of the system of ‘Joint Liability’ in the cases of arising out of barbaric orders (dikats) of ‘Khap panchayat’ in order to accord stringent punishments to those to issue dikats along with those who are involved in the execution of such brutal orders.
Along with these amendments, the offenders of ‘honour killing’ must also be tried as the violators of the fundamental rights facilitated by the Constitution of India to all its citizens. Therefore, the cases of honour killing must be put under constitutional scrutiny in order to ensure the facilitation of inalienable rights especially to every woman who suffers from the patriarch notions of living life and as aptly elucidated by an American poet “There are miles to go before we sleep, miles to go before we sleep”; and hence the only vaccine for this pandemic of caste would be a separate regime on honour killing.
Shell companies: Illegality in functioning & regulatory framework
The Guwahati High Court in the case of Assam Company India Ltd and Ors v. Union of India explained the working of shell companies by stating that a ‘shell company is artificially identified
with suspicious activities which include serious offences like tax evasion’.
Shell Companies and their features Shell Company has neither been defined under Companies Act 2013, Income Tax Act 1961 nor under any of the Indian Legislations. The Organization for Economic Cooperation and Development (OECD) defines shell companies as “A shell company is a company that is formally registered, incorporated, or otherwise legally organised in an economy but which does not conduct any operations in that economy other than in a pass-through capacity. Shells tend to be conduits or holding companies and are generally included in the description of Special Purpose Entities”. These companies are usually established with the motive to save the illegal money earned from the eyes of law. The money is transferred to the shell companies which have no physical existence, business transactions, etc. Through these companies, people try to commit offences like tax evasion, money laundering, use of money received from unknown sources. Recent cases and scams have helped the Indian judiciary to determine some basic features of Shell Company. The features identifying a company to be a shell company are –
The product or services provided are totally different from the company’s main business. Companies having no physical existence at the mentioned address or several companies having the same address. Companies having very less or no assets. The company established for illegal cross-border transactions and transfer of a huge amount of money. Payments of the large amount made to shell companies without any reasonable and legal business.
Through the above mentioned features of a shell company, it can be concluded that the simple motive behind the establishment of these companies is to commit economic offences through the laundering of illegal money earned by the large businessmen with the help of powerful people. These shell companies get registered by fulfilling all the legal formalities required for registration of a company. Due to the lack of check and balance system, and proper legislation on these companies, people go on committing such offences very easily. These offences lead to black marketing to a greater extent affecting the economic condition and trust of people over financial institutions very badly.
The Legality of Shell Companies
The Guwahati High Court in case of Assam Company India Ltd. and Ors v. Union of India explained the working of shell companies by stating that “A shell company is artificially identified with suspicious activities which include serious offences like tax evasion, Benami transactions, and conversion of black money to white, money laundering along with other associated offences”. A shell company is not always made for illegal purposes. Incorporating shell companies is completely legal while carrying out general business activities, such as a subsidiary to facilitate business takeovers along with estate acquisitions1, or to protect assets from lawsuits, to hide dealings with another company or to avoid target of criminals, or to gain access to foreign markets.
Recent Scams based on Shell Companies
Many wealthy individuals in India are using a large number of shell companies for illegal dealings and evasion of tax, etc. Some of the recent cases which had involvement of shell companies in India are: Yes Bank Scam: The founder of Yes Bank Mr. Rana Kapoor, along with his family floated more than 100 shell companies as per the information by Central Bureau of Investigation and Enforcement Directorate for misappropriation of funds and financial manoeuvres. These companies were used to cover the illegal money earned and were named after relatives of Mr. Rana. Due to lack of regulations over shell companies, Mr. Rana was able to set up more than 100 companies to commit an economic offence to a larger extent becoming a scam.
In Punjab National Bank Scam (2018), the Enforcement Directorate found that Nirav Modi, with the help of 17 shell companies based out of India, laundered an amount of Rs. 5,921 Crores in the Year 2017. Nirav Modi’s uncle Mehul Choksi, who was a fellow fugitive billionaire diamond merchant, ran a larger number of shell companies. While ED shortlisted 140 shells companies, SFIO was probing at least 400 companies. Both of them turned fugitive after deceiving the PNB of Rs 14,000 crore by procuring Letters of Undertakings (LoUs) fraudulently.
In the INX media Case, Former Minister P.Chidambaram was involved in granting Illegal foreign investment (FIPB) clearances to receive kickbacks. These kickbacks were paid through shell companies operated by his son Karti Chidambaram. The investigation department identified that there were several shell companies registered in India and abroad which had an investment of more than Rs. 300 Crore. His son also received payments of huge amount from a company located outside India which was figured in Panama Paper as well.
Impact of Shell Companies on the Economy
Shell companies help to launder money, illicit fund flows and tax evasions which harm the economy.
The shell companies are assumed to have a serious risk to the investors. Due to the lack of proper definition of shell companies, it’s difficult for the investors to identify a legal and a shell company made for illegal purposes. The network of shell companies puts in jeopardy the interest of investors and shareholders. It also adds fuel to black money menace.
Therefore, shell companies are hard to trace as they disguise their ownership to escape regulatory monitoring.
