by Aggarwals Associates | May 24, 2023 | Civil Law, Corporate Law, General
Introduction
With developments in education, employment, and the industrial sector, an increasing number of women are entering the country’s workforce today. The 21st-century world has evolved the roles of women and made great progress towards achieving gender equality in comparison to the older and conservative times. They have emerged as significant leaders and successful and diligent workers. But unfortunately, women are unsafe and are subjugated to sexual harassment at the workplace which has a major impact on their mental as well as physical health and which also hinders their performance. According to the latest statistic, a large percentage of 54%-81% of women experience sexual harassment at their workplace and 58%-72% of victims do not even report the wrongdoings of workplace sexual harassment due to fear of retribution or feeling like it would not be taken seriously by supervisors. In addition, a lack of understanding of one’s rights and the redressal process may also be a factor in the decision not to report. Women have a legal right to a safe workplace, which is acknowledged in the Indian Constitution and to be protected from being subjected to any form of discrimination, to enjoy life and personal freedom to the fullest.
What is Sexual harassment?
The sexual harassment of women in the workplace violates their dignity, self-respect as well as fundamental constitutional rights. Sexual harassment is defined as an unwanted sexually determined activity, which can involve physical contact, demands for sexual favours, the display of pornography, and other verbal or nonverbal behaviours. To combat these practices and protect women, the Parliament passed the Prevention of Sexual Harassment of Women at Workplace Act, 2013 (the “PoSH Act”) in 2013. This act deals with the Prevention, Prohibition, and Redressal of sexual harassment in any institution.
Prevention of Sexual Harassment Act 2013 (PoSH Act,2013)
In 1992, a social worker named Bhanwari Devi who was appointed with the Women’s Development project of the Rajasthan government was brutally gang raped by five men while she was trying to anticipate child marriage in that area. Whilst the absence of law relating to sexual harassment of women in the workplace Supreme Court laid down some guidelines in 1997, numerous women’s rights activists and attorneys had filed a Public Interest Litigation (PIL) before the Supreme Court of India under the name of Vishakha. The Vishakha Guidelines were developed in response to a petition brought by Vishakha and four other Rajasthan-based women’s organizations against the state of Rajasthan and the Union of India. It was seen as a big stepping stone in legal success for women’s organizations in India. Consequently, sexual harassment was recognized in India in 1997, and the action was the product of a collaborative effort by non-governmental organizations, feminists, and attorneys. All the organizations were bound to meet three obligations: – Prevention, Prohibition and Redressal.
Prevention of Sexual Harassment Act 2013 (PoSH Act, 2013) provides guidelines and procedures for a safe and secure working environment with proper implementations of PoSH policy. Under this PoSH Act, every organization is required to set up an Internal complaint committee (ICC) to investigate and keep a check on activities relating to sexual harassment of women at the workplace. It also requires employers to create awareness and training programs on sexual harassment for all employees so that they get educated and can communicate for redressal of complaints regarding any sexual harassment they face while working. The ICC also lays down the procedure for the investigation and resolution of complaints and protects women who file complaints from further retaliation and harassment.
Procedure for Complaints and Punishments
Constituting a PoSH policy at work provides a definite mechanism to address complaints of the aggrieved. It states the consequences and punishments given to the wrongdoers and safeguards women’s interests.
The complaint files should be handwritten, mailed, or typed only, along with the names of the complainant and the respondent. The important thing to be kept in mind is that the complaint should be filed within a period of 3 months from the date of the last incident of sexual harassment and in some cases, this time can be extended with justification given to the committee.
Once the investigation and inquiry have been completed and the allegations are proven to be true then the ICC advances actions or punishments that can be termination, stopping from increments or promotions, warning, suspension, providing compensation for the psychological or physical loss, loss of career opportunities, employee’s pain and sufferings, etc.
Conclusion
Every organization should abide by the regulations and directions laid by the judgment of the Supreme Court under the PoSH Act, to safeguard women who are working to earn their living and ensure them a safe working environment.
“If the authorities/managements/employers cannot assure them a safe and secure workplace, they will fear stepping out of their homes to make a dignified living and exploit their talent and skills to the hilt,” Justice Kohli wrote in the judgment.
