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STUDY 1 FOREIGN EXCHANGE MANAGEMENT ACT,1999

APPLIES TO WHOLE OF INDIA AND PASSED IN PARLIAMENT ON ALSO OFFICES OUTSIDE INDIA IF 29-DEC-1999 OWNED BY INDIA RESIDENT Contains total 49 Sections Controlling authority is RBO

AVERAGE 11-12 MARKS QUESTIONS ARE ASKED FROM THIS CHAPTER

This Act was enacted by repealing the earlier Act called Foreign Exchange Regulation Act, 1973 (FERA). The new Act (called FEMA) was enacted to facilitate foreign trade And foreign receipts/payments and to develop foreign exchange market in India.

Important Definitions
AUTHORIZED PERSON SEC 2 (C) MEANS AN AUTHORIZED DEALER, MONEY CHANGER, OFFSHORE BANKING UNIT OR PERSON AUTHORIZED TO DEAL IN FOREIGN EXCHANGE OR FOREIGN SECURITIES (Asked in jun 2007, jun 2012) Means transaction other than capital account transaction but includes payment due in foreign trade, interest on loan, remittance for living expenses, foreign Travel expenses etc.

Current Account Transaction Sec 2(j)

CAPITAL ACCOUNT TRANSACTION SEC 2 (E) Foreign Exchange Sec 2 (n) Foreign Security Sec 2(o) Person Resident of India Sec 2(v)

MEANS A TRANSACTION WHICH ALTERS THE ASSETS OR LIABILITIES, OUTSIDE INDIA OF PERSONS RESIDENT IN INDIA OR ASSETS R LIABILITIES IN INDIA OF PERSON RESIDENT OUTSIDE INDIA Means foreign currency, and includes deposit, credit, draft, LC, BoE, or any draft/ LC/ BoE drawn by bank/person outside India but payable in Indian currency (Asked in jun 2007) Means any security, share, stock, bond, debenture expressed I foreign currency, even though interest/dividend is payable In India currency Who is residing in India for more than 182 days in preceding Financial Year. However person gone outside India for employment/business for uncertain period and person who comes to India (otherwise than for employment/business for uncertain period) are not person resident in India

Some Special Word/Terms used in this Chapter


LC FII ECB ADR RFC DGFT BoE FCCB GDR Swap KYC FDI LETTER OF CREDIT Foreign Institutional Investors External Commercial Borrowing American Depository Receipt Resident (Foreign Currency) A/c Director General of Foreign Trade Bill of Exchange Foreign currency convertible Bond Global Depository Receipt Exchange Know Your Client/Customer Foreign Direct Investment

Sectoral cap SEBI (SAST) Regulation Merchant Banker PIO Offshore Banking Unit Chit Fund Nidhi Company Asset Reconstruction Company Benami Transaction

Maximum Ceiling of investment which can be made by FII or through FDI in a particular sector say telecom sector, cement sector etc. SEBI (Substantial Acquisition of share and Takeover) Regulation, 2011. An intermediary through Whom all the work relating to issue of share is made. Person of Indian Origin, who himself any time has held Indian Passport or whose either of parents or grandparents were citizen of undivided India. A bank which is located in special Economic Zone (SEZ) by permission of RBI under Banking Regulation Act. A fund in which many person given periodic contribution and after completion of certain period, every contributor is entitled to a prize. A company which accepts deposit from its member or public and doing business of lending money and registered an NBFC A company which is usually formed to takeover nonperforming assets of any bank. Transaction entered by any person not in his own name, but in the name of any fictitious person.

Concept of FEMA
Concisely the whole Act covers all transactions between only two types of person only viz., Person Resident in India and Person resident India. It is depicted in following diagram:

Sec 3 says that following tasks are not allowed to be performed by any person except by permission of RBI 1. Dealing in foreign exchange (however authorized dealer can deal in foreign exchange) 2. Make/receive any payment to /from person resident outside India.

3. Enter into any financial transaction regarding any assets outside India.

Current Account Transaction (Sec 5)


1) Any person can sell/draw foreign exchange to or from an authorized person as current account transaction by complying with FEM(Current Account Transaction) Rules, 2000. 2) Drawl of foreign for travel to Nepal/Bhutan, or for transaction with Nepal/Bhutan or for transaction specified in Schedule-I are prohibited. Schedule-I contains transaction like remittance on export etc. 3) Prior approval of Government is required for transaction specified in Schedule-II, which is given I point no 4 infra. 4) Prior approval of RBI is required for following purpose: i. ii. iii. iv. v. vi. Release of exchange exceeding US$ 10,000 in one calendar year for private visit to any country except Nepal and Bhutan. Gift/Donation exceeding US$ 5000 per remitter/donor per annum. Remittance for maintenance of close relative abroad exceeding net salary or US$ 1 lakh. Release of foreign exchange exceeding US$ 25,000 for business travel/conference. Release of foreign exchange exceeding US$ 5000 for person going abroad for employment for emigration. Release of foreign exchange exceeding for studies abroad or for preincorporation expenses.

Capital Account Transaction (Sec 6)


1) RIB may specify permissible capital account transactions. It may prohibit or restrict: a. Transfer or issue of foreign security, b. Borrowing or lending in foreign exchange, c. Acquisition or transfer of immovable property etc. 2) Person resident in India is allowed to hold, own or transfer foreign currency, foreign security or immovable property outside India, if such currency/security/property was acquired by him when he was resident outside India or inherited from person resident outside India.

3) Similarly person resident outside India can hold, transfer India currency/security or immovable property in India, if acquired by him when he was resident in India or inherited from person in India 4) Following are permissible capital account transaction for person resident in India: a. b. c. d. e. Investment in foreign security, Foreign currency loan, Transfer of immovable property outside India, Maintenance of foreign currency accounts, Sale/purchase of foreign currency derivatives.

However, he can draw foreign exchange from authorized person not exceeding US$ 25,000 per calendar year for above purpose. 1.Following are permissible capital account transaction for person resident outside India: a. Investment in India in security of India company or contribution to capital of Indian firm, b. Acquisition and transfer of immovable property in India c. Foreign currency account in India d. Remittance outside India of capital assets in India However, above transaction shall be within permissible limits. Further person resident outside India cannot invest in India chit fund. Nidhi Company, agricultural or plantation, or real estate business.

Foreign Direct Investment (FDI) in India


FDI can be made either under automatic route or approval route. Following are basic Provision: 1. Prohibition: FDI is prohibited in company engaged in business of chit fund, Nidhi company, agricultural/plantation activities or real estate. However, Real estate here does now include development of township, road etc, hence investment in these sectors is allowed. Further FDI is also prohibited in retain trading (except single brand retail), atomic energy, lottery and gambling. 2. Eligibility: A person resident outside India, other than Citizen of Pakistan and Bangladesh can invest in India subject to FDI policy. Indian companies can freely issue equity shares, convertible instruments subject to prescribed valuation norms. 3. Investment in Various Sectors: Investment in SSI is allowed if the unit is not engaged in prohibited list of business and subject to maximum limit of 24% of

paid-up capital. If SSI issues more than 24% it has to give-up SSI status and thereupon, it cannot engaged itself in manufacturing of item reserved for SSI and it has to comply with prescribed sectoral cap. However, SSI unit which is EOU or operating in FTZ/EPZ etc, can issue has exceeding 34% of paid-up capital. Person resident outside India, other than Foreign Institutional Investor (FII) can invest in equity capital of Assets Reconstruction Company (ARC) up to 49% of paid-up capital. FII can invest in Security Receipt issued by ARC. Foreign investment is permitted in stock exchange, depository etc up to 49% of paid-up capital with prior approval of Foreign Investment Promotion Board (FIPB). Investment from Nepal and Bhutan is permissible if it is made via inward remittance in free foreign exchange through normal banking channel or Non Resident (External) Account (NRE)/ Foreign Currency (Non-Resident) Account (FCNR). India companies can make right/bonus issue subject to sectoral cap and by following SEBI (ICDR) Guidelines at a price which is not lower than price of share offered to residents. In cases of merger/amalgamation, shareholding of person resident outside India shall not exceed sectoral cap, and new company should not be engaged I prohibited list. Listed India companies can issue shares under EDOS/ESPS to person resident outside India subject to approval of SEBI and with condition that face value of share issued under ESOS/ESPS shall not exceed 5% of paid-up capital. 4. Reporting of FDI: India company receiving investment shall report to RBI the name of investor, name of authorized dealer, date of receipt and Government approval within 30 days from date of receipt. Company shall file prescribed form FC-GPR within 30 days from issue of share/convertible security. Part A of this form is signed by authorized dealer, along with certificate that all requirements of Companies Act conditions of Government approval has been complied with and Company is eligible to issue share. Part B is filled annually. Share should be issued within 180 days of receipt of inward remittance; otherwise whole amount has to be refunded.

Transfer of Share/Convertible Security


There is general permission to non-resident and NRI to acquire shares. Person outside India other than NRI can transfer share to any person outside India. However, if the transferee has previous venture or tie-up in India in the same field, he has to obtain prior permission of SIA/FIPB. Person resident outside India can gift any security to person resident in India. He is also permitted to sell the securities on stock exchange in India.

Person resident in India can transfer shares of Indian company (which is not engaged in finance sector) to person resident outside India. Similarly person resident outside India can transfer to person resident in India any securities subject to guidelines issued by RBI. Prior permission of RBI: Person resident in India, making gift of securities to person outside India has to obtain prior permission from RNI. Before granting permission, RNI considers sectoral cap, relationship of donor and donee, value of security. Such gift shall not exceed US$ 25,000 or 5% of paid-up capital of the company whichever is higher. Transfer of share, bond etc of Indian company engaged in financial sector and transactions which attract SEBI (SAST) Regulation require RBI approval if such transfer is from resident to non-resident. Further if the company is engaged in sector falling under Approval Route, or sectoral cap is breached, Governments approval is also required. Conversion of ECB/Royalty into Equity: Indian Companies can convert ECB/Royalties/lump sum payment of know-how etc into equity subject to condition that activities of company is under automatic route for FDI, sectoral is adhered, pricing and other requirements of SEBI is followed. Details of issue of shares shall be reported to RBI in prescribed format.

Issue of Shares by Indian Companies under ADR/GDR


a) Indian companies can issue DR/GDR abroad in accordance with Scheme for issue FCCB and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993, provided it is eligible under FDI scheme. b) Unlisted company has to get itself listed either prior to suck ADR/GDR issue or simultaneously. c) Issue proceed has to be kept abroad till actually required in India. Till that time, the company can invest the fund in rated deposits or treasury bills. d) There is no end use restriction except that, investment in real estate or stock exchange is now allowed. e) Pricing should be not less than high if (i) average of weekly high low price during last six months or (ii) average of weekly high low price during last two weeks.

Direct Investment Outside India

Direct investment by resident in joint venture (JV) and Wholly Owned Subsidiary (WOS) is allowed subject to certain conditions; a) There is prohibition on investment in foreign entity engaged in real estate or banking business. b) Acquisition and sale of share purchased out of funds in RFC account or as bonus is permitted. c) Indian party can invest in foreign JV/WOS not exceeding 400% of its net worth of Indian company. This ceiling is not applicable if investment is made out of Exchange Earners Foreign currency (EEFC) account or out of funds raised via ADR/GDR. d) Indian party can give loan/guarantee only to such foreign entity in which it has equity participation, and subject to cap of 400 percent subject to condition that guarantee should not be open-ended. e) Where investment exceeds US$ 5million, valuation shall be done by Category I Merchant Banker. f) Indian party is also permitted to acquire shares of foreign entity in exchange of ADR/GDR subject to condition that ADR/GDR are listed and backed by underlying equity and it does not exceed sectoral cap. g) Investment in Nepal is permitted in Indian Rupee only. h) Indian party making investment abroad in entity engaged in financial sector will be permitted if it is registered in India and has net profit in last three years and also fulfilled prudential norms of RBI.

Method of Funding:
Investment in overseas JV/WOS can be funded from; a) Drawl of foreign exchange from Authorized Dealer in India. b) Capitalization of export. However export proceeds beyond six months requires RBI approval. c) Swap of shares. d) Utilization Proceeds of ECB/FCCB. e) In exchange of ADR/GDR. f) Balance on EEFC account.

Approval of RBI:
In all other cases of investment abroad, approval of RBI is required. Before granting approval, RBI considers viability of project of both parties, expertise and benefit to India regarding export.

Overseas Investment by Partnership/Proprietorship


Proprietor and unregistered partners can set-up their JV/WOS outside India with prior approval of RBI, subject to condition that: a) Firm is DGFT recognized star Export House of which export is Rs 20 crore or more b) AD bank satisfies the exporter as KYV compliant. c) Exporter has proven track record and not came under adverse notice of Government. d) Maximum investment allowed is 10% of average of three years export realization or 200% of its net owned fund whichever is less.

Investment in Partnership Firm Proprietorship in India


Person resident outside India is not allowed to invest in capital of partnership/proprietorship in India. However, NRI or person of Indian origin may make such investment subject to condition that amount invest is received by inward remittance through normal banking channel , firm is not engaged in agriculture/real estate or print media business and amount shall not be repatriable.

Disinvestment of Share of JV/WOS


Disinvestment is allowed without prior permission of RNI in following cases: a) JV/WOS is listed abroad. b) Indian promoter is either unlisted, or if listed in India then shall have net worth of at least 100 crore. c) Maximum investment is US$ 10 million.

General Permission for Purchase Foreign Securities

Following investments outside India are generally allowed: a) b) c) d) Acquiring foreign securities as gift. Acquiring share under cashless ESOP. Acquiring share by way of inheritance. Acquisition for qualification shares not exceeding 1% of paid-up capital subject to US$ 20.000 p.a. e) Purchase of right share f) Purchase of share of JV/WOS abroad by employee/director of Indian Promoter Company which is engaged in software subject to US$ 10,000 in 5 years further subject to maximum 5% of paid-up capital of that JV/WOS.

Investment in Foreign Securities Other Than by Direct Investment


Indian company can issue FCCB outside India not exceeding US$ 500 million subject to following conditions: a) b) c) d) e) f) g) Issue should confirm to FDI policy including sectoral cap etc. Maximum ceiling limit is US$ 500 million in one financial year. Issue shall be through reputed lead manager. Maturity period shall not be less than 5 years. Issue of FCCR with attached warrant is not permitted. Issue proceeds cannot be utilized for investment in stock market. Financial intermediaries in India like a bank or NBFC are not allowed to access to FCCB, neither they shall provide guarantee for FCCB issue. h) Issue related expenses shall not exceed 4% of issue. i) In case issue exceeds US$ 500 million, permission of RBI is required.