Laws to prevent illegal activities of Shell Companies
To tackle with the illegal activities of Shell Companies, there are few major statutes such as The Companies Act, 2013; Benami Transactions Prohibition (Amendment) Act, 2016; Prevention of Money Laundering Act 2002; Indian Penal Code, 1860; The Income Tax Act, 1961; Securities and Exchange Board of India Act, 1992; Black Money and Imposition of Tax Act, 2015.
All these laws have helped to find out the culprits behind the big scams all over the country. A few of them have been discussed above. For example, Nirav Modi was charged with an offence under PMLA in PNB Bank Scam; Rana Kapoor in Yes Bank Scam was booked for misappropriation of funds and financial manoeuvres.
In Satyam Scam, the country’s biggest accounting scandal, the company misrepresented its accounts to its investors, stakeholders, stock exchanges, regulators and its board members as well; and thus was booked under the aforesaid laws. P. Chidambaram was charged by CBI with offences of forgery, corruption and cheating under IPC in INX Media case, and moreover, the effectiveness of these laws can be seen from the fact that in Panama Papers leak case exposed 2,14,488 shell companies for numerous companies around the globe.
In February 2017 a Task Force was set up by the Prime Minister’s Office under the chairmanship of Ministry of Corporate Affairs and Revenue Secretary to establish a systematic way to identify such companies indulging in illegal activities (here referred as shell companies).
This Task Force had found more than 2 lakh such companies whose names it had struck off the Registrar of Companies (RoC) under Section 248 of Companies Act, 2013.
A proper definition of Shell Company is required to create a clean economy and to make such offenders come out of their shell before they start harming the economy to a greater extent. For example, we can look into the definition of shell companies as per The US Securities Act Rule 405 and Exchange Rule 12b2 which defines shell company as ‘A company with no or nominal operations; and either, no or nominal assets consisting of cash and cash equivalents, or, assets consisting of any amount of cash and cash equivalents and nominal other assets’.
The Shell companies not only put investor’s interest in jeopardy but also give a boost to the business of black money. The government should plan at increasing vigilance over such companies with the help of data analytics. New rules and regulations should be made to protect the interest of investors. SEBI should keep an eye on wealthy organisations. The doubtful companies should be asked to submit a timely report of financial details mentioning about their subsidiaries and huge bank transactions compulsorily. The setting of a proper regulatory system, timely check, eye on corrupt practices will lead to a decrease in the amount of the frauds and use of shell companies for illegal purposes. The new regulations and enactments should be made in such a way that it doesn’t harm or affects the perfectly running legal business entities.
How can India face AI consequentialism?
AI consequentialism is not a new phenomenon in the making. The concept is quite simple. In a research paper published in May this year, entitled ‘On Consequentialism and Fairness’, the notions of consequentialism with respect to AI ethics have been beautifully discussed.
Artificial Intelligence (AI) Consequentialism is not a new phenomenon in the making. The conception is quite simple. In a research paper published on May 8, 2020, entitled “On Consequentialism and Fairness” in Conceptual Analysis, the notions of consequentialism with respect to AI Ethics, have been beautifully discussed by the authors. The paper tries to show that consequentialism is a linear area of development, where its cones and sides can have blurs and sharpness. Nevertheless, consequentialism is an important doctrine in the philosophy of ethics in the West, which India with utmost humility, must never ignore. The author, therefore, intends to discuss what can be consequentialism, its problematic behaviour with regards to adopting a policy on AI Ethics, and how can India overcome it. The reasons behind the need of India’s potential to overcome consequentialism in AI is because of the political role of disruptive technology in our lives, and the lack of aesthetic understandings of the West of the East, especially India and China. The article therefore is a generic insight on the same development and its problems.
How did Consequentialism Transform in the West and what did India learn from it? Consequentialism in general is about the politics, aesthetics and naturalization of consequences in any frame of reference. Whatever be the subject, it is the art and science of consequence which drives various considerations behind the subject. The theory of consequentialism has its basis in the theories of Jeremy Bentham, John Stuart Mill, Peter Singer & Derek Parfit. Theories of consequentialism can also be sought in Newtonian physics and Galilean relativity. In the coming centuries, amidst the First and Second World Wars, the political, scientific and social transformation of consequentialism has been lucrative & impressive. Considering the same development, what can be sought from Alan Turing’s ‘Polite Convention’ (also known as the Turing Test in his work “The Imitation Game”) to Nick Bostrom in the 21st Century, it is clear that the West has been proficient in adapting and practicing how consequentialism works. There can be many political references to the art of consequentialism, some of which can be American Exceptionalism, Israeli-Russian masochism, Chinese strategic secular realism. The cultural ethos of India also is based on these contours, and can be seen in the political and historical tenets of the phenomenon known as Indian Idealism. Vivekananda, Deen Dayal Upadhyaya, Gandhi, Ambedkar and even former PM Nehru have showered their own manifestations of ‘idealism’, which can be based on Indic, western or any credentials possible. It’s therefore not necessary to agree with every tenet and idea of the Indian schools of thought. However, one of the most emerging school of thought, which is looked upon by many people, is the Indic school of thought, comprising the Vedic-Historic approaches towards the conceptions of libertarianism, conservatism, secularism & capitalism – the four most important aspects of political contemporaries in the 21st century. The transformation of these 4 tenets of political and economic thought in India would shape how the Government of India would consider the role of AI in governance. The Responsible AI Draft proposed by NITI Aayog is a learned culmination of the values regarding AI Ethics with its own reservations kept in the Indian scenario. This draft, which was disclosed to the public in July 2020, is in lines with the AI Commitments rendered by the Pax Americana bloc, especially the US, the EU/ NATO/Council of Europe members, Singapore and the UK. Interestingly, even this draft espouses a reasonable coverage of consequentialism and constitutional morality with practical examples and models. This at least shows that India is committed to learn and adapt with the international standards over disruptive technologies. However, considering the Apps Ban procured by the Government as a significant example, it is not unreasonable to infer that actions like these also reflect a confusing image as to what can be the preventive measures that investors should adopt to affirm confidence for technology related investments in India in the coming years.
