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Question 1.
Mr. ‘X’ an Indian resident had remitted an amount of USD 2,80,000 under Liberalised Remittance
Scheme (LRS) for family maintenance in USA during the F.Y. 2022-23 which exceeded the
prescribed limit of USD 2,50,000. The Bank had reportedly sought clarification from the Mr. ‘X’.
Mr. ‘X’ claimed ignorance stating that he assumed that the LRS limit was unlimited and hence did
not declare the transactions done. Mr. ‘X’ was issued a Memorandum of Contravention advising
him to remit back the excess amount.

In view of the above facts, answer the following:

(i) Can remittances be made only in US Dollars? Is Mr. ‘X’ eligible for compounding of the
contravention of Liberalized Remittance Scheme?

(ii) Mr. ‘X’ had remitted an amount of USD 2,80,000 under Liberalized Remittance Scheme (LRS)
for expenses in connection with medical treatment abroad? Will your answer be different in this
situation?

Question 2.
What is the limit on possession and retention of foreign currency or foreign coins under the
Foreign Exchange Management (Possession and Retention of Foreign Currency) Regulations,
2015?

Answer to Question 2.
Under Regulation 3 of the Foreign Exchange Management (Possession and Retention of Foreign
Currency) Regulations, 2015, the Reserve Bank has specified following limits for possession or
retention of foreign currency or foreign coins, namely:

(i) Possession without limit of foreign currency and coins by an authorized person within the scope
of his authority;
(ii) Possession without limit of foreign coins by any person;
(iii) Retention by a person resident in India of foreign currency notes, bank notes and foreign
currency travellers cheques not exceeding US$ 2000 or its equivalent in aggregate, provided that
such foreign exchange in the form of currency notes, bank notes and travellers cheques acquired
during a visit to any place outside India by way of payment for services not arising from any
business in or anything done in India; or from any person not resident in India and also who is on
a visit to India, or as honorarium or gift or for services rendered or in settlement of any lawful
obligation; or as a honorarium or gift while on a visit to any place outside India; or represents
unspent amount of foreign exchange acquired from an authorised person for travel abroad.

Regulation 4 provides that a person resident in India but not permanently resident therein may
possess without limit foreign currency in the form of currency notes, bank notes and travelers'
cheques, if such foreign currency was acquired, held or owned by him when he was resident
outside India and, has been brought into India in accordance with the law for the time being in
force.

Question 3.
Explain the powers of the Reserve Bank of India to issue directions to an authorised person
under the Foreign Exchange Management Act, 1999.

Answer to Question 3.
Section 11 of the Foreign Exchange Management Act, 1999 empowers the Reserve Bank of India
(RBI) to issue directions to the authorised person in regard to making of payment or doing or
desist from doing any act relating to foreign exchange or foreign security. Reserve Bank of India
has also been empowered to issue directions to the authorised persons to furnish such
information in such manner as it deems fit. If any authorised person contravenes any direction
given by the RBI or fails to file the return as directed by RBI, he may be liable to a fine not
exceeding Rs. 10,000/- and in the case of continuing contravention, with an additional penalty
which may extend to Rs. 2,000 for every day during which such contravention continues.

Question 4.
What do you mean by Compounding of Contraventions?

Answer to Question 4.
Contravention is a breach of the provisions of any Act and rules/ regulations / notification /
orders/ directions/ circulars issued there under. Compounding refers to the process of voluntarily
admitting the contravention, pleading guilty and seeking redressal. The Reserve Bank of India
empowered to compound any contraventions under section 13 of the Foreign Exchange
Management Act, 1999 except the contravention under Section 3(a), for a specified sum after
offering an opportunity of personal hearing to the contravener. It is a voluntary process in which
an individual or a corporate seeks compounding of an admitted contravention. It provides comfort
to any person who contravenes any provisions of Foreign Exchange Management Act, 1999
(except section 3(a) of the Act) by minimizing transaction costs. Willful, malafide and fraudulent
transactions are, however, viewed seriously, which will not be compounded by the Reserve Bank.

Any person who contravenes any provision of the Foreign Exchange Management Act, 1999
except section 3(a) or contravenes any rule, regulation, notification, direction or order issued in
exercise of the powers under this Act or contravenes any condition subject to which an
authorization is issued by the Reserve Bank, can apply for compounding to the Reserve Bank.
Applications seeking compounding of contraventions under section 3(a) of Foreign Exchange
Management Act, 1999 may be submitted to the Directorate of Enforcement.

Question 5.
Tiya purchases a laptop for her sister Siya from HP. The laptop had initial installation issues, when
taken to the manufacturer’s service centre defect in the laptop was detected. The company
refuses to redress the issues faced by Siya on the pretext that she was not the consumer. On the
basis of the above case, answer the following questions :

(i) Can Siya be treated as a consumer as she is not the person who purchased the laptop ?
(ii) If this laptop was purchased through amazon, explain the duty of the ecommerce giant in
case of grievance.
(iii) Had a mediator been appointed to settle the issue, what is the procedure of mediation as
given in provision.

Answer to Question 5.
As per Section 2(7) of the Consumer Protection Act, 2019, Consumer means any person who—

(i) buys any goods for a consideration which has been paid or promised or partly paid and partly
promised, or under any system of deferred payment and includes any user of such goods other
than the person who buys such goods for consideration paid or promised or partly paid or partly
promised, or under any system of deferred payment, when such use is made with the approval of
such person, but does not include a person who obtains such goods for resale or for any
commercial purpose; or
(ii) hires or avails of any service for a consideration which has been paid or promised or partly
paid and partly promised, or under any system of deferred payment and includes any beneficiary
of such service other than the person who hires or avails of the services for consideration paid or
promised, or partly paid and partly promised, or under any system of deferred payment, when
such services are availed of with the approval of the first mentioned person, but does not include
a person who avails of such service for any commercial purpose.

Thus, even if Siya has not purchased the laptop but she uses it with the approval of Tiya, her
sister, so according to the definition Siya can be treated as a Consumer.

Question 6.
Titto is seller of dental floss in the market where he holds monopoly as there are only handful
sellers in this product line of dental care. The competitor accuses him of possessing dominant
position and abusing the same. Explain the understanding of dominant position and abuse of
the same.

Answer to Question 6.
Section 4 strictly prohibits abuse of dominant position by any enterprise or group. Section 4 (2)(a)
of Competition Act, 2002 states that there is abuse of dominant position if an enterprise or group
– directly or indirectly imposes unfair or discriminatory (i) condition in purchase or sale of goods
or services or (ii) price in purchase or sale (including predatory price) of goods or service.

Section 4 (2)(b) includes in abuse of dominant position an enterprise or group limiting or

restricting (i) production of goods or provision of services or market therefore or (ii) technical or
scientific development relating to goods or services to the prejudice of consumers.

Similarly Section 4 (2)(c), (d) (e) specify three other forms of abuses namely, if any person indulges
in practice or practices resulting in denial of market access in any manner, or makes conclusion of
contracts subject to acceptance by other parties of supplementary obligations which, by nature
or according to commercial usage, have no connection with the subject of such contracts and also,
if any person uses dominant position in one relevant market to enter into, or protect, other
relevant market.

Dominance refers to a position of strength which enables an enterprise to operate independently

of competitive forces or to affect its competitors or consumers or the market in its favour. Abuse
of dominant position impedes fair competition between firms, exploits consumers and makes it
difficult for the other players to compete with the dominant undertaking on merit. Abuse of
dominant position includes –

1. Imposing unfair conditions or price

2. Predatory pricing
3. Limiting production/ market or technical development
4. Creating barriers to entry
5. Applying dissimilar conditions on similar transactions
6. Denying market access
7. Using dominant position in one market to gain advantage in another market.

Question 7.
Faizal is a fugitive economic offender and has left India to avoid legal proceedings against him.
Discuss the provisions relating to power of civil/tribunal to disallow civil claims and attach his
property.

