DELHI LAW REVIEW STUDENT EDITION Vol. V (2016-17) ISSN 0973-00IX FACULTY OF LAW UNIVERSITY OF DELHI DELHI LAW REVIEW STUDENT EDITION Volume V 2016-17 Patron Dr. Ved Kumari Dean and Head Faculty of Law University of Delhi Editorial Board 2016-2017 Faculty Advisors Dr. Alka Chawla Dr. Vandana Dr. Anju Vali Tikoo Dr. Vageshwari Deswal Student Editors-in-Chief Shaurya Upadhyay Shreeyash Uday Lalit Harsh Bedi Student Editors Aashish Yadav Narayani Anand Yash Varmani Radhika Roy LETTER FROM THE DEAN The Delhi Law Review, the flagship journal of the Faculty of Law, University of Delhi, has always aimed to contribute quality academic writing to the legal fraternity. It has, however, largely remained a journal receiving scholarship from senior faculty members and professors from within the academic circles. In the fall of 2016, seeing the pressing need at the Faculty for a student-driven journal, the editorial team began to work tirelessly to bring forward this volume to revive the Student Edition of the Delhi Law Review. It is with great pride and optimism that we release the fruit of this labour, the first online issue of the Student Edition of the Delhi Law Review Journal, to the readers. This will hopefully provide a new space for students, academics, and practitioners to add quality academic research and expand the province of scholarship. I extend my best wishes to this initiative and look forward to subsequent Editorial Boards carrying forth the torch lit by the first Editorial Board working under the capable guidance of their faculty advisors. As you will discover, the journal tries to forward scholarship from a diverse range of themes and topics, and does not confine itself to any particular field of law. All articles deal with issues of contemporary significance, and add significantly to the available insights on their respective subjects. Dr. Ved Kumari Dean and Head Faculty of Law University of Delhi FROM THE EDITOR’S DESK On behalf of the entire Editorial Board and faculty advisors, we are proud to present to you the first online issue of the Student Edition of the Delhi Law Review. From the outset, we were acutely aware of the enormity of the task that lay before us. Undeterred, our enthusiasm at receiving the opportunity to work on starting a student-driven academic journal motivated us to learn the ropes quickly. Each one of the editors shared the wealth of their prior experience and skills, and wherever we required guidance with difficult matters, our faculty advisors, especially Dr. Alka Chawla, hastened the learning process. We thank all the members of the Editorial Board for their hard work, valuable contributions and for helping us put this journal in its present completed form. The journal comprises articles from both students within the Faculty and outside of it, and we thank every author for their contribution. We hope that the journal will be as illuminating an experience for you as it has been for us. The journal has been divided into three parts, namely, articles, legislative commentaries, and short articles. The views and opinions expressed in the journal are of the authors alone; the editorial board has limited itself to making suggestions and minor changes for improved readability, and ensuring consistent formatting. The articles have been selected following a double-blind peer review process, and the editorial board has tried its best to keep up the standard set by the previous editions of the Delhi Law Review. It is the board’s collective aspiration that the efforts put into this inaugural volume should be honoured by prospective editors by enhancing student-driven academic scholarship in subsequent editions. Despite the best efforts of the editorial board, some mistakes may have crept in inadvertently. In our capacity as editors, we take responsibility for any such oversight. Editors-in-Chief Delhi Law Review Student Edition CONTENTS Volume V 2016-17 Articles Page 1. Theoretical Underpinnings of Acquisition of ‘Control’ in Takeover 1 Shreyash Santara and Kavita Sharma 2. The State of Being Stateless – Critical Analysis of the India’s Stance on 13 Refugees Sushant Shankar 3. The Constitution and the Working of the Executive since Independence 26 Yashdeep Chahal 4. Changing Paradigms in Drug Control – An Opportunity for Drug Policy 39 Reform in India Narayani Anand 5. Victim Compensation: An Indian Perspective 54 Abhishek Kumar and Himanshu Pabreja 6. The Internet Never Forgets? 72 Shreeyash Uday Lalit and Shaurya Upadhyay 7. Rights in Captivity: Issues in Implementation of the Model Jail Manual and 104 Key Policy Recommendations for Delhi Jails Abhinav Verma 8 The In and Out of Entry Tax 123 Yash Varmani 9. Contempt of Courts: A Challenge to the Rule of Law? 136 Tanmay Yadav 10. 