The Aesthetic Transformation of AI Consequentialism and the Indic Way
AI Consequentialism is a transformative phenomenon, and the Indic transcendence towards the same can be effective based on how India sees the constructive and substantive roles of the four tenets in politics, economics and society, which are – secularism, libertarianism, capitalism and conservatism. There are special reasons as to why only these 4 tenets are important in the road to the Indic way. First, all of the four tenets have international considerations, and can be utilized by a state by transforming it in clear coherence with the geographic, cultural and civilizational aspects of the state and its people. Israel for example is a Jewish state, but its proceduralism, like the UK (which is technically not a secular state due to the monarchy) – can be secular. Libertarianism and Conservatism are binary political ideas, undoubtedly. However, their role is significant because both of them have intersectional cohesion when it comes to the implementation of solutions. The problems of today, where global progressivism (Democratic Socialism and Cultural Marxism) and global conservatism (revisionism, civilizational intransigence & cultural relativism) are prevalent today also shows the need that the libertarian voice and considerations have either been ignored or have been marginalized into socialistic ideals, which is cancerous for any liberal democracy. Former US President Ronald Reagan & the former British Prime Ministers Thatcher, Cameroon and Blair believed in neoliberalism – which paved for a liberal, rules-based international order. The shortcomings of the order and technology politics which we see today, whether in the case of Brexit or the role of China in controlling the future of technology stems from the very issue that certain state actors, like China, Russia, DPRK and even the US until Donald Trump believed that they can control the future of technology. Israel, India, the EU, African Union member-states and even ASEAN countries were correct on their path that they cannot control how politically relevant technology can be. In fact, even if India’s policy considerations are thawing out from the Non-Aligned Movement faster than before, it is possible that most of the countries will now shape technology politics through protectionist, neoconservative and neorealist measures, and India will join them. Thus, we already have the background for the Indic way to come in and transform how can India seek AI Consequentialism.
Let us begin with Secularism. Secularism itself is a fluid concept, and a better term that defines harmony and respect for religious freedoms stems from the idea of organic secularism. The Vedic methodology towards people who practice other faiths has never been antagonistic, considering Sanatana Dharma/Hinduism as a natural religion. Issues related to religion-centric violence do not hold water as they are social and individual problems, and not ideologically related. Therefore, India must learn from the thinkers and the schools of thought within the Indic literature to accommodate Organic Secularism as a replacement to civic nationalism, which was alleged by some jurists and scholars as the conception of the Constituent Assembly members. Organic Secularism can gain much higher validation that a model of secularism that is based on ethnocentric and Western-Mediterranean values because the role of technology would be assumed not through the lens of identity politics, which eventually ethnocentric models of secularism lead to in post-colonial states from Bangladesh to Nigeria. Even the neoconservative/classic liberal view towards the US Constitution must not be limited to the SCOTUS judgments on Secularism, because the comment on the separation of church from state by Thomas Jefferson is based on a premise that there was such an intermingled connection at the first place. The United States, unlike the Europeans, the Turks and the British, has been an open-ended state, which endorses religious freedoms at all levels. The Judeo-Christian view, which was biblical, has now transformed into American Exceptionalism. Despite anti-Semitism, Hinduphobia, Islamophobia, Jewish hatred and even White Supremacy, the US has retained its considerations as a stable and reasonable secular state, where the contours of exceptionalism do not sideline religious freedoms. Instead, the same is protected, whether of any identitarian origins. India can learn from American exceptionalism, and focus on the idealistic, all-comprehensive annals of Dharma and utilize the conceptions of Sanatana Dharma to transform the social aisles of morality, ethics, strategic parity and constitutionalism in matters related to technology politics, diplomacy and constitutionalism. Considering the beautiful resemblance of constitutionalism India can seek between the Constitution of India, 1950 and Shrimad Bhagavad Gita, it is possible that the Dharmic understandings of Organic Secularism in India can be utilized to cater, weaponize and stir the social, political and strategic causes of technology, and so, artificial intelligence. The second and third tenets, that is – Libertarianism and Conservatism – can be approached via the Indic way. It is true that the origins of classic liberalism and modern conservatism in Europe cannot be applied directly in the 21st Century due to obvious reasons. However, as Simon Anholt pointed out in his book “The Good Country Equation”, anything which nationalized, even propaganda, may or may not be internationalized that wide. This is the difference between global progressivism, an amalgamation of Cultural Marxism and Democratic Socialism & Libertarianism. Black Lives Matter, for example, as a cause, and not as an organization, is a reasonable cause. However, the involvement of the Chinese in the BLM rioting and the activities of revisionist vandalism in the US, the UK and EU states in the name of decoloniality shows that global progressivism, which actually misused the moderate behaviour of neoliberalism and global capitalism, is now being challenged in Europe and the US, in starters. There is no doubt that neoconservatism also needs to be transformed and limit itself from religious evangelism, whether of any kind, in the West, the Middle East and Asia. Thus, it is a global need that Libertarianism and Conservatism come up as a joint political phenomenon and school of thought, where dissent, support and considerations towards political actions are incrementally and reasonably assessed. India therefore can effectively transform libertarianism-conservatism since the Indic civilization, and the Indic school of thought actually focuses on some sort of idealistic virtues. The significant problems which can come in when it comes to adapting tech are related to (a) the kleptocratic and restrictive approaches towards rule of law and constitutional morality; (b) the philosophizing and selective application of comparative constitutional jurisprudence on civil liberties; and (c) the lack of harmony of ideological viewpoints when any judicial review, administrative reform or parliamentary action is put in course. India needs to overcome these issues through better background reforms. The Government of India at least has started the initiative via the works published by NITI Aayog on AI Ethics.