Overseas Investment by trust/Society


Indian trust, which is registered under the Indian Trust Act, 1882 and society, which is registered under Societies Registration Act, 1860 can invest outside India subject to condition that trust deed or memorandum of society contains such authorization and compliance of KYC. Further, such trust or society should be in existence for at least 3 years.

Acquistion and Transfer of Immovable Property Outside India

There is general Prohibition on acquisition/transfer of immovable property outside India by person resident in India without RBIs permission. However, person resident in India may acquire immovable property outside India as gift or inheritance from a person resident outside India. Further, purchase out of foreign exchange held in RFC account is permitted. Indian company, having overseas branch, can acquire immovable property outside India for business purpose or for its staff.

Acquisition and Transfer of immovable Property in India


An Indian citizen resident outside India may acquire immovable property (not being agricultural/farm house) in India; transfer any property in India to person resident in India or citizen/person of Indian origin resident outside India. Similarly person of Indian origin resident outside India may acquire ant immovable property (not being agricultural/farm house) in India. He can acquire property in India by way of inheritance. He can transfer such property to person resident in India or to citizen/person of India origin resident outside India. Person resident outside India, having business place in India can acquire immovable property in India for its business. Resident outside India cannot repatriate outside India sale proceeds of such immovable property in India, without permission of RBI.

Establishment of Branch or Office in India


Person resident outside India has to get approval of RBI for establishing branch office in India. Following are other provisions in this regard: a) Permission of RBI is not necessary if it has taken permission from IRDA or under Banking Regulation Act. b) Permission of RBI is not necessary to establish office at SEZ, subject to condition that it is functioning in those sectors where 100% FDI is allowed and it complies with Companies Act c) It will do only specified activities like export/import, professional, consultancy, research etc. d) He shall be allowed to remit profits of such business outside India.

Export of Goods/Services

Every exporter has to furnish to RBI a declaration of full export value and other particulars as required. However, following exports are allowed without declaration: a) Sample supplied free of cost b) Personal effects of travelers c) Ship store d) Goods/software not exceeding Rd 25,000/- in value. e) Gift not exceeding one lakh rupees in value. f) Aircraft and other goods for repair, subject to their re-import. g) Goods imported free of cost subject to re-import. h) Goods permitted by Development Commissioner of EPZ, EHTP, FTZ etc. The authority, to which such declaration is made, may require other evidence in support of declaration. The export value shall be paid through authorized dealer only. All the export value shall be realized within twelve months from date of export. In case of delay in receipt of payment, RBI may give direction to exporter regarding how to secure payment etc. Where exporter has received advance payment against export, he shall make shipment within one year and rate of interest shall not exceed LIBOR + 100 basis point. All documents of exports shall be submitted to authorized dealer within 21 days. In case of export of goods on lease or hire, or export under special arrangement between Government of India and foreign Government shall be made only with prior approval of RBI.

Realization, Repatriation and Holding of Foreign Currency


a) Person resident in India, to whom any foreign exchange is due or has accrued, shall take steps to realize such money and repatriate to India. b) Upon such repatriation, he shall either sell such exchange to authorized person, or retain upto permissible extent in an account with authorized dealer. c) Foreign exchange due as remuneration or in settlement, or gift or inheritance shall be sold to authorized person within 7 days of its receipt. In any other case, within 90 days of receipt. d) Any person may hold and operate foreign currency account within limits prescribed by RBI. e) As regards possession and retention of foreign currency, following limits are applicable: i. Authorized person can possess foreign currency without limit, ii. Any person can possess foreign coins without limit.

iii.

Any person can possess foreign currency notes not exceeding US$ 2000.

Authorized Person
Authorized person is a person who has got permission from RBI to deal in foreign exchange or foreign securities as authorized dealer, money changer or offshore banking unit. He has to make an application to RBI and comply with directions. Even after permission, RBI can revoke the authorization in public interest after giving an opportunity of being heard. Authorized person shall, before entering into ant transaction, satisfy himself that there is no contravention of any provision. In case of non-compliance of any of direction, he shall be punishable with fine of Rs 10,000/- and further fine of Rs 2000/- every day. RBI shall also have power to inspect business transaction of authorized person.

Contravention and Penalty


Sec 13 provides that any person contravening any provision shall be liable for penalty up to 3 times the contravened amount or Rs 2 lakh. For continuous contravention, penalty of Rs 5000/- per day is prescribed. In addition, the adjudicating authority can confiscate currency or security. If any person fails to comply with order of adjudicating authority or fail to make payment of penalty shall be liable to civil imprisonment. If defaulter is likely to abscond himself, warrant of arrest can also be issued. Appeal against adjudicating officer can be preferred to Appellate Tribunal within 45 days. Directorate of Enforcement and RBI can compound the offence U/S 13 wihtin 180 days. Compounding benefit is available once in a period of three years. Once the offence has been compounded, no enquiry shall be held for such case (Asked in Dec 2006). In case the contravention has been compounded, compounded amount shall be deposited within 15 days.

Adjudication and Appeal

Government can appoint adjudicating authority to hold enquiry either upon complaint or upon its order. Appeal can be preferred to Special Director (Appeals) from orders of Asst. Director/ Dy Director(Appeals) within 45 days. Government has established Appellate Tribunal to hear appeal against order of Special Director(Appeal). Appeal can be made High Court against order of appellate tribunal within 60 days. Government has established directorate of enforcement for investigating contravention under this Act. In case of contravention by company, every person in-charge or responsible to the company, as well as the company shall be deemed to be guilty and liable to be proceeded and punished. Where such contravention is committed with consent or with negligence on the part of director, manager or secretary, they shall also be deemed to be guilty. RBI and Director of Enforcement have power to compound the offence under this Act. For this purpose, the accused person has to make an application along with prescribed compounding fee and thereupon his offence can be compounded.

Summary of Some Important Transactions Covered in this Chapter


PERSON RESIDENT IN INDIA CAN DO ALLOWED LIMIT FOLLOWING TRANSACTION Release of foreign currency for visit to US$ 10000 any country, other than Nepal Bhutan Receiving gift from outside India US$ 5000 per Donor/remitter Release of foreign currency for Business US$ 25000 Travel/conference abroad Release of foreign currency for medical US$ 1 lakh treatment/studies abroad Holding foreign currency, foreign security, Allowed immovable property outside India all of which acquired when he was resident outside India Investment in foreign security, derivative US$ 25000 etc. Transfer of share in Indian company Allowed (other than finance company) to person outside India Making gift of share Indian company Max US$ 25000

Making investment outside India by Indian company Indian partnership/proprietary firm can invest outside India Indian trust or society can invest outside India Acquisition of immovable property by citizen of India or person of India Origin Acquisition of immovable property by person outside India except citizen of India or person of Indian Origin Person Resident Outside India can do following transaction Holding Indian currency, Indian security, immovable property in India all of which acquired when he was resident outside India Invest in India Company, firm or purchase of immovable property in India etc. Invest in India by any person other than citizen of Pakistan and Bangladesh and other than in Retail trading, agriculture, plantation activities, chit fund, nidhi companies (FDI) FDI in SSI Investment in Stock Exchange (i.e. direct holding share of BSE/NSE) by FII Transfer of share from one person to other (both are outside India) Sale or Gift of India security in India

Or 5% of capital of Company Upto 400% of its NW Subject to conditions Subject to conditions Allowed For business Purpose only Allowed Limit Allowed

Allowed up to prescribed limit Allowed up to prescribed sectoral cap Up to 24% of SSI Up to 49% Allowed Allowed

List of Some important Sections of FEMA


SECTION PARTICULARS 3 Regulation of Dealing in foreign exchange, foreign Securities or financial transaction involving foreign exchange. 4 Holding of foreign currency by person resident in India. 5 Current Account Transaction

6 7 8 10 11-12 13 15 16-35

Capital Account Transaction Export of Goods and Service Realization and Repatriation of foreign exchange. Authorized person/authorized dealer Power of RBI to regulate authorized person Penalties Compounding of Offence Adjudication and appeals

FOREIGN CONTRIBUTION (REGULATION) ACT 2010


PASSED IN PARLIAMENT ON 26SEPT2010 Contains total 54 Sections APPLIES TO WHOLE OF INDIA AND ALSO OFFICES OUTSIDE INDIA IF OWNED BY INDIAN RESIDENT. Controlling authority is RBI

The Foreign Contribution (Regulation) Act (FCRA) was originally framed in 1976, but due to change in security scenario, increased information technology, rise in foreign contribution receipts and growth in registered organization earlier Act was repealed by the new Act of 2010. This FCRA 2010 was enacted to regulate acceptance and utilization of foreign contribution and hospitality by certain individuals/associations/companies which can be detrimental to national interest and security

Definitions
CANDIDATE FOR ELECTION SEC 2(D) Foreign Contribution Sec 3(h) Foreign Hospitality Sec 2(i) MEANS A PERSON NOMINATED AS A CANDIDATE FOR ELECTION TO ANY LEGISLATURE Means donation or transfer by foreign source of : - Any article, other than gift for personal use - Any currency, whether Indian or foreign - Any Security Means any offer, either in cash or kind, by foreign source providing cost of travel to foreign country with free boarding, lodging, transport or medical facility.

Foreign Source Sec 2 (j)

Includes: Foreign Government - International Agency, other than UNO World Bank - Foreign Company - Corporation incorporated in foreign company - Company registered under the Companies Act, 1956 of which more than 50% of capital is held by foreign Government or foreign Citizen or Foreign Company - Foreign Trust, Foreign Society - Foreign Citizen Means Association of citizens of India registered with Election Commission of India. -

Political Party Sec 2 (n)

REGULATION OF FOREIGN CONTRIBUTION AND FOREIGN HOSPITALITY


Prohibition to Accept Foreign Contribution (Sec 3) 1. There is restriction on accepting foreign contribution on following person/association etc. a) Candidate for election. b) Columnist, cartoonist, editor, owner of printer of registered newspaper. c) Association engaged in broadcasting of news. d) Judge, Government servant or employee of Government company. e) Member of Legislature f) Political party, its office bearer or organization of political nature. 2. Further following two persons cannot accept foreign contribution from a foreign source on behalf of political party: a) Any person resident in India and b) Any citizen of India resident outside India. 3. There is restriction on a person resident in India, or an Indian citizen resident outside India to delivery and currency, which is received by him from foreign source, to any such person, if that person can deliver this currency to political party. 4. Every person receiving any currency from foreign source on behalf of person referred in Sec 9 shall deliver this currency only to the person on whose behalf he has received it and not to anyone else.

SUPPOSE ABC IS POLITICAL PARTY OR ANY EDITOR OF NEWSPAPER OR A JUDGE ETC. X IS PERSON RESIDENT IN INDIA, Y IS CITIZEN OF INDIA RESIDENT OUTSIDE INDIA AND Z IS OTHER PERSON. NOW SEE: First restriction says that ABC cant accept any foreign contribution from any source at all. Second restriction says that X or Y cant accept any foreign contribution on behalf of ABC Third Restriction says that X or Y shall not delivery foreign contribution to Z if they believe that Z will give such contribution to ABC.

Following are Exceptions of Sec 3 as Specified under Sec 4


Any person receiving foreign contribution shall be allowed to accept it: a) By way of salary, wages or other remuneration in ordinary course of business. b) By way of gift made to him as a member of Indian delegate which is received under Rules made by Government. c) From his relative d) By way of scholarship or stipend etc.

Organization of Political Nature


Government may specify by publication in Official Gazette that certain organization will be called organization of political nature by taking in consideration: 1. Their activities 2. Their ideology 3. Any other ground

Restriction on Foreign Hospitality (Sec 6)


(Asked in Dec 2006) Following person cannot accept foreign hospitality except with prior permission of Government; a) Member of Legislature b) Office bearer of Political Party c) Judge, Government servant of employee of Government company.

However, for emergency medical treatment due to sudden or severe illness, only intimation (and not permission) is required to be given the Government within in one month from receipt of hospitality.

Prohibition on Transfer of Foreign Contribution (Sec 7)


Where a person, who is registered under this Act or has taken prior approval of Government, receives any foreign contribution, he shall not transfer such contribution to any other person.

Utilization of Foreign Contribution (Sec 8)


Every registered person, who has taken prior approval of Government, if he receives any foreign contribution, shall utilize such contribution only for the purpose for which it was received. Such contribution cannot be utilized for speculation purpose. Further such person cannot utilize foreign contribution to meet his administrative expenses exceeding 50% without approval of Government.

Power of Government (Sec 9)


Government can: 1. Prohibit any person/association, other than person specified u/s 3 accept foreign contribution. 2. Require any approval, other than person specified u/s 6 to obtain prior approval or to intimate before accepting foreign contribution. 3. Require any person, other than person mentioned u/s 11 to intimate particulars of foreign contribution received by it. 4. Require any person specified u/s 11 to take permission before accepting foreign contribution Further Sec 10 gives power to Government to prohibit or restrict any person, who has in his possession any article, currency or foreign security, in contravention of this Act, from dealing delivering or transferring it.

Registration on Certain Persons (Sec 11)

Any person having a definite culture, education or religion shall register itself with the Government before accepting any foreign contribution. However such person can accept foreign contribution even if it is not registered if it takes prior approval of Government.

Approval/Certificate of Registration
To get prior approval or certificate of registration from Government, an application in prescribed from along with fee is required to be made to the Government. The Government will check the application and, on being satisfied, will grant approval or certificate within 90 days. In case of rejection, Government will intimate reason of rejection to applicant. Before grant of approval or certificate, Government may consider following factors: a) He has prepared some project for utilization of funds. b) The applicant is not fictitious person or benami. c) He is not convicted for religious conversion or creating communal tension. d) He has not been found guilty of mis-utilization of funds. e) He is not prohibited to receive funds. f) Acceptance of funds will not prejudicially affect sovereignty and integrity of India, public interest, relation with foreign state or religious harmony. g) Acceptance of funds shall not lead to incitement to offence or shall not endanger life of any person. Certificate granted by Government is valid for 5 years and approval is valid for particular purpose only. This certificate can be renewed within 12 months before its expiry. Further, Government has power to suspend the certificate by specifying the reasons which may be: a) Applicant has made some misstatements b) Holder of certificate has violated its terms or violated provisions of this Act or Rules. c) He has not been engaged in any activity or has become defunct. Upon cancellation of certificate , all foreign contribution received and assets created out of it shall vest ion authority prescribed by Government.

