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PUBLICATIONS

1. Real Estate

• Stamp
  • Stamp Duty and Registration Fees

    • Stamp Duty and Registration Fees
      

      Difficulties are being faced in South City and other projects at the time of the registration of the conveyance due to the Registrar’s demanding stamp duty and registration fees on the market value of the apartment ruling today which is about Rs.4000/- per sft according to him. The persons who booked the flats at Rs.1500/- or Rs.1700/- per sft are finding it to be too high. 
      Usually the prices increase as the time passes after the initial booking of flats.  Therefore it is suggested that in all your projects and particularly in Bengal NRI (where you and your friends have retained lands) Allotment/Agreement for Sale should be stamped and registered immediately. Though the Stamp Act mentions that stamp duty is payable on the Conveyance at the market value which means the market value prevailing at the time of registration of the Conveyances. But by a notification Government of West Bengal has directed that if the Agreement for Sale has been stamped and registered, then no extra stamp duty will be demanded on the Conveyance in pursuance thereof and the market value as on the date of registration of the Agreement for Sale will be applicable.
      This may not suit investors because conveyance in favour of a nominee may not get this benefit.
      Naresh Balodia

  • Stamp Duty on Lease and Agreement to Lease

    • STAMP DUTY ON LEASE / AGREEMENT TO LEASE:

      1. Lease means letting out of any property for specific period - which may also be perpetual in certain cases.
      2. In West Bengal Lease includes Agreement to Lease w.e.f. 31.1.1994 (Section 2) (16).
      3. In West Bengal on agreement for Lease, Stamp Duty payable is same as in case of Lease since Lease includes the Agreement for Lease.
      4. Stamp Duty payable on Lease is calculated as follows :-

       

      No.	Lease period	Stamp Duty payable
      A.	Less than one year	Same as Bottomry Bond (currently 4%) on whole amount of rent payable.
      B.	1 year to 5 years	Same as Bottomry Bond (currently 4%) of 1 year’s average rent.
      C.	5 years to 10 years	Same  Duty  as  conveyance i.e, (6% if less than 25 lacs & 7% if more than 25 lacs) on 1 year’s average rent.
      D.	10 years to 20 years	do  - on double the amount of rent.
      E.	20 years to 30 years	do  - on three times of the amount of rent.
      F.	30 years to 100 years	do  - on four times of the annual rent.
      G.	More than 100 years	do –1/10th for agricultural purpose and 1/6th for other purposes on the total amount of rent which would be paid or additioned in respect of first fifty years of Lease.

       

      5. If Lease is without any definite term.

      Stamp Duty as on conveyance i.e, (6% if less than 25 lacs & 7% if more than 25 lacs) on 3 times of the average rent for first 10 years.

      6. If the lease is granted for a fine or premium, or for money advanced and where no rent is reserved, the same stamp duty as conveyance i.e, (6% if less than 25 lacs & 7% if more than 25 lacs) for a consideration equal to the amount or value of such fine or premium or advance as set forth in the Lease.
      7. In case lease is granted for a fine or premium, or for money advanced in addition to rent reserved, the same stamp duty as conveyance for a consideration equal to the amount or value of such fine, premium or advance as set forth in the lease in addition to the duty which would have been payable on such lease, if no fine or premium or advance had been paid or delivered.

      If lease is transferred by way on assignment then full stamp duty is payable as per conveyance on the market value of the property (Article 63).
      Naresh Balodia

• Payment of Consideration under promoter's act

  • Payment of consideration under the Promoters’ Act

    [The WB Building (Regulation of Promotion of Construction and Transfer by Promoters) Act, 1993].

    A question has arisen whether the Promoters’ Act bars receiving more than 40% of the sale price before delivery of possession. The provisions in this regard are as follows:

    1. Sec. 7 prohibits the Promoters from accepting any advance payment or deposit before it receives permission to construct under Sec.3 of the Promoters Act.
    2. It further provides that not more than 40% of the sale price can be taken as advance and the advance can be taken only after execution of a written agreement of a sale of the flat.

