Tag: LOCKDOWN

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COVID-19 related Frequently Asked Questions (FAQs) on Corporate Social Responsibility (CSR)

Further to the clarification issued by the Ministry of Corporate Affairs (MCA) on contributions to PM CARES fund as eligible CSR activity under item number viii of Schedule VII of Companies Act, 2013 the MCA has received several representations from various stakeholders seeking clarification on eligibility of CSR expenditure related to COVID-19 activities. As a consolidated response to all the representations, the MCA has released a set of FAQ’s along with clarifications for better understanding of the stakeholders on CSR expenditure related to COVID-19 activities.

Whether contribution made to ‘PM CARES Fund’ shall qualify as CSR expenditure?

MCA: Contribution made to ‘PM CARES Fund’ shall qualify as CSR expenditure under item no (viii) of Schedule VII of the Companies Act, 2013 and it has been further clarified vide office memorandum F. No. CSR-05/1/2020-CSR-MCA dated 28th March, 2020.

Whether contribution made to ‘Chief Minister’s Relief Funds’ or ‘State Relief Fund for COVID-19’ shall qualify as CSR expenditure?

MCA: ‘Chief Minister’s Relief Fund’ or ‘State Relief Fund for COVID-19’ is not included in Schedule VII of the Companies Act, 2013 and therefore any contribution to such funds shall not qualify as admissible CSR expenditure.

Whether contribution made to State Disaster Management Authority shall qualify as CSR expenditure?

MCA: Contribution made to State Disaster Management Authority to combat COVID-19 shall qualify as CSR expenditure under item no (xii) of Schedule VII of the 2013 and clarified vide general circular No. 10/2020 dated 23rd March, 2020.

Whether spending of CSR funds for COVID-19 related activities shall qualify as CSR expenditure?

MCA: Ministry vide general circular No. 10/2020 dated 23rd March, 2020 has clarified that spending CSR funds for COVID-19 related activities shall qualify as CSR expenditure. It is further clarified that funds may be spent for various activities related to COVID-19 under items nos. (i) and (xii) of circular No. 21/2014 dated 18.06.2014, items in Schedule VII are broad based and may be interpreted liberally for this purpose.

Whether payment of salary/wages to employees and workers, including contract labour, during the lockdown period can be adjusted against the CSR expenditure of the companies?

MCA: Payment of salary/ wages in normal circumstances is a contractual and statutory obligation of the company. Similarly, payment of salary/ wages to employees and workers even during the lockdown period is a moral obligation of the employers, as they have no alternative source of employment or livelihood during this period. Thus, payment of salary/ wages to employees and workers during the lockdown period (including imposition of other social distancing requirements) shall not qualify as admissible CSR expenditure.

Whether payment of wages made to casual /daily wage workers during the lockdown period can be adjusted against the CSR expenditure of the companies?

MCA: Payment of wages to temporary or casual or daily wage workers during the lockdown period is part of the moral/ humanitarian/ contractual obligations of the company and is applicable to all companies irrespective of whether they have any legal obligation for CSR contribution under section 135 of the Companies Act 2013. Hence, payment of wages to temporary or casual or daily wage workers during the lockdown period shall not count towards CSR expenditure.

Whether payment of ex-gratia to temporary /casual /daily wage workers shall qualify as CSR expenditure?

MCA: If any ex-gratia payment is made to temporary / casual workers/ daily wage workers over and above the disbursement of wages, specifically for the purpose of fighting COVID 19, the same shall be admissible towards CSR expenditure as a onetime exception provided there is an explicit declaration to that effect by the Board of the company, which is duly certified by the statutory auditor.

