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Amendment to the Companies (Corporate Social Responsibility Policy) Rules, 2014 to include COVID-19 related activities

According to Section 135 of the Companies Act, 2013 (Act), every company having

(i) net worth of rupees five hundred crore or more, or

(ii) turnover of rupees one thousand crore or more, or

(iii) a net profit of rupees five crore or more,

during the immediately preceding financial year shall constitute a Corporate Social Responsibility Committee (CSR Committee) of the Board.

Among other functions, the CSR Committee formulates and recommends the Corporate Social Responsibility (CSR) Policy which shall indicate the activities to be undertaken by the company in areas or subject specified in Schedule VII of the Act.

According to the Companies (Corporate Social Responsibility Policy) Rules, 2014 (CSR Policy Rules), Rules 2(e), CSR Policy relates to activities to be undertaken by the company in areas or subject  specified in Schedule VII of the Act and the expenditure thereon, excluding activities undertaken in pursuance of normal course of business of a company. 

Further, Rule 4 and Rule 6 of the CSR Policy Rules, excludes “activities undertaken in pursuance of normal course of business of a company” from the ambit of CSR Policy.

On 24 August 2020, the CSR Policy rules were amended to modify the aforesaid Rules 2, 4 and 6, to allow within the ambit of CSR Policy, companies engaged in research and development activity of new vaccine, drugs, medical devices in their normal course of business to undertake research and development of new vaccine, drugs and medical devices related to COVID-19 for financial years 2020-21, 2021-22, 2022-23.

This is subject to the condition that, (i) such research and development activities must be carried out in collaboration with any institutes or organisations mentioned in Item (ix) of Schedule VII of the Act; and (ii) details of such activity must be disclosed in the annual report on CSR included in the board’s report.

On 23 March 2020, the Ministry of Corporate Affairs announced that the corporate expenditure on fighting COVID-19 will constitute eligible expenditure towards CSR.  Read more at Corporate Expenditure on COVID-19 to count as eligible CSR Expenditure and COVID-19 related FAQ on CSR.

Restructuring of Corporate Loans under RBI’s Covid Resolution Framework

I. Introduction 

On August 6, 2020, the Reserve Bank of India (“RBI”) promulgated a special regulatory package – Resolution Framework for Covid-19-related Stress (“Covid Resolution Framework”). This package has been introduced because several Indian borrowers have been adversely affected by the pandemic and are facing difficulties in servicing their debt obligations. The moratorium imposed by the RBI has provided some breathing space to such borrowers, but once that expires, several borrowers may need to restructure their debts as they recover from the havoc Covid-19 has created in their businesses. Lenders also need an effective and flexible restructuring tool for Covid-related defaults and the existing Prudential Framework for Resolution of Stressed Assets dated June 7, 2019 (“June 7 Framework”) of the RBI may not cater to their needs arising specifically out of the pandemic. The Covid Resolution Framework applies to personal loans as well corporate loans. However, in this update, we are focussing only on resolution of corporate loans.

II. Hallmarks of the new framework 

The hallmarks of the Covid Resolution Framework are as follows:

• It is exclusively directed towards viable businesses with temporary stress due to the pandemic;

• It is applicable to wider array of domestic financial institutions than the June 7 Framework;

• It endeavours to provide a system of economic incentives and disincentives for implementing a resolution plan within strict timelines and aims to address some intercreditor problems; and

• Unlike the June 7 Framework, this framework enables restructuring without any corresponding asset classification downgrade.

III. Applicability 

(a) Type of Lender: The Covid Resolution Framework has been made applicable to all types of Indian banks, all-India financial institutions and non-banking finance companies (“NBFCs”) including housing finance companies (collectively, “Lending Institutions”). Lending Institutions need to frame a board-approved policy for evaluation of resolution plans and objective criteria to be applied when considering a resolution plan. Participation by other financial players like mutual funds, debenture holders, lenders of external commercial borrowings and alternative investment funds has also been enabled, subject to them agreeing to the terms of the inter-creditor agreement.

(b) Type of Borrower: Loans to almost all types of corporate borrowers can be resolved under the Covid Resolution Framework. The only exceptions are:

(i) debts to medium, small and micro enterprises which are INR 250 million or less; (ii) farm credit; (iii) loans to Primary Agricultural Credit Societies, Farmers’ Service Societies and Large-sized Adivasi Multi- Purpose Societies for on-lending to agriculture; (iv) exposures to financial service providers (as defined under the Insolvency and Bankruptcy Code, 2016 (“IBC”)); (v) exposures to governmental and statutory bodies; and (vi) exposures of housing finance companies where the exposure has been rescheduled under certain provisions, unless another Lending Institution invokes a resolution plan under this framework.

(c) Type of loans: For the loan account to be eligible for resolution under the Covid Resolution Framework, it needs to be: (i) a standard account, (ii) not in default for more than 30 days with any Lending Institution as on March 1, 2020 and (iii) the account should continue to remain standard till the date of invocation.

The reference date that will be considered for the outstanding amount of debt for resolution under thisframework will be March 1, 2020.

(d) Restructuring of ineligible accounts: Accounts that do not fall under the Covid Resolution Framework can continue to be considered for resolution under the June 7 Framework or other relevant frameworks, where the June 7 Framework is not applicable.

IV. Invocation Process and Inter-Creditor Arrangements

(a) Relevant time periods:

A resolution under this Covid Resolution Framework can be invoked until December 31, 2020. Once a resolution is invoked, the same needs to be implemented within 180 days thereafter. The Covid Resolution Framework does not specify when the implementation is deemed completed. In this regard, it would be useful to refer to June 7 Framework which specifies when the implementation is deemed to be completed for different types of resolution plans.