Miscellaneous Provisions
Foreign Contribution Through Bank: Every person receiving foreign contribution shall receive it only in such bank account as are specified by him in application and the Bank shall, on receipt of such foreign contribution, intimate the same to prescribed authority.

Intimation: Every person receiving foreign contribution shall intimate the same to prescribed authority the amount, purpose source and utilization of the contribution. He shall also maintain proper accounts of all foreign contribution received and utilized. Every candidate for election, if he receives any foreign contribution before 180 days of his nomination, shall intimate such receipt to Government. Audit: Government can direct audit of the person who received foreign contribution if: a) He has not furnished information as required by Government or by Act or Rules. b) After inspection, Government deem it necessary. Inspection and Search: If Government has a suspicious that any person, political party or association has violated any provisions of this Act or Rules, it may authorize ant officer to inspect any account or records of such person, association or political party. Seizure: Court of Session has power to adjudge seized article, currency or security without any monetary limit. However an opportunity of being heard shall be given to person from whom such article, currency or security is seized. Appeal: Against the order of Court of Session, an appeal can be preferred to high Court within one month. Penalty: Where a person is prohibited by any order of Government violated the prohibition, he shall be punished with 3 years imprisonment or fine. Any person, association or political party, it is accepts foreign contribution in contravention of this Act or Rules shall be punished with 5 years imprisonment of fine, If offence is made by a company, then the company and its officer in-charge will be deemed to be guilty and shall be punished accordingly. Compounding of Offence: Any offence, which is not punishable by imprisonment only, can be compounded before prosecution, once in three years, by prescribed authority.

List of Some Important Sections of FCRA


SECTION 3 5 7 9 PARTICULARS Prohibition on acceptance of foreign contribution by specified person Organization of Political Nature Restriction on acceptance of foreign hospitality by specified person. Power of Government to control foreign contribution, hospitality etc.

33-41

Offences and Penalties

STUDY 2 FOREIGN POLICY


DECLARED FROM TIME TO TIME FOR A PERIOD OF 5 YEARS AVERAGE 3-5 MARKS QUESTIONS ARE ASKED FROM THIS CHAPTER

Following are major objectives of Foreign Trade Policy (FTP) 2009-2014: a) To reverse declining trend of export and to double Indias share in global trade by year 2020 b) Improvement of infrastructure relating to export and lowering transaction cost. c) Recognition of exporters on the basis of their export performance and to permit them to import capital goods free from duty

Some Special Word/Terms used in this Chapter


DGFT EPCG Advance Authorization Status Holder DIRECTOR GENERAL OF FOREIGN TRADE: DEPARTMENT, WHICH CONTROLS WHOLE FOREIGN TRADE Export Promotion Capital Goods: Government allows import of Capital Goods which can be used to produce such finished goods which can be exported later (Asked in Dec 2009) Usually import license is issued by Government on export upto some extent, but under Advance Authorization, we can import first upon fulfillment of export obligation later. Person (or Company) which regularly export upto such amount as prescribed by Government and are granted star status, which means

DFIE Export Obligation Actual User Condition FOB CVD

that they are regular exporter. Duty Free Import Entitlement: Imports are allowed without payment of duty subject to condition that importer will export pre-determined amount of export Minimum value of export, which must be made License can be used only by the person to whom it is granted Free on Board, its price which includes all cost till goods are loaded on ship, but does not include freight and insurance Countervailing Duty. This Duty is levied to counter balance the effect of excise or sales taxes which are not imposed on imported goods.

Special Focus Initiative


To increase Indias share in global trade, following special focus initiatives have been identifies: 1. Market Diversification: New market in Latin America, Africa and some countries of Asia has been identified for export purpose 26 new countries have been identified under Focus Market Scheme. 2. Technological Up-gradation: Export Promotion Capital Goods (EPCG) Scheme is launched to import capital goods at zero rate of duty and Advance Authorization is allowed on export of imported goods on 15% value addition, i.e. Advance Authorization is allowed if a person agrees export worth Rs 115/- on import of Rs 100/3. Status Holder: Status holders have been allowed duty credit of 1% of FOB value of past export. 4. Agriculture and Village Industry: Capital goods imported under EPCG scheme is permitted in Agri Export Zone, Advance Authorization is allowed on export of agro product, town pf export excellence is notified and Vishesh Krishi and Gram Udyog Yojna has been launched. 5. Handloom and Handicraft: Specific finds have been allocated under Market Access Initiative (MAI) and Market Development Assistance (MDA). Duty Free Import Entitlement (DFIE) have been fixed at 5% of FOB value of export and new towns for export excellence have been notified. 6. Gems and Jewellery: DFIE for jewellery and diamonds has been fixed at Rs 300,000 and for rejected jewellery it is fixed at 2% of FOB value of export. Personal carriage limit for jewellery for overseas exhibition has been increased to US$ 5 million. 7. Leather and Footwear: DFIE have been fixed at 3% of FOB value of export and machinery have been exempted from custom duty. Countervailing duty has also been exempted in certain materials.

8. Marine: Import under EPCG has been exempted from export obligation, DFIE have been allowed at 1% of FOB value of export and marine products are considered under Vishesh Krishi and Gram Udyog Yojna. 9. Electronics and IT Hardware: Mai and MDA schemes have been initiated for export promotion. 10. Sport Goods and Toys: These goods have been identified as 3% of FOB value of export and these products comes under fast track clearance under DGFT.

Board of Trade
BOT has been created by Ministry of Commerce and Industry to: a) Advise Government on policy matter regarding export [promotion b) Setting-up and reviewing export performance c) Examining issue, identifying barriers to export and strengthening competitiveness of Indian goods Exports and imports have been made free subject to regulation by Foreign Trade Policy. Item-wise policy has been specified in ITC(HS).DGFT has been empowered to interpret and decide any question or doubt arising in respect of any provision of the FTP.

General Provisions of Export-Import


DGFT specifies whole procedure and exports and imports including licensing requirement and procedures. Further DGFT can exempt any person from any provision of policy or procedure. DGFT can frame any rules to: a) Protect human, animal or plant. b) Protect ant patent, trade mark, copyright or any other intellectual property. c) Protect national treasure, historic or archaeological value. d) Prevent traffic in arms and war etc. Every license, certificate or authorization granted by DGFT usually includes quantity and value of goods, export obligation actual user condition and minimum export/import price. Such license is valid only till specified time. If holder of license fails to fulfill export obligation, DGFT can impose penalty. Government owned State Trading Enterprises (STE) have also been incorporated to export/import certain good.

IEC Number

Import-Export Code number has to be obtained by every person engaged in foreign trade. However IEC is not required for export/import of personal goods, export/import from/to Nepal/Myanmar upto Rs 25,000 and export/import by Government. Application for IEC shall be made in prescribed format to such Regional office of DGFT in which head office of applicant is situated. In case IEC is not used after its issuance, the same can be surrendered.

Export Promotion Measures


1. Assistance to State for Developing Export Infrastructure and Allied Activities (ASIDE): Central Government which does following activities: a) Development of infrastructure for export, like road, power, inland container depot, minor port, effluent treatment facility etc. b) Creation of new SEZ or export promotion parks c) Equity participation in SEZ. 2. Market Access Initiative (MAI): Where Export Promotion Council (EPC), Industry and Trade Associations (ITA), Agencies of State Government of other specified person does following activities, central Government provides MAI by way of financial assistance: a. b. c. d. Market study/survey, publicity campaign, brand promotion. Setting up of showroom or warehouse. Display in International Departmental Stores. Assistance in anti-dumping litigation.

Government provides 25% to 100% financial assistance for above mentioned activities. 3. Market Development Assistance (MDA): It is also a financial assistance to EPC etc for participating at trade fair abroad, export promotion seminars etc. 4. Towns of Export Excellence (TEE): Selected towns producing goods worth 750 crore (150 crore for handloom/agriculture) or more have been identified as TEE. Projects in TEE are given priority for financial assistance under ASIDE. 5. Brand Promotion: Indian Brand Equity Foundation(IBEF) was set-up in 1996 to promote made in India label. Now it has been more strengthened by providing it with more financial assistance. Government will upgrade and modernize its test centres and Regional Sub-committee on Quality complaint (RSCQC) has been established at every regional office of DGFE.

Trade Disputes
If DGFT thinks that any export or import is made in such a manner which is prejudicial to trade relation of India with other country or prejudicial to the interest of other exporters/importers, he may take such action against such exporter ot importer as specified under the Act or Rules.

SPECIAL ECONOMIC ZONES ACT,2005


PASSED IN PARLIAMENT ON 23 RD JUN2005 Contains total 58 Sections APPLIES TO WHOLE OF INDIA

This Act provides for establishment, development and management of Special Economic Zone for promotion of export.

Important Definitions
DEVELOPER SEC 2(G) Domestic Tariff Area Sec 2(i) Offshore Banking Unit Sec 2(u) Infrastructure Facility SEZ MEANS A PERSON WHO HAS BEEN GRANTED A LETTER OF APPROVAL TO DEVELOP SEZ Means the Whole of India but does not include are of SEZ Means branch of a bank located at SEZ and which has obtained permission of RBI under Banking Regulation Act (asked in Jun 2008) Means such infrastructure which are necessary for development so SEZ (e.g. transport, power, water etc) It is an area notified by Government which, through in India, is deemed to be place out of India for trade purpose (Asked in Dec 2006 and Jun 2007)

Establishment of SEZ
Sec 3 provides that SEZ can be established either severally or jointly by Central Government, State Government or any other person. The purpose of establishment of

SEZ is to manufacture goods, providing services, act as free trade zone or for warehousing purpose. Any purpose who wants to establish SEZ, shall identify the area and shall apply to the board of Approval (herein after called the board) and on receipt of approval; he shall also take concurrence of State Government. Central Government need not take any approval of Board to establish SEZ. The Board shall have power to modify or reject the proposal. Any person, who wishes to provide infrastructure facility in SEX, shall apply to the Board after making an agreement with the Developer of the SEZ. On approval of establishment of the SEZ, the Developer of the SEZ shall submit exact details of the identified area to the State Government and the State Government shall, thereupon declare that area to be SEZ. After such declaration, the Board shall authorize Developer to start operation in SEZ.

Guidelines for Declaration of SEZ


Sec 5 provides that the Central Government shall consider following factor before notifying any area as SEZ: a) b) c) d) Generation of Additional Economic Activities Export promotion Promotion of domestic and foreign investment Generation of new employment opportunities etc.

Processing and Non-Processing Area


Sec 6 provides that Central Government may divide the whole area covered by SEZ in: a) Processing area, for manufacturing of goods and providing service. b) Area to be used for trading or warehousing. c) Non-processing area to be used for any other purpose.

Board of Approval

Central Government can appoint the Board of Approval under Sec 8 to perform following functions: a) b) c) d) e) f) g) Promote and develop SEZ. Granting approval with or without modification, rejecting approval. Approving developer or units to enter into foreign collaboration. Approving proposal for providing infrastructure facilities in SEZ. Granting license to industrial undertakings. Hearing and disposing of appeals. Delegating powers to Development Commission

Where the Board is of opinion that a Developer is not able to perform his functions or he violates directions given by the Board, it can suspend the approval granted to the Developer and shall appoint an Administrator for a period of one year to perform in place of Developer. Board shall also have power to transfer the approval to any other person. Before suspension, the Board shall give a notice of 3 months to the Developer stating the grounds of suspension.

Development Commissioner
The Central Government shall appoint Development Commissioner and other staff to perform following functions: a) b) c) d) e) Guide entrepreneurs to establish units at SEZ. Take suitable step to promote exports from SEZ. Coordinate with Government departments. Monitor performance of any unit of SEZ or its developer. To work as officer in-charge of the SEZ and to exercise administrative control. f) To Call information from any unit to monitor its performance.

Single Window Clearance


Central Government shall constitute an Approval Committee for each SEZ for perform following functions: a) Approve import of goods from Domestic Tariff Area. b) Approve services provided in SEZ from Domestic Tariff Area or from a place outside India. c) Monitor utilization of goods/service in trade or warehouse d) Approve, modify or reject proposal of setting-up of any unit at SEZ

Any person, who intends to set-up a unit at SEZ, shall submit his proposal to the Development Commissioner in prescribed form. The Development Commissioner shall forward the same to Approval Committee and the Committee shall approve, modify or reject the application. Person aggrieved by decision of the Approval Committee can prefer an appeal to the Board. If the person to whom approval was granted to set-up unit at SEZ contravenes any terms and condition, the Approval Committee can cancel his approval. Application for setting-up of offshore banking unit can be made to the RBI. Similarly, Central Government has power to approve establishment of International Financial Service centre in SEZ. Sec 19 provides that the Central Government can prescribe a single form for obtaining any type of approval in SEZ and single form of furnishing of returns.

Investigation Etc
Central Government shall also have power to appoint enforcement agency to carry out investigation, search and seizure in SEZ or a unit at SEZ. State Government also has power to establish designated court to try all civil suits under the SEZ. Any person aggrieved by decision of such designated court can prefer an appeal to High Court within 60 days.

Offences
In case of offence is committed by Company, every person on charge of the Company, as well as the Company shall be deemed to be liable. Where such contravention is committed with consent or with negligence on the part or director, manager or secretary, they shall also be deemed to be guilty.

Exemption for Tax and Other Concession


Sec 7 says that import/export of any goods from/to Domestic Tariff Area by any unit of SEZ or a Developer shall be free from such tax as specified in First Schedule. The first schedule contains less imposed by various Acts. Sec 26 provides following exemptions to every Developer: a. Exemptions from Custom Duty b. Exemptions from Excise Duty c. Exemptions from Service Tax d. Duty Drawback benefit to units from which goods were brought to SEZ e. Exemptions from Security Transaction Tax

f. Exemptions from Central Sales Tax g. Exemptions and other benefits under Income Tax Act as specified in Second Schedule (e.g. Sec 10A, 10AA, 80IA, 80IAB, 80LA, 71, 54GA, 115JB etc of the Income Tax Act)

Domestic Clearance
Where any goods are removed from SEZ to Domestic Tariff Ares, such goods shall be liable to duty of customs, anti-dumping duty, countervailing duty etc.

