Section107A of the Indian Patent Act is known as India’s Bolar Exemption. It is a defence used against patent infringement.

When an invention is made, it is either used or sold by a third party for certain purposes in order make further research and development. Thus, this provision is made extremely important for the very fact that the generic drug manufacturers who seek to  boost their business in the market soon after the expiry of the innovator companies’ patents, and thereby having the necessary time or opportunity for conducting research on the product while the patent being still valid.

It is also to be noted that in the Bayer v. Natco, the dispute created jurisprudence for affirmatively deciding the scope of India’s ‘Bolar Exemption’ as being the first post-TRIPS grant of compulsory license.

The Bolar Exemption According to the Section 107A of the Indian Patent Act, 1970, the concept of “Bolar Exemption” in simple terms provides for an exception in infringements of patents, that is to say, the exception is given to generic manufacturers from using and in furtherance to importuning such patented drugs for their research and development in order to get regulatory approvals.

The prime purpose of the Section107A is to ensure that the patented products are ready with the approval for market launch as soon as the innovators’ products get expired.


The Bolar exemption under the Indian Patent Act, 1970


The fundamental object of the Section 107A talks about certain acts not to be considered as infringement. The section says –

For the purposes of this Act,-

(a) any act of making, constructing, using, selling or importing  a patented invention solely for uses reasonably related to the development and submission of information required under any law for the time being in force, in India, or in a country other than India, that regulates the manufacture, construction,  use, sale or import of any product;[1]

(b) Importation of patented products by any person from a person, who is duly authorised under the law to produce and sell or distribute the product,

Shall not be considered as an infringement of patent rights.[2]

Current Perspective of the Bolar Exemption Scenario

India is the nation which has the highest production of generic drugs as compared to any other developing nations.

Under Article 30 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), the exceptions may be provided as follows:

  • prior use,
  • private non-commercial use,
  • And experimental use.

The aforementioned exceptions should meet the three-step test:

  1. They are limited
  2. Do not unreasonably conflict with the normal exploitation of the patent
  3. Do not unreasonably prejudice the legitimate interests of the patent owner

(Taking account of legitimate interests of third parties)

The Bolar exemption can be largely marked by a good or legitimate reason as in consonance with the Doha Declaration, which is continuing firmly or obstinately in an opinion or course of action in spite of difficulty or opposition for the need of providing medicines at a cheaper cost.

However, the present issue is the comparing observation in such a way as to emphasize differences on regard to the issue of commercial purposes. Albeit Section 107A is yet  to undergo the judicial scanner.

Purpose of the Bolar exemption

India’s market is highly sensitive with low per capita income, though it being a developing country, masses of people are largely dependent upon the conditions of the market for survival.

In layman terms, it can be said that patent right is a temporary government-granted monopoly right and a market oriented right.

That is why the perspective of patent law is a critical issue such that the Bolar exemption has paramount importance for the public at large.

In short, the need of Bolar exemption in India can be justified with the following points:-

  1. It is useful for promoting the market competition.
  2. It is useful in providing the people an access to essential lifesaving drugs.
  3. The Bolar exemption further promotes research and development in the medical field.


The Bolar exemption is very relevant to the Indian scenario; it plays a crucial role in the protection of major part of the population in India that is suffering from deadly diseases.

It is a blessing for serving the needs of the pharmaceuticals industries in the generic drug production albeit, the lack of judicial interpretation is posing several doubts with questions that bring the patent law under the scanner of criticisms that are in abundance per se.

According to my opinion a step to move forward would require a reformation of the prevalent law which is inclusive of the data exclusivity period, prohibition of over stockpiling of drugs etc. Also, in order that there shall be a rise in genuine pharmaceutical companies the existing law must be amended so that the new law would focus on the international requirements, so as to ensure that patent rights are respected and in furtherance the research and development of generic drugs will be encouraged.

