COVID-19 – CLOSURE OF FACILITIES AND ESTABLISHMENTS IN INDIA

In light of the Hon’ble Prime Minister’s announcement on March 24, 2020 declaring a lock-down in India for 21 (twenty-one) days that emanated from the unfortunate COVID-19 epidemic, the relevant department of the Central Government has issued an order, inter alia, directing the closure of manufacturing facilities, shops and other establishments and prohibiting the provision of services (while providing a few exceptions thereto). In addition to the aforesaid Central Government order, certain other departments of the Central Government and certain State Governments have also issued orders relating to closure and regulation of manufacturing facilities, shops and other establishments and services that have been permitted to continue to function/operate. We have set-out below the key aspects of such governmental orders and the restrictions imposed on facilities, establishments and their operations and provision of services, while not delving into restrictions relating to government operations/activities (except as specifically stated herein), in the form of questions and answers.

1. What is the Central Government order under which closure of certain types of manufacturing facilities, shops and other establishments, and prohibition of provision of certain types of services, has been ordered?

The Ministry of Home Affairs, Government of India (“MHA”) vide its order no. 40-3/2020-D dated March 24, 2020 (“Government Order”) has issued guidelines on the measures to be taken by the Government of India and the State Governments (including the concerned ministries/departments) to, inter alia, ensure that manufacturing facilities, shops and other establishments are closed, and services are not provided, other than those exempted, towards containment of unfortunate COVID-19 epidemic.

In furtherance of the Government Order, the MHA has also issued ‘Standard Operating Procedure (SOP) for maintaining supply of Essential Goods’ on March 26, 2020, in terms which the MHA has clarified, inter alia, that constituents of the supply chain dealing with essential goods/commodities and essential services (as specified in the Government Order) are also allowed to operate. Further, the MHA has issued orders dated March 25, 2020 and March 27, 2020 (“Subsequent Orders”) clarifying and/or modifying certain matters in the Government Order. The MHA has further issued a document consolidating the directions/guidelines in the Government Order and the Subsequent Orders. Following the issuance of the Subsequent Orders and the aforesaid consolidated document, the Home Secretary, Government of India has issued certain clarifications on March 29, 2020 in relation to the matters covered in the Government Order and the Subsequent Orders.

It is to be noted that the restrictions stipulated under the Government Order and the Subsequent Orders will remain in force in all parts of India for a period of 21 (twenty) days with effect from March 25, 2020.

2. What kind of facilities, shops and establishments (and services) does the Government Order and the Subsequent Orders apply to?

The Government Order and the Subsequent Orders stipulate that the following types of facilities, shops and establishments are to be closed, and the following types of services are to be suspended (other than those exempted, as detailed in responses to Questions 4, 5 and 6 below):

• Commercial and private establishments;
• Industrial establishments;
• All transport services – air, rail, roadways (except those detailed in response to Question 4 below);
• Hospitality services (except those detailed in response to Question 4 below);
• Educational, training, research, coaching institutions, etc.; and
• Places of worship, and religious congregations are not permitted.

Also, please note that social, political, sports, entertainment, academic, cultural, religious functions and gatherings have been barred, and funeral congregations of more than 20 (twenty) persons are also not be permitted.

3. What kind of commodities/goods can continue to be sold?

In terms of the Government Order and the Subsequent Orders, the following commodities/goods are considered essential commodities/goods and the same can be continued to be sold. Accordingly, facilities, shops and establishments selling such commodities/goods are permitted to remain open and continue to operate:

• Food, groceries, fruits and vegetables, dairy and milk, meat and fish, animal fodder, pharmaceutical and medical equipment. It has been clarified that ‘groceries’ include hygiene products like hand washes, soaps, disinfectants, body wash, shampoos, surface cleaners, detergents and tissue papers, toothpaste/oral care, sanitary pads and diapers, battery cells, chargers, etc. Further, in respect of milk, the entire supply chain of milk collection and distribution (including its packaging material) has also been permitted to function. Additionally, in relation to sale of pharmaceuticals, it has been clarified that persons/entities holding certain specified licenses under the Drugs and Cosmetics Rules, 1945 relating to sale or distribution of specified drugs through retail outlets are allowed to sell the same by doorstep delivery of the drugs;
• Newspapers (including the delivery supply chain associated with the same);
• Petrol, LPG, petroleum and gas; and
• Raw materials and constituents in the supply chain dealing with the aforesaid essential goods and permitted manufacturing activities.