(b) Date of invocation:

The date of invocation will be as follows: (i) in case of sole Lending Institution, the date on which the Lending Institution accedes to a request from the borrower for resolution under the Covid Resolution Framework; and (ii) in case there are multiple Lending Institutions, the date on which 75% of them by value and 60% by number (“Specified Majority”) agree to the invocation.

(c) Execution of an Intercreditor Agreement (“ICA”):

In case of multiple Lending Institutions, within 30 days of the invocation date, all Lending Institutions are required to execute an ICA for cases requiring implementation of a resolution plan. If the Specified Majority does not sign the ICA within the specified 30-day period, then the invocation under the Covid Resolution Framework will be deemed as lapsed. No second invocation is permitted in these cases. Those resolution plans are then governed by the June 7 Framework. The framework permits lenders to the borrower, who are not the Lending Institutions, to also sign the ICA if they desire. Once the ICA is signed, it is binding on them.

(d) Contents of the ICA:

The ICA must specifically provide for: (i) an effective dispute resolution mechanism inter-se the lenders (as the RBI will not interfere in such disputes) and (ii) suitable mechanisms for information sharing amongst Lending Institutions during and after implementation of the resolution plan.

(e) Breach of timelines: If any timelines under this Covid Resolution Framework are breached, then the framework will cease to apply. Thereafter, any resolution plan shall be governed by the June 7 Framework or any specific framework applicable to lenders to whom the June 7 Framework does not apply.

V. Role of Expert Committee

(a) Recommending parameters: The RBI has set up an expert committee under the chairmanship of Mr. K.V. Kamath for recommending financial parameters and sector-specific benchmarks to be factored into the resolution plans.

(b) Approval for certain plans: Further, all resolution plans for accounts where the aggregate exposure is in excess of INR 1500 crores (INR 15 billion) require approval of the expert committee. While the expert committee will check if processes have been followed, it will not interfere with the commercial judgement exercised by the lenders.

VI. Resolution Plans

(a) Type of restructuring: In addition to parameters as per the recommendations of the Expert Committee (which must be included in each resolution plan), the resolution plans under this Covid Resolution Framework may have any of the features permitted under the June 7 Framework, other than compromise settlements. These include the following:

(i) regularisation of the account by payment of all over dues by the borrower entity;

(ii) sale of the exposures to other entities / investors;

(iii) change in ownership; and

(iv) restructuring.

(b) Additional financing: The resolution plan may include terms for providing additional finance to the borrowers. However, it should be noted that the framework itself does not provide any priority on repayment to the additional financing providers.

(c) Moratorium: The resolution plan can also provide an extension of the tenor of the loan by up to 2 years, with or without moratorium. Any moratorium granted would come into effect immediately on implementation of the plan.

(d) Conversion of the debt: The resolution plan may provide for conversion of a portion of the debt into equity or other marketable, non-convertible debt securities issued by the borrower. However, the amortisation schedule and the coupon carried by such debt securities should be similar to the terms of the debt held on the books of the Lending Institutions, after implementation of the resolution plan. The holding of such instruments by the Lending Institutions is subject to any applicable existing instructions on investments. The valuation of any equity instruments will be in accordance with the June 7 Framework, and the valuation of the debt securities will be as per existing norms applicable to the specific category of Lending Institutions.

VII. Other features

(a) Credit Evaluation: For borrowers where the aggregate exposure of the Lending Institutions at the time of invocation is INR 100 crore (INR 1 billion), the resolution plans need an independent credit evaluation by one credit rating agency authorised by RBI under the June 7 Framework.

(b) Escrow Mechanism: In case of consortium or multiple banking arrangements, all resolution plans must provide that all receipts, repayments and additional disbursements will be routed through an escrow account that will be maintained with one of the Lending Institutions. Lending Institutions are required to enter into an escrow agreement which details the roles and responsibilities of the escrow agent and an enforcement mechanism that is available to the escrow agent in case any Lending Institution does not service its disbursement obligations on a timely basis.

VIII. Asset Classification

The following asset classification norms apply:

(a) Borrowers’ accounts: If the plan is implemented, then the accounts which are classified as standard can retain such classification, and borrowers’ accounts which may have slipped into the non-performing asset (“NPA”) classification between invocation and implementation may be upgraded as standard.

(b) Additional financing: Any additional finance provided during the implementation phase may be classified as a standard asset regardless of actual performance of the facilities. After the implementation, the asset classification will be based on the actual performance of the additional financing or rest of the facilities, whichever is worse.

IX. Provisioning requirements

(a) Lenders that sign the ICA within 30 days: For such lenders, after implementation, the provision will be the higher of the provisions as per the existing income recognition and asset classification (“IRAC”) norms prior to implementation or 10% of the total residual debt (including debt securities).

(b) Lenders that don’t sign the ICA within 30 days: For such lenders, after the expiry of 30 days, the provision will be the higher of the provisions as per the existing IRAC norms or 20% of the total debt in their books (i.e. the carrying debt). Further, as a greater disincentive, if an implementation lapses because the ICA signing thresholds are not met, then the Lending Institution which agrees to sign the ICA within 30 days but actually does not do so, shall be required to hold 20% provisioning on the carrying debt.

(c) June 7 provisions: Any additional provisions maintained under the requirements of the June 7 Framework may be reversed upon invocation of the resolution process under the Covid Resolution Framework.