[1] Section 107A, clause (a) of the Indian patent Act,1970

[2] Section 107A, clause (b) of the Indian patent Act,1970

Meaning of Internal Audit

The term “internal auditing” has been defined under Section 138 of the Companies Act, 2013 wherein it states the following:-

  1. Such class or classes of companies as may be prescribed shall be required to appoint an internal auditor, who shall either be a chartered accountant or a cost accountant, or such other professional as may be decided by the Board to conduct internal audit of the functions and activities of the company.[1]
  2. The Central Government may, by rules, prescribe the manner and the intervals in which the internal audit shall be conducted and reported to the Board.[2]

In layman terms, “internal auditing” can be defined as an independent consulting activity which is made for the purpose of adding value by objective assurance and also by improving the operations of the organization in concern. In other words, it is a process to achieve the organization’s goals by rendering a systematic format to evaluate and further improve the corporate governance and risk management, for providing an effective mechanism, and thereby helping in gaining insight and providing recommendations by virtue of the evaluation analysis and also the business management and assessment of data.

In simple words, internal auditing is a mechanism which provides value to the concerned corporate entity as rendering crucial independent advice.  

Eligibility for Appointment of Internal Auditors 

Internal auditors are professionals  who are hired by the concerned organization for internal auditing, and according to Section 138 of the Companies Act, 2013, the internal auditors shall either be a chartered accountant, cost accountant , company secretary, or any such other professional hired by the organizations for the purpose of internal auditing.

The companies are required to appoint an internal auditor

Under Rule 13 of the Companies (Accounts) Rules, 2014, the following companies are required to appoint internal auditors:-

(1) Listed companies

(2) All unlisted companies having-

  • The paid up share capital must be 50 crore or above, that is to say in the preceding financial year.
  • There must be a turnover of income of 200 crore or more that is to say in the preceding financial year.
  • The organization should have outstanding loans from either banks or financial institutions that is exceeding 100 crore or more in the preceding financial year at any time, or;

(3) In case of private companies where

  • There must be a turnover of income of 200 two hundred crore or more, in the preceding financial year; or
  • The organization should have outstanding loans from either banks or public financial institutions that is exceeding 100 crore or more in the preceding financial year at any time, or;


This section primarily emphasize on indirect avenues and opportunities to internal auditors, hence it is therefore termed as internal auditor’s gift ( I-LCD )


Key Points:

  1. In order to check the aforementioned limits, it is to be noted that the preceding financial year is to be considered. For example, the applicability of Section 138 of the Companies Act, 2013 for assessment year 2014-15, FY 2013-14 to be taken into consideration.
  2. Another way to remember the aforesaid limits is to consider the above limit decreasing in the same proportion, such as “L” is the half of “I” and “C” is half of “L”.
  3. All the listed companies have to comply with the Section 138 of the Companies Act, 2013 irrespective of the aforementioned limit.
  4. In order to check out the applicability of the Section 138 in the case of ‘private unlisted companies’, we must look into their income and loans to consider such applicability.

Roles and Responsibilities of an Internal Auditor

  • Evaluation for rendering assurance of risk management, corporate governance systems, that is to say, the systems are functioning as intended to meet the organization’s goals.
  • Issues relevant in risk management and control deficiencies identified are reported by the auditor. The internal auditor also provides recommendations in pursuit of improving the structure in efficiency and proactive performance towards the organization.
  • Evaluating risk exposures and security threat of the organization’s information.
  • Evaluating programs relevant to regulatory compliance.
  • Evaluating the readiness of the organization in case of any interruption towards the business of the organization.
  • Providing workshops and seminars towards education and staff development
  • Plays a key role in maintaining the organization’s anti-fraud programs.

Ways Forward

The internal auditors must assess the organization’s internal controls with regards to the financial report ,wherein they must carry out fraud risk assessment controls. It would provide a scope of review in the framework of risk management, and  thereby helping the directors of the organization in their decision-making process.


[1] Section 138 (1) of the companies act,2013

[2] Section 138 (2) of the companies act,2013

Assignment of Trademarks in India

The assignment of a trademark takes place when the ownership of such trademark is transferred from one entity to another, which may either be along with or without the goodwill of the trademarked business, and which has to be recorded in the register of trademarks.