Relaxation in adherence to prescribed timelines issued by SEBI due to COVID-19

In wake of the current nationwide lockdown of 21 days as directed by Government of India SEBI has considered the requirement to extend the timelines for processing of various investor requests pertaining to physical securities and compliance and disclosures to be made under SEBI Regulations and various SEBI circulars. In the event of further extension in the lockdown period as directed by Government of India / State Governments, additional relaxation in prescribed timelines for equal number of extended days in lock down is also being given to intermediaries / market participants for the following matters:

  • Processing of Remat Requests;
  • Processing of Transmission Requests;
  • Processing of request for Issue of Duplicate Share Certificates;
  • Processing of Requests for Name Deletion/ Name Change/Transposition/ Pending Share Transfers (Re-lodgement cases in the case of share transfers);
  • Processing of Requests for Consolidation / Split / Replacement of Share Certificates / Amalgamation of Folios;
  • Handling Investor Correspondence / Grievances / SCORES complaint;
  • Submission of Half Yearly Report to SEBI pursuant to Circular No. CIR/MIRSD/7/2012 dated July 05, 2012;
  • Compulsory Internal Audit of RTAs by CA / CS / CMA holding Certificate of Practice and Certified Information Systems Auditor (CISA)/ Diploma Information Systems Auditor (DISA) pursuant to Circular dated April 20, 2018, issued by SEBI;
  • Submission of Audit Report by CISA/CISM qualified or equivalent auditor by QRTAs to SEBI along with comments of the Board; pursuant to Circular dated September 08, 2017 issued by SEBI on Cyber Security and Cyber Security Resilience framework for QRTAs
  • Submission of Compliance Report by QRTAs duly reviewed by the Board of Directors of the QRTA to SEBI on Enhanced monitoring ofQRTAs pursuant to Circular dated August 10, 2018 issued by SEBI;
  • Regulation 74(5) of the SEBI (Depositories and Participants) Regulations, 2018 on Manner of surrender of certificate of security; and
  • Regulation 76 of the Securities and Exchange Board of India (Depositories and Participants) Regulations, 2018 on audits.

 

Please refer to the SEBI circular no. SEBI/HO/MIRSD/RTAMB/CIR/P/2020/59 dated April 13, 2020 for more details.

Relaxations of compliances under Goods and Services Tax

In view of the COVID-19 outbreak and the nation-wide lockdown, the Government has issued notifications in line with the Taxation and other Laws (Relaxation of certain provisions) Ordinance, 2020, amending the Goods and Services Tax Rules, 2017 (“CGST Rules”) and providing relaxations for compliances to the taxpayer.

Key relaxations under such notifications are summarised below.

1. NIL/reduced rate of interest payable on late payment of tax – Notification No. 31/2020-Central Tax dated April 3, 2020
Prescribes NIL or reduced rate of interest for delayed filing of form GSTR-3B for the months of February 2020, March 2020 and April 2020, subject to the condition that form GSTR-3B for the said months are filed within the prescribed due dates. Please refer the below table for the due dates and applicable rates of interest.

Class of registered personRate of interestTax periodDue dates
Taxpayers having an aggregate turnover of more than INR 5 crores in the preceding financial yearNil for the first 15 days from the due date and 9% thereafterFebruary 2020, March 2020 and April 2020June 24, 2020
Taxpayers having an aggregate turnover of more than INR 1.5 crores and up to INR 5 crores in the preceding financial yearNilFebruary  2020 and March 2020June 29, 2020
April 2020June 30, 2020
Taxpayers having an aggregate turnover of up to INR 1.5 crores in the preceding financial yearNilFebruary 2020June 30, 2020
March 2020July 03, 2020
April 2020July 06, 2020

2. Late fees waived on delayed filing of Form GSTR 3B – Notification No. 32/2020-Central Tax dated April 3, 2020
Waives the amount of late fee payable on account of delayed filing of form GSTR-3B for the months of February 2020, March 2020 and April 2020, subject to condition that form GSTR-3B for the said months are filed within the prescribed due dates (as mentioned in the above table).

3. Late fees waived on delayed filing of Form GSTR 1 – Notification No. 33/2020-Central Tax dated April 3, 2020
Waives late fee payable on account of delayed filing of form GSTR-1 for the months of February 2020, March 2020 and April 2020 subject to the condition that form GSTR-1 for the said months are filed by June 30, 2020.

4. Due date for filing Form GSTR 3B for the month of May 2020 – Notification No. 36/2020-Central Tax dated April 3, 2020
Prescribes staggered due dates for filing form GSTR-3B for the month of May 2020. The due dates are tabulated below for ease of reference.

