Essentials of a Vendor Agreement

Vendors are an essential part of any company and it’s critical to have a strong vendor agreement in place when one buys goods or services from vendors. This is because a sound vendor agreement clarifies the specifics of a business transaction and can help avoid a plethora of problems.

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Essentials of MoA and AoA

It is crucial to have the necessary preliminary documents prior to the registration of a company. Memorandum of Association, MoA and Articles of Association, AoA are two such documents. They detail the scope of work, objectives, rules and internal management of the company.

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The Limited Liability Partnership (Amendment) Bill, 2021: All you need to know

The Limited Liability Partnership (Amendment) Bill, 2021 has been the focus of the legal fraternity during the course of the past few weeks. The bill, which was introduced on July 31, 2021, was passed by both the Rajya Sabha and the Lok Sabha by August 9, 2021. Even as the focus of the Parliament was on the recent controversy surrounding the Pegasus spyware leading to protests from the opposition, the bill was introduced and got passed without a lot of hassles.

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Trademark vs Brand – Significance in the modern markets

By Bhanita Das, Flywork.io Team, Flywork.io.

The significance of a Brand name and a trademark has increased manifolds in the current highly competitive markets, nationally and internationally. Let’s look at a comparative overview of both.

In our day-to-day life we often hear the term Trademark and Brand, both seem to be similar but they have their significant distinction. Brand and Trademark both are valuable assets of a company.

MEANING OF BRAND

Brand is a name that is basically given by the manufacturer to the product or services they produce from its own of their specific company. For example: Puma, Biba, Apple, ZARA etc. It helps to create its identity and helps to make a strong market among the people. One of the best examples is the COLGATE, people are so used to this brand that they forgot that Colgate is a brand instead of toothpaste; often heard people saying other brand toothpaste also to be Colgate.

MEANING OF TRADEMARK

Trademark is basically a symbol or word which is legally registered to use as a representative of a company or product. In simple words, we can say it is a symbol that denotes a specific product and also legally differentiates from other products. The symbol should be unique in nature. It is a type of intellectual property consisting of design, signs, words, or expressions.

Both the term sounds to be similar in nature but there are some differentiations between them. So let’s have a look at it. 

SIGNIFICANCE OF BRAND 

Brand helps the buyer to identify the product which they like and dislike.

Brand helps to identify the marketer as well as helps in reducing the time needed for purchasing the product and services.

For a seller, branding helps to reduce price comparison and helps the firm to introduce a new product.

It helps to facilitate promotion of the goods and services.

SIGNIFICANCE OF TRADEMARK

Trademark is important for a startup for its security, by trademarking a company can secure its product and services being used by another company.

Trademark is permanent which needs to be renewed periodically.

Trademark is a company’s greatest asset that acts as a catalyst for increasing the value of a startup.

DIFFERENCE BETWEEN TRADEMARK & BRAND

1.     A legal brand is not a legal name of a company, it is just a name selected by the company but a trademark is legally bound to represent a business by its services or goods.

2.     Not all brands are trademarks but all trademarks are brands.

3.     A brand consists of several elements which include image, character identity, personality, essence, culture reputation; and these combines to define the value of a brand                  whereas a  trademark is used to protect a various aspect of a brand such as Brand name, Signatures, Color Schemes, Packaging, Unique labeling etc.

4.     Brand name is associated with culture, personality, vision, and reputation whereas a trademark is associated with the description, packaging, color schemes.

5.     Brand can only be protected to state-level but a trademark protects the company’s product identity by establishing that the mark has not been used before.

6.     Brand can be created or named by any manufacturer but a trademark can only be used after it is registered.

7.     Brand can be used by different producers & sellers but trademarks can only be used by the producer who has got it registered.

8.     The fundamental concept of the brand is that it is the easy way to remember the product, whereas the trademark is a source of origin of any product or service.

CONCLUSION

Thus, the above-mentioned terms i.e. Brand and Trademark both are valuable assets of a company. Although both the terms sometimes act as a synonym yet they are very different from each other. A brand is a name that relates to products and services offered by a company whereas a Trademark is a legally registered trade or brand name or logo or slogan that basically identifies a company to its product or services. A good brand helps in suggesting the product benefits and its usage as well as the trademark gives us the right to use our business name nationwide in connection and also allows us to file a suit in case of a dispute.

 

Let the qualified curated professionals at Flywork.io assist you to resolve any legal and allied issues. For more details visit us at Flywork.io.

 

Digital Signature – validity in India

By Achyutha Bharadwaj,  Flywork.io Team, Flywork.io.