Following is the process of assignment of trademark in India:

  • Complete Assignment of trademark from one entity to another: The owner transfers all his rights held in the trademark to the other entity.
  • Assignment of trademark with respect to only certain goods and services: Here, the ownership of trademark is limited to only certain products or services. For example, “A” is the owner of a brand and uses his trademark for selling computers, television sets and air-conditioners. “A” assigns “B” the rights in the brand with respect to only the Air-conditioners, and whereby “A” retains the rights in the brand with respect to computers and television sets.
  • Assignment with the goodwill: Here, the absolute ownership over the rights and value of a trademark associated with the product is transferred from one entity to another. For example, ”A” is the owner of a brand and uses his trademark for selling computers. “A” sells his brand to “B” whereby “B” retains all such rights vested in the brand, and can use the brand trademarks for selling computers as well as other electronic products of his choice.
  • Assignment without the goodwill: The assignment without goodwill is also known as “gross assignment”. Here, the assignment refers to restrictions of rights of the buyer whereby it limits the new owner of using the brand on products that the original owner is already For example, “A” is the owner of a brand and uses his trademark for selling computers. “A” sells his brand to “B” such that “B” will have no rights to use the brand trademark for selling his computer products. However, “B” can use the brand trademark in the chain of businesses other than computer.

Licensing of a Trademarks in India

The licensing of a trademark allows the licensee to use the trademark, albeit the trademark itself is not assigned to the other entity, that is to say, the ownership has not been transferred but the mere use of the trademark is permitted to be used by the licensee.

Licensing of trademark has a plethora of benefits for both entities. Here, the licensor may enjoy his rights to the trademark by generating royalties for its use, whereby the licensee is able to broaden his market chain operations by using the said trademark for building reputation and brand value.

In layman words, a licensor has the right to license his rights over the trademark as he may be pleased with, such as by restricting the rights of the licensee in the trademark with respect to products or services. The licensor may restrict the time and area within which said trademark can be used by the licensee with respect to the product and services.

Agreements for Transmission

Trademark assignments are generally executed by way of trademark assignment agreements under which the transmission of transfer takes place from one entity to another.

The following points are to be ensured while drafting such agreements for the assignment and licensing of trademarks in India:-

  • That the rights of the trademark brand do not tend to cause harm due to obligations prescribed in such agreement.
  • The provision with regard to assignment is with or without the goodwill of the business should be properly negotiated and explicitly mentioned in the agreement.
  • The agreement must be drafted in accordance with the purpose of the transaction in question.
  • The rights and duties of licensee must be distinctively pre-determined and defined.
  • The license agreement should be registered with the trademark Registrar, although it is not compulsory but in a legal prospective it is most advisable.


Understanding the process of assignment and licensing of trademarks in India is a paramount issue. The process of marketing and strategic management would surely open a plethora of broadening horizons in this domain, for the licensor and licensee likewise. It all depends upon the development of a brand, and the use of the brand, which collectively form a factor to boost marketing in various sectors.

With the new accounting standards on board, all corporate entities who have a net worth of Rs 500 crore or more are required to comply and adopt the new standards in the fiscal year of 2017.

The process wherein the period of undergoing will have a considerable impact on the computation of generation of revenue, operating profit, net profit, and networth of the listed companies. Other sectors such as telecoms, oil & gas, natural resources and real estate are also likely to be impacted most from this. With the new norms in place, analysts are estimating that there will be an appreciation in revenues by 4-5 percent, albeit there may be a drop by 2-3 percent in the overall Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA). The Securities and Exchange board of India (Sebi)  asked public-listed companies to declare results of June and September quarters under provision of the new norm.

Why we need the New Accounting Standards

Every county has a method or process wherein it stipulates a financial report data based on rules called accounting standards. Here, In India we follow the Indian Acceptable Accounting Principle, albeit from the FY17, India will comply with the Indian Accounting Standard (Ind-AS ) wherein its principles are based on international accounting system, also known as IFRS. Coming to the question as to why India needs this new accounting standard, is because it will increase the comparability of local Indian companies with their international counterparts.

What are the primary advantages of the Ind-AS

The Ind-As recognizes the facets of substance and the paramount of fair value to compute financial statements. In layman words, this new accounting standard will render an accurate report over all necessary legal provisions and will display the most current picture of the financials.