Applicability of this Act will only be valid when employers protect the interest of their female workers by addressing their complaints timely and providing them redressal. The ICC should take measures to ensure a sexual harassment-free work environment for every employee.
-Kashish Rastogi
Associate Intern at Aggarwals & Associates, Mohali
by Aggarwals Associates | May 19, 2023 | General
INTRODUCTION
Foreign portfolio investment regulations are a set of rules and guidelines put in place by a country’s government or regulatory authority to govern the investment of foreign individuals or entities in the country’s financial markets. These regulations are designed to protect the
interests of both the foreign investors and the host country’s economy. The primary objective of foreign portfolio investment regulations is to encourage foreign investment in a country’s financial markets while ensuring that such investments do not pose a threat to the stability and security of the country’s economy. The regulations typically cover areas such as the types of securities that foreign investors are allowed to invest in, the amount of investment allowed, the reporting and disclosure requirements, and the taxation of foreign portfolio investments.
FOREIGN PORTFOLIO INVESTMENT
Foreign Portfolio Investment (FPI) refers to investments made by non-resident entities or individuals in the securities market of a foreign country. FPI typically involves investing in financial instruments such as stocks, bonds, and other debt securities. Foreign portfolio investors can be institutional investors such as mutual funds, pension funds, hedge funds, and sovereign wealth funds, or individual investors. These investors are not interested in taking a controlling stake in the company but are primarily focused on earning returns on their investments through capital gains and dividends. However, FPI can also pose some risks, such as currency risk, market volatility, and sudden capital outflows, which can cause significant disruptions to the economy. Therefore, governments typically regulate FPI to ensure that it is properly monitored and regulated to promote economic stability and growth.
FOREIGN PORTFOLIO INVESTMENT IN INDIA
Foreign Portfolio Investment refers to the holding of Financial Assets and Securities by investors in other country outside of the investor’s own country. It is the investment by non-residents in India by the way of securities including:
– Shares
– Government bonds
– Convertible securities etc.
Group of investors who invest in these securities are known a Foreign Portfolio Investors they include:
– Asset management companies
– Bankers
– Mutual funds
REGULATORY FRAMEWORK FOR FOREIGN PORTFOLIO INVESTMENT IN INDIA
1. Securities and Exchange Board of India and Reserve Bank of India
– Foreign Portfolio Investment (FPI) regulations in India are governed by both the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI). While SEBI regulates the entry and operation of FPIs in Indian securities markets, the RBI regulates the inflow and outflow of foreign exchange related to FPIs. Here are some of the key FPI regulations by RBI in India.
– Eligible Investors:
• To invest in Indian financial markets, foreign investors need to be registered with the SEBI as a Foreign Portfolio Investor.
• As of March 2021, there were around 11,000 registered Foreign Portfolio Investors (FPIs) in India.
• The total number of registered Non-Resident Indians (NRIs) investing in the Indian markets was around 3 million as of 2020.
• Non-resident entities such as foreign companies, foreign institutional investors, and foreign individuals are eligible to invest in Indian securities markets as FPIs.
• Non-resident Indians (NRIs) are eligible to invest in Indian securities markets as per the regulations prescribed by the RBI.
– Investment Limits:
• Investors are restricted from investing in sectors like real estate and agriculture,unless they have obtained specific permission from the government.
• There are certain limits on the amount of investment that foreign investors can makein Indian companies. These limits are periodically revised by the government.
• The overall foreign investment limit in Indian companies is currently set at 74%,subject to certain sectoral limits.
• FPIs are allowed to invest up to 100% of the paid-up capital of an Indian company,subject to sectoral limits.
• The total investment by FPIs in Indian equity and debt markets was around $22.6 billion as of April 2021.
– Investment Instruments:
• As of April 2021, FPIs held around 23% of the total market capitalization of the Indian stock market.
• FPIs are allowed to invest in Indian equity shares subject to a ceiling of 24% of the paid-up capital of the company.
• NRIs can invest up to 5% of the total paid-up capital in Indian companies.
– KYC Requirements:
• Investors need to follow the “know your customer” (KYC) norms, which require them to provide identification documents, bank account details, and other information to SEBI.
