Rate of ESI contribution reduced by the Government to benefit Employers and Employees
The Ministry of Labour & Employment (“MLE”) issued a press release stating that the government has reduced the rate of contribution from 6.5% to 4% under the Employees’ State Insurance Act (“ESI”). Employees will now contribute 0.75% instead of 1.75% and employers will contribute 3.25% instead of the erstwhile 4.75%.
The reduced rates are intended to bring about increased compliance of law while also facilitating a greater enrollment of workers under the ESI scheme. The lowered rates in favour of the employers will reduce the financial liability of the establishments, thereby increasing their viability. Moreover, it will provide substantial relief to the workers and bring more of the workforce into the formal sector.
The revised rates will be effective from July 1, 2019, and would benefit over 12.85 lakh employers and 3.6 crore employees collectively.
The benefits under the ESI Act are financed by the contributions of the employees and employees and include maternity, medical, disability, dependent and cash benefits to insured people under the Act. The Act itself is regulated by the Employees’ State Insurance Corporation (“ESIC”), and the Indian government through the MLE fixes the rate of contribution. In order to expand the Social Security coverage to a greater number of people, the government intends to extend the coverage of the scheme in a phased manner to all the districts. These collective actions will lead to a boost in the revenue income of the ESIC and increase the total number of registered employers and employees.
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It is true that a greater number of workers will get enrolled under the ESI scheme if the rates are lowered, however, the onus still remains on the government to increase the benefits to the employees under the scheme rather than cutting down on the contribution.
The ESI Act is a beneficial legislation that attempts to secure the employees against any unfortunate incidents, and this objective is thwarted if the overall amount that can be recovered by the employees is lowered, even if the immediate benefits are greater. It still remains to be seen if it’s the employees or the employers who are truly the beneficiaries of this change in rate of contribution.
SEBI moves Apex Court against NCLT order proclaiming overriding effect of IBC over SEBI
The Securities and Exchange Board of India (“SEBI”) has approached the Supreme Court to challenge the order of the National Company Law Tribunal (“NCLT”) which ruled that the Insolvency and Bankruptcy Code (“IBC”) would have an overriding effect on the SEBI Act.
In the matter of HBN Diaries & Allied Limited, (“HBN Diaries”) in February, 2015, SEBI directed the properties of HBN Diaries to be attached in order to pay back the illegal monies of Rs. 1136 crores collected by them from depositors through an unauthorized Collective Investment Scheme (“CIS”). Subsequently, this order was upheld by the Securities Appellate Tribunal (“SAT”).
However at a later stage, a group of 30 depositors filed an application under the IBC before the NCLT, without involving the SEBI. The NCLT ordered for the de-attachment of properties that were previously attached by SEBI and directed for the appointment of an Insolvency Resolution Professional to carry out the proceedings under the IBC.
The NCLT further held that the IBC would override the provisions of the SEBI Act, as a result of which SEBI would be unable to recover money from HBN Diaries. This order was upheld and reiterated by the NCLAT, which ultimately led to the current appeal being filed in the Supreme Court.
The main issue in the instant case is whether the IBC can be invoked in a case involving CIS, which is regulated and governed by the SEBI Act. SEBI has contended that since the CIS is constituted as a Trust, the assets are held by the Trustees in favour of the investors. Moreover, the Trust is completely disconnected Collective Investment Management Company that initiates the scheme. Thus, the IBC cannot be triggered when the matter is related to a CIS and not a Company.
Further, it has been contended that the depositors in the scheme, who are the unit purchasers, are holders of units and not lenders. These units would eventually become tradable commodities when the trust gets registered. Therefore, the depositors would not be in the nature of Financial Creditors as claimed by them when they approached the NCLT.
The vacation bench of the Supreme Court has listed the matter for hearing on July 17, 2019 and ordered for status quo to be maintained in the meantime.
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The reason the IBC was codified and implemented was for speedy disposal of cases and recovery of money to the creditors. A probable reason for the NCLT passing such an order might be because the SEBI has a low success rate when it comes to disposing of assets attached under CIS in fraud cases, and in order to benefit the depositors, recovery under the IBC would have seemed to be a better option.
However, the orders given must be in compliance with the law and now, it shall be up to the Supreme Court to resolve this legal impasse to determine whether the IBC would truly have precedence over the SEBI Act or not. Hopefully, the decision will be made by keeping the larger interests of the stakeholders in mind.
Delhi HC directs Trademarks Registry to mandatorily send notices prior to trademark removal from Register
Delhi High Court, in the case of Vijay Kumar Salwani Trading V. Union of India and Anr, passed an order holding that the Trademarks Registry cannot remove a registered Trademark without mandatorily sending notice under Section 25(3) of the Trade Marks Act, 1999.
In the present case, the Petitioner i.e Salwani Trading approached the Delhi HC challenging the removal of its registered Trademark from the Register without any notice.
The Central Government representing the Trademarks Registry submitted that the notice was issued by the department but the record of the notice was not available and hence, the department was unable to show proof of the same. It was also submitted that the Trademarks Registry had taken a decision to reconsider all applications of trademark removal where the required notices were not duly sent.
Thus, the Delhi HC set aside the removal of the above registered Trade Mark and directed the Trademark Registry to issue a fresh notice. It was also held that Salwani Trading was free to file an application for renewal of the Trade Mark which must be considered by the Trademarks Registry in accordance with the law.
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Under the Trade Marks Act, 1999, registration of a trade mark is available for a period of 10 years and the proprietor can renew such registration after expiry of the said period. However, before the expiration of the registration, the Registrar of Trade Marks must send a notice to the proprietor intimating the expiration and conditions for renewal. This is to enable the registered proprietors to have reasonable time to fulfill conditions for renewal of trade marks. Thus, the Registrar cannot arbitrarily remove any trade marks from the Register without following the due process of sending a notice. The judgments upholds the same and further directs the Registry to process all applications of renewal of trade mark registration where the notices were not duly sent by the Registry.