Impact on companies

Accounting Standards_LetsComplyThe Ind-As will give an effect to how the financials within the company such as  revenue, operating profit, net profit, book value, goodwill, and return on equity will be computed. Under the new norms, excise duty will be treated as a tax on manufacturing activity. This would boost the revenue of companies, but the operating margin would show depreciation on charts. However, earning per share (EPS) will remain unchanged. The new Ind-AS will provide an impact on the financial assets and liabilities which would also be interpreted and measured.

According to the institute of chartered accountants of India (ICAI), with the new implementation of international reporting standards, sectors including financial services and infrastructure are predicted to be impacted while on the other hand manufacturing will not have much adverse impact.

According to Mr. Manoj Fadnis, The president of the ICAI, “There will be some impact (on the financial statements) as higher levels of disclosures will be required and for the first time there will be more ‘fair value’ accounting. It will have a well defined standard in place for financial instruments which would be made applicable. So, there will be some changes in which financial statements are reported,” he said.

The exemption included within the Ind-As road map as declared by the Central Government are Banking, insurance and non-banking finance companies.

The corporate affairs ministry’s roadmap entails that  all companies, listed or unlisted, with a sigma net worth exceeding Rs 500 crore , also where such companies having their subsidiaries, joint venture, associate companies and holding companies which have a a sigma net worth exceeding Rs 250 crore’s up to  Rs 500 crore’s will be regulated within the ambit of the Ind-AS rules starting from April 2017.


The Hon’ble Finance Minister of India Mr.Arun Jaitley had proposed to impose a cess which is known as the Krishi Kalyan Cess (KKC). Subject to the provisions of Chapter VI, Clause 158 of the Finance Bill, KKC is a service tax subject to all taxable services levied at 0.5% of the value of such services, taxable during the Budget 2016, with effect from 1st June 2016

What is a Cess?

According to Article 270 of the Constitution of India, cess is imposed by the Parliament, and levied and collected by the Government of India and distributed between the Union and the States, albeit it is not needed to be shared with the State Governments. A cess is a tax that is levied by the government to raise funds for a specific purpose. Here, the KKC is a cess which shall be levied as a service tax on all taxable services at the rate of 0.05% of the value of taxable Services and collected in accordance with the provisio of Chapter VI of the Finance Act, 2015. With the introduction of this cess, all the funds accrued from it shall be first credited to the consolidated fund of India and further utilized for improving the welfare and agriculture lands of farmers in India.

Application of KKC on Works Contract Services

As per Rule 2(a) of Service Tax (Determination of Value) Rules, 2006 , the application of the KKC on works contract services would be levied on the value so arrived at 15% where such effect rate of tax of original works and other than original works would be 6% (15%* 40%) and 10.5% (15% * 70%) respectively.

CENVAT Credit Rules, 2004 on KKC

The CENVAT credit payment shall be made available and utilized for the payment of KKC. A claim of refund of KKC in service tax is permitted, which is also allowed in the CENVAT Credit. Both Exporters of goods and services garner a refund due to no restriction of its availment.

Mode of Payment of KKC

For the purposes of payment of the KKC, a notification of a separate accounting code would be delivered to establishments (hotels, restaurants etc.) that levy and charge the cess on invoices itself, which in furtherance are paid to the government along with the service tax and swachh bharat cess.

KKC similarity to the Krishi Kalyan Surcharge

Domestic tax payers can render a declaration of undisclosed income of any asset by paying tax at 30%. And surcharge at 7.5% with a penalty at 7.5%, totalling a sigma of 45% of undisclosed income. Thus, earning immunity from prosecution, hence this surcharge levied will called as Krishi Kalyan Surcharge, that is applied for the same purpose as of the KKC.

Calculations of KKC

For the prime purposes of understanding how the KKC is calculated, let’s take an example of the following –
If we take Rs 100 as for the service charged, the Service Tax will be Rs. 14 at 14% rate, here the Swachh Bharat Cess includes a 0.5 % and in the case for the KKC it will also be of Rs. 0.05 at 0.5%.
So the total chargeable amount will be Rs. 115.