The fourth tenet, Capitalism, does not require much justification, because the American view of capitalism has few shortcomings, such as corporatism and big government, which are a part of the ethnocentric oversight of MNCs, NGOs and governmental, multilateral and intergovernmental bodies affiliated or associated with the US and the Council of Europe member-states. Since, India focuses on reformed multilateralism, and can catalyse welfare policies in a reasonable way, it is strictly important that the Government ends all the archaic and restrictive means of economic marginalization, and repeat the 1991 moment. The moment of reforms in Labour Law and agricultural economics has already been achieved through the legislations passed in the past weeks, and this development is certainly reasonable. More or less, there are significant examples of the involvement of Indian diplomats, companies and start-ups, where in most cases, India has avoided corporatism, ethnocentrism and kleptocracy. Nevertheless, reforms and implementation can be cyclic, and the Indian state is therefore at least capable if not efficient right now, to bring effectiveness. In the information age, it is the state that takes a back seat and ensures more.
An Indian Approach Towards AI Consequentialism
AI Consequentialism is a transformative phenomenon, and the Indic transcendence towards the same is approachable. Let us understand what stems out of AI Consequentialism, and how those principles can be democratized in application. There are certain important conceptions in the field of AI Ethics and Social Sciences that have emerged in the coming times. Some of them, connected to the emerging nature of AI Consequentialism are:
• Responsible AI
• Algorithmic Accountability
• Algorithmic Justice
• Algorithmic Policing
• Human-centered AI All these popularized conceptions have stemmed their origins from the US and Europe. Some of the common problems that these conceptions do have are –
(a) they are too materialistic and lack practical application;
(b) the conception of responsibility is too much marginalized to limited actors despite recognizing the fact that AI is influenced by omnipresence and the multiplicity of actors;
(c) the conception that the multiplicity of actors in case of AI would be reasonable does not mean to marginalize the substantive thickness and structure of human rights or civil liberties enforcement because over clustering of human rights conceptions causes greater problems for law enforcement agencies and juries & the usage of old principles of civil and criminal liabilities is transformed into kleptocratic formulations; most of them are ideologically biased and untrue: their definitions are unsettling and they are central to political subversion and ethnocentrism; Now, considering India, it is important to gather incremental anthropological research to draw out solutions and contours to these common problems.
Starting with the idea of Responsible AI, it is well-reasonable within the ambit of NITI Aayog to understand that there are no generalist solutions to recognize an autonomous ambit of AI. However, combating the ethnocentric approach of Responsible AI is impossible unless the Indic way of idealism and commitment does not fall into the trap of indoctrination. Instead, a better solution is to prevent any obscuration, focus on incremental and constructive inferential research, educate the cultural, aesthetic, identitarian, social and individual realities of AI and its influence, by balancing the perils of experience and developing superstitions and their normalization. The reason is that if any anthropological development is encultured as a tradition, which even AI can foster, in horizons like lifestyle, social media, economic cycles and global capitalism, then if on a chronological basis, the very aspect and reason behind the foresight and control of exercise of that custom/tradition is not acutely determined and self-regulatory for the individual, community or organization, then it is clear that the rupture and degeneracy of traditions and customs can easily lead to the development of superstition and judgementalism. Companies misuse AI Ethics and fund infotainment propaganda for the same purpose. India can learn from its civilizational maturity and articulation to prevent any radical enculturation of AI solutions in the social and economic forum of the sub-continent. Similar issues come up with algorithmic policing and algorithmic justice, because the difference between the two is that while the former is more related to the explanability and lack of fluidity cum coherence of algorithms to real scenario and their interventionism and aberrations made, the latter needs strong, and highly experienced definitive considerations, where non-elected representatives cannot participate at multilateral levels, and without a whole pack of consultations, education beyond basic standards of awareness, avoidance of fearmongering and judgementalism & pedagogy to enculture constructive enquiry – neither of the two conceptions can be appropriately retained.
