SC quashes RBI’s Feb 12 notification that directed banks to initiate insolvency proceedings if debt is not resolved within 180 days
The Supreme Court (“SC”), in the case of Dharani Sugars and Chemicals Limited v. Union of India & Others, passed a judgment quashing the General Circular issued by the Reserve Bank of India (“RBI”) on February 12, 2019, (“Circular”).
The Circular issued by the RBI directed all banks to resolve all debts above₹ 2,000 Crore within 180 days of non-payment. The Circular also stipulated that in the event the debts are not resolved within 180 days, then banks are to approach the National Company Law Tribunal within 15 days to initiate insolvency proceedings under the Insolvency and Bankruptcy Code, 2016 against the defaulter.
The main contention of the applicants in this matter was that the RBI has no jurisdiction or authority to determine as to when banks should initiate insolvency proceedings. The RBI, in turn had argued that Section 35A of the Banking Regulation Act, 1935 (“BR Act”) authorized the RBI to issue general directions to banks.
The SC, however, rejected the arguments of the RBI, stating that the Government of India had amended the BR Act in 2017 and inserted Section 35AA which stated the RBI can direct any banks to initiate insolvency proceedings with respect to a default only upon the Government’s direction to the RBI in that regard. Therefore, the SC opined that it was the intention of the Government to ensure that the RBI can direct banks to initiate insolvency proceedings only in specific cases and not make general directions without the consent of the Government.
Quick View:
- The RBI had introduced the Circular with the aim of improving credit culture in India. However, with this judgement, theRBI’s hopes of improving the credit culture in India will be dented.In the absence of the Circular, the RBI will have no control over the manner in which banks can initiate insolvency proceedings. Therefore, the onus to restructure accounts and initiating insolvency proceedings is upon banks, who are still to initiate insolvency proceedings at their discretion.
Municipalities’ employees are entitled to gratuity under the Payment of Gratuity Act, 1972: SC
The Supreme Court (“SC”) in the case of Nagar Ayukt Nagar Nigam, Kanpur v. Sri Mujib Ullah Khan and Another, passed a judgment whereby it held that the employees of local bodies like municipalities are entitled to gratuity under the Payment of Gratuity Act, 1972 (“Central Act”).
The SC upheld the judgment from the Allahabad High Court which had rejected the contention that municipalities’ employees are entitled to gratuity in terms of the regulations framed under Section 548 of the Uttar Pradesh Municipal Corporation Act, 1959 (“State Act”).
The Supreme Court took note of Central Government’s Notification dated 08.01.1982 (reproduced in the judgment in paragraph 7) which provided that local bodies with ten or more employees are a class of establishments to which the Central Act applies. Additionally, the Apex Court also noted that the State Act conferred more restrictive benefit of gratuity compared to the Central Act. The Court referred to Section 14 of the Central Act and ruled, that the provisions of the State Act with respect to the payment of gratuity shall be inapplicable in this case.
Quick View:
- The judgment of the Supreme Court has come as a welcome clarification with respect to the relationship shared by the Central Act and other enactments passed by the various states on the subject. Consequently, while settling the issue for the State of Uttar Pradesh, this judgment will also in turn will act as a precedent in resolving matters pending on the same subject in other states.
WIPO launches AI based image search option for identifying similar logos
Before commencing the process of registration of a trade mark, companies and brands are advised to do a trade mark search to identify same or similar trade marks in the same line of business or market. In fact, we advise our clients to undertake this trade mark search even before announcing their trade mark, thus ensuring that the trade mark they choose for their business has not been previously registered by any other party. While the TM India website provides for a trade mark search option, the same is limited to word mark search, i.e., there was no option to upload the image of a logo mark and search for similar registered logo marks.
The World Intellectual Property Organization (“WIPO”) has recently launched a new artificial intelligence (AI) powered image search option that makes it easier to establish the distinctiveness of a trademark. Prior to this launch, certain other image search tools were available. However, they primarily determined trademark image similarity by identifying shapes and colors in marks. This new-gen AI powered image search claims to identify combination of shapes and colors and provide a narrower and more precise group of potentially similar marks
Anyone can access the AI search technology for free through WIPO’s global brand database.
This database features 38 million trademarks registered in over 45 trademark offices across the globe.
Quick View:
- This new technology introduced by WIPO will definitely go a long way in assisting trademark owners in identifying the most distinctive logo mark for their business, one that is not similar to any other previously registered logo mark. Unlike other AI features or software that is available to only a few people, by making this free and available to all users across the globe, WIPO has ensured that this facility is accessible to everyone.
Disclaimer: This post has been prepared for informational purposes only. The information/or observations contained in this post does not constitute legal advice and should not be acted upon in any specific situation without seeking proper legal advice from a practicing attorney.