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From money laundering to cleaner energy: The legality of NFTs

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While the COVID-19 pandemic has had a negative impact on India’s art markets, there is only one thing that has instead provided hope to artists and producers hoping to break through traditional market boundaries and that are NFTs. They are one-of-a-kind digital assets that can be used to establish ownership. NFTs are “minted” on these assets utilising blockchain technologies like Ethereum and smart contracts like Binance Smart Chain, which make them extremely safe by creating a unique digital signature.

From Kevin Mc Coy’s Quantum to Beeple who sold his piece “Everydays: The First 5000 Days” for a staggering $69 million to now even Amitabh Bachchan announcing the launch of his NFT collection of one-of-a-kind artworks inspired by his life and career, NFTs have come a long way.

NFT and Cryptocurrency:

NFTs are fundamentally different from cryptocurrencies like Bitcoin, which are indistinguishable from one another as the value of one Bitcoin would remain the same as the value of another and thus fungible. But NFTs as the name says, ‘Non-Fungible Tokens’ aren’t freely exchangeable as all of them have unique properties and cannot be exchanged for one another. This can be linked to the claim of originality which NFTs provide to the asset’s purchaser. For example, anyone who wants to buy a Van Gogh painting can do so, but only the individual who owns the original can control its ownership and enjoy all other rights.

Moreover, there is a royalty generation mechanism for NFTs that would automatically transmit a predetermined portion of the resale revenues to the asset’s original inventor.

The issues with NFTs

NFTs are traded globally because DLT platforms typically perform better outside of national borders. At the same time, the likelihood of illicit actions being enabled by cryptocurrencies because they are anonymous is one of the issues regarding NFTs as according to investors all around the world, even if it is difficult to create an NFT, the prevailing fear of the world is that NFTs are not immune to foul play. The “pump and dump” strategy is used by creating many accounts to artificially raise the pricing resulting in pricing fluctuations among countries. It is too early to tell whether NFTs are a long-term investment or merely a “trend”.

The Financial Action Task Force has voiced worry about NFTs, stating that they may be used to support money laundering or terrorism financing. Even under the Money Laundering Regulations, 2017, crypto assets are defined as “a cryptographically secured digital representation of value or contractual rights that uses a form of distributed ledger technology and can be transferred, stored, or exchanged electronically.” This implies that dealing in cryptocurrency-related properties would necessitate registration.

In the case of United States v. Harmon, Criminal Case No. 19-cr-395 (BAH) (D.D.C. Apr. 16, 2021), the respondent was said to be conspiring to launder monetary instruments by using a bitcoin tumbler known as ‘Helix.’ This tumbler’s service had been touted expressly as a tool to conceal transactions from authorities. Furthermore, persons who buy NFTs use pseudonyms and their profiles lack any information that can be used to identify them. For example, Vignesh Sundaresan, who paid $69 million for the most expensive NFT, purchased it anonymously and only later revealed his identity.

Moreover, there are no set rules or criteria for pricing NFTs, it can be subjective, for example, an animated flying cat with a pop-tart body, on the other hand, was recently auctioned for nearly $600,000 because there are no parameters for determining the worth of this flying cat and other similar NFTs, money launderers can acquire them at inflated rates, making it incredibly easy to launder significant quantities of money.

Another issue that arose with NFTs is their contribution to the tonnes of planet-warming carbon dioxide emissions due to the cryptocurrencies that are used to buy and trade them. Take, for example, “Space Cat,” an NFT that is essentially a GIF of a cat in a rocket travelling to the Moon, the carbon footprint of Space Cat can be said to be equivalent to the two-month supply of power for an EU resident. Clean energy, i.e., more cryptocurrency machines using renewable energy is the simplest solution to NFTs’ emissions problem.

NFTs and Intellectual Property Rights

Let’s take the most famous example of a video of LeBron James’ slam-dunk, which can be purchased and sold on the ‘Top Shot’ marketplace. Even if the card representing the dunk sells for a lot of money, the NBA still owns the rights to the original film. Even if one is fortunate enough to own one of the rare NBA NFTs, they are still prohibited from altering the video moment captured in your NFT or selling any items related to your NFT without the NBA’s permission. If one breaks the conditions of their licence, platforms like Top Shot marketplace may suspend or deactivate their account.