S. No. Particulars


Service Tax 14

Swachh Bharat Cess 0.5

Krishi Kalyan Cess (KKC) 0.5





Time of issuance of invoice as well as amount of Invoice

Amount of payment received

Position of Taxability

1. 27.5.2016 for Rs 9,00,000 29.5.2016 for Rs 11,00,000 Not Taxable
2. 25.5.2016 for Rs 2,00,000 27.5.2016 for Rs 2,00,000 Not Taxable , Albeit payment made post the 31st of may , then it will be subject to KKC
3. 10.5.2016 for Rs2,50,000 12.5.2016 for Rs2,50,000 Not Taxable, as because recival of amount surface 21 days in advance before the due date.
4. 14.6.2016 for Rs 2,50,000 20.5.2016 for Rs 5,00,000 Non Taxable to the extent of 6,00,000 because only part payment has been collected before the date of taxation  of service or new levy. The Balance Rs 4 Lac, if the remainder of balance paid post the the date of 31st of may then it will be subject to KKC
5. Total consideration was 11 Lacs. On 27.5.2016 invoice was issued for Rs 9,00,000 29.5.2016 for Rs 11,00,000 Non Taxable, as entire payment declared and received before the due date.




What do we understand by “directors of a company”?

A director of a company is a person appointed or elected as a member of the board of directors, and along with other directors having the roles and duties for strategizing and implementing the company’s policies. A director does not need to be a shareholder or an employee of the company, he/she may just hold an office of a director.

Directors Roles and Responsibilities:

They act on the purview of resolutions that are made in the director meetings which lay down their powers that are derived from the articles of association. They are the company’s agents; they enter into contracts with third-parties which create a binding obligation between them. Directors cannot vote by proxy and cannot absolve themselves of their responsibility for the delegated duties.

Directors Liabilities:

Shareholders shall sue the directors for the consequences of the acts that are fraudulent or beyond the powers vested in them, even when appointed validly or not, they are individually and collectively liable for the acts and/or negligence of the Company.

Kinds of Directors with Their Qualifications

Resident Director: Under Section 149 of the Companies Act, 2013, an appointment of one resident director is necessary by the “Board of Directors” of a company, who has lived in India for more than 181 days in the previous calendar year. It requires all companies to comply with the section 149 within a period of one year.

Woman Director: Section 149 of the Act, further, states the requirement of certain categories of companies to appoint at least one woman director on the board.

Independent Director: Section 149 (4), states that a listed company is required to have at least 1/3rd independent directors of the total number of directors. Independent Directors are those directors’ who do not have a material or pecuniary relationship with the company or related persons. They do not own shares in the company, they only seek sitting fees. Section 149(6) demarcates the conditions for the qualifications of an independent director as follows:

  1. Person of integrity and relevant experience
  2. Person must not be a promoter or in any relation with the directors or promoters of the company and its associate, subsidiary or holding company;
  3. There must be no pecuniary relationship by the person with company, or its holding, subsidiary or associate company, or a relation with the promoters or directors from the last two years of his/her appointment
  4. Person does not have relatives who have a relationship that is pecuniary with the company, and its holding, subsidiary or associate company, its promoters or directors, which overall amounts a 2 % in the preceding two years of the person’s appointment.
  5. who possesses such other qualifications as may be prescribed.

The shareholders must approve that such appointment of independent directors.

Additional Directors:  Under section 161, the Article of Association confers powers on the Board of Directors of the company for the appointment of additional directors. Here, the proposed Director must be qualified in order to be appointed in a General Meeting.

Nominee Director: The “explanation clause” of section 149  refers that a nominee director is a person who is nominated by way of any agreement or by such appointment by any government to represent its interest of the company as to the law as applicable for the time in force.

Alternate Directors: As prescribed under section 161(2) of the act, Alternate Directors are individuals that are appointed to attend a board meeting on behalf of one of the principle director of the company who would be otherwise unable to attend. The concerned individual must be qualified for the position and must not hold any directorship and remains in office till the principle director is able to attend.

