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Why India must revive traditional ties with Iran

For India, Iran’s sudden proximity to China is a cause for big concern. Beijing will not leave any stone unturned to widen the chasm in economic and strategic ties between the two nations.

Lt Gen Kamal Davar (Retd.)

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File photo of Prime Minister Narendra Modi with Iranian President Hassan Rouhani.

With an overly expansionist and hegemonic China perilously confronting India, it requires no great geopolitical prudence to conclude that it is imperative for India to not only confront China but also strive for a harmonious environment in its neighbourhood. Being involved in diverse fronts simultaneously is never a good strategy. China, despite countless overtures and assistance in international forums since 1950 by successive Indian governments, still persists in its strategy to belittle India and confine the latter’s influence to South Asia. Accordingly, it is time for India to adopt a proactive stance to combat the revisionist Chinese in all fields, including the military, economic and diplomatic turfs. One such significant endeavour for India, unquestionably, lies in reviving its traditional friendly ties with another big country of the region — Iran.

In the last couple of years, owing to a large number of factors, India moved away from its longestablished ties with Iran. Meanwhile China, attributable primarily to its deep pockets, has succeeded in weaning Iran away from India. This cannot be denied that India getting closer — both militarily and commercially — to the United States has irked the Iranians and the wily Chinese, smelling an opportunity, are now working for an alliance with Russia, Iran and Pakistan. India’s growing military ties with Iran’s sworn rival, Israel, has also adversely impacted India-Iran relations to an extent. Iran’s strategic significance for India can never be overstated.

Till the last few years, Iran had been the second largest energy supplier to India, supplying nearly 4,25,000 barrels of crude oil per day and with India purchasing annually over $12 billion of oil from Iran. However, this annual oil trade got disconnected due to the extensive UN sanctions against Iran which then resulted in India paying off these bills through a banking system in Turkey. India, one of the world’s largest oil importers, pays for its oil imports in far larger amounts in precious foreign exchange, as Iranian oil is not being imported because of the sanctions. The ready availability and geographical proximity of Iranian oil imports to Indian ports can never be overemphasised. This aspect, vital for Indian interests, should have been strongly emphasised with its strategic partner — the US — and despite American opposition, India should have continued importing oil from Iran for a variety of reasons.

 In the last few months, two disconcerting developments for India and its relations with Iran have surfaced. Recently, India’s Ministry of External Affairs (MEA) has confirmed that India is no longer involved in the Farzad-B gas field project of Iran. It was way back in December 2005 when a consortium of India’s Oil and Natural Gas Corporation (ONGC) Videsh, Indian Oil Corporation and Oil India had signed a contract with the Iranian authorities for carrying out exploration of the Farzad-B block. In May 2016, when Prime Minister Narendra Modi visited Iran, he discussed the progress of this project with Iranian President Hassan Rouhani. This block has reportedly more than 19 trillion cubic feet of gas reserves. The ONGC has invested approximately $100 million. Now after commerciality of this oil field has been established, the Iranians appear to have shown India the door, however reiterating that they will involve India appropriately at a later stage. This cooperation agreement needs to be sorted out by India and Iran.

The other major contentious issue between the two nations which has erupted recently has been the contract to develop the 628-km Chabahar-Zahedan railway line which would run along the IranAfghanistan border. This agreement was signed in 2016. After all the formalities were over, it was only this month that without taking India into confidence, Iran commenced work on this railway project. As of now, India has been kept out of this project. India has, however, conveyed to Iran that India is open to joining the development of this project later. Nevertheless, a significant project between the two nations which is progressing well is the Chabahar Port complex whose genesis was laid in the New Delhi Declaration signed in 2003. This port development was exempted from sanctions. India has taken over operations of one terminal and has handled 82 ships with 12 lakh tonnes of bulk cargo in 8,200 containers since December 2018. It must be emphasised that Chabahar is not only significant to maritime relations between the two nations but also provides an opportunity to India to reach Central Asia and Russia by the land route. It also permits India to bypass Pakistan which does not allow Indian cargo to move by the land route via Pakistan to Afghanistan.