(d) Reversal of provisioning by ICA signatories: The provisions maintained by ICA signatories may be reversed in the following manner: (i) 50% upon repayment of 20% of the residual debt; and (ii) the balance 50%, upon repayment of additional 10% of the residual debt, without slipping into the NPA category in each case.

(e) Reversal of provisioning by non-ICA signatories: The provisions maintained by Lending Institutions that did not sign the ICA may be reversed in the following manner: (iii) 50% upon repayment of 20% of the carrying debt; and (iv) the balance 50%, upon repayment of additional 10% of the carrying debt, subject to IRAC provisions being maintained.

X. Post Implementation Default

If there is a default by the borrower with any ICA signatories during the “monitoring period”, it triggers a review period of 30 days. If the default continues at the end of the review period, the asset classification of the borrower with all Lending institutions, including those who did not sign the ICA, will be downgraded to NPA. The NPA downgrade will be from the date of implementation of the resolution plan or the date from which the borrower had been classified as NPA before implementation of the plan, whichever is earlier. The “monitoring period” is the period starting from the date of implementation of the resolution plan till the borrower pays 10% of the residual debt, subject to a minimum of one year from the commencement of the first payment of interest or principal (whichever is later) on the credit facility with longest period of moratorium.

XI. Disclosures

All lenders are required to make disclosures regarding details of accounts restructured under this Covid Resolution Framework in their quarterly and/ or half- yearly financial statements.

XII. Conclusion

At a time when proceedings under the IBC have been suspended for defaults that take place between March 25, 2020 to September 24, 2020 (which can be extended upto another six months), the Covid Resolution Framework hopes to provide some respite to lenders and borrowers. While a one-time settlement scheme was most sought after, the RBI in its wisdom has decided against providing that flexibility to borrowers and lenders. However, the economic incentives (and disincentives) provided to the Lending Institutions coupled with a robust escrow mechanism for monitoring inflows and outflows should help mitigate some of the intercreditor issues plaguing restructurings under the June 7 Framework and give an impetus to lenders to effectively use this framework to restructure some of their debts. It would also be important for other financial sector regulators to extend co-operation in making this special package as broad- based and comprehensive as possible.

Unlockdown 4.0: MHA Guidelines

Lockdown measures to contain the spread of COVID-19 has been in force in the country since 24 March 2020.

On 30 May 2020, pursuant to the direction of the National Disaster Management Authority under Section 6(2)(i) of the Disaster Management Act, 2005, the Ministry of Home Affairs (MHA) issued an order enumerating the guidelines for phased re-opening of activities which were prohibited during the lockdown in areas outside the designated containment zones, as Unlockdown 1. This order was to remain in force up to 30 June 2020.

On 29 June 2020, with a view to re-open more activities in the country, in a calibrated manner, in areas outside containment zones, the MHA issued detailed guidelines on Unlockdown 2. The order had also extended the lockdown in containment zones up to 31 July 2020.

On 29 July 2020, MHA had issued guidelines on Unlock 3 which came into effect on 1 August 2020 for further extension of the process of phased re-opening. However, the order also stipulated for strict adherence to lockdown in containment zones up to 31 August 2020.

To provide further relaxations to the prohibited activities MHA issued detailed guidelines for Unlockdown 4 on 29 August 2020 as below:

  1. Activities permitted during Unlock 4 outside the Containment Zones:

All activities except the following are permitted:

(i) Schools, colleges, educational and coaching institutions to continue to remain closed for students and regular class activity up to 30 September 2020. However, the following are permitted:

  1. Online/ Distance learning;
  1. 50% of teaching and non-teaching staff may be permitted to be called to the schools at a time for online teaching/tele-counseling and related work, in areas outside Containment Zones with effect from 21 September 2020 for which SOP will be issued by the Ministry of Health and Family Welfare (MoHFM).
  1. Students of class 9 to 12 may be permitted to visit schools outside Containment Zones only, on voluntary basis, for taking guidance from their teachers. This is subject to the written consent from parents/ guardians, with effect from 21 September 2020 for which SOP will be issued by the MoHFW.
  1. Skill or Entrepreneurship training will be permitted in National Training Institutes, Industrial Training Institutes, Short term training centres registered with National Skill Development Corporation or State Skill Development Missions or other Ministries of the Government of India or State Governments.

National Institute for Entrepreneurship and Small Business Development, Indian Institue of Entrepreneurship and their training providers will also be permitted.

This will be only with effect from 21 September 2020 for which SOP will be issued by the MoHFW.

  1. Higher Education Institutions only for research scholars (Ph.D.) and post-graduate students of technical and professional programmes requiring laboratory/ experimental works. 

(ii) Metro rail will be allowed to operate with effect from 7 September 2020 in a graded manner, by the Ministry of Housing and Urban Affairs/ Ministry of Railways in consultation with MHA. SOP to be issued by the Ministry of Housing and Urban Affairs.

(iii) Social/ academic/ sports/ entertainment/ cultural/ religious/ political functions and other congregations with a ceiling of 100 persons will be permitted from 21 September 2020 with mandatory wearing face masks, social distancing, provision for thermal scanning and hand wash or sanitizer. 

However, marriage related gatherings with number of guests not exceeding 50 and funeral/ last rites related gatherings with number of persons not exceeding 20 will continue to be allowed up to 20 September 2020, after which the ceiling of 100 persons will apply. 

(iv) Cinema halls, swimming pools, entertainment parks, theatres and similar places will remain closed. However, open air theatres will be permitted to open with effect from 21 September 2020.