At this time of lockdowns and restrictions, as traditional ways of executing documents is getting more and more difficult, the significance of digital signature increases. Is digital signature recognized under Indian Law? Can all documents be executed using digital signatures? Read on to find the answers.

Almost every business entity has been digitized, people are shopping online more often than in malls, this creates a question in the mind whether signing of cheques and other official documents can be done online as well. The answer is yes. With so many start-ups coming up, the technological and commerce industry is growing rapidly and this raises the need to make it convenient for individuals, companies, etc. to fulfill and execute contracts with just the use of their fingertips. This has been made possible by the Information Technology Act, 2000 (“IT Act”) along with a couple of other legislations, in the form of digital or electronic signatures (e-signatures). A digital signature is simply an alternative way for a user/subscriber to authenticate any electronic record, through either an e-signature or any other authentic electronic technique. 

Digital signatures, which are viewed as a subset of electronic signatures, are liked for certain business/organisational exchanges, for example, e-documenting with the Ministry of Corporate Affairs, and merchandise and administration charge filings. The Second Schedule of the IT Act has incorporated a method for electronic authentication through the electronic signatures and it also helps determine Aadhar e-KYC (Know your Customer) authentications as an electronic authentication method and strategy. A lot of banks and financial institutions are using online methods for verification of the customer – e-signatures become very necessary in order to authenticate the entire transaction and the process itself, as it is extremely necessary to affirm  the personality of an individual or check the accuracy of the data. 

The IT Act permits the utilization of an electronic or digital signature for 

  • recording any structure, application or archive with any administration authority; 
  • issue of any permit, license or endorsement by the public authority; and
  • receipt or instalment of cash in a specific way, in electronic structure. 

Following conditions should be met for  an electronic signature to be considered reliable:

  • It must be unique to signatory;
  • While putting the signature, the signatory must have control over the data used to generate the electronic signature;
  • Alteration to the affixed electronic signature, or to the document to which the signature is affixed, should be detectable;
  • An audit trail of steps taken during the signing process should be available
  • The signer certificates must be issued by a certifying authority (CA) recognized by the Controller of Certifying Authorities appointed under the IT Act (Second Schedule).

 
The public authority may make rules endorsing the way where electronic records and electronic signatures are acknowledged for these reasons. For example, Rule 7 of the Companies (Registration Offices and Fees) Rules, 2014 indicates that each application, fiscal summary, outline, return, affirmation, reminder, articles, specifics of charges, or some other points of interest or report or any notification, will be documented in PC coherent electronic structure in pdf. Further, Rule 8 specifies that an e-structure should be verified utilizing Digital Signature; and the Central Board of Direct Taxes have told strategy for documenting e-TDS/e-TCS and different structures utilizing digital signatures.
 
Although digital signatures are widely accepted in India through governing laws, the following documents must be signed with a traditional signature, physically:

  • A power-of-attorney.
  • A trust.
  • A negotiable instrument (other than a cheque) 
  • Any contract for sale or conveyance of immovable property or any interest in such property.
  • A will.

Thus, it is clear that although e-signatures can be extremely helpful to quicken the process of verification, it cannot be used in all places as it can be seen above. This is, of course, due to identity thefts, forging documents, or notarization which can only be completed by an enrolled public accountant under their signature and seal. Therefore, legislations must make ways for smooth verification through digital signatures in all forms of transactions/business by ensuring that there is complete authenticity in the same. 

Let the qualified curated professionals at Flywork.io assist you to resolve any legal and allied issues. For more details visit us at Flywork.io.

IBC Amendment and IBBI Regulations on Pre-Packaged Insolvency Resolution Process come as boon to MSMEs.

By: Adil Zawahir, Team Flywork.io, Flywork.io.

The pandemic and the restrictions have unequivocally created challenges in starting a business, running a business moreover in closing a business. Here is an overview on the new scheme introduced by the government to easy closure of MSMEs. Need any assistance in the closure of your business, then contact us at  Flywork.io.

The Central Government, on April 4 2021, by way of an Ordinance titled ‘Insolvency and Bankruptcy Code (Amendment) Ordinance 2021’, amended the Insolvency and Bankruptcy Code 2016 (IBC) to introduce the concept of Pre-Packaged Insolvency Process (PPIP). The Ordinance inserts a new chapter (III-A) to the IBC and provides for making an application for initiating PPIP with regards to a micro, small or medium enterprise (MSME) in light of the impact that the pandemic has had on businesses, financial markets and economies all over the world. The Ordinance is a welcome step towards the resolution of insolvent MSMEs. The objective of the Ordinance states that the PPIP for MSMEs has been introduced to provide them with an efficient alternative insolvency resolution process that will achieve value maximization in a quicker and cost-effective manner while causing the least disruption to the business.