Class of registered personDue date
Aggregate turnover in the preceding financial year of more than INR 5 croresJune 27, 2020
Aggregate turnover in the preceding financial year upto INR 5 crores, in the states of Chhattisgarh, Madhya Pradesh, Gujarat, Maharashtra, Karnataka, Goa, Kerala, Tamil Nadu, Telangana, Andhra Pradesh, the Union territories of Daman and Diu and Dadra and Nagar Haveli, Puducherry, Andaman and Nicobar Islands or LakshadweepJuly 12, 2020
Aggregate turnover in the preceding financial year upto INR 5 crores in the States of Himachal Pradesh, Punjab, Uttarakhand, Haryana, Rajasthan, Uttar Pradesh, Bihar, Sikkim, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura, Meghalaya, Assam, West Bengal, Jharkhand or Odisha, the Union territories of Jammu and Kashmir, Ladakh, Chandigarh or DelhiJuly 14, 2020

5. Time limits pertaining to various proceedings extended – Notification No. 35/2020-Central Tax dated April 3, 2020
Provides relaxation of completion or compliance of any action required to be undertaken by a registered person and/ or a tax authority (such as issuance of notices, orders, etc. and filing replies, appeals, etc.) during the period March 20, 2020 to June 29, 2020, under the provisions of Central Goods and Service Tax Act, 2017 (‘CGST Act’) and CGST Rules, by extending such time limit to June 30, 2020.

However, the said extension will not be available for undertaking compliances pertaining to obtaining registration, issuance of tax paying documents, filing of returns, payment of interest and late fees, power to arrest, liability of partners under Section 90 of CGST Act, levy of penalties for various offences, detention and seizure of goods and generation of e-way bills.

Further, the said notification provides relaxation in relation to e-way bills, by extending the validity of e-way bills expiring during the period March 20, 2020 to April 15, 2020, till April 30, 2020.

6. Relaxation in compliance with Rule 36(4) of CGST Rules – Notification No. 30/2020-Central Tax April 3, 2020 and Circular No. 136/06/2020-GST dated April 3, 2020
Provides that restriction prescribed for availing input tax credit as per the provisions of Rule 36(4) of CGST Rules, will not apply to input tax credit availed by the registered persons in form GSTR-3B for the months of February, March, April, May, June, July and August, 2020, however, the same will apply cumulatively for the said period and form GSTR-3B for the month of September, 2020 will be furnished with a cumulative adjustment of input tax credit for the said months in accordance with Rule 36(4) of CGST Rules.

7. Relaxation for dealers opting for composition scheme – Notification No. 30/2020-Central Tax dated April 3, 2020
Provides for a relaxed time period for filing intimation under form GST CMP-02 and statement in for GST ITC-03 required for intimating the authorities for opting for composition scheme, for the financial year 2020-21 till June 30, 2020 and July 31, 2020, respectively.

Further, Notification No. 34/2020-Central Tax dated April 3, 2020 prescribes due date for filing statement for payment of self-assessed tax in form GST CMP-08 for quarter ending March 31, 2020 to be July 7, 2020 and due date for filing form GSTR-4 for FY 2019-20 to be July 15, 2020.

Recent Legal and Regulatory Changes Impacting Debt Transactions

In March 2020, there have been several changes in the Indian legal and regulatory landscape that will have an impact on debt transactions. Many of these changes have been precipitated due to the nationwide lock-down imposed as a result of COVID-19. The key changes are summarised below.

1. Insolvency regime

  • Increase in default threshold: The threshold for initiating the corporate insolvency resolution process (“CIRP”) under section 4 of the Insolvency and Bankruptcy Code, 2016 (“IBC”) has been increased from Rs. 100,000 to Rs. 10,000,000. This move will benefit various companies, especially medium and small enterprises, who may be unable to repay their debts in a timely manner and be forced into insolvency due to COVID-19.

  • Extension of CIRP timelines: The period of lockdown (i.e. March 24, 2020 to April 15, 2020) in relation to COVID-19 will be excluded for the purpose of calculating the 330-day period for completion of the CIRP. This will be applicable for all cases where the CIRP has been initiated and pending before any bench of the National Company Law Tribunal (“NCLT”) or in appeal before the National Company Law Appellate Tribunal (“NCLAT”).