SEZ Authority
Central Government can constitute an authority for each SEZ for perform following functions: a. b. c. d. Development of infrastructure at SEZ Promoting export from SEZ Review functioning of SEZ Establishing a fund for SEZ

Other Provisions
1. Where any court has not been designated and dispute arises, such dispute shall be referred to Arbitration. 2. Every person, employee or resident at SEZ shall be provided with an identity card by the Development Commissioner. 3. Central Government shall have power to make Rules under this Act.

List of Some Important Sections of SEZ Act


Section 2 (za) 3 4 8-9 11-12 Particulars Special Economic Zone Establishment of SEZ Authorization to Developer of SEZ to operate SEZ Board of Approval and its functions Development Committee and its function

13-14 15 26

Approval committee and its function Setting up of unit at SEZ Exemptions to developer and entrepreneur

FOREIGN TRADE POLICY: AT A GLANCE

DAIGRAM

SPECIAL ECONIMIC ZONES ACT, 2005: AT A GLANCE

DIAGRAM..

STUDY 3 THE COMPETITION ACT, 2002


PASSED IN PARLIAMENT ON APPLIES TO WHOLE OF INDIA EXCEPT 13-JAN-2003 JAMMU & KASHMIR Contains total 66 Sections Controlling authority is CCI Average 18-20 marks question are asked from this chapter Competition is a market situation in which seller wants to attract buyers patronage to achieve its business goals. It is a process of economic rivalry between sellers to attract consumers. In a competitive market, every producer has to produce products of good quality and variety so as to attract the consumer. Competition has been deemed to be essential for sustained economic development . Competition helps to minimize the cost by reducing wastage and achieving efficiency in production. In competitive market, price elasticity of demand is high which lead seller to achieve improved productivity and hence, to increase profit. In uncompetitive and less-matured market, anti-competitive practices may take place which may prejudice interest of consumer. There are various reports, theories and books which advocates competition and describe benefits of competition. Competition Law is framed by Government to promote competition market and to prevent anti-competitive measure. India has seen Government intervention in its economy till 1991. After that, Government introduced various economic reforms and allowed deregulation, liberalization and disinvestment. Monopolies and Restrictive Trade Practices (MRTP) Act was framed in 1969 to curb monopoly and to prevent restrictive and unfair trade practices. Where an undertaking is able to production in such a manner to maximize its profit, it is said to have monopoly power. Similarly where there is any agreement by which trade is distorted or flow of capital is restricted, it is called restrictive trade practice. These agreements may include horizontal-vertical price-fixation, market allocation, boycott, exclusive dealing, tie-up sale etc. Erstwhile MRTP Act contained provisions to curb these restrictive trade practices. MRTP also contained some provisions relating to Unfair Trade Practices which were used by certain traders by making distorting and misleading advertisements. The Competition Act was enacted in year 2002 after repealing MRTP Act. AGREEMENT SEC 2(B) Cartel Sec 2(c) INCLUDES ANY ARRANGEMENT OR UNDERSTANDING WHETHER IT IS FORMAL OR NOT, INTENDED TO BE ENFORCEABLE OR NOT Includes an association of producer, seller, distributors or service providers who, by agreement among themselves, limit or control production, distribution, sale or price of goods or services. It may be international cartel, import cartel, export cartel etc. Means goods as defined under Sale of Goods Act and includes product manufactured, processed or mined and debentures/shares Means service of any kind made available to potential user and includes banking, communication, insurance, transport, supply of

Goods Sec 2(i) Service Sec 2(u)

Relevant Market Sec 2 Relevant Geographical Market Sec 2(s) Relevant Product Market Sec 2(t)

electricity, boarding, lodging, entertainment, repair, construction etc. It is determined by Competition Commission with reference to following two basis: A market comprising any area in which conditions of competition for demand/supply of goods/services are homogeneous as compared from conditions of any other area (Asked in Dec 2011) A market comprising of all those products which can be called as interchangeable by a consumer having regard to its character, price or use.

Basic Concept
(Asked in Jun 2007) The whole Competition Act comprises only three basic things, viz: a) Anti-competitive agreement b) Dominant Position c) Combination The Act defines these three terms, makes provisions for control of these types of agreement or position and imposes penalty for violation of provisions.

Anti-Competitive Agreement (Sec 3)


(Asked in Dec 2008, Jun 2009, Jun 2011) Anti-competitive agreement is such which includes restrictions relating to production, supply, storage, distribution etc of goods or services which may have appreciable adverse effect on the competition. Sec 3 prohibits entering into any such type of anti- competitive agreement and declares such agreement as void. Here existence of appreciable adverse effect is a must to declare such agreements void. (Asked in Jun 2007) Sec 3 further provides that following types of agreement, including cartel, shall be deemed to have their appreciable adverse effect on the competitive, which: a) Determines price of goods/services directly or indirectly. b) Limits or controls production, supply market or technological advancement. c) Results in bid rigging or collusive bidding. Bid Rigging/Collusive Bidding(Asked in Dec 2011) means any process by which any bidding process is eliminated or which results in manipulation in bidding process. Where

the bidder pre-determines the price of bidding by making a cartel or otherwise; it can be called bid rigging or collusive bidding, Following are some method by which bidding is manipulated: a) Agreement to submit identical bid by each bidder. b) Agreement as to who will submit lowest or highest bid. c) Agreement not to bid against each other. d) Agreement to get rid of outside bidder by manipulation. e) Agreement to declare bid winner on rotation basis etc. Sec 3 further provides that following agreements shall also be deemed to be anticompetitive: a) Tie-in Agreement: Agreement which require buyer to buy range of products in place of single product. It may also include a condition to buy another product on purchase of one product.(Buy gas stove, if you buy gas cylinder) b) Exclusive Supply Agreement: This agreement includes a condition to deal only and only in the goods/services of a particular person and not of any other person. c) Exclusive Distribution Agreement: Any agreement, which limit the production or supply of any goods/service or which allocate/distribute any market for sale of goods/service. d) Refuse Price Maintenance: (Asked in Dec 2008, Jun 2009, Dec 2012) Any agreement which pre-determines re-sale price by buyer of goods. Here, manufacturer, who sells goods to wholesale dealer, specifies the minimum price at which he should sell to retain dealer. It must be noted that all restrictions imposed by Sec 3 does not extend to any restriction imposed to protect any copyright, trade mark, patent, design or geographical indication. Further the Supreme Court, in TELCO v RRTA has specified following consideration before deciding whether particular agreement is restrictive or not: a) Fact peculiar to business which is sought to be restricted. b) Condition before or after restriction. c) Nature of restriction and its probable effect.

Abuse of Dominant Position (Sec 4)


Sec 4 prohibits an enterprise from abusing its dominant position in market. An enterprises may enjoy dominant position in relevant market in such a way so as to enable it to operate independently of competitive forces or affects its competitors or market in its favour . We have already defined relevant market as relevant geographic market and relevant product market. Further, dominant position is abused if any enterprises: a) Imposes unfair condition in purchase or sale of goods/services or price, including predatory pricing, of such goods/service. b) Imposes restriction on production of goods or services or their technical advancement.

c) Indulge in such practice which result in denial of market access to any person. d) Terminates certain contract subject to such conditions which does not have nay business relation. (Asked in Jun 2008, Dec 2010, Jun 2012) Here predatory pricing means selling of goods or services at a price lower than its cost so as to eliminate or reduce competition. The Competition Commission of India (CCI) has power to decide whether an enterprises enjoys dominant position or not.

Combination (Sec 5)
(Asked in Dec 2006, Dec 2009)Combination is either: a) Fresh Acquisition, or b) Such Acquisition where Acquirer already has control over production, distribution of similar or identical (or substitute) goods/services, or c) Any merge or amalgamation If any of above situation happens, it may be called combination if after above mentioned transaction, both parties jointly have: 1. In India, assets of Rs 1000 crore or more or turnover of Rs 3000 crore or more or 2. In and outside India assets of US$ 300 million or more (including Rs 500 crore in India) or turnover of US$ 1500 million or more ((including Rs 1500 crore in India) OR, if after transaction specified in points a to c supra, the enterprises belongs to a group then in place of point 1 and 2 supra, following limits will be applicable: 1. In India, assets of Rs 2000 crore or more or turnover of Rs 12000 crore or more or 2. In and outside India assets of US$ 2 billion or more (including Rs 500 crore in India) or turnover of US$ 6 billion or more (including Rs 1500 crore in India) (Asked in Dec 2007) Sec 6 prohibits any person from entering into combination which can cause appreciable adverse effect on competition and such combination shall be void. Any person entering into any merger/amalgamation as referred in point (c) supra or acquiring any control as referred in point (a) and (b) supra shall given a notice within 30 days to the CCI. Such merger/amalgamation or acquisition shall be effective only after permission from CCI, and if CCI does

not reply within 210 days, it will be deemed to be permitted. CCI allows such combination if it does not have appreciable adverse effect on competition. However, restrictions of Sec 6 do not apply if an share is subscribed or any finance is given by a public financial institution, foreign institutional investors (FII), bank or venture capital.

Competition Commission of India


Sec 7 gives power to Central Government to establish Competition Commission of India (CCI), which shall be a body corporate having perpetual succession and common seal. It shall have minimum 2 and maximum 6 members, including chairman, which are appointed by Central Government ob recommendation of a selection committee. Members are appointed for 5 years and can be re-appointed up to age of 65 years. Following are disqualification of any member or chairman of CCI. a) Person adjudged as insolvent. b) Person engaged in any paid employment. c) Person convicted of an offence involving moral turpitude. d) Person who is physically or mentally incapable etc.

Duties, powers and functions of CCI are (Asked in Jun 2008):


a) To eliminate trade practice having appreciable adverse effect on competition b) To promote competition. c) To protect interest of consumers.

Director General:
Director General (DG) is appointed to assist CCI in conducting inquiry into violation of any of provisions of this Act. Central Government has power to appoint DG. Assistant/Additional joint or Deputy DG. DG has power of Civil Court like to summon and enforce attendance of a witness, discovery and production of documents, receiving evidence on affidavit etc. He also has power to search and seize any records during investigation.

Inquiry into Anti-Competitive Agreement Dominant Position and Combination


As per Sec 19 in case of any allegation of anti-competitive agreement and dominant position; the CCI may investigate: a) Upon its own motion (suo motu) b) On receipt of information from consumer, consumer association or trade association. c) On reference of Central or State Government. It must be noted that DG can not apply for investigation for anti-competitive agreement and dominant position. If CCI is satisfied that a prima-facie case exists, it can direct to DG to investigate into the matte and report within prescribed time. The report of DG is sent by CCI to all parties concerned, Government and any other statutory authority. CCI can also invite for comments of Government if the case was referred by Government. Sec 20 provides that CCI may inquire into combination having appreciable adverse effect on competition on: a) Its own motion (suo motu) b) Receipt of notice under Sec 6 regarding acquisition or merger/amalgamation. If CCI is of opinion that the combination can have appreciable adverse effect on Competition, then it will issue a show cause notice to concerned parties. On receipt of reply, it will order DG to make a report. After this CCI can issue order to concerned parties to publish a public notice in prescribed manner inviting objections from public. After considering all objections, it can demand further information from concerned parties and finally either allow the combination or order that such combination shall not take effect. For determining whether an anti-competitive agreement is having appreciable adverse effect on competition or not, the CCI can consider following factors. a) Is there barrier to new entry in market. b) Is existing competitors are leaving market. c) Is there is threat to competition in the market. d) What benefits may accrue to consumer by this agreement. e) What are chances of improvement in production/distribution of goods/services. f) What technical or scientific development are expected. To determine dominant position of an enterprise, the CCI can consider following factor. a) Size of enterprise and its share in market as compared to size and share of its competitors.

b) Economic or commercial advantage of enterprise as compared to its competitors. c) Vertical integration of enterprise, i.e. its sales/marketing network. d) Dependence of consumer on goods/services of enterprise. e) Restriction on entry for new competitors in market. f) Advantages or looses to economy due to dominant position of enterprise etc. In addition to above, CCI can consider following factors to determine relevant geographical/product market. RELEVANT GEOGRAPHICAL MARKET RELEVANT PRODUCT MARKET Trade barriers Characteristics of goods service Local requirements Price of goods/service Government procurement policy Consumers preference Transport cost Existence of producers having Language and consumers preference specialization

For determining whether a combination is having appreciable adverse effect on competition or not, the CCI can consider following factors: a) Actual and expected level of competition in market. b) Entry barriers and countervailing power in market. c) Whether any substitute exists in market or not. d) Market share of enterprise after combination. e) Whether combination will result in increase in profit of the enterprise or not. f) Whether benefits of combination is more than its adverse effect.

Reference by Statutory Authority


Where any person claims before any statutory authority that there is violation of provisions of the Competition Act, then that statutory authority can refer the matter to the CCI and the CCI will give its opinion within 60 days to such statutory authority.

Order of Competition Commission


CCI can, after proper investigation, order for following in case of anti-competitive agreement and dominant position under Sec 27: a) Direction to discontinue the agreement or abuse of dominant position, i.e. cease and desist order. b) Direction to modify the agreement. c) Imposition of penalty which may extend to 10% of average turnover of last three years. d) Order to compensate the cost or any other matter CCI can also order for division of the undertaking enjoying dominant position by which following can be provided: a) Transfer of property, rights or liabilities. b) Carry forward, transfer or adjustment of contracts. c) Issue, surrender etc of shares etc. Under Sec 29 to 31, CCI may make following orders regarding combination: a) If combination can have appreciable adverse effect on competition, CCI may direct that it shall not take effect. b) CCI can make combination effective by modifying terms of such combination. c) If parties does not modify the terms of combination, it shall be deemed to have adverse effect on competition. d) However, parties may themselves purpose modification in terms of combination, which can be approved by CCI. e) Once CCI has rejected the combination, then any merger/amalgamation shall not be approved by High Court under the provisions of the Companies Act Sec 32 empowers CCI to inquire and pass orders of any anti-competitive agreement, dominant position or combination is having its appreciable adverse effect on competition even though such agreement is entered outside India or having any party or enterprise outside India or the whole combination takes place outside India.

Appearance and Procedure Before Commission


The complainant defendant to Director General can appear before the CCO either in person or through any CA, CS, CWA or Legal Practitioner practice. CCI is not bound to follow procedures of Civil Procedure Code, but shall have all powers of a Civil Court so as to summoning or enforcing attendance of witness, discovery and production of documents, receiving evidence on oath etc. If a person fails to pay any monetary penalty imposed under this Act then the CCI can make reference to the Income Tax Authority ans penalty can be recovered like income tax.