Importantly, India is home to the second largest Shia population in the world, after Iran. India’s Shias do look up to the Iranian clergy for spiritual guidance. This is one factor which has also kept the two nations together, for Iran knows that their Shia brethren in India are treated with respect, unlike in Sunni-dominated Pakistan which traditionally has been riding roughshod over its indigenous Shia population. What is inexplicable to many across the world is that despite the Chinese indulging in massive violence and atrocities targeted against their Uighur Muslims in its restive Xinjiang province, the entire Islamic ‘Ummah’ has remained quiet on China’s worsening human rights record. Perhaps a case of China’s overflowing coffers satiating the greed of many Muslim nations.

For India, Iran’s near sudden proximity to China is indeed a cause for concern. Iran too is hardly appreciative of India’s growing proximity to the US. China will not leave any stone unturned to widen the chasm in economic and strategic ties between India and Iran and assist Pakistan, in whatever manner, to keep India occupied along its vast borders. Triggering the current serious face-off with India in eastern Ladakh is part of China’s grand design for the region.

Diplomacy is a complex interplay of many factors which go to define national interests. Nations once close to each other do, at times, drift apart. Notwithstanding India getting closer to the US, it will be in our supreme interest that we maintain our strategic autonomy in foreign affairs and keep the otherwise divided and restive Islamic world also on our side. It will be in the interest of both Iran and India for peace, stability and economic growth amongst them and the region to foster closer ties with each other. That is the cardinal imperative dictated by our geography.

The author is India’s first chief of the Defence Intelligence Agency and now president of the Delhi Forum for Strategic Studies.

Legally Speaking

Farmers at the centre of political debate once again: Looking at farm bills from competition lens

Prof (Dr) Vijay Kumar Singh

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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. 

CONTRACT FARMING:

 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.’

 DE-REGULATION:

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

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‘LEVY & DEMAND OF INTEREST’ ON BORROWERS DURING COVID-19

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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

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Opinion

Akalis quitting NDA could impact Haryana also

Pankaj Vohra

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The decision of the Shiromani Akali Dal (SAD) to sever its links with the National Democratic Alliance (NDA) is not only going to impact politics in Punjab but in neighbouring Haryana as well. The Akalis were amongst the oldest partners of the BJP, an association described by former Chief Minister Parkash Singh Badal as “Nau Maas da rishta” (A relationship that is as close as the nail and the skin). Therefore, it was unthinkable that the party would break its bond with the saffron brigade with whose help, it had returned to power, both in 2007 and 2012. There are 23 Hindudominated seats in Punjab which the Congress used to earlier win. But in those two crucial elections of 2007 and 2012, the Congress performed very poorly on these seats and allowed the BJP to consolidate its position. The Akalis on their own were short of numbers and it was because of the seats won by the BJP that the alliance was able to successfully form the government. 

The relationship between the two parties has been strained and it was only political compulsions that kept them together. A section of the BJP wanted this partnership to end so that the BJP could grow and contest all the seats. Navjot Singh Sidhu, who was with the BJP at that point of time, was viewed as a possible chief ministerial nominee. Now that the BJP is not under any obligation to appease its erstwhile ally, Sidhu could well be on his way back, given that he has been marginalised in Punjab politics by Chief Minister Captain Amarinder Singh. The Congress High Command has been urging the CM to speak to Sidhu to sort out matters, but Amarinder seems adamant. However, the separation of the two parties has further weakened the Akalis who are also facing dissent from within. 

The Badals, who have been in control of the party since many years, are believed to have acted solely because they feared that their continuation in the NDA would have further damaged their interests. It is a well-known fact that the Badals and the Chautala family have very close links. Thus, it would not be surprising if pressure is mounted on Dushyant Chautala to leave the Haryana Cabinet and come out in the open against the farm bills. The BJP is understood to have taken the required precautions, and if Dushyant decides to leave, he could face the prospect of losing some of his MLAs, who could switch over to the BJP.

 The complex developments that could have far-reaching ramifications could usher in a period of instability in Haryana with the Jats taking to streets. Speculation has already begun in Punjab that Amarinder could use the opportunity to strengthen his own position and consider holding Assembly elections one year before they are due. This would certainly be a folly and the Congress which has the advantage as of now, may surrender it, if the polls were held early, given that a lot of promises are still to be fulfilled.