  • Extension of timelines due to lockdown: The Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (“CIRP Regulations”) were amended to provide that if any activity in relation to the CIRP cannot be completed during the lockdown period imposed by the Government due to COVID-19, then such lockdown period will not be counted for the purposes of any timeline within which such activity has to be completed under the CIRP Regulations. This will provide a breather to many resolution professionals who were struggling to complete certain activities given the nationwide lockdown.

  • Priority financing: The Central Government has sponsored the Special Window for Affordable and Middle-Income Housing Investment Fund I for providing priority debt financing for completion of stalled housing projects that are in the affordable and middle-income housing sector. Any debt availed from such fund will be treated as “interim financing” under the IBC and will receive priority in repayment under the CIRP or liquidation of the corporate debtor.

  • Special GST process: Corporate debtors undergoing CIRP have to obtain a new GST registration in each state and union territory where they are carrying on business. The same must be obtained within 30 days of appointment of the interim resolution professional or resolution professional. Where any CIRP is ongoing on March 21, 2020 (the date of the notification), then the new registration has to be obtained within 30 days of such notification. The process set out in the notification has to be followed for filing returns and availing input tax credit.

  • Applicability to Jammu & Kashmir: The application of the IBC has been extended to the Union Territory of Jammu and Kashmir with effect from March 18, 2020 pursuant to the Jammu and Kashmir Reorganisation (Adaptation of Central Laws) Order, 2020.

  • December 2019 Ordinance codified by an IBC amendment: Various amendments that were introduced to the IBC pursuant to an ordinance in December 2019 were codified pursuant to a formal amendment to the IBC on March 13, 2020. These amendments are effective from December 28, 2019 (the date of the ordinance). The key changes brought about pursuant to the ordinance and this amendment include the following:

    (i) Restrictions on governmental authorities and regulators from suspending or terminating any license, quota, concession, clearance or similar right granted to the corporate debtor;(ii) No interruption of supply of goods and services to the corporate debtor which are critical to preserve the value and manage the operations of the corporate debtor

    (iii) Protection to the corporate debtor its assets from offences committed prior to the CIRP period by the erstwhile management and promoters of the corporate debtor; and

    (iv) Minimum number or percentage of applicants required to initiate CIRP proceedings by certain classes of creditors.

 

2. Moratorium permitted by the Reserve Bank of India (“RBI”)

On March 27, 2020, the RBI announced certain regulatory measures to ease the burden of debt servicing brought about by disruptions on account of COVID-19. The measures were aimed at ensuring continuity of viable businesses. One of the measures was to provide a moratorium to borrowers.

  • Moratorium on Term loans: The RBI permitted all commercial banks (including regional rural banks, small finance banks and local area banks), co-operative banks, all-India Financial Institutions, and non-banking financial companies (including housing finance companies) (“lending institutions”) to grant a moratorium in respect of term loans (including agricultural term loans, retail and crop loans), of three months on payment of all “instalments” falling due between March 1, 2020 and May 31, 2020. The “instalments” will include (i) principal and/or interest components, (ii) bullet repayments, (iii) equated monthly instalments, and (iv) credit card dues. The repayment schedule for such loans as also the residual tenor, will be shifted across the board by three months after the moratorium period. However, interest will continue to accrue on the outstanding portion of the term loans during the moratorium period. It is noteworthy that the moratorium related provisions are not applicable to foreign lenders, foreign portfolio investors (“FPIs”), mutual funds or alternative investment funds that have extended any debt to Indian borrowers.

  • Deferment of interest on Working capital facilities: In relation to working capital facilities sanctioned in the form of cash credit/overdraft (“CC/OD”), lending institutions have been permitted by RBI to defer the recovery of interest applied in respect of all such facilities during the period from March 1, 2020 upto May 31, 2020 (“deferment”). The accumulated accrued interest will be recovered immediately after the completion of this period.

  • Recalculation of Drawing power: Lending institutions can also recalculate the drawing power of borrowers facing stress due to COVID-19 in relation to CC/OD facilities sanctioned to them. The recalculation can be by reducing the margins and/or by reassessing the working capital cycle. This relief is available in respect of all such changes effected up to May 31, 2020 and contingent on the lending institutions being satisfied that the change is necessitated due to a fallout of COVID-19.