Miscellaneous Provision
Penalties: any person who fails to comply any provisions of this Act or fail to pay any penalty is liable to imprisonment upto 3 years or fine of Rs.25 crores. Any person who fails to comply with direction issued by DG is punishable with penalty or Rs 1 lakh every day upto maximum Rs 1 crore. Penalty of Rs 50 lakh to 1crore is imposed on giving false information. Where any contravention of this Act is done by a Company, then the Company and its officer in-charge shall be deemed to be guilty and liable to be punished accordingly. Competition Advocacy: (Asked in Jun 2010) Government may ask for opinion of CCI to know possible effect of a proposed policy. The CCI shall give its opinion to the Government within 60 days from such reference. Purpose of Government or CCI is usually to promote competition , creating awareness of competition and providing training for competition. Competition Fund: The Competition Act has provided for creation of the Competition Fund in which Government grant and fee received under this Act are deposited. Money of the fund is applies in the prescribed manner. Competition Appellate Tribunal: Government can establish Competition Appellate Tribunal (CAT) to hear appeal against order passed by CCI. Every appeal shall be made to CAT within 60 days of receipt of order from CCI. This CAT may consist of one chairman and two other member who may hold office for 5years and can be re-appointed till age of 68 year (for chairman) or 65 year (for member).

Cat is not bound to follow procedures of Civil Procedure Code, but shall have all powers of the Civil Court so as to summoning or enforcing attendance of witness, discovery and production of documents, receiving evidence on oath, deciding ex-parts, setting aside any order etc. Any person who contravenes provisions of CAT shall be liable to imprisonment of 3 years or fine Rs 1 crore. Any persons can appear before Cat either in person or through any CA,CS, CWA or Legal Practitioner in practice. Appeal from order of CAT lies to Supreme Court within 60 days from receipt of order from CAT. Powers of Government: Government can exempt any person from any provisions of this Act. Government also has power to issue any direction to any person, to supersede CCI, to make rules and regulation etc. By Sec66 of the Act, the MRTP Act has been repealed, and all pending proceedings under MRTP Act has been transferred to the CCI.

List of Some Important Sections of Competition Act


Section 2(c) 2(f) 4 6 42-48 Particulars Caretl Consumer Abuse of Dominant Position Regulation of Combination Penalties 2(e) 3 5 18-39 Commission Anti Competitive Agreement Combination Power and function of commission

CONSUMER PROTECTION ACT,1986


There are several Acts which seek to indirectly protect consumer like Indian Contract Act. 1872, The Sales of Goods Act,1930, Dangerous Drugs Act, 1930, Drugs and Cosmetics Act, 1940, Prevention of Food Adulteration Act , 1954, LEGAL Metrology Act,2009 etc. But the Consumer Protect Act was first Act which directly aims to protect the consumer. Due to doctrine of caveat emptor and

some other reason, this Act was framed . Following were basic objectives of this Act: a. Right of consumer to be protected against marketing of hazardous goods/services. b. Right to consumer to be informed about quality, quantity, purity, potency and price of goods/services. c. Right to get variety of goods/services at competitive price. d. Right to be heard and get redressal in case of grievance. e. Right to consumer education.

Definitions
Consumer means a person who buys any goods for consideration (whether paid or not) and includes user of such good if he use it with permission of buyer but does not include person who obtains goods for re-sale or commercial purpose; or Person who avails any service for consideration (whether paid or not) and includes user(or beneficiary) of such service if he avails it with permission of buyer but does not include person who obtains services for commercial purpose (Sec 2(1)(d)). In Laxmi Engineering Works VPSG Institute, the Supreme Court held that commercial purpose is a question of fact and using goods or services for his own livelihood is not called commercial purpose. Similar decision was held in Bhupendra Jung Bhadur Guna V Regional Manager. In A Narasimha V LIC it was held that widow of deceased person is beneficiary and hence consumer. Complainant (Asked in Dec 2010) means a consumer, more than one consumer having common interest, legal heir of consumer in case of his death, registered consumer association and Government. Complaint any allegation made in writing so as to obtain a relief by complainant that: a. Unfair or restrictive trade practice has been adopted by trader or service provider. b. Goods bought or agreed to be bought by him suffers from defect(s).

c. Services availed or agreed to be availed by him suffers from deficiency. d. Trader or service provider has charged price in excess of price fixed by law or displayed on goods or agreed. Goods mean goods as defined under Sale of Goods Act, 1930. Sec 2(7) of the sale of Goods Act says that goods includes movable property including stock, shares, growing crop and money. In Morgan Stanley Mutual Fund V Kartik Das it was held that application for allotment of share is not goods. Service (Asked in Jun 2008) means service of every description including banking, insurance, transport, electricity, boarding, lodging, construction, amusement etc, but does not include service provided free of charge or contract of service. In Consumer Unity And Trust Society V State of Rajasthan it was held that patient of Government hospital cannot be called to have received service as it was free of cost. In Indian Merchant Association VVP Santha Supreme Court said that there can be two types of services, one, contract for services, in which one person serves other without being under control of person served, like a professional. Secondly there may be contract of service in which service provider is under full control and supervision of person served, like an employee. Hence contract for services is included in service but contract of service is excluded. If a person says that he has paid taxes to the Government regularly, hence service provided in Government hospital should not be counted free of cost, is wrong. However in State of Hariyana V Santra, the Supreme Court held Government responsible for deficiency in family planning treatment by medical officer. It must be noted that taking mediclaim insurance is not called free of cost. In Alex Rebello V Banglore University it was held that university is not service provider if it takes exams. Restrictive Trade Practice (Asked in Dec 2006) means a trade practice which can manipulate price or supply of goods or services and has impact of imposing unjustified cost on consumers, and includes: a. Delay in supply of goods which can result in rise in price. b. Any trade practice which force consumer to buy a goods as a pre-condition to buy another goods. Defect (Asked in Jun 2011) means any fault, imperfection or shortcoming in quality, quantity, potency, purity or standard which required to be maintained as per provisions of any law or which is claimed by trader in relation to any goods (Sec2(1)(f)). Deficiency (Asked in Dec 2008, Jun 2009, Jun 2012) means any fault, imperfection or shortcoming or inadequacy in quality, nature and manner of performance of service which is required to maintained as per provisions of any law or which is claimed by service provider in relation to any service (Sec2(1)(g)).

In LIC V Bhavanam Srinivas Reddy, negligence in settlement of insurance claim was held to be deficiency. In Punjab National Bank B KB Shetty, bank was declared responsible for loss of ornaments form locker. Similarly in N Prabhakaran V Southern Railway, Railway was held responsible for not providing cushion seat in first class compartment. Railway was also held responsible to wrongly penalize a passenger who sat on train with permission of TTE (Bhaskar Chowdhary V Dr. Pramod Kumar Agarwal) However in Pradeep Kumar Jain V Citi Bank, the bank was not held responsible for non-renewal of insurance policy even though post dated cheques were given. Similarly cancellation of train due to riots was also not held to be deficiency in Dainik Rail Yatri Sangh V Northern Railway.

Consumer Protection Councils


Central Consumer Protection Council (Sec 4): Central Council shall be established by Central Government of which chairman shall be Minister of Consumer Affairs. State Consumer Protection Council (Sec 7): State Council shall be established by any State Government of which chairman shall be Minister of Consumer Affairs of that state. District Consumer Protection Council (Sec 8A): District Council shall be established by State Government in every district in the state.

Redressal Agencies
Every complaint under this Act must be made within 2 years from the date on which cause of action arises. District Forum is established under Sec 9 in every district of a State by State Government in which a person, who is qualified to be a District Judge, is appointed as president and two other person prescribed qualification are appoint as members. Person convicted of any offense, insolvent, of unsound mind etc are disqualified to be members. Every member of District Forum can be appointed for 5 years and can also be reappointed till age of 65. Jurisdiction of District Forum is to entertain complaint where value of values of goods or services does not exceed Rs 20 lakhs. Further, it will accept complaint only if within the local limit of the District, the defendant resides or has office or cause of action arises. In Dynavox Electronics P Ltd V BJS Rampuria College where goods were delivered and installed at different place, it was held that cause of action arise partly at both places.

State Commission is established under Sec 16 in every State by State Government in which a person, who is qualified to be judge of High Court, is appointed as president and two Person convicted of any offence, insolvent, of unsound mind etc are disqualified to be a members. Every member of District Forum can be appointed for 5 years and can also be reappointed till age of 67. State Commission entertains complaint where value of goods or services exceeds Rs 20 Lakhs but does not exceed Rs 1 crore. Further it has jurisdiction to hear appeal against the order of District Forum within the State. However, before filing appeal, the appellant has to deposit Rs 25,000 or 50% of amount appealed against. State Commission also have revisionary jurisdiction. State Commission can, either on its own motion, or on application of complainant transfer any case from one District Forum to another. National Commission is established under Sec 9 by Central Government in which a person, who is qualified to be judge of Supreme Court, is appointed as president and two other person of prescribed qualification are appointed as members. Person convicted of any offence, insolvent, of unsound mind etc are disqualified to be members. Every member of District Forum can be appointed for 5 years and can also be reappointed till age of 70. National Commission entertains complaint where value of goods or services exceeds Rs 1 crore. Further it has jurisdiction to hear appeal against the order of State Commission. However, before filing appeal, the appellant has to deposit Rs 35,000 or 50% of amount appealed against.

Procedure for Filing Complaint


Complaint shall be filed by complainant as defined earlier, and must be accompanied by prescribed fee. This complaint is admissible or not, is usually decided within 21 days by District Forum/State Commission. If complaint is admissible, its copy is sent to file his reply within 30 days. This period of 30 days can be extended by more 15 days. If opposite party admits, case is decided on the basis of material record, but if opposite party denies then alleged fault in goods is determined by sending goods to prescribed laboratory for test. Where goods are not available; or testing is not possible, case is decided on the basis of evidence shown by both parties.

Power of Redressal Agencies


All the redressal agencies shall have all powers of a Civil Court so as to summoning or enforcing attendance of witness, discovery and production of documents, receiving evidence on oath, etc. They also have power to issue written order for entry and search of any place or seize any books, account or any other thing.

Where the complaint has made frivolous claims, he can be held liable to pay Rs 10,000 towards penalty. District Forum, State Commission o National Commission can pass following orders if goods are found defective or services are found deficient (Asked in Dec 2008): To remove the defect or to replace the goods. To remove deficiency in service. To return the price paid by consumer along with compensation for loss or injury. To discontinue restrictive and unfair trade practices. To withdraw hazardous goods from sale and not to offer such goods for sale in future. To cease manufacturing of hazardous goods and not to provide hazardous services in future. To issue corrective advertisement to counterbalance negative impact created by misleading advertisement etc.

Appeal
Any person aggrieved by order of District Forum can prefer appeal to State Commission within 30 days. Similarly appeal against State Commission can be filed before National Commission within 30 days. As we have seen earlier that before filing of appeal, the appellant has to deposit 50% of amount of Rs 25,000/35,000 with appellate authority.

Some Important Cases


Consumer Court has jurisdiction to entertain complaint even though agreement contained arbitration clause (N K Modi V Fair Air Engineering P Ltd) Failure to provide basic facilities in swimming pool training conducted by a school, which charges fee from participants for such raining was held as deficiency in service in Shashikant Krishnaji Dole V Shikshan Prasarak mandali In Indian Airlines V Dr Jitesh Ahir, a compensation of Rs 40,000 was awarded to a air passenger, who injured while strepping down from a ladder, which was suddenly removed by airlines In Ravneet Singh Bagga V KLM Royal Dutch Fintimes, airlines was not held guilt because it acted in good faith and also offered compensation to its passenger as passenger missed his flight due to some mistake in visa. A homeopathic doctor was held liable for practicing allopathic medicines (Poonam Verma V ashwin Patel). In Gopi Ram Goyal V National Heart Institute, doctors were not held responsible for death of a patient because they exercise proper care and diligence.

Where the passenger fell down from a running trail while passing through vestibule passage (i.e. passage between two connecting coaches), it was held that it was not rail accident, rather it was due to lack of safety by Railway, hence compensation was awarded. (Union of India V Nathmal Hansatria) In Harshad J Shah V LIC, the insured person paid his insurance premium to LIC agent, but agent failed to deposit the same with LIC. Hence, it was not fault of LIC, because agent does not have power to receive premium on behalf of LIC. In National Insurance Co V Seema Malhotra, where cheque of insurance premium was dishonoured and meanwhile insurance claim arose due to accident of car. Insurance company was not held liable because fault was on the part of insured person. Where University did not provided degree of LLB to a student due to nonrecognition of college was held responsible and was liable to pay compensation to student. (Sreedharan Nair N V University of kerala)

List of Some Important Sections of Consumer Protection Act


Section 2(1)(B) 2(1)(f) 4 9 19 27 Particulars Complaint Defect Central Consumer Protection Council Establishment of District, State and National Forum Appeal to National Forum Penalties Section 2(1)(d) 2(1)(g) 7 15 23 Particulars Consumer Deficiency State Consumer Protection Council Appeal to State Forum Appeal to Supreme Court

COMPETITION ACT, 2002: AT A GLANCE DIAGRAM

STUDY 4 MANAGEMENT OF INTELLECTUAL PROPERTY RIGHTS

Average 20 marks questions are asked from this Chapter


Properties are of two kind viz., tangible and intangible, Intellectual properties are those intangible properties which arise by virtue of creation of human mind and intellect. It includes rights relating to literary artistic work, invention, scientific discovery, industrial design, trademark etc. Industrial Property includes invention of new solution to technological problems and design i.e. aesthetic creation to present the appearance of industrial product. Patent grants monopoly status to its holder to regulate production, supply and price of patented product. Trade Mark consists of world, letter etc which distinguishes goods of one producer from similar goods of other manufacturer. Copyright gives the holder exclusive right to reproduce or distribute goods. Particularly it is related to print, sound, films etc. Industrial Design is some patter for manufacture of product, like design of particular bike or bottle of beverage.