(v) International air travel of passengers, except as permitted by MHA.

  1. Lockdown limited to Containment Zones:

Lockdown to remain in force in Containment Zones up to 30 September 2020.

District Authorities to demarcate the Containment Zones, on due consideration of the guidelines issued 

by the MoHFW.

Containment Zones to be notified on the websites of respective District Collectors and by the States/ 

UTs and information will be shared by MoHFW.

  1. National Directives for COVID-19 Management:

The MHA order in its Annexure I has also issued revised directives to be followed throughout the 

country:

  1. Compulsory wearing of face cover in public places and work places;
  2. Maintenance of minimum distance of 6 feet in public places;
  3. Shops to ensure physical distancing among customers;
  4. Spitting in public places is punishable with fine as prescribed by the local authorities;
  5. Workplace directives:

(i) Work from home to be practised to the extent possible;

(ii) Staggering of work/ business hours to be followed in workplaces, shops, offices, markets, industrial and commercial establishments;

(iii) Provision of thermal screening, sanitizer, hand wash to be made at all entry and exit points and common areas;

(iv) Frequent sanitization of all points which come into human contact to be ensured;

(v) Practising of social distancing by workers is to be ensured by all persons in charge of workplaces.

  1. States/ UT Governments are prohibited from imposing any local lockdown outside containment

zones without prior consultation of the Central Government.

  1. Inter-State and Intra-State movement:

No restriction has been placed on inter-State and intra-State movement of persons and goods including

those for cross land-border trade under Treaties with neighbouring countries. No separate permission/

approval/ e-permit will be required for such movements.

  1. Movement of persons with SOPs:

The following to continue to be regulated by the respective SOPs issued:

  1. Movement by passenger trains;
  2. Domestic air travel;
  3. Movement of Vande Bharat and Air Transport flights;
  4. Sign-on and sign-off of India seafarers.
  1. Protection of Vulnerable persons:

Persons above 65 years of age, persons with co-morbidities, pregnant women and children below the age

of 10 years are advised to stay at home, except for essential and health purposes.

The order further reiterated the use and purpose of the Aarogya Setu application.

Unlockdown 3.0: Ministry of Home Affairs Guidelines

Lockdown measures to contain the spread of COVID-19 has been in force in the country since 24 March 2020.

On 30 May 2020, pursuant to the direction of the National Disaster Management Authority under Section 6(2)(i) of the Disaster Management Act, 2005, the Ministry of Home Affairs (MHA) issued an order enumerating the guidelines for phased re-opening of activities which were prohibited during the lockdown in areas outside the designated containment zones. This order was to remain in force up to 30 June 2020.

On 29 June 2020, with a view to re-open more activities in the country, in a calibrated manner, in areas outside containment zones, the MHA issued detailed guidelines on Unlockdown 2. The order had also extended the lockdown in containment zones up to 31 July 2020.

On 29 July 2020, MHA has issued guidelines on Unlock 3 which will come into effect on 1 August 2020 for further extension of the process of phased re-opening. However, the order also stipulated for strict adherence to lockdown in containment zones up to 31 August 2020.

  1. Activities permitted outside the Containment Zones:

All activities except the following are permitted:

  •     Schools, colleges, educational and coaching institutions will remain closed till 31 August2020. Online/ distance learning shall continue to be permitted and shall be encouraged.
  •       International air travel of passengers, except as permitted by MHA;
  •       Metro Rail;
  •     Cinema halls, swimming pools, entertainment parks, theatres, bars and auditoriums, assembly halls etc;
  •      Social, political, sports, entertainment, academic, cultural, religious functions and other large congregations.
  •        Yoga institutes and gymnasiums will be allowed to function from 5 August 2020 for which Standard Operating Procedures will be issued by the Ministry of Health and Family Welfare
  1. Protection of Vulnerable persons:

 

Persons above 65 years of age, persons with co-morbidities, pregnant women and children below the age of 10 years are advised to stay at home, except for essential and health purposes.

  1. Lockdown in Containment Zones:
  1. a)The order directs the District Authorities to demarcate the Containment Zones, on due consideration of the guidelines issued by the MoHFW;
  2.   b)It also imposes continuation of the lockdown in such zones until 31 August2020;
  3.   c)Only essential activities are to be allowed in the Containment Zones;
  4.   d)Strict perimeter control shall be imposed in such zones to ensure that there is no movement of people in and out of these zones, except for medical emergencies and maintenance of supply of essential goods and services;
  5.   e)The Order also stipulates intensive contact tracing, house-to-house surveillance, and other clinical interventions.
  6.   f) States and UTs may also identify Buffer zones outside the Containment Zones, where new cases are likely to occur. The Order allows the District authorities to exercise their discretion to impose restrictions within such buffer zones.
  1. Movement of persons/ goods:
  1. a)No restriction has been placed on inter-State and intra-State movement of persons and goods including those for cross land-border trade under Treaties with neighbouring countries. No separate permission/ approval/ e-permit will be required for such movements.
  2. b)Movement of the following persons are required to adhere to the respective SOPs:

(i)        movement of person by train, issued vide Order dated May 11, 2020;

(ii)      movement of Indian Nationals stranded outside the country and specified persons to travel abroad, issued     vide Order dated May 5, 2020;

(iii)    sign-on and sign-off of Indian seafarers, issued vide Order dated April 21, 2020; and

(iv)    domestic passenger air travel issued vide Order dated 21 May 2020.

