In this article, Nikhil Mukund Borkar Ransingh pursuing M.A, in Business Law from NUJS, Kolkata discusses Ten things the Government should do to make Mediation effective in India.

As a young republic, India and Indians have stepped up to the challenge and have successfully come within sniffing distance of setting up all the essential and necessary infrastructure that one has accustomed to associate with a modern, economic superpower of the 21st century.

The transformational process of being known as a former British colony to a self-sufficient, vibrant democracy wasn’t always going to be easy. The lack of resources in terms of skilled labor and technical expertise has been putting incremental strain on the framework. This has lead to a gradual slowing down of the efficacy of various institutions of strategic national importance.

The Indian Legal System is a prime example of an elegant framework burdened with a Herculean task of providing equitable and impartial ear and resolves disputes.

The general perception is that people tend to trust institutionalized mechanisms, especially those established in the public sphere for dispute resolution. There exists a widespread feeling that the judicial system is on the verge of collapse because of acute strain on resources. The existing crisis in the judicial system calls for a more widespread adoption of alternate means of dispute resolution like mediation and arbitration under skillful and unbiased oversight of ex-judges, experienced lawyers and government officials with special domain knowledge to cover a wide gamut of industries and nature of dispute.

Before Diving into Mediation, Let us first examine the various Archetype of Disputes Determination

As problems are diverse and the nature of disputes varied, varied models have evolved for resolving them. These models are categorized mainly into four types: rights-based, power-based, interest-based and legislative. The models promise results either on a win-lose or win-win paradigm.

The rights-based approach is adopted in litigation. Disputing parties contest on claims of ‘rights’ and the final decision are considered to be a vindication of the party whose rights were aggrieved. This model creates winners and losers.

In the legislative model, rules or laws are made by the competent authority to solve a logjam. The rules can either provide a process through which disputes could be settled or determine the issue itself. This also would result in winner-loser situation or both the parties may find themselves at the losing end.

The power-based model is a model in which one party is imposingly positioned over the other, and their relative positions determine the outcome of the disputes. This also creates a win – lose situation. This model is typically used independently or in combination with litigation.

The interest-based approach is the one that accommodates the interests of the parties involved in a dispute. Rather than an endorsement of one’s right through adjudication, the conflict is sought to be resolved by varied methods of intermediation. This method is designed to engineer a win-win situation. This model is based on a consensual scheme where parties in disputes, themselves would be responsible for the outcome.

We can clearly see how interest based approaches like meditation is intuitively better and a more holistic way to approach and resolve disputes quickly and reducing the burden of pending cases on the legal system.

Let us now Understand What Exactly Mediation is  

Mediation is the process in which a neutral third party, a Mediator helps the disputing parties to harmoniously resolve their disputes using creative methods. A skillful Mediator typically is expected to use specialized communication skills and negotiation techniques to facilitate disputing parties resolve their differences and find a solution mutually acceptable to both.

Mediation can be initiated at any stage of a dispute – prior to litigation, i.e. when differences of opinions arise or even during the trial.

Let us Take a Look at the Different Types of Mediation

1. Statutory

There are some types of cases that are required by law to go through the mediation process. Labor disputes and domestic (Family Law) disputes are two prime examples. In India, however, this type of mandatory mediation is rare.

2. Contractual

The parties to a contract, as part of the terms of their agreement, may include a mediation clause as a mechanism to resolve disputes. Although binding arbitration is a much more common contractual term since it will always result in a resolution, mediation can be an effective tool to resolve contractual disputes before they blossom into a protracted battle. The selections of the mediator, as well as the conditions of the mediation, are usually stated in the contract. If the mediation is successful, the results can be enforced as a judgment of a court.

3. Court Ordered

Most jurisdictions in India require some form of alternative dispute resolution before a case may be resolved through the traditional judicial process. As soon as a case is filed, the parties are provided a number of ADR options. They must, unless exempted by the Court, select and pursue one of these options. Included, as an option is mediation. The Court maintains a list of mediators—skilled and experienced attorneys selected by the Court — who are available to the parties. For parties who elect this option, the Court will appoint a mediator and designate a date by which the mediation must be completed. The results of the mediation are confidential — the Court will not know what occurred at the mediation, unless of course, an agreement (or partial agreement) is reached. If an agreement is reached, that agreement is enforceable as a judgment of the Court.

4. Voluntary

The parties to a dispute may decide to seek mediation without being compelled by law, court order, or contract. They may choose to mediate their dispute at any time: as the dispute is developing, before initiating legal action, or even while legal action is pending. The conditions of the mediation— e.g., who will be the mediator, when the mediation will occur, the rules of the mediation— are controlled by the parties.

Why opt for Mediation instead of Trial

Casual and Voluntary

• Informal process that isn’t bound by rules of evidence and procedure.
• Parties have freedom to choose their own Mediator.
• It can be opted for at any time — before or during adjudication.
• Allows parties and counsel to communicate their views directly, informally, and confidentially without fear of adverse repercussions.
• Party’s’ prerogative to opt for the mediation process.
• Parties can choose to terminate the process at any time without assigning any reason.
• Mediation is scheduled according to the parties’ convenience.
• Interconnected issues can be brought in for discussion and settlement.

Customized advisory

• Tailor-made solutions and procedures and creative resolution is possible since it is the disputing parties and not a Judge or Arbitrator who determines the outcome of the case.
• Terms of settlement isn’t restricted to factors such as claims made in Court, positions taken etc., thus, allowing for expanded permutations and combinations of outcomes.

Secure

• It’s a closed-door process that is open only to the disputing parties and individuals chosen by the disputing parties.
• Confidential information revealed to a Mediator during the mediation process cannot be disclosed unless allowed by the parties. Statements made during mediation or documents produced or prepared for mediation remain confidential.

Self Determined

• Parties determine the terms of settlement and the outcome of mediation.

Win-Win

• Settlement terms are reached only when it’s agreed by both the parties.

Closure

• Once the terms of a mediated settlement is written and signed by both the parties involved, it becomes binding, the settlement terms are filed in Court and a decree is passed, which is final and non-appealable. A mediated settlement tends to have a high rate of compliance as it is mutually agreed to by the parties.

Symbiotic Process

• Mediation is a symbiotic process that reduces animosity between parties by offering an opportunity to restore and preserve business and personal relationships.
• Avoids damage to important ongoing relationships, which often results from the adversarial process.

Cost-effective and Quick

• Mediation is conducted in an informal and comfortable setting and parties are central to the process. A few sessions has the potential to bring the dispute to a resolution unlike litigation which involves lengthy pleadings, detailed evidence, extensive arguments and several appeals which could extend to many years.
• Separates the people from the problem.
• Shifts the focus of the dispute from right and wrong to resolution.

Mediation Procedure can be Divided into Six Steps, Each of Which Represents a Particular Stage of the Mediation Process. These Stages have been Outlined below

a. Initiating Process and Primary Arrangements

The process of initiating the mediation is perhaps the most difficult and challenging part of the process. It often entails the coming together of parties who do not want to negotiate, or between whom relations are strained to such an extent that they may not want to negotiate.  

b.Mediation introduction and setting down the ground rules for mediation

The mediator in the second stage has to explain the mediation procedure which will be followed throughout the course of the mediation. The mediator should also inform the parties about tactics and conditions that can potentially lower the possibility of success of the mediation.

c. Statements by Representatives, Followed by a Summarization of the Problem by the Mediator

In this stage, the mediator would open the line of communication and seek statements from the representatives. This is a very important stage as it is in this stage that the parties honestly articulate their views, so that the other party to the dispute can understand exactly what they want. This is particularly important if the parties, before the mediation, weren’t cordial or on speaking terms. In addition to getting to know each other’s stance, the parties can better understand the core interests underlying the party’s positions and factors that are driving the discord.

The mediator would then summarize the point of contention and the reason of discord from the vantage points of the parties involved. This requires a lot of tact and skill on the part of the mediator to summarize the dispute while not appearing biased in the phrasing of the summary.

d. Agenda and Timeline Setting for the Mediation

While setting the agenda, the mediator would set the dates and the venue for the negotiation sessions that are in agreement to both the parties. The mediator will also list out the issues which have to be discussed by them in sequence, to remove ambiguity and uncertainty from the mediation process. This demystification of the mediation process not only helps the mediator in assisting the parties to reach a settlement, but also the parties as they now have a benchmark against which they can evaluate individually the progress of their negotiations.

e. Facilitating the Mediation

Here the mediator may strategically work towards creating various work-around to the dispute as he now has an intimate understanding of the underlying factors that caused aggravation. The creation of options for conflict resolution shouldn’t be seen as interference on part of the mediator in reaching the final settlement. The mediator mustn’t interfere by insisting that the parties reach a final settlement; the rules formulated by the Delhi High Court prohibit the mediator from forcing the parties to reach a settlement.

e. Reaching to an Acceptable Settlement

The final stage of the mediation procedure is a collection of two steps, firstly it entails reaching to a mutually agreeable settlement. Next, it requires the summation of the settlement agreement. After these two stages get completed successfully, the implementation process of the agreed settlement begins.

Now that we are familiar with the Mediation Process, let us look at the Challenges and Roadblocks the Discipline of Mediation faces in India.

1.Confusion Caused by Multiple Terms (Mediation, Arbitration, Conciliation)        

By looking at the multiple available statutes in the Indian context, it becomes clear that there are primarily four Alternative Dispute Resolution (“ADR”) processes, which may be classified as Mediation, Conciliation, Arbitration and an ambiguously defined mechanism known as Judicial Settlement through Lok Adalat.

As there are no formal legislative principles relating to mediation and settlement as there are for Arbitration and conciliation, it leads to confusion amongst practitioners who would’ve intended to opt for one method but erroneously chose the other method of ADR. Hence, caution must be exercised so that people within the ADR ecosystem are knowledgeable about the types of ADR processes and the mechanisms that are involved in each variant.

2. Lack of Clear Distinction in Laws Pertaining to Arbitration, Mediation and Conciliation

The Mediation and Conciliation Rules, 2004 was brought into effect from 11th August, 2005. A cursory look at these rules and other rules pertaining to the ADR realm would reveal that the Mediation and Conciliation Rules, 2005 aren’t adequately framed and they do not cover the entire spectrum of the mediation process.

Practitioners of ADR methods have noted that the Mediation and Conciliation Rules, 2004 cover more or less the same provisions that are covered in the Arbitration and Conciliation Act, 1996. Hence, this lack of clear distinction and absence of specific statutes leads to a lack of confidence and a feeling of vagueness in the mediation process.

3. Low Success Rate of Mediation Mandated by the Courts

It’s observed that there exists uncertainty in the minds of the parties involved in court mandated mediation regarding the impartiality of the mediator. Even if the mediator’s mandate could be regulated with a specific statute, the parties involved are jittery about whether the statute would intrinsically limit the mediator’s ability to act in an unbiased manner.

4. Absence of Mediation Culture

A big roadblock in way of successful adoption of median is the lack of attitude of peaceful settlement. A wider implementation of mediation and other ADR tools is also restricted by the affinity towards a simplistic binary result rather than a nuanced, sophisticated approach which requires communication, tact and creativity in equal parts.

5. Reluctance of the Advocates

The core reason that stands out is the perception among legal professionals that the ADR adoption at scale would lead to them losing out on potential clients with gainful litigation revenue opportunities. Also, the option of ADR in the Indian legal landscape remains to be on the more expensive side of the spectrum. There are no fixed financial costs that are specified. This leaves the mediator and the institute offering mediation services to fix rates arbitrarily. Unfortunately, the cost of litigation is lower than that of pre-litigation mediation.

6. Lack of reputed and credible mediation institutions

There is a distinct lack of dedicated mediation institutes with professionals trained in the trade-craft of mediation.

7. Lack of Public Awareness

The scarcity of publicly available information regarding ADR mechanisms and its benefits deviates them from potentially resolving them through mediation, and instead opt for litigation. This immediately puts the parties in disagreement in adversarial positions which doesn’t allow them to retract from their stands unless done via judicial or other form of settlement.

Having recognized the Roadblocks in the way of successful and effective adoption of Mediation and other ADR techniques. Let us now discuss the ways in which the Government can make Mediation effective in India.

1. Clear and Distinct Definitions for Various ADR Processes       

The government must strive to come up with succinct, lucid and intuitive definitions and explanation for the various ADR processes and attempt to clear the confusion related to what ADR constitutes.