THE PATENTS ACT, 1970


Passed in Parliament on 19-sept-1970 Contains total 163 Sections Applies to Whole of India

Some Special Word/Terms used in this Chapter

PCT Anticipation

Patent Cooperation Treaty, i.e. agreement between many Countries to make patent effective in all such agreeing countries. If any person has described something in his specification which applicant has also described, it is called that claim of applicant has been anticipated (hence the claim may not be new) Details containing particulars of patent applied. But it is not finalized yet due to lack some information (Asked in Dec 2009) It contains full description of patent i.e. its name, best method of performance, name of inventor etc (Asked in Dec 2009) Where invention involves some technological advancement as compared to existing knowledge, it is inventive step. (Asked in Dec 2012)

Provisional Specification Complete specification Inventive Step

Invention
As per section 2(j) invention means any new and useful product, substance or art, process, method of manufacture or any machine, apparatus etc and includes any improvement in any of them. Sec 3 provides that following, although they may come under above definition, are not inventions (Asked in Jun 2007, Jun 2008, Jun 2009, Dec 2011): a. Invention which are frivolous or country to natural laws. b. Invention, commercial exploitation of which may be against public order or morality. Mere discovery of a scientific principle or discovery of living or nonliving thing in nature. c. Mere discovery of new form of known substance, not resulting in increasing its efficacy or mere discovery of new use of known process. d. Discover of new admixture by merely aggregating properties of other known substances. e. Mere re-arrangement or duplication of known devices.

f. Method of agriculture or horticulture. g. Medicinal or surgical process for treatment of human or animal so as to render them free of disease or increasing their economic value. h. Literary, dramatic, musical or arrtistic work. i. Method of performing mental act, method of playing game

Who Can Apply for Patent (Sec 6)


Following person can apply for patent: (Asked in Jun 2008) 1. Any person claiming as true and first inventor 2. Any person being the assignee of person claiming to be first inventor. 3. Legal representative of deceased person mentioned in 1 or 2 supra

How To Apply
A. Following points must be taken in mind 1. Sec 7 requires every application for patent should be made for one invention only. Every international application under Patent Cooperation Treaty (PCT) filed designating India, shall be deemed to be application under this Act. 2. Along with application, specification regarding patent should be filed. Where provisional specification is filed, then a complete-specification shall be filed within twelve months. 3.Where two or more applications in the name of same applicant is filed with provisional specification, the Controller may allow filing of only one complete-specification if all application relate to single invention. 4. Where application is accompanied by complete-specification, Controller may make a direction within 12 months to treat such specification as provisional.

B. Content of Specification (Sec 10)


(Asked in Jun 2009) All specification whether provisional or complete, must describe the invention by starting its title and subject matter. Every complete-specification must describe following:

a. Full description, operation and method of use. b. Best method of performing the invention, which claimant wants to protect. c. Claim of claimant d. Abstract of technical information. In case application relates to biological material, the applicant shall deposit the same to the Controller and the Controller may for providing better explanation of points a and b above, deposit the material to an International Depository Authority.

C. Publication of Application
Usually application are not open to public for inspection, however applicant may request the Controller to publish his application before expiry of prescribed period. Controller shall publish such application unless where secrecy is required. Publication shall includes date of application, number of application, name and address of applicant etc. From this date publication, the applicant shall have same privilege and rights as he has been granted the patent. This right is available till date of actual grant, or rejection of application. However, applicant cannot institute any proceeding for infringement.

D. Request for Examination


Application for patent cannot be examined unless applicant or any other interested person makes a request for examination. Where such period, application is treated to be withdrawn. Under Sec 12, when request for examination has been made, Controller shall make reference of specification and other documents to an examiner to make a report on following:

a. Whether application is in accordance with provisions of this Act. b. Whether objection can be made for the applied patent c. Results of examination or investigation

E. Search for Anticipation


Sec 13 says that examiner shall make investigation regarding: a. Whether invention has been anticipated publication before the date of filing of complete-specification by applicant. b. Whether the invention is claimed in any other claim or complete-specification published on or after date of filing complete-specification by applicant.

F. Report of Examiner and Consequences


Where examiner gives adverse report which may require amendment, the Controller shall communicate the same to the applicant. Further, the Controller may either refuse the application or direct the applicant to amend the specification. Controller can also direct to post-date the application if applicant makes a request for a date which cannot be more than six months. Where Controller is of opinion that applied invention has been anticipated he can refuse the application. However, he shall not refuse if applicant either shows his early priority date or amends his complete- specification. Where Controller is of opinion that applied invention is already claimed in any other complete-specification he can direct that reference to that other completespecification shall be inserted.

G. Potential Infringement (Sec 19)


(Asked in Dec 2011) where controller is of opinion that applied invention cannot be performed without potential infringement or other patent, he can make direction that

reference to that other patent shall be inserted. However, where applicant shows grounds of his claim or amend his complete-specification, Controller shall not insert such reference. Where reference to other patent as above has been inserted, Controller can delete the reference if: a. That other person is revoked b. Complete-specification of that patent is amended. c. That other patent is invalid

H. Other Provisions
Where a person, before grant of patent, claims and shows to the satisfaction of Controller that because of some agreement, claimant is also entitled to undivided share of that patent, the controller may direct that the patent shall be proceeded in the name of claimant or in joint of applicant and claimant. Controller gives such direction only if following conditions are satisfied: a. Copy of the said agreement is given to controller, b. Invention is identified c. Rights of claimant for that patent has been established Where an application is made by joint applicants and before grant of patent, one of the applicants dies, then controller may direct the application to proceed in the name of survivor, if consent is given by legal representative of deceased applicant. Where application does not complies with all requirements of this Act within prescribed time period, application for patent is deemed to have been abandoned. Where in the course of proceeding, any document has been returned by Controller, the applicant has to re-submit those document after due compliance.

Powers of Controller
(Asked in Jun 2012) Powers of Controller can be summarized as: 1. Controller can refuse the application or require applicant to modify the application if: a. Application or specification does not comply with requirement of Act or Rules b. Invention is such is not patentable c. Application is made in violation of any other law

d. Invention has been anticipated 2. Controller can order for division of application if one application contains more than one claim for patent. 3. Controller has power to change the dte of application 4. He has power to add reference of other patent incase of potential infringement etc.

Anticipation
Sec 29-34 deals with application and says that existence of following situation only will not be called as anticipation: 1. Anything published before priority of relevant specification published by applicant 2. Communication of invention to Government for investigation of the same 3. Public display of invention with permission of first and true inventor 4. Working of invention within one year before priority date of relevant specification, etc.

Opposition to Patent
(Asked in Dec 2006 and Jun 2010) As per Sec 25, after publication but before grant of patent any person may apply in writing to Controller his opposition to the patent on the following grounds: a. The application has been wrongfully obtained invention from him b. Claimed invention has been already published before priority date in any other document c. Claimed invention is published in a claim of other complete specification on or after priority date of applicants claim. d. Claimed invention is publicly known or publicly used in India before priority date. e. Complete-specification does not sufficiency describe the invention, or it does not disclose the source of biological material

f. Complete-specification does not sufficiency describe the invention, or it does not disclose the source of biological material g. In case of convention application, the application was not made within twelve moths from first application. h. Claimed invention is anticipated having regard to knowledge available in India or elsewhere. Further any interested person can give notice of opposition to Controller after of patent and up tone year on same grounds as mentioned above. Sec26 provides that if opponent makes request, the controller may make direction that patent shall be proceeded in the name of opponent. Where any notice of opposition is given under Sec 25 to Controller, then he shall notify the patentee shall constitute an Opposition Board. This board shall conduct the examination of opposition.

Secrecy Direction
(Asked in Dec 2006) Where Central Government has notified class of an invention as secret for defense purpose, the Controller shall give direction for prohibiting publication of any information regarding that class of patent. The Controller shall give notice of application of such patent to the Government and there upon Government shall decide whether publication of information is prejudicial defence of India or not. Any secrecy direction issued by Government can be reviewed periodically.

Grant of Patent
Application for patent, if it is in order and not refused and not found to be in contravention of any provision of the Act, it shall be granted under the seal of patent office with date. Where patent is not opposed or where opposition has ended in favour of

applicant. Controller will grant the patent. Controller shall publish the fact that patent has been granted. Sec 47 specifies some condition subject to which patent can be granted, viz (Asked in Jun 2007, Dec 2008 and Dec 2010): a) Any machine or articles of which patent has been granted can be imported by Government. b) Ant process of which patent has been granted can be used by Government. c) Any machine or article of which patent has been granted can be used by any person for experiment or research purpose. d) Sec 53 provides that term of patent shall be twenty years from the date of application, which can be renewed on payment of renewal fees (Asked in Dec 2007, Jun 2008 Dec 2008, Jun 2010 and Jun 2011).

Miscellaneous Provisions
Patent of Addition (Sec 54) (asked in Dec 2008, Jun 2010 and Jun 2011) Where application is made for improvement or modification of the main invention. Controller may grant the patent for improvement . However, where the application for improvement is subject to an independent patent, the Controller may revoke the patent of addition cannot be revoked simply because it does not involve any inventive step. The patent of addition is granted for equal term of that of unexpired period of original patent.

Restoration of Lapsed Patent


(Asked in Dec 2007 and Dec 2010) Where patent is expired because of non payment of renewal fees, it can be restored if application is made within 18 months from date of expiry. If Controller is satisfied that failure to pay renewal fees was unintentional, he shall publish the application of restoration and thereupon any person can oppose it in the ground that:

a) Failure to pay fees was intentional or b) Application for restoration has been made after undue delay.

Where patent is restored, patentee will get same rights as earlier, subject to such conditions as may be specified as may be specified by Controller.

Surrender and Revocation


(Asked in Dec 2012)Where the patentee wants to surrender the patent, the Controller shall publish his offer of surrender any interested person, thereupon, can oppose it. Where Government is satisfied that patent relating to atomic energy has been granted, it may direct the Controller to revoke the patent.

Register of Patent
At patent office, a register of patent is kept wherein name and address of patentee is entered. Further any information regarding transmission, assignment or license of patent is also entered in the register. This register is open for inspection of public on payment of prescribed fee.

Working of Patent
(Asked in Dec 2012) Patent are granted to encourage invention and for commercial utilization in India, and not merely to enjoy monopoly. Hence it is necessary to ensure that patent granted do not impede protection of public health and are not abused by patentee. Otherwise Government can take any action in public interest.

Compulsory License
1. After three years from sealing of patent, any interested parson can apply to Controller from grant compulsory license on following grounds (Sec 84): a) Requirement of public has not been satisfied, b) Patented item is not available to public at reasonable price, c) Patented invention is not worked in India. Person applying for compulsory license has to state the manner in which he is interested. Controller will grant license upon such terms as he thinks fit he is satisfied about above grounds. Before granting license Controller will consider measures taken by patentee himself for production of goods, ability of applicant and efforts by applicant to take license directly from patentee. As regards point (a) above, requirement of public is deemed as not to have been satisfied trade in India is prejudiced or demand of public is not me or patented invention is not worked up to adequate extent. 2. Where manufacture or sale of a material which is not protected by patent is wrongfully affected due to conditions imposed by patentee, the Controller can grant compulsory license to person who is using unprotected material. (Suppose, mobile is not protected but mobile charger is patented, as mobile cannot be used without its charger, Controller can give compulsory license of charger to person who want to manufacture mobile). 3. Where two or more patents are held by same patentee and demand of public is not met as regards any one of the product and if such product cannot be worked without infringement of other, then, controller can grant compulsory license. (for Example, A is patentee of mobile and charger, then any person having license or manufacture mobile can get compulsory license of charger) 4. Where, due to national emergency or extreme urgency, Central Government is satisfied that compulsory license should be granted, then upon declaration of Government, Controller shall grant license to the persons who are applying for the same. 5. Where a country is having insufficient supply of any pharmaceutical product for export to such countries.

While granting compulsory license, Controller considers following points: a) Reasonable royalty or other remuneration payable to patentee. b) Invention is used to fullest extent. c) Patented item is available to public at reasonable price. d) License granted is non-exclusive and non-assignable.

Revocation of Patent for Non-working


If within two years from grant of compulsory license, if patented invention is not worked then Government or any interested person can apply Controller to revoke the patent. Application should state nature of interest of person making application and reasons for making application. The Controller shall give copy of the application to the patentee and oppose the same.

Controller
The Controller shall have powers of Civil Court like, to summon and enforce attendance of a witness, discovery and production of documents, receiving evidence on affidavit, review of its decision setting aside order, passing interim order etc. Controller has power to amend application of patent or complete specification to correct clerical mistake if such request made to him.

International Arrangement
(Asked in Dec 2012) Sec 133 to 139 provides for recognition of patent internationally. Accordingly, convention country is that country which is signatory of any bilateral/multilateral treaty or convention. Convention country gives same rights to patentee of other countries as are available to patentee of his country.

Where any country which is notified by India to be convention country does not give citizen of India same right which available to its own national, then citizen of such country shall also not be entitle to apply for patent/license or registered as assignee in India. Where a person makes application for patent in convention country, he can make application under this Act within 12 months.

Patent Agent
(Asked in Jun 2011) Patent agent is a person who performs the works relating to drafting of specification, making application and other related work regarding patent. Sec 126 prescribes qualification of Patent Agent like, he should be citizen of India, having degree in science or other equivalent as prescribed by Government and has passed qualifying exam conduct for this purpose. Patent agent can practice before the Controller.

Appeal & Penalties


Appeal can be made to High Court within 3 months fro specified orders of the Controller. Such appeal shall be disposed off the High Court within 12 months. Any person who fails to comply with direction of Controller, or who makes any false entry in any register maintained under this Act shall be punishable with imprisonment of 2 years or fine. Similarly if any person false claims that he has patent of any product, he shall be punishable with fine of Rs 500/-

List of Some Important Sections of The Indian Patents Act


SECTIONS PARTICULARS 2 Convention Application 3 What are not invention 9 12 25-26 35-42 53 60 83 118-124 Provisional and Complete Specification Examination of Application Opposition of Patent Secrecy Direction Terms of Patent Restoration of Lapsed Patent Working of Patent Penalties SECTION 2(h) 6 10 15-20 29-43 43 54 63-64 84 133-139 PARTICULARS Invention Who can apply for patent Contents of Specification Certain Powers of Controller Anticipation Grant of Patent Patent of Addition Surrender and Revocation of Patent Compulsory License International Arrangement

THE TRADE MARKS ACT, 1999


PUBLISHED ON 30-DEC-1999 Contains total 159 Sections APPLIES TO WHOLE OF INDIA Latest amended in year 2010

Trade mark is a mark affixed on any goods or service which distinguishes goods/service of one manufacture from similar goods produced by other manufacturer. A trade mark affixed on any goods/service makes impression in mind buyer it contains a given quality.