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Opinion

A roadmap for NEP 2020 implementation is crucial

The new education policy can be successful only after its recommendations are
implemented well. The need of the hour is to carve out a plan of action with the
joint and coordinated efforts of Central and state government bodies.

Ved Prakash

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The National Education Policy (NEP), 2020, has received an unprecedented scale of attention and publicity, compared to any other contemporary reform agenda. Within a week of its approval on 29 July, the University Grants Commission (UGC) and the Ministry of Education (MoE) jointly organised a couple of highlevel webinars focusing on the role of the NEP in transforming education. What is notable about these webinars, which were attended by scores of senior-level functionaries, is that they have been addressed by the Prime Minister and the President. Such webinars are also being organised at the state level. The idea behind these webinars is twofold: One is to familiarise and sensitise policy implementers and the other is to strategise and develop a roadmap for its implementation.

 The commitment shown in the last one-and-a-half months demonstrates that, after the eleventh FiveYear Plan, education has occupied centre-stage in the development agenda once again. This perception may be strengthened if the system starts showing visible changes by effecting unequivocal support in terms of the selection of leaders capable of handling the envisioned transformation and ensuring both enhanced budgetary provisions and a timely flow of funds. It may be corroborated further if the system swiftly starts responding to implementation requirements by way of initiating activities and assigning tasks for the purpose of re-examining existing provisions and formulating essential frameworks as proposed in the policy. What remains to be seen is whether the prevailing enthusiasm persists unto the implementation of the policy or gets run over by some other unforeseen agenda in times to come. Any laxity, when the tempo is soaring, might be construed as an optical illusion, which would be unseemly. 

The country has brought out the NEP after a gap of 34 long years because since then education has undergone an enormous amount of transformation due to national and international developments. Service providers have been confronting issues that are exposing the hollowness and fragility of the existing system. In times such as these, the NEP has made a huge commitment of making quality education accessible to about 37 crore children in the age cohort of 3 to 18 years, with the goal of universalising school education, and to about 7 crore children in the age group of 18-23, with the aim of achieving 50 percent Gross Enrolment Ratio (GER) in higher education. The commitment now obligates the system to accord top priority to developing a plan of action and strategising the movement of the entire machinery both at the state and the Centre. It would require much bigger a push, in terms of an increased budgetary allocation both at the Central and state levels. 

There are always some recommendations in almost every policy document which are central to bringing about real change in the system. Apart from that, there are also some recommendations which are written for the sake of it and, interestingly, they also get implemented on their own. Therefore, it is always necessary to critically examine such a document and sift out those recommendations which fall in the former category. 

A dispassionate analysis of the policy on higher education reveals that there are about a dozen recommendations which are critical for invigorating the system as envisioned in the policy. It may, therefore, be appropriate to classify these recommendations on the basis of the twin criteria of type and necessities, which in a way will make the job easier and facilitate the development of the plan of action. It is noted from the analysis that there are some recommendations which would require legislative frameworks of one kind or the other. There are others that would require the formulation of new apparatuses which hitherto are not the part of the system. There is also a third set of recommendations that would require the revision of the existing frameworks and amendments therein. This classification may help in crystallizing the right approach for the implementation of all three kinds of recommendations. 

The first set of recommendations would essentially require the creation of enabling conditions for revamping the entire system of higher education. Some of them, of course, might require a little more than mere legislation. Recommendations such as the establishment of the Higher Education Commission of India (HECI) with its four verticals in the name of National Higher Education regulatory Council (NHERC), National Accreditation Council (NAC), General Higher Education Council (GEC), Higher Education Grants Council (HEGC), Multidisciplinary Education and Research Universities (MERU), National Research Foundation (NRF), National Education Technological Forum (NETF), the constitution of Board of Governors (BOG), Entry of Foreign Universities Act, etc, fall in this category. The implementation of these recommendations would require the establishment of the proposed statutory bodies. They are the part of the legislative agendas which involves quite a time-consuming process. They will have to pass through multilevel detailed scrutiny prior to and after they are introduced as bills in Parliament. Since a fairly large number of quality initiatives are going to flow from them, they may be accorded top priority by the Ministry of Education. 