4. What kind of services can continue to be provided?

In terms of the Government Order and the Subsequent Orders, the following services, which are considered essential services can continue to be provided:

• Healthcare/medical services through hospitals and related medical establishments, including their manufacturing and distribution units, both in public and private sector, such as dispensaries, chemists and medical equipment shops, laboratories, clinics, nursing homes, ambulance, etc., including transportation for all medical personnel, nurses, para-medical staff and other hospital support services;
• Services of the Indian Red Cross Society;
• Banking, including services of IT vendors for banking operations, banking correspondence, insurance, ATM services and cash management agency services;
• Pension and provident fund services provided by the Employees’ Provident Fund Organisation;
• Print and electronic media;
• Telecommunications, internet services, broadcasting and cable services. IT and IT enabled services only for essential services and as far as possible with work from home, has been permitted to be provided;
• Delivery/supply of essential goods, including food, pharmaceuticals, medical equipment through e-commerce;
• Restaurants supplying home delivery of cooked food items;
• Power generation, transmission and distribution units and services;
• Capital and debt market services as notified by the Securities and Exchange Board of India (SEBI);
• Cold storage, warehousing services and other facilities for storage of essential goods. Warehousing facilities having both essential goods and non-essential goods can also continue to operate;
• Private security services; and
• Farming operations by farmers and farm workers in the field.

Please note that in respect of transportation services, (i) transportation for essential goods, (ii) fire, law and order and emergency services, (iii) operation of railways, airports and seaports for cargo movement, relief and evacuation and their related operational organisations, (iv) inter-state movement of goods (essential and non-essential) for inland transport and exports, (v) cross land border movement of goods (essential and non-essential) including petroleum products and LPG, food products and medical supplies, and (vi) intra and inter-state movement of harvesting and sowing related machines like combined harvester and other agriculture/horticulture implements are exempted from the applicability of the Government Order and the Subsequent Orders, and can accordingly continue to operate.

Further, please also note that in respect of hospitality services, (i) hotels, homestays, lodges and motels, which are accommodating tourists and persons stranded due to lockdown, medical and emergency staff, and air and sea crew, and (ii) establishments used/earmarked for quarantine facilities are exempted from the applicability of the Government Order and the Subsequent Orders and can accordingly continue to operate.

5. What kind of facilities, shops and establishments can continue to be open and operate?

Facilities, shops and establishments that are selling/dealing with essential commodities/goods and essential services (as detailed in Questions 3 and 4 above) can continue to be open and operate. Accordingly, the following kinds of facilities, shops and establishments can continue to be open and operate:

• Shops, including ration shops (under the public distribution system (PDS)) dealing with essential commodities/goods. However, it has been clarified that the district authorities are to encourage and facilitate home delivery to minimize the movement of individuals outside their homes;
• Establishments dealing with essential commodities/goods and essential services;
• Facilities, shops and establishments in the supply chain of essential goods, including whole-sale or retail of such goods through local stores, large brick and mortar stores or e-commerce companies;
• Agencies engaged in procurement of agriculture products, including Minimum Support Price (MSP) operations;
• ‘Mandis’ operated by the Agriculture Product Market Committee or as notified by the State Government; and
• ‘Custom Hiring Centres (CHC)’ related to farm machinery.

It is to be noted that all facilities, shops and establishments allowed to operate under the Government Order and the Subsequent Orders are required to have a ‘shops and establishments’ registration under the concerned State laws.

6. Is manufacturing activity permitted?

Manufacturing activity is not permitted and all industrial establishments are required to close down, other than the following types of units:

• Manufacturing units of essential commodities/goods (as detailed in the Government Order and the Subsequent Orders, and mentioned hereinabove), including drugs, pharmaceuticals, medical devices, and their raw materials and intermediaries; and
• Production units, which require continuous process, after obtaining the required permission from the State Government;
• Coal and mineral production, transportation, supply of explosives and activities incidental to mining operations;
• Manufacturing units of packaging material for food items, drugs, pharmaceuticals and medical devices; and
• Manufacturing and packaging units of fertilizers, pesticides and seeds.

7. In relation to production units requiring a ‘continuous process’ (as specified in response to Question 6 above), which governmental authority should be approached for permission to operate?