    On this basis, it is being contended that before delivery of possession or conveyance, a promoter cannot receive more than 40% of the sale price.
    Attention is drawn to Rule 8 of the rules framed under the Act. It provides, inter alia, that the Agreement should mention (i) date and the amount of each installments of the advance (ii) date and particulars of payment of the balance amount of the consideration.
    Therefore it is apparent that the Act makes a difference between advance or deposit and payment of installments of the consideration. Hence, despite the bar regarding receiving not more than 40% of the sale price as advance, the agreement can provide that the balance 60% of the consideration can be received in installments on specific dates before the delivery of possession.
    Therefore, it can be contended with considerable force that a promoter cannot take more than 40% of the sale price before entering into an agreement and can take the balance in installments as advance or part payment of sale price before delivering possession of the flat.
    Dipankar Bose

• Thika Tenancy

  • Thika Tenancy
    The Thika Tenancy Act, 2001 (the "Act") has been amended wef 1st November, 2010. The salient features of the amendments are as follows:

    1. Sec. 2(14).
    1. By the amendment in the definition of "Thika Tenant" the word "structure" has been replaced with "pucca structure".
    2. The definition of “Thika Tenant” in both the 1981 Act and the 2001 Act in the definition of "Thikka Tenant" the word "structure" was used and the Calcutta High Court had, inter alia, held that "word 'structure' in the definition of 'Thika Tenant' must necessarily mean a 'kutcha structure' and cannot be a 'pucca structure'". The amendment is nullifying these judicial decisions.
    3. The practical effect of this amendment is that if a person, in occupation of a land under 'another person' (the "Landlord"), under a written lease or otherwise, has erected or acquired any 'pucca' structure thereon, then the interest of the Landlord in such land shall vest in the Government.
    2. Section 5(5)
    1. This is a new insertion and it empowers the Thika Tenants, after obtaining a 'no objection certificate' ("NOC") from the Controller of Thika Tenancy (the "Controller"), to construct 'pucca structure' in accordance with the building plans sanctioned by the appropriate municipal authorities.
    2. The practical effect is that now the Thika Tenants can demolish the existing 'structures', whether kutcha or pucca, and have building plans sanctioned from appropriate sanctioning authorities to construct new structures.
    3. Section 6
    1. Under Section 5(4), the interests of Thika Tenants are only heritable and NOT transferable.
    2. Under Section 6(2), transfers or agreement for transfer are to be declared invalid under by the Controller and these shall stand forfeited to the Government.
    3. By the amendment of Section 6(2) transfers and agreements to transfers of 'pucca' structures even after obtaining the NOC to construct it are also void and liable to be forfeited.
    4. Section 8
    1. The practical implications of the amendments to this section are that the 'bharatiyas' under a 'Thika Tenants' shall be governed by the West Bengal Premises Tenancy Act of 1997 and the Controller under this Act shall exercise the powers and perform the duties to be exercised by the Rent Controller under the West Bengal Premises Tenancy Act, 1997.
    2. Further, where there is no Thika Tenant, the Bharatia shall deposit rent with the Controller but the Government will not be deemed to be the Landlord under the West Bengal Premises Tenancy Act,1997, but be a Licensor.

    B.S.Purohit

2. Arbitration

• Alternative dispute resolution method

  • Alternative dispute resolution methods: Arbitration and mediation
    
    Aug 8, 2011, 01.58am IST
    Asha Nayar-Basu.
    
    Two of the most common alternative dispute resolution methods are arbitration and mediation. Arbitration is less formal than litigation, while mediation is even less formal than arbitration. Unlike that of an arbitrator, the decision of a mediator is not binding on the parties to the dispute. A mediator does not hold evidentiary hearings as would an arbitrator but instead may conduct informal joint and separate meetings with the parties to understand the issues, facts, and positions of the parties.
    