The ownership and commercialization of IP rights in NFTs is a complex area as of now. The owner of the NFT may or may not have rights to the underlying IP rights. The owner of a work has the right to copy or distribute copies of his work under Section 14 of the Copyright Act, 1957. As a result, the author’s specific permission, licence, or assignment is required for the NFT owner to exploit or replicate the artwork in any way. Otherwise, the NFT they own is more akin to a licence to use the artwork for personal purposes, collectibles, or secondary market sale.

Is it legal?

As of now, there are no rules in India that control the trade of NFTs. Since NFTs can only be traded in cryptocurrencies, crypto-trading companies such as WazirX, Zebpay, and others have already built their own virtual NFT marketplaces in India .Despite the fact that cryptocurrencies are not illegal in India, the Banning of Cryptocurrency & Regulation of Official Digital Currency Bill, 2019 pushes for a complete prohibition. It also imposes a fine or a sentence of up to ten years in prison for those who deal in it.

In Internet and Mobile Association of India v. Reserve Bank of India, the Supreme Court of India held that the April 2018 RBI circular prohibiting all regulated organisations from trading in cryptocurrencies was irrational and hence violated Article 19(1)(g) of the Indian Constitution.

In India, even though there is no explicit legislation governing NFTs, there are a few Foreign Exchange Management Act (FEMA) provisions that prohibit crypto-trading. FEMA laws have operated as a check on the flow of cash beyond Indian borders on numerous occasions. If one looks at the current FEMA laws, crypto assets should be classified as intangible assets like software and intellectual property, which are both protected by FEMA regulations.

It is a fact that the majority of NFT buyers and sellers are located outside of India’s borders, hence participants from India are frequently seen making cross-border transfers to participate in NFTs. There is currently no universal rule governing cross-border NFT transactions. If they are classified as intangible assets under FEMA, determining their location is critical because they are backed by cryptocurrencies, which are recognised as “global-ledgers,” meaning that the data is recorded, shared, and synchronised across multiple data stores or through a distributed network of different network participants. This will make it impossible to link the NFT to a specific location. If Indian participants continue to participate in the cryptocurrency market, they must do so using fiat currencies that are reported to their approved dealer banks in order to take a less risky approach.

Moreover, with the introduction of the Finance Act of 2020, a non-resident “e-commerce operator” is required to pay a 2% equalisation levy on the amount of consideration received or receivable by him. Foreign entities selling NFTs now will be required to pay the equalisation levy if they want to operate in India.

Conclusion

NFT is a developing field, and only time will tell if it will stick around. For the time being, the NFT revolution appears to be thrilling and promising, especially for artists who want to monetise their work and safeguard it from limitless replication in the digital realm. But what makes trading in NFTs more risky is that there is no clear understanding of the legal status of cryptocurrencies in India,

India can learn from countries with a well-balanced legal and regulatory environment, such as Singapore, Canada, Japan, and Switzerland.

If NFTs are deemed legal in India, amendments to the Prevention of Money Laundering Act, 2002, as well as the Antiquities and Art Treasures Act, 1972, will be required. Taking more advice from the European Union’s “Fifth Anti-Money Laundering Directive” may also be beneficial. In fact, there is a special law to combat money laundering through the art market, which includes NFTs in the definition.

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‘The crime committed has to be considered in the remission or premature policy of the state’

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The Supreme Court in the case Radheshyam Bhagwandas Shah, Lala Vakil vs State of Gujarat observed that where the crime was committed has to be considered in the remission which is applicable in the State and the pre­mature release in terms of the policy

The Court noted while hearing the writ petition that in terms of the policy which is applicable in the State of Gujarat where the crime was committed and not the State where the trial stands transferred and concluded for exceptional reasons under the orders of this Court once the crime was committed in the State of Gujarat, after the trial been concluded and judgment of conviction came to be passed, all further proceedings have to be 6 considered including remission or pre­mature release, as the case may be, in the instance case. under Section 432(7) CrPC, there cannot be a concurrent jurisdiction of two State Governments, can be either the Central or the State Government of the appropriate government.

in terms of Section 432(7) CrPC, the trial was to be concluded in the same State and ordinarily in the State of Gujrat the crime in the instant case was admittedly committed. by an order 06.08.2004., the case was transferred in exceptional circumstances by this Court for limited purpose for trial and disposal to the neighbouring State i.e., the State of Maharashtra, observed by the bench of Apex Court.