2. Distinct Legal Framework for Laws Pertaining to Arbitration, Mediation, Conciliation

The government must come up with clear, distinct statutes that would provide a framework that can be identified with the specific ADR processes. This would greatly help the practitioners in structuring the mediation process on a more solid footing and a strong underlying legal principle.

3. Improve Success Rate of Court Mandated Mediation

The government must incentivise parties to seek mediation to resolve disputes by being more accommodative of their concerns about the impartiality of mediators. The government must make efforts to take all the concerned stakeholders in confidence and work out a roadmap to ensure statutes specific to mediation is intrinsically unbiased.

4. Encourage Mediation Culture

The government must promote a culture of resolving disputes amicably and not burden the traditional litigation channels for ironing out disputes. The adversarial stance that the parties to a dispute take ends up being counter-productive even in a court mandated ADR process.

5. Penalize Litigation Culture

The government must try to discourage parties wanting to opt for the litigation process by making the litigation process more expensive than ADR. This would prompt parties to approach ADR institutes as the first mode or step of conflict resolution. This would also reduce the burden on the courts.  

6. Set ADR Targets for Bar Associations

The government must set a minimum percentage of new cases in each financial year that must be solved via any of the ADR processes. This would prompt them to train and upskill member advocates in the field of ADR and start developing a gainful practice in ADR.

7. Develop a Framework for Accreditation of ADR Professionals

The government must come up with a mechanism to have a directory of all the ADR professionals that meet a minimum benchmark and are well versed with specific a body of knowledge pertaining to ADR practice, much like the insolvency professionals.

8. Include ADR Concepts to Make Law School Curriculum More Holistic

The government must recognize that most legal practitioners build their foundations in law schools, the curriculum of which is largely focused on training students for litigation oriented practice. Students aren’t conditioned to recognize which cases are appropriate for immediate settlement through ADR methods such as mediation and which cases are suitable for litigation.

It has been observed that even practitioners aren’t fully adept at distinguishing the two distinct classes of dispute cases. Hence, as a result, cases that could be solved by ADR processes are sent for litigation, which in turn burdens the courts.  

There is a dire need for the students to be trained and taught the distinction between the cases fit for litigation and the ones fit for ADR. If this distinction isn’t taught, they would be an inherently biased towards litigation and may not be able to adapt to a role of the mediator when the occasion arrives.

9. Setup Reputable Institutions for Mediation

The government must take the initiative and set up mediation institutions along the lines of ICC, LCIA, SIAC etc; that have come up with specific framework for mediation. These institutions must also provide clear training and continuous professional development workshops for interested people.

10. Mediator Liability

In order to protect the ADR ecosystem from scrupulous and/or under trained mediators, the government must hold the mediators to a global standard of accountability. The government must clarify if professional indemnity insurance can be made available to accredited mediators without diluting their key accountability and deliverables. There should also be a strict disciplinary mechanism to deter bad conduct and poor performance on the mediator’s part.  

References

1. https://www.ibanet.org/Document/Default.aspx?DocumentUid=B705AE33-0AF0-4DA2-9C93-7421D28D2767
2. https://gettingthedealthrough.com/area/54/jurisdiction/13/mediation-2017-india/
3. https://vakilsearch.wordpress.com/2011/01/15/procedure-to-be-followed-during-a-mediation/
4. http://lawcommissionofindia.nic.in/adr_conf/sriram17.pdf
5. https://blog.ipleaders.in/indian-should-know-about-mediation/  
6. http://mediationbhc.gov.in/PDF/concept_and_process.pdf
7. http://campmediation.in/mediators-mediation-specialists
8. https://static1.squarespace.com/static/551ea026e4b0adba21a8f9df/t/579ee7be5016e10ca2ae66   f0/1470031920694/Interim+Report_Strengthening+Mediation+in+India.pdf

The post Ten things the Government should do to make Mediation effective in India appeared first on iPleaders.

In this blog post, Komal Shah, Company Secretary, explains aspects of Recovery and Resolution planning done in large sized financial institutions.

What are recovery and resolution plans?

Simply put, recovery and resolution plans, also called living wills, are a plan of what a financial institution needs to do in the event it is about to collapse.

Though the terms recovery plans and resolution plans are often used together in one breath, there is a fine line of difference. Recovery planning would be used when restoring the viability of the financial institution (recovery) still seems possible, while resolution planning would be used when the collapse seems inevitable.

Why were these plans born?

One would think as to why a financial institution would predict itself to collapse? Why not function in such a way so that there would never be a situation of failing? However, the shattering of the belief that it was possible for a financial institution to function in such a manner so that it never fails, is precisely what led to the birth of recovery and resolution planning.

When a financial institution which is sizeable enough to impact the economy of a country fails, it is very likely to have implications on other institutions (or for that matter, even other countries), which would be unpredicted, just like aftershocks to an earthquake. What seemed like a sound and profitable business judgment a few years ago, would then seem like an insane decision, in the economical earthquake scenario.

This very realization of the fact that an economic earthquake is possible, as it started with the collapse of Lehmann Brothers in 2008, is what led to the setting up of the Financial Stability Board (FSB) by the G20 countries, and ultimately, recovery and resolution planning.

Indian Context

It’s not like we haven’t had our share of failure of market-affecting financial institutions before 2008 – the US 64 of the Unit Trust of India being a point in case. And there have been legislative responses to such instances, such as the repeal of the UTI Act.

Then, there is something called the ‘Prompt Corrective Action’ which can be initiated by the Reserve Bank of India (RBI) once the set trigger points of a regulated financial entity show a serious threat to solvency.

But the requirement for preparing systematic recovery plans by the entity itself did not exist before being filtered down from ‘key attributes’ agreed upon by the G20 countries after the 2008 economic crisis.

Who needs to prepare these plans?

These plans were initially required to be prepared by global systemically important financial institutions (G-SIFIs) and other institutions which, in the belief of the national authorities had impact on financial stability, if they failed.

Per the Dodd Frank Wall Street Reform and Consumer Protection Act, bank holding companies with total consolidated assets of $50 billion or more and other financial companies designated for supervision by the Federal Reserve need to submit the resolution plans to the Federal Reserve and the Federal Deposit Insurance Corporation.

Indian Context

In India, ‘specified banks’ (meaning specified by the RBI as such) need to prepare recovery plans and these should be integrated within their overall risk management systems (like fire extinguishers in a building) so that if need arises, they can be acted upon immediately. The plans have to be submitted to the RBI.

Interesting to note that plans to be submitted to the Fed are ‘resolution’ plans while those to be submitted to the RBI are ‘recovery’ plans.

How do these plans need to be prepared?

Per the guidance issued from the FSB, some of the important factors for developing resolution strategies are:

• Sufficient Loss absorbing capacity (LAC): This basically means that the financial institution should have enough LAC to be able to stand up back again with additional capital or to properly wind down. This can be maintained through equity or debt, but needs to come from entities who can themselves absorb losses without adverse effects. The guidance also specifies considering the creditor hierarchy vis a vis the LAC.
• Legal and operational structure & continuity: The structure of the financial institution should enable critical functions to continue while it is being orderly wound up.
• Enforceability of ‘bail in’: The institution needs to be legally able to ask the creditors / depositors to take a loss rather than the government and taxpayers (bail – out).
• Funding arrangements: The institution needs to plan how and from where it will bring in the funding to meet temporary liquidity requirements.
• Approvals or authorizations needed to implement the strategy: The institution must consider how the approvals or authorizations necessary to implement the resolution plans will be obtained.

Other important factors to be considered include treatment of business contracts during the resolution, cross border cooperation agreements, managing the data and information systems, fall back options in case the preferred resolution plan does not work, and the post resolution strategies.

Indian Context

The RBI has clearly specified the structure of the recovery plans with the main ingredients being as under:

• Integration: Since the RBI believes in prevention rather than cure, the first element is to explain how the plan has been integrated within the bank’s risk management framework;
• Stress Scenarios: This basically involves checking the bank’s capacity to withstand extreme economic movements and their effects on the bank’s capital adequacy;
• Trigger framework and identification of triggers, early warning indicators: What will be the triggers which will start the implementation of the bank’s recovery plan, how to decide triggers which would have both qualitative and quantitative factors, what are the early warning indicators even before the triggers are reached;
• Recovery plan options: Summary, details and impact of each recovery plan option and the credibility of each option;
• Issues: Possible issues in the execution of the recovery plan and ways to overcome these issues;
• Accessing Central Bank’s facilities: Plans in the event the bank is going to require to access the Reserve Bank of India’s or overseas banks’ liquidity facilities;
• Radical options: Detailing radical options such as selling off part or whole of banking business in extreme stress events;
• List of executives: List of key executives / officials who will be involved in initiating / implementing recovery actions and their roles and responsibilities.

Need to know about recovery and resolution planning

For anyone working with a large bank, particularly in finance, legal or compliance departments, recovery and resolution planning will affect their everyday work since these will be ingrained within the risk management framework of the bank, and hence, the need to know what it means and entails. For large sized private clients of a bank, it helps to know that the bank does have the appropriate planning in place.

References

http://www.fsb.org/wp-content/uploads/r_121102.pdf?page_moved=1

http://www.fsb.org/wp-content/uploads/r_130716b.pdf?page_moved=1

https://www.federalreserve.gov/supervisionreg/resolution-plans.htm

https://rbi.org.in/scripts/PublicationReportDetails.aspx?UrlPage=&ID=781

The post The What, Why, Who and How of Recovery and Resolution Planning in the Indian context appeared first on iPleaders.

In this article, Sonu Surana pursuing M.A, in Business Law from NUJS, Kolkata discusses Is corporate corruption (where no government/public official is involved and also talks of the laws which can be used to curb it.

Corruption misrepresents markets and creates unfair competition. Companies often pay bribes or fix up bids to win various public/private procurement contracts. Many companies hide corrupt acts behind secret deals and arrangements. they seek to pressure political decision-making in wrong manner. Also many companies exploit tax laws to evade taxes, wok under cartels or misuse legal loopholes. Private companies have huge influence in many public spheres. So it’s easy to see how corruption in private sector businesses harms taxpayers’ interests, consumers benefits and in effect paralyses the whole system.

Today, businesses are operating in extremely challenging, the fact that executives and their teams are under increasing pressure to deliver unrealistic results in difficult markets. Managers in their companies are under tremendous pressure to deliver exception financial results over the next fiscal years. Thus, they indulge in corrupt practices next time to win businesses.

India in recent times the public and private partnership system has been put under the microscope and it has been found to be actively working in partnership with politicos and bureaucrats to perpetrate large-scale corruption. Also, private sector is involved in corruption internally which involves top management of the companies to mislead the shareholders or public in large or involves the middle and lower tier of the company to fool the top management or the consumers to gain extra monetary benefit.The same has been noticed in the Central Vigilance Commission (CVC) report by Transparency International India (TII) that documents this unholy nexus. The report makes scathing observations on the decay in the private sector against the backdrop of the various scams, in which major private players are in the dock for colluding with the system execute India’s biggest corruption scandals.

The private sector cannot be considered as a victim of corruption in India. Instead, it is instrumental in effecting it too and may be it is hands-in-glove with public/private officers. The government is trying to install some strong deterrent tool to curb corruption in the private sector. India’s drive against corruption is perceived to be hampered by the general weakness of the country’s anti-corruption institutions. However, India’s Supreme Court is regarded as one of the key institutions which has been effective in fighting corruption. This decision is consistent with this view, notwithstanding any misgivings about the judicial activism required to reach the decision.

Few big corruption and fraud scams which have unearthed in private sector in recent times are:

Satyam scam: It was about corporate governance issues and fraudulent auditing practices allegedly in collusion with auditors. The company distorted its accounts to its board, stock exchanges, regulators, investors and all other stakeholders. Finally it misled the market and other stakeholders by lying about the company’s financial health. All the basic facts and figures such as revenues, operating profits, financial  liabilities and cash and bank balances were grossly inflated to show the company position in good health.

NSEL case: The NSEL (National spot Exchange Ltd) scandal or NSEL fraud was a methodical and planned corruption perpetrated in the commodity market on Jignesh Shah owned National Spot Exchange (NSEL) which is based in Mumbai, India. The NSEL was a company promoted by Financial Technologies India Ltd and the National Agricultural Cooperative Marketing Federation. This scam was a Ponzi scheme and is estimated to be a Rs. 5600 crore  fraud that came out to light after the National Spot Exchange failed to pay its investors in commodity contracts after 31 July 2013. Thirteen thousand investors from India lost about Rupees Five Thousand Six Hundred Crores when the fraud was discovered and it was found that NSEL had neither the money nor the stocks to pay them back.