    To be effective, mediation requires a temperament for settlement from all the parties involved. If successful, mediation is efficient. When parties do not reach an agreement on all the issues involved, mediation can still have a positive effect; it can create a more forthcoming attitude, narrow the issues, disclose some underlying interests, and set the stage for future settlement.
    In contrast, arbitrators hear the testimony and receive evidence in a joint hearing, on which they render a final and binding decision known as an award. At the initial stages, the arbitrators and the parties together decide the procedural calendar and agree on ground rules. Arbitration also offers the parties a level playing field to resolve their disputes. It gives them an opportunity to decide for themselves the rules of procedure, the applicable substantive law, and even who will arbitrate. When cases are fact-intensive and technical, parties can benefit from choosing specialists.
    Any person can be appointed as an arbitrator. These are usually impartial and independent persons in whom all parties repose confidence. If a specialist is chosen for the purpose, it saves the parties the trouble of having to educate a judge. Parties can rely on these arbitrators to render specialized decisions. In certain cases of failure to appoint the arbitrators, the Chief Justice of the High Court or his designate has been given power to appoint the arbitrator under Section 11(6) of the Arbitration and Conciliation Act (Act), 1996.
    One of the factors for determining arbitration as an effective legal institution is the efficiency and efficacy of its award enforcement regime. Under Section 36 of the Act, an arbitral award is enforceable as a decree of the court, and could be executed like a decree in a suit under the provisions of the Civil Procedure Code, 1908. Awards are less susceptible to being challenged than court decisions. This greater degree of finality may be attractive to parties in certain situations. However, it should be remembered that the restrictions on the ability to set aside or vary the decision of the arbitral tribunal may be a considerable disadvantage if you are on the receiving end of a bad decision.
    The Act also empowers the arbitrator to make an interim arbitral award. While there is no time limit for making the award by arbitrators, under Section 14, an arbitrator's mandate can be terminated if he fails to act without undue delay.
    The parties are free to settle the matter any time during the arbitration proceedings.
    A dissatisfied party may apply to the court for setting aside the Award, subject to the conditions as mentioned in Section 34(2) and 34(3). An Arbitral award may be set aside by the court only if the party making the application proves that:
    • It was under some incapacity • The arbitration agreement is not valid under the law • The party was not given proper notice of the arbitral proceedings • The award deals with a dispute not within the ambit of arbitration • The composition of the tribunal or the arbitral procedure was not in accordance with the agreement • The award can also be set aside if the court finds that: • The dispute cannot be settled by arbitration under the law for the time being • The award is in conflict with the public policy of India
    The maximum permissible period for an application to set aside the award is a period of three months. This section provides, thus a sort of a limitation on the applicant.
    Section 37 of the Act contains provisions regarding appeals against certain orders. There are limited grounds on which an appeal shall lie to the appellate court. The Act permits only one appeal. So, no second appeal can be made against an order passed in appeal. However, the right to appeal to Supreme Court is always there.
    But these alternative methods have their drawbacks. If ordered by court or mandated by contract, they can restrict immediate access to the courts. This can result in lower compensatory awards, less negative publicity for the defendant, and a lack of precedent.
    But having said that, the transactional real estate lawyer can no longer simply ignore the issues of how disputes might arise subsequent to execution of a contract. We have to place mandatory arbitration provisions in the agreements. At the bare minimum, there will have to be mediation. The process has to be given a chance to work and that process begins with mediation.
    
    The author is the managing partner of law firm S Jalan & Company.

3. Company and LLP

• Limited Liability Partnership

  • Limited Liability Partnership

    In response to our Advisory No.2 dated 18.06.2009, a lot of interest has been shown in the subject. It has also been announced in the new Budget that LLP will be taxed like an ordinary partnership. In the circumstances, we are setting out the provisions regarding LLP in  a bit more detail hereunder.

    Main advantages in forming a LLP:

    • Maximum number of persons can be unlimited. It is only 20 in ordinary partnership and 50 in private limited companies.
    • Utmost flexibility in management structure: Members can decide the manner in which they want the partnership business can be governed and there are very few restrictions concerning the same. The Act also provides that in case the members do not agree on a particular structure, then the terms contained in First Schedule of the Act will apply which have been mentioned later in detail.
    • Liability of a partner is limited to his investment.

    (This gives  greater flexibility to deal with the strangers and the professionals)

    • Minimal formalities required in operating a LLP.

    • Convertibility:
    • Existing partnerships, private companies and unlisted public companies can be converted into a LLP and vice versa
    • Upon such conversion, the assets and liabilities are automatically transferred into the new entity without  any expense or duties.

     

    • Formation: Only the Partnership Agreement and some forms have to be filed with the ROC.