Answer to Question 7.
Power to Disallow Civil Claims.

Section 14 of the Fugitive Economic Offenders Act, 2018 deals with power to disallow civil
claims. It provides that notwithstanding anything contained in any other law for the time being
in force

a. On a declaration of an individual as a fugitive economic offender any court or tribunal in India

in any civil proceeding before it, may, disallow such individual from putting forward or
defending any civil claims and

b. Any Court or Tribunal in India in any civil proceeding before it, may disallow any company or
limited liability partnership from putting forward or defending any civil claim, if an individual
filing the claim on behalf of the company or the limited liability partnership or any promoter or
key managerial personnel or majority shareholder of the company or an individual having a
controlling interest in the limited liability partnership has been declared as a fugitive economic
offender.

Attachment of Property.
Section 5 of the Fugitive Economic Offenders Act, 2018 empower the Director or any other
officer authorised by the Director, not below the rank of Deputy Director, may with the
permission of the Special Court, attach any by an order in writing in prescribed manner.

The Director or any other officer authorised by the Director, not below the rank of Deputy
Director, authorised by the Director may by an order in writing, at any time prior to the filing of
the application to the Special Court attach any property.

1. For which there is a reason to believe that the property is proceeds of crime, or is a property
or benami property owned by an individual who is a fugitive economic offender and

2. Which is being or is likely to be dealt with in a manner which may result in the property being
unavailable for confiscation.

Director or any other officer who provisionally attaches any property shall within a period of
thirty days from the date of such attachment file an application before the Special Court.

The attachment of any property shall continue for a period of one hundred and eighty days from
the date of order of such attachment or such other period as may be extended by the special
court before the expiry of such period.

Question 8.
Chandu intends to make overseas direct investment with a view to earning a return. Since
Chandu is looking at either real estate or lottery, you are required to state the restriction or
prohibitions in context of ODI.

Answer to Question 8.
Rule 19 of the Foreign Exchange Management (Overseas Investment) Rules, 2022 provides that
unless otherwise provided in FEMA or these Rules, no person resident in India will make Overseas
Direct Investment (ODI) in a foreign entity engaged in

a. real estate activity

b. gambling in any form and
c. Dealing with financial products linked to the Indian rupees without specific approval of Reserve
Bank.
Any ODI in start-up recognised under the laws of the host country or host jurisdiction as the case
maybe, shall be made by an Indian entity only from internal accruals whether from the Indian
entity or group or associate companies in India and in case of resident individuals from own funds
of such an individual.

No person resident in India shall make financial commitment in a foreign entity that has invested
or invest into India, at the time of making such financial commitment or at any time thereafter
either directly or indirectly, resulting in a structure with more than two layers of subsidiaries.

Question 9.
Enumerate the sectors/activities where foreign direct investment is prohibited under the
Foreign Direct Investment Policy in India.

Answer to Question 9.
Sector or activities where Foreign Direct Investment is prohibited are as under:

– Lottery Business including Government/private lottery, online lotteries, etc.

– Gambling and Betting including casinos etc.
– Chit funds
– Nidhi company
– Trading in Transferable Development Rights (TDRs)
– Real Estate Business or Construction of Farm Houses
– Manufacturing of cigars, cheroots, cigarillos and cigarettes, of tobacco or of
tobacco substitutes
– Activities/sectors not open to private sector investment e.g. (I) Atomic Energy
and (II) Railway operations(other than permitted activities).

Question 10.
Define the following terms as stated under Foreign Exchange Management Act, 1999:
(a) Automatic Route
(b) Government Route
(c) Foreign Portfolio Investment
(d) Foreign Portfolio Investor.

Answer to Question 10.

(a) ‘Automatic Route’ means the entry route through which investment by a person resident
outside India does not require the prior approval of the Reserve Bank of India or the Central
Government.

(b) ‘Government Route’ means the entry route through which investment by a person resident
outside India requires prior Government approval and foreign investment received under this
route shall be in accordance with the conditions stipulated by the Government in its approval.

(c) ‘Foreign Portfolio Investment’ means any investment made by a person resident outside India
through capital instruments where such investment is less than ten percent of the post issue paid-
up share capital on a fully diluted basis of a listed Indian company or less than ten percent of the
paid-up value of each series of capital instrument of a listed Indian company.

(d) ‘Foreign Portfolio Investor’ (FPI)1 means a person registered in accordance with the provisions
of Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2019, as
amended from time to time.

Question 11.
Competition Commission of India (CCI) primary function is to promote competition and curb anti-
competitive practices in the market. “Market” could be anything i.e., from food to infrastructure
and it may be incorrect to state that the Competition Act in India is complementary to the
enactments such as Telecom Regulatory Authority of India Act, 1997, Insurance Regulatory and
Development Authority of India Act, 1999 governing sectors such as Telecom Sector and Insurance
Sector respectively.

Insurance Regulatory and Development Authority of India (IRDAI) is a statutory body created
under the IRDAI Act, 1999. The IRDAI is vested with the regulatory powers to regulate to the
insurance sector. The Competition Act does not contemplate the CCI to act as an appellate court
or a grievance redressal forum against any decisions, which are taken by other regulators, in
exercise of their statutory powers and are not interfaced with trade or commerce.

In view of the above, whether the following statements are valid. Answer with reasons:

(i) The basic objectives of the Competition Act are to promote and sustain an enabling competition
culture and support economic growth in India.
(ii) Whether the Statutory Functions of IRDAI are within the jurisdiction of the Competition
Commission of India (CCI)?

Question 12.
What are Anti-Competitive Practices under Competition Act, 2002? State the factors, which are
taken into account by the Competition Commission of India to determine whether Anti-
Competitive Practices of an enterprise would have the effect of or is likely to have an appreciable
adverse effect on competition in relevant market.

Question 13.
Who is a Fugitive Economic Offender? How is an individual can be declared a Fugitive Economic
Offender under Fugitive Economic Offender Act?

Question 14.
What are the permitted activities if SAS Inc. a company incorporated in USA want to set up a
Branch office in India?

Question 15.
ABC Bearing Limited along with other four companies, who are the key Competitors in the market
decided among themselves to revise the prices to be quoted to Original Equipment Manufacturers
(OEMs). Discuss whether this act amounts to Cartelisation under the Competition Act, 2002 ?

Answer to Question 15.

According to Section 2(c) of the Competition Act, 2002, “Cartel” includes an association of
producers, sellers, distributors, traders or service providers who, by agreement amongst
themselves, limit, control or attempt to control the production, distribution, sale or price of, or,
trade in goods or provision of services.

The nature of a cartel is to raise price above competitive levels, resulting in injury to consumers
and to the economy. For the consumers, cartelisation results in higher prices, poor quality and
less or no choice for goods or/and services.

An international cartel is said to exist, when not all of the enterprises in a cartel are based in the
same country or when the cartel affects markets of more than one country.

In the Competition Act, cartels meant exclusively for exports have been excluded from the
provisions relating to anti- competitive agreements. This is because such cartels do not adversely
affect markets in India and are hence outside the purview of the Competition Act. If there is
effective competition in the market, cartels would find it difficult to be formed and sustained.

Competition Commission of India in the matter of ABC Bearing Ltd., dated June 05. 2020 held that
where key Competitors in bearings market discussed amongst themselves to decide on revision
of prices to be quoted to Original Equipment Manufacturers (OEMs), thereby their independence
is compromised, facilitating them to quote price revisions to OEMs different than what they would
have quoted independently, will amount to Cartel as defined under Section 2(c) of the
Competition Act, 2002.

Competition Commission of India in the case of All India Tyre Dealers Federation Vs. Tyre
Manufacturers observed that no explicit agreement is required in order to prove cartelisation, it
may be proved even through the intention or conduct of parties.

So, in the light of the above case, this Act of ABC Bearing Limited amounts to Cartelisation.

