LEGAL ASPECTS OF BUSINESS

END TERM PRESENTATION

Group 8

TOPICS TO BE DISCUSSED

1. If Ban on gutka is justified then why the same should not be imposed on cigarettes

2. Novation and alteration in terms of contract - Eg. DLF Blair

TOPIC 1 - IntroductionGutka is a preparation of crushed areca nut (also called betel nut), tobacco, catechu, paraffin, slaked lime and sweet or savoury flavourings. Manufactured and Exported A mild stimulantSold across IndiaSmall, individual-sized packets that cost between 2 and 10 rupees per packet. Consumed much like  chewing tobacco

Young GenerationGutkha use can begin at

a very young age.

Due to its often

flavourful taste, easy availability

and cheapness

Exhibit precancerous lesions at a

very early age as a result.

Symptoms of cancer appear by high school

or college age. 

Social custom does not permit children to smoke so eventually becomes

another habit tough to quit.

In 2008, about 5 million children under 15 were addicted to gutkha. A survey in Uttar Pradesh and Madhya Pradesh found precursors of mouth cancers in 16% of the children

NEGATIVE EFFECTS OF GUTHKA

Highly addictive and a known carcinogen.

Lead to loss of appetite, promote unusual sleep patterns, and loss

of concentration.

Prominently stained teeth ranging from dirty yellowish-orange to

reddish-black.Generally spat onto a wall or at

the ground, causing an unsightly red stain that is quite resistant to

the elements. More than 2,500 people in our country die every day due to

diseases caused by tobacco and its related products. 

Cancer to a person devastates his family as all savings are spent on

the treatment of the disease.

Ban on GuthkaSeveral states of India have banned the sale, manufacture, distribution and storage of gutka and all its variants.

Banned under centrally enacted Food Safety and Regulation (Prohibition) Act 2011.

Pseudo permanent ban.

Enforced by the state public health ministry, the state Food and Drug Administration and the local police.

Enforcement of the law is somewhat lax.

Provisions of imposing fines up to  25000 on selling of products that are injurious to health.

Guthka IndustryThe consumer base of tobacco in India stands at 34.6% of all adults (with cigarette share being 5.7%)

while 75% of Indian tobacco consumers use non‐smoking tobacco products such as gutkha and paan masala. The gutkha market in India is worth INR150bn ‐ INR 200bn. Sachets of several brands are sold through paan shops thus easily accessible to everyone.

14 states have already banned guthka. More states are expected to follow the

same.

Why the BAN??

Gutkha is proved to contain

carcinogens

A Supreme Court ruling states that since pan masala, gutkha and supari are eaten for taste and nourishment,

they are all considered food.

Rule 2.3.4 of the Food Safety and

Standards (Prohibition and Restrictions on

Sales) Regulations, 2011. under

centrally enacted FSR act 2011

Subsequently various states have banned

the sale, manufacture

and distribution of gutkha

Why the BAN??India has the highest prevalence of oral cancer globally, with 75,000 to 80,000 new cases being reported every year. Nearly 80% of all oral cancer cases are due to the consumption of tobacco products like gutkha, pan masala, betel quid with tobacco, and khaini. India spends approximately INR300bn annually (in both public and private health services) on treatment of tobacco related illness, accounting for roughly one fourth of all health spending. India is known as the world capital of oral cancer

WILL THE BAN WORK?If implemented nationwide via strict monitoring and punitive actions against offenders.

Outcome of the ban: Increase in prices – Sachets, earlier available at INR1, are now being sold at 5‐10x making it unviable for the poor

Availability has decreased significantly, restricting access to vulnerable groups like women and children.

Work around the BANManufacturers and sellers are resorting to newer tricks to sell their products.

In the North‐East, gutkha factories are found to operate out of trucks

In states like Maharashtra and Gujarat, raw materials of gutkha are being sold in separate pouches to customers (one pouch with supari mix and the other ‘zarda’ pouch containing gutkha) since these do not qualify as food products containing tobacco; the ban can thus be easily evaded.

Also, as the ban is not effective pan India, gutkha from states (where it is not banned) is being smuggled to states where it is banned through private vehicles.

WHY ALL STATES SHOULD BAN GUTKHA?

Though Maharashtra has banned gutkha

and paan masala, since it is easily

available in other states, gutkha

finds its way to the state rather freely.

A ban in Kerala is proving to be ineffective as

neighbouring state (Karnataka) has not yet enforced

the ban

The ban can be effective in

practice only if the Union government puts a blanket ban

on production, sale, marketing and storage of

tobacco products, paan masala and

gutkha.

Should Cigarettes be Banned??

Which is more Harmful

Gutkha or Cigarette

Against Gutkha

Invisible form of tobacco consumption

Against Gutkha

• Gutkha use may lead to throat cancer• 80% of all oral cancer cases are due to

the consumption of tobacco products like gutkha, pan masala, betel quid with tobacco, and khaini.

Against Gutkha• Statistics show that 26% of adults above the age of 15

years consume oral tobacco as compared to 14% who smoke. Among women, 18% consume oral tobacco as compared to 2% who indulge in smoking.

State % of Customers below 15 years of age

Odisha 38

Assam 36.6

Chhattisgarh 32.5

Jharkhand 24.1

Bihar 22.5

Uttar Pradesh 21.0

Madhya Pradesh 18.9

Uttarakhand 8.8

Rajasthan 6.9

Gutkha contains at least 28 known carcinogens and at least 30 metallic compounds comprising of heavy metals.Pycnogenol in cigarette filters scavenges free radicals and reduces mutagenicity and toxicity of tobacco smoke. This makes gutkha more harmful as compared to cigarettes.

Against Gutkha

CigarettesCigarette makers especially, the low end manufacturers may benefitMay not be huge as this is a visible form of consumption and there is not much duplication in consumer base

History of Cigarette Control in India

1975 ‐ Cigarettes (regulation of production, supply and distribution) Act came into force

1990 ‐ Central government issued directive prohibiting smoking in public places, banned tobacco advertisements on national radio and TV channels

History of Cigarette Control in India

1999 ‐ Ministry of Railways banned sale of cigarettes and bidis

2001 ‐ Supreme Court of India mandated a ban on smoking in public places.

2008: Revised smoke‐free rules implemented that defined public places and identified people responsible for maintaining smoke‐free work places

2009: Pictorial warnings (scorpion and damaged lungs) were made mandatory for all cigarette packaging

History of Cigarette Control in India

Why not Feasible

It is not classified as a food item:

Why not Feasible

Major Source of Revenue: Non‐cigarette tobacco products account for 85% of

the tobacco consumption in India, but contribute only 15% as taxes on tobacco

Less Harmful than Gutkha

Not banned anywhere in the World

Why not Feasible

Increase net of Tobacco taxes: Bidis have a maximum tax of only 9% Taxes based on length

Suggested Action

Studies of price elasticities in India find that a 10% increase in tobacco prices is estimated to reduce bidi consumption by 9.1% and cigarette consumption by 2.6%.

Suggested Action

Simplify and Strengthen Taxation: 38 different taxes making collection difficult Adjustment for inflation

Suggested Action

Earmarking as a means of supporting additional tobacco control efforts

To support a comprehensive tobacco control effort and other social and public health programmes.

Suggested Action

Plain Cigarette Packaging Law Impact the desirability of smoking to some extent

Suggested Action

Introduce Ad Valorem tax Plan to introduce ad valorem component of 10 per

cent to the existing specific rates

Suggested Action