     

    • No fixed form of Partnership Agreement. It is only to contain the following:
    • Name of the Partners
    • Name of the Partnership with the suffix LLP
    • Business
    • Address of the Registered office
    • Names and addresses of partners responsible to fulfill the statutory requirement (Designated Partners)

    In case of conversion, the Partners and/or the shareholders become the partners of LLP.
    The rights and liabilities of the Partners  to the extent different from those in First Schedule of the Act.
    Features of Standard clauses of Schedule I – They can be altered in the LLP Agreement

    • All partners entitled to share equally in the Capital and Profits/losses.
    • Indemnity Clause
    • Every Partner shall take part in management
    • No partner shall be entitled to remuneration.
    • No partner introduced without consent of all partners.
    • All decisions with majority of partners consent
    • Minutes of decisions to be recorded within 30 days
    • Rendering of true accounts & information by all partners
    • All Disputes will be referred to Arbitration Act

     

    Name of Managing Partner(They can be different  from Designated partners. If not given, then  all  Partners are entitled to management)

     

    Dipankar Bose &
    Tanmay Jalan

• Director's private company

  • Directors of Private Company personally liable for the Income Tax Dues of the Company.

    Under the Company law, a director of a company is not personally liable for the company’s debts unless a court of competent jurisdiction finds him guilty of misfeasance. It proceeds on the basic principle of jurisprudence that a director is presumed to be innocent unless he is proved to be otherwise.
    Nevertheless, Section 179 of the Income Tax Act, 1961 imposes a vicarious liability on Directors and such liability can be imposed by the Assessing Officer (AO) without adjudication by the court.
    The section lays down that the tax due from a private company can be recovered, from every person who was a Director at any time during the relevant Accounting year unless such Director proves that the non-recovery cannot be attributed to any gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the Company.
    The AO under the Said Section may initiate proceeding only if all the following conditions are fulfilled:-

    1. The company is a private company;
    2. Unable to pay tax for the relevant Accounting year;
    3. If the same cannot be recovered fully from the assets of the company;
    4. The process of liquidation or dissolution of the Company has been commenced or its name has been struck off the register of ROC.

    Even resignation of Directorship from the Company will not absolve him from the liability incurred during such period he was a Director of the Company.
    To avoid this liability many people convert the private company into a deemed Public Company in accordance with Section 43A of the Companies Act, 1956 before the same is being wound up.  Upon such conversion the Section 179 of the Income Tax Act does not apply. This is a lacuna in law which has not so far been corrected.

    N.Balodia

4. FEMA

• ADR & GDR

  • AMERICAN DEPOSITORY RECEIPT/ GLOBAL DEPOSITORY RECEIPT

    Introduction
    

    Foreign currency resources abroad can be raised by issuing American Depository Receipts (ADRs) or Global Depository Receipts (GDRs). An Indian Company is permitted to issue its Rupee denominated shares to a person resident outside India being a Depository for the purpose of issuing GDRs and/or ADRs.
    Approval
    An Indian Company has to seek the approval from the Ministry of Finance, Government of India or otherwise if it fits within the eligibility criteria in accordance to the relevant scheme in force or notification issued by the Ministry of Finance.
    Concept

    1. Depository Receipts (DRs) are negotiable securities issued outside India by a Depository Bank, on behalf of an Indian company, which represent the local Rupee denominated equity shares of the company held as deposit by a Custodian bank in India.
    2. DRs listed and traded in the US markets are known as ADRs and those listed and traded elsewhere are known as GDRs.
    3. The proceeds so raised have to be kept abroad till actually required in India. There is no end use restriction except a ban on investment of such funds in Real Estate and Stock Market.
    4. There is no monetary limit upto which an Indian company can raise ADRs/GDR.
    5. It should comply with FDI policy with regard to eligibility and sectoral cap.
    6. On the basis of the ratio worked out and the rupee shares kept with the Domestic Custodian, the Overseas Depository will issue ADRs/GDRs.