The concept of humancentric AI can be transformed and rejuvenated by the Indian philosophical take towards human anatomy, the cyclic connect between mind, body and soul & the constructively optimistic enculturation of AI into better, responsibly foreseen and stronger surroundings, at an aesthetic level. Similarly, algorithmic accountability can very well be established, but through avoiding the misuse of technocratic measures in a legal system. Considering the administrative conditions of the Indian state, it is highly recommended that no top-to-down absolutist approaches are established. Thus, deputizing and federalizing the implementation of the NITI Aayog’s proposals would certainly be of great help and use. Thus, in order to make that happen, trust as a credential and currency of purpose here – must be reflected through the intermingled network of feedback & experience backed by explanability & the resistant tolerance towards any sort of disruption that the collectivist and all-connective behaviour of AI infrastructures can cause in the near decades. Some of the recommendations made can be the initial ways to encourage ideas and solutions, but we must realize that the Indian state and its civilizational philosophy has not focuses on ends-centric, linear and mundane time frames of solutions, which means that the process of replenishment is more of a collective transformation & transition of the social order and civil society. It is important that Indian idealism should be not subject as a scapegoat towards any indoctrination of superstitious, ethnocentric or impractical diplomatic strategies.
Abhivardhan, Chairperson & Managing Trustee, Indian Society of Artificial Intelligence and Law & Chief Executive Officer, Internationalism.
Farmers at the centre of political debate once again: Looking at farm bills from competition lens
It is surprising for many that ‘Kisan’ (the Farmer) is at the center of political debate and legislative action but for an election season. Generally, farmers in India are at the center of debate during Lok Sabha elections, as every political party has to make assurances in their manifestos for the farmers. Mostly these promises relate to ‘waiver of debt’ (karz mafi’), easy credit or some financial allowances. No one thinks to empower the farmer as a businessman himself to negotiate and be part of the competitive market regarding his produce. NITI Aayog in it policy paper in March 2017 proposed strategy and action plan for ‘doubling farmers’ income’. The present debate is going around the three legislations (Farm Bills) passed by the Parliament in a stormy monsoon session. While the proposal is awaiting final signatures of the Hon’ble President of India to become law with effect from 5th June 2020 (date on which the Ordinance was brought), let us have a look at the main features of the following legislation from competition perspective.
• The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 (Freedom of Choice to Sell Farmers’ Produce)
• The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill 2020 (Framework for farming agreements)
• Essential Commodities (Amendment) Act, 2020 (decontrolling supply of farm produce) An analysis of the aforesaid three Bills from the competition reforms perspective is a welcome step for the following reasons:
FREEDOM OF CHOICE
One of the greatest problems which have been highlighted across the governments in the past years was that of Agricultural Produce Market Committees (APMC) and its higher commission rates and exploitation of poor farmers. As the state APMC laws had restrictions, Competition Commission of India (CCI) had on several occasions said that “APMC laws and the pricing policy needs to be reviewed to remove competitive bottlenecks for the benefit of the farmers”. The new law takes away the exclusive rights of the APMC to trade in agricultural produce in an area. A farmer is free to choose competitive alternative trading channels for price discovery. While a trader would require mandatory PAN card, the farmer producer organizations or agricultural cooperative society are exempted. The freedom extends to the interstate as well as intra-state trade of farmer’s produce. No market fee by any name whatsoever can be charged under any state APMC Laws.
Timely Payment to Farmer:
Law requires the farmer to be given a receipt on the same day as an evidence of the trade and payment not later than 3 working days of the trade.
Electronic Trading and Transaction Platform: Any person other than an individual may establish the ETTP for facilitating inter-State or intra-State trade and commerce of scheduled farmers’ produce in a trade area. This would be greatly helpful to the farmer to sell their produce online. This would be another open market, where competitors of ETTP would ensure advocacy, quality, and efficiency of their platforms. Though a government portal e-NAM exists, regulated privatization in this space would bring healthy competition. This is also forwardlooking keeping in view the focus on dynamically changing agri-economy, ecommerce and agri-exports.
Price Information and Market Intelligence System (PIMIS):
It is said that information and data is the ‘new oil’. Information is a double edged sword, while information asymmetry dissuades competition, information sharing sometimes may lead to anticompetitive practices like cartelization. Law enables the Central Government to develop a PIMIS for dissemination of information and would be a great tool at the hands of the farmers to know the demand and supply information for getting best for their farm produce. From competition perspective, the only challenge would be to monitor cartelisation in this space.
Fragmented small landholdings is one of the major challenges in India agricultural sector’s growth to which contract farming may be one solution. The second proposed legislation provides for empowerment and protection of farmers while entering into contract farming agreements if they wish to. The agreement would be in relation to the (a) the terms and conditions for supply of such produce, including the time of supply, quality, grade, standards, price and such other matters; and (b) the terms related to supply of farm services. Responsibility of the legal compliance part shall be on the sponsor. Rights of the sharecropper (bataidar) cannot be compromised through this agreement. Minimum period for this agreement would be one crop/livestock cycle and maximum 5 years, unless mutually decided more by the farmer and the sponsor wherein the production cycle of the crop is longer.
Protection to Farmers: There shall be clarity on prices and would not depend on contingency. Farm produce under contract farming shall be exempted from the applicability of State Acts. Sponsor is prohibited from acquiring ownership rights or making permanent modifications on farmer’s land or premises. Farming agreement may also be linked to the insurance or credit instrument under any scheme of Central/State Government. A registration authority is contemplated to provide facilitative framework for registration of farming agreements. One of the provision clearly mentions that “no action for recovery of any amount due in pursuance of an order passed under this law, shall be initiated against the agricultural land of the farmer.”
