Treading a tightrope: The way forward for the virtual currency sector in India - The Daily Guardian
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Treading a tightrope: The way forward for the virtual currency sector in India

Akshay Pathak

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“When digital transformation is done right, it’s like a caterpillar turning into a butterfly, but when done wrong, all you have is a really fast caterpillar.” — George Westerman

The aforementioned quote illustrates that unless implemented correctly, digital transformation can end up being a façade. The digital currency ecosystem in India is passing through a phase where growth of the digital currency market is happening amidst regulatory uncertainty. The growth of virtual currency (“VCs”) sector is the last decade marked the beginning of a new digital economy. It would not be wrong to state that in this digital age, we had started visualizing a new VC ecosystem.

In the last decade we noticed growth in the VC sector worldwide. However in India, since inception, the VC sector has been battling the regulator with intrinsic value of VC as a legal tender often being questioned. It has often been argued that, VC lack the very basic attributes of legal tender and that VC may pave way for criminal activities including money laundering, since as opposed to other non-cash payment methods, VC offers greater anonymity. The RBI and government since the growth of the VC market in India have been making efforts to highlight the security, operational and the consumer protection risks associated with the VC ecosystem.

By way of circular dated April 6, 2018, RBI prohibited the entities regulated by it from dealing in virtual currencies and from providing services for facilitating any person or entity in dealing with VCs. Regulated entities which were already providing such services were directed to exit the relationship within 3 months from the date of the circular. Way back in November 2017, an Inter-Ministerial Committee (“IMC”) was constituted by the government to analyse the implications of VCs, which submitted its report in February 2019. The IMC in its report had observed that cryptocurrencies (a specific type of VC) do not offer any advantage as a currency and proposed the ‘Banning of Cryptocurrency and Regulation of Official Digital Currency Bill, 2019’ (Crypto Bill) with an intent to prohibit the usage of cryptocurrencies as legal tender and to criminalize activities connected with cryptocurrencies. At the same time, the draft Bill contemplated (i) the creation of a digital rupee as a legal tender, by the central government in consultation with RBI and (ii) the recognition of any official foreign digital currency, as foreign currency in India. Even though the IMC report did recognize the need to regulate the VC sector considering several factors, including the degree of pseudonymity associated with VC transactions, the inability of the current regime to deal with the risks associated with VC industry, RBI and the central government are yet to clear the air on VC.

The VC sector had almost come to a standstill after the aforementioned circular of RBI dated April 6, 2018, which prohibited the entities regulated by it from dealing in VCs. It lead to many VC exchanges shutting down in India or shifting overseas. It created an uproar in the VC sector which lead to the circular being challenged by way of several writ petitions. The matter was finally heard by the apex court in the matter of Internet and Mobile Association of India vs. Reserve Bank of India. The Supreme Court was of the view that till date,

RBI has not come out with a stand that any of the entities regulated by it namely, the nationalized banks/scheduled commercial banks/cooperative banks/NBFCs has suffered any loss or adverse effect directly or indirectly, on account of the interface that the VC exchanges had with any of them. Citing another decision by the hon’ble court, the apex court stated that there must have been at least some empirical data about the degree of harm suffered by the regulated entities (after establishing that they were harmed). In light of the aforementioned reasoning, the apex court set aside the impugned RBI circular dated April 6, 2018.

There have been reports suggesting that RBI intends to file a review petition against Supreme Court’s judgement, setting aside April 6, 2018 circular of RBI. However, there have also been reports suggesting that recently, RBI in response to an RTI, has clarified that there is no prohibition on banks in providing accounts to traders dealing with virtual currencies. However, we are yet to see if RBI comes up with a revised circular in light of the apex court judgement. Amidst lack of clarity from the regulator, the Indian VC market has been swiftly growing with several cryptocurrency exchanges reporting upsurge in users, trading volume and new cryptocurrency exchanges opening in India.

Despite the fact that the April 6, 2018 circular has been set aside by the apex court, the biggest battle for the VC sector continues to be absence of a clear legal framework considering that the Crypto Bill is pending in the parliament. Amidst this lack of clarity from the RBI and government, banks had continued to show their distrust towards VC and many banks had denied their services to crypto currency sector players. RBI’s response to the RTI may act as a beacon of light and may pave way for banks serving cryptocurrency players without hurdle.