Due to the simpler corporate structure of the MSMEs, Corporate Insolvency Resolution Process (CIRP) for reorganization is considered a tedious task which when dragged out leads to disruption in business. To overcome this problem, the PPIP mechanism has been introduced which will function as a hybrid framework blending both formal and informal processes within the basic mechanism of the IBC.

On 9th April 2021, the Insolvency and Bankruptcy Board of India notified the PPIP regulations for MSMEs. The regulations detail the forms that stakeholders are required to use, and the manner of carrying out various tasks as part of the pre-pack resolution process. It also provides details about various aspects, including eligibility criteria to act as a resolution professional, identification and selection of authorised representative, competition between the base resolution plan and the best resolution plan. 

The process can be initiated by the corporate debtor (CD) who will have to serve notices of a meeting to all unrelated financial creditors five days in advance, in order to seek their approval. The regulations prescribe at least 66% approval from the creditors. The Creditors will then have seven days to raise their objections to the notice of claims submitted to the resolution professional by the CD.

The resolution professional must necessarily be independent of the CD. This means the resolution professional and all partners and directors of the insolvency professional entity, of which they are a partner or director, have to be independent of the corporate debtor. If the concerned insolvency professional entity or any of its partners or directors represent any of the stakeholders, the person will be ineligible for being appointed as a resolution professional.

Another highlight of the PPIP is that it enables the management of affairs of the corporate debtor to continue to be in the hands of the Board of Directors or partners of the CD. This is in stark contrast to the CIRP, where the resolution professional is handed the reigns along with the assistance of the financial creditors. Creditors still have the option to initiate bankruptcy proceedings against the MSMEs under the CIRP.

After approval from the unrelated creditors, the CD will proceed with filing an application before the National Company Law Tribunal (NCLT) to initiate the PPIP, after taking a mandate from the directors and shareholders. The plans must be submitted within 90 days and the NCLT must approve of such plans within 30 days. The whole process will be completed within 120 days as opposed to the 270 day time period prescribed for the CIRP. Once the application is admitted by NCLT, the CD will itself first provide a Base Resolution Plan and if such plan is unsatisfactory, the resolution professional will publish an invitation for resolution plans within 21 days of the commencement of formal proceedings.

The Pre-Packaged Insolvency Resolution Process makes the debtor the only person capable of triggering the bankruptcy process. This scheme will yield faster resolution than the CIRP and will also reduce litigation, triggered by defaulting promoters, while simultaneously cutting costs. The process is also expected to run smoother due to the requirement of 66% approval from unrelated creditors. If the NCLT infrastructure is improved by the government, this ordinance is a welcome step in the corporate world as it will genuinely lift the weight off the shoulders of MSMEs.

Let the curated and highly skilled professionals at Flywork.io assist you to solve all your legal issues. To know more visit Flywork.io.

GST Login

With the introduction of Goods & Service Tax in India (GST), several businesses have come under the tax bracket. With a huge number of GST registered persons/ businesses in the country, the introduction of the GST portal right from the beginning of the GST era has proven to be useful for all registered persons. This portal facilitates to undertake  every process and procedures which a registered person needs to perform. This starts from filing the regular GST returns and extends till applying for a refund in case of the excess tax credit is available.

First, allow us to clear some basic doubts which an individual may have with reference to GST registration:

Should every person do business register themselves under GST?

The simple answer is NO. There is no compulsory registration under GST, apart from certain circumstances as mentioned by the government. Certain situations under which GST registration may be required includes (but not limited to):

  1. Voluntary basis  (There is no restriction with registering oneself under GST without the need for it. However, it should be noted that once a person is registered, he should comply with all the procedures laid under the Act)
  2. If a person is selling goods or providing service outside the state in which he is operating
  3. If a person is indulged only in selling goods and his turnover exceeds Rs. 40 lakhs(the turnover limit varies for certain states/ Union territories)
  4. If a person is indulged only in providing service or provides both services and sells goods and his turnover exceeds Rs. 20 lakhs (the turnover limit varies for certain states/ Union territories)

Is there any benefit in registering for GST?
Certain benefits of registering under GST is as follows:

  1. Lesser compliance compared to VAT/ Service Tax/ Excise duty
  2. Regulated the unorganized sector
  3. Several benefits for small business, such as the option to opt for a composition scheme, exempt from filing annual returns, etc
  4. Business can claim a tax credit for their purchases
  5. A registered buyer would prefer to buy goods from a registered person

GST Login: How to register under the GST portal?