    Ineligibility
    1. A Listed Indian Company which is not eligible to raise funds from the India Capital Market including company which has been restrained from accessing the securities market by SEBI will not be eligible to issue ADRs/GDRs.
    2. Overseas Corporate Bodies (OCBs) who are not eligible to invest in India through the portfolio route and entities prohibited to buy, sell or deal in securities by SEBI will not be eligible to issue ADRs/GDRs.
    Requirement in case of unlisted company
    An unlisted company which has not yet accessed the ADRs/GDRs route for raising capital would require prior or simultaneous listing in the domestic market.
    Sponsoring of Issue of ADR/GDR by an Indian company
    It is permitted for an Indian company to sponsor an issue of ADRs/GDRs with an overseas depository against the shares held by its shareholders at a price to be determined by the Lead Manager.  Under this mechanism, the company offers its resident shareholders a choice to submit their shares back to the company so that on the basis of said shares, ADRs/GDRs can be issued abroad.  The proceeds of the ADR/GDR issue is remitted back to India within a period of one month and distributed among the resident investors who had offered their rupee denominated shares for conversion.
    Resident shareholders of Indian companies who offer their shares for conversion to ADRs/GDRs are permitted to receive the sale proceeds in foreign currency and keep such proceeds in their Exchange Earners Foreign Currency (EEFC)/ Resident Foreign Currency (Domestic) accounts in India.

    M.K.Surana

5. Tax

• Income Tax Act 1961

  • Income Tax Act, 1961 (the “IT Act”)

    In case of default in payment of Income Tax by an 'assessee', u/s-222 the Tax Recovery Officer can, even after proceedings for recovery of the arrears by any other mode that has been initiated, recover the amount due by attaching and sale of the movable and immovable properties of the defaulter or appoint a receiver over these properties for management or arrest him.
    The recovery mode of the IT Department shall not affect the recovery proceedings by the Government against the concerned assessee of any of its dues by filing of suit or otherwise under any other law for the time being in force relating to the recovery of debts due to the Government. (Sec-232) 
    If an assessee creates a charge or parts with the possession of any of his assets by way of sale, mortgage, gift, exchange or otherwise during the pendency of any recovery proceeding such charge or transfer shall be void as against any claim in respect of any tax or any other sum payable by such assessee provided that such charge or transfer shall not be void if done with the previous permission of the Assessing Officer or made for adequate consideration and the transferee had no notice of the pendency of such proceeding.(Sec-281)
    U/s 54 of the West Bengal Value Added Tax Act, 2003 (the “VAT Act”)are very much the same in case of 'dealers' as u/s 281 of IT Act but provisions are not similar.
    In view of the above, the purchasers are advised to send requisition on title to ask the seller whether there are any dues under the IT Act or VAT.

     

    Dipankar Bose

6. Miscellaneous

• Ambush Marketing at CWG

  • Ambush marketing at CWG

    Asha N Basu /  October 7, 2010, 1:03 IST

     

