Jyotsna JayaramPartner
Akshaya ParthasarathySenior Associate
Anirudh Rao SaxenaAssociate
Key Developments
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India unveils new guidelines to promote and regulate participation in the space sector
The Government of India issued the Indian Space Policy – 2023 (Space Policy) to regulate and specify the activities that Indian entities operating in the space sector can undertake. The Space Policy was drafted with the intention to promote the inclusion and capabilities of Non-Government Entities (NGE) such as companies and partnership firms operating within the Indian space industry. In a significant move to promote the growth of the space sector in India and for the effective implementation of the Space Policy, in May 2024, the Government of India and the Indian National Space Promotion and Authorization Centre issued the Norms, Guidelines, and Procedures for implementation of the Space Policy (Space Policy Guidelines).
The Space Policy Guidelines, among other things, outline the authorisation process for NGEs planning to conduct specific space activities in Indian territory. They detail the terms and conditions governing such authorisation, including requirements related to the financial and technical capacities of the applicants, prohibitions on certain types of space activities, and compliance with various applicable laws. The Space Policy Guidelines provide regulatory clarity and promote indigenous capabilities in India's space sector. It is crucial for entities aiming to benefit from India’s space ambitions to adhere to the Space Policy Guidelines.
(To read our earlier update on the recent liberalisation of foreign investment in the space sector, click here.)
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Bombay High Court examines overlapping offences in the Indian Penal Code and Information Technology Act
A three-judge bench of the Bombay High Court assessed1 whether actions covered under Section 43 read with Section 66 of the Information Technology Act, 2000 (IT Act) addressing fraudulent and dishonest offences, take precedence over the Indian Penal Code, 1860 (IPC). The Chief Justice bench of the High Court held that for a special statute like the IT Act to override a general law like the IPC, the ingredients of the offence under both laws must be the same. If the special statute lacks any ingredient of an offence contained in the general law, the offence can be tried under both laws.
The High Court determined that with respect to the offence of cheating, while Section 66 of the IT Act only requires the ingredients ‘fraudulently’ and ‘dishonestly’ to be present, it does not require the element of ‘deceit’, which is necessary under the IPC. Based on this, the High Court concluded that while there may be some overlap between the IT Act and the IPC, they do not contain the same ingredients. Therefore, an accused can be tried for both offences, that is cheating as envisaged under both the IT Act and the IPC, and one shall not prevail over the other. The High Court also addressed concerns related to collective liability and common intention among offenders. It held that neither Section 43 nor Section 72 of the IT Act made punishable an offence committed by two or more persons who shared a common intention. This distinction, according to the High Court, highlights the complementary nature of the IT Act and the IPC in prosecuting cybercrimes.
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Default Loss Guarantee Guidelines clarified
The Reserve Bank of India (RBI), on 26 April 2024, released Frequently Asked Questions (FAQ) clarifying the Guidelines on Default Loss Guarantee (DLG) in Digital Lending (DLG Guidelines). The DLG Guidelines permitted certain Regulated Entities (RE) to enter into risk-sharing arrangements with third parties, including Lending Service Providers (LSP) for the purposes of DLG schemes. The DLG Guidelines require that REs assume majority of the risk associated with loan defaults. Before the introduction of the DLG Guidelines and the RBI’s Guidelines on Digital Lending, 2022, unregulated fintech companies would assume a significant portion of the risk for defaults in the repayment of the loans.
DLG refers to an arrangement where an LSP guarantees to cover a certain portion of the losses incurred by the loan portfolio in case of defaults (DLG Cover). The DLG Guidelines require the DLG Cover to not exceed 5% of the amount of an outstanding loan portfolio specified upfront. However, the manner of determining the loan portfolio on which DLG can be given was unclear. This is now clarified by the FAQs which state that DLG Cover must be calculated based on the total amount disbursed from the identifiable and measurable loan assets that have been sanctioned.
Additionally, the FAQs, among other things, clarify that DLG is not allowed for loans arranged on Non-Banking Financial Company - Peer to Peer platforms, credit cards, revolving credit facilities offered through digital lending channels and any loan which is outside the purview of the Guidelines on Digital Lending, 2022.
Looking ahead to the upcoming months, several noteworthy developments are anticipated in the fintech space. the RBI has proposed major changes to the way it regulates Payment Aggregators (PA) by releasing a draft circular for “Regulation of Payment Aggregators – physical Point of Sale” to regulate offline PAs and has also proposed amendments to the Payment Aggregator Payment Gateways Guidelines, most notably in relation to the definition of PAs. The digital lending landscape is poised for regulatory developments as the RBI has sought feedback on its draft guidelines titled Digital Lending – Transparency in Aggregation of Loan Products from Multiple Lenders, issued on 26 April 2024. These guidelines aim to regulate loan aggregation services provided by LSPs or regulated entities acting as LSPs.
[1]In the case of Awadhesh Kumar Prasanth Pathak v State of Maharashtra and Another