Bank NPA defaults: Loan malaise has been plaguing the Indian banking system, both public and private sector banks which roughly have 70% market share in assets.

Various other private sector corruption scams of recent memories are:

1. Indian Premier League Scam – Allegedly involving top officials of BCCI
2. Harshad Mehta stock market scam
3. Kingfisher Airlines

These numerous scams which have surfaced in India in recent times has made the enforcement agencies increasingly proactive and vigilant in terms of monitoring compliance under relevant anti-corruption and bribery laws and taking action against violations thereof. For example, the Central Vigilance Commission (CVC) in 2015 initiated an inquiry against a private company for the first time, amidst allegations that the company had bribed public servants in order to obtain certain clearances and permits in India. The Serious Fraud Investigation Office (SFIO) , an investigative arm of the Ministry of Corporate Affairs) has also investigated cases of alleged fraud in various companies in the past many years, of which many investigations have concluded to an logical end.

Besides the monetarily losing out, businesses that are victims of corruption also suffer long-term negative impact on their brand reputation. In current times, market reputation of some of the large corporate organisations have been mauled by a series of instances relating to frauds/corrupt practices including corruption and bribery. There are concerns about the financial losses that businesses suffer as a result of these frauds. Intentional corrupt and misguided financial reporting, information manipulation, theft of stock, etc are among the common types of misconducts or corrupt practices that can result in financial losses for private companies. Further, the cost of employing additional internal compliance controls/ remedial measures to combat frauds/corruption leads to financial impact and also waste of managerial time in complying to these. This shows that irrespective of the impact of frauds on private sector businesses, a number of organisations remain averse to implementing a comprehensive anti-fraud system to work on these, detect, prevent and remediate fraud risks.

The above instances are indicating that India’s business situation provides a fertile ground for corruption, frauds and manipulations. There is an urgent need for companies/corporates to put in place robust deterrents, hold constant vigilance and identify alerts at the earliest hint of any corrupt instances. With an overall awareness about corruption situations and the unique ways being adopted by fraudsters, expansion in the scope of corruption mitigation plans, workshops and reconsideration of their existing governance standards, private sector can actively manage their risks. Further, strict law enforcement and rigorous penal provisions prosecutions by courts and law regulatory agencies will help in transparency and accountability across the Board, both in the government and corporate sectors.

The Supreme Court (“SC“) in Central Bureau of Investigation, Bank Securities and Fraud Cell and Others v. Ramesh Gelli and Others (Criminal Appeal Nos. 1077-1081 of 2013 and W.P. (Crl.) No. 167 of 2015) has held officers of private banks to be public servants under Prevention of Corruption Act, 1988 (“PCA“)

Parliament of India recently passed:

• The Whistleblowers’ Protection (Amendment) Bill 2015 (pending presidential assent).
• The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act 2015; and
• The Lokpal and Lokayukta (Amendment) Act 2016;

The Prevention of Corruption (Amendment) Bill 2013, which is pending parliamentary approval, seeks to amend the Prevention of Corruption Act 1988 by setting out specific provisions for the prosecution of bribe givers; explicitly bringing commercial organisations within the ambit of the definition of ‘bribe giver’; and prescribing a specific time limit for completing trials.

The Prevention of Corruption (Amendment) Bill criminalises the acceptance of gratification (pecuniary or otherwise) other than the acceptance of legal remuneration by private sector persons which is paid by their employers in connection with the performance of their duties. Aiding and abetting the commission of bribery is also an offence, such that any person, who bribes or attempts to bribe a public servant or acts as a middleman for such bribing may also be held liable. Further, the law creates an adverse presumption if a public servant’s assets are disproportionate in value to his or her income and cannot be satisfactorily accounted for. The provisions of the law apply regardless of the location or jurisdiction of the commission of an offence, as long as the same is committed by a ‘public servant’ as defined under it. Judicial decisions have also interpreted the term ‘public servant’ in the laws to include a wide variety of persons, such as bank employees in both private and government owned banks

However, despite several emerging issues, India, has responded back by enacting several pieces of Legislations. One piece of Legislation that stood out recently is the Companies Act, 2013 (the ‘Act’). The Act has raised the bar of how Indian companies need to evaluate themselves and aims to increase corporate transparency. The other anti-corruption Legislations, Regulations, Guidance, include the following:

(a) Prevention of Corruption Act(1988)

(b) Whistle Blowers Protection Act

(c) Prevention of Money Laundering Act, 2012

(d) Central Vigilance Commission Act, 2003

(e) Indian Contract Act, 1872

(f) Indian Penal Code, 1860

(g) Listing Agreements

(h) CARO 2006

(i) Income Tax Act, 1961

(j) Right to Information Act, 2005

For instance, the Companies Act, 2013 which replaced the Companies Act 1956 has several measures to deal with corporate corruptions. One of such measure is the formation of a financial reporting body called the “National Financial Reporting Authority (NFRA)” for better monitoring of Corporate Financial Management. This body will have quasi-judicial powers to order investigation, levy penalty and bar professionals from practice in case of their indulgence in professional or other misconduct.

Such authority has the mandate to ensure scrutiny and compliance of Accounting and Auditing Standards. It will also ascertain the quality of service of professionals associated with compliance. The new Act provides more fangs to Serious Corruptions Investigation office (SFIO).The SFIO is a multi-disciplinary organization under the Ministry of Corporate Affairs,consisting of experts in the field of accountancy, forensic auditing, law, information technology, investigation, company law, capital market and taxation for detecting and prosecuting or recommending for prosecution of corruptions, and has enforcement powers, including arrests; focus on protection of investors with recognition of class action suits and provision for nomination of Directors by small shareholders and stricter role for auditors including rotation.

The major gridlock of occurrence of regulatory overlap with more than one agency entitled to investigate an event of corporate crime has been overcome with the Companies Act, 2013 and designating SFIO as the agency to investigate corporate corruption. Currently under various regulations like Clause 49 of the Listing Agreement, the CEO and CFO of a company, in their certification have to confirm that there are, to the best of their knowledge and belief, no corruption /illegal / fraudulent transactions entered into by the company during the year. Also, as per Companies (Auditor’s Report) Order (CARO) 2006, the auditor has to report whether any corruption by or on the company was noticed or reported along with its nature and amount.

Section 447 of the new Companies Act, 2013 provides for the definition of fraud and also the punishment for committing fraud. Fraud is defined inclusively as under: “Fraud in relation to affairs of a company or any body corporate includes any act, omission, concealment of any fact or abuse of position committed by any person or any other person with the connivance in any manner, with intent to deceive, to gain undue advantage from, or to injure the interests of, the company or its shareholders or its creditors or any other person, whether or not there is any wrongful gain or wrongful loss.”

It is clear from the definition that not all acts, omissions, concealment of fact or abuse of position will lead to fraud or corruption . In order to fall within the meaning of ‘fraud/corruption’ these actions, omissions, concealment of fact or abuse should be done with an intent to deceive or to gain undue advantage or to injure the interest of the company or its shareholders or creditors or any other person. Therefore, this brings in the concept of mensrea.

Further, it would still constitute fraud or corruption whether or not such acts, omissions, concealment of fact or abuse of position results in ‘wrongful gain’ or ‘wrongful loss’ i.e. commission of crime with that intent is important not the results thereof. ‘Wrongful gain’ has been defined to mean gain by unlawful means of property to which the person gaining is not legally entitled.

Similarly, “wrongful loss” has been defined to mean loss by unlawful means of property to which the person losing is legally entitled. Therefore, to fall within the meaning of fraud or corruption, the following should have happened:

(a) acts, omissions, concealment of fact or abuse of position should have taken place;

(b) such acts, omissions, concealment of fact or abuse of position should have essence of mens-rea in them; and

(c) irrespective of the fact whether or not they resulted in ‘wrongful gain’ or ‘wrongful loss’. The definition of the term fraud uses the term ‘person’ which gives it a very wide coverage.

Thus, it just doesn’t only mean and cover certain officers, directors or employees of the company, instead it covers any person in relation to the affairs of the company. So irrespective who that person is, as long as that person in the context of the affairs of the company falls within the ambit of the definition of fraud, he will be guilty of committing fraud or corruption.

Various Domestic law  The key laws pertaining to corruption and bribery in India are as follows:

• The Indian Penal Code is the penal law of India and puts in place various provisions that are interpreted to cover bribery, corruption and fraud matters, including those committed even in the private sector. Its provisions include offences relating to cheating and dishonestly inducing delivery of property and criminal breach of trust.
• The Prevention of Corruption Act 1988, is the main anti-corruption law of the country. It punishes the offences committed by public officials. However, recently private persons have also been included under its ambit and thus is one of the guiding anti-corruption laws of the country.
• The Whistleblowers’ Protection Act 2011, is mainly intended to protect whistleblowers, one who initiated or bring to the public any bribe or corruption event, with respect to disclosure of acts of corruption, any wilful abuse of power, wilful abuse of discretion etc.
• The Whistleblower Protection Act, 2011 (the “Whistleblowers Act”l) also aims to promote and protect the interest of whistleblowers. It has been approved in both the Lok Sabha and Rajya Sabha, both houses of the Parliament, and has received Presidential assent. Under the Whistleblowers Act, any public servant or any other person including a non-governmental organisation may make a public interest disclosure to the CVC or the State Vigilance Commission or the High Court, including disclosures in relation to the commission of, or an attempt to commit, an offence under the PCA. The Whistleblowers Act, further seeks to establish a mechanism to receive complaints relating to disclosure on allegations of corruption, misuse of power against any public servant or private officials, to inquire into such disclosure and provide safeguards against the victimisation of the complainant.
• The Foreign Contribution (Regulation) Act 2010 controls the acceptance and use of foreign contributions by corporate entities and individuals. Receipt of foreign contributions needs prior registration with or approval of the Ministry of Home Affairs. In the lack of such registration or approvals, any receipt of foreign contributions may be considered illegal and punishable under the Indian laws.
• The Prevention of Money Laundering Act 2002 forms the core of the legal framework put in place by India to fight money laundering. It came into force in 2005. PMLA defines money laundering offence and provides for the freezing, seizure and confiscation of the proceeds of crime.

The anti-corruption laws do not differentiate between the penalties to be imposed for offences committed by an individual and those committed by a company or organisation; therefore, the relevant penalties apply to both. However, where the penalty for a given offence involves imprisonment and a fine, the courts will impose only the fine on the company or organisation (as the penalty of imprisonment cannot be imposed on a legal person), although persons in charge of the company or responsible for the conduct of its business when the offence was committed may be liable to imprisonment.

While conceptually the Indian industry has expressed its desire and keenness for adopting measures which would be effective deter and helpful tools in curbing corruption, however, it has, in the same breath, expressed its concerns that it would be necessary to ensure that the amended law does not cause undue harassment to businessmen and women in the country and in a sense curb their freedom of ease of doing business. It would be open for any police officer, irrespective of rank, to initiate criminal proceedings against a private sector business official for violation of the proposed law. No prior permission from any authority whatsoever would be required for the said purpose.

India is witnessing a sea change in its approach to the issue of corruption. Given the spate of recent scams and public outcry on the issue, it is clear that public displeasure about the level of corruption has reached alarming proportions. This socio-cultural development must be seen and understood in the political and legal context which requires adherence to international standards for combating corruption as envisaged by the United Nations Convention Against Corruption (UNCAC), ratified by India in 2011.

While new laws, as envisaged, may take some time to be incorporated into existing statutes or new statutes, companies doing business in India – both foreign as well as Indian – must step up their own ethical standards, compliance and the overall standard of corporate governance to deter corruption. There is indeed strong need to build a clean corporate environment in which standards and values are central to the private company’s growth strategy just as much, if not more as economic objectives. Companies doing business in India must relook at their Ethics & Compliance policies, make them more strong, and ensure their effective implementation. This alone would ensure compliance with existing as well as imminent laws as well as the norms of good governance and would lead to check and deter corrupt practices.

The post Is corporate corruption (where no government/public official is involved) punishable in India? What laws can be used to curb it? appeared first on iPleaders.

In this article, Suraj G Badrayan pursuing M.A, in Business Law from NUJS, Kolkata discusses Ten factors to consider before deciding seat of Arbitration.