Follow the below steps for GST Login: Goods & Services Tax GST Portal www.gst.gov.in Login India

STEP 1: Visit www.gst.gov.in Under the ‘Services’ tab, click on the ‘Registration – New Registration’ option.

STEP 2: On the next page, click on the option ‘New Registration’ and provide the necessary details such as type of person (Tax Payer, GST Practitioner, Others, etc.); State; Legal name of the business as per PAN, mobile number, Email, etc. and click on ‘Proceed’ for OTP verification of Mobile Number and Email ID.

STEP 3: After successful OTP verification, you will receive a ‘Temporary Reference Number (TRN)’, which should be used in the next steps of detailed registration.

STEP 4: Follow STEP 1 & 2. However, this time, select on ‘Temporary Reference Number’ option as seen in the image under STEP 2. Provide the TRN and enter the captcha code. Another OTP verification needs to be done before proceeding further.

STEP 5: Under the new page, you will find the saved application. Click on the button given under the tab ‘Action’. This will take you to the detailed registration process, where the person registering needs to fill in several details and upload relevant proofs before submitting the registration application.
Once the Application Form is submitted, you will receive an Application Reference Number (ARN). Also, the application form is subject to mandatory verification in the GST portal, based on which it could get approved or rejected. Once your New Registration Application has been verified and approved in the GST portal, you will receive a 15 digits GSTIN (Goods and Services Tax Identification Number) along with a temporary password. You can start logging in by using the GSTIN number because of the User ID and therefore the temporary password which you'll reset.

NOTE: In certain cases, there could be certain fields that some more explanation or further documentary proof could be additionally required from your side. In case, some more clarification is required from you, a Show Cause Notice (SCN) Reference No. will be provided to you and will be intimated via an SMS and E-mail which you provided during the GST registration process. Alternatively, you can follow the STEP 1 & STEP 4 procedure (as given above) to log into the portal, navigate to the notification/ exact page and field where the clarification is needed, and use the same to provide relevant clarification & also to upload the relevant documents requested in the Show Cause Notice (if any)

GST Login: How to check the GST registration application status?

Once the GST registration process is completed and the application is submitted, it might take about 2 – 6 working days for the GST registration number to be allotted. Meanwhile, one can track the status of the application by following the below steps & by using the Application Reference Number (ARN).

STEP 1: Visit Government GST Login Website: www.gst.gov.in Under the ‘Services’ tab, click on ‘Registration – Track Application Status’.

STEP 2: On the next page, provide the ARN and the captcha code. Click on ‘Submit’ to look at the GST registration status.

How to login for the first time in the GST portal?

STEP 1: Visit Govt GST Login Portal India: www.gst.gov.in On the right-hand side top corner, you will find the option ‘Login’. Click on the same.

STEP 2: On the next page, below the option ‘Forgot Username’, you will find an option for the first-time login by users. Click on the same.

STEP 3: Provide the GST registration number (GSTIN) and the temporary password received by you. Enter the captcha code and click on login.

STEP 4: Now you will be required to provide a New Username & New Password for your GST portal account. Provide the new username and new password which satisfies the relevant instructions given on the page (that is, number of characters, special characters, numbers, upper case letter, etc.) and click on Submit.
Hereafter, you shall use the above Username and Password given by you for future logging into the GST portal account.

How to download the GST registration certificate for reference?

After creating an account in the GST portal by providing your own Username and Password, you can log in to your account for downloading your GST registration certificate which may be used for your future reference. The steps to download the GST registration certificate is as follows:

STEP 1: Visit Govt GST Login Portal Online: www.gst.gov.in Click on the ‘Login’ option on the top right corner. Provide the username and password alongside the captcha code and click on login.

STEP 2: On the home page of your account, you will find a tab with the name ‘Services’ on the top. Click on the same. Under same, click on ‘User Services’ and click on on ‘View/ Download Certificate’

STEP 3: Now you can find the GST registration certificate for download on the screen.

LAW MINISTRY AND MINISTER OF INDIA

The Ministry of Law and Justice in the Government of India is a cabinet ministry which deals with the management of the legal affairs, legislative activities and administration of justice in India through its three departments namely the Legislative Department and the Department of Legal Affairs and Department of Justice respectively.

The Department of Legal Affairs is concerned with advising the various Ministries of the Central Government while the Legislative Department is concerned with drafting of principal legislation for the Central Government.

 The ministry is headed by a cabinet rank minister appointed by the President of India on the recommendation of the Prime Minister of India.