• FPIs are required to comply with Know Your Customer (KYC) and Anti-Money Laundering (AML) norms prescribed by the RBI.
• FPIs are required to register with the designated depository participant (DDP) before investing in Indian securities.
• SEBI requires foreign investors to undergo KYC procedures to ensure their authenticity and prevent fraudulent activities.
• The KYC process involves collecting information about the investor’s identity, residence, and source of funds. SEBI also mandates regular updates to the KYC information.
Compliance Requirements:
• FPIs are required to appoint a designated custodian for their investments in India.
• FPIs must submit a monthly report on their investments in Indian securities to the designated depository participant, while NRIs and QFIs must report theirinvestments on a quarterly basis.
• As of March 2021, SEBI had cancelled the registration of around 2,000 FPIs for noncompliance with regulations.
– Taxation:
• Foreign investors are subject to various taxes on their investments in India, such as capital gains tax and withholding tax. The government periodically revises tax regulations to attract foreign investment.
• The withholding tax on equity investments by FPIs was reduced from 20% to 10%in 2020.
• The tax rate for FPIs investing in corporate bonds and government securities ranges from 5% to 20%.
– Monitoring and Enforcement:
• They are required to monitor and report their investments and transactions to SEBI.
• The RBI can take enforcement actions against FPIs for non-compliance with regulations, including imposing fines and cancellation of registration.
• SEBI regularly monitors foreign portfolio investments in India to ensure compliance with the regulations and prevent fraudulent activities.
• SEBI has the power to impose penalties and take other enforcement actions against non-compliant investors.
• SEBI’s Market Surveillance System (MSS) is used to monitor market activities and take action against fraudulent activities.
In summary, SEBI regulations on foreign portfolio investment in India have resulted in significant foreign investment in the Indian financial markets. The regulations ensure compliance with legal and regulatory requirements while promoting transparency and
preventing fraudulent activities.
2. Foreign Exchange Management Act, 1999
– The FEMA regulates all foreign exchange transactions, including foreign portfolio investment in India. The regulations are aimed at facilitating foreign investments in the Indian economy while ensuring transparency and preventing money laundering and other illicit activities.
– Eligibility:
• Any non-resident entity or individual, including foreign institutional investors (FIIs), foreign portfolio investors (FPIs), and qualified foreign investors (QFIs), can invest in Indian securities subject to certain eligibility criteria.
• The entities must be registered with the Securities and Exchange Board of India (SEBI) to invest in the Indian securities market.
– Investment Limits:
• The overall limit for foreign portfolio investment in Indian companies is currently set at 74% of the paid-up capital, subject to certain sectoral limits.
• The foreign portfolio investment limit in Indian debt securities is currently set at $30 billion for FPIs, subject to certain conditions.
– Investment Instruments:
• Non-resident entities can invest in Indian securities, including equity shares,debentures, and warrants, subject to certain limits.
• FPIs can invest in Indian mutual funds, subject to certain limits and guidelines issued by SEBI.
– Reporting and Compliance Requirements:
• Non-resident investors must comply with KYC and other regulatory requirements to invest in Indian securities.
• The non-resident entities are required to obtain a unique identification number (UIN) from the designated depository participant (DDP) to invest in Indian securities.
• The non-resident entities must also report their investments to the DDP and SEBI in a prescribed format and time frame.
– Enforcement:
• FEMA provides for penal provisions for non-compliance with the regulations, including fines and imprisonment.
• The Reserve Bank of India (RBI) is the regulatory authority for enforcing FEMA regulations related to foreign portfolio investment.
In summary, the FEMA regulations related to foreign portfolio investment aim to facilitate foreign investments in the Indian economy while ensuring compliance with regulatory and legal requirements. The regulations provide for eligibility criteria, investment limits, reporting and compliance requirements, and enforcement provisions to promote transparency and prevent money laundering and other illicit activities.
CONCLUSION
In conclusion, foreign portfolio investment (FPI) regulations in India are an essential aspect of the country’s economic policy framework. The Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) have put in place a comprehensive regulatory framework that aims to promote transparency, prevent money laundering, and ensure compliance with legal and regulatory requirements.