Introduction

Over the years, arbitration has grown to be one of the most preferred dispute resolution mechanisms between parties, particularly in the areas of international business. Arbitration is a form of alternate dispute resolution for the settlement of disputes where an independent third party makes a decision that is binding[1]. There is considerable time spent in negotiating, selecting and drafting arbitration clauses to enable an effective arbitral process and adjudication in the event of any dispute. Arbitration is generally a voluntary and consensual process, it is very important to take into account all the key factors that generally affect an arbitral process. In this regard, one of the key factors that underlie in any arbitral agreement is selecting the seat of arbitration.

The “seat” or place of arbitration has been defined as the geographical location to which the arbitration is ultimately tried and which in the absence of the agreement otherwise prescribes the procedural law of the arbitration[2]. Hence, it means that the seat of arbitration is the jurisdiction where the parties intend the law of arbitration to apply in their arbitration agreement or the applicable procedural law of the arbitration.

Since arbitration is a voluntary process, the parties to an arbitration are free to agree on the seat at anytime. Usually, it is agreed in the arbitration agreement. If not, it might be agreed later. The freedom to choose the seat of arbitration is one of the bedrock principles on which arbitration is based on. The jurisdiction of the seat is not necessarily the same as the governing law of the contract. For example, the governing law of the contract can be the law of India but the seat of arbitration can be in Singapore, i.e the procedural law of the arbitration will be governed by the Singapore law while substantive law of contract to be analysed by the Arbitral Tribunal is governed by Indian laws.

As highlighted since arbitration agreement is voluntary and based on consensus between the parties, deciding the seat of arbitration is very important in the context of effective arbitral dispute resolution. Hence, in the preceding sections, ten factors to be considered before deciding the seat of the arbitration are discussed.

Seat of Arbitration

One of the most important factors to be considered before deciding the seat of arbitration is the national arbitration law of the seat. Since, the seat of arbitration decides the procedural law of the arbitration which governs the process of arbitration. Although the UNCITRAL model law exists to assist States in reforming and modernizing their laws on arbitral procedure so as to take into account the particular features and needs of international commercial arbitration, the model law is not binding on the States. It just reflects worldwide consensus on key aspects of international arbitration which have been accepted by States of all regions and the different legal or economic systems of the world. Hence, there are variations in procedural laws between different States.

The procedural law of arbitration of a State is a body of rules which sets a standard external to the arbitration agreement, and the wishes of the parties, for the regulation and conduct of the arbitration. It comprises rules governing interim measures, rules for supportive measures by the court, and rules for courts to exert judicial review which will be explained separately[3].

Some of key issues to consider in procedural arbitration law that one should consider are:

1. Need to be party to the New York Convention or Geneva Convention
2. Desired level of judicial interference and control
3. Appointment of Arbitrators and legal representatives

Some examples include, local lawyer requirements hence impairing ability to choose their own legal representatives and their own arbitrators.

1. Challenge to appointment of arbitrators
2. Power to grant interim orders:

For example, under French law an arbitrator has the power to impose penalties on parties that refuse to comply with his/her interim orders – no such power is found in most other arbitration legislation.

1. Enforcement of Awards
2. Power of judicial review
3. Local laws may impose a particular choice of law, law of limitations on arbitrators.
4. Process of adducing evidence and discovery

For example, if the key evidence is in one party’s hands and that party does not want such evidence to be available to the other side, it may choose an arbitral institution without full discovery. Another example includes if a party initiated discovery is desired, the arbitration can be held in United states or England, however is discovery is to be avoided it can be any civil law jurisdiction.

Enforcement of Foreign Arbitral Awards

The New York Convention requires that, the states that have ratified it to recognize and enforce international arbitration agreements and foreign arbitral awards issued in other contracting states, subject to certain limited exceptions. These provisions of the New York Convention, together with a large number of contracting states, have created an international legal regime that significantly favours the enforcement of international arbitration agreements and awards.

Once the arbitral tribunal has passed an order, the interim or final order has to be enforced in a Country where it is required to be enforced. While selecting the seat of arbitration, it is very important to determine whether any international arbitral award can be enforced in the jurisdiction of any particular state. While most of the countries which are signatories to New York Convention recognise the interim arbitral awards and final arbitration awards it is important to have reciprocal arrangement between the countries. Even in enforcing such awards, the court interpretation with regard to Public policy or other grounds on which the enforcing court can refuse enforcement, matters a lot. For example, the state where the forum of arbitration is, or the state which is supposed to enforce a foreign award, may not be a member of 1958 New York Convention.

Jurisdiction neutrality and impartiality

Another aspect to consider is the forum neutrality of the State designated as the seat of arbitration. Neutrality is in the sense denotes that none of the parties have any interest or stake in that particular jurisdiction. It also covers the aspect that no party has any place of business or residence in the country designated as seat of arbitration. Generally, all Courts historically favour the local party, and also the neutrality of arbitrators adjudicating in the case comes into question. Hence, the concept of forum neutrality not only refers to the ability of the parties to select a neutral arbitral seat, rather it refers as well to their ability to select neutral arbitrator. This avoids local party bias as foreign parties perceive such partiality and hence and impediment to fair and just resolution of the dispute. Both courts and arbitrators should not only be neutral, impartial and independent but deemed to be neutral as well.

Challenge to Arbitral award – Extent of Judicial Review

The Courts within the seat of arbitration have supervisory powers of judicial review and powers to review any challenge to the arbitral award. Although the national law of the seat and the signatory to the New York convention are discussed. It is much more important to understand on what grounds the arbitral award can be challenged and extent of judicial review of the seat based on statutory laws and analysing previous judicial verdicts on the same is important.

The important considerations as highlighted in major statutory laws are: violation of principle of natural justice by the arbitrator, evidence of corruption by the arbitrators, the agreement not valid under law of the land, and on grounds of public policy. The important aspect is the treatment of national courts under the garb of judicial review and analysing the trend. The Courts may have special public policy concerns, such as political or religious factors, and set aside the arbitral award at issue.

Convenience for the parties and Arbitrators

It is also important that issues such as availability of appropriate venues and a supportive arbitral infrastructure are also important to allow the arbitration to run smoothly. In this regard, another important factor to consider is the convenience for the parties and arbitrators during the process of arbitration. The seat of arbitration should be geographically convenient for most people who will be involved in the arbitration like parties, witnesses, arbitrators and lawyers. It is also important is that there are international flights and facilities such as appropriate hotels and rooms for conducting the arbitration hearings and also presence of good communication infrastructure. Another important aspect is the local language of the arbitral tribunal/arbitrators. It is important that both the parties and the arbitrators converse and fairly conduct proceedings in a common lingua franca. Other factors to consider include, the Location of records and evidence (both material and immovable), place of residence of the chairperson of the arbitral tribunal or the sole arbitrator, and place of previous court action.

Fixed by the Arbitral Tribunal

If the parties in the arbitration agreement do not make an express choice of the place of arbitration, the choice will have to be made for them, either by the express mention of the law of the State where the agreement was made, by the arbitral tribunal itself or by the arbitration institution. Hence, it is very important to unequivocally state the seat of arbitration leaving no scope for ambiguity. Generally, on express mention of the seat of arbitration, courts do not interfere, but in case of ambiguity, or for the sake of convenience the arbitral tribunal itself can decide of the seat of arbitration. The relevant UNCITRAL rules states that:

“Unless the parties have agreed upon the place where the arbitration is to be held, such place shall be determined by the arbitral tribunal, having regard to the circumstances of the arbitration[4]”

Cost of Arbitration

Another important aspect that is necessary to consider before deciding the seat of arbitration is the cost of arbitration. The cost of the arbitration can be divided into two main categories:

1. The ‘arbitration costs’ which include the arbitrators fees and expenses and the administrative charges of any arbitral institution, as well as charges for any other assistance required by the arbitral tribunal; and
2. The ‘party costs’, which include legal costs and other expenses incurred by a party for the arbitration, including the fees and expenses of outside counsel, party-appointed experts, witnesses, translators, etc.

From the above discussion, we see that, the main cost factor is usually the legal fees. A study conducted by the International Chamber of Commerce analysing the proportion between the two cost categories as discussed above in recent ICC final awards showed that the party costs accounted for more than 80 per cent of the total costs of the arbitration.[5]

The ‘party cost’ varies depending on the seat of arbitration and the local lawyers appointed to represent the interests of the parties. One should also consider, the arbitration costs and draw a balance between the cost of arbitration and the cost of dispute settled by judicial means. The party costs are decided by the national cost rules applicable at the place of arbitration is considered for legal fees and in line with market practice.

There are costs incurred due to witness testimony, expert witness and support systems costs. Another factor to be considered, is in case, the arbitrator is not the local arbitrator of the seat, then there are costs incurred for paying the arbitrator to travel from his place of residence to the seat.

Quality of Judiciary, Court System and Political Stability

In international commercial arbitration, quicker, reliable resolution of dispute is of great importance. Hence, the quality of judiciary, the court system and political stability becomes a very important factor in deciding the seat of arbitration. If it becomes necessary during arbitration proceedings to approach a court for assistance, it is necessary to analyse if that court be able to deal with the matter quickly, efficiently and predictably. The courts must be experienced in dealing with complex commercial matters in an independent and objective manner. Although States may have adopted the UNCITRAL model law, there is difference and one must distinguish between formal legislation and actual practice in real cases. That practice can be demonstrates only over time, and many States are in this transition period.

Another dimension to this point is the lack of Supportive infrastructure and experience of local courts in judicial assistance in cases where appointment of arbitrators and arbitral forum is difficult for the parties to finalize. Further political situation of a country also plays a role, for example choosing Hong Kong as a seat of arbitration in Asia is unadvisable because of concerns regarding neutrality and independence.

Choosing Arbitration organisation directly

It is favourable in many cases to select the seat of arbitration directly by naming it or indirectly delegating the choice to an arbitration organization. Each of these organizations has a different set of rules and provides a neutral forum and has set rules for governing the process of arbitration. The various such organisations include:

1. The International Court of Arbitration of the International Chamber of Commerce (ICC): The ICC, which is based in Paris, was established in 1923. It is regarded the best known international commercial arbitration institution.
2. The London Court of International Arbitration (LCIA): The LCIA, which is based in London, was established in 1892. It is Europe’s second leading international arbitration institution (after the ICC) and is very well known internationally. The LCIA has affiliated arbitral institutions in Dubai (DIFC-LCIA), India (LCIA India) and Mauritius (LCIA-MIAC).
3. The International Centre for Dispute Resolution (“ICDR”): The ICDR is a part of the American Arbitration Association (AAA), which was established in 1926, and is the best known arbitral institution in the US. The AAA administers a large number of domestic disputes through its network of US offices. The ICDR administers international arbitrations (pursuant to its International Arbitration Rules).

The rules of the ICC, LCIA and ICDR are all suitable for use around the world and for arbitrations conducted in various languages and under various governing laws. In each case, it is for the arbitrators to resolve the dispute, with the institutions simply administering the arbitrations. In this capacity, the ICC, LCIA and ICDR each receive and distribute the parties’ initial submissions, assist with the appointment of the tribunal (with or without party-nominations) and resolve any challenges that a party may make against an arbitrator.

The choice of which arbitration institution to choose can also depend on its rules. For example, the ICC procedure is more actively administered, involving two additional steps:

1. The preparation of Terms of Reference, a document which defines the scope of the arbitration by setting out the basic claims and defences, the relief sought and the issues to be addressed; and
2. The scrutiny of draft awards, especially as regards issues which might affect their enforceability, by the ICC Court before the final awards can be issued to the parties[6].

The value of these supervisory functions must be weighed up against the likely additional time and cost to be devoted to them. In contrast, the procedures under the LCIA and ICDR Rules are lightly administered, with the role of the LCIA and the ICDR in each case being primarily concerned with the appointment of (and challenges to) the tribunal. There is no formal requirement for Terms of Reference or the scrutiny of draft awards.

Requirement of experienced Arbitrators regarding specialise matters in a dispute

Disputes regarding specialised matters such as intellectual property with complex technology, many complex commercial transactions etc. require experienced and sophisticated arbitrators to handle the dispute. Many matters involve laws of more than one country; they are complex and counterintuitive and vary from country to country. The facts relevant to the dispute often involve scientific, technical data, and extensive accounts and calculations.