  • Asset classification: Any moratorium / deferment / recalculation of drawing power will not be treated as a concession or change in terms and conditions of loan agreements due to financial difficulty of the borrower under the RBI (Prudential Framework for Resolution of Stressed Assets) Directions, 2019 dated June 7, 2019. Therefore, such measure itself will not result in a downgrade of asset classification. The asset classification of term loans which are granted any relief mentioned above will be determined based on the revised due dates and the revised repayment schedule. Further, for working capital facilities where relief is provided, the special mention account status and the out of order status will be evaluated considering the application of accumulated interest immediately after the completion of the deferment period as well as the revised terms.

  • No adverse impact on credit history: Any rescheduling of payments, including interest, will not qualify as a default for the purposes of supervisory reporting and reporting to credit information companies (“CICs”) by the lending institutions. CICs shall ensure that the actions taken by lending institutions pursuant to the above announcements do not adversely impact the credit history of the beneficiaries.

  • Board approved policy: The board of each lending institution must frame appropriate policies to deal with the above measures. The policies must set out objective criteria for considering the abovementioned reliefs and must also be made available in the public domain.

 

 

3. Increased corporate bond limits

The RBI has increased the limit for FPI investment in corporate bonds to 15% of the outstanding stock for the financial year April 1, 2020 to March 31, 2021. The revised limits for FPI investment in corporate bonds are as follows:

FPI Investment limit in corporate bonds for FY 2020-2021 Rs. (crores)
Current limit 3,17,000
Revised limit: April 1, 2020 to September 2020 429,244
Revised limit: October 2020 to March 2021 541,488

 

4. Time periods for creating reserves extended

  • Under the Companies Act, 2013, certain type of companies that have issued secured debentures are required to invest at least 15% of the value of debentures maturing in the next financial year into certain prescribed form of investments by April 30. The timeline to make such prescribed investments has now been extended to June 30 for this financial year.

  • Under the Companies Act, companies which have accepted deposits from the public or its members have to deposit an amount equal to 20% of the deposits maturing in the following financial year in a separate deposit repayment reserve account with a scheduled bank. Such deposit has to be made by April 30 each year. The timeline for this deposit has now been extended to June 30 for this financial year.

 

 

5. Certain relaxations under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR Regulations”)

  • Financial information: Companies that propose to issue non-convertible debentures, non-convertible preference shares or commercial paper which are to be listed can now provide audited financial information for the period ending September 30, 2019 for all issuances upto May 31, 2020 (instead of issuances upto March 31, 2020).

  • Extension of timelines for filings/disclosures: Timelines for certain filings and disclosures that need to be made in relation to listed non-convertible debentures, non-convertible preference shares or commercial paper have been extended. These include the following: (i) The timeline for initial disclosures for large corporates have been extended by 45 days upto June 30, 2020; (ii) The timeline for annual disclosures for large corporates have been extended by 60 days upto June 30, 2020; (iii) The timeline for declaration of half-yearly financial results has been extended by 45 days to June 30, 2020; and (iv) The timeline for declaration of annual financial results has been extended by 30 days to June 30, 2020.

 

 

6. Encumbrances on units of Real Estate Investment Trusts (“REITs”)

  • Creation of encumbrance: On March 23, 2020, the Securities and Exchange Board of India (“SEBI”) has, by way of a circular, permitted sponsors and sponsor group entities holding any units under the SEBI (Real Estate Investment Trusts) Regulations, 2014 (“REIT Regulations”) during the mandatory holding period to create an encumbrance on such units. The encumbrance will include a pledge, lien, negative lien, non-disposal undertaking etc. or any other covenant, transaction, condition or arrangement in the nature of encumbrance. Any agreement in relation to the encumbrance shall include the conditions for creation and invocation of encumbrance under the SEBI circular.
  • Invocation of encumbrance: Any encumbrance cannot be invoked during the holding period prescribed under the REIT Regulations unless the following conditions are fulfilled: (i) the person(s) invoking the encumbrance (whether directly or through any trustee or agent acting on its behalf) shall get itself or its nominee to become re-designated sponsor upon compliance with the terms and conditions for re-designation of sponsor as specified under REIT Regulations; however this condition is not applicable in case the person invoking the encumbrance is already a member of the sponsor group; and (ii) the re-designated sponsor has to fulfil the obligations specified for sponsor under REIT Regulations.
  • Disclosures of encumbrance to the REIT manager: The sponsor(s) and sponsor group entity creating any encumbrance on the REIT units held by them has to provide details of the encumbrance to the manager of the REIT within two working days from the date of creation of such encumbrance in a prescribed format. Further, they must also notify the manager of any change in the above information pursuant to release or invocation of encumbrance, or in any other manner, within two working days from the date of such event.
  • Disclosures to stock exchanges: Within two working days from the receipt of encumbrance related details mentioned above, the REIT must disclose such information to every stock exchange where units of the REIT are listed. The disclosure has to be in a prescribed format.