  1. Independence day functions:

Independence day functions at National, State, District, Sub-Division, Municipal and Panchayat levels and ‘At Home’ functions, wherever held, will be allowed with social distancing and by following other health protocols eg. wearing masks. In this regard instructions issued vide MHA letter shall be followed.

The order also stipulates that the National Directives for COVID-19 Management, as specified in Annexure 1 of the 30 May 2020 order, must continue to be followed throughout the country.

The State/ UTs, based on assessment of the situation, may prohibit certain activities or impose any restrictions as deemed necessary, outside the Containment Zones.

Latest MCA updates on account of COVID-19

1. Companies (Meetings of Board and its Powers) Second Amendment Rules, 2020  to allow board meeting through video conferencing or other audio-visual means for all matters up to 30 September 2020;

2.  Companies (Appointment and Qualification of Directors) Third Amendment Rules, 2020 to amend compliances required by a person eligible and willing to be appointed as an independent director.

3. Extension of timeline up to 30 September 2020 for creation of deposit repayment reserve of 20% under Section 73(2)(c) of the Companies Act, 2013 and to invest or deposit 15% of amount of debentures under Rule 18 of Companies (Share Capital and Debenture) Rules, 2014.

4. Companies (Share Capital and Debentures) Amendment Rules, 2020

5. Scheme for relaxation of time for filing forms related to creation or modification of charges under the Companies Act, 2013.

6. Extension of time up to 30 September 2020 to conduct EGMs through video conferencing and other audio-visual means.

Unlockdown 1.0 – Maharashtra Guidelines

The Government of Maharashtra has time and again undertaken various lockdown measures in adherence to the guidelines and notifications issued by the Ministry of Home Affairs and in view of the continuing spread of COVID-19 within the State. On 17 May 2020 the State  Government through its powers constituted under the Disaster Management Act 2005, issued an order to extend the lockdown measures in the State up to 31May 2020 and further issued revised consolidated guidelines from time to time to contain the spread of COVID-19.The State Government, on evaluating the threat of spread of COVID-19 in the State of Maharashtra, in exercise of its powers conferred under Section 2 of the Epidemic Diseases Act and all other enabling provisions of the Disaster Management Act, 2005 has extended the lockdown in the entire State of Maharashtra further till midnight of 30th June 2020.In light of the above, directions have been issue vide an order dated 31 May 2020 (“Order”) to extend the existing  lockdown, with amendments and to operationalize MISSION BEGIN AGAIN for easing of restrictions and phase-wise opening. The order is set to come into effect from 1 June 2020 and will remain effective till 30 June 2020.


1.      Night Curfew: The movement of individuals is strictly prohibited between 9:00 pm to 5:00 am except for essential activities


2.      Protection of Vulnerable Persons: Except for medical and essential services, persons who are above the age of 65 years, persons with comorbidities, pregnant women and children below the age of 10 years have been advised to stay at home


3.      Containment Zones: For the demarcation and ascertainment of permitted activities in a containment zone, the guidelines of the Ministry of Health and Family Welfare (“MOHFW”) shall be taken into consideration.


(a)    The containment zones will be demarcated by the Municipal/District Authorities. The municipal commissioners in corporation areas and district collectors in other parts of the district are empowered to decide the containment zone. The containment zone can be a residential colony, mohalla, slum, building, group of buildings, lane, ward etc. Anything larger than this (eg. Whole taluka/ Whole Municipal Corporation etc.) can be declared as containment zone only after consultation with Chief Secretary.


(b)   In these containment zones, only essential activities will be allowed. There shall be strict perimeter control to ensure there is no movement of people in and out of the zones, except for medical emergencies


4.      Activities allowed in a phase wise manner in certain regions: The Order allows the following activities with phase wise restrictions in municipal corporations of MMR region, including MCGM, Municipal Corporations of Pune, Solapur, Aurangabad, Malegaon, Nashik, Dhule, Jalgaon, Akola, Amravati and Nagpur.


I.                Phase 1 – With effect from June 3, 2020


(a)    Outdoor physical activities:
Individual physical exercises like cycling, jogging, running, walking shall be permitted (with an emphasis on cycling) on public open spaces including beaches, public / private playgrounds, grounds belonging to societies/institutions, gardens and promenades with following conditions:

(i)     The activities can take place between 5 am to 7 pm.

(ii)   They shall not be in the form of a group activity and children should be accompanied by an adult.

(iii) It shall be undertaken for a limited duration

(iv)  No other activity shall be permitted.

(v)   People have been permitted to use only nearby/neighbourhood open spaces. Long distance travel has not been permitted.

(vi)  People have been advised to avoid crowded open spaces.These activities will be not permitted in indoor portion or indoor stadium.

(b)   Activities relating to self-employed people like plumbers, electricians, pest control and technicians

(c)    Garages to mend vehicles and workshops with prior appointments

(d)   All government offices (excluding Emergency, health and medical, treasuries, disaster management, police, NIC, food and civil Supply, F.C.I, N.Y.K , Municipal Services who can operate at the levels as per the need) are allowed to  function at 15% strength or minimum 15 employees whichever is more.


II.              Phase II – With effect from 5th June 2020


(a)   All markets, market areas & shops, except malls and market complexes, have been  allowed to function on PI-P2 basis (shops on one side of the road/lane/passage to be opened on odd dates while shops on the other side on even dates) from 9 am to 5 pm with following conditions.

(i)     The use of trial rooms in the shops have not be permitted for clothes, apparels and similar items to prevent spread of infection. Similarly exchange policy and return policy have also not be permitted.