As mentioned by the petitioner in the plea that by judgment impugned dated 17.07.2019., the application for pre­mature release has to be filed in the State of Maharashtra and not in the State of Gujarat and His petition filed in the High Court of Gujarat was dismissed taking note of Section 432(7) CrPC on the premise that since the trial has been concluded in the State of Maharashtra. under Sections 433 and 433A of the Code of Criminal Procedure, 1973, the petition was filled by the petitioner for premature release further the petitioner stated that that he had undergone under the custody of more than 15 years 4 months.

Section 302, 376(2) (e) (g) and reading it with Section 149 IPC, Shah was found guilty for the offence, the offence committed by him in the State of Gujrat.

The bench comprising of Justice Ajay Rastogi and the justice Vikram Nath observed that under Section 432(7) CrPC can be either the Central or the State Government but there cannot be a concurrent jurisdiction of two State Governments of that appropriate government.

The bench comprising of Justice Ajay Rastogi and the justice Vikram Nath observed that under Section 432(7) CrPC can be either the Central or the State Government but there cannot be a concurrent jurisdiction of two State Governments of that appropriate government.

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Seeking reduction of qualifying the percentile for admission in ayurveda course: A plea in Supreme Court

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The Supreme Court in the Case Amit Kumar v UOI & Or’s observed in Ayurveda course in view of large number of vacancies and for seeking reduction of qualifying percentile for admission, an ayurveda aspirant who appeared in NEET 2021 has approached the Court.

the court had observed that lowering the minimum marks and reducing the percentile for admission to first year BDS Course would not amount to lowing the standards of Education and further the Court directed to lower the percentile mark by 10 percentiles for admission in first year of BDS Course for academic year 2020-2021, with regards to substantive the contentions made by the petitioner by referring the judgement passed in the case in Harshit Agarwal & Or’s v Union of India.

the percentile may also be reduced for Ayurveda programme enabling the Petitioner to take admissions then If percentile is being reduced/considered for reduction for BDS course was further stated by the petitioner in the plea, while referring to an order dated 04.29.2022. Thereafter the top Court had asked Centre to consider lowering the percentile for BDS Courses.

Seeking the Centre’s response in a plea by filing a counter affidavit, noted by the Top Court specifying the above-mentioned information:

after deducting the admission granted for MBBS Courses (BDS Courses), the total number of Candidates.

in All India Quota and State Quota, the totals number of vacant seats.

in government colleges on one hand & private/deemed colleges on the other hand, the number of seats which are remaining.

the petition was filed through AOR Neeraj Shekhar and for the petitioner Advocate Shivam Singh appeared.

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Bank case rejected by Supreme Court against farmer

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The Supreme Court in the case Bank of Maharashtra & Or’s v Mohanlal Patidar observed an order given by the High Courts of directing the bank the OTS proposal given by a farmer who had availed a loan from the bank, the court further pulled up the Bank of Maharashtra for challenging the order.

The Bank shall complete remaining formalities and provide all consequential benefits flowing therefrom to the petitioners, the court further stated that it is needless to emphasize The OTS proposal given by the petitioners in both the cases shall be accepted by the Bank and ‘sanction letters’ be issued forthwith, the court allowed the petitioner plea.

The petitioner not only promptly challenged the said order, it is noteworthy that petitioner never acceded to the unilateral decision dated 25th August 2021 and even otherwise the letter dated 25th August 2021 is held to be illegal by us, clause-7 of policy cannot take away the fruits of OTS benefits, within two months from the date of issuance of order dated 22th September 2021, the petitioner filled the instant petition and further the court directed we are unable to give stamp of approval to the impugned orders and action of the Bank, observed by the bench comprising of Justice Sujoy Paul and the justice Dwarka Dhish Bansal while setting aside the impugned orders of the bank.