 

 

7. Encumbrances on units of Infrastructure Investment Trusts (“INVITs”)

  • Creation of encumbrance: On March 23, 2020, the SEBI has, by way of a circular, permitted sponsors and sponsor group entities holding any units under the SEBI (Infrastructure Investment Trusts) Regulations, 2014 (“INVIT Regulations”) during the mandatory holding period to create an encumbrance on such units. The encumbrance will include a pledge, lien, negative lien, non-disposal undertaking etc. or any other covenant, transaction, condition or arrangement in the nature of encumbrance. Any agreement in relation to the encumbrance shall include the conditions for creation and invocation of encumbrance under the SEBI circular.

  • Invocation of encumbrance: Any encumbrance cannot be invoked during the holding period prescribed under the INVIT Regulatio

  • Disclosures of encumbrance to the INVIT manager: The sponsors creating any encumbrance on the INVIT units held by them has to provide details of the encumbrance to the manager of the INVIT within two working days from the date of creation of such encumbrance in a prescribed format. Further, they must also notify the manager of any change in the above information pursuant to release or invocation of encumbrance, or in any other manner, within two working days from the date of such event.

  • Disclosures to stock exchanges: Within two working days from the receipt of encumbrance related details mentioned above, the INVIT must disclose such information to every stock exchange where units of the INVIT are listed. The disclosure has to be in a prescribed format.

 

 

8. Extension of amendments to stamp duty on Debentures

  • Pursuant to certain amendments that were made to the stamp duty law, the stamp duty rate on the debentures was modified from a maximum of 0.25% or Rs. 25 lacs, whichever was lower, to an ad valorem rate of 0.005% of the value of the debentures. These new stamp duty rates were to come into effect from April 1, 2020. However, they are now proposed to come into effect from July 1, 2020.

Relaxations provided on compliances to be met by units / developers / co‐developers of SEZs

In view of the sudden outbreak of COVID‐19 pandemic and the nation-wide lockdown, the Department of Commerce on 30 March 2020, provided certain relaxations on compliances to be met by units / developers / co‐developers of Special Economic Zones (“SEZs”). Such compliances to which the relaxations will apply, includes:

  1. Requirement to file Quarterly Progress Report (QPR) attested by Independent Chartered Engineers by Developers/ Co‐developers;
  2. SOFTEX form to be filed by IT/ITES units;
  3. Filing of Annual Performance Reports (APR) by SEZ units;
  4. Extension of Letter of Approvals (LoA) which may expire, in the cases of:

    a) Developers/co‐developers who are in the process of developing and operationalising the SEZ;

    b) Units which are likely to complete their 5 years block for NFE assessment;

    c) Units which are yet to commence operations.

The Development Commissioners of SEZs has been directed to ensure that in cases where any compliance is not met during this period impacted by the above disruption, no hardship is caused to Developers / Co‐Developer / Units and no punitive action is taken.

Further, as may be possible, all extensions of LoAs and other compliances may be facilitated through electronic mode in a time‐bound manner. In the cases where it is not possible to grant extension through electronic mode or in cases where a physical meeting is required, the Development Commissioners has been asked to ensure that the Developer / Co‐developer / Units do not face any hardship due to such expiry of validity during this period of disruption. Ad‐hoc interim extension / deferment of the expiry date may be granted without prejudice till 30 June 2020 or further instructions of the Department on the matter, whichever is earlier.