The first Law and Justice minister of independent India was B. R. Ambedkar, who served in Prime Minister Jawaharlal Nehru's cabinet during 1947–52.

Ravi Shankar Prasad is the current minister for law and justice in India.

 

The Government of India (Allocation of Business) Rules of 1961 entail the various departments working under the Ministry of Law and Justice of Government of India. In terms of these Rules, the Ministry comprises the following departments:

Department of Legal Affairs,

Legislative Department,

Department of Justice

 

Legislative Department

The Legislative Department is mainly concerned with drafting of all principal legislation for the Central Government i.e. Bills to be introduced in Parliament, Ordinances to be promulgated by the President, measures to be enacted as President's Acts for States under the President's rule and Regulations to be made by the President for Union territories.

It is also concerned with election Laws namely the Representation of the People Act 1950 and the Representation of the People Act 1951.

In addition, it is also entrusted with task of dealing with certain matters relating to List III of the Seventh Schedule to the Constitution like personal law, contracts evidence etc.

 The responsibility of maintaining up to date the statutes enacted by Parliament is also with this Department. The Allocation of Business Rules identify the following functions to be carried out by this Department;

 [1]The drafting of Bills, including the business of the Draftsmen in Select Committees, drafting and promulgation of Ordinances and Regulations; enactment of State Acts as President's Acts whenever required; scrutiny of Statutory Rules and Orders (except notifications under clause (a) of section 3, section 3A and section 3D, of the National Highways Act, 1956 (48 of 1956)).

Constitution Orders; notifications for bringing into force Constitution (Amendment) Acts.

(a) Publication of Central Acts, Ordinance and Regulations; (b) Publication of authorised translations in Hindi of Central Acts, Ordinances, Orders, Rules, Regulations and bye-laws referred to in section 5(1) of the Official Languages Act, 1963 (19 of 1963).

Compilation and publication of unrepealed Central Acts, Ordinances and Regulations of general statutory Rules and Orders, and other similar publications.

Elections to Parliament, to the Legislatures of States, to the Offices of the President and Vice-President; and the Election Commission.

Preparation and publication of standard legal terminology for use, as far as possible, in all official languages.

Preparation of authoritative texts in Hindi of all Central Acts and of Ordinances promulgated and Regulations made by the President and of all rules, regulations and orders made by the Central Government under such Acts, Ordinances and Regulations.

Making arrangements for the translation into official languages of the States of Central Acts and of Ordinances promulgated and Regulations made by the President and for the translation of all State Acts and Ordinances into Hindi if the texts of such Acts or Ordinance are in a language other than Hindi.

Publication of law books and law journals in Hindi.

Marriage and divorce; infants and minors; adoption, wills; intestate and succession; joint family and partition.

Transfer of property other than agricultural land (excluding benami transactions registration of deeds and documents).

Contracts, but not including those relating to agricultural land.

Actionable wrongs.

Bankruptcy and insolvency.

Trusts and trustees, Administrators, General and Official Trustees.

Evidence and oaths.

Civil Procedure including Limitation and Arbitration.

Charitable and religious endowments and religious institutions.

Department of Justice

The Department of Justice performs the administrative functions in relation to the appointment of various judges at various courts in India, maintenance and revision of the conditions and rules of service of the judges and other related areas. The Allocation of Business Rules identify the following functions to be carried out by this Department.

Appointment, resignation and removal of the Chief Justice of India and Judges of the Supreme Court of India; their salaries, rights in respect of leave of absence (including leave allowances), pensions and travelling allowances.

Appointment, resignation and removal, etc., of Chief Justice and Judges of High Courts in States; their salaries, rights in respect of leave of absence (including leave allowances), pensions and travelling allowances.

Appointment of Judicial Commissioners and Judicial officers in Union Territories.

Constitution and organisation (excluding jurisdiction and powers) of the Supreme Court (but including contempt of such Court) and the fees taken therein.

Constitution and organisation of the High Courts and the Courts of Judicial Commissioners except provisions as to officers and servants of these courts.

Administration of justice and constitution and organisation of courts in the Union Territories and fees taken in such courts.

Court fees and Stamp duties in the Union Territories.

Creation of all India Judicial Service.

Conditions of service of District Judges and other Members of Higher Judicial Service of Union Territories.

Extension of the Jurisdiction of a High Court to a Union Territory or exclusion of a Union Territory from the Jurisdiction of a High Court.