Minimum Support Price (MSP): This has been the most contentious issue in agriculture sector. While competition does not suggest prescribing any pricing, or MSP or subsidy, as this may be considered as market distorting. India being member of WTO has to also comply with the requirements on Agreement on Agriculture. A competitive market provides for price discovery based on demand and supply. Farm Bills does not provide any statutory backing to MSP. Otherwise, MSPs are announced by the government on the recommendations of the the Commission for Agricultural Costs and Prices (CACP) under the Ministry of Food and Agriculture for the enlisted crops (14 kharif, 6 rabi and 2 commercial crops). For sugarcane, Fair and Remunerable Prices (FRP) is declared. This topic requires a separate deliberation.
Aggregators and Farm Service Providers: Small farmers may take services of “aggregator” who acts as an intermediary between a farmer or a group of farmers and a Sponsor and provides aggregation related services to both farmers and Sponsor as well as that of farm service providers like pesticide control, harvesting services, etc.
Producer companies have now been proposed to be made part of the Companies Act 2013 under the 2020 Amendment (chapter XXIA-378A-ZU). ‘Producer companies include companies which are engaged in the production, marketing and sale of agricultural produce, and sale of produce from cottage industries.’
Regulation of the supply of such foodstuffs, including cereals, pulses, potato, onions, edible oilseeds and oils may now only be done under extraordinary circumstances which may include war, famine, extraordinary price rise and natural calamity of grave nature by notification of the Central Government. An order regulating stock limit (hoarding) of agricultural produce may be issued in the following circumstances: (i) hundred per cent increase in the retail price of horticultural produce; or (ii) fifty per cent increase in the retail price of non-perishable agricultural foodstuffs, over the price prevailing immediately preceding twelve months, or average retail price of last five years, whichever is lower. Public Distribution System (PDS) or the Targeted Public Distribution System orders are exempted from application of this deregulation, which means that procurement for PDS will not be hit by this order. Some concession is also available to a processor or ‘value chain participant’ of agricultural produce. VCP includes a set of participants, from production of any agricultural produce in the field to final consumption, involving processing, packaging, storage, transport and distribution, where at each stage value is added to the product.
What would need serious attention by the Government?
State Governments on Board: Agriculture is a State subject (Entry 14); however, the aforesaid legislation are likely framed under the concurrent powers vested with the Central Government (Entry 33) as opening up the whole agricultural produce market would require interstate facilitation, which in turn would need intervention of Central Government. Integrating the agricultural markets as one common market for the whole country offers several opportunities but also challenges which needs to be addressed.
Advocacy: Prime Minister has said that people are spreading rumors about the farm Bill’s disutility for the farmers. Hence it is necessary to educate the poor and gullible farmers about the benefits of the legislation and how they can avail it.
Dispute Resolution System: Conciliation Board has been provided as the mechanism of resolution and SDM is made the owner of this process. While this is a welcome step, if Mediation mechanism could have also been included it would have been better. Further the SDMs handling this profile would require special training and an orientation towards service (‘sevak’) and support to farmers. MS Swaminathan National Commission of Farmers in 2006 recommended that “the “net take home income” of farmers should be comparable to those of civil servants”. Farmers need to be treated as equal partners in economic development of this country. Let it not become another license raj bureaucratic system.
Paralegal Volunteers: The modern day farmer cannot be at the mercy of the traders. Farmers have to take assistance from legal professionals when entering into the legal contract. There is a huge opportunity to create para-legal professionals in each village who can help the farmers with their legal issues of farming contract and other disputes with traders. While the government shall provide for facilitation in terms of guidelines, some support through the existing village community information and service centers.
Competitiveness of Farmers: It is important to raise the agricultural competitiveness of farmers with small land holdings. However, at the same time, age old sensitivities to subsidies and MSP needs to be taken care of by the government, once the farmer gets hang of the new system, things would improve. Any change meets with some resistance, and this is a huge change rather a transformation of its kind. The visualization of farmers have mostly been dictated in movies and Indian literature as poor down-trodden person being exploited by traders (sahukars); however, the present requirement is that we look at the brighter side, that is ‘mere desh ki dharti sona ugle, ugle hire moti’ (my country’s land produces gold and pearls – lyrics from movie Upkar). If the farmer’s son looks at farming as an entrepreneurship opportunity, a lot can change the way we look at farming and its potential. This will cure several ills like migration, job scarcity and rapid urbanization. Need is to suggest positive changes in the laws and support implementation to the core.
Dr. Vijay Kumar Singh is Dean, School of Law at UPES Dehradun. Views are personal
‘LEVY & DEMAND OF INTEREST’ ON BORROWERS DURING COVID-19
In the wake of the pandemic and the subsequent lockdown, the Reserve Bank of India in March issued circular, allowing banks to grant a moratorium to borrowers on payment of installments for three months. An extension of the moratorium period was announced in May, making it a six-month moratorium.
The objective behind the RBI circular was to “mitigate the burden of debt servicing on account of the disruption caused due to the pandemic”. As per the RBI circular, banks will be permitted to continue charging interest for the moratorium period also but the interest would be collected later.
Later a petition (PIL) by Gajendra Sharma has been filed in the Supreme Court followed by petitions by various business groups & associations that the objective of the circular would be rendered futile if interest is levied later and further contended that interest should not be charged during the moratorium period.