The advantage in arbitration over judicial intervention is that in arbitration it is possible to obtain arbitrators with expertise in a given subject matter. For example, in Intellectual Property dispute, it is possible to obtain arbitrators that is experienced both in intellectual property and if a particular technology is involved with it as well. Hence, choosing a seat of arbitration where there is availability of such specialized arbitrator is important. Further, choosing the arbitral institution based on the subject matter of dispute can be considered.

For example arbitration in World Intellectual Property Organisation. JAMS in USA, for example, is well-known for having retired judges to handle sophisticated disputes (among other things), and AAA is known for having excellent construction arbitrators to handle multi-faceted disputes (among other things). Also, if it is an international dispute involving a treaty, one can choose international organization, like ICC, CPR, or AAA[7].

CASE LAWS

In this section we will discuss two cases that illustrate the importance of the seat of arbitration.

Gouvernement du Pakistan – Ministère des Affaires Religieuses v. Dallah Real Estate and Tourism Holding Company[8]

The Paris Court of Appeal, in this case, rejected an application by the Government of Pakistan to set aside ICC awards delivered in Paris, holding that the tribunal was correct in finding that it had jurisdiction over the Pakistani Government, despite not signing the arbitration agreement. The facts of the case is that: Dallah – a Saudi trading group had initially entered into a memorandum of understanding with the Pakistani Government in relation to the construction of housing for Pakistani Pilgrims visiting holy sites within Saudi Arabia. Following this, Dallah entered into a contract with the Awami Hajj Trust created by a Pakistani presidential Ordinance to move forward with the housing project. Said project never came to fruition and, following a change of government in Pakistan, the Trust ceased to exist as a legal entity. The contract contained an arbitration agreement, under which all disputes were to be referred to the ICC. On analysis, the Paris Court of Appeal took into account the surrounding context of the contract (including pre-contractual negotiations) and ruled the tribunal was correct. However, curiously in a similar case the UK Supreme Court ruled that the Tribunal does not have jurisdiction as it framed the issues notions of privity of contract and separate legal personality. Hence, this case illustrates how the selection of seat affects the outcome of the arbitration proceedings.

PT Garuda Indonesia v Birgen Air[9]

The Singapore Court of Appeal held that the seat of an arbitration does not change simply by virtue of the tribunal holding hearings or other meetings at a location other than the seat. The facts of the case are as follows: the parties’ arbitration agreement had expressly designated Indonesia as the seat of arbitration. It was subsequently decided as the result of political unrest in Indonesia the hearings should be conducted in Singapore as the situation was not right in Indonesia. The court held that Indonesia had remained the seat of arbitration throughout the arbitration, as a result, the Singapore courts did not have jurisdiction to entertain an application to have the award set aside. In the words of the court,

“There is a distinction between ‘place of arbitration’ and the place where the arbitral tribunal carries on hearing witnesses, experts or the parties, namely, the ‘venue of hearing’. The place of arbitration is a matter to be agreed by the parties. Where they have so agreed, the place of arbitration does not change even though the tribunal may meet to hear witnesses or do any other things in relation to the arbitration at a location other than the place of arbitration.”

CONCLUSION

The consensual nature of arbitration is extremely useful for parties who during agreement can mould the arbitration clause based on various requirements in consideration of various factors. As highlighted, the parties have the freedom to decide on law governing the arbitration agreement. But, the parties must be circumspect and care must be taken to select the seat of arbitration carefully. Each of the factors discussed above must be weighed carefully during negotiations before signing of the arbitration agreement. Then, the parties can truly utilize the convenience that arbitration as an alternate dispute resolution provides.

References

[1] http://www.ciarb.org/dispute-appointment-service/arbitration/what-is-arbitration, last accessed on 25^th June 2017.

[2] Russell on Arbitration 2003, para 2-209

[3]https://singaporeinternationalarbitration.com/2012/06/26/the-laws-governing-an-arbitration/, last accessed on 27^th June 2017.

[4] UNCITRAL Arbitration Rules, Art. 16(1)

[5] See the 2015 ICC Report on Decisions on Costs, para. 2

[6]https://www.lw.com/thoughtleadership/guide-to-international-arbitration-2014, last accessed on 26^th June 2017.

[7]http://www.insidecounsel.com/2016/02/18/arbitration-101-choosing-the-right-forum-for-dispu, last accessed on 26^th June 2017.

[8] Case No. 09/28533, dated 17^th February 2011.

[9] [2002] 5 LRC 560.

The post Ten factors to consider before deciding seat of Arbitration appeared first on iPleaders.

In this article, Siddharth Kottiath pursuing M.A, in Business Law from NUJS, Kolkata discusses Real Estate (Regulation and Development) General Rules, 2016.

Shelter, food and clothing are one of the basic needs of human society. The need of shelter has been prevalent since the evolution of mankind who previously used to take shelter in caves and as society evolved different types of shelter were explored. The right of housing is one of the most basic rights which every human being should be administered with.

Even in the age of supercomputers, people die a painful death because of lack of infrastructure for housing, people are forced to sleep on the streets, die of cold, hygiene and other road accidents. It is one of the most important human rights which should be given utmost importance by almost every government.

“The first important document that codified the right to adequate housing is the Universal Declaration of Human Rights (UDHR) adopted by the UN General Assembly in 1948. Article 25 (1) states Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.“

Owning a house has its own sets of freedom some being, the security from being evicted, a property which has a face as well as a resaleable value, right to privacy and well being. Conflicts like war and riots have played a major role in displacing millions of human beings from their abode since decades. Inspite of having a place to stay people are forced to leave their houses in war stricken places and have to lead a dreadful life as refugees. Immigration also changes the entire demographics of a host country.

Natural disasters like the tsunami in India, also displaced a number of people in places like the Andaman and Nicobar island of Kamota, etc. The Indian government had taken initiatives in building shelters for the people who had been displaced during the natural calamity. Displacement of any kind needs to be counter effected by fulfilling the conditions of placing the displaced people properly. It is also pertinent to note that such facilities of housing should be made available to all the strata of the society irrespective of any gender bar or any other hurdles of caste, creed and colour.

Regardless the cause of such action, this is a major cause of infringing the basic human right of peaceful settlement. Though there is no obligation on the Government of countries to provide access to such settlement to each and every citizen of the country, government are endeavouring in providing assistance to citizens to build their own houses. In India, the right to housing, though not discussed directly has found a source in Article 21 of the Indian Constitution. There are matter of concerns which should be exercised while displacing indigenous tribes from their natural habitat, if there are events of development and industrialisation in interest of the State.

There are many programmes in India which have cropped up for providing shelter to the needy, to name a few

• Bharat Nirman Programme
• National Urban Housing & Habitat Policy
• Jawaharlal Nehru National Urban Renewal Mission

Human settlements have evolved down the years. Previously families used to stay in joint families in one house, with the advent of nuclear families people have started to move into private flats or individual houses. The changing economic scenario has also added to the scope of investments in the form of real estate. Real estate can be defined as the land and anything which is permanently attached to it.

In India, the real estate sector has been into a roller coaster ride with its share of ups and down. This sector witnessed growth with the liberalization of the economy. The rising economic changes have led to such growth.

The real estate sector can be broadly divided into the following sections – retail, hospitality, housing and commercial. It is one of the most influential sector responsible in propelling the economic capabilities of the country. The housing arena has witnessed a steady growth while the commercial sectors have seen additional growth in terms of office spaces, wherein many Multinational companies and other domestic companies have been spreading their wings in the growing Indian economy. Banking policies have also played a major role in boosting the sector, lower interest in home loans, have aided in the growth of the demand of first time home buyers.

Inspite of the boom, there have been instances wherein the consumers of this sector have faced harrowing experiences. One of the most articulate problems faced by the consumer is the delay in projects, these can be due to manifold issues like land clearance, financing issues and problems created by the builders.

Though the builders are not always on fault, they have their own set of problems which they have to regulate. Red tapism in the government, lack of approvals from the government departments, land acquisition problems, high rate of taxation, labour problems, material costs, syndicate problems, environmental issues are amongst a few. The main reason for such problems is that this industry was mostly unregulated and it was uncharted territory on which initiatives and actions were being taken.

This sector has the potential to attract a lot of Foreign Direct Investments, but there needs to be a symbiotic relation with the investors and the government. Transparency in the process, improved financing can lead to build low cost projects for the masses.

To counter these problems, The Real Estate (Regulation and Development) Bill, 2013 was introduced principally to regulate the real estate sector so as to protect the interests of the consumers and buyers and to provide a forum for grievance redressal. The Real Estate (Regulation and Development) Act, 2016, has been passed with the intent to bring transparency and safety in the market for consumers of residential and commercial projects by introducing a sectoral regulatory mechanism. It received the assent of the President on 25th March, 2016.

The Act has been notified and sections relating to Definition, Constitution and Powers of RERA, Constitution of Central Advisory Council, Appellate Authority, Appointment of Judicial Officers for calculating Compensation, Finance Accounts & Audit of RERA and other Miscellaneous Provisions relating to the formation of the Authority have come into force from 1st May, 2016 and all the States have been advised to form Rules under the Act by 31st October 2016 and establish Authorities by 30th April, 2017.

The Act contains several provisions to address the lacunae in the real estate market, essentially by way of establishing a disclosure framework and setting strict liabilities for promoter irregularities. Under the new RERA Act, Projects cannot be advertised, marketed, booked or sold in any form by any Promoter prior to registration and obtaining the necessary construction approvals. The Act provides that it is applicable to all ongoing projects where the completion certificate has not yet been obtained, thereby making it is partly retrospective in effect. The promoter of such projects shall make an application to the Authority for registration of the project within a period of three months from the date of establishment of the Authority, as per the relevant provisions of the Act.

The Authority may, direct the promoter of projects which are developed beyond the planning area but with the requisite permission of the local authority, to register such project with the Authority.

The Act requires mandatory registration of real estate projects with the RERA where the total area of land proposed to be developed exceeds 500 sq. mts. or where more than eight apartments (inclusive of all phases) are proposed to be developed. However, the Appropriate government may reduce this threshold limit.

The registration is not required for projects which has already received completion certificate prior to the commencement of the Act. Also, it is not obligatory for the purpose of renovation or repair or re-development which does not involve marketing, advertising, selling, or new allotment of any apartment, plot or building.

The promoter shall file an application for registration of the project in such form and manner as may be prescribed. Documents to be enclosed with the application are – a brief detail of the Promoter’s enterprise, a brief detail of the projects launched by him in the past five years, whether already completed or being developed, including current status of the said projects, any delay in completion, details of cases pending, details of type of land and payments pending, authenticated copy of the approvals and commencement certificate from the competent authorities as may be applicable for the projects mentioned hereinabove.

The plan of development works to be carried out in the proposed project and the proposed facilities to be provided thereof including fire fighting facilities, drinking facilities, emergency evacuation services, use of renewable energy, the location details of the project, with clear demarcation, Proforma of the allotment letter, agreement for sale and conveyance deed proposed to be signed with the allottees, Publicly accessible disclosures of the project and promoter details, along with a self-declared timeline within which the promoter is required to complete the project is compulsory. Promoters must park 70% of all project receivables in a separate account. Drawdown from such account is permitted for land and construction costs only, in proportion to the percentage of completion of project (as certified by an architect, an engineer and a CA).

A promoter shall not accept a sum more than ten per cent of the cost of the apartment as an advance payment or an application fee, from a person without first entering into a written agreement for sale with such person and register the said agreement for sale, under any law for the time being in force.

“The promoter shall transfer or assign his majority rights and liabilities in respect of a real estate project to a third party after obtaining prior written consent from RERA and two-third allottees, except the promoter. Provided that such transfer or assignment shall not affect the allotment or sale of the apartments, in the real estate project made by the erstwhile promoter.

On the transfer or assignment being permitted by the allottees and the Authority the intending promoter shall be required to independently comply with all the pending obligations under the provisions of the Act and the pending obligations as per the agreement for sale entered into by the erstwhile promoter with the allottees.”  However, this shall not result in extension of time to the intending promoter to complete the real estate.

The promoter shall execute a registered conveyance deed in favour of the allottee and hand over the physical possession of the apartment to the allottees and the common areas to the association of the allottees or the competent authority, as the case may be, in a real estate project, and the other title documents pertaining thereto within specified period as per sanctioned plans as provided under the local laws. Provided that, in the absence of any local law, it shall be carried out by the promoter within three months from date of issue of occupancy certificate.

It shall be the responsibility of the promoter to handover the necessary documents and plans, including common areas, to the association of the allottees or the competent authority, as the case may be, as per the local laws. Provided that, in the absence of any local law, it shall be done within thirty days after obtaining the occupancy certificate.