Clarifications issued in furtherance of the guidelines issued by the Ministry of Home Affairs

Official Advisory
Breakup marriage couple with divorce certification

The Ministry of Home Affairs has issued guidelines on the measures to be taken by Ministries/ Departments of Government of India, State/Union Territory Governments, and State/ Union Territory Authorities for containment of the COVID-19 epidemic in the country on March 24, 2020 (Annexure to the order). This was further modified on March 25, 2020 and March 27, 2020. A summary of these guidelines is available at https://jsacovid19.blogspot.com/2020/03/21-day-nationwide-lock-down-guidelines.html.

In furtherance to the guidelines issued on 24 March 2020 and the addenda on March 25, 2020 and March 27, 2020, certain clarifications have been issued by the Home Secretary on March 29, 2020. These clarifications are as follows:

  1. Transportation of all goods, without distinction between essential and non-essential goods, will be allowed;
  2. Pension and provident fund services provided by Employees Provident Fund Organisation shall remain functional;
  3. Services of the Indian Red Cross Society will continue to remain functional;
  4. Shops dealing with groceries, including hygiene products, such as hand wash, soap, disinfectants, body wash, shampoos, surface cleaners, detergents and tissue papers, toothpaste/oral care, sanitary pads and diapers, battery cells, chargers, etc. shall remain open;
  5. The entire supply chain of milk collection and distribution, including its packaging material shall remain functional; and
  6. Newspaper delivery supply chain shall also remain functional.

Further, the Central Government has allowed the use of the State Disaster Response Fund (SDRF) for the benefit of homeless people, including migrant labourers, stranded due to lockdown measures and sheltered in relief camps, and other places, in order to provide them food etc., as part of COVID-19 containment measures. The Ministry of Health Affairs has issued further orders under the Disaster Management Act, 2005, directing district authorities, to ensure strict implementation of additional measures to stop the movement of migrants, to provide them with quarantine facilities, shelter, food, etc.; and to protect their economic rights by ensuring payment of wages; and protecting them from eviction by landlords.

India under Lockdown – Center invokes Disaster Management Act to contain COVID-19. What happens to State orders?

The Indian Prime Minister, Mr. Narendra Modi, while addressing the nation on March 24, 2020, announced a nationwide lockdown for 21 days to contain the spread of COVID-19.

Shortly thereafter, the National Disaster Management Authority (“NDMA”) issued an order dated March 24, 2020 under the Disaster Management Act, 2005 (“DM Act”) noting that it was satisfied that the country is threatened by the spread of COVID-19, and that there is an urgent need to bring about consistency in the application and implementation of various measures across the country while ensuring maintenance of essential services and supplies (“NDMA Order”). To this end, the NDMA directed that necessary guidelines be issued immediately.

Pursuant to the NDMA Order, and in exercise of the powers conferred under Section 10(2)(l) of the DM Act, 2005, the Ministry of Home Affairs, through the National Executive Committee under the DM Act, issued an order dated March 24, 2020 (“Lockdown Order”) for the prevention and containment of COVID-19. The Lockdown Order will be operative for a period of 21 days, with effect from March 25, 2020.

Under the Lockdown Order, all States and Union Territories need to ensure strict implementation of the guidelines set out therein, which can be accessed here.

The Lockdown Order has effectively placed India under a nationwide lockdown for 21 days. In the days leading up to the Lockdown Order, several State Governments had issued orders notifying curfews and restrictions in their respective States for containment and prevention of COVID-19 (“State Orders”). At the time of writing, the State Orders have not yet been revoked by the respective States. However, under Section 72 of the DM Act, the provisions of the DM Act will have an overriding effect over any other law or instrument issued under any other law for the time being in force. Accordingly, the guidelines issued under the Lockdown Order will, to the extent of any conflict with the previous State Orders, have an overriding effect. Therefore, all State Governments would need to comply with the guidelines issued under the Lockdown Order.