Reference Guide for opening new Commercial Establishments

 

Introduction to Idea of Shops, Establishments and the Licenses Required

This blog post aims to serve as a one-time reference guide with regard to opening new shops and commercial establishments in India. It deals with various licenses and registrations that one has to compulsorily acquire in order to set up a business. Every state in India has the jurisdiction to enact its own Shops Act to regulate every business that exists within their territories. It is one of the most powerful tools to ensure that all legal businesses are recorded with the respective state governments. Only after successful compliance with the shops registration act, the existence of the business is confirmed.

This blog post deals specifically with the license requirement for opening shops and commercial establishments in Mumbai. There is no specific reason for choosing Mumbai as a model city except that it requires one of the maximum numbers of permits from different departments of the Municipal Corporation. Giving an account of the licenses required in Mumbai would almost definitely cover the licenses required in other states in India.

Depending on the type of business one is in, the licenses vary. For example, someone who wishes to venture into the food industry, by opening a restaurant requires permits from the Food and Drug Inspector, the Fire Department, the Police Commissioner and the local municipal authorities; for a normal grocery shop, one needs approvals from the fire department, municipality and health department. This blog will cover the general requirements for opening a shop or any commercial establishment under the meaning of the Bombay Shops and Establishments Act, 1948.

Application Procedure

Any citizen who wishes to open a shop or a commercial establishment in Maharashtra must be registered under the Bombay Shops and Establishments Act, 1948. For the purposes of registration, every business owner must send the relevant application form along with the fees to the Inspector appointed under Section 48 of the Act. The default authority under the Act is “local authority” that can be the following entities as per Schedule 1A of the Act –

  1. Any corporation under the Bombay Municipal Corporation Act, 1888
  2. A Municipality under the Bombay Municipal Boroughs Act, 1925, Bombay District Municipal Act, 1901, the Central Provinces and Berar Municipalities Act, 1922 or the Hyderabad District Municipalities Act, 1956
  3. A local board constituted under the Local Boards Act, 1923

An application sent to the local authority along with the following mandatory documents and registration fees would complete the registration process.

  1. Address proof of the premises where the shop or commercial establishment shall be set up (electricity bill/sale deed/tax receipt are considered valid for this purpose);
  2. Identity proof of the owner (in case of a firm/trust, then that of the partners/trustees);
  3. Nature of business verification – this can be of the following types:
  1. If Bar and Restaurant, Wine Shop or Beer Shop, then State Excise License has to be attached;
  2. If Medical Stores, then Food and Drug Administration License needs to be attached;
  3. If Cyber Café, then NOC from the Police Department -, Police Commissioner License and Man Power Supplier copy of the Work Order of the Principal Employer has to be attached;
  4. If Entertainment, then copy of the Collector’s permission has to be attached;
  5. If Transportation/Tour and Travel Agency, then RTO Transport Permit needs to be attached;
  6. If Import/Export/Clear Forwarding/Shipping/Cargo Industry, then licenses from the concerned department to be attached;
  7. For a share brokering business, SEBI Enrolment Form to be attached;
  8. For Trading Business, copy of the financial transaction to be attached;
  9. For Fire Works Shops, Municipal Corporation NOC, Fire Brigade NOC, Collector’s NOC and Police Department NOC must be attached.

Once a shop is registered under the Shops and Establishments Act, there are some basic conditions relating to work and employment that the employer has to adhere to. The objective of the Bombay Shops and Establishment Act was to regulate the conditions of work and employment in shops, commercial establishments, hotels, restaurants, eating houses, theatres and other establishments. Opening and closing hours of shops/residential hotels/restaurants/theatres, their daily weekly work hours, interval for rest, holidays. It prohibits the working of children in establishment. General rules regarding leave, paid leaves and other benefits accorded to employees are also laid down. Health Safety and precautions in case of emergency also have to be observed. Penalty for not complying with any of the provisions of the Act attracts a maximum fine of Rs 5000.

These requirements are more on part of the employer to accord certain basic work conditions to his employees. The workers have been left completely out of the purview of this legislation. Rightly so, the author feels, since the requirements of the employee differs from case to case basis, and it is the employer who can best decide the qualification of his employees. It is important to understand the legislative intent behind the enactment of Shops Act; it is not to balance the rights of employers and employees, it is a clear pro-worker legislation aimed at regulating various details about the business like work hours, holiday’s list, overtime rule, joining and termination criteria etc. Therefore, it is a democratic jurisdictional act that is established by every state in India in order to guide their business segments.

License Requirements for opening a Small-Sized Restaurant in Mumbai

Just to give a perspective, it would be interesting to take a look at the licenses/permits/certificates to be obtained by a small-sized restaurant in Mumbai.