(ii)   The shopkeepers will be responsible for ensuring social distancing norms in the shops and are encouraged to take measures such as foot markings on the floor, token system, home delivery etc.

(iii) People are advised to walk / to use cycles for shopping purposes and to use nearby/neighborhood markets as far as possible. Long distance travel for nonessential items have not been permitted. Use of motorized vehicles for shopping have also been strictly discouraged.

(iv)   The shops shall be shut down by the concerned authorities if there is any failure of social distancing.

(b)    Movement of people have been allowed in the following manner:

(i)     Taxi/Cab/aggregator – Only essential 1+2(ii)   Rickshaw – Only essential 1+2(iii) Four wheeler- Only essential 1+2(iv)  Two Wheeler- Only essential 1+2


III.            Phase III – With effect from June 8, 2020


All private offices have been allowed to operate with up to 10% strength as per requirement, with remaining persons working from home.


5.       Permitted activities in other regions: In the states apart from the ones mentioned above, all activities, which are not expressly prohibited under this order and which are not otherwise explicitly prohibited or banned, shall continue to be permitted, with following conditions:(a)    No permission is needed from any govt. authorities for permitted activities(b)    Outdoor portion of Sport complexes and Stadia and other open to sky public spaces will be permitted to remain open for individual exercises; however, spectators and group activities will not be allowed.(c)    All public and private transport will follow passenger management in the following manner:(i)     Two Wheeler – 1 rider(ii)   Three Wheeler – 1 + 2(iii) Four Wheeler – 1 + 2(d)   Intra district bus service will be allowed with maximum 50% capacity per bus with physical distancing and sanitation measures.(e)     Inter-district bus service orders will not be permitted.(f)    All markets/shops will remain open from 9 a.m. to 5 p.m. If any crowding or failure of social distancing norms is seen, then authorities are required to immediately close down such shops/markets.

6.      Activities prohibited throughout the State: The following activities shall be expressly prohibited throughout the state and the easing of restrictions and opening up for these activities will be done in a phased manner along with Standard Operating Procedures (“SOPs”)and Guidelines:


(i)     Schools, colleges, educational, training, coaching institutions etc.

(ii)   International air travel of passengers, except as permitted by the Ministry of Home Affairs (“MHA”).

(iii) Metro Rail.

(iv)   Passenger Movement by trains and domestic air travel unless specifically allowed through separate orders and Standard Operating Procedure (SOP)

(v)   Cinema halls, gymnasiums, swimming pools, entertainment parks, theatres, bars and auditoriums, assembly halls and similar places.

(vi)  Social, political, sports/ entertainment, academic/ cultural, religious functionsand large congregations.

(vii)          Religious places/ places of worship for public

(viii)         Barber Shops, Spas, Saloons, Beauty Parlours.

(ix)   Shopping Malls, Hotels, Restaurants and other Hospitality Services.

7.      Movement of persons and goods in certain cases.

(a)    All Authorities have been authorized to allow inter-State and Intra-State movement of medical professionals, nurses and para medical staff, sanitation personnel and ambulances without any restrictions.

(b)   The inter-state and inter-district movement of persons are continued to be regulated.

(c)    The following will be regulated by the relevant SOPs issued:

(i)     Movement of persons by shramik special trains issued vide  Order dated 2 May 2020

(ii)   Movement of Indian nationals stranded outside the country and of specified persons to travel abroad , issued vide Order dated May 5, 2020;(iii) Evacuation of foreign nationals; sign-on and sign-off of Indian seafarers vide Order dated April 21, 2020.

(d)    Inter-State movement of all types of goods/ cargo, including empty trucks shall be allowed by authorities

(e)    The movement of any type of goods/cargo for cross land-border trade under Treaties with neighboring countries shall not be stopped by any authority.

8.       Use of Aarogya Setu
In order to facilitate timely provision of medical attention to those individuals who are at risk, employers and district authorities have been advised to undertake best effort basis to ensure that Aarogya Setu is installed by all individuals/employees having compatible mobile phones and they regularly update their health status on the app.


9.      National Directives for COVID-19 Management:
The Order in its Annexure I has also advised that the national directives for COVID 19 Management be followed throughout the state as follows:

(a)    Compulsory wearing of face coverings.

(b)   Mandatory Social Distancing of at least  6 Feet.

(c)    Large public gatherings are prohibited.

(i)     For marriage related gatherings, number of guests to not exceed 50.

(ii)   For funeral related gatherings, number of persons to not exceed 20.

(d)   Spitting in public places is punishable with fine as prescribed by the local authorities;

(e)    Consumption of liquor, paan, gutka, tobacco etc in public places is prohibited.

(f)    Workplace directives:

(i)     Work from home to be practised to the extent possible;

(ii)   Provision of thermal screening, sanitizer, hand wash to be made at all entry and exit points and common areas;

(iii) Frequent sanitization of all points which come into human contact to be ensured;

(iv)  Practising of social distancing by workers is to be ensured by all persons in charge of workplaces.

10.   Activities permitted so far by various orders upto the order (Here) dated 19 May  2020The Order under Annexure II has specified that the activities allowed in certain regions as phases under Paragraph (4), above, shall be in addition to the following set of previously permitted activities:

(a)    All essential shops which are allowed to remain open before this Order, shall continue to do so.

(b)   All non-essential shops will be allowed to continue as per relaxations and guidelines issued before this order and are in operation as per the policy of respective Municipal Corporation. Liquor shops will continue to operate if permitted, home delivery or otherwise.

