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Report on Khap Panchayats The Law Commission has drafted a consultation paper on caste panchayats. A draft legislation titled “The Prohibition of Unlawful Assembly (Interference with the Freedom of Matrimonial Alliances) Bill, 2011” has been attached to the consultation paper. The Bill prohibits people from congregating together to condemn a legal marriage on the ground that the said marriage has brought dishonour to the caste or community. Every member of such a group shall be punished with imprisonment of a minimum term of 6 months and a maximum term of 1 year. The member may also be liable to a fine of up to Rs 10,000. Under our criminal justice system, the presumption is that the accused person is innocent until proven guilty. This Bill reverses this presumption. It provides that if an accused person participated in an unlawful assembly, then it will be presumed that the accused intended to commit an offence under the Bill. The Commission has invited public comments on the consultation paper within 4 weeks. The comments can be sent by post or email to lci-dla@nic.in. A copy of the consultation paper is available at http://lawcommissionofindia.nic.in/reports/cp-Honour%20Killing.pdf. Report on compounding of offences including Sec 498A of IPC (harassment for dowry) The Law Commission has also submitted its report on ‘Compounding of (IPC) Offences. Compoundable offences are offences which allow the parties to enter into a private compromise. The Supreme Court in some recent cases had asked the Law Commission to identify more offences which could be treated as compoundable. Section 320 of the Code of Criminal Procedure lists the offences which are compoundable. Currently under the section there are 56 compoundable offences. Certain offences can be compounded only with the prior permission of the court. The Commission has recommended that Section 498A of the IPC (cruelty against a married woman by her husband or relatives) should be made compoundable with the permission of the Court. It has recommended that the magistrate should give a hearing to the woman and then permit or refuse the compounding of the offence. This has been recommended to ensure that woman is not coerced into compounding the offence. The other IPC offences that the Commission has recommended should be made compoundable include (a) Section 324 (simple hurt); (b) Section 147 (rioting); (c) Section 380 (theft in dwelling house); (d) Section 384 (extortion) and (e) Section 385 (extortion by threat to person). A copy of the report is available at http://lawcommissionofindia.nic.in/reports/report237.pdf
Recently, there have been instances of certain collective investment schemes (CISs) attempting to circumvent regulatory oversight. In addition, some market participants have not complied with Securities and Exchange Board of India's (SEBI) orders of payment of penalty and refund to investors. In August, the Securities Laws (Amendment) Bill, 2013 was introduced in the Lok Sabha to amend the Securities and Exchange Board of India Act, 1992 (the SEBI Act, 1992), the Securities Contract (Regulation) Act, 1956 (SCRA, 1956) and the Depositories Act, 1996. The Bill replaced the Securities Laws (Amendments) Ordinance, 2013. The Bill makes the following key amendments: a) Definition of Collective Investment Schemes The SEBI Act, 1992 defines CISs as schemes in which the funds of investors are pooled, yield profits or income and are managed on behalf of investors. It also exempts certain types of investments which are regulated by other authorities. The Bill introduces a proviso to the definition of CIS. This proviso deems any scheme or arrangement to be a CIS if it meets all three of the following conditions: (a) funds are pooled, (b) it is not registered with SEBI, or it is not exempted by SEBI Act, 1992, and (c) it has a corpus of Rs 100 crore or more. These provisions could potentially lead to some schemes not conventionally defined as CIS to fall under the definition. For instance, partnership firms operating in the investment business or real estate developers accepting customer advances could be termed as CISs. SEBI has been given the power to specify conditions under which any scheme or arrangement can be defined as a CIS. This raises the question of whether this is excessive delegation of legislative powers - usually the parent act defines the entities to be regulated and the details are entrusted to the regulator. b) Disgorgement (repayment) of unfair gains/ averted losses SEBI has in the past issued orders directing market participants to refund i) profits made or ii) losses averted, through unfair actions. The Bill deems SEBI to have always had the power to direct a market participant to disgorge unfair gains made/losses averted, without approaching a court. This power to order disgorgement without approaching a court is in contrast with the provisions of the recently passed Companies Bill, 2011 and the draft Indian Financial Code (IFC) which require an order from a court/tribunal for disgorgement of unfair gains. Further, the Bill specifies that the disgorged amount shall be credited to the Investor Education and Protection Fund (IEPF), and shall be used in accordance with SEBI regulations. The Bill does not explicitly provide the first right on the disgorged funds to those who suffered wrongful losses due to the unfair actions, unlike the draft IFC. c) Investigation and prosecution The Bill empowers the SEBI chairman to authorise search and seizure operations on a suspect’s premises. This does away with the current requirement of permission from a Judicial Magistrate. This provision removes the usual safeguards regarding search and seizure as seen in the Code of Criminal Procedure, 1973, the recently passed Companies Bill, 2011 and the draft Indian Financial Code. The Bill also empowers an authorised SEBI officer to, without approaching a court, attach a person’s bank accounts and property and even arrest and detain the person in prison for non-compliance of a disgorgement order or penalty order. Most regulators and authorities, with the exception of the Department of Income Tax, do not have powers to such an extent. d) Other Provisions of the Bill The Bill retrospectively validates consent guidelines issued by SEBI in 2007 under which SEBI can settle non-criminal cases through consent orders, i.e., parties can make out-of-court settlements through payment of fine/compensation. The United States Securities and Exchange Commission settles over 90% of non-criminal cases by consent orders. The Bill retrospectively validates the exchange of information between SEBI and foreign securities regulators through MoUs. The Bill sets up special courts to try cases relating to offences under the SEBI Act, 1992. For a PRS summary of the Bill, here.