There are five major departments that need to be approached – Brihanmumbai Municipal Corporation (BMC), Police Department, State Government, Excise Department and Sales Department. The Central Government also needs to be approached for Food Safety and Standards Authority of India license and recorded musical performance licenses.

Sr No Department License/NOC
1. BMC Shops and Establishment Certificate
2. BMC Health License (to serve food)
3. BMC Madira License (to serve Liquor)
4. BMC Grading Certificate, Sign Board License under License Department, Medical Certificate of Kitchen Staff, Water Connections, Drainage Inspection Certificate, Neon Sign certificate, Pollution Clearance Certificate, Weights and Measures Certificates etc.
5. BMC Permission to operate more than two gas cylinders at a time (fire department and health department), permission to operate heavy machinery (PWD)
6. State Government Professional Tax Certificate of employees and employers
7. Police Department Police Registration Certificate and under the Bombay Police Act, Noakarnama
8. Sales Tax Department Sales Tax Registration Certificate under Bombay Sales Tax Act
9. Income Tax Department PAN for Restaurant Business
10. Excise Department Dance Permits (if any), Accounts Register, Customer’s Drinking Permit etc.

Critique of the Application Procedure and Suggestions

Shops and Establishments Act has been one of the effective tools to protect the illegitimate and illegal acts in the employment segment of particular state jurisdiction. It is compulsory for all business houses to register under various authorities mentioned under the Act before starting their business. Waiver under the Act is not an option under the Indian Laws.

Most of the other states have their own Shops and Establishments Act that lay down the long list of authorities to be approached for opening a single shop. While each of these licenses are necessary keeping in mind the safety and regulatory aspect, the actual procedure of procuring a license from so many departments is very cumbersome.

India is counted among the fastest growing economies in the world today, and if we are to live up to our name, it is imperative that we incentivise the domestic production, manufacturing and service sectors. Opening a restaurant, or a hair-saloon or a simple grocery store would definitely contribute to the GDP of our country, albeit in a smaller scale. Therefore, the process of acquiring licenses by these small scale enterprises must be made easier and hassle-free. Some of solutions are suggested below.

  • A much needed reform in the system is to create a centralised nodal agency for procuring licenses, where all forms can be submitted together, and the approval would also be given from that nodal centre. This would ensure a one stop solution for the license seekers while at the same time not compromising with any of license requirements.
  • Another solution can be to create different sets of licenses, with each set pertaining to the licenses required by one particular entity, for example, all the licenses required to open a restaurant will be in Set-A, all licenses required to open a medical store in Set-B, for a cyber café Set-C and so on. This would help the license seekers get a clearer and cleaner understanding of all the regulations they are supposed to comply with. This would also aid the concerned government department to regulate the licensees according to their establishment-type.

More than the above mentioned solutions, it is the present system that needs to be strengthened; the extent of red-tapism existing in our bureaucratic framework is staggering. The culture of collecting files needs to be replaced with a positive culture of clearing files. Every department needs to be proficient in its working, so much so that prospective business houses should feel hopeful about their licenses getting approved at the earliest and believe that their government is supportive of their ventures. It is only with a change in attitude can we really expect a change for real.

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Do celebrities owe us a duty for the claims they make in advertisements?

Do celebrities owe us a duty for the claims they make in advertisements?

The favorite midnight snack of many, Nestlé’s Maggi has been banned by the Food Safety and Standards Authority of India (FSSAI) because of problems associated with the quality and labeling of the product. The notices issued to various celebrities who had been endorsing Maggi noodles and the orders for lodging FIR against them have reignited an extremely important legal debate concerning the liability of celebrities for the product endorsements they make. This article discusses the duty of celebrities for their endorsements, relevant laws in India and the precedents in some other countries.

 