Question 16.
Vinesh is a person resident outside India. He wishes to acquire the Immovable property in India
for carrying on a permitted activity. Explain whether Vinesh can do so under Section 6(5) of the
Foreign Exchange and Management Act, 1999 ?

Answer to Question 16.

According to Section 6(5) of the Foreign Exchange and Management Act, 1999, a person resident
outside India may hold, own, transfer or invest in Indian currency, security or any immovable
property situated in India if such currency, security or property was acquired, held or owned by
such person when he was resident in India or inherited from a person who was resident in India.

A Branch or office or any other place of business in India, other than a Liaison office, established
by a person resident outside India, may acquire immovable property in India which is necessary
for or incidental to the activity carried on in India by such branch or office.

Such a person is required to file with the Reserve bank a declaration in the form IPI (as given in
the Master direction on Reporting), not later than 90 days from the date of such acquisition. The
immovable property so acquired can be mortgaged to an Authorised Dealer as a security for any
borrowing.

In the given case, Mr. Vinesh can do so and he has to file above compliance.
Question 17.
Mukesh is a manufacturer of ‘Jaggry Powder’ and brings this product into the market in the pre-
packaged form but the Retail price and Quantity has not been mentioned on the Packet. Is it an
offence under the Legal Metrology Act, 2009 ? If yes, what are the penalties for this offence ?

Will your answer be different if Mukesh mentions the wrong quantity on pre-packaged ‘Jaggry
Powder’ ?

Answer to Question 17.

Yes, it is an offence under the Legal Metrology Act. 2009.

Section 18(1) of the Legal Metrology Act, 2009 specifies that no person shall manufacture, pack,
sell, import, distribute, deliver, offer, expose or possess for sale any pre-packaged commodity
unless such package is in such standard quantities or number and bears thereon such declarations
and particulars in such manner as may be prescribed.

Any advertisement mentioning the retail sale price of a pre-packaged commodity shall contain a
declaration as to the net quantity or number of the commodity contained in the package in such
form and manner as may be prescribed.

Under Section 36 of the Legal Metrology Act, 2009, whoever manufactures, packs imports, sells,
distributes, delivers or otherwise transfers, offers, exposes or possesses for sale, or causes to be
sold, distributed, delivered or otherwise transferred, offered, exposed for sale any pre-packaged
commodity which does not conform to the declarations on the package as provided in this Act,
shall be punished with fine which may extend to twenty-five thousand rupees, for the second
offence, with fine which may extend to fifty thousand rupees and for the subsequent offence,
with fine which shall not be less than fifty thousand rupees but which may extend to one lakh
rupees or with imprisonment for a term which may extend to one year or with both.

Whoever manufactures or packs or imports or causes to be manufactured or packed or imported,

any pre-packaged commodity, with error in net quantity as may be prescribed shall be punished
with fine which shall not be less than ten thousand rupees but which may extend to fifty thousand
rupees and for the second and subsequent offence, with fine which may extend to one lakh rupees
or with imprisonment for a term which may extend to one year or with both.

No, answer will not be different if Mukesh mentions the wrong quantity on Pre-Packaged ‘Jaggery
Powder’.
Question 18.
Who are recognized lenders in External Commercial Borrowing Framework?

Answer to Question 18.

Recognised lender should be resident of Financial Action Task Force (FATF) or International
Organisation of Securities commission's (IOSCO) compliant country, including on transfer of
External Commercial Borrowing. However,

(a) Multilateral and Regional Financial Institutions where India is a member country will also be
considered as recognised lenders;

(b) Individuals as lenders can only be permitted if they are foreign equity holders or for
subscription to bonds/debentures listed abroad; and

(c) Foreign branches / subsidiaries of Indian banks are permitted as recognised lenders only for
foreign currency ECB (except FCCBs and FCEBs). Foreign branches / subsidiaries of Indian banks,
subject to applicable prudential norms, can participate as arrangers/underwriters/market
maker/traders for Rupee denominated Bonds issued overseas. However, underwriting by foreign
branches/ subsidiaries of Indian banks for issuances by Indian banks will not be allowed.

Question 19.
What is the procedure of raising external commercial borrowings? Explain.

Answer to Question 19.

All External Commercial Borrowings (ECB) can be raised under the automatic route if they conform
to the parameters prescribed under External Commercial Borrowings Framework.

For approval route cases, the borrowers may approach the Reserve Bank of India with an
application in prescribed format (Form ECB) for examination through their Authorised Dealer (AD)
Category I bank.

Such cases shall be considered keeping in view the overall guidelines, macroeconomic situation
and merits of the specific proposals.

ECB proposals received in the Reserve Bank above certain threshold limit (refixed from time to
time) would be placed before the Empowered Committee set up by the Reserve Bank.
The Empowered Committee will have external as well as internal members and the Reserve Bank
will take a final decision in the cases taking into account recommendation of the Empowered
Committee.

Entities desirous to raise ECB under the automatic route may approach an AD Category I bank
with their proposal along with duly filled in Form ECB.

Question 20.
How hedging is regulated under External Commercial Borrowing framework ?

Answer to Question 20.

The entities raising External Commercial Borrowing (ECB) are required to follow the guidelines for
hedging issued, if any, by the sectoral or prudential regulator in respect of foreign currency
exposure. Infrastructure space companies shall have a Board approved risk management policy.
Further, such companies are required to mandate 70 per cent of their ECB exposure in case the
average maturity of the ECB is less than 5 years. The designated Authorised Dealer (AD) Category-
I bank shall verify that 70 per cent hedging requirement is complied with during the currency of
ECB and report the position to RBI through Form ECB 2.

The following operational aspects with respect to hedging should be ensured:

Coverage : The ECB borrower will be required to cover the principal as well as the coupon financial
hedges. The financial hedge for all exposures on account of ECB should start from each such
exposure (i.e., the day the liability is created in the books of the borrower).

Tenor and Rollover : A minimum tenor of one year for the financial hedge would be required with
rollover, duly ensuring that the exposure on account of ECB is not unhedged at any point currency
of the ECB.

Natural Hedge : Natural hedge, in lieu of financial hedge, will be considered only to the extent of
offsetting projected cash flows / revenues in matching currency, net of all other projected
outflows. For this purpose, an ECB may be considered naturally hedged if the offsetting exposure
has the maturity cash flow within the same accounting year. Any other arrangements/ structures,
where revenues are indexed to foreign currency will not be considered as a natural hedge.

Overseas investors are eligible to hedge their exposure in Rupee through permitted derivative
products Category I banks in India. The investors can also access the domestic market through
branches / subsidiaries of Indian banks abroad or branches of foreign banks with Indian presence
on a back-to-back basis.

Question 21.
Analyse the powers of the Central Government to supersede the Special Economic Zone Authority
under the Special Economic Zones Act, 2005. What will be the consequences of its
implementation ?

Answer to Question 21.

Section 40 of the Special Economic Zones Act, 2005 empowers the Central Government to
supersede an Authority for a maximum period of six months if at any time, it is of the opinion
that an Authority is unable to perform, or has persistently made default in the performance of
the duty imposed on it by or under this Act or has exceeded or abused its powers, or has wilfully
or without sufficient cause, failed to comply with any direction issued by it under section 38.
However, before issuing a notification superseding an authority, the Central Government is
required to give reasonable time to that Authority to make representation against the proposed
suppression and consider the representations, if any, of the Authority.

Section 40(2) dealing with the consequences of publication of the notification superseding the
Authority, provides that –

a. the Chairperson and other Member of the Authority shall, notwithstanding that their term of
office has not expired as from the date of supersession, vacate their offices as such;

b. all the powers, functions and duties which may, by or under the provisions of the Act, be
exercised or discharged by or on behalf of the Authority shall, during the period of supersession,
be exercised and performed by such person or persons as the Central Government may direct;

c. all property vested in the Authority shall, during the period of supersession, vest in the Central
Government.

