India: Bills That We Look Forward To

Last Updated: 4 January 2017
Article by Bijit Das

2016 had witnessed a lot of laws being passed, from laws on real estate to bankruptcy, there have been striking reforms in the financial, corporate, and legal sector to reduce uncertainty relating to several problems in law that have emerged with the passage of time. Out of the several pending Bills, we look forward to passing of the following:

The Companies (Amendment) Bill, 2016

This Bill amending certain provisions of the Companies Act, 2013 was introduced in Lok Sabha in March 2016 on recommendations from the Companies Law Committee. This Bill was thereafter referred to the Standing Committee on Finance for deliberation. Broadly this proposed amendment relates to structuring, disclosures, and compliance requirement for companies. Three years since the passing of the Companies Act 2013 it has faced several revisions time and again. The 2016 Amendment proposes to further revise and liberalize the requirements for conducting business.

  • It has attempted to remove the requirement of providing separate offer letters to individuals to whom private placement is likely to be made. However, in case of any return of allotment the Registrar of Companies must be notified.
  • The Amending Bill further amends Section 188 pertaining to related party transactions and says that where in a company 90% or more members in number are relatives of promoters or related parties they shall be allowed to vote on the companies special resolutions to approve any contract or arrangement. Earlier such related parties did not possess any right to vote in a special resolution in matters relating to the company's contracts or arrangements.
  • Further, the Bill requires that any person or a group of persons who hold a beneficial control in a company must disclose their respective interests.
  • Where on one hand the proposed Bill limits the number of Intermediary companies through which investments can be made in a company, all limits on layers of subsidiaries that a company can have are proposed to be removed. Therefore, as per the proposed Bill a company may have a number of subsidiaries without any limitation.
  • The proposed amendment also removes the provisions relating to prohibition of forward dealing and insider trading which is regulated by the SEBI (Prohibition of Insider Trading) Regulations, 2015.
  • Earlier provisions highlighted that Independent directors should have no pecuniary interest whatsoever with the company, the proposed amendment does away with this compliance and allows pecuniary interest up to 10% of his total income.

We look forward to these changes being implemented.

The Consumer Protection Bill, 2015

The Consumer Protection Bill 2015 once passed will be set to replace the Consumer Protection Act, 1986. The aim of the Bill is to hold the rights of the consumers sacrosanct and paramount.

The Bill in addition to imposing high penalties for misleading ads highlights that a redressal mechanism body shall be set up at district, state, and national level in the form of Consumer Dispute Redressal Commissions. Further –

  • A Consumer Protection Authority is delineated under the Bill as an investigation agency.
  • The Bill empowers an aggrieved consumer to file a claim of product liability against the manufacturer.
  • The Bill also gives way to certain grey areas that need to be addressed and gaps that need to be filled. E.g., it gives the Central Government supervisory powers over the Consumer Redressal commissions in District, State, and Central level and the directions given by the central government shall be binding upon these commissions. The question of law that the Bill raises is pertaining to violation of the doctrine of separation of power as the District commission which is a quasi-judicial body will be headed by the District magistrate, an executive.
  • Furthermore, product liability includes defects in goods and deficiency in services and proving the factum of deficiency in services to supplement a consumer claim remains unclear under the Bill.

The Ministry of Consumer Affairs is hopeful that the Bill will crystallize into the Amending Act by the Parliamentary Budget session.1

Payment of Wages (Amendment) Bill, 2016

This Bill was recently introduced in Lok Sabha in December, 2016 and proposes to make suitable amendments to the Payment of Wages Act, 1936. The 1936 Act mandates that payment of wages can be carried out by issuing coins or currency notes or both, the employer can also pay wages to his employees by issuing a cheque or by crediting the amount accrued to the bank account of the employee. However, the latter could be effected only after obtaining a written permission from the employee. This Bill removes the requirement of obtaining a written permission from the employee. With the government's move on going cashless in the wake of cash crisis and demonetization, doing away with the requirement of obtaining employee's permission for payment of wages through wire transfer is sure to relieve employers from the hassles of making wage payments in cash. Additionally, the relevant government may specify the industrial or other establishments where an employer should pay wages by cheques or through wire transfers.

Employees Compensation (Amendment) Bill, 2016

This Bill was introduced in Lok Sabha in August 2016 to amend the Employees Compensation Act, 1923. The Bill stipulates payment of compensation to employees and their dependents in event of any injury caused to them by industrial accidents in the course of employment and such injuries also include occupational diseases. The amending Bill introduces a provision wherein the employer should inform the employees of all the rights to compensation available to them under the Act and all these disclosures shall be made in writing (in Hindi/ English/ Relevant Official Language) at the time of employment. The Bill highlights that if the employer fails to comply with this requirement and fails to inform the employees of their right to compensation, a penalty shall be levied upon him that may range in between INR 50000 to INR 100000.

This Bill empowers the Employees Compensation Commissioner to hear any dispute arising under the Act and the Commissioner's decisions would be appealable in the High Court provided the amount in dispute is above or equal to INR 10000.

Motor Vehicles (Amendment) Bill, 2016

The Motor Vehicles (Amendment) Bill was introduced in Lok Sabha in August 2016 with an aim to amend the Motor Vehicles Act 1988 that provides standards for Motor vehicles, grant of driving licenses, and penalties for violating of the provisions under the Act. The Bill requires the Central Government to formulate a National Transportation Policy with a view to establish a planning framework for road transport and for identifying priority areas for road transport system. This Bill also allows the Central Government to order for recall of motor vehicles if such motor vehicles are, by any means, capable of causing damage to the environment, or the driver, or other people on the road. Further, the Bill states that the manufacturer will have to reimburse the buyers for full cost of the vehicle in dispute or replace the defective vehicle with another vehicle with similar or better specifications.

The Motor Vehicles (Amendment) Bill proposes to make numerous pioneering changes, one of which is also the much awaited defining moment of throwing light on the validation of web aggregator services. The Bill describes an aggregator as a digital intermediary or a market place where services may be availed by a passenger to connect with the drivers who offer transportation services. The aggregator must obtain the requisite licenses to commence such a business/ service and additionally comply with the requirements of the Information Technology Act, 2000.


1. PTI, Govt. Hopes Consumer Protection Bill to Pass in Budget Session, MONEYCONTROL (December 23, 2016)

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