(c)    E-commerce activity for essential as well as non-essential items & material.

(d)    All the industrial units which are presently open will continue to operate.

(e)    All construction sites (Public/Private) which are allowed to remain open and operational. All such pre-monsoon works (Public and Private) which are allowed.

(f)    Home delivery restaurants / Kitchen.

(g)   On-line/ distance learning and related activities.

(h)   Govt Offices at 5% strength or 10 persons whichever is higher.

(i)     People’s movement is allowed in following manner:

(i)     Two wheeler only essential one rider

(ii)   Four Wheeler only essential (1 + 2)

(j)      Any other allowed and permitted activity by any specific/general order.

Face masks and hand sanitizers cease to be essential commodities

On 13 March 2020, the Ministry of Consumer Affairs, Food and Public Distribution notified masks (2 ply & 3 ply surgical masks, N95 masks) & hand sanitizers as essential commodities under the Essential Commodities Act, 1955 (Act) up to 30 June 2020.


Under the Act, if the Central Government deems fit, it may, in the interest of public, notify certain commodities as ‘essential’ in order to control the production, supply and distribution of such commodities.
The origins of this Act can be found in the Defence of India Act, 1939 (“DOI Act”) and the Defence of India Rules, 1939 (“DOI Rules”). The DOI Act and the DOI Rules conferred broad discretionary powers on the Government to regulate and prohibit the production, distribution, consumption, movement and disposal of goods notified by the Government and forbid the practice of controlling prices by withholding of goods from the market. The DOI Act and DOI Rules ceased to have force in 1946, but the need to have control over certain commodities to meet inflation and shortages persisted. Therefore, the Essential Supplies (Temporary Powers) Act, 1946 was enacted.[1] Post-independence, keeping in mind the Constitutional principles and safeguards, the Act was enacted in 1955 and is the present legislation that regulates the market for “essential commodities”.
The term ‘essential commodities’ although not defined under the Act refers to the commodities listed in the Schedule of the Act. Until 05 June, 2020 the schedule had 9 commodities.


When an item is enlisted in the Schedule of the Act, the Central Government has the authority vested under Section 3 of the Act, to;

(i) Regulate its manufacture/ production by licenses and permits;

(ii) Control the price at which it is bought and sold;

(iii) Prohibit its withholding from sale;

(iv) Direct any person holding it in stock to sell whole/ part of the stock held;

(v) Regulate its storage, transport, use, consumption and disposal.

On 24 March 2020 the Ministry of Consumer Affairs further issued a control order to regulate the prices of 2 ply and 3 ply masks till 30 June 2020.


Three months into the pandemic, the Ministry of Consumer Affairs, declared that, the 13 March 2020 and 24 March 2020 orders, notifying the masks and sanitizers as essential commodities and regulating their prices, will not be extended beyond 30 June 2020. The reason cited by the Ministry was that, face masks and hand sanitizers are no more essential products as their supply is sufficient in the country and therefore must be kept out of the purview of the Act.

Unlockdown 2.0: Ministry of Home Affairs Guidelines

Lockdown measures to contain the spread of COVID-19 has been in force in the country since 24 March 2020.


On 30 May 2020, pursuant to the direction of the National Disaster Management Authority under Section 6(2)(i) of the Disaster Management Act, 2005, the Ministry of Home Affairs (MHA) issued an order enumerating the guidelines for phased re-opening of activities which were prohibited during the lockdown in areas outside the designated containment zones. This order was to remain in force up to 30 June 2020.


On 29 June 2020, with a view to re-open more activities in the country, in a calibrated manner, in areas outside containment zones, the MHA issued the following detailed guidelines. The order has also extended the lockdown in containment zones up to 31 July 2020:


1. Activities permitted outside the Containment Zones:
All activities except the following are permitted:

  • Schools, colleges, educational and coaching institutions will remain closed till 31 July 2020. Online/ distance learning shall continue to be permitted and shall be encouraged.
  • Training institutions of the Central and State Governments will be allowed to function from 15 July 2020, for which Standard Operating Procedure (SOP) will be issued by the Department of Personnel & Training (DoPT).
  • International air travel of passengers, except as permitted by MHA;
  • Metro Rail;
  • Cinema halls, gymnasiums, swimming pools, entertainment parks, theatres, bars and auditoriums, assembly halls etc;
  • Social, political, sports, entertainment, academic, cultural, religious functions and other large congregations.

Domestic flights and passenger trains have already been allowed in a limited manner. Their operations will be further expanded in a calibrated manner.


2.    Night Curfew:
(i)  Movement of individuals between 9.00pm and 5.00am shall continue to be prohibited throughout the country, except for essential activities, including operation of industrial units in multiple shifts, movement of persons and goods on National and State Highways, loading and unloading of cargo and travel of persons to their destinations after disembarking from buses, trains and airplanes.

(ii)  Persons above 65 years of age, persons with co-morbidities, pregnant women and children below the age of 10 years are advised to stay at home, except for essential and health purposes.


3.    Lockdown in Containment Zones:
  a) The order directs the District Authorities to demarcate the Containment Zones, on due  consideration of the guidelines issued by the MoHFW;   

b)    It also imposes continuation of the lockdown in such zones until 31 July 2020;   

c)    Only essential activities are to be allowed in the Containment Zones;   

d)    Strict perimeter control shall be imposed in such zones to ensure that there is no movement of people in and out of these zones, except for medical emergencies and maintenance of supply of essential goods and services;   

e)    The Order also stipulates intensive contact tracing, house-to-house surveillance, and other clinical interventions.   

f) States and UTs may also identify Buffer zones outside the Containment Zones, where new cases are likely to occur. The Order allows the District authorities to exercise their discretion to impose restrictions within such buffer zones.