    Till the XIX Commonwealth Games (CWG) began, many companies were wary of letting their brand ride on the Games. Hence, official corporate sponsorships were limited to begin with. Having been launched successfully, the Games now find many riding the wave. Ambush marketing has taken over!
    The surreptitious entry of non-sponsor brands into the Games Village and the eleventh hour tangential entry of companies have made non-sponsor brands ubiquitous.
    Ambush marketing is not new to sports events. At the 1996 Summer Olympics in Atlanta, Nike saved $50 million by shying away from official sponsorship but mounted a marketing campaign plastering billboards around the city, handing out free banners to spectators and erecting an enormous Nike centre overlooking the stadium.
    The tactics devastated the International Olympic Committee’s credibility and spooked other organizations such as FIFA into adopting more assertive anti-ambushing strategies. That explains why sporting bodies, including the CWG organizing committee (OC) are alarmed by the phenomenon, more so because ambush marketing is not illegal. Just unethical.
    When Jerry Welsh coined the term ‘ambush marketing’ in the early ’90s, while at American Express, it was seen more as an act of subversion against expensive and often ill-conceived sponsorships. Today, however, the expression has acquired a negative overtone. It’s more like commercial theft. Sports bodies across the globe are not only familiar with the phenomenon, but have learnt to fear it.
    Narrowly viewed, ambush marketing refers to the direct efforts of a party to weaken or attack a rival’s official association with an event acquired through the payment of sponsorship fees. More broadly, rather than direct misrepresentation or infringement, ambush marketing refers to a company’s attempt to capitalize on the goodwill, reputation, and popularity of an event by creating an association without the authorization or consent of the necessary parties. It is believed to be the biggest risk for advertisers seeking sponsorships at sporting events.
    Ambush marketers simply develop a creative advertising campaign around the event, never use the event logo, trademark, and capitalize by association with the event without paying for “official sponsor” status. The Pepsi hot air balloon flying above Sharjah, on the day of the Coca-Cola Cup final, is one such example. And closer home, the straight fight between Hero Honda, a global sponsor of the Champions Trophy taking place in Sri Lanka, and its rival TVS. TVS has, according to industry experts, paid Rs 12 crore to rope in cricketer Sachin Tendulkar as its brand ambassador for three years.
    In most legal systems it would be very difficult to argue that a parody is illegal or a copyright infringement as most often it is protected free speech and a form of permissible cultural criticism. But imagine if it makes better sense to ambush than to be an official sponsor, they would soon be left with nobody to foot the bill!
    Since a major chunk of any Games budget comes from corporate marketing sponsors, broadcast rights fees, and royalties from official merchandise licensees. Event organizers should educate the public about the basics of intellectual property and ambush marketing in its battle against trademark infringement.
    In India, existing law does not provide the “ambushed” entity or the event organiser a ready remedy. In the 2003 case of ICC vs Arvee Enterprises and Philips, the Delhi High Court, while recognising the alleged act as ambush marketing observed that such acts were not in fact prohibited under the Indian law. As a result, the contractual restraints are (for various technical reasons) of very limited use in curbing ambush marketing by opportunistic players.
    It would be interesting to see how the CWG OC will deal with ambush marketing at the Games. Given the event’s ultimate success, after all that bad press, there may be more attempts on the closing day!
    (The writer is partner S Jalan & Co, Attorneys, New Delhi, and Advisor, Communication, Sponsorship & Legacy, CWG 2010)

• Did you spot an Ambush Marketer

  • 24 Mar, 2011, 04.43AM IST, Asha Nayar-Basu,

    Did you spot an ambush marketer?
    
    Over the last two decades, there has been an extraordinary growth in sport sponsorship and its commercial orientation. Even as India, Sri Lanka and Bangladesh are co-hosting the biggest cricket event, the World Cup, several companies have prepared a marketing blitz for the event. And at the same time, several others will seek to associate themselves with the World Cup and access to its audience and will try to capitalise on the accompanying goodwill without approval of the ICC or payment of the requisite sponsorship fees (sometimes without breaking a law).

    When Jerry Welsh coined the term 'ambush marketing' in early 1990s, while at American Express, it was seen more as an act of subversion against expensive and often ill-conceived sponsorships. Today, however, the expression has acquired a negative overtone. It is more like commercial theft. Sport bodies across the globe are not only familiar with the phenomenon but have learnt to fear it. It is believed to be the biggest risk for advertisers seeking sponsorships at sporting events.

    The best example of ambush marketing in India was during the 1996 Cricket World Cup. Coke was an official sponsor, but Pepsi's brilliant counter-ad, Nothing official about it, clearly occupied more of the consumer's mindspace. While PepsiCo did not hijack a brand, it almost hijacked the entire event. Studies have shown that ambush marketers often get at least as much mileage as the official sponsors.

    That explains why sporting bodies are alarmed by the phenomenon, since ambush marketing poses an odd fringe gray area threat because it is not technically trespassing on a trademark. The status of sport stars as youth icons also increases the possibility of conflict between an event, the organisers and the individual sponsorship contracts.

    Usually, the ambush marketer's intention is not to create an impression of affiliation with the sponsor's trademark but to create a nexus between the event and his brand. Thus, there is no confusion or deception between the two trademarks and, hence, there is no infringement.

    For example, American Express bought substantial advertising time on TV networks to counter Visa's official sponsorship of the 1992 Olympic Games in Albertville, France, and Barcelona, Spain. Although American Express did not use the official IP, it featured ad spots that referred generally to 'winter fun and games' and depicted the French Alps, and ran advertisements that stated, And remember, to visit Spain, you don't need a visa.