Section 40(3) also provides that on the expiration of the period of supersession specified in the
notification, the Central Government may extend the period of supersession for such further
period not exceeding six months or reconstitute the Authority in the prescribed manner.
Question 22.
Explain the provisions of section 5 of the Foreign Contribution (Regulation) Act, 2010 relating to
procedure to notify on Organization of a political nature.

Answer to Question 22.

According to section 5(1) of the Foreign Contribution (Regulation) Act, 2010, the Central
Government may, having regard to the activities of the organisation or the ideology propagated
by the organisation or the programme of the organisation or the association of the organizations
with the activities of any political party, by an order published in the Official Gazette, specify such
organisation as an organisation of a political nature not being a political party, referred to in clause
(f) of sub section (1) of section 3. The Central Government may, by rules made by it, frame the
guidelines specifying the ground or grounds on which an organisation shall be specified as an
organisation of a political nature.

As per Section 5(2) of the Act, before making an order under sub- section (1), the Central
Government shall give the organisation in respect of whom the order is proposed to be made, a
notice in writing informing it of the ground or grounds, on which it is proposed to be specified as
an organisation of political nature under that subsection.

Section 5(3) states that the organisation to whom a notice has been served under subsection (2),
may, within a period of thirty days from the date of the notice, make a representation to the
Central Government giving reasons for not specifying such organisation as an organisation under
sub-section (1). The Central Government may entertain the representation after the expiry of the
said period of thirty days, if it is satisfied that the organisation was prevented by sufficient cause
from making the representation within thirty days.

Section 5(4) provides that the Central Government may, if it considers it appropriate, forward the
representation referred to the sub-section (3) to any authority to report on such representation.

The Central Government may, after considering the representation and the report of the authority
referred to in sub- section (4), specify such organisation as an organisation of a political nature
not being a political party and make an order under sub-section (1) accordingly.

Every order under sub-section (1) shall be made within a period of one hundred and twenty days
from the date of issue of Notice under sub-section (2). In case no order is made within the said
period of one hundred and twenty days, the Central Government shall, after recording the reasons
therefore make an order under sub-section (1) within the period of sixty days from expiry of the
said period of one hundred and twenty days.

Question 23.
Explain the Guidelines for notifying Special Economic Zone.

Answer to Question 23.

Section 5 of the Special Economic Zones Act, 2005 stipulates broader guidelines to be considered
by the Central Government, while notifying any area as a Special Economic Zone or an area to be
included in the SEZ and in discharging its functions under the Act. These include:

a) Generation of additional economic activity;

b) Promotion of exports of goods and services;
c) Promotion of investment from domestic and foreign sources;
d) Creation of employment opportunities;
e) Development of infrastructure facilities; and
f) Maintenance of sovereignty and integrity of India, the security of the State and friendly
relations with foreign States.

Question 24.
What kinds of restrictions and prohibition have been imposed upon person, resident of India
and citizen of India to accept foreign contribution under the Foreign Contribution (Regulation)
Act, 2010 ?

Answer to Question 24.

Section 3(1) of the Foreign Contribution Regulation Act, 2010 prohibits following person to
accept foreign contribution:

(a) candidate for election; (b) correspondent, columnist, cartoonist, editor, owner printer or
publisher of a registered newspaper; (c) public servant, Judge, Government servant or employee
of any corporation or any other body controlled or owned by the Government; (d) member of any
Legislature; (e) political party or office-bearer thereof; (f) organisation of a political nature as may
be specified by the Central Government; (g) association or company engaged in the production or
broadcast of audio news or audio visual news or current affairs programmes through any
electronic mode, or any other electronic form or any other mode of mass communication. (h)
correspondent or columnist, cartoonist, editor, owner of the association or company referred to
in clause (g).
Section 3(2) states that:

(a) No person, resident in India, and no citizen of India resident outside India, shall accept any
foreign contribution, or acquire or agree to acquire any currency from a foreign source, on behalf
of any political party, or any person referred to in sub-section (1), or both.

(b) No person, resident in India, shall deliver any currency, whether Indian or foreign, which has
been accepted from any foreign source, to any person if he knows or has reasonable cause to
believe that such other person intends, or is likely, to deliver such currency to any political party
or any person referred to in subsection (1), or both.

(c) No citizen of India resident outside India shall deliver any currency, whether Indian or foreign,
which has been accepted from any foreign source, to—

(i) any political party or any person referred to in sub-section (1), or both; or

(ii) any other person, if he knows or has reasonable cause to believe that such other person
intends, or is likely, to deliver such currency to a political party or to any person referred to in sub-
section (1), or both.

According to Section 3(3) of the Act, no person receiving any currency, whether Indian or foreign,
from a foreign source on behalf of any person or class of persons, referred to in section 9, shall
deliver such currency—

(a) to any person other than a person for which it was received, or

(b) to any other person, if he knows or has reasonable cause to believe that such other person
intends, or is likely, to deliver such currency to a person other than the person for which such
currency was received.
Question 25.
“Cancellation of certificate under the Foreign Contribution (Regulation) Act, 2010”. Discuss.

Answer to Question 25.

Section 14 of the Foreign Contribution (Regulation) Act, 2010 empowers the Central Government
to Cancel the Certificate. Accordingly, the Central Government may if it is satisfied after making
such inquiry as it may deem fit, by an order, Cancel the certificate if –
• the holder of the certificate has made a statement in, or in relation to, the application for the
grant of registration or renewal thereof, which is incorrect or false; or

• the holder of the certificate has violated any of the terms and conditions of the certificate or
renewal thereof; or

• in the opinion of the Central Government, it is necessary in the public interest to cancel the
certificate; or

• the holder of certificate has violated any of the provisions of this Act or rules or order made
thereunder; or

• if the holder of the certificate has not been engaged in any reasonable activity in its chosen field
for the benefit of the society for two consecutive years or has become defunct

Before passing an order of cancellation of Certificate, the person concerned would be given a
reasonable opportunity of being heard. Any person, whose certificate has been cancelled, shall
not be eligible for registration or grant of prior permission for a period of three years from the
date of cancellation of such certificate.
Question 26.
State the provisions regarding the penalties and punishment provided under the Foreign
Contribution (Regulation) Act, 2010.

Answer to Question 26.

Section 34 of the Foreign Contribution (Regulation) Act, 2010 prescribes for penalty on any
person, on whom any prohibitory order has been served under Section 10 of the Act, pays,
delivers, transfers or otherwise deals with, in any manner whatsoever, any article or currency or
security, whether Indian or foreign, in contravention of such prohibitory order, he shall be
punished with imprisonment for a term which may extend to three years, or with fine, or with
both.

The Court trying such contravention may also impose on the person convicted an additional fine
equivalent to the market value of the article or the amount of the currency or security in respect
of which the prohibitory order has been contravened by him or such part thereof as the court
may deem fit

Section 35 of the Foreign Contribution (Regulation) Act, 2010 on the other hand provides for
punishment with imprisonment for a term which may extend to five years, or with fine, or with
both for accepting, or assisting any person, political party or organisation in accepting, any
foreign contribution or any currency or security from a foreign source, in contravention of any
provision of this Act or any rule or order made thereunder.

Section 39 deals with offences by companies and Section 41 provides for composition of certain
offences.
Question 27.
When and to whom an appeal may be preferred against the order of adjudication of confiscation,
under the Foreign Contribution (Regulation) Act, 2010 ?

Answer to Question 27.

Section 31 of the Foreign Contribution (Regulation) Act, 2010 deals with appeals and provides
that any person aggrieved by any order made under section 29 of the Act may prefer an appeal,
where the order has been made by the Court of Session, to the High Court to which such Court is
subordinate; or where the order has been made by any officer specified, to the Court of Session
within the local limits of whose jurisdiction such order of adjudication of confiscation was made,
within one month from the date of communication to such person of the order.