The RBI has rightly pleaded that waiver of interest during moratorium on term loan repayment would jeopardizes the financial health and stability of banks as well as the interest of debtors. The RBI has informed that the decision of moratorium was to ensure continuity of viable businesses and the regulatory package to defer payment of loan cannot be construed as a waiver. The RBI has also informed that banks are expected to run on viable commercial considerations and are guardians of the depositors’ monies and actions of the banks need to be guided by the interest of the depositors.
Banks are important for any economic activity in the country and they should be financially viable at any point of time. Banks cannot be treated as charitable institutions to help only borrowers. Expecting banks to lend free without any interest can never be an acceptable proposition as they have to pay interest to depositors and depositors also cannot be expected to freely park their funds with the banks.
When banks accept deposit, it is a contractual obligation. On their own, banks cannot deny paying interest to depositors. Even when banks provide moratorium to borrowers, it is the banks’ discretion and not borrowers’ decision. In the same way, when depositors park their money, the depositors are lenders to the bank and only depositors can decide whether to forego interest or whether there should be any moratorium on the funds lent.
The Supreme Court of India (SC) hearing on the plea has asked the centre, Reserve Bank of India to “review” the issue whereas asked India Bank Association to see if new guidelines can be created. The Supreme Court has restrained banks from declaring any account of the borrower, which has availed the loan moratorium, as NPA due to non-payment of dues — principal or /and interest — until it decides the matter.
“There are 133 lakh crore rupees in deposits with banks and interest has to be paid on them and the waiver will have a cascading effect,” said Tushar Mehta, Solicitar General on behalf of centre and RBI told the apex court in the same PIL. As per RBI’s estimates, out of the total Rs 102 lakh crore loan book, Rs 38.68 lakh crore was under the six-month moratorium. Suppose, this was carrying an average interest of 12%, the simple interest would work out to Rs 2.32 lakh crore for six months. On compounding (12.30%), the overall interest dues could aggregate to Rs 2.38 lakh crore, an additional loss of approximately Rs 6,000 crore (interest on interest).
While hearing the pleas on 17 Sept, the apex court observed that the borrowers’ request for relief can’t be termed as adversarial. SC is inclined to consider that there can be no levy of interest on interest; they are yet to decide on the interest waiver. The RBI in its submission to the Supreme Court had stated that the lenders would lose Rs 2 lakh crore if interest for the moratorium period was waived. While posting the matter for further hearing on September 28, the SC had advised the GoI, the RBI and banks to come out with their final views on the request for waiver of accrued interest and interest on interest, and place all the documents before it for appropriate decision in the matter. SC would allow no more adjournments in the matter.
Following the SC observation, the GoI has set up a three-member expert committee to scale the impact of waiver of (i)interest and (ii) interest on interest due to the COVID-19 related moratorium on the financial stability of the lenders as also to suggest measures to contain the financial constraints of various sections of society in this regard.
While the Government at the highest levels is considering solutions in consultation with RBI and the scheduled commercial banks, if the Banking Law (i.e., levy of interest on loans and compounding of interest — interest on interest) which has been in practice since the time banking came into existence is rewritten, the fallout will be immense. Also these solutions cannot permit the restructuring of loan. If you look at the 2008 financial crisis, many borrowers opted for restructuring, and converted into longer-term tenures, this brought along moral hazards. That point in time, cash flows which ideally should have gone back to lenders, was used for further growth purposes. Restructuring also resulted in ever greening of loans, which eventually led to an NPA problem.
Unfortunately, apart from force majeure doctrine there is no other legal remedy available to address the current situation but this also cannot be use as it only delay the performance of contract & do not waive it. The various petitions filed before apex court on this ground have also not achieved success. The doctrine of proportionality also not came to the rescue of such petitions as the contract or its performance has not been challenged but the discretionary power of Central Government & NDMA under Disaster Management Act have been mostly challenged under the petitions before the apex court.
However, the 180 days moratorium and even the interest waiver might not be enough considering the Corona impact on businesses. Accordingly, the most viable solution for borrowers and the lenders might need to resort to one time settlements (OTS) to ease the financial burden and pave the way for a more conducive repayment schedule. The resorting to OTS would assume even more importance with the suspension of Corporate Insolvency Resolution Process (“CIRP”) under the Insolvency & Bankruptcy Code (IBC) initiation to avoid the potential business disruptions. The Government also announced other amends and relaxation to the IBC including increasing the monetary threshold of default for the initiation of insolvency and resolution process, excluding the period of lockdown for counting the time-lines for any activity in relation to liquidation process, et al. The measures are collectively aimed at providing some safeguard to corporate debtors and would lead lenders to look at other modalities of recovery.
With a view to channelize the money flow in the midst of the acute financial crunch and to provide impetus to have the economy running again, businesses and lenders might need to negotiate more and more closed room deals for debt restructuring/ OTS. Further, the OTS package deal may have various permutation and combinations of incentives including, inter-alia, interest waiver, conversion of unpaid interest into loan, partial waiver of principal portion of the loan. The tax implications under Section 28(iv) of the ITA on loan waiver being benefit or perquisite arising from the business was ruled out by the Supreme Court in the recent case of Commissioner v. Mahindra And Mahindra Ltd. 2018 which averred that the loan waiver is a monetary item to which the provisions which aim to tax benefit/perquisite, whether convertible into money or not, would not be applicable.