The FPI regulations provide for investment limits, reporting and compliance requirements, and enforcement provisions, which promote transparency and prevent illicit activities in the financial markets. The regulations have been updated periodically to address emerging
challenges and opportunities in the global economic landscape.
-Rossel Aggarwal
Associate Intern at Aggarwals & Associates, Mohali
by Aggarwals Associates | May 12, 2023 | Contract Law
Privity of contract is a fundamental concept in the law of contracts, and it is an
essential principle of contract law in India. Privity of contract refers to the
relationship that exists between the parties to a contract, which creates rights
and obligations that are enforceable by law. The Indian Contract Act, 1872,
(hereinafter referred to as Indian Contract Act) defines the rules and principles
related to the privity of a contract, and it is essential for anyone entering into a
contract to understand its implications.
The Indian Contract Act defines a contract as an agreement between two or
more parties that creates legally enforceable obligations. The parties to a
contract are known as the “parties to the contract” and they must have a
contractual relationship to enforce their rights and obligations. The principle of
privity of contract means that only the parties to the contract can enforce their
rights and obligations under the contract. This means that a third party cannot
sue or be sued under the contract, except in certain limited circumstances.
The doctrine of privity of contract is based on the principle that a contract is a
private agreement between two or more parties, and it is not the business of
any third party. Therefore, a third party cannot acquire any rights under the
contract, nor can it be held liable for any breach of the contract. The doctrine
of privity of contract has been developed over the years by courts in India and
other common law countries to protect the interests of parties to the contract.
The Hon’ble Supreme Court in the case MC Chacko V. State of Travancore AIR
1970 SC 504 held that a person not a party to a contract cannot subject to
certain well-recognized exceptions, enforce the terms of the contract.
For example, A makes a promise to deliver the car to B’s place at a particular
time. A fails to deliver the car. In this case, only B can sue A and no third has
the right to sue.
Essentials of Privity of Contract:
1. Valid Contract: The first and foremost essential requirement is a valid
contract. The parties entering into the contract must be competent and there
must be a valid consideration in the contract as defined under Indian Contract
Act.
2. Breach of Contract: There must be a breach of contract by either party.
3. Only parties can sue each other: In the privity of the contract only parties to
the contract can sue each other and no third party has the right to sue parties
in the contract unless they fall in the exceptional area mentioned in the later
part of article.
What are the different exceptions to the doctrine of privity of contract?
There are certain exceptions to the principle of privity of contract under Indian
law. These exceptions have been developed by courts over the years to
address situations where the strict application of the principle of privity of
contract would lead to an unfair or unjust outcome.
Tortious Interference: Under this doctrine, a third party may be held liable for
interfering with the contractual rights of one of the parties to the contract. For
example, if C persuades A not to sell the car to B, C may be held liable for
tortiously interfering with B’s contractual rights.
Beneficiary rights: Under this concept, a third party may acquire certain rights
under a contract if it is clear from the terms of the contract that the parties
intended to confer those rights on the third party. For example, if A agrees to
pay B a sum of money to be held in trust for C, then C may acquire rights under
the contract as a beneficiary. In Pandurang V. Vishwanath AIR 1939 Nag 20,
the court held that the person beneficially entitled under the contract can sue
even though not a party to the contract itself.
In conclusion, the privity of contract is a fundamental principle of contract law
in India, and it is essential for anyone entering into a contract to understand its
implications. The principle of privity of contract means that only parties to a
contract can enforce their rights and obligations under the contract. However,
there are certain exceptions to this principle, which have been developed by
courts over the years to address situations where the strict application of the
principle of privity of contract would lead to an unfair or unjust outcome.
Surbhi Singla
Associate at Aggarwals & Associates,
S.A.S Nagar Mohali
by Aggarwals Associates | May 8, 2023 | Tort Law
Corporate tort liability is a complex legal issue that arises when a corporation is held responsible for harm caused by its actions or inactions. Corporations can be held liable for torts committed by their employees, agents, and even independent contractors.
Vicarious Liability
One of the most important concepts in corporate tort liability is vicarious liability, which is the legal doctrine that holds employers liable for the torts committed by their employees during the course of their employment. This means that if an employee commits a tort while performing their job duties, the employer can be held responsible for the harm caused by the tort.