In an order dated 03.09.2021 it was stated and it showed that the petitioner was required to pay minimum 10% of the OTS amount within stipulated time and that he had deposited Rs.35,00,000/- out of Rs.36,50,000/- within the stipulated time, it was argued before the court by the counsel.

As full and final settlement of the dues, he will be required to deposit Rs.50.50 lakhs as he was informed by the Asset Recovery Branch of the Bank.

Whole law comes into place when a matter of farmers come as the down payment were also accepted and it was further stated by the bench in an oral remark You don’t file cases against the ones who loot 1000s of crores.

The respondent had obtained a loan and intended to pay it in terms of a One Time Settlement which was quantified as Rs 3650000/-. in furtherance thereof the respondent had deposited Rs 35,00,000 with the bank, in the above-mentioned matter.

The bank had miserably failed to accept the same and on the contrary, decided to enhance the compromise amount to Rs.50.50 lakhs unilaterally which was contrary to the OTS scheme, contended by the counsel further the counsel stated that the bank had miserably failed to accept the same and on the contrary, decided to enhance the compromise amount to Rs.50.50 lakhs unilaterally which was contrary to the OTS scheme.

The bench comprising of Justice DY Chandrachud and the justice Surya Kant observed and remarked while dismissing the plea assailing Madhya Pradesh High Court’s order dated 02.21.2022 Such a litigation in Supreme Court will spoil the families of farmers financially, Go after bigger fish.

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In Company Law the duomatic principle is applicable even in Indian context: Supreme Court

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The Supreme Court in the case Mahima Datla vs Renuka Datla observed and stated that it will be applicable even in the Indian context, if the same is consented by all members ‘strict adherence to a statutory requirement may be dispensed with if it is demonstrated in the Duomatic Principle.

It was therefore held that G.V. Rao never seized to be a Director of the Company in view of the acquiescence by Dr. Datla and he had withdrawn his resignation prior to its acceptance, the resignation dated 6th April 2013 was clearly not accepted by Mr. G.V. Rao, as it is clearly being showed by her conduct and there is overwhelming evidence to show that Dr. Datla had accepted Mr. G.V. Rao back into the Board, in this case the court noted.

anything the members of a company can do by formal resolution in a general meeting, they can also do informally, if all of them assent to it, as stated briefly in the Duomatic Principle as derived from the decision In Re: Duomatic Ltd further the court noted the case of Salmon v. Salmon Co. Ltd, as it was held in that case if a company is bound in a matter intra vires by the unanimous agreement of its members. As In Re the court noted that the Duomatic Principle as derived from the decision.

Mr. G.V. Rao continued to carry on as the Director in view of the acquiescence by Dr. Renuka Datla? And weather can the Duomatic Principle can be invoked to state that the issue of resignation of the Director had lapsed, as one of the issues being raise in the appeal filled before the Apex Court.

The High Court of Judicature at Hyderabad for the State of Telangana and Andhra Pradesh allowed the Company appeal filed by Dr. Datla and the court further issued the various directions as this petition was dismiised by the Board as only to ensure Dr. Datla doesn’t have sufficient shareholding to maintain a petition under Sections 397 and 398 of the Companies Act, 1950, as it was being approached by Dr. Datla to the Company Law Board complaining that the holding of board meetings was illegal as an attempt was made to increase the number of members in the Company.

there is no protest by Dr. Renuka Datla regarding attendance of Mr. G.V. Rao. Dr. Renuka Datla also participated in the Board Meetings dated 22nd August 2013 and 25th September 2013, without any protest for continuation of Mr. G.V. Rao as its Director as in the resolution passed. The latter which was placed in the meeting of the Board on 9th April 2013, seeking withdrawal of his resignation as on 6th April 2013, G.V Rao submitted his resignation letter and further which it was later withdrawn by G.V Rao on 9th April 2013. As on 20th March 2013 the late Dr. Vijay Kumar Datla as the directors of the Company were Biological E. Ltd are Dr. Renuka Datla and one G.V Rao.

The bench comprising of Justice Vineet Saran and the justice JK Maheshwari clarified that the said principle is only applicable in those cases wherein bona fide transactions are involved and that ‘Fraud’ is a clear exception.