The Ministry may consider creating a committed bureau to accelerate the pace of all the legislative proposals. Obviously, these recommendations can be fructified into reality only with the will and commitment of the government. The second set of recommendations would require the formulation of new apparatuses which hitherto do not exist but are now envisioned as inevitabilities to compete with the best of the world. These recommendations are going to be process-oriented. They are going to be a good weight for academia. Recommendations like the formulation of the National Higher Education Qualification Framework (NHEQF), Academic Bank of Credit (ABC), Institutional Development Plan (IDP), defragmentation of higher education, designing of virtual labs, evolving the criteria for the three sets of institutions, bringing all teacher preparation programs under the ambit of the university system, a merit-based tenure track system, online proctored examination, etc, form part of this category. Of them, the formulation of NHEQF is going to be the most time-consuming exercise and thus, would require the setting up of a special taskforce for its timely execution. Other recommendations in this category may be accomplished too, provided that well-intentioned people with the right kind of orientation are concurrently tasked with dissimilar responsibilities to deliver within the defined timeframe.

 The academia will have to work openly and collectively to translate these recommendations into reality. Since most of them are going to be part of the mandate of the GEC, the Ministry may like to press for its establishment early. The third set of recommendations would require the examination of existing instruments for the purpose of aligning them with the requirements of the day. Recommendations such as revising the Choice Based Credit System (CBCS), the National Skill Qualification Framework (NSQF), moving towards more liberal multidisciplinary undergraduate education with multiple exits, e-content development, integration of values and ethics, criterion-referenced testing, etc., are going to be part of this category. Most of them are directly related to the basic realities of classroom processes which eventually bring about qualitative improvement and thus ought to be accorded priority in the scheme of teaching and learning. Most of these recommendations can be operationalised with minor modifications in the existing frameworks. There are only a few recommendations which may require newer formulations. Most may require the issuance of certain frameworks or guidelines. Since they are in pursuit of activities like teaching, learning, skilling, research and testing, their implementation may be carried out by individual institutions without looking up to any command room. Since there are three sets of recommendations, it is imperative to adopt different approaches for their implementation.

 There are a few relating to legislative agendas that may require a particular sequence in their implementation because of their inter-linkages and enabling requirements. The second category of recommendations, which would warrant the setting up of a couple of taskforces comprising eminent experts may be undertaken simultaneously. Likewise, the third set of recommendations may also be carried forward by individual institutions. It is thus clear that some of the operational activities in the implementation process may be carried out concurrently across the categories. An important aspect of the entire exercise may, however, be how ably the senior-level executives and heads of institutions across the states understand the spirit of the intents of the policy statements and efficiently and effectively strategise their implementation. Another important aspect that needs to be taken into account is the level of support to the state governments. Since the bulk of higher education is with the states, which are starved for funds, the federal government may consider constituting an expert committee for the purpose of ascertaining the quantum of resources required for the implementation of the policy and then making budgetary provisions to meet the shortfall. The bottom line is how the Ministry of Education and the state departments of higher education mobilise finances to meet the most immediate financial challenges as everything involved, from structural changes to quality initiatives, would require a lot. 

The writer is former Chairman, University Grants Commission. The views expressed are personal.

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Opinion

How much funny is really funny? The debate over parody in copyright law

The rights that a work of parody might violate are the distribution rights over the work, right to publicise the work in a positive light, and the moral rights which are associated with the author. Moral rights essentially prohibit modification of the copyrighted work in a manner that injures the honour and reputation of the owner of the work.

Anurag Tiwary and Abhinav Narayan Jha

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The difference between parody and satire has not been accepted or developed by the Indian courts in the context of IP laws. This means that whether a work is a parody or a satire, the defence of fair use can be claimed by the defendants and the work shall also be entitled to claim separate copyright protection as well. 