In case the Promoter fails to complete or is unable to give possession in accordance of the terms or due to discontinuance of his business, he shall be liable to return the amount received from the allottee, along with interest. The Promoter shall compensate the allottees in case of loss caused to him due to defective title of the land. (Such claim shall not be barred by limitation). The promoter shall be liable to compensate the allottees in case of any other failure to discharge his duties in the manner as provided under the Act.

Apart from the RERA Act, the Real Estate (Regulation and Development) (General) rules have been enacted for the five Union Territories. Some of the highlights of such rules are the following

Regarding ongoing projects

In respect of the ongoing projects that have not received completion certificate in specified time,  developers will have to make public the original sanctioned plans with specifications and changes made later, total amount collected from allottees, money used, original timeline for completion and the time period within which the developer undertakes to complete the project, duly certified by an Engineer/Architect/practicing Chartered Accountant. Promoter shall also declare size of the apartment based on carpet area even if it was earlier sold on any other basis.

The developer, within three months of applying for registration of a project with the Real Estate Regulatory Authority shall deposit in a separate bank account, 70% of the amount collected and unused for ensuring completion of ongoing projects.

Registration of projects

For registration of projects with the authorities, developers will be required to submit authenticated copy of PAN Card, annual report comprising audited profit and loss account, balance sheet, cash flow statement and auditors report of the promoter for the immediate three preceding years, authenticated copy of legal title deed, copy of collaboration agreement if the promoter is not the owner of the plot. Promoter also has to declare information regarding the number of open and closed parking areas in the project.

Promoter shall upload on the webpage of the project, within 15 days of expiry of each quarter information regarding number and type of apartments or plots, garages booked, status of the project with photographs floor-wise, status of construction of internal infrastructure and common areas with photos, status of approvals received and expected date of receipt, modifications in sanctioned plans and specifications approved by the competent authority.

Registration fees

To incentivize registration of projects and Real Estate Agents with Regulatory Authorities, fee for the same has been reduced by half based on suggestions from promoters for reduction of fee. For registration of projects, the fee has been reduced to Rs.5 per sq.mt for up to 1,000 sq.mt area and Rs.10 per sq.mt beyond this limit subject to a maximum of Rs.5.00 lakh per project. For commercial and mixed development projects, it will be Rs.10 and Rs.15 per sq.mt subject to a maximum of Rs.7.00 lakh. For commercial projects, it will be Rs.20 and Rs.25 subject to a cap of Rs.10 lakh per project. For plotted development, it is Rs.5 per sq.mt with a ceiling of Rs.2.00 lakhs.

A cap has been placed on the total amount of registration fee based on the suggestion of real estate bodies.

Fee for renewing registration of projects with the Regulatory Authorities would be half of the registration fees.

Interest to be paid in case of delay

Developers will be required to refund or pay compensation to the allottees with an Interest Rate of SBI’s highest Marginal Cost of Lending Rate plus 2%.

Fee for appeals and complaints

For every appeal to be made to the Real Estate Appellate Tribunal, fee proposed is Rs.5,000. For every complaint to be made to Regulatory Authorities and Adjudicating Officers, fee proposed is Rs.1,000.

Compounding of punishment

Rules provide for compounding of punishment with imprisonment for violation of the orders of Real Estate Appellate Tribunal against payment of 10% of project cost in case of developers and 10% of the cost of property purchased in case of allottees and agents. Compliance with reasons for punishment shall comply within 30 days of compounding.

Under the Rules, Adjudicating Officers, Real Estate Authorities and Appellate Tribunals shall dispose of complaints within 60 days.”

The interesting thing which lies is how effective RERA and the rules would be in ironing out the lacunae in this sector. The watertight compartments issued by the regulator would be a difficult situation, from which the promoters and builders, would find difficult in wriggling out of the situation. Further, the demonetisation drive might have affected the builders and promoters, causing a dent in their finances. Previously, it was almost a rule amongst the promoters and developers that a major chunk of the price of the real estate property would be dealt in black money and the balance in white. A clarity is expected in this after the new rules have stepped in.

Further, it could also have a negative impact, as a lot of fund has to be kept in escrow accounts. The end result would be that previously the price of flats and other real estate properties which were negotiable earlier, would have to be sold at a premium or at fixed rates, because there would not be much circulation of money, increase in cost of labour and other variables will also add up to the price increase. It is worthwhile to think, that soon the builders and promoters would take the advantage of using more substandard raw materials, in order to reduce the cost of construction and further increase their profit margin. An additional legislation or a set of standards should be laid in the forthcoming period or retrospective effect, on the use of materials to be used in such real estate projects, so that the consumers can expect the same thing which they are paying for. While, this legislation is more towards the interest of the consumers, the builders can also protect themselves from errant consumers, who hold back the legitimate dues for no reason at all and also customers who make untimely payments.

On the other hand, it would be helpful for the consumers. Though they will have to cough up additional money, it would really aid them in case the promoters or the developers try to cheat them. They would pay for the exact carpet area, instead of getting into the complexities of super built area, which used to be deceitful and inaccurate in nature. Instead of going from pillar to post in case of deceit, default by such promoters and builders resulting in entangling themselves under various others acts, they now have a one stop redressal forum. This was really needed, as this sector was never properly regulated as it was mostly a unorganised one.

The sense of commitment should be infused totally into business practices so that the margin of error and quality of property should be at par, with the strict quality controls applicable in international projects. Further, it would also reduce the number of middle men in the arena. If there is clarity between the end consumer and the developers or the promoters there would no need of middlemen and brokers. It is a matter of time to understand, that how RERA would benefit the sector.

The post Real Estate (Regulation and Development) General Rules, 2016 appeared first on iPleaders.

In this article, Shant Kumar Kurbur pursuing M.A, in Business Law from NUJS, Kolkata discusses all you need to know about Apprentices Act 1961.

Introduction

The National Apprenticeship Act was launched in the year 1959 at first on voluntary cause. The Apprentices Act 1961 was presented in the Parliament during 1961 and came into effect from 1st January 1963. The act was eventually amended in 1973 and 1986. In the starting, the Act was meant for the training of trade apprentices.

The onus of administering the Apprentices Act, 1961 in relation to Trade Apprentices under Central Government and Departments lies with the Central Apprenticeship Adviser/Director of Apprenticeship Training in the DGE&T, Ministry of Labour and Employment with the help of six Regional Directorates of Apprenticeship Training (RDATs).

Primary Objective of the Act

The main objective of the Apprentices Act, 1961 is to meet the rising need for proficient craftsman. Giving experimental training to the people who’re specialized in their crafts is the primary aim of the Apprentice Act. Candidates holding Diploma and Engineering Graduates can likewise benefit from this plan. As per the announcement of Central Government any industry or any area the provisions of the act are applicable. It is assumed by means of the Government, to use, the infrastructure, space and provisions to be had for instruction of apprentices and to ensure that their preparation is concurring with a ponder program. With the progressive advancement of industries, different question initiated to manifest between the businesses and the students and to recoup from them. This Act should control and screen the preparation of students in exchanges and issues related with them.

The act envisages clarifying the connection between the various employers and apprentices. The apprentices aren’t dealt with as employees. This Act endeavours to make provisions for the health, protection, welfare and many others for the apprentices. It additionally includes provisions for settling disputes bobbing up out of the agreement between the employers and the apprentices.

Scheme of the Act

There are 38 Sections in generally and Schedule. This Schedule is in regards to the adjustments in the Workmen’s Compensation Act, 1923 with reference to its application to students under the Apprentices Act, 1961.

Who are Apprentices

An apprentice is someone who takes training in some company to master the competencies and crafts of a specific craft. The Apprenticeship Act explains apprentices to be the ones who receive apprenticeship or practical training under an apprenticeship scheme for a specified duration. The main requisites for a person to receive an apprentice training are that he/she should have attained an age of 14 years and for the trades where safety issues are concerned to the apprentice should have attained 18 years. Other than the above-prescribed qualification, extra qualifications may be prescribed for special trades and special categories of apprentices.

The phrases and conditions of an apprenticeship are mandated with the aid of an apprenticeship agreement. The agreement is entered into among a business enterprise and an apprentice. In case, an apprentice hired is a minor, his/her mother or father could enter right into a settlement with the company.

The terms and conditions which are mentioned in the agreement/contract should be mutually agreed to with the help of the parties for settlement. In any case, those phrases and conditions can’t be detracted under this Act or be varying with the provisions of this Act.

Applicability

As per the Apprentice Act 1961, for the industries and trades which were informed by the Central Government in the Official Gazette, the act is applicable. The date of application may follow those particular circulars. Almost all the industries fall under the purview of the act. The Apprentice Act moreover may not be applicable to the special Apprenticeship programs of the government unless and until informed by the Central Government in the Official Gazette. For clearing the doubts, this act applies to those categories of apprenticeship where the practical education is necessary to the trade. ‘Internships’ are not covered under this act.

What is the Duration of Apprenticeship Training

The duration of apprenticeship training, which shall be clearly mentioned in the agreement of apprenticeship, will be as follows:-

• The apprentices related to any trade who, having gone through institutional schooling in a school or any institution-affiliated by the National Council, have cleared the trade exam or any examinations conducted that particular Council or by means of any institute affiliated with that particular Council, the period of apprenticeship training will be which include can be determined via that Council or via an group recognized through that Council.
• In an event any apprentices who have received training through any institute or school or college or other group affiliated to or recognized by using a Board or State Council of Technical Education or every other authority which the Central Government may via notification in the Official Gazette specify in this behalf, have cleared  the trade exams or tests organized by that Board or State Council or authority, the period of apprenticeship education shall be along with can be prescribed.
• In an event of other apprentices, the length of apprenticeship training will be along with may be prescribed.
• The period/duration of the apprenticeship training shall be all inclusive and may be prescribed for graduate engineer trainee or technician apprentices or any vocational apprentices.
• Duration of the training period and the ratio of apprentices to skilled employees for distinctive trades have been prescribed in Apprenticeship Rules, 1991. Duration of Apprenticeship may be from six months to four years depending on the alternate, as prescribed in Rules. Period of training is decided via National Council for Education in Vocational Trades (hooked up through Government of India).

What are the Duties of an Apprentice

• An apprentice must master the selected trade with utmost attentiveness and awareness. He ought to strive exceptionally to qualify himself as a skilled person in the related trade for the period of apprenticeship.
• He has to attend all the practical and instructional sessions given by the employer or someone particular on his behalf on a normal basis.
• An apprentice must obey all lawful orders of the employer and other superiors in the organization.
• An apprentice should work for duration as specified by the employer which might be subject matter to the prescribed period of the training period.
• He should carry out all of the responsibilities which are mentioned in the apprenticeship agreement.
• The apprentice’s behaviour and the knowledge or skills will be assessed with the help of the person who set the guidelines and regulations that practice to corresponding employees in an establishment.

What are the Responsibilities of an Employer

• An employing company is obligated to deliver a duplicate of every apprenticeship agreement that he enters into within 30 days from the date of entering to the Apprenticeship marketing consultant. Once a portal internet site is made with the aid of the imperative government for this reason, then the business enterprise would possibly send the info of contracts within seven days from the date of entering.
• He shall reserve training locations for apprentices who belong to Scheduled Castes, Scheduled Tribes, and other backwards categories. The size of places reserved for these classes must as per the provisions prescribed by the government, keeping in mind the population of every category in the country.
• The apprentices ought to be furnished with sufficient training in lines with the provisions of the act and also by means of the terms of the apprenticeship agreement. For this purpose, an enterprise must make good enough preparations for the cause of providing practical schooling.
• Good enough Instructors should be appointed for the purpose of training if the employer is not in a position of training the apprentices himself. The team of workers so appointed ought to have prescribed qualifications for the purpose of training the apprentice practically and theoretically to ease the trade test of the apprentices.
• The organization might be liable to compensate for any non-public accidents that an apprentice may suffer during the duration of apprenticeship. The compensation should paid as per the provisions of the Workmen’s Act 1923 as applicable.
• The organisation is obligated to pay the prescribed minimum wages to every apprentice or the prescribed minimum wages
• The provisions of the Manufacturing Unit’s Act, 1948 and Mines Act, 1952 shall apply to apprentices running in factories and mines, respectively, insofar because the matters relating to fitness, safety and welfare of the apprentices is concerned.
• An employer cannot compel apprentice to work overtime until and unless he has a due permission from the concerned Apprenticeship Advisor, who shall not permit until he is contented that an apprentice should work time beyond the prescribed time in his own interest or public interest.
• An apprentice must be allowed by the organisation to take leaves or vacations weekly as per the company’s policy.