That being said, State Governments are also empowered under Section 38 of the DM Act to undertake such further measures, over and above the guidelines issued by the NDMA, they may deem necessary or expedient. Therefore, there is no restriction on States to implement further or more stringent measure than those set out in the Lockdown Order, provided such measures are not in conflict the Lockdown Order. Accordingly, measures taken by State Governments under previous State Orders will continue to have force, to the extent that they are not in conflict with the Lockdown Order.

It remains to be seen whether any State Government will implement further or more stringent measures, given the variation in the impact of COVID-19 across States.

21-day nationwide lock-down – Guidelines issued by the Ministry of Home Affairs

On 24 March 2020, the Ministry of Home Affairs vide its order no. 40-3/2020-DM-I(A) issued guidelines to be followed by ministries/departments of the Government of India, State/ Union Territory Governments and Authorities, containing measures to combat the spread of COVID-19.

These guidelines were issued by the National Executive Committee under the directions of the National Disaster Management Authority (order No. 1-29/2020-PP(Pt. II) dated 24 March 2020) and in exercise of its powers conferred under Section 10(2)(l) of the Disaster Management Act, 2005.

The Guidelines, inter alia, provide for the following containment measures which shall remain applicable for a period of 21 days with effect from 25 March 2020:

  1. All offices of the Government of India, its autonomous/subordinate offices and public corporations shall remain closed except for defence, central armed police forces, public utilities (including petroleum, LPG, CNG, PNG), disaster management, power generation and transmission units, post offices, National Informatics Centre, Early Warning Agencies etc. Certain offices, like that of the treasury, MCA-21 registry, GSTN, RBI etc., shall function with bare minimum staff.
  2. The offices of the State/Union Territory Governments, their autonomous bodies and corporations etc. shall remain closed except for police, home guard, civil defence, fire and emergency services, disaster management, prisons, district administration and treasury, electricity, water, sanitation and municipal bodies (relating to essential services like water supply and sanitation only), Mandis operated by the Agricultural Produce Market Committee or as notified by the state government, etc.
  3. All hospitals and related medical establishments including dispensaries, chemist, medical equipment shops, laboratories, clinics, nursing homes, ambulance, veterinary hospitals, pharmacies and pharmaceutical research labs etc. shall remain functional. Further, transportation of medical personnel, nurses, other hospital support services etc. shall be permitted.
  4. All commercial and private establishments to be closed other than shops dealing in food, groceries, fruits and vegetables, dairy, meat, fertilizers, seeds, pesticides etc.; bank, ATMs, insurance offices; print and electronic media; telecommunication, internet services, broadcasting and cable services; delivery of essential goods through e-commerce; petrol pumps, LPG, petroleum and gas retail and storage outlets; power generation and transmission units; private security services; farming operations by farmers and farm workers in the field, etc.
  5. All industrial establishments shall remain closed; other than those engaged in the manufacturing of essential goods, including drugs, pharmaceuticals, medical devices, their raw materials and intermediates; those production units which require continuous process and have obtained the approval from the state government; coal and mineral production, transportation, supply of explosives etc.; manufacturing units of packaging materials for food items, drugs, pharmaceuticals and medical devices and manufacturing and packaging units for fertilizers, pesticides and seeds.
  6. All transport services, other than for the transport of essential commodities or of fire or law and order or emergency services or for cargo movement, relief and evacuation and their related operational organisations, inter-state movement of goods/cargo for inland and exports, transit arrangements for foreign nationals in India according to the specified standard operating procedure, etc., shall remain suspended.
  7. All educational, training, research, coaching institutions etc. to remain closed.
  8. All places of worship shall remain closed.

(Please refer to the Guidelines, the first Addendum to the Guidelines (dated 25 March 2020), the second Addendum to the Guidelines (dated 27 March 2020), the third Addendum to the Guidelines (dated 02 April 2020), the fourth Addendum to the Guidelines (dated 03 April 2020) and the fifth Addendum to the Guidelines (dated 10 April 2020) for the complete list of containment measures and exceptions)

Wherever any exception has been provided to the containment measures, the organisation/ employer shall ensure necessary precautions, including social distancing measures, as advised by the Health Department.

Any violation of the containment measures specified in the Guidelines shall be liable to action under Sections 51 to 60 of the Disaster Management Act, 2005 and Section 188 of the Indian Penal Code, 1860.

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