Vicarious liability is based on the principle of agency, which is the legal relationship between a principal (the employer) and an agent (the employee). Under agency law, the actions of the agent are attributed to the principal, and the principal is responsible for the consequences of those actions.
However, there are limitations to vicarious liability. Employers can only be held liable for torts that are committed within the scope of the employee’s employment. If an employee commits a tort outside the scope of their employment, the employer cannot be held responsible.
Joint and Several Liability
Another important concept in corporate tort liability is joint and several liability. This is the legal doctrine that holds multiple defendants jointly and severally liable for the same harm. This means that each defendant is responsible for the full amount of the damages, regardless of their individual degree of fault.
In the context of corporate tort liability, joint and several liability can be particularly important because it means that multiple defendants (such as the corporation and the individual employee) can be held responsible for the same harm. This can make it easier for the plaintiff to recover damages since they can pursue all responsible parties.
However, joint and several liability can also be problematic for defendants, particularly when one defendant (such as the corporation) has significantly greater financial resources than the other defendants. In these cases, the corporation may end up paying a disproportionate share of the damages, even if it was only partially responsible for the harm.
The Corporate Veil
Finally, one of the most controversial issues in corporate tort liability is the concept of the corporate veil. The corporate veil is the legal principle that separates the liabilities of the corporation from those of its shareholders or owners. This means that in most cases, the shareholders or owners of a corporation cannot be held personally responsible for the corporation’s torts.
However, there are exceptions to the corporate veil. For example, if the corporation was formed for an illegal or fraudulent purpose, or if the shareholders or owners engaged in wrongdoing themselves, the court may pierce the corporate veil and hold them personally liable.
Piercing the corporate veil can be difficult since courts are generally reluctant to disregard the legal separateness of the corporation and its owners. However, in cases where the corporation has engaged in egregious conduct or the shareholders or owners have abused the corporate form, it may be necessary to pierce the veil in order to hold all responsible parties accountable for the harm caused.
Conclusion
Corporate tort liability is a complex and nuanced legal issue that requires a careful analysis of the facts and the law. Understanding the legal concepts of vicarious liability, joint and several liability, and the corporate veil is essential for any corporation or individual facing a potential tort claim. By working with experienced legal counsel and taking appropriate steps to mitigate the risks of tort liability, corporations can protect themselves and their stakeholders from potentially costly and damaging litigation.
-Surbhi Singla
Associate at Aggarwals & Associates
by Aggarwals Associates | May 1, 2023 | Civil Law, Contract Law
Tort Law and Contract Law are two distinct branches of civil law that deal with different types of legal issues. Contract Law is concerned with the rights and obligations arising from agreements between parties whereas Tort Law deals with civil wrongs that cause harm to individuals voluntarily or involuntarily. Some of the key differences between Tort Law and Contract Law:
- Nature of the Relationship: Contract Law involves a consensual relationship between parties, where one party promises to perform a certain obligation in exchange for something from the other party. On the other hand, Tort Law deals with an unconsented relationship where a party’s actions or omissions result in harm to another person.
- Basis of Liability: In Contract Law, the parties are liable for the breach of the terms of the agreement. On the other hand, in Tort Law, the liability is based on the breach of a legal duty towards others.
- Damages: In Contract Law, the damages are generally limited to the losses suffered as a direct result of the breach of the agreement. In Tort Law, the damages can include compensation for various types of losses, such as physical and emotional harm, damage to property, loss of income, and more.
- Standard of Care: In Contract Law, the standard of care is usually defined by the terms of the agreement. In Tort Law, the standard of care is usually based on what a reasonable person would do in similar circumstances.
- Remedies: In Contract Law, the remedies are usually limited to specific performance of the agreement, damages, or termination of the agreement. In Tort Law, the remedies can include compensation for the harm caused, injunctions to prevent further harm, and more.
In conclusion, while Tort Law and Contract Law are both branches of civil law, they differ in terms of the nature of the relationship, basis of liability, damages, standard of care, and remedies available. It is important to understand these differences when dealing with legal issues related to contracts or civil wrongs to ensure that the appropriate legal remedies are sought.
…Surbhi Singla
Advocate at Aggarwals & Associates, Mohali
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