Parody refers to a work that humorously and critically comments on existing work to expose the flaws of the original work. Parody, as a means of criticism, has been historically used by various people such as stand-up comedians, YouTubers, Bloggers, actors, authors, etc. to communicate a particular message or a point of view to their audience. This means that to create a successful parody, one has to, inevitably, use the original work. Since copyright law gives authors of original work certain exclusive rights, such as the right to reproduction, communication to the public, distribution rights, right to make derivative works, and other such rights associated with the work, parody turns out to be a violation of the rights granted to the copyright owner.

 The rights that a work of parody might therefore violate are the distribution rights over the work, right to publicize the work in a positive light, and the moral rights which are associated with the author. Moral rights essentially prohibit modification of the copyrighted work in a manner that injures the honor and reputation of the owner of the work.

 Parody issues generally come into play with tort law as well as criminal law, especially law on defamation. However, in this article, we’ll try and focus on the major IP issues that hover around the debate regarding parody.

 Copyright Law and its philosophy 

Copyright is a unique kind of property. Just like other Intellectual property, you cannot touch or feel it, but you certainly can protect the ‘creation of the mind’. However, the objective behind copyright law is to “strike a fine balance between monopolistic claims made by authors of original work and adequate protection to the Intellectual property to encourage further creative thought”. Such copyrighted work can therefore be used by third parties to encourage creativity – This is fair use. However, such use has to be reasonable and under certain conditions for specific purposes only. 

The Four Factor Test

 For a valid fair use claim, the defendant will have to satisfy what is commonly known as the “Four Factor Test”. Under the four-factor test, the consideration is: firstly, what was the purpose and character of your use of the copyrighted work. Secondly, the nature of the copyrighted work, which means that if the work is copyrighted then, what is the degree of protection that it deserves. Thirdly, the amount and substantiality of the portion of the work that was taken by you. This means that whether the amount of copying done by you was reasonable in relation to the purpose of copying and lastly, the effect that your use will have on the market of the owner. Will your use impact the potential market of the original work. 

Parody and Satire 

Indian laws treat parody and satire as one and the same. However, the position is different when one looks at the jurisprudence evolved by the courts of foreign Jurisdictions.

 In the United States, the courts have differentiated parody and satire to the extent that it impacts the defense of Fair Use under their copyright law. In Campbell v. Acuff-Rose Music, Inc (1994), the court differentiated between the two and held that “Parody needs to mimic an original to make its point, and so has some claim to use the creation of its victim’s imagination, whereas satire can stand on its own feet and so requires justification for the very act of borrowing.” Parody, according to the court, meant, “Second work by a different author that imitates the characteristic style of the first author … to ridicule or criticize the copied work.” However, satire meant a work in which “prevalent follies are assailed with ridicule or attacked with irony, derision or wit.” The Supreme Court of the United States, in this case, made it clear that while parody was entitled to the defense of fair use, satire was not.

 On the other hand, in May this year, the Delhi High Court had an interesting case before it. Netflix aired a web series on its platform named “Hasmukh” which is a dark comedy about a small-town boy who arrives at Mumbai to pursue his career in stand-up comedy. Something weird about Hasmukh, the protagonist, is that he can only successfully perform his act if he commits murders before his performances and makes jokes about his victims. During one of the episodes, Hasmukh has been shown to have had an upsetting experience with a lawyer. The lawyer is someone dishonest and greedy. During the same episode, the protagonist allegedly makes derogatory remarks against the entire legal fraternity. So, a suit was filed before the Delhi High Court seeking a stay against further airing the web series. The court in Ashutosh Dubey v. Netflix (2020) sat to decide whether the above situation amounted to freedom of speech and expression under Article 19(1) (a) of the Constitution of India. Although the case was decided based on the above contention, the court made certain remarks on what a satire is. The court said, “Satire is a work of art. It is a literary work that ridicules its subjects through the use of techniques like exaggeration. It is a witty, ironic, and often exaggerated portrayal of a subject.”