CERTIFICATION TRADE MARK SEC 2(1)(E)

Trade Mark Sec 2(1) (zb) Well-Known Trade Mark Sec 2(1)(zg) Collective Mark Sec 2(1)(g)

MARK CAPABLE OF DISTINGUISHING THE GOODS/SERVICES WHICH ARE CERTIFIED BY PROPRIETOR IN RESPECT OF ORIGIN, MATERIAL, QUALITY ETC FROM GOODS/SERVICES NOT SO CERTIFIED (ASKED IN JUN 2007, DEC 2009 AND DEC 2010) Mark capable of represented graphically and capable of distinguishing goods/services of one person from those of others. It shows a connection between goods and person. A mark, which is so well-known to public which regularly uses such kind of product, to indicate connection of mark and goods with its producer. Mark used by member of an association of person (but not partnership firm) (Asked in Dec 2008, Dec 2009 and Dec 2011)

Procedure for Registration of Trade Mark


Government has established Trade Marks Registry under Sec 3 known as Controller General of Patent, Design and Trade Marks, where application for trade marks can be made. Trademark is granted for several classes of goods or services. Registration of trade mark is prima facie evidence that all requirements of this law has been duly complied with (Asked in Jun 2010 and Jun 2012). A register of trade mark is kept at head Office of Trade Mark Registry. An application for registration of any trade mark can be made under Sec 18 by the person claiming to be proprietor. Such application can be rejected for two reasons:

Absolute Grounds for Rejection


Registrar can reject the trade mark application under Sec 9 on absolute ground on following basis:

a) If mark is devoid of any distinctive character. E.g. where any character of any language or any shape has not been especially designed or visible. b) Any mark which shows just kind, quality, quantity or intended purpose of any goods, e.g. trademark of any goods cant be 500 grams c) Mark consisting of marks or indications which are customary in current language, e.g. OMG (abbreviation of Oh My God) cannot be trade mark d) However where trademark which bears distinctive character because of its use, or is well-known to public is allowed, e.g. Sugar-free mark shows just quality but still allowed because this product is well-known to public e) If a mark is capable to deceive or cause confusion to public, or hurt religious susceptibility, or is obscene, it will not be registered. f) Mark consisting of shape of natural goods (e.g. Neem leaf) or such shape which is necessary to obtain a given technical result shall not be registered.

Relative Grounds for Rejection


Sec 11 (as amended by Trade Mark (Amendment) Act,2010) provides that Registrar will reject the trademark application on relative grounds which are: a. Where mark is identical and affixed to similar goods or service, e.g. Lux washing powder b. Where mark is similar and affixed to identical or similar goods or service, e.g. Nirama washing powder (Original is Nirma) c. Where mark is identical or similar and affixed to goods which are not similar, if such mark is well-known to public e.g. Lux shoes d. Where marks use is prevented by law of passing-off or copyright However, Registrar shall not reject any application for trade mark on the grounds specified in point c and d supra, unless an objection is raised by proprietor of earlier trade mark. Sec 14 provides that if any mark falsely suggests a connection with a living person who died within 20 years prior to application of trade mark, then Registrar can demand consent of such person or his legal representative.

Registered Trade Mark


Sec 20 says that whenever an application for trade mark is field with Registrar, he shall publish the same in prescribed manner. Any person can oppose such application within 3 months from date of advertisement. If application has not been opposed, or if opposition have been decided in favour of applicant, trade mark is granted. Tenure of trade mark is of 10 years with provision for renewal from time to time for further period of 10 years (Asked in Jun 2009). Where trade mark is not renewed after 10 Years, it can be removed by the Registrar, which can be restored within 1year from the date of removal (Asked in dec 2007). Where a proprietor of trade mark applies for another mark which is identical or similar to earlier registered trade mark, Registrar may allow such mark to be registered as associated trade mark. Original registration is prima facie evidence of its validity; however where a person is using mark similar to registered mark from prior date, owner of registered mark cannot interfere. IN case of unregistered mark, owner can sue only for passing-off but not for infringement. Generally, ownership of mark is governed by priority of use. Prior sale of goods is sufficient to establish priority .

Infringement of Registered Trade Mark


(Asked in Dec 2006, Jun 2009 and Jun 2012) Sec 29 provides that if a person who is not registered proprietor of mark uses a mark which is identical or deceptively similar to registered trade mark, it is called infringement. Further, registered trade mark is infringed if:

a. Mark is identical and used in respect of similar goods/services, or b. Mark is similar and is used in identical or similar goods/services, or c. Mark is identical and is used in respect of identical goods, and It is likely to cause confusion on the part of public. Further, following action is also called infringement; a. Mark is identical or similar to registered trade mark and used in respect of goods which are not similar, b. Using someone elses trade mark as his trade name as dealing with similar goods. c. Affixing someone elses trade mark to goods or packing or using such mark in business papers or advertisements.

What is Not Infringement of Trade Mark:


(Asked in Jun 2008) Where mark is used with honest business practice without taking unfair advantage, it is not deemed to be infringement. Following acts are not infringement: a. If trade mark is used to indicate kind, quality or quantity etc of any goods/service. b. If trade mark was registered subject to certain conditions. c. Where mark is used in such types of goods/services for which owner of that market had impliedly consented to its use. d. Registered trade mark can be used in relation to parts and accessories to other goods/services. The Supreme Court in Mahindra & Mahindra Paper Mill V Mahindra & Mahindra Ltd said that to determine similarly of two trademarks, nature of mark, nature of goods, extent of resemblance etc must be taken into account.

Assignment and Transmission


(Asked in Jun 2007 and Jun 2011) Sec 37 says that registered proprietor of trade mark can, at any time, assign his trade mark. The Act also provide for assignment of unregistered trade mark. In case of assignment of registered trade mark without goodwill, assignor ahs to obtain permission of Registrar and has to publish advertisement.

Other Provisions
Proposed Use by Company to be Formed: As a general rule, trade mark is granted only to person who is using that mark himself. However, if Registrar is satisfied that a company is being formed and applicant will assign the trade mark to the company, he can grant the mark. Removal of Trade Mark: Where trade mark has not been put into use within five years of its registration, it can be removed. However, the Registrar shall not remove the trade mark where special circumstances or reason are shown for its non-use. Registered User: (Asked in Jun 2007) Owner of mark can assign to the mark to a person called registered user of the mark. Registered user is not entitled to assign the mark. Registrar can demand information from owner regarding agreement by which any person was made registered user. Where registered user uses the mark in violation of agreement, Registrar can cancel registration. Collective mark: Collective mark. Which belongs to a group or association, can be registered by Registrar. This mark is owned by an association whose members can use this mark subject to compliance of specified standard. Certification Trade Mark: This trade mark shows that goods on which this mark affixed are certified by some competent person in respect of quality, mode or manufacture etc. Proprietor of certification trade mark does not himself deal in the goods. For example if a particular toothpaste is certified by IDA (i.e. Indian Dental Association), then IDA is certification trade mark which is affixed on the toothpaste.

Well-Known Trade Mark: Sec 11 provides following determining factors to decide whether a trade mark is well-known or not: a. Recognition of that mark in relevant section of public, e.g. number of actual or potential consumer of that goods b. Duration and geographical area of use of such mark c. Record of successful enforcement of rights under such trade mark Intellectual Property Appellate Board (IPAB): Any person aggrieved by decision of Registrar can prefer appeal to IPAB. This Board has powers of Civil Court but not bound to follow the procedures of the Code of Civil Procedure. Offence and Penalties: Following penalty provisions are prescribed under this Act: a. Penalty of imprisonment of six months to three years and fine upto Rs two lakh for applying false trade mark or false trade description. b. Any removal or sale of cotton yarn or cotton thread which are not marked in accordance with provisions of this Act is liable to forefeited. c. Any person who is falsely represents a trade mark to be registered trade mark is punished under this Act. d. In case of offence by Company, every person in charge of the Company, as well as the Company shall be deemed to be liable. Where such contravention is committed with consent or with negligence on the part or director, manager or secretary, they shall also be deemed to be guilty. Trade Mark Agent: Trade mark agent is a person who performs the work relating to trade mark before the Registrar. Sec 145 prescribes that legal practitioner or Company Secretary can acts as trade mark agent.

List of Some Important Sections of the Trade Marks Act


Section 2(1)(e) & 67-68 2(1)(zg) 11 18 25 37 69-78 101-121 Particulars Certification Trade Mark Well-known Trade Mark Relative grounds of Rejection Procedure of Registration of Trade Mark Tenure of Trade Mark Assignment of Trade Mark Certification trade Mark Penalties Section 2(1)(zb) 9 16 21 29 61-68 83 145 Particulars Trade mark Absolute Grounds of rejection Registration of associated trade mark Opposition of Application Infringement of Trade Mark Collective Trade Mark Appellate Board Trade mark agents

THE COPYRIGHT ACT, 1957


Published on Contains total 79 Sections Applies to Whole of India Latest amended in year 2013

Important Definitions

Literary Work Sec 29(o)

Includes computer program, table, computer data base

Artistic Work Sec 2(c)

Means painting, sculpture, drawing, map or plan, engraving, photograph, architecture and others Choreographic work, scenic arrangement or acting which is fixed Work of music, graphical notation of such work

Dramatic Work Sec 2(h)

Musical work Sec 2(p)

Cinematograph Film Sec 2(f)

Work of visual recording through a process of moving image including sound recording accompanying such visual recording Sound Recording Sec 2(xx) Recording of sound from which such sound may be produced.

Meaning of Copyright (Sec 14)


Copyright means exclusive right to do or authorize doing of following work:

In case of Literary, dramatic or musical work In case of Computer Program (Asked in Dec 2008) In case of Artistic-work

-Reproduction of work -Issuing copies of work to public -Performing work in public -Making cinematograph film or sound recording -Making translation or adaption of work -To do any of acts specified above -To sell or to give on rent -Reproduction of work -Issuing copies of work to public -Communication of work in public -Including work in cinematograph film -Making adaptation of work -Making copy of film or any image -To sell or to give on rent -Communicating the film or recording to public

In case of Cinematograph film and sound recording

Term of Copyright
(Asked in Jun 2007, Jun 2008, Jun 2010 and Dec 2010) For literary dramatic, musical or artistic work, copyright is granted for life time of author plus 60 years. In case of joint authors, it will be 60 years after death of survivor. For photographs, cinematograph films, sound recording etc, term of copyright is 60 years from beginning of next calendar year. In case of broadcast reproduction right, time period is 25 years from beginning of next calendar year.

Copyright Board
Government has established a Copyright Board consisting of qualified person to perform following functions:

a) Settlement of dispute regarding term of copyright, assignment of copyright etc. b) Granting of compulsory license in respect of Indian work, unpublished work or translation. c) Determination of royalty etc. d)

Assignment of Copyright
Assignment is transfer of whole of legal rights from assignor to assignee. Copyright owner has right to use manuscript and has exclusive right similar to that of patentee. Mere transfer of manuscript does not mean assignment. Purchaser of a copy does not acquire right to reproduce. Assignment of present as well as future work can be made either wholly or subject to limitations. However, assignment of future work comes into effect only when work comes into existence. Assignment should be made by an agreement in writing signed by the owner. It should specify the work, and include duration, territorial extension of assignment and remuneration. In absence of above conditions, duration is deemed for five years and territory shall be India.

License of Copyright
a) License by Owner: Owner of present or future work can grant license in writing to any person. In case of future work, where owner dies before the work comes into existence, his legal representative shall be entitled to benefit of license. b) Compulsory License for Work Withheld from Public: Where a complaint is made to Copyright Board that the owner of any work has refused to republish the work which has been earlier published or the work has been withheld from public, then the Copyright Board can after giving the owner opportunity of being heard, direct the Registrar of Copyright to grant license to the complainant to republish the work, subject to payment of royalty to owner. c) Compulsory License in case of Unpublished Work: Where the author of work at the same time of making the work was citizen of India, it is called Indian work. In case of such Indian work, where author is dead or unknown or cannot be traced, any person may apply to Copyright Board for license to publish such work or its translation in any language.

d) License to Publish Translation: Any person may apply to Copyright Board after seven years from its first publication for license to publish a translation of literary or dramatic work in any language. However, the Copyright Board can grant license of translation of work other than Indian work after three years for the purpose of teaching or research. e) Termination of License: Where, after grant of license, the owner of the copyright himself publishes such work at reasonable price, license granted shall terminated.

Copyright Society
As a general rule, the Copyright Act prohibits any person or association to carry on business of issuing license in respect of any protected work. However, Government can grant registration to copyright society after considering following factors: a) Protections of interest of authors, b) Interest and convenience of public, and c) Ability of person applying for license. However, Government cannot register more than one society to do business of same class of work. This Copyright Society can accept exclusive authorization from owner of copyright to exercise any right in relation to the work. It can enter into agreement with foreign copyright societies too. Following are functions or power of Copyright Society. a) Issuing license b) Collecting fees for license c) Distribution of fees among owners of right

Registration and infringement


Registration of copyright is not compulsory under this Act (asked in Jun 2011). Claim of infringement of copyright can be made even if registration has not been done. Registrar maintains various register to register different types of copyrights. Whenever author, publisher or owner of work makes application in prescribed from along with fee, Registrar makes relevant entry in this register. Before registration, the Registrar can make appropriate inquiry. Every entry made in this register is published in official gazette.

Infringement of Copyright
(Asked in Jun 2012) Copyright gives exclusive right to owner to reproduce the work. Any unauthorized copying of the protected work constitutes infringement. Following acts are deemed as infringement if done without license: a) Doing anything which is exclusive right is of owner. b) Permitting any place to be used for unauthorized communication of work to public for profit. c) Sale. Distribution, exhibition or import of infringed copies of the work. However import of one copy is allowed.

Exception/What is not infringement


a) Fair dealing of literary, dramatic, musical or artistic work for private use or research. b) Fair dealing of literary, dramatic, musical or artistic work for reporting current events in any news or newspaper. c) Making cop of computer program by lawful purchaser to utilize the program. d) Reproduction of literary, dramatic, musical or artistic work for judicial proceeding. Reading or recitation of reasonable extract of work in public. a) Publishing work in a collection consisting largely on non-copyright matters intended to be used in educational institutions. b) Reproduction of literary, dramatic, musical or artistic work by teacher. c) Performance of literary, dramatic, musical or artistic work in the activities of an educational institution. d) Performance of literary, dramatic, musical or artistic work by amateur club to non-paying audience. e) Making not more than three copies for public library. f) Hearing recording in public in enclosed room or hall (not being hotel or commercial place meant for common use of residents in any residential premise. g) Reproduction of work for research or private study. h) Reproduction of work published in Official Gazette, or Act or Legislature with commentary. i) Production of translation of Act or Legislation in any Indian language if not published by Government.

j) Publishing a photo or painting of a work of architecture. k) Inclusive of any artistic work situated at public place in cinematograph film. l) Performance of literary, dramatic or musical work in religious ceremony or Official ceremony of Government.