While efficiencies can be built into most of these covenants of OTS, benevolent relaxations provided by various stakeholders including tax policy is required to enable the businesses opting for OTS to sail through these testing times and help in attainment of the Government’s vision of “Atmanirbhar” (self-reliant) India.
Adv. Ankit Singh practices at the Delhi High Court
MSMEs and Intellectual Property Rights
In this competitive market, one major issue faced by smaller entities is exploitation by larger entities and the same continues in case of the MSME sector.
According to a research, IP-intensive industries generate 72 percent more value-per-employee than non-IP-intensive industries globally. This idea of establishment of L2Pro platform and training the MSME sector already get success in many different countries like France, Germany and the UK.
On 14 October 2019 the Department for Promotion of Industry and Internal Trade (DPIIT) launched a platform named L2Pro (Learn to Protect, Secure and Maximize your innovation) to help MSMEs sector to maximize and promote innovation after acquiring knowledge of trademark, patent and copyrights and other plethora of aspects of Intellectual property rights. The DPIIT decided to launch and establish this platform for MSMEs and to collaborate for the long run benefit in terms of economic development and enhancement in figures of National output.
This will not only promote and paves way to growth and extension in the national figure of MSMEs but also help in order to get edge in this competitive market and globalized world. With the establishment of L2Pro platform, India’s as a ground of 63 million gets enormous support in terms of learning and the platform designed in such a way that it will taught and help MSMEs to get better insight of the whole gamut of IPR.
Before the introduction of L2Pro platform, concept of IPR and its related concepts like- Copyright, trademark and patents are totally beyond the reach of MSMEs sector and they have not even the basic knowledge of it. Without acquiring sufficient knowledge and training of IPR it will act as devastating element for any sector.
IPR and its crucial role in MSMEs Sector
In this competitive driven market the one major issue faced by any smaller entities is exploitation from larger entities and same continues in case of MSMEs sector in this competitive market. MSMEs looks exploitation as a major issue and threat and to combat this problem DPIIT came up with the idea of L2Pro so that MSMEs gets training and knowledge of IPR and to deal with problem of registration of product, filing of infringement suit to get remedy and to cope up with issue of exploitation of large scale industries. In the absence of it large scale enterprises exploits MSMEs sector by copying their innovation and earns a huge profit out of that innovation and this is also a major reason behind this idea.
IPR and MSMEs Collaboration: A Global Scenario
After the globalization and interlinking of nations the market becomes more competitive and full of exploitation and threat due to which it is very much important to provide a shield to the MSMEs sector so that they can protect themselves from all exploitation and threats and largely contribute to the national figure. According to a research IP-intensive industries generates 72 percent more valueper-employee than non-IPintensive industries globally. This idea of establishment of L2Pro platform and training MSMEs sector already get success in many different countries like- France, Germany and UK.
Imparting Education and training regarding IPR to MSMEs only is not sufficient. Providing holistic views on this particular arena is required along with providing different incentives to MSMEs sector to contribute to National economy through this long-run pairing.
Online transfer or sharing of files never a debatable issue or contemporary issue before the Napster Case of P2P network comes in highlight in the year 2001 when some major companies decided to sue Napster Incorporation. Around 1990s, a network came in front of audience or consumer as a medium of peer-to-peer file sharing and soon attains popularity in the market for the sharing or transferring of music by converting it in mp3 format.
Different companies sued Napster Inc. but the case of A&M Records, Inc. v. Napster Incorporation, draws attention of people towards the illegal way of sharing music and contributory & vicarious infringement. This case when addressed by the Court of Appeals for the Ninth Circuit many issues were taken into consideration. The first and major one is Fair Use Defence, Second one is Direct Infringement and last one is Contributory Infringement and while addressing all dilemma, court came up with different reasoning with legal support.
Analysis of Case along with Legal Reasoning
A&M Records, Inc. v. Napster Inc., is considered to be a landmark judgment in IPR field for the establishment of regulation of copyright in online file sharing. The Court of Appeals agreed to the legal reasoning applied by the district court and the judgment pronounced. Three issues were addressed by the court of appeals in order to deliver the judgment with proper explanation of legal reasoning as already mentioned.
While dealing with the issue of Fair Use Defense, the court mentioned 17 U.S.C. Section 107 that talks about ‘Limitation on exclusive rights: Fair Use’ and laid down four most important factors to determine whether the use of that work falls within the ambit of Fair Use Defense or not.
1. Whether use is for commercial purpose or not?
2. Nature of the copyrighted work.
3. Amount and sustainability of the portion used of the copyrighted work.
4. What is the overall effect of the use on the copyrighted work? After analyzing and checking reasonability, the court of appeal held appropriate injunction with its opinion against any of Napster’s future infringing activities. But same peer-to-peer sharing issue again addressed by the court in the case of MGM Studious Inc. v. Grokster, Ltd.
Post-related effects of Napster Case: Positive & Negative Implications
Napster case has overall mix effect on music industries as well as on different arena. Some of the major effects that faced and noted down are that peer-to-peer sharing network leads in the decline of sale of CD and contribute in generating profit in illegal way. It is not like that it leaves only negative impact but also positive impact like exposing or interaction of an individual to different artists which is never possible without this network.
So, as like everything peerto-peer file transfer has also both negative as well as positive implication and different forms of it developing with the passage of time and a remarkable and huge impact on economy’s output which also shifted the attention towards the MSMEs sector and how collaboration of IPR paves way in strengthening National output.
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