 Another instance when the court considered the issue of satire was in the case of Indibily Creative Pvt. Ltd. vs. Govt. of West Bengal (2019). It was the Supreme Court that held that “A Satire is a literary genre where issues are held up to scorn by means of ridicule or irony. It is one of the most effective art forms.” The difference between Parody and satire has not been accepted or developed by the Indian courts in the context of IP Laws. This means that whether a work is a parody or a satire, the defense of fair use can be claimed by the defendants and the work shall also be entitled to claim separate copyright protection as well. This is because the courts in India have considered both these forms of expression as a work of art and have characterized them under artistic expression.

 Parody and Fair Use 

Parody is included under a category of works allowed under Section 52(1)(a)(ii) of the Copyright Act, 1957. This provision provides for ‘criticism or review, whether of that work or any other work.’ Parodies usually are essentially a criticism of original work and are therefore included in the list of works allowed in the above provision. However, it isn’t as simple as it sounds. The real problem starts when you have to prove that your work was a parody and not an infringement on the rights of the original copyright holder. 

To prove that your work is covered under parody, you have to satisfy two conditions which will essentially conclude as to whether it is covered under fair use or not. They are, Firstly, you must not have intended to compete with the copyright holder. This is also called the Market Substitution Test and Secondly, you must not have made ‘improper’ use of the original work. These conditions were laid down in the case of Blackwood and Sons Ltd. & Ors. v. A.N. Parasuraman & Ors. (1959)

 So, if you can prove that your work has not impacted the potential market of the original work and that the parody and the original work cater to two completely different sets of audiences, you would have passed the market substitution test. This is tricky because applying this rule strictly is impossible for the simple reason that one is not quite sure if the categorization of the audience can be done in the manner that this rule presupposes. If the court looks into the commercial gains made by the parody to see if the parodist has competed with the original author, then that too wouldn’t be an effective mechanism. Kris Ericson writes, that, even if the parody has made commercial gains by criticizing the original work it doesn’t mean that it has made inroads into its potential market. Infact, he goes on to mention that, it has indirectly helped the original copyright owner by publicizing the original work and for lesser-known works, it has served to make it more famous/popular. 

The Transformative Work Test

 To meet the difficulties that could arise while analyzing the first condition, the courts have evolved the “Transformative Work” Test. This test was also used in the Campbell case where the US Supreme Court held that the relevant question to decide in such circumstances is to see “to what extent the new work is transformative, i.e., to what extent the new work alters the original with new expression, meaning or message.” This test has therefore substantially downplayed the commercial use argument and if the parodist can show that his work is transformative, he would be entitled to fair use defense. However, what qualifies as a “transformation” under this test has to be decided by the court on a case-to-case basis.

 In Leibovitz v. Paramount Pictures Corporation (1998), the US Court of Appeals for the Second Circuit was faced with a dilemma. Leibovitz is a well-known photographer. Among her most famous works is the photograph of the actress Demi Moore. Moore was pregnant when the photo had been shot by Leibovitz. She was depicted nude with a serious facial expression. The photo was shot keeping in mind various aspects such as skin tone, body positioning, and lightning, among other things. The photograph gained popularity in very little time. Paramount pictures, sometime later, published a photograph of the actor Leslie Nielsen where the company had used the same concept behind Leibovitz’s photo. The company used the photo of a naked pregnant woman, which was shot using similar lightning, body positioning, etc. and superimposed the ‘smirking’ face of Nielsen in the place of the woman. Now, the question that the court had to decide upon was, whether this amounted to a transformative work at all. The court held that Paramount’s use was transformative because it had imitated the original work and had brought in a ‘comic effect or ridicule’ which was an addition to the original work. The court also held that Nielsen’s photo with a smirking face had a contrasting dissimilarity with the serious expression of Moore which may be perceived as commenting on the ‘pretentiousness’ of the original.

 In R.G. Anand v. M/s Deluxe Films (1978), the Supreme Court in India has held that “Where the theme is the same but is presented and treated differently so that the subsequent work becomes a completely new work, no question of violation of copyright arises.”