Contract with Apprentice

Apprentice appointed has to execute a contract of apprenticeship with the employer. The agreement must be registered with Apprenticeship Adviser. If an apprentice is minor, an agreement has to be signed via his father or mother.  Apprentice is eligible for a Casual leave of 12 days, Medical Leave of 15 days and other leaves of 10 days in 12 months.

Legal Role of Apprentices

• An apprentice is not a workman throughout the apprentice training program.  Statutory benefits like Bonus, PF, ESI Act, Gratuity, Industrial Disputes Act and so forth aren’t applicable to the apprentice trainee.
• However, provisions of Factories Act concerning fitness, safety and welfare are applicable to the trainee. Apprentice is also entitled to get compensation from the employer for any kind of injuries happens during the period of employment.
• An employer is not obliged to employ the apprentice after of completion of apprenticeship.

Settlement of Disputes

Any argument or dispute which could rise under the apprenticeship agreement shall be raised to the Apprenticeship Advisor for resolution.

If any party to the apprenticeship agreement isn’t pleased with the decision of the Apprenticeship Advisor, then it is can approach the Apprenticeship Council which shall employ a Committee for the purpose of listening to the plead of the parties for resolving the issue. The decision made by the council would be deemed as final.

Novation of the Contract of Apprenticeship

In case an enterprise with whom the contract of apprenticeship has been signed, is not able to keep its promise under the agreement and with Apprenticeship Advisor’s consent it is accepted by the apprentice, company and apprentice’s guardian and any other company that the candidate shall be appointed as apprentice under the company for the portion of apprenticeship which is not expired. The agreement after registration with Apprenticeship Advisor, shall be considered as the contract apprenticeship among the apprentice or his/her guardian and any other company, and at the time of registration, the agreement with the previous employer shall be dissolved or terminated and no responsibility under the agreement or contract shall be applicable at the instance of any party to the agreement or contract opposite the other party thereto.

Conducting the Test and Grant of Certificate and Conclusion of Training

After successful completion of the apprenticeship training, every apprentice shall appear for an exam held by the National Council to evaluate his/her capabilities in related trade in which he/she has taken an apprenticeship training.

1. As per the sub-section (1), every apprentice who clears the apprentice test shall be awarded a certificate of skillfulness in the trade by the National Council.
2. The employer will evaluate the development of every Graduate or Technician apprentice, or Vocational apprentice periodically.
3. After successful completion of the apprenticeship training, each graduate or technician apprentice or Vocational Apprentice will be awarded a proficiency certificate by the regional board.

On successful completion of the apprenticeship training, the apprentice shall serve the employer despite whatever mentioned in sub-section (1), where there is a clause in the contract/ agreement. The employer is responsible for offering a suitable job to the apprentice and the apprentice is bound to work for the employer in that ability for that duration and on the remuneration which is specified in the agreement/contract. The Apprenticeship Advisor should find the remuneration and duration reasonable; If not reasonable he may revise the duration and remuneration. The revised duration and remuneration shall be assumed to be the duration or remuneration accepted by both the employer and the apprentice.

What is the Commencement Date of Apprenticeship Training

The date on which the apprenticeship contract/agreement is executed is considered as the date of start of apprenticeship training program.

Registration

• The employer should send a copy of the apprenticeship contract to the apprenticeship advisor for registration within three months from the date of its execution.
• The employer should get the contract registered by the concerned Apprenticeship Advisor. The apprenticeship advisor approves the contract once satisfied that the described apprentice candidate is well qualified as per the act.

Termination of Contract

On completion of the duration of the apprenticeship training, the contract shall be terminated. The employer or The Apprentice can send the application for the termination of the contact to the concerned Apprenticeship Advisor and afterwards, can send a copy of the application to the other party.

On completion of the period of apprenticeship training, the contract/agreement of apprenticeship training shall terminate. Either party can apply for the termination of the contract to the concerned Apprenticeship Adviser and thereafter send a copy of the same to the other party. The Apprentice Advisor once satisfied that both employer and apprentice have failed to abide by the terms and conditions of the contract and it is desired by both the parties to terminate the contract, will register the same. Nevertheless, the employer shall pay the stipulated amount of compensation to the apprentice if the employer breaches the contract. In case the contract is the apprentice breaches the contract, he or his guardian shall refund the cost incurred on the training to the employer.

Common Misuses of Apprentice Act

• Some employers are engaging the apprentices who are not qualified enough for hiring and also failing to execute the terms and conditions of a contract/agreement of apprenticeship or breach the provisions of the Act regarding the number of apprentices which he is supposed to hire as per the provisions of the act.
• The Employer is supposed to make appropriate arrangements in his workshop for offering the practical training to the apprentice in compliance with the apprentice act. Most of the employers do not adhere to it. They do not obtain permission from central and state Apprenticeship Advisor.
• Sometimes apprentice is not allowed by the employer to learn the work related to their trade, which is mandatory as per the Section 10 of Apprentice Act, 1961. The employers may not treat the time spent by the apprentice in attending such kind of workshops as part of their paid period of work.
• Most of the employers are not paying the stipend to the apprentice as per the Rule 11 of the Apprenticeship Rules, 1991.
• The employers are violating the provisions of the act and are not paying the stipend for the month before the 10th day of the following month.
• If an apprentice takes a casual leave or medical leave, some of the employers are deducting from the stipend, which is against the act.
• Some companies are engaging the apprentices to work in night shifts between 10 p.m. to 6 a.m. without the permission of the Apprenticeship Adviser.
• In some cases, the total number of hours per week is more than the prescribed hours i.e. 42 to 48 hours.
• The employer may not allow the apprentices to take any leaves.
• The employers are not allowing the apprentice any holidays which are followed in the establishment.
• During apprenticeship training, if any apprentice meets with any accident or personal injury, the employer is responsible for paying the compensation to the apprentice as per the provisions of the Workmen’s Compensation Act.
• An employer may not be concerned about health, safety and welfare of an apprentice as per the provisions of the Factories Act.
• The employer may appoint an apprentice on any work which is not related or connected with the training of the apprentice.
• The employer may not extend his cooperation to the concerned authority for visiting, inspecting, examining or inquiring.
• The employer may pay to an apprentice on hourly work rate basis, which is in the provision of the act.
• The employer may not encourage an apprentice to participate in any schemes like output bonus or incentive schemes.
• The employer may not allow the Central Apprenticeship Advisor to enter the organization to check whether the training rendered to the apprentices is an approved program.
• Some employers are employing apprentices who are untrained and not taken any training in any institute or school which is recognised or affiliated by the National Council or state council or any recognised board.
• As per Section 3(A), employers aren’t reserving a training site for SC and ST apprentices for every assigned trade, training.

Amendment to the Apprentices Act – Significant Changes

• To make sure that the Apprentice Act is implemented effectively, some changes were also made by the Apprentices (Amendment) Act, 2014 and it came into effect on 22 December 2014.
• Below given are some of the main modifications which are brought about by the Amendment.
• To include agency workers and contractual workers the definition of ‘worker’ has been widened. That is applicable because the number of employees in a status quo is one of the constituents which might be considered even as determining the number of apprentices to be appointed within the company.
• The amendment to the apprentice Act has paved the way for the transformation of conventional methods of records to electronic records and information systems by launching a portal. The portal would allow certain activities like registering the apprenticeship contract, maintenance of records and filing the returns etc., which can be done online now.

• Due to the amendment in the apprentice act, there is a change in the procedure of checking the strength of apprentices to be employed.
• If anyone violates the Apprentice Act imprisonment is no more a penalty. Following the amendment, if anyone is not abiding the provisions of the Act payment of a fine is the only punishment.
• The main objective behind these changes seems to make sure that employers employ more and more apprentices, and to encourage the organizations abide by the provisions of the Apprentices Act.

Why Should Employers Encourage Apprenticeship

By participating in apprenticeship schemes the organization or employer are getting skilled and trained employees, which serves as an investment in coming times. Employer’s participation in apprenticeship programs aids the organization in attracting top talent. The employer can hire competent and well-qualified employees, who are capable enough of progressing to more responsible and challenging positions. By participating in apprenticeship programs the employer can make sure that the training standards are met and are revamped. The cost incurred on training is also minimized and employee turnover also lessened.

Conclusion

The Apprenticeship Act helps in settlement of disputes between the employer and apprentice and the Apprenticeship Advisor is the judging authority. They should make an appeal before the committee formed by the council. The employer will be penalised if he is not abiding with the provision of the act. To protect the rights of the employer and safeguard the rights of apprentice the Apprentice Act, 1961 can be treated as an extensive law. The Apprentice act can be executed to safeguard the rights of the apprentice and succeed over the problems faced by the apprentice throughout the training period.

References

• www.dget.nic.in
• itigurgaon.co.in
• http://mhrd.gov.in/sites/upload_files/mhrd/files/upload_document/ApprenticeAct1961.
• http://www.prsindia.org
• https://www.slideshare.net/sushmitabelekar3/the-apprentices-act-1961
• pdfwww.talimrojgar.gujarat.gov.in
• http://www.indiacode.nic.in/acts2014/29_of_2014.pdf
• http://www.apprenticeship.gov.in/
• http://lawyerslaw.org/the-apprentice-act-1961/
• http://www.mottaassociates.com/apprentices-act
• http://www.yourarticlelibrary.com/business-management/what-was-the-primary-objective-of-apprentice-act-1961/257

The post All you need to know about Apprentices Act 1961 appeared first on iPleaders.

In this article, Ashwini Gehlot of Institute of Law, Nirma University discusses Lifting of The Corporate Veil.

Introduction

Incorporation of an organization by registration was presented in 1844 and the precept of limited liability of an organization followed in 1855. In this manner in 1897 in Salomon v. Salomon and Company, the House of Lords influenced these establishments and solidified into English law the twin ideas of limited liability and corporate entity. All things considered, the pinnacle Court set out the rule that an organization is a distinct legitimate person altogether not the same as the members of that organization. This guideline is alluded to as the ‘veil of incorporation’.

The main preferred standpoint of incorporation from which all others follow is the separate entity of the organization. As a general rule, be that as it may, the matter of the legitimate person is constantly carried on by, and for the advantage of, a few people. In a definitive investigation, some individuals are the real beneficiaries of the corporate preferences, “for while, by the fiction of law, an enterprise is an unmistakable distinct entity, yet in all actuality, it is a relationship of people who are in certainty the beneficial proprietors of all the corporate property.

“And what the Salomon case decided is that ‘in questions of property and limit, of acts done and rights gained or, liabilities expected in this manner… the personalities of the natural persons who are the organizations’ corporators are to be overlooked”.

This hypothesis of corporate, entity is, in fact, the essential guideline on which the entire law of corporation is based. The cases are not few in which the Courts have effectively opposed the compulsion to get through the corporate shroud.

However, the hypothesis can’t be pushed as far as possible. “There are circumstances where the Court will lift the veil of incorporation keeping in mind the end goal to analyze the “realities” which lay behind. Now and again this is explicitly approved by statute… and sometimes the Court will lift its own particular volition”.

Meaning of lifting or piercing of the Corporate Veil

The human resourcefulness, however, began utilizing the veil of corporate personality explicitly as a shroud for misrepresentation or despicable direct. In this way, it ended up noticeably important for the Courts to get through or lift the corporate veil and take a gander at the people behind the organization who are the real beneficiaries of the corporate fiction.

The lifting of the corporate veil implies neglecting the corporate personality and looking for the genuine individual who is in the control of the organization. At the end of the day, where a false and deceptive utilize is made of the legitimate entity, the people concerned won’t be permitted to take shield behind the corporate personality. In this respects, the court will get through the corporate shell and apply the guideline of what is known as “lifting or piercing the corporate veil.” And while by the fiction of law an organization is an unmistakable element, yet truly it is an association of people who are in reality the beneficial proprietors of all the corporate property. In United States V. Milwaukee Refrigerator Co., the position was summed up as follows:

“An organization will be looked upon as a lawful entity as a general rule…… however when the idea of the legitimate element is utilized to vanquish public convenience, defend crime or protect fraud, justify wrong, the law will view the enterprise as a relationship of people.”