4.    Movement of persons/ goods:
a)  No restriction has been placed on inter-State and intra-State movement of persons and goods including those for cross land-border trade under Treaties with neighbouring countries. No separate permission/ approval/ e-permit will be required for such movements.b)   Movement of the following persons are required to adhere to the respective SOPs:

(i)        movement of person by train, issued vide Order dated May 11, 2020;

(ii)      movement of Indian Nationals stranded outside the country and specified persons to travel abroad, issued     vide Order dated May 5, 2020;

(iii)    sign-on and sign-off of Indian seafarers, issued vide Order dated April 21, 2020; and

(iv)    domestic passenger air travel issued vide Order dated 21 May 2020. 

The order also stipulates that the National Directives for COVID-19 Management, as specified in Annexure 1 of the 30 May 2020 order, must continue to be followed throughout the country.

The State/ UTs, based on assessment of the situation, may prohibit certain activities or impose any restrictions as deemed necessary, outside the Containment Zones.

The Ministry of Home Affairs, vide a letter dated 29 June 2020, reiterated to the States and Union Territories to not dilute any of the aforesaid restrictions and guidelines that have been issued.

Latest developments by SEBI on account of COVID-19

Since March 2020, the Securities and Exchange Board of India (SEBI) has relaxed various provisions of rules and regulations for listed entities on account of the pandemic. Recent relaxations include:


(i) Extension of relaxation from compliance to REITs and InvITs.

(ii) SEBI (Substantial Acquisition of Shares and Takeovers) Third Amendment Regulations, 2020.

(iii) SEBI (Issue of Capital and Disclosure Requirments) Third Amendment Regulations, 2020.

(iv) Relaxation in timelines for compliance with regulatory requirements.

(v) Relaxation of time gap between two Board/ Audit Committee meeting of listed entities.

Karnataka High Court on grant of COVID-19 moratorium

The Reserve Bank of India (RBI) notified COVID-19 – Regulatory Package (Circular) on 27 March 2020 which inter-alia, permitted all commercial banks, co-operative banks, all India Financial Institutions and NBFCs to grant a 3-month moratorium on all payment of installments falling due between March 1, 2020 and May 31, 2020. Subsequently, on 22 May 2020, the period of the moratorium was extended by another 3 months by the RBI.

Detailed note on the Circular can be accessed at https://jsacovid19.blogspot.com/2020/04/rbi-instructions-in-light-of-covid-19.html

Followed by the Circular, the Ministry of Finance also issued FAQs on the matter to address the technicalities of the moratorium. However, several ambiguities still persisted in the subject matter, which the Karnataka High Court has addressed in its judgment on 8 July 2020 while ruling on a Writ Petition filed by a borrower.

The Writ Petition was filed by Velankani Information Systems Limited (VISL) engaged in the business of running an information technology park and a 5-star hotel. VISL had availed loan facilities from HDFC Bank, Federal Bank and Aditya Birla Finance to run the business. All 3 banks have a pari passu first charge over the receivables, revenue and rent from the hotel and tech park business.

VISL was forced to shut down its hotel on account of the Covid-19 pandemic causing VISL to approach the banks for grant of the moratorium. Aditya Birla Finance was willing to grant the moratorium. However, as the lending facility was a consortium finance with common securities and pari passu charge, Aditya Birla Finance contended that the grant of the moratorium required the consent of the other two banks. The other banks contended that the Circular issued by RBI was not mandatory in nature and only directory, and hence the discretion of granting the moratorium lies solely with the lending institution.

Ruling on the nature of the Circular, the Court held that, though the Circular is discretionary in nature, as to the power of a bank to grant moratorium or not, it is mandatory for the banks to ensure the continuity of viable businesses, that is, the non-grant of a moratorium should not result in adversely affecting the survival and continuity of a viable business.

Further, the banks have also, in the FAQs on their respective websites, stated that all their customers would be eligible for such moratorium in lines with the Circular.

Therefore, it was held that all borrowers are eligible to seek for a moratorium. If a borrower were to seek for grant of a moratorium on the ground that continuity of its business would be affected and establish the same, the borrower would as a matter of right be entitled to the grant of moratorium so that such continuity is not adversely affected. And all 3 banks, HDFC Bank, Federal Bank and Aditya Birla Finance was directed by the Court to grant moratorium to VISL for the three months from 01 March 2020 to 31 May 2020 and also for the extended period from 01 June 2020 to 31 August 2020.

The Court also directed the RBI to monitor the implementation of the Circular, including verification of whether there are board-approved policies formulated by each of the lenders, direct all the banks to submit the board-approved policies for approval to the RBI, to approve such board-approved policy, verify if such a board-approved policy contains objective criteria, set up a proper and effective grievance redressal forum for any aggrieved borrower to approach on account of the improper or non-implementation of the policy and/or Circular etc.

The High Court order sought to clear the lack of consensus among the banks on the extension of loan moratorium due to lack of clarity from RBI.

This case is also peculiar due to the fact that the Court had allowed a writ of mandamus against private institutions, stating that the enforcement of the Circular involved enforcing a public duty, though it was against a private body.
Ruling in favour of the maintainability of the Writ, the Court held that, as the Circular was issued to protect and preserve the economy of the country on the account of the COVID 19 pandemic, the issuance of the Circular is in the public interest, the interest of the economy and the country.

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