Absence of clarity from RBI may also be a hurdle in attracting foreign investors in the Indian VC market considering that even the foreign direct investment regime does not regulate or restrict VCs. The confusion prevails not just on the regulatory front but also on the taxation of VC transactions. VC players are seeking clarification as to how they will be taxed under the GST regime. The apex court has also been of the view that the RBI Act, 1934, the Banking Regulation Act, 1949 and the Payment and Settlement Systems Act, 2007 cumulatively do recognize vide powers of RBI to regulate inter alia financial system of the country. Hence, the apex court has in a way recognized RBI’s authority to regulate the VC sector.

Though the apex court has paved way for the Indian VC sector to boom by overturning the blanket ban on cryptocurrency imposed by RBI, new investors will show interest in the Indian crypto market only if the government and RBI act together, shedding off all their inhibitions regarding issues involving VCs and come up with clear regulatory framework governing digital currency. The persisting regulatory uncertainty may be the biggest hurdle for the Indian crypto market renaissance after the apex court judgement and majority of the investors would prefer waiting until there is more regulatory clarity on VCs. Akshay Pathak is an Associate at Cyril Amarchand Mangaldas, Delhi office. His practice area includes domestic and cross-border M&A transactions, and general corporate matters including restructurings.

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SC Collegium Recommends elevation of Justice Prasanna B. Varale as Karnataka HC Chief Justice; Recommends New CJs For Orissa, J&K

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The Supreme Court Collegium has recommended elevation of Justice Prasanna B. Varale, Bombay High Court Judge as the Chief Justice of Karnataka High Court.
Justice Prasanna B. Varale was born on 23rd June, 1962 and enrolled as an Advocate on 12th August, 1985. He also served as a lecturer in Law at Ambedkar Law College, Aurangabad from 1990 to 1992 and as the Assistant Government Pleader and Additional Public Prosecutor, High Court Bench at Aurangabad and also as an Additional Standing Counsel for Union of India.
On July, 18., he was elevated to the bench at Bombay High Court.
The Supreme Court Collegium also recommended to elevate of Orissa High Court Judge, Justice Jaswant Singh, as its Chief Justice.
Justice Singh was February 23, 1961 and was enrolled as an Advocate in 1986 in Haryana. In April 1988, he moved to Chandigarh and held the posts of Assistant Advocate General, Deputy Advocate General, Senior Deputy Advocate General and Additional Advocate General, in the office of Advocate General, Haryana, since March 1991.
On December 5, 2007., he was elevated as a Judge of Punjab and Haryana High Court and on 8th October, 2021., he was transferred to the Orissa High Court.
The Collegium also J&K High Court’s Judge, Justice Ali Mohammad Magrey to take charge as the Chief Justice.
Justice Magrey was born on 8th December, 1960 and enrolled as Advocate in the year 1984. However, he remained as standing counsel from 1986 onwards for various State instrumentalities and was appointed as Additional Advocate General in February, 2003. In September 2009, he was appointed as Senior Additional Advocate General.
On 8th March, 2013., he was appointed as Permanent Judge of the Jammu and Kashmir High Court.

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Supreme Court Collegium Recommends Transfer Of 3 Judges To Bombay, Jharkhand & Tripura High Courts

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The Supreme Court Collegium has recommended transfer of three Judges in its meeting held on 28th September, 2022 in the following manner:
The transfer of Justice Sanjaya Kumar Mishra from Uttarakhand High Court to Jharkhand High Court
Justice Mishra was born on December 29, 1961 and has obtained his LL.B. degree in 1987 and in February 1999 joined as Additional District & Sessions Judge. However, he worked as District & Sessions Judge, Sundergarh, Dhenkanal, Special Judge (CBI), Bhubaneswar and has joined as Registrar General of Orissa High Court.
On October 7, 2009., he was elevated as Judge of the Orissa High Court and was transferred to the Uttarakhand High Court on October 11, 2021. Between December 24, 2021 and June 28, 2022, he served as the Acting Chief Justice of Uttarakhand High Court.
The transfer of Justice K. Vinod Chandran from the Kerala High Court to Bombay High Court
Justice K. Vinod Chandran was born on April 25, 1963 and has started his law practice in 1991. Also, he served as a Special Government Pleader (Taxes) of the Government of Kerala from 2007 to 2011. In November 2011, he was sworn-in as Additional Judge of Kerala High Court and was appointed as a Permanent Judge with effect from June 24, 2013.
The transfer of Justice Aparesh Kumar Singh from Jharkhand High Court to Tripura High Court
Justice Singh was born on 7th July, 1965 and got enrolled as an advocate at Patna in 1990. On 24th January, 2012., he was elevated as an Additional Judge of Jharkhand High Court and was confirmed as permanent Judge on 16th January, 2014. Presently, he is holding an additional charge as Executive Chairman of Jharkhand State Legal Services Authority.