Remedies for Infringement


(Asked in Dec 2006, jun 2008 and Dec 2008) Owner of copyright has following remedies against the person who does infringement: a) Injunction, i.e. owner can restrain the person doing infringement to stop such infringement. b) He can claim for damage suffered. c) He can proceed to obtain possession of infringed copies. d) All plates or moulds used in production of infringed copies are deemed to be property of owner of copyright.

Other Provisions
Rights of Author: Author is a person who has created the work, i.e. in case of book, the writer, in case of musical work, the composer etc. Author has right to restrain a person who infringes copyright and also can claim damage. Author has such right even after he has assigned the work. Broadcasting Organization: Broadcasting organization has reproduction right for 25 years starting from next calendar year in which broadcasting is made. Following are not deemed to be infringement of broadcasting right. a) Making sound/video recording for private use or for teaching/research. b) Fairly using the work in reporting of current events. International Copyright: (Asked in Jun 2007, Dec 2007 and Jun 2010) Central Government can extended benefits of copyright to work published first time in foreign country. These rights are equivalent to right available to work in home country and subject to condition that the foreign country should also extend same benefit to Indian work. These benefits are given upon following conditions:\ a) Work is first publishing by International Organization. b) There is no copyright of that work in India at that time. Central Government can extend above benefits to broadcasting organization too.

Offences and penalties: Any person knowingly infringes any copyright is liable to imprisonment for 6 months to 3 years and fine of Rs 50,000/- to 2 lakh. Similarly any person who use infringed copy of computer program is liable to imprisonment for 7 days to 3 years and fine of Rs 50,000/- to 2 lakh. Police officer has power to seize without warrant all copies of the work and plates/mouldings used in making infringed copies. Appeal: Any person aggrieved by decision of Magistrate for seizure of infringed copy of the copyrighted material can prefer appeal ro appellate court. Any person aggrieved by decision of Registrar of Copyright can prefer appeal to the Copyright Board within 3 months. From the order of Copyright Board, appeal lies to high Court within 3 months. Registrar of Copyright and Copyright Board shall have power of civil court so as to issue summon enforcing attendance of witness, receiving evidence on oath etc.

List of Some Important Sections of the Copyright Act


SECTIONS 2(d) 14 22-29 33 51 PARTICULARS Author Meaning of Copyright Term of copyright Copyright Society When copyright is infringed SECTIONS 11 18 30-32B 40-43 52 PARTICULARS Copyright Board Assignment of Copyright License International Copyright What is not infringement

THE DESIGNS ACT, 2000


ENACTED ON 25-MAY- APPLIES TO WHOLE OF INDIA 2000 Contains total 48 sections Controlling authority Controller General of Patent, Designs and Trade Marks.

This Act was enacted by repealing the earlier Act called The Designs Act, 1911 with a view to protect industrial designs.

Important Definitions
DESIGN SEC 2(D) MEANS ONLY THE FEATURES OF SHAPE, PATTERN OR COMPOSITION OF LINE OR COLOUR APPLIED TO ANY ARTICLE IN 2D OR 3D FORMAT BY ANY MANUAL OR MECHANICAL PROCESS WHICH CAN BE JUDGED BY EYES. IT DOES NOT INCLUDE ANY TRADE MARK OR ARTISTIC WORK (UNDER COPYRIGHT_ Includes (1) Author of design (2) Person who get the design executed through other person and (3) Person who acquires design right from author

Proprietor of a new or original design Sec 2(j)

Some Special Word/Terms used in this Chapter


SCANDALOUS DISGRACEFUL, IMMORAL Obscene Offensive to morality, corrupt Reciprocal Mutual, simultaneous

Application
Sec 5 provides that application for design can be made by any person who claims to be proprietor of new or original design can be made to the Controller. Application shall be made in prescribed format and shall be accompanied by four copies of representation of design and prescribed fee. This application can be sent by hand or by registered post. Application shall state the class to which such design is to be registered. The Designs rules, 2001 prescribes classification under which application can be preferred. On application, if any objection appears to Controller, which requires amendment in application, he may communicate list of such objections to the application. Applicant shall remove/solve the objections within 6 months.

Under Sec 6, Design is registered for all or any of the articles comprised in a particular class. Where design is registered for any one article coming under given a single classification. The application for same design but for any other article in same classification can be granted to the same applicant. Say Bottle and bag comes under same classification and if any one has obtained design under bottle he himself will not refused from obtaining same design for bag. The Controller can either grant or refuse the application. On refusal, the person aggrieved can prefer appeal to High Court. The Controller shall grant a certificate of registration to the applicant and publish the fact of registration of the design. A register of designs is kept at the Patent Office, in which all particulars of designs shall be entered. Such register is prima facie evidence of any fact regarding design. Reciprocal Application: Any person who has applied for any design in UK or any other convention country can claim the same design in India. However, such claim shall be made within 6 months from the date of application in UK or other convention country.

Rejection
The Controller shall not register the design if: a) It is not new or original. b) It has been published in India or elsewhere in any format before priority date of application of applicant. c) It is not significantly different from known design or their combination. d) It contains scandalous or obscene matter.

Substitution
Where before registration of design: a) A person has applied for registration of any design; and b) Other person claims same design as his design due to any agreement or assignment. Then, the Controller can proceed to register such design in the name of claimant. However, the design should be identified to the satisfaction of the Controller and the agreement or assignment shall also be produced under which claim of the claimant has been made.

Copyright on Registration
Sec 11 provides that on registration, the registered proprietor shall have copyright in the design for 10 years. After expiry of such 10 years, the Controller can extend the period of copyright for 5 years on payment of renewal fee. During copyright, any person may inspect the design and obtain certified copy of the design on payment of fee to Controller. Restoration: Where renewal fee is not paid, the right is lapsed which can be restored within 1 years, from the date of expiry of original period on payment of fee. Application for restoration, as applied but applicant, shall be published by Controller.

Marking before Sale


Where design of any article is registered a mark with the work Registered or Regd shall be affixed along with registration number on such article before delivery for sale of such article.

Cancellation of Registration
Any interested person can file petition to Controller for cancellation of registration of design on following grounds: a) The design is already registered in India by any other person. b) It has been published in India or elsewhere before its priority date c) The design is not new or original d) It does not come under definition of design. Petition shall be in duplicate and one copy of it shall be sent to the registered proprietor. Registered proprietor can file his counter statement within prescribed time period. Controller shall fix a date for hearing on giving 10 days notice and shall decide the matter. Any person aggrieved by decision of Controller can prefer an appeal to high Court.

Piracy of Registered Design

Following acts are deemed to be infringement of design, if done without permission of registered proprietor: a) Applying design on its imitation on any article in its sale. b) Import any article for the purpose of sale. c) Knowingly publishing any article for sale. Any person doing above act in contravention of the Act, shall be liable to pay Rs 25,000 to proprietor. Further the injunction in District Court.

Power and Duties of Controller


1. The Controller shall have powers of a civil court so as to call and receive evidence, taking oath, enforcing attendance of witness, discovery of documents etc. 2. Controller shall have power to get direction from Central Government in case of any doubt or difficulty in administration of this Act. 3. Controller has power to reject application on appropriate ground.

Other Provisions
1. Every register kept under this Act at Patent Office is open for inspection and any person can take certified copies of any entry in such register upon payment of prescribed for (Sec 26). 2. Where any application for a design has been refused, then any information, drawing, photo, representation relating to such application shall not be open for inspection. 3. Any person, who is entitle to any design due to any assignment or transmission, can apply to the Controller and the Controller, Thereupon, shall register him as proprietor of such design. 4. The Controller shall not disclose any information of a design if it can be prejudicial to interest of security of India.

Design Agent

All application and other communication to the Controller shall be signed by or through a legal practitioner or agent. The agent under this Act means the Patent Agent under the Patents Act.

List of some Important Sections of the Designs Act


SECTIONS PARTICULARS SECTION PARTICULARS 2(s) Design 2(j) Proprietor of design 3 Appointment of Controller 4 Design which cant be registered 5 Application for 7 Publication of Application registration 8 Substitution of 9 Grant of design Application 11 Term of copyright 12 Restoration of lapsed designs 17 Inspection of register 19 Cancellation of registration 22 Piracy of registered design 43 Patent Agent to Design Agent

GEOGRAPHICAL INDIVATION OF GOODS (REGISTRATION & PROTECTIO) ACT,1999


ENACTED ON 30-DEC-1999 BUT CAME INTO FORCE ON 15-SEPT2003 Contains total 87 Sections APPLIES TO WHOLE OF INDIA

Controlling authority is Controller General of Patent Design & Trade Mark

This Act was Enacted by reason of TRIPS agreement under WTO regime to register and protect some geographical indication of good which shows that gods relates to such geographical area.

Important Definitions
GEOGRAPHICAL INDICATION GEOGRAPHICAL INDICATION IN RELATION TO GOODS, MEANS INDICATION WHICH IDENTIFIES GOODS AS

2(E)SEC

Deceptively Similar Sec 2 (c)

ORIGINATED OR MANUFACTURED IN SUCH TERRITORY REGION OR LOCALITY IN INDIA TO ASSUME A GIVEN QUALITY, REPUTATION OR OTHER CHARACTERISTICS OF GOODS AND THAT THE MANUFACTURING OR ANY OTHER SIMILAR PROCESSING TAKES PLACE IN SUCH TERRITORY, REGION OR LOCALITY. E.G. KOLHAPUR CHAPPAL, WHICH IS MANUFACTURED OF SUCH CHAPPAL HAS TO FOLLOW GIVEN QUALITY. So resemble as to be likely to deceive or create confusion.

Some Special Word/Terms used in this Chapter


HOMONYM A WORD WHICH SOUNDS OR SPELLS THE SAME AS ANOTHER WORD BUT HAS DIFFERENT MEANING, E.G TWO BOYS WANTS TO PLAY TOO.

Registrar of Geographical Indications


The Controller General of Patent, Designers and Trade Marks shall be registrar under this Act. Central Government shall establish a place of registry, to be known as Geographical Indications Registry. A Register shall be maintained at Head Office of Geographical Indications registry to enter particulars of all Geographical Indications.

Registration of Geographical Indications


Geographical indications are registered u/s 8 for class of the goods as classified by the Registrar. Classifications are given in Fourth Schedule to the Geographical Indications Rules. For example pharmaceuticals, food for babies, dental wax etc comes under same classification (i.e. Class 5) and surgical, dental and medical instruments comes under same classification (i.e. class 10) Sec 9 provides that following geographical indications shall not be registered: a. Use of which can create confusion

b. Use of which can be unlawful c. Which contains scandalous or obscene matter d. Which falsely represent that goods belong to another territory Sec 10 provides that a homonymous geographical indication can be registered if registrar is satisfied it is different from other homonymous geographical indication and shall not misled the consumer

Procedure for Registration


Any association of persons or procedure or any authority representing interest of procedures of the concerned goods shall apply to the Registrar in prescribed from. Sec 11 clearly that geographical indication is not granted to only one person, rather it is granted on behalf of all manufacturers of same territory. This application shall contain: a. A statement as to how the geographical indications designates the goods as originating from particular territory or region. For example, if application relates to Mysore Silk, the statement shall show why this silk is different from silk produced at any other city and what is connection of silk with Mysore. b. Class of the goods c. Map of the territory etc Application is examined by the Registrar who may refuse the application or accept it absolutely or subject to modification. Registrar may withdraw the accepted application before its registration, if there was any error in application. On acceptance of application ,it shall be advertised by the Registrar within 3 months from such advertisement any person may oppose the application Registrar shall send the particulars of opposition to the applicant who shall submit his counter statement within 2 months Registrar can hear both the parties and can decide the matter. Sec 15 provides for correction and amendment of the application by the applicant of the application by the applicant before or after acceptance of the application. Sec 16 provides that where application has not been opposed or the opposition has been decided in the favour of applicant, he shall register the geographical indication. If because of default by applicant, registration is not completed within 12 months the date of application, Registrar can abandon the appliaction.

Any person who claims as producer can apply to the Registrar as authorized user of such geographical indication.

Duration, Renewal, Removal, Restoration


Sec 18 provides duration of the geographical indication to be 10 years which can be renewed for further 10 years from time to time. Before the expiry of third time period of registration, the Registrar shall give a notice to the proprietor or authorized user of the geographical indication requiring him to get the indication renewed. On failure to renew , the Registrar can remove the indication. However, Registrar shall not remove the indication within 6 months from the registration. After 6 months of expiry of registration but before 1 year, the Registrar can restore the removed indication, if application has been made in prescribed form.

Effect of Registration
Sec20 provides that no one can sue for infringement of geographical indication which is not registered under this Act. Registered indication gives following rights: a. To get relief from infringement and b. To exclusively use the indication

Infringement of Registered Indication


Sec 22 prescribed following acts as infringement of registered indication: a. Use of geographical indication in design or presentation of goods in such a manner as to suggest that such goods have been originated from such area. For example, if any person selling Kesar mango produced in Maharastra bit showsthem to be Gir Kesar Mango B. Use of geographical indication contrary o honest practice of competition which may create confusion or misleading impression on the public. c. Use another geographical indication to the goods which may be literary true but falsely represents its origin.For example any person selling Bikaneri Bhujia made at Sholapur.

Other Provisions

1. Sec 24 prohibits assignment or transfer of the geographical indication. 2. Sec 25 prohibits registration of trade mark containing geographical indication.However, earlier registered trade mark shall not be affected ny this provision. 3. Registrar shall have power to correct or alter the register of geographicalindications maintained by him. 4. Any kind of appeal against order of Registrar shall lie within 3 months to appellate board. 5. Anu person who falsifies or falsely applies geographical indication to the goos shall be punished with imprisonment up to two years and fine up to Rs. 2 lakh. 6. All the acts done under this Act shall be done by legal practitioner or any other person registered as agent under this act.

List of Some Important Sections of the Geographical Indications Act


Section 2(a) 9 14 18 22 84 Particular Authorized User Prohibiton on registration of some geographical indication Opposition of application Duration, renewal, restoration of indication Infringement of indication Convention countries Section 2(e) 11 16 20-21 31 particular Geographical indication Application for registration Registration of application Registration of appliaction Appeal