 However, a work does not become a parody simply because there is humor inside it. If it is found that the parodist has tried to use a famous work to gain more commercial benefit by simply incorporating humor in the work, it wouldn’t be considered a parody. For instance, during the fag end of 2015, a US court was hearing an exciting case. The defendant, who was an apparel company, had used the iconic Superman logo on its T-shirt. The T-Shirts featured the word “Dad” in a superman-styled logo. They claimed that SuperDad T-Shirts by the defendant were an obvious parody of the Superman logo and therefore there is no likelihood of confusion that could be caused to the consumers. They infact claimed that the word ‘Dad’ was used to point out Superman’s ‘undue self-importance’. The court was sitting to decide on the motion to dismiss the complaint. The judge disagreed with the arguments of the defendant and held that although the defendant’s use of the word Dad is humorous, it is only to promote the t-shirts using the logo of the plaintiff, and therefore it is not a parody. 

What does the SupermanSuperDad fiasco show? It shows two things in particular. It shows how a defense of parody will only succeed if the work is not likely to confuse the consumers as to the source of the work. Secondly, it shows how parody has to be more than being just funny especially when the work is purely commercial in nature. It has to make some commentary on another’s work. The commentary must be meaningful and must not be simply to utilize someone else’s work to increase your sales. 

Parody and Moral Rights

 Moral Rights are inalienable rights granted to an author of a copyrighted work. They exist independently of Copyright. The author of an original copyrighted work, even after agreeing to alienate his exclusive economic rights, retains moral rights in his works which can be enforced when the need be. They give the right to the author to have the work attributed to him which is also known as the right to paternity. 

Moral Rights were included in Article 6bis of the Berne Convention way back in 1928. Section 57 of the Copyrights Act, 1957 grants protection against any act of distortion, mutilation, modification, or any other untoward act done to an author’s original work in which copyright exists. Acts which prejudice the honor or reputation of the creator of the work is read as a violation of the Right to Integrity, which also forms a part of Section 57.

 It is to be understood that parody directly infringes upon the moral rights of the author of an original work. This is because it is based on ridiculing and mocking the copyrighted work. This is where the second test to claim parody as fair use comes in. We do know that to claim fair use defense in parody, the parodist will have to prove that he did not use the original work in an ‘improper’ manner. But the test becomes difficult to theorize because of a lack of a clear definition of the word ‘improper’ and as to what it entails.

 Here, there are issues relating to freedom of speech and expression (argued by the parodist) as well as those related to defamation law and claim over one’s right to dignity (argued by the author of a copyrighted work). It is to be understood that freedom of speech and expression is not an unbridled right. It is infact a right with reasonable restrictions. This means that a parodist is not allowed to ridicule or attack the work such that it can be imputed to the author of the work. 

How can this distinction be made is a question of fact which the courts have to decide on a case-to-case basis. Usually, the courts apply what is called “The line of Creativity” principle. This principle draws a line between the parodist’s creative application of ideas and expressions to criticize the original work, and, the insult or humiliation intended towards the author of the original work. Such an inquiry is for the courts to do. But while doing such an inquiry the courts need to draw a distinction between innocent humor and defamation intended against the moral rights of an author.

 Notably, the Australian Supreme Court laid down the ‘bane and antidote Test’ in the case of Charleston & Smith vs. Newsgroup Newspaper Ltd (1995). The test laid down a rule that if any defamatory text or picture is accompanied by a disclaimer prescribing that the work has been used just for humor purposes then it must be taken only for humor purposes and nothing more or nothing else. This was a big development.

 The growth of new media technologies has increased the number of actors, standup comedians, bloggers, and other stakeholders in copyright law. The use of original copyrighted works, without the permission of the author of the work, has almost become a norm and a social and cultural behavior. This is all being done in the name of a joke or a parody. Majority of these contents violate the moral rights of authors of original works and are offensive. The rest use parody as a fair use defense for works that are purely aimed at commercial gain. Such infringements need to be regulated in an age of digital India to grant incentives for creators to create more works of artistic expression. The different tests adopted by the courts have to be applied equitably. In the longer run, this will further the goal of Intellectual Property to balance the rights of the Authors as well as those forming part of the citizenry. 

Anurag is a student of National Law University, Visakhapatnam and can be contacted at anuragtiwary66@gmail.com Abhinav is a student of law from Amity University, Noida and can be contacted at narayanabhinav14@gmail.com 

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Legally Speaking

The delay disaster

The justice delivery system continues to lumber on for now, but the question really is whether it is delivering justice or whether the justice delivery system is maintaining a Nelson’s eye to all serious and severe problems arising from mounting arrears.