In relation to production units requiring a ‘continuous process’, an application needs to be filed with the State Government. At the district level, the application needs to be filed with the jurisdictional District Magistrate or the District Collector (as the case may be). Also, please note that the Principal Secretary of the Ministry of Industries of the concerned State Government also has the authority to review and monitor applications for seeking permission to continue to operate as a ‘continuous process’ production unit.

8. What constitutes ‘continuous process’?

While the Government Order and the Subsequent Orders do not specify a meaning/definition of ‘continuous process’, we understand that this term refers to a manufacturing process which is in operation all the time (i.e. 24 hours a day) in a production unit for the production of the goods in such production unit, and such which process is strikingly different from a batch-process. Please also note that a ‘continuous process’ appears to be a process which is required to be carried on in a manufacturing facility/production unit to ensure that the production of the concerned commodities/goods is not hindered and if such ‘continuous process’ is impeded or stopped then it would not only affect the production of the concerned commodities/goods but also make it difficult/unviable for the manufacturing facility/production unit to commence the process again.

9. If a unit is manufacturing an essential commodity/good or any other commodity/goods under a ‘continuous process’, then can such manufacturing unit procure raw materials from vendors in order to carry on its manufacturing activity and transport the finished commodities/goods?

Yes, the concerned manufacturing unit can procure raw materials that are necessary for the manufacturing activity and can transport the finished commodities/goods. Such transportation may involve intra-city, inter-city in the same State/Union Territory or inter-State movement.

Please also note that the Government Order clarifies that the restrictions under the Government Order and the Subsequent Orders fundamentally relate to movement of people and not to movement of commodities/goods (especially essential commodities/goods as stipulated in the Government Order and the Subsequent Orders).

As regards import of any goods/commodities required for the manufacture of essential goods/commodities (as stipulated in the Government Order and the Subsequent Orders), given that the Government Order and the Subsequent Orders are presently not clear as to the transport of such goods/commodities from the customs authorities to the concerned manufacturing facilities, clarity on the same should be sought from the local/jurisdictional district magistrate in this regard. Having said that, please note that the Subsequent Orders have clarified that customs clearance at ports, airports and land borders is permitted and the concerned governmental authorities can continue to operate. As mentioned in our response to Question 4 above, transportation of essential goods and non-essential goods is also permitted. Therefore, the transport of goods/commodities from the customs authorities to the concerned manufacturing facilities can be construed to be permitted at least for essential goods/commodities, but, as regards non-essential goods/commodities, clarity is required.

10. Are there any consequences of non-compliance with the Government Order and the Subsequent Orders?

Yes, any person violating the Government Order and the Subsequent Orders will be liable to be proceeded against as per the provisions of Section 51 to 60 of the Disaster Management Act, 2005 (“DMA”) and legal action under Section 188 of the Indian Penal Code, 1860 (“IPC”).

Please note that in terms of the relevant provisions of the DMA, the person/entity violating the provisions of the Government Order and the Subsequent Orders can be punishable with fine or imprisonment up to 2 (two) years. Further, in terms of Section 188 of the IPC (dealing with disobedience to an order duly promulgated by a public servant), any person who disobeys a direction given by a public servant shall be punishable with imprisonment up to 1 (one) month or fine up to INR 200 (Rupees Two Hundred) or both and if such disobedience causes or tends to cause danger to human life, health or safety, or causes or tends to cause a riot or affray, the offence will be punishable with imprisonment up to 6 (six) months or fine up to INR 1,000 (Rupees One Thousand) or both.

11. In addition to the Government Order and the Subsequent Orders, are there are state specific orders in relation to closure of facilities, shops and establishments (and prohibition of provision of services)?

Yes, certain governmental bodies in various States, including those in the States of Karnataka, Maharashtra, Delhi and Haryana have issued orders directing inter alia the closure of facilities, shops and establishments (and services) additionally (which are generally in line with the broad stipulations of the Government Order and the Subsequent Orders). Please note that some of these orders have been in existence before the issuance of the Government Order and the Subsequent Orders and the duration for which such orders will remain in force may vary from State to State.

While the Government Order and the Subsequent are required to be followed in relation to closure of facilities, shops and establishments (and prohibition on provision of services), depending on the location of such facilities, shops and establishments (and the services being provided), the specific orders issued by the concerned state governmental authorities will also need to be complied with.

This Article has been authored by Aparajit Bhattacharya (Partner), Sharath Chandrasekhar (Partner) and Naren BS (Principal Associate) of DSK Legal. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views and opinions of DSK Legal.