The Covid-19 pandemic has challenged human civilization and governance systems across the world. The priority is to sustain the scope of livelihood and uphold the sanctity of laws relating to employment and social security. Health care must reinvent itself with more research and inclusiveness. In the post-pandemic world, law reforms will play a major role.
Labour Laws: Three laws, namely the Industrial Disputes Act, 1947, Industrial Employment (Standing Order) Act, 1946 and the Trade Unions Act, 1926 regulate the employeremployee relationship in the organized sector in India. During the lockdown, we saw the plight of our work force in unorganized sector and more specifically of migrant workers. Non-implementation of laws including the Unorganized Worker’s Social Security Act, 2008 was the order of the day.
A State has no reliable data on how many of its citizens have migrated to other states for work and how many workers from other states are working within its borders. Starting with the Delhi Anand Vihar misgovernance in March 2020, a narrative has been created to prioritize the need to be more proactive and sensitive. During this lockdown, every day, Articles 19 and 21 and the Directive Principles and judicial activism of Supreme Court upholding the fundamental rights of these workers to life and livelihood have mocked us.
There are crores of workers in the domestic sector, shops and establishments, small offices and on the streets as hawkers and vendors who are beyond the scope of any substantial law. We need a reform in the mind-set of our policymakers. There is no evidence or proof that absence of bargaining power of labour will attract investment or will regenerate industries.
India has so far ratified 43 conventions of ILO including four core human rights Conventions like forced Labour Convention (C-29), Equal Remuneration Convention (C-100), Abolition of Forced Labour Convention (C- 105) and Discrimination (Employment and Occupation) Convention (C-111).
The Prime Minister has the vision for a self-reliant India but without a framework of rational labour laws and without integrating more than 40 crore workers of unorganized sector meaningfully into stable employment, this will not be a reality.
The Parliamentary Standing Committee on Labour has submitted its Report to the Lok Sabha Speaker on the Code on Social Security, 2019 with recommendations for creation of a welfare fund for inter-state migrant workers, a national data base of unorganized workers and establishing a Social Security Fund to help them cope with hardships that have been aggravated by the pandemic. This Code amalgamates nine labour Acts relating to compensation, insurance, provident fund, maternity leave, gratuity and unorganized labour. All labour laws have been subsumed into four Codes – the Code on wages, Code on Industrial Relations, the Occupational Health, Safety and Working Conditions Code and the Code on Social Security. The Committee made important suggestions in law-making regarding the unorganized sector to address their sufferings during lockdown. The Report has laid a lot of emphasis on creation of a national data base to be managed by the Central Government. This data would be useful in providing social security benefits to migrant workers even when they relocate.
The Government should also incorporate unemployment Insurance in the Code on Social Security to take care of retrenchment and other unforeseen labour market situations. The New Education Policy is another major reform to empower emerging India. This policy will develop skills, ideas to transform, confidence, flexibility, uniformity and excellence to strengthen the basics of development. This policy requires discussion at every possible level to end the legacy of the colonial education system.
Amendments to Essential Commodities Act, 1955: After independence, a policy has been adopted to support farmers through large subsidy programmes and loan waivers while the Essential Commodities Act, 1955 disincentives investment in crop warehouses and storage. The ECA was a successor of a series of war-time laws enacted by a colonial Government during World War II to regulate the supply of goods essential to the war. NITI Aayog recommended its amendment and suggested to remove agricultural commodities from the Essential Commodities Act and a shift towards organized trading wherein lower number of traders with enough capital will reform the market.
The Essential Commodities (Amendment) Ordinance, 2020 was promulgated on 5 June 2020. The ordinance seeks to increase competition in the agriculture sector and enhance farmers’ income. It aims to liberalize the regulatory system while protecting the interests of consumers. The Act empowers the Central Government to designate certain commodities, such as food items, fertilizers, and petroleum products as essential commodities. It provides that the Central Government may regulate the supply of certain items including cereals , pulses, potato, onions, edible oilseeds, and oils only under extraordinary circumstances. The Central Government also promulgated an Ordinance the same day called The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020. It will provide a framework for the protection and empowerment of farmers with reference to the sale and purchase of farm products. From now on, any farmer may enter into a contract with any person or company to sell his produce. This law removes the lack of competition from the intermediary/trader market. Both these ordinances are now laws, having been passed by Parliament.
Enforcement of Contract: Indian Contract Act, 1872 nowhere expressly refers to the term ‘Force Majeure’. However, Section 32 provides for contingent contracts. It says: “Enforcement of contracts contingent on event happening. Contingent contracts to do or not to do anything if an uncertain future event happens, cannot be enforced by law unless and until that event has happened.” The pandemic itself may not be sufficient to interpret as a Force Majeure condition as Courts seek to interpret contracts strictly in terms of stipulated provisions of the agreement. Another defence may be doctrine of frustration as embodied in Section 56. The performance of an act may not be literally impossible, but it may be impracticable and useless from the point of view of the object and purpose of the parties. The doctrine of frustration is really an aspect of the law of discharge of contract by reason of supervening impossibility or illegality of the act agreed to be done and hence comes within the purview of Section 56. We have to understand the language of a contract, facts in the context of the pandemic and the governing law to avoid or delay performance and for an equitable sharing of the burden of the pandemic. While appreciating the experiences, our future contract may include such pandemics as a Force Majeure condition with liquidated damages in case of non-performance.