Amir Singh Pasrich

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Indian Judiciary

A little known fact is that during the pandemic there has been an increase in the number of cases pending in Indian courts by roughly 20,000 cases per day. A Delhi High Court Judge is reported to have calculated in 2009 that if we are to clear the arrears in the Delhi High Court, it might take up to 464 years. The Law Commission noted this in its 230th report and opined that the position “may not be that gloomy” but it was “still alarming”. That was their view on the 5th of August 2009. Eleven years later, the Chairman of the Law Commission has naturally moved on, the recipient of the report who was the then law minister has also demitted his office and several Chief Justices have been sworn in and then retired in the Supreme Court of India and in each of the High Courts. The justice delivery system continuesto lumber on…for now, but the question really is whether it is delivering justice or whether the justice delivery system is maintaining a Nelson’s eye to all serious and severe problems arising from mounting arrears. Are we not ignoring the tremendous injustices perpetuated upon every innocent person who remains under trial and is yet incarcerated while s/he is accused of an offence, but has not been adjudicated to be guilty? The favourite maxim of the courts that you are innocent until proven guilty is actually a chimera insofar as it concerns persons who don’t get bail once they are accused of a serious crime. It is even worse if such innocent folks happen to be poor, picked-up by an overzealous police officer who finds the right ingredients of suspicious activity, perceived notoriety and prior criminal record even if such prior criminal record is patently unproven. 

As a reader I would not blame you if you thought: “Surely not – Mr. Author – surely this system is better than that you would assume it to be in your pessimistic article? Surely, we have a system in place to put these people behind bars when they have actually done something wrong?” But the answer sadly is that 69% of India’s jails are occupied with undertrials who have not been convicted. That is the figure as of today. What is worse is that although we started understanding the seriousness of the problem somewhere in the late 90s when the Supreme Court issued its first set of serious directions in the case of Anil Rai vs. State of Bihar in the year 2001, we had no idea how much this behemoth would grow. Far from improving the situation, the number of pending cases has grown from 3.14 crore casesin the year 2009 to 3.46 crore cases today. Shockingly a report that showed a pendency of 3.34 crore cases in late July 2020 when seen in the context of pendency as on Friday, the 25thof September 2020 reflects an increase of 1.2 million cases in just 60 days. If we aren’t bothered about human rights, the effect of “pendency” on prisoners, or the consequences of sending other innocent people to jail for long periods of time (after all – they must have done something wrong!), perhaps our people may worry about money. After all, money determines everything and affects our day-to-day business. India strives to demonstrate its economic power through the new and renewed Ease of Doing Business (EoDB). Chambers of Commerce and business houses alike seek to “unclog the Indian legal system” so as to improve contract enforcement and have faster dispute resolution mechanisms. With courts still stuck in the pendency paralysis, it is clear that our money and the cost of pursuing an ordinary business will be compromised unless we begin with strictly enforced new measures for contract enforcement. Our companies will need to be “saved” from the clutches of civil court pendency which is robbing India of a major element of its business credibility. Mr. Fali Nariman, one of India’s most noted jurists, famously said that in some countries they have Order and in India we have Law. Should we not now quickly marry the two and deliver law and order so as to change international perceptions about how our courts involve themselves with dispute resolution in a purposive and result-oriented approach that might eventually be better than what is on offer elsewhere? What we really need is serious reform and steps for that must be identified soon. 

We are debating this issue in an online platform of the PHD Chamber of Commerce and Industry on this 26th of September, please feel free to find the link at www.phdcci.in and listen in. After this first initiative, another part of this article will emerge with suggested steps for reform based on the lessons of the past. 

Amir Singh Pasrich is Managing Partner of I.L.A. Pasrich & Company, Advocates. He is co-chair of the India Working Group of the International Bar Association (IBA) and is an elected member of the IBA’s LPD Council, he is also Chairman of the Law & Justice Committee of the PHD Chamber of Commerce.

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