    It is an established fact that despite the inclusion of a term setting down the minimum visibility that the sponsor must be provided in the field of play and elsewhere, the sponsor may not be able to hold the organiser liable for an unforeseen incursion of a competitor upon that event. However, the broadcaster contracts may have clauses that restrict endorsements by competing brands, thus securing the sponsors rights on media.
    Rising awareness of merchandise use to promote a rival brand has seen entry prohibited to those spectators who wear apparel bearing a rival's logo. During the Athens Olympics, strict rules by the Greeks and the IOC dictated that spectators be refused admission to events till they discarded food or drinks made by firms that were not official sponsors. The Olympics staff checked for t-shirts, flags, hats and bags displaying the unwelcome logos of non-sponsors.

    One classic ambush marketing strategy is to buy up billboards during an event. During the 2008 Olympics, the Beijing Organizing Committee introduced priority allocation of prominent surrounding sites to sponsors and worked with the Beijing Municipal Government to prevent ambush marketing by controlling content of advertisements near games venues, regardless of long-term pacts.

    In India, the 2003 case of ICC versus Arvee Enterprises and Philips, the Delhi High Court, while recognising the alleged act as ambush marketing, categorically stated that such acts were not, in fact, prohibited under Indian law and observed that "an ambush marketer does not seek to suggest any connection with the event but gives his own brand or other insignia, a larger exposure to the people, attracted to the event, without any authorisation of the event organiser".

    Recognising the inadequacy of law to combat ambush, or parasite, marketing, which undermines an event's ability to attract future sponsors, several host countries of major sporting events such as Australia (Olympics 2000), South Africa (2003 Cricket World Cup), West Indies (2007 Cricket World Cup), China (Olympics 2008), Canada (Winter Olympics 2010) and the UK (Olympics 2012) either passed event-specific legislation or amended law to contemplate protection of official sponsors of sporting events. These legislations often have a limited life and cease once the event ends.

    Event organisers and sponsors will have to develop intelligent strategies if they are to make the most of their huge investment in the games, such as:

    Since a major chunk of an event's budget comes from corporate sponsors, broadcast rights fees and royalties from official merchandise licensees, event organisers should educate the public about the basics of intellectual property and ambush marketing in its battle against trademark infringement.

    In some events, sponsorship rights to the event do not include associated media rights. Therefore, the event owners can consider reducing the cost of broadcast rights in return for obtaining more control over who these are sold to, thereby ensuring official sponsors can also purchase normal advertising time and space.

    Finally, the success of a sponsorship rests on the sponsor's ability to sign a watertight contract that clearly defines event owners' responsibility and sponsors' rights as providing more grounds for action and a wider range of remedies.

    (The author is partner at S Jalan & Co)

• Service of Notice

  • Service of Notice

    Preamble
    As common people think, if a notice is not received by the person to whom it has been sent would be treated as non-service. But in law, if a notice is sent properly then even if the addressee does not receive the same, it would be treated as good service.
    Service of Notice

    1. The service of notice shall be deemed to have been served at the time at which the letter would be delivered in the ordinary course of post if –
    1. properly addressed;
    2. pre-paying the postal charges;
    3. posting by registered post,
    4. the letter containing the document,
    5. unless the contrary is proved.
    6. (Sec.-27 : General Clauses Act, 1897)
    2. Service of Notice shall be deemed to be effected by properly addressing, prepaying and posting it by registered post, a letter containing the document. Then a presumption of due service is raised, irrespective of any acknowledgment due is received or not..

    1. Citations :-
    2. AIR 1981 SC 1284 [Har Charan Singh v. Shiv Rani].

    3. When due to any reason, the letter could not be delivered to the addressee, the postman shall endorse the reason of the same and return it back to the addressor. The usual endorsement and its effects are -

    1. “Out of Station”

    1. Good service.
    2. Citations :-
    3. (2007) 6 SCC 555 [CC Alavi  -Vs- Palapetty Md. & ors.].

    2. “The addressee was abroad”

    1. Good service.
    2. Citations :-
    3. (2007) 6 SCC 555 [CC Alavi  -Vs- Palapetty Md. & ors.].

    3. “Refused”

    1. Good service.
    2. Citations :-
    3. AIR 1992 SC 1604 [Jagdish Singh vs. Natthu Singh].
    4. (1981) 2 SCC 535 [Harcharan Singh vs. Shivrani].
    5. AIR 2005 SC 109 [V. Rajakumari vs. P.Subbaramma Naidu & Anr].
    6. AIR 1989 SC 1433 [Gujarat Electricity Board vs. Atmaram Sungomal].