Further the Appellate Court may, if it is satisfied that the appellant was prevented by sufficient
cause from preferring the appeal within the said period of one month, allow such appeal to be
preferred within a further period of one month, but not thereafter.

Every appeal preferred under this section shall be deemed to be an appeal from an original decree
and the provisions of Order XLI of the First Schedule to the Code of Civil Procedure, 1908, shall,
as far as may be, apply thereto as they apply to an appeal from an original decree.
Question 28.
“Shardha Heights,” a duly registered welfare society, took the proactive step of filing an
application with the District Consumer Disputes Redressal Commission. The application was on
behalf of 12 allottees who had encountered significant issues with Shobha Ltd. a real estate
developer. These allottees alleged that despite booking units with Shobha Ltd. on various dates
and making substantial payments towards the purchase, they had yet to receive possession of
their properties.

However, the District Commission took a decisive stance, rejecting the complaint lodged by
Shardha Heights. Their decision rested on the assertion that Shardha Heights lacked the necessary
legal standing, or locus standi, to file such a complaint. ‘The Commission reasoned that Shardha
Heights did not qualify as either a ‘Consumer ‘or a ‘Recognised’ consumer association’ under the
applicable regulations. In light of this setback, Shardha Heights is now seeking to appeal against
the District Commission’s ruling.

Considering the above statements, answer the following questions:

(i) Define Recognised Consumer Association as per Consumer Protection Act, 2019?
(ii) Whether Shardha Heights is a ‘Recognised Consumer Association’ as per Consumer Protection
Act, 2019? Explain.
(iii) What is the Manner of filing Complaint to District Consumer Disputes Redressal Commission
under Section 35 of the Consumer Protection Act, 2019?
(iv) Can complaint be filed before Consumer Commission online? Explain.
(v) To whom an Appeal can be filed by Shardha Heights against the order of District Consumer
Disputes Redressal Commission and what is limitation period for doing so?
(vi) What are the restrictions on filing an appeal against the order of District Consumer Disputes
Redressal Commission?
(vii) State the constitution of the District Consumer Disputes Redressal Commission.

Answer to Question 28.

(i) “Recognised Consumer Association” means any voluntary consumer association registered
under any law for the time being in force. (Explanation to section 35(1) of the Consumer
Protection Act, 2019)

(ii) Yes, Shardha Heights, being a duly registered welfare society, is a “Recognised Consumer
Association as per Consumer Protection Act, 2019.
In the case of Sobha Hibiscus Condominium vs. MW Sosha Developer’s Ltd. judgement dated
February 2020, Hon’ble Supreme Court observed that in essence voluntary consumer association
will be a body formed by group of persons coming together, of their own will and without any
pressure or influence from anyone and without being mandated by any other provisions of law.

(iii) Section 35 Consumer Protection Act 2019 provides that provides that a complaint, in relation
to any goods sold or delivered or agreed to be sold or delivered or any service provided or agreed
to be provided, may be filed with a District commission by

(a) the consumer: -

(vii) to whom such goods are sold or delivered or agreed to be sold or delivered or such
service is provided or agreed to be provided; or
(viii) who alleges unfair trade practice in respect of such goods or service.

(b) any recognised consumer association, whether the consumer to whom such goods are sold or
delivered or agreed to be sold or delivered or such service is provided or agreed to be provided,
or who alleges unfair trade practice in respect of such goods or service, is a member of such
association or not,

(c) one or more consumers, where there are numerous consumers having the same interest, with
the permission of the District Commission, on behalf of or for the benefit of, all consumers so
interested; or

(d) The Central Government, the Central Authority or the State Government, as the case may be.

It may be noted that the complaint maybe filed electronically in such manner as may be
prescribed. Every complaint filed under Section 35, sub-section (1) shall be accompanied with
such fee and payable in such manner, including electronic form, as may be prescribed.

(iv) Yes, the complaint be filed before Consumer Commission online in the prescribed manner at
http:// edaakhil.nic.in/.

A complaint:

l Should be in writing
l Can be filed in a regular way (offline)
l Can be filed online – http://edaakhil.nic.in/

(v) According to Section 41 of the Consumer Protection Act, 2019 any person aggrieved by an
order made by the District Commission may prefer an appeal against such order to the State
Commission on the grounds of facts or law within a period of forty-five days from the date of the
order, in such form and manner, as may be prescribed. It may be noted that the State Commission
may entertain an appeal after the expiry of the said period of forty-five days, if it is satisfied that
there was sufficient cause for not filing it within that period.

Shradha Heights may appeal to the State Commission.

(vi) There are certain restrictions on filling an appeal against the order of District Consumer
Disputes Redressal Commission, unless the person fulfils the following conditions namely-

l No appeal by a person, who is required to pay any amount in terms of an order of the District
Commission, shall be entertained by the State Commission unless the appellant has deposited
fifty per cent. of that amount in the manner as may be prescribed.

l No appeal shall lie from any order passed under sub-section (1) of section 81 by the District
Commission pursuant to a settlement by mediation under section 80.

(vii) Section 28 of the Consumer Protection Act, 2019 empowers the State Government to
establish a District Consumer Disputes Redressal Commission, to be known as the District
Commission, in each district of the State. State Government may also, if it deems fit, establish
more than one District Commission in a district. Each District Consumer Disputes Redressal
Commission shall consist of –

(a) a President; and

(b) not less than two and not more than such number of members as may be prescribed, in
consultation with the Central Government.
Question 29.
Rajeev booked a Flat in a housing scheme named ‘Alpha Tower’ Launched by Alpha Pvt. Ltd. by
paying the booking amount and executing the ‘Buyer’s Agreement’. As per the Buyer’s
Agreement’, Flat was to be delivered with 3 years of the Agreement but the promoters of the
Company failed to deliver the Flat even after 5 years. Rajeev wants to withdraw from the project
and wants the refund of amount paid. Discuss as per the provisions of Real Estate Regulation and
Development Law whether Rajeev can withdraw from the Project?

What is the remedy available to Rajeev, if he does not wish to withdraw from the project?

Answer to Question 29.

Section 18(1) of the Real Estate Regulation and Development Act, 2016 provides that if the
promoter fails to complete or is unable to give possession of an apartment, plot or building –

a. in accordance with the terms of the agreement for sale or, as the case may be, duly completed
by the date specified therein, or

b. due to discontinuance of his business as a developer on account of suspension or revocation of

the registration under this Act or for any other reason,

he shall be liable on demand to the allottees, in case the allottee wishes to withdraw from the
project, without prejudice to any other remedy available, to return the amount received by him
in respect of that apartment, plot, building, as the case may be, with interest at such rate as may
be prescribed in this behalf including compensation in the manner as provided under this Act.

Provided that where an allottee does not intend to withdraw from the project, he shall be paid,
by the promoter, interest for every month of delay, till the handing over of the possession, at such
rate as may be prescribed.

The promoter shall compensate the allottees in case of any loss caused to him due to defective
title of the land, on which the project is being developed or has been developed, in the manner
as provided under this Act, and the claim for compensation under this subsection shall not be
barred by limitation provided under any law for the time being in force.

If the promoter fails to discharge any other obligations imposed on him under this Act or the rules
or regulations made thereunder or in accordance with the terms and conditions of the agreement
for sale, he shall be liable to pay such compensation to the allottees, in the manner as provided
under this Act.

In the light of above provision Rajeev can withdraw from the Project. If he does not wish to
withdraw from the project, he shall be paid Interest for every month of delay, till the possession
is handed over to him. He shall also be compensated for any loss caused to him as stated above.

Question 30.
Define the term “Money Laundering”. What is the punishment for money laundering?

Answer to Question 30.

According to Section 2(1) (p) of the Prevention of Money Laundering Act, 2002 "money-
laundering" has the meaning assigned to it in section 3 of the Act.