Procedure for Appointment of Directors

Subject to the provision under section 152, Chapter XI, of the Companies Act, 2013, specific requirements for the appointment of directors are laid down as follows:

  • The Articles of Association contains the provisions for appointment of directors, but in case, where no such provision exists, the shareholders will be deemed as the first directors of the company until directors are considered for appointment;
  • A director is to be appointed in the general meeting, followed by an explanatory statement for such appointment, that has to annexed as notice in the general meeting which shall include the board’s opinion of statements which should fulfill the conditions specified under this act with regards to such appointments;
  • Under section 153 and 154, Once the appointment procedure of Directors have been finalized, the Proposed Directors have to obtain a Director Identification Number , viz provided on the post on submission of the application of the proposed Director of a company, that is allotted by the Central Government;
  • A declaration must be furnished by the proposed directors, specifically stating that he/she is not disqualified to be a director and that such appointments were consented; here consent implies that being appointed a director and taking charge of the office are two different things, where such consent has to be filed with the Registrar of Companies within 30 days of appointment.

What are Bad Loans?

In layman terms a bad loan is a loan which the “borrower”  is unable to repay  the “lender” as per the loan agreement, and which further becomes a bad debt, which in course is never repaid  to the creditor due to the debtor declaring bankruptcy. Henceforth, this bad debt is declared as an expense by the debtor.

The Plight: Causes & Effects

Over the past few years, the investors in the emerging markets sought higher yields, which initially brought down borrowing costs with an added bonus of liquidating  them, but, since the domestic interest rates were rising to curb inflation, the economic growth hindered, and to add salt on to the wounds, there is still an influx and increase in the inflow of borrowers, who are failing to pay their loans back to the lenders.

According to Saswata Guha, director of Fitch Ratings India  (financial institution) “Such phenomena must essentially be monitored to provide for counter measures by the public sector banks, the nature of bad loans economic reality of this stature, is something that has to be addressed above the economic environment”

According to the reserve bank of India, the 2015-16 fiscal year saw state banks receiving a 140 billion rupee infusion, which went up from 125 billion rupees on the previous fiscal year , it also stated (RBI) that Public-sector lenders reign their dominance in the Indian banking system which carry 90% of India’s bad and stressed loans.

The major cause in this regard is due to the very fact that there is less diversification of the public lenders who seek to make profits from the difference between  the interest earned from assets and on which the interest rate is paid on deposits in their loan portfolio. They lend more to big, government-controlled companies as well as Start-up businesses due to the factors pertaining to political environment pressures and government policies and laws. On the other hand iron and steel companies, followed by real estate companies, are amongst the biggest defaulters, and thus, have become a matter of concern for the public sector banks.

According to K.R. Kamath, Punjab National Bank (Chairman), the global slowdown following 2008 has brought drawback to borrowers, they face the difficulty to pay back loans. The bank’s profit slumped 53% to 5.05 billion rupees in the fall of the quarter, as the bad loan burden elevated to 5.14% of its loan portfolio.

Fact As Is:

The ratio of Non-Performing Loans at the Indian banks is the highest in the Asian continent, as per the World Bank, due to the understating of their bad loans ,where on the other hand they (Banks) try to recover the money from their borrowers via legal measures, but the borrowers counter the measures and mostly resort to filing an injunction to procrastinate the matter, and due to this, and as per to the RBI with the end of the 2015-16 fiscal year, a total of 1 trillion rupees is still under the recovery process, albeit public banks had a mere success to at least recover a mere 22% of the amount.

Recent News:

In a report published by the Times of India, stated that the Punjab National Bank reported a net loss of Rs. 5,367.14 crore; as on march 31, 2016, on the basis of higher provisioning for bad loans, which recorded as the biggest quarterly loss since the inception of Indian Banking Industry  and within that quarter the sigma income decreased  1.33% to Rs. 13,276.19 crore from Rs. 13,455.65 crore a year ago. Overall the financial year (2015-16) of PNB reported that the total income during the year rose to Rs. 54,301 crore as against Rs. 52,206 crore in the previous fiscal.

Way Forward:

Certain banks have proposed to initiate a report on the borrowers incapacity during the early stages of such struggling and thereby, also reprimanding borrowers for their non-timely payments. And according to the Reserve Bank of India, it wants banks to set-up adequate provision for tackling these troubled accounts by classifying these troubled accounts as Non-Performing Assets.

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