Making a case for celebrity endorsement

There are many questions which crop up when we seek to make celebrities liable for their claims in advertisements. First among them being do the people actually believe in the claims celebrities make? Are the products bought because of endorsements or are they bought first and endorsements only reassure the consumer? Well, there is no straitjacket formula to these questions unlike believed by some. It certainly depends on “the context, the product or service endorsed, the expertise of the celebrity in that area, the mass appeal of the celebrity and the reliance of individual consumer”. This brings us to a more nuanced argument. Does the fact that celebrities have a right to publicity which they harness economically while advertising, impose a duty on them to not use this right in a manner detrimental to the general public? Or since the celebrities have a right to publicity, the audience has a reciprocal right of reliance? After all, unlike the movies, the fact that the plot and characters are fictional is never reflected/shown in an advertisement. In fact the representations made by the likes of Ms. Padukone are a “cause in fact” of the pecuniary loss to the consumers to the extent of the difference between an effective gym equipment for losing one’s weight and the Kellogg’s Special K. Similar arguments can be made for every misleading advertisement. Some make a superficial distinction between the celebrities giving personal testimonies versus the celebrity playing a role in the advertisement, for instance Ms. Dixit is playing the role of a mother in the Maggi advertisement. It is argued that a celebrity should be liable only when (s)he is making a personal testimony and not when (s)he is playing a role of another. However, it is extremely difficult to accept this difference. Audience generally does not think this way when relying upon the claims. Further, as stated above, unlike films, the fictional and impersonalized role is not emphasized in advertisements, thus making no space for this argument. Another argument put forth by the people disagreeing with making celebrities liable is based on the fact that celebrities have to no way in which they can identify the truthfulness of the statement which they are made to say in the testimonial by the ad-gurus. However a simple counter to this is requiring celebrities to test, try and experiment the product to find out. Similar has been legislated upon in various countries as we will see in the next section. While this may sound a little far-fetched in the case of Maggi noodles, after all, checking the amount of lead is the duty of the FSSAI and not Ms. Dixit’s and every single pack can certainly not be checked by the celebrities, yet celebrities can certainly be made liable for making sweeping claims like a person drinking Drink X can grow twice as taller as (s)he would grow drinking Drink Y (the ad for the health drink Complan). Therefore, there remains a strong case for making celebrities liable.

 

What are our neighbors and partners in trade doing about it?

In the USA, the Federal Trade Commission Guidelines prohibit deceptive and misleading endorsements by celebrities and make celebrities liable for the same. The endorsers are required to reflect their “honest opinions, findings, beliefs, or experience” in the advertisements. In fact, the advertisers can continue to use the endorsements only as long as the advertiser has a good reason to believe that the endorser continues to remain a bona fide user of the endorsed product. In Europe, the celebrities follow a self-imposed code whereby they refrain from endorsing products harmful to the health of the general public like alcohol, medicines etc. Korea on the other hand has an Advertising Self-regulation Institution which issues guidelines with respect to endorsements and reviews the endorsed advertisements making false advertisements a rarity. Among our neighbors, China makes the endorsers jointly liable with the service provider for the harm caused by the product. Pakistan also has laws forbidding false and misleading advertisements, however it is uncertain whether these laws will also include liability of celebrities for their endorsements. The Malaysian Code of Advertising Practice requires that the endorsements or testimonials contained in advertisements should be based on genuine experience of the endorser over a period of time. Malaysia also has special guidelines for “[p]ersons, characters or group who have achieved particular celebrity status with children”. These celebrities are forbidden from promoting food or drinks in a manner that may undermine the need for a healthy diet however the endorsers are not liable for the same since sanctions are in the form of “withholding of advertising space from advertisers and the withdrawal of trading privileges from advertisers/ advertising agencies”. Singapore has similar laws  relating to false advertisements and is also cogitating to put into place specialized guidelines pertaining to children. In Japan on the other hand celebrities participating in false endorsements are made to apologize publicly. This harms the reputation of the endorser decreasing the employment opportunities of these people, forcing celebrities to refrain from making claims with regard to the quality or effectiveness of a product.

 

What is the law in India?

Section 24 of the Food Safety and Standards Act, 2006 puts restrictions on misleading advertisements. It states, that “no person” shall be allowed to engage in misleading representation concerning the “standard, quality, quantity or grade-composition” and “need for, or the usefulness” of a food product. (S)he should not make any statement which “gives to the public any guarantee of the efficacy [of the product] that is not based on an adequate or scientific justification thereof.” Section 53 of the Act describes the penalty for such false advertisements which can extend to ten lakh rupees. This penalty applies to “any person” and hence should ideally include the celebrities; however there is no case law to support this proposition. The Central Consumer Protection Council (CCPC) has also decided to issue specific guidelines to this effect after the MP High Court directed to set up an advertisement monitoring panel as per the Vibha Bhargava Commission. These guidelines if enforced will allow consumers to claim compensation from celebrities for misleading claims made regarding a product, recklessly or with knowledge that the claim is false.

 

Conclusion

The case for celebrity endorsement is a strong one considering the status which is accorded to the claims made by these stars and the money which is used in these endorsements. This has been understood across the world and many countries have laws to the effect of punishing celebrities for misleading claims. Indian laws are also developing in this regard and stars in India are becoming more aware with respect to the duty they owe to their fans. For instance recently Amitabh Bachchan stopped promoting Pepsi after a young girl questioned him as to his reasons for endorsing Pepsi which her teacher had termed as poison.