Section 3 of the Prevention of Money Laundering Act, 2002 states that whosoever directly or
indirectly attempts to indulge or knowingly assists or knowingly is a party or actually involved in
any process or activity connected with the proceeds of crime including its concealment,
possession, acquisition or use and projecting or claiming it is an untainted property shall be guilty
of offence of money laundering.

Section 4 provides that any person who commits the offence of money laundering shall be
punishable with rigorous imprisonment for a term which shall not be less than three years but
which may extend to seven years and also liable to fine. However, where the proceeds of crime
involved in money laundering relates to any offence specified under the Narcotic Drugs and
Psychotropic Substances Act, the punishment may extend to rigorous imprisonment for ten years.

Question 31.
Which information should be preserved by the banks under Prevention of Money Laundering Act,
2002 ?

Answer to Question 31.

According to the Prevention of Money Laundering Act, 2002 requires every Bank shall—

(a) Maintain a record of all transactions, including information relating to transactions in such
manner as to enable it to reconstruct individual transactions.
(b) Furnish to the Director within such time as may be prescribed, information relating to such
transactions, whether attempted or executed, the nature and value of which may be prescribed.
(c) Maintain record of documents evidencing identity of its clients and beneficial owners as well
as account files and business correspondence relating to its clients.
(d) Preserved information such as the nature of the transactions; the amount of the transaction
and the currency in which it was denominated; the date on which the transaction was conducted;
and the parties to the transaction.

Every information maintained, furnished or verified, save as otherwise provided under any law
for the time being in force, shall be kept confidential.

The records shall be maintained for a period of five years from the date of transaction between a
client and the reporting entity.

Question 32.
Which commodities have been declared as essential commodities under the Essential
Commodities Act, 1955 ?

Answer to Question 32.

Section 2A of the Essential Commodities Act, 1955 dealing with Essential commodities
declaration, etc. defines the “essential commodity” as to mean a commodity specified in the
Schedule.

Schedule to the Act lists out following commodities:

(1) Drugs: The explanation clarifies that for the purposes of this Schedule, "drugs" has the
meaning assigned to it in Section 3(b) of the Drugs and Cosmetics Act, 1940;

(2) Fertilizer, whether inorganic, organic or mixed;

(3) Foodstuffs, including edible oilseeds and oils;

(4) Hank yarn made wholly from cotton;

(5) Petroleum and petroleum products;

(6) Raw jute and jute textiles;

(7) (i) Seeds of food-crops and seeds of fruits and vegetables;

 (ii) seeds of cattle fodder; and
(iii) jute seeds.

Question 33.
What are the conditions for foreign investment in Limited Liability Partnerships (LLPs) ?

Answer to Question 33.

Foreign Investment in Limited Liability Partnerships (LLPs) is permitted subject to the following
conditions:

i) Foreign Investment is permitted under the automatic route in Limited Liability Partnership (LLPs)
operating in sectors activities where 100% FDI is allowed through the automatic route and there
are no FDI-linked performance conditions.

ii) An Indian company or an LLP having foreign investment, is also permitted to make downstream
investment in another company or LLP in sectors in which 100% FDI is allowed under the
automatic route and there are no FDI-linked performance conditions. Conversion of an LLP having
foreign investment and operating in sectors/activities where 100% FDI is allowed through the
automatic route and there are no FDI-linked performance conditions, into a company is permitted
under automatic route. Similarly, conversion of a company having foreign investment and
operating in sectors/ activities where 100% FDI is allowed through the automatic route and there
are no FDI-linked performance conditions, into an LLP is permitted under automatic route.

iii) Foreign Investment in LLP is subject to the compliance of the conditions of LLP Act, 2008.

Question 34.
What was Raghavan Committee ? What were the recommendations of Raghavan Committee ?

Answer to Question 34.

As India moved steadily on the path of reforms comprising of Liberalisation, Privatisation and
Globalisation it did away with the MRTP Act, 1969 as it was realised that the Act had outlived its
utility and control of monopoly was not appropriate to support the growth aspirations of Indians.
Indeed, need was felt to promote and sustain competition in the market place. The then Finance
Minister in budget speech in 1999 had announced: “The Monopolies and Restrictive Trade
Practices Act has become obsolete in certain areas in the light of international economic
developments relating to competition laws. We need to shift our focus from curbing monopolies
to promoting competition. Government has decided to appoint a committee to examine this
range of issues and propose a modem Competition Law suitable for our conditions." Accordingly,
a High-Level Committee on Competition Policy and Law was constituted under chairmanship of
Mr. S.V.S Raghavan.

The Committee submitted its report on 22nd May 2000 recommending replacement of the MRTP
Act with a modem competition law for fostering competition and for eliminating anticompetitive
practices in the economy. After consulting the stakeholders, Competition Bill, 2001 was
introduced in the Parliament which eventually became the Competition Act, 2002. Rashaan
Committee recommendation for the establishment of a Competition Commission of India &
winding up of MRTP Commission, formulation of merger rules etc.

Question 35.
An Organization constituted by the owners of Cement Industries unanimously decided to raise
the price of cement above competitive levels resulting in injury to the consumers and to the
economy. But the decision taken by the organization was not in writing and also not intended to
be enforced by legal proceedings. Discuss whether the decision taken by organization may be
considered as an ‘agreement’ under the provisions of the Competition Act, 2002?

Answer to Question 35.

According to Section 2(b) of the Competition Act, 2002 the term agreement includes any
arrangement or understanding or action in concert –

(i) whether or not, such arrangement, understanding or concert is in formal or in writing; or

(ii) whether or not such arrangement, understanding or concert is intended to be enforceable by
legal proceedings.

It implies that an arrangement need not necessarily be in writing. Intention of legal enforceability
is also not relevant for an arrangement to be treated as agreement under this section. The term
is relevant in the context of Section 3, which envisages that anti-competitive agreements shall be
void and thereby prohibited by the law. Thus, the organisation constituted by the owners of
cement industries which decided to raise the price of cement above competition level which is
causing injury to the consumers and economy, will be treated as an agreement under Section 2(b),
though it was neither in writing nor intended to have legal enforceability. Such agreement will be
void and thereby prohibited under the Competition Act.
Question 36.
What do you understand by Anti-Competitive Agreements under the Competition Act, 2002 ?

Answer to Question 36.

Anti-Competitive Agreements are those agreements that have their object as to prevent, restrict
or distort competition in India.

According to Section 3(1) of the Competition Act, 2002, no enterprise or association of enterprises
or person or association of persons shall enter into any agreement in respect of production,
supply, distribution, storage acquisition or control of goods or provision of services, which causes
or is likely to cause an appreciable adverse effect on competition. Section 3(2) further declares
that any anti-competitive agreement within the meaning of sub-section 3(1) shall be void. Under
the law, the whole agreement is construed as ‘void’ if it contains anti- competitive clauses having
appreciable adverse effect on competition. Section 3(3) provides that following kinds of
agreements entered into between enterprises or association of enterprises or persons or
associations of persons or person or enterprise or practice carried on, or decision taken by any
association of enterprises or association of persons, including “cartels”, engaged in identical or
similar goods or services which –

(a) directly or indirectly determines purchase or sale prices;

(b) limits or controls production, supply, markets, technical development, investment or provision
of services;
(c) shares the market or source of production or provision of services by way of allocation of
geographical area of market, or type of goods or services, or number of customers in the market
or any other similar way; and
(d) directly or indirectly results in bid rigging or collusive bidding;

shall be presumed to have an appreciable adverse effect on the competition.

Question 37.
Mention the most commonly adopted ways in which collusive bidding or bid rigging may occur.

Answer to Question 37.

Some of the most commonly adopted ways in which collusive bidding or bid rigging may occur
are:

• agreements to submit identical bids

• agreements as to who shall submit the lowest bid, agreements for the submission of cover bids
(voluntarily inflated bids)
• agreements not to bid against each other,
• agreements on common norms to calculate prices or terms of bids
• agreements to squeeze out outside bidders
• agreements designating bid winners in advance on a rotational basis, or on a geographical or
customer allocation basis.