    4. “Addressee absent hence unclaimed”

    1. Good service.
    2. Citations :-
    3. AIR 1999 SC 3762 [K. Bhasskaran vs. Sankaran Vaidhyan Balan & Anr].

    5. “Not Available in House”, “House Locked” & “Shop Locked”

    1. Good service.
    2. Citations :-
    3. (1996) 7 SCC 523 [State of M.P. vs. Hiralal & Ors.].

    6. “Left, not known”

    1. Good service.
    2. Citations :-
    3. 2002 CriLJ 1926 (SC) [Fakirappa vs. Shiddalingappa & Anr.].

    7. “No such Addressee”

    1. Good service.
    2. Citations :-
    3. ILR 2004 Kar 5112 [Neelesh Kumar vs. Janardhan].

    8. “Not Claimed” and “Left without address”

    1. Good service.
    2. Citations :-
    3. 2008 (3) CHN 811 [Rabin Paul & Ors. Vs. Prasanta Kumar Dutta].

    9. “Not found”

    1. Good service.
    2. Citations :-
    3. ILR 2000 Kar 1255 [A. Sathyanarayana vs. C. Nagaraj].

    10. “Addressee always absent during delivery time” and “Party not in station, arrival not known”

    1. Good service.
    2. Citations :-
    3. AIR 2006 SC 2179 [D. Vinod Shivappa vs. Nanda Belliappa].

     

    Special case U/s 138 of N.I. Act

    1. When there is a statement stating that a notice has been sent through registered post to the drawers address, it is unnecessary to further aver in complaint inspite of its return as unserved.

    Citations (for both 1 & 2)  :-

    1. (2007) 6 SCC 555 [C.C Alavi  -Vs- Palapetty Md. & ors.]
    1. When legal notice is sent to the drawer of cheque U/s 138 of N.I. Act, and same is not returned as unserved a presumption could not be drawn that it had been duly served on the drawer/addressee.

    Citations (for 3)  :-
    Manu /DE /0771 /2009 [Held in HDFC Bank vs. Amit Kumar Singh] (Delhi High Court)

     

    T.K.Chowdhury          

• Subsequent Sale

  • The Artist retains the right to a share of the price fixed in every subsequent sale

    1. Even after sale of painting, sculptures, drawings, manuscripts, literary, dramatic and musical work the author / first owner or his legal heirs have a right of share in the sale price (Royalty) of all subsequent sale.
    2. Such right is available in India on and from 10.5.1995.
    3. Such share of the first owner is to be fixed by Copyright Board, which shall in any event not exceed 10% of re-sale price.
    4. Such right of share in subsequent sale is available to the first owner as well as his legal heirs for the entire period of terms of copyright in the work.
    5. The term of copyright starts from its first publication till 60 years from the beginning of the year next, in which the author / first owner dies.  e.g. If author / first owner dies in Jan,’09 or in Dec,’09 in both and all intermediate cases the counting of aforesaid 60 years will start from 1st Jan,’10.
    6. Such right is available to the author and or his legal heirs even after assignment of copyright in such work.
    7. Such right shall come into an end only if author relinquish his copyright in work by giving notice to the registrar of copyright.
    8. The relinquishment does not affect the rights of any persons as a transferee subsisting on the date of notice to the registrar.
    9. There is no limitation prescribed in the act for making such claim. However limitation act may apply which prescribes a period of 3 years for all residual applications.
    10. The originator has the right to restrain or claim damages if there is any distortion which is prejudicial to the reputation of the originator.
    11. The concept is that even in case of sale and/or assignment of a particular painting or literary work right of copying such painting and literature remain with the originator and he can produce as many copies of originals of the same he wants.

     

    The legislation across the world also recognizes the aforesaid right of the author / first owner of artistic or literary work, and such right of share in subsequent sale is termed as Droite de suite (DDS) which means re-sale of Right in original work of art.

    T.K.Chowdhury