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Kerala High Court Directs Union Health Ministry And Department of Pharmaceuticals To File Response: Patents On Life Saving Drugs

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The Kerala High Court while taking serious note in the case XXX v. Union of India of the unaffordability of a life-saving patented medicine for breast cancer, the Court directed a competent officer of the union health ministry and the department of pharmaceuticals for filing their response on the issue within a month.
A direction has been issued by the Court after noting that the matter had to be taken up at the higher level.
The bench of Justice V.G. Arun observed and has warned that if the counter is not filed within the stipulated time, the court would be constrained to proceed with the case based on the “uncontroverted averments in the writ”.
During the hearing, the counsel appearing on behalf of the Department for Promotion of Industry and Internal Trade (DPIIT) and the Controller General of Patents, Patent Department, Standing Counsel T.C. Krishna submitted that the situation to invoke Sections 92 and 100 for compulsory license of the patented drug as sought for in the petition and was not prevalent as of present.
Further, it was asked by the counsel that how far the court could interfere in this case, since the plea had sought that the drug be made available at a reasonable price. Adding to it, he questioned that weather the Court could suggest what a ‘reasonable price’ would be to the government.
In response to the question, it was clarified by advocate Rahul Bajaj that cancer was not part of the list of the notifiable diseases list issued by the Central Government.
The Amicus Curiae, Advocate Maitreyi Sachidananda Hegde submitted that the authority to take decision under Section 92 or Section 100 of the Patent Act ought to be of the Joint Secretary level as the Assistant Patent Officer could not decide whether the issue falls within the government realm or not.
It was also argued by the Amicus that the legal question which has been raised could be decided by the Court.
Further, it was submitted by Amicus that the counter Affidavit that had been submitted by DPIIT and Patent Department suffered from certain drawbacks for not addressing whether reasonable discretion had indeed been exercised in the instant case or not.
The Counsel appearing for the respondent refused while stating that the government has to take the decision in this regard, before the Patent Department could go ahead with compulsory licensing or any other such measure.
Representing an intervenor, Advocate Bajaj pointed out that the right to health in Indian and International spectrum includes within its ambit the right to life-saving medicines, as well. Hence, it was submitted by the counsel that the issue could not merely be looked into from a policy lens alone, but that it is a rights-based issue in itself.
The Court on 16.09.2022., had taken a suo motto cognizance of the issue of unaffordability of patented life-saving medicines, in light of the death of the petitioner who had espoused this cause having not been able to afford the Ribociclib drug for the treatment of her breast cancer.
Accordingly, the court posted the case for the next hearing on 2nd November 2022.

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Allahabad high court: Not mandatory to summon lower court record before deciding state’s plea for grant of leave u/s 378(3) crpc

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The Allahabad High Court in the case State of U.P. v. Vakil S/O Babu Khan observed and has held that it is not mandatory for the High Court to summon the lower court record in every case before deciding the State Government’s application for grant of leave to appeal against an acquittal order as provided under Section 378(3) Cr.P.C.
It stated that section 378 Cr.P.C. provides for filing of appeal in case of acquittal by the State and sub-section 3 of Section 378 Cr.P.C. contemplates for grant of leave for the entertainment of such appeals filled.
The bench comprising of Justice Ashwani Kumar Mishra and Justice Shiv Shanker Prasad observed and has stated that it is for the High Court to decide on the basis of the facts and circumstances of each case that whether the application filled for grant of leave requires the perusal of the lower court records or not.
However, the court was of the view that though the right of the appellate court to summon the lower court record in an appropriate matter always subsists and it is not necessary for the High Court to call for the lower court records for consideration of an application under Section 378(3) Cr.P.C., in every case or as a matter of routine.
The Court also referred to the Apex Court’s ruling in the case of State of Maharastra Vs. Sujay Mangesh Poyarekar (2008) 9 SCC 475, wherein it was observed that the High Court while exercising the power to grant or refuse leave must apply its mind and considering where a prima facie case has been made out or arguable points have been raised and not whether the order of an acquittal would or would not be set aside.
It was observed that the court also took into account sub-section 2 of Section 384 Cr.P.C. which provides that before dismissing an appeal, summarily, the Court may call up for the record of the case. Thus, the court noted that non-summoning of the lower court records in an appeal against conviction is not fatal and that the use of the expression ‘may’ in sub-section (2) clearly suggests that the power to summon the record is only an enabling provision and as shall it is not to be read.
Further, the court stressed that every appeal is not required to be admitted inasmuch as leave must not necessarily be granted in every matter and the exercise of power in that regard is dependent before the Court upon a prima facie assessment of the material placed so as to ascertain whether the appeal raises arguable points or not.
Subsequently, the Court came to the conclusion that it is not mandatory for the High Court to summon the lower court record in every case before deciding the application for grant of leave under Section 378(3) Cr.P.C.
It was added by the court that the right of the appellate court to summon the lower court record in an appropriate matter always subsists and It is for the High Court to decide on the basis of the facts and circumstances of each case that whether the application for grant of leave requires the perusal of the lower court records or not.