Question 38.
Discuss the Functions of ‘Development Commissioner’ under the Special Economic Zones Act,
2005.

Answer to Question 38.

Section 12 of the Special Economic Zone Act, 2005 deals with the functions of the Development
Commissioner. Section 12 requires every development commissioner to take steps in order to
discharge his functions to ensure speedy development of the Special economic zone and
promotion of exports therefrom.

The functions of the development commissioner include:

a) Guide the entrepreneurs for setting up of units in the special economic zone.
b) Ensure and take suitable steps for effective promotion of exports from the special economic
zone:
c) Ensure proper coordination with the Central Government or the State Government
departments concerned or agencies with respect to, or for above purpose:
d) Monitor the performance of the developer and the units in SEZ;
e) Discharge such other functions as may be assigned to him by the Central Government under
this Act or any other law for the time being in force, and
f) Any other function as may be delegated to him by the Board of approval.

Question 39.
What constitutes ‘abuse of Dominance’ under Competition Act, 2002? Critically analyse the
relevant provisions.

Answer to Question 39.

Section 4 of the Competition Act, 2002 expressly prohibits any enterprise or group from abusing
its dominant position.
Section 4(2)(a) states that there shall be abuse of dominant position, if an enterprise or group,
directly or indirectly imposes unfair or discriminatory:

(i) condition in purchase or sale of goods or services; or

(ii) price in purchase or sale (including predatory price) of goods or service.

Section 4(2) (b) includes in abuse of dominant position an enterprise or group limiting or
restricting:

(i) production of goods or provision of services or market therefore; or

(ii) technical or scientific development relating to goods or services to the prejudice of consumers.

Similarly Section 4 (2) (c), (d) and (e) specify three other forms of abuses namely, if any person
indulges in practice or practices resulting in denial of market access in any manner; or makes
conclusion of contracts subject to acceptance by other parties of supplementary obligations
which, by their nature or according to commercial usage, have no connection with the subject of
such contracts and also, if any person uses dominant position in one relevant market to enter into,
or protect, other relevant market.

Question 40.
Discuss briefly, the establishment, composition and term of office of chairperson and other
members of Competition Commission of India.

Answer to Question 40.

Establishment of Competition Commission of India.

The Central Government under Section 7 has been empowered to establish a Commission to be
called “Competition Commission of India” by issue of a Notification. The Commission is a body
corporate having perpetual succession and a common seal. The Commission has power to acquire,
hold movable or immovable property and to enter into contract in its name and by the said name,
sue or be sued.

The Head Office of the Commission shall be at such place as the Central Government may decide
from time to time. Vide Notification: SO 1198 (E) dated 14th Oct., 2003, the Central Government
established the Competition Commission of India having its Head Office at New Delhi. The
Commission has also been authorized to establish its office at other places in India. Thus, the law
provides for setting up of CCI’s office sat places other than that of its Headquarter.

Composition of Competition Commission of India.

The composition of the Commission as spelled out under Section 8 of the Act, consists of a
Chairperson and not less than two and not more than six other Members. The Chairperson and
the Members are to be appointed by the Central Government. Regarding the qualifications of the
Chairman and other Members, Section 8(2) provides that they shall be person of ability, integrity
and standing and who has special knowledge of and such professional experience of not less than
fifteen years in international trade, economics, business, commerce, law, finance, accountancy,
management, industry, public affairs or competition matters including competition law and policy
which in the opinion of the Central Government, may be useful to the Commission. The
Chairperson and other Members are to be appointed on whole time basis.

Term of office of chairperson & other member of Competition Commission of India

The Act stipulates that the Chairperson and every other Member shall hold office as such for a
term of five years from the date on which he enters upon his office and shall be eligible for
reappointment. However, the Chairperson other Members shall not hold office as such after he
has attained the age of sixty-five years.

Question 41.
Discuss the provisions when the order passed by the Competition Commission of India may be
rectified under the Competition Act, 2002.

Answer to Question 41.

Section 38(1) of the Competition Act, 2002 provides that the Competition Commission of India
may amend any order passed by it under the provisions of this Act with a view to rectifying any
mistake apparent from the record.

Section 38(2) provides that subject to other provisions of this Act, the Commission may make –
(a) an amendment of an order of its own motion;
(b) an amendment for rectifying any mistake apparent from record, which has been brought to its
notice by any party to the order.

An explanation below the Section clarifies that while rectifying any mistake apparent from the
record, the Commission shall not amend substantive part of the order passed by it under the
provisions of this Act.
Question 42.
What are the orders that may be issued by the Competition Commission of India after inquiry into
any agreement entered into by any enterprise or association of enterprises or any person or
association of persons or an enquiry into abuse of dominant position under Section 27 of the
Competition Act, 2002?

Answer to Question 42.

Section 27 of the Competition Act, 2002 envisages that the Commission after any inquiry into
agreement entered into by any enterprise or association of enterprises or person or association
of persons, or an inquiry into abuse of dominant position may pass all or any of the following
orders, namely, –

(i) direct that such agreement, or abuse of dominant position shall be discontinued and such
agreement, which is in contravention of Section 3 shall not be re-entered or the abuse of
dominant position in contravention of Section 4 shall be discontinued, as the case may be. The
direction to discontinue and not to recur is commonly known as “Cease & desist” order.

(ii) the Commission may impose penalty not exceeding ten percent of the average turnover of last
three preceding financial years, upon each of person or enterprises which are parties to such
agreement in contravention of Section 3 or are abusing dominant position within meaning of
Section 4.

In case any agreement which is prohibited by Section 3 has been entered into by any cartel, the
Commission may impose upon each producer, seller, distributor, trader or service provider
participating in that cartel, a penalty up to three times of its profits for each year of the
continuance of such agreement whichever is higher.

(iii) The Commission may direct that the agreements shall stand modified to the extent and in the
manner as specified in the order.

(iv) The Commission may direct the enterprises concerned to comply with such other orders and
directions, including payment of cost, if any, as it deems fit.

(v) to pass such order or issue such directions as it may deem fit.
Question 43.
State the factors, which are taken into account by the Competition Commission to determine
whether the combination would have the effect of or is likely to have a appreciable adverse effect
on competition in the relevant market?

Answer to Question 43.

The Competition Commission shall have due regard to all or any of the factors for the purposes of
determining whether the combination would have the effect of or is likely to have an appreciable
adverse effect on competition in the relevant market, namely

1. actual and potential level of competition through imports in the market

2. extent of barriers to entry into the market;
3. level of combination in the market;
4. degree of countervailing power in the market;
5. likelihood that the combination would result in the parties to the combination
being able to significantly and sustainably increase prices or profit margins;
6. extent of effective competition likely to sustain in a market;
7. extent to which substitutes are available or are likely to be available in the market
8. market share, in the relevant market, of the persons or enterprise in a combination, individually
and as a combination;
9. likelihood that the combination would result in the removal of a vigorous and effective
competitor or competitors in the market;
10. nature and extent of vertical integration in the market
11. possibility of a failing business;
12. nature and extent of innovation;
13. relative advantage, by way of the contribution to the economic development, by any
combination having or likely to have appreciable adverse effect on competition;
14. whether the benefits of the combination outweigh the adverse impact of the combination, if
any.
Question 44.
Discuss ‘Competition Law and Policy’ under the Competition Act, 2002.

Answer to Question 44.

The World Bank and OECD in its Report- A Framework for the Design and Implementation of
Competition Law and Policy pointed out that a dynamic and competitive environment,
underpinned by sound competition law and policy, is an essential characteristic of a successful
market economy. Effective enforcement of competition law and active competition advocacy can
also be powerful catalysts for successful economic restructuring. This in turn fosters flexibility and
mobility of resources, which in the current global business environment are critical elements for
the competitiveness of firms and industries across nations. Although the field of competition law
and policy is evolving rapidly and includes many different viewpoints on specific issues,
recognition is growing that effective competition law is important in shaping business culture and
that its proper implementation needs to allow for the education of business people, government
officials, the judiciary, and the interested public.