377: Use, Misuse, and Abuse 149 Tanushree Bhalla Legislative Commentaries 11. Mandatory Woman Director: A Fulcrum for Sustenance and Higher 175 Growth Saloni Agarwal and Ishika Rout 12. Search and Seizure under the NDPS Act 185 Himaa Short Articles 13. The Crime of Defamation: A Step Back in Time 198 Veda Handa THEORETICAL UNDERPINNINGS OF ACQUISITION OF ‘CONTROL’ IN TAKEOVERS Shreyash Santara* and Kavita Sharma ** Increasing cross-border takeovers on the one hand, and divergent views of adjudicatory authorities on the other, have fuelled a palpable need in India to frame a bright line test for the acquisition of ‘control’ over a company. Such a test is well-defined, cannot be circumvented to the detriment of minority shareholders and facilitates takeovers which are beneficial for the acquirer as well as the target company. In its quest to devise a bright line test, SEBI released a Discussion Paper in 2016 and invited suggestions from various stakeholders. However, there seems to be a lack of consensus on what may be the ideal test for the Indian takeover market. With a view to advance the academic discourse on this issue, the article discusses the theoretical underpinnings of determining control and suggests measures that may help in the framing of a bright line test. Introduction The test for Acquisition of ‘Control’ in India has been a matter of controversy, which has been an albatross-hanging-around-the-neck feature for the Indian corporate sector. SEBI re-examined the definition of control following the acquisition of 24% stake in Jet Airways (India) Ltd. by Etihad Airways in 2013.1 In Subhkam Ventures (I) Pvt. Ltd.2, SEBI’s decision to hold that protective rights of acquirer, under a contractual agreement, amounted to acquisition of control, was rejected by the Securities Appellate Tribunal(SAT) on the ground that protective rights protect the investment of the investor. This has raised a question on the existing definition of ‘control’ and the test for acquisition of ‘control’. A need was felt by the regulator to lay down a bright line test for acquisition of control under SEBI Takeover Regulations. Consequently, the regulator released a discussion paper3 on the same in order to obtain comments of the public. The Paper provides two bright lines for control, namely, a framework for protective rights and a numerical threshold. Both are based on well-recognised approaches to acquisition of control. In order to determine which * Research Assistant at the Rajiv Gandhi School of Intellectual Property Law, Indian Institute of Technology, Kharagpur. ** Assistant Professor at the S. S. Jain Subodh Law College, Jaipur 1 Jayshree P. Upadhyay, “Sebi may peg M&A ‘control’ cap at 25%”, Retrieved from http://www.livemint.com/Money/YgqtocSu1UTWcT2wiBexPP/Sebi-may-peg-MA-control-cap-at-25.html (last visited on 10/09/2016 at 10:00 p.m.) 2 Subhkam Ventures (I) Pvt. Ltd vs. Securities Exchange Board of India, MANU/SC/1587/2011 3Discussion Paper on “Brightline Tests for Acquisition of ‘Control’ under SEBI Takeover Regulations”, Retrieved from http://www.sebi.gov.in/cms/sebi_data/attachdocs/1457945258522.pdf (last visited on 11/09/2016 at 8:00 a.m.) 1 approach is suitable for Indian capital market, there is a need to analyse the theoretical underpinnings and principles of ‘Control’. While countries such as Australia, Germany, New Zealand, Russia, Hong Kong, Singapore, South Africa and the UK adopt a numerical threshold for determining control, whether or not the shareholding confers de facto control, countries such as Canada, France, Ghana, Norway and Spain adopt a framework of protective rights for determining control, such as right to alter the composition of the Board of Directors, right to veto key company decisions, etc. Japan, Malaysia, Switzerland and the USA have not specifically defined ‘control’ in their takeover regulations. Brazil, China, Denmark, Indonesia, Italy and Nigeria determined control on the basis of a numerical threshold as well as a framework of protective rights. The authors have divided this article into segments to give a coherent and comprehensive analysis. The first deals with Mandatory Offer Rule (MOR) which is invoked when an investor gains control over a company. The second section describes the approaches to determine the trigger for Mandatory Offer Rule. Thereafter, the article deals with a quantitative approach to define control, which prescribes a numerical threshold. The penultimate section deals with the qualitative approach to define control which prescribes a framework of protective rights. The author has concluded the article by suggesting measures that may help in the framing of a bright line test for India. Mandatory Offer Rule The Mandatory Offer Rule (hereinafter referred to as ‘MOR’) is one of the basic tenets of any takeover statute. It was first discussed by William D. Andrews in 19654 and was recognised by the US Courts in their decisions5 as a duty of the acquirer, as early as 1955. It has been an essential part of the takeover regulations in many jurisdictions.