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All women, married or unmarried, entitled to safe and legal abortion: SC

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All women, married or unmarried, entitled to safe and legal abortion: SC

In a landmark judgement this week, the Supreme Court held that all women are entitled to a safe and legal abortion. A bench headed by Justice D.Y. Chandrachud said that the meaning of rape must include marital rape for the Medical Termination of Pregnancy Act.
The Supreme Court said that the distinction between married and unmarried women for the purposes of the MTP Act is “artificial and constitutionally unsustainable” and perpetuates the stereotype that only married women indulge in sexual activities.
The rights of reproductive autonomy give similar rights to unmarried women as those to married women, the bench held.
Insisting on a “forward-looking” approach, the Supreme Court on 7 August opined that any discrimination between married and unmarried women in respect of the medical termination of pregnancy law in India that does not allow a single woman to go for an abortion after 20 weeks violates her personal autonomy.
The top court had said that it would interpret the Medical Termination of Pregnancy (MTP) Act and the related rules to see if unmarried women could be allowed to abort up to a 24-week pregnancy on medical advice.
The upper limit for the termination of pregnancy is 24 weeks for married women, with special categories including survivors of rape and other vulnerable women such as the differently-abled and minors; the corresponding window for unmarried women in consensual relationships is 20 weeks.

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SEBI v/s RIL : Review Petition Admitted

The present issue relates back to certain share transactions of RIL in 1994, whereby around 12 crore equity shares of RIL were “fraudulently” allotted to its promoters and group companies.

Tarun Nangia

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SEBI v/s RIL : Review Petition Admitted

The Supreme Court in the case Securities and Exchange Board Of India vs. Reliance Industries Limited & Ors observed and has allowed for listing of the instant petition in open court.

The bench comprising of the Chief Justice Of India U.U. Lalit, Justice J.K. Maheshwari and the Justice HimaKohli observed while considering the facts and circumstances of the case and on the submissions made by the counsel in the review petition. The bench deemed it appropriate to allowe the application filled for the listing of the instant petition in open court.

Background of the Case:

The present issue relates back to certain share transactions of RIL in 1994, whereby around 12 crore equity shares of RIL were “fraudulently” allotted to its promoters and group companies. In 2020, a complaint was filled by S Gurmurthy, the regulatory initiated probe into the alleged irregularities. An opinion was sought by SEBI of former Supreme Court judge Justice BN Srikrishna twice and also the opinion of a Chartered Accountant named YH Malegam.

It was requested by the RBI for disclosure of these opinions and related internal documents. The RIL filed a writ petition before the Bombay High Court, when SEBI turned the request and the same was dismissed in February 2019.

A Criminal complaint was lodged by SEBI in 2020 before Special Judge, Mumbai against RIL alleging offences punishable under SEBI Act and Regulations. The same was rejected by the Court as time-barred. A revision petition was filled by the regulatory before the Bombay High Court challenging the dismissal of the complaint. However, in SEBI’s revision petition, RIL filed an interlocutory application seeking the disclosure of the documents. The High Court adjourned RIL’s application on March 28, 2022 by stating that it can be considered only along with the main revision petition. Therefore, this led to filling of the special leave petition before the Supreme Court.

On September 29, 2022., the matter was circulated in the Supreme Court. Accordingly, the court listed the review petition for next hearing on 12.10.2022.

Case Title: Securities and Exchange Board Of India vs. Reliance Industries Limited & Ors
Case No: W.P.(C) No. 250 of 2022 & W.P.(C) of 1167 of 2022.
Coram: Chief Justice Of India U.U. Lalit, Justice J.K. Maheshwari, Justice Hima Kohli
Date Of Order: 29th Day of September, 2022.

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