The basic purpose of Competition Policy and law is to preserve and promote competition as a
means of ensuring efficient allocation of resources in an economy. Competition policy typically
has two elements: one is a set of policies that enhance competition in local and national markets.
The second element is legislation designed to prevent anti- competitive business practices with
minimal Government intervention, i.e., a competition law. Competition law by itself cannot
produce or ensure competition in the market unless this is facilitated by appropriate Government
policies. On the other hand, Government policies without a law to enforce such policies and
prevent competition malpractices would also be incomplete.

Question 45.
What facilities are available in case of private visits and for emigration under the Liberalized
Remittance Scheme (LRS) ?

Answer to Question 45.

Private visits : For private visits abroad, other than visit to Nepal and Bhutan, resident individual
can obtain foreign exchange up to an aggregate amount of USD 2,50,000, from an Authorised
Dealer, in any one financial year, irrespective of the number of visits undertaken during the year

Further, all tour related expenses including cost of rail/road/water transportation; cost of Euro
Rail; passes/tickets, etc. outside India; and overseas hotel/lodging expenses are to be subsumed
under the Liberalised Remittance Scheme (USD 2,50,000 per Financial Year). The tour operator
can collect this amount either in Indian rupees or in foreign currency from the resident traveller.

Emigration : A person wanting to emigrate can draw foreign exchange from AD Category I bank
and AD Category II up to the amount prescribed by the country of emigration or USD 250,000.
Remittance of any amount of foreign exchange outside India in excess of this limit may be allowed
only towards meeting incidental expenses in the country of immigration and not for earning
points or credits to become eligible for immigration by way of overseas investments in
government bonds; land; commercial enterprise; etc.

Question 46.
Who is status holder under the Foreign Trade Policy and Procedure of India enumerated as per
Foreign Trade Policy.

Answer to Question 46.

a. Status Holders are business leaders who have excelled in international trade and have
successfully contributed to country's foreign trade, Status Holder are expected to not only
contribute towards India's exports but also provide guidance and handholding to new
entrepreneurs.

b. All exporters of goods, services and technology having an import-export code (IEC) number
shall be eligible for recognition as a status holder. Status recognistion depends upon export
performance. An applicant shall be categorized as status holder upon achieving export
performance during current and previous two financial years, as indicated in Foreign Trade Policy.
The export performance will be counted on the basis of FOB value of export earnings in free
foreign exchange.

c. For deemed export, for value of exports in Indian Rupees shall be converted in US$ at the
exchange rate notified by CBEC, as applicable on 1st April of each Financial Year.

d. For granting status, export performance is necessary in at least two out of three years.
Question 47.
What is meant by “Regulated Entities” (REs) under the Prevention of Money-Laundering Act, 2002
?

Answer to Question 47.

The “Regulated Entities” (REs) under the protection of Money-Laundering Act, 2002 means:

a) all Scheduled Commercial Banks (SCBs), Regional Rural Banks (RRBs)/ Local Area Banks (LABs)/
All Primary (Urban) Co-operative Banks (UCBs)/ State and Central Co-operative Banks
(StCBs/CCBs) and any other entity which has been licenced under Section 22 of Banking
Regulation Act, 1949, which as a group shall be referred as ‘banks”.

b) All India Financial Institutions (AIFIs).

c) All Non-Banking Finance Companies (NBFCs), Miscellaneous Non- Banking Companies (MNBCs)
and Residuary Non-Banking Companies (RNBCs).
d) All Payment System Providers (PSPs), System Participants (SPs) and Prepaid Payment
Instrument Issuers (PPI Issuers).
e) All authorised persons (APs) including those who are agents of Money Transfer Service Scheme
(MTSS), regulated by the Regulator.

Question 48.
XYZ Ltd. has been granted approval by the Board of Approval for foreign collaborations and foreign
direct investments (including investments by a person resident outside India) in the Special
Economic Zone for its development, operation and maintenance. XYZ Ltd. has persistently
defaulted in complying with the directions of the Board. What action can be taken by the Board
of Approval against XYZ Ltd. under Section 10 of the Special Economic Zones Act, 2005 ?

Answer to Question 48.

Section 10 of the Special Economic Zones Act. 2005 empowers the Board of Approval to suspend
the letter of approval granted to the Developer (XYZ Ltd.in this case) for a whole or part of his
area established as Special Economic Zone for a period not exceeding one year and appoint an
Administrator to discharge the functions of the developer in accordance with the terms and
conditions of the letter of approval and manage the Special Economic Zone accordingly. The
suspension may be ordered by the Board, if in its opinion following circumstances exist:

• The developer is unable to discharge the function for performing the duties imposed on
him.
 • The developer has persistently defaulted in complying with the directions of the Board.
• The developer has violated the terms and conditions of the letter of approval.
• The financial position of the developer is such that he is unable to fully and efficiently
discharge the duties and obligations imposed on him by the letter of approval and
• the circumstances exist which render it necessary for it in public interest so to do, the Board
may, on application, or with the consent of the Developer, or otherwise, for reasons to be
recorded in writing, suspend the letter of approval, granted to the Developer for a whole
or part of his area established as Special Economic Zone, for a period not exceeding one
year and appoint an Administrator to discharge the functions of the Developer in
accordance with the terms and conditions of the letter of approval and manage the Special
Economic Zone accordingly.

Consequent upon appointment of an Administrator, the management of the Special Economic

Zone of the Developer shall vest in the Administrator.

However, no letter of approval can be suspended unless the Board has given to the Developer not
less than three months’ notice, in writing, stating the grounds on which it proposes to suspend
the letter of approval, and has considered any cause shown by the Developer within the period
of that notice, against the proposed suspension. It has been further provided that the Board may,
instead of suspending the letter of approval, permit it to remain in force subject to such further
terms and conditions as it thinks fit to impose.

Section 10(4) makes any further terms or conditions so imposed binding upon the Developer.
These terms and conditions have the force and effect as if they were contained in the letter of
approval. Where the Board has given notice for suspension of letter of approval the Developer
may, after prior approval of the Board, transfer his letter of approval to any person who is found
eligible by the Board for grant of such approval.

Question 49.
Gama is resident in India and citizen of India. He is going to receive the foreign contribution from
US. Explain the foreign contribution and conditions under which he can receive such foreign
contribution under Foreign Contribution (Regulation) Act, 2010 ?

Answer to Question 49.

According to Section 2(1)(h) the Foreign Contribution (Regulation) Act, 2010, Foreign Contribution
means the donation, delivery or transfer made by any foreign source-
(a) Of any article, not being an article given to a person as a gift for his personal use, if market
value, in India, of such article, on the date of such gift, is not more than such sum as may be
specified from time to time, by the Central Government by the rules made by it in this behalf.

(b) Of any currency, whether Indian or Foreign currency.

(c) Of any security as defined u/s 2 (h) of the Securities Contracts (Regulations) Act, 1956 and
includes any foreign security as defined u/s 2(o) of FEMA, 1999.

Conditions to receive Foreign Contribution:

Any person can receive foreign contribution subject to the following conditions:

l It must have a definite cultural, economic, educational, religious or social programme

l It must obtain the FCRA registration/prior permission from the Central Government.
l It must not be prohibited under section 3 of FCRA, 2010.

It may be noted that “Person” includes –

i) An individual:
ii) A Hindu undivided family:
iii) An association;
iv) A company registered under section 25/8 of the companies Act [Section 2(1)(m)]

Question 50.
Discuss proceeds of crime under Prevention of Money Laundering Act, 2002 (PMLA). What are the
actions that may be taken for not complying with the obligations under PMLA?