The nationwide lockdown impacted the business environment due to the suspension of markets. At the regulatory level, amendments in corporate laws brought changes to Section 4 of the Insolvency and Bankruptcy Code, 2016. The Ministry of Corporate Affairs raised the threshold of default to Rs. 1 crore from Rs 1 lakh as a response to the pandemic. Section 10 A has been inserted to suspend fresh bankruptcy proceedings against persons impacted because of Covid for at least six months, and up to a maximum of one year. The new rule came into effect on 1 June 2020.
Amendment of Consumer Protection Law: Digitization has transformed the market and posed opportunities and threat to the customers. The Consumer Protection Act, 2019 has come into force with effect from 20 July 2020. It amends the old law and introduces the concept of product liability and covers e-commerce within its ambit. The pandemic has compelled consumers to adopt online mode of purchase and the law has to protect their interest against evil forces playing in the market. The new law has recognized offline and online transactions and a consumer can now institute a complaint from her or his place of residence or where the consumer works for gain. The Act includes rules for the establishment of a Central Consumer Authority to protect and enforce the rights of consumers.
The CCPA will be empowered to conduct investigations into violations of consumer rights and institute complaints and prosecution, order recall of unsafe goods and services as well as discontinue unfair trade practices and misleading advertisements. It will also have powers to impose penalties on manufacturers, endorsers and publishers of misleading advertisements. A Central Consumer Protection Council will be constituted as an advisory body on consumer issues with a three-year tenure. Several changes have been introduced in the dispute resolution process, including the pecuniary jurisdiction of Commissions, and empowering them to review their own orders.
Corporate Governance: In the post-pandemic era, corporate governance has to redefine its parameters to calculate its impact on interests of stake holders, market and public policy. Now the board and management of a company have to exercise their responsibility for oversight of corporate management and business strategies, consistent with the goal of long-term sustainability. Pandemic has created space for greater Board Management. Boards of health care entities must reorganize their functioning to face fundamental challenges. Covid-19 has validated the need for a vital Enterprise Risk Management (ERM) function. The effectiveness of current ERM is required to be evaluated to elevate the scope of the ERM Committee. In the post pandemic situation, oversight of work culture, compliance of governance rules, upgradation of technology are factors that the Board must critically analyse and plan.
Foreign Direct Investment: Foreign Direct Investment has been a major non-debt financial resource for economic development in India. The favourable policy regime and amicable business environment has multiplied opportunities and possibility of foreign investment. On 17 April 2020, India amended its Foreign Direct Investment policy to protect Indian companies from “opportunistic takeovers/acquisitions” due to the pandemic under the FEMA law. While the new FDI Policy does not restrict markets, the policy ensures that all FDI will now be under scrutiny of the Ministry of Commerce and Industry. The Department of Economic Affairs, under the Ministry of Finance has ensured that foreign capital keeps flowing into the country. The Central Government has initiated many reforms to relax FDI norms across sectors such as defence, PSU oil refineries, telecom, power exchanges and stock exchanges, among others. In the post pandemic era, India is going to be one of the most attractive destinations for FDI.
Road Ahead: In a far reaching move part of the ‘Atmanirbhar Bharat’ (self-reliant India) Mission, the Defence Ministry on 9 August brought out a list of 101 items that would be placed under import embargo to boost indigenous production of military equipment. The decision is expected to result in contracts worth almost Rs. 4 lakh crore being placed with the domestic industry over the next 5-7 years. The list includes not just simple parts but also high-technology weapon systems like artillery guns, assault rifles, Corvettes, sonar systems, Light Combat Helicopters, transport aircraft, radars, missile destroyers and other items to fulfil the needs of our defence services.
Moody’s Investors Service had observed in August 2020 that the pandemic would likely accelerate fundamental shifts in trade relationships and global supply chains in a protectionist global economy. Moody’s is of the view that as the global trade system becomes more regionally focussed, each major region – Asia, Europe and the US – would likely have its own suppliers for strategically important products. In the post-pandemic era, our law makers have a challenging task to enact and amend laws for a nation still in the developing stage, but with a determined will to prosper and to be self-reliant.
The Central Government has initiated reforms in capital market, taxation and labour laws. The amendments to the Essential Commodities Act have opened the market for farmers as private players may enter to change the dynamics. Now we need radical land reform to integrate skilled youth in progress and to ensure a sustainable land policy for industrialization. Speaking on the occasion of Independence Day, the Prime Minister announced the launch of the National Digital Health Mission Scheme which will empower every citizen with a health card and this scheme along with the new National Medical Commission Law will revolutionalise the health sector. Prime Minister has also announced a new Cyber Security Policy to address the challenges of the digitized era. In this journey towards self-reliance, the law is destined to play a transformative, conciliatory and at the same time, a bloodless revolutionary role.
The writer is a lawyer and an author.