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SUPREME COURT ASKS WEST BENGAL GOVERNMENT TO LOOK INTO REPORT OF OLDER WOMEN PUSHED INTO PROSTITUTION AFTER COVID IN SOUTH 24 PARGANAS

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The Supreme Court in the case Budhadev Karmaskar v. State of West Bengal and Or’s observed that women of older age groups are being forced into prostitution after the onset of the COVID-19 pandemic and further the court ordered the State of West Bengal to look into the issue that in South 24 Parganas District of West Bengal.

The traffickers who were finding it difficult to get hold of young women due to the lockdown had shifted focus and by taking advantage of their acute poverty which was being worsened by the pandemic engaged older women from West Bengal’s costa regions in prostitution. An article was referred by the Amicus, The Article covered the plight of the women in the Sunderban Delta region of West Bengal and stated and noted that the pandemic coupled with climate change is now pushing older women and even the grandmothers into the trade, the Article was published on the website of The Print.

The pandemic that has stretched on for more than two years, it was said by the activists working in the area and this made them vulnerable to traffickers who found it difficult to procure young women and minor girls and shifted focus to middle aged women from West Bengal’s coastal regions due to their abject poverty.

No precautionary measure are taken by the State Government though the State Government is aware it further request the State Government to look upon the issue as due to the pandemic In South 24 Parganas (West Bengal), aged women are being used for this purpose for their poverty.

The Bench asked the Counsel representing the State of West Bengal to look into this issue and respond when the matter is put up for hearing on 05.17.2022., At the request of the Amicus the bench directed.

The Bench Comprising of Justice L. Nageswara Rao and the justice B.R. Gavai observed that the older women in South 24 Parganas District of West Bengal, from poor families, especially after the onset of the pandemic, are being pushed into prostitution and the Amicus further alleged though the State Government aware of the same but the State Government have not taken any precautionary measures. The Bench noted while hearing a plea seeking various benefits for sex workers across the country, Amicus Curaie, Mr. Piyush K. Roy apprised it that, as per news reports.

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Supreme Court sets aside POCSO conviction; TN custom is of marriage of girl with maternal uncle

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The Supreme Court in the case K Dhandapani vs State observed while hearing a plea that after noticing that he had married the prosecutrix and had two children, a man accused in a POCSO case, the court set aside the conviction.

The Court cannot shut its eyes to the ground reality and disturb the happy family life of the appellant and the prosecutrix. Thereafter the Court said that it has been informed of the custom in Tamil Nādu of the marriage of a girl with the maternal uncle. if the accused-appellant does not take proper care of the prosecutrix, she or the State on behalf of the prosecutrix can move for modification of this Order, further being clarified by the Court. The bench is of the considered view that the conviction and sentence of the appellant who is maternal uncle of the prosecutrix deserves to be set aside in view of the subsequent events that have been brought to the notice of this Court, while considering the facts and circumstances of the Case.

The Court observed, while allowing the appeal that the marriage between the accused and the prosecutrix is not legal and it was submitted by the state in an appeal that the prosecutrix was aged 14 years on the date of the offence and gave birth to the first child when she was 15 years and the second child was born when she was 17 years.

the prosecutrix stated that she has two children and they are being taken care of by the appellant and she is leading a happy married life, the statement given by her was being noticed by the Court. the allegations submitted by the

the appellant against him was that he had physical relations with the prosecutrix on the promise of marrying her and that he married the prosecutrix and they have two children, submitted before the Apex Court.

Section 6 of Protection of Child from Sexual Offences (POCSO) Act, 2012 and reading with the Sections 5(j)(ii) read with Section 6, 5(I) read with Section 6 and 5(n). the maternal uncle of the prosecutrix who is the accused in the said case was being convicted under the said sections and was sentenced to undergo rigorous imprisonment for a period of 10 years by the Madras High Court.

The Bench comprising of Justice L Nageswara Rao and the justice B R Gavai observed while rejecting the objection raised by the State which contended that the marriage might be only for the purpose of escaping punishment that the court have been informed about the custom in Tamil Nādu of the marriage of a girl with the maternal uncle and on the ground of reality and to disturb the happy family life of the appellant and the prosecutrix, The Court cannot shut its eyes.

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