In Littlewoods Mail Order Stores Ltd V. Inland Revenue Commrs, it was observed that:

“The regulation set down in Salomon v. Salomon and Salomon Co.Ltd must deliberately be observed. It has frequently should cast a veil over the personality of a limited liability organization through which the Courts can’t see. In any case, that is not valid. The Courts can and generally it does draw aside the veil. They can and often do, pull off the cover. They hope to perceive what truly lies behind”.

Judicial provisions or grounds for lifting The Corporate Veil

Fraud Or Improper Conduct

The Courts have been more than arranged to pierce the corporate veil when it feels that fraud is or could be executed behind the veil. The Courts won’t enable the Salomon standard to be utilized as an engine of fraud. The two great instances of the fraud exception are Gilford Motor Company Ltd v. Horne and Jones v. Lipman. In the main case, Mr. Horne was an ex-worker of The Gilford engine organization and his business contract gave that he couldn’t solicit the clients of the organization. With a specific end goal to crush this, he incorporated a limited organization in his better half’s name and solicited the clients of the organization. The organization brought an action against him. The Court of appeal was of the view that “the organization was shaped as a gadget, a stratagem, keeping in mind the end goal to veil the viable carrying on of the business of Mr. Horne” for this situation obviously the primary reason for incorporating the new organization was to execute fraud. Along these lines, the Court of appeal viewed it as a negligible sham to shroud his wrongdoings.

In the second instance of Jones v. Lipman, a man contracted to offer his territory and after that point altered his opinion with a specific end goal to keep away from an order of specific performance, he transferred his property to an organization. The court, in this case, held that the organization here was “a veil which (Mr. Lipman) holds before his face trying to maintain a strategic distance from acknowledgment by the eye of equity” Therefore the court ordered for specific performance both against Mr.Lipman and the organization.

For Benefit Of Revenue

“The Court has the ability to ignore corporate substance in the event that it is utilized for tax evasion or to dodge tax commitments. A reasonable outline is Dinshaw Maneckjee Petit, Re;

The assessee was a rich man enjoying gigantic profit and interest income. He formed four privately owned businesses and concurred with each to hold a piece of speculation as an operator for it. Income received was credited in the accounts of the organization however the organization gave back the sum to him as a pretended loan. Along these lines, he separated his income into four sections in an offer to lessen his tax liability.

It was held that “the organization was formed by the assessee absolutely and basically as a method for maintaining a strategic distance from super tax and the organization was just the assessee himself. It did no business, yet was made basically as a legitimate entity to apparently get the profits and interests and to hand them over to the assessee as pretended loans”.

Enemy Character

An organization may expect a foe character when people in true control of its affairs are occupants in an enemy nation. In such a case, the Court may analyze the character of people in genuine control of the organization, and announce the organization to be an adversary organization. In Daimler Co.Ltd V. Mainland Tire And Rubber Co.Ltd, An organization was incorporated in England with the end goal of selling in England, tires made in Germany by a German organization which held the majority of shares in the English organization. The holders of the rest of the shares, aside from one, and every one of the chiefs was Germans, living in Germany. Amid the First World War, the English organization commenced an action for the recuperation of a trade debt. Held, the organization was an outsider organization and the payment of debt to it would add up to trading with the foe, and in this manner, the organization was not permitted to continue with the activity.

Where The Company Is A Sham

The Courts additionally lift the veil where an organization is a minor cloak or sham (lie).

Company Avoiding Legal Obligations

Where the utilization of an incorporated organization is being made to maintain a strategic distance from legitimate commitments, the Court may dismiss the lawful personality of the organization and continue on the presumption as though no organization existed.

Single Economic Entity

Now and again on account of the meeting of endeavors, the Salomon principle may not be clung to and the Court may lift the veil to take a gander at the financial realities of the group itself. On account of D.H.N.food items Ltd. V. Tower Hamlets, it has been said that the Courts may neglect Salomon’s case at whatever point it is just and impartial to do so. In the previously mentioned case, the Court of claim suspected that the present case was one which was appropriate for lifting the corporate veil. Here the three auxiliary organizations were dealt with as a part of the same financial entity or group and were qualified to pay compensation.

Agency Or Trust

Where an organization is going about as agent for its investor, the investors will be obligated for the acts of the organization. It is an issue of facts for each situation whether the organization is going about as an agent for its investors. There might be an Express consent to this impact or an agreement might be suggested from the conditions of every specific case. In the case of F.G.Films ltd, An American organization financed the creation of a film in India in the name of a British organization. The leader of the American organization held 90% of the capital of the British organization. The Board of exchange of Great Britain declined to register the film as a British film. Held, the decision was substantial in perspective of the way that British organization acted only as the nominee of the American Company.

Avoidance Of Welfare Legislation

Avoidance of welfare enactment is as normal as avoidance of tax collection and the approach of the Courts in considering issues emerging out of such evasion is, for the most part, the same as avoidance of tax assessment. It is the obligation of the Courts for each situation where ingenuity is used to maintain a strategic distance from welfare enactment to get behind the smoke screen and find the genuine state of affairs.

Public Interest

The Courts may lift the veil to ensure open strategy and prevent exchanges in opposition to public policy. The Courts will depend on this ground while lifting the veil is the most “just” result, however, there is no particular justification for lifting the veil. Consequently, where there is a contention with public policy, the Courts disregard the form and consider the substance.

Statutory Provisions For Lifting The Corporate Veil

Reduction Of Number Of Members

Under Section 45 of The Indian Companies Act, 1956, if an organization carries on business for over a half year after the number of its members has been diminished to seven if there should arise an occurrence of a public company and two in the event of a privately owned business, each individual who knows this fact and is a member during the time that the organization so carries on business after the half year, becomes liable severally and jointly with the organization for the payment of debts contracted following a half year. It is just that part who stays after a half year who can be sued.

Fraudulent Trading

Under Section 542 of The Indian Companies Act, 1956, if any business of an organization is gone ahead with the aim to defraud creditors of the organization or creditors of some other individual or for any deceitful reason, who was intentionally a party to the carrying on of the business in that way is subject to imprisonment or fine or both. This applies regardless of whether the organization has been or is in course of being twisted up. This was upheld in Delhi Development Authority v. Captain Constructions Co. Ltd. (1997).

Misdescription Of The Company

Section 147 (4) of The Indian Companies Act, 1956, gives that if any officer of the organization or other individual acting on its benefit signs or approves/authorized to be signed by the organization any promissory note, bill of exchange, order or cheque for money or goods, endorsement in which the organization’s name is not specified in readable letters, he is obligated to fine and he is personally liable to the holder of the instrument unless the organization has effectively paid the sum.

Failure To Refund Application Money

As indicated by Section 69(5) of The Indian Companies Act, 1956, the executives of an organization are mutually and severally at risk to reimburse the application cash with premium if the organization neglects to refund the cash within 130 days of the date of issue of the prospectus.

Holding and Subsidiary Companies

In the eyes of law, the holding organization and its subsidiaries are separate legitimate entities.

However, in the accompanying two cases, the subsidiary may lose its different entity-

• Where toward the end of its monetary year, the organization has subsidiaries, it must lay before its members in meeting not only its own particular accounts but also append therewith yearly accounts of each of its auxiliaries along with copy of the board’s and examiner’s report and a statement of the holding organization’s interest in the subsidiary.
• The Court may, on the facts of a case, regard a subsidiary as simply a branch or division of one expensive endeavor claimed by the holding organization.

Conclusion

In this manner, it is bounteously certain that incorporation does not cut off individual liability consistently and in all conditions. “Honest enterprise, by methods for organizations, is permitted; however people, in general, are ensured against kitting and humbuggery”. The holiness of a different entity is maintained just in so far as the entity is consonant with the fundamental approaches which give it life.

Along these lines, the individuals who enjoy the advantages of the machinery of incorporation need to guarantee a capital structure satisfactory to the size of the enterprise. They should not pull back the corporate assets or blend their own individual accounts with those of the corporation. The Courts have now and again seized upon these realities as evidence to legitimize the burden of liability upon the investors.

The demonstration of piercing the corporate veil up to this point says a standout amongst the most disputable subjects in corporate law. There are categories, for example, agency, fraud, facade or sham, group enterprises, and unfairness, which are accepted to be the most curious premise under which the Law Courts would pierce the corporate veil. However, these categories are simple rules and in no way, means far from exhaustive.

References

1. Lawteacher.net. (n.d.). Lifting Of The Corporate Veil | Law Teacher. [online] Available at: https://www.lawteacher.net/free-law-essays/business-law/article-on-lifting-of-the-law-essays.php [Accessed 3 Aug. 2017].
2. Majithia, V. and Rajora, Y. (2015). Lifting Of Corporate Veil – Academike (ISSN: 2349-9796). [online] Academike (ISSN: 2349-9796). Available at: https://www.lawctopus.com/academike/corporate-veil-2/ [Accessed 3 Aug. 2017].

The post Lifting The Corporate Veil – Provisions under the Companies Act, 2013 appeared first on iPleaders.

In this article, Rajdeep Singh Rao pursuing M.A, in Business Law from NUJS, Kolkata discusses the Different Parts of the Indian Constitution and what do they deal with.

Introduction

“I feel that the constitution is workable, it is flexible and it is strong enough to hold the country together both in peacetime and in wartime. Indeed, if I may say so, if things go wrong under the new Constitution, the reason will not be that we had a bad Constitution. What we will have to say is that Man was vile.” (Dr. B. R. Ambedkar – Principal Architect of the Constitution of India)

“So far as the government is concerned, there is only one holy book, which is the Constitution of India.” (Narendra Modi – Prime Minister of India)

The former quote by Dr. Ambedkar after the Constitution was adopted by the Constituent Assembly on 26th November 1950. The longest written Constitution of any sovereign country of the world came into effect on 26th January, 1950 which is celebrated as the Republic Day every year. The latter quote, however, highlights the Constitution’s importance 67 years hence after it has been amended 101 times.

The Constitution is the supreme law of the land. It lays down the framework to make laws, govern the country, establish a structure of policies, procedures, powers and duties of the Union and State governments. It states out the Fundamental Rights, Directive Principles and Duties of citizens.  

It all began with the constituent assembly setting up a Drafting Committee on 29th August 1947 to frame the Indian Constitution. The Chairman of the Drafting Committee was Dr. B.R. Ambedkar along with six other members while the constitutional adviser was B. N. Rau. Inspired majorly by the British Constitution. However there was a lot of framework taken from other countries like the idea of preamble taken from United States which says:

“We, THE PEOPLE OF INDIA, having solemnly resolved to constitute India into a [SOVEREIGN, SOCIALIST, SECULAR, DEMOCRATIC, REPUBLIC] and to secure to all its citizens:

JUSTICE, social, economic and political;

LIBERTY, of thought, expression, belief, faith and worship;

EQUALITY, of status and of opportunity; and to promote among them all

FRATERNITY, assuring the dignity of the individual and the unity and integrity of the Nation;

IN OUR CONSTITUENT ASSEMBLY this twenty-sixth day of November, 1949, do HEREBY ADOPT, ENACT AND GIVE TO OURSELVES THIS CONSTITUTION.”

Originally the Constitution had 395 Articles, 8 Schedules and 22 Parts; currently it has 448 Articles, 12 Schedules and 25 Parts. The Constitution has been amended 101 times till date. The power of amending the Constitution and making laws lies with the Parliament. The most important amendment being the 42nd Amendment in 1976 which was so elaborate that it is called the Mini-Constitution.  The latest 101st Amendment being the Goods and Service Tax which is by far the biggest Tax reform after the Indian Independence.

The Twelve Schedules

1. First Schedule: Territorial Demarcations of States and Union territories.
2. Second Schedule: Provisions for the President, Governor and Senior Executives.
3. Third Schedule: Affirmations and Oaths.
4. Fourth Schedule: Allocation of Seats in the Rajya Sabha.
5. Fifth Schedule: Administration and Control of Scheduled Areas.
6. Sixth Schedule: Administration of Tribal areas of North-East.
7. Seventh Schedule: Union, State and Concurrent Lists.
8. Eighth Schedule: Languages (22).
9. Ninth Schedule: Laws immune to Judicial Review.
10. Tenth Schedule: Disqualification on grounds of Defection.
11. Eleventh Schedule: Provisions for Panchayats.
12. Twelfth Schedule: Provisions for Municipalities.

Parts of the Constitution

There are a total of 25 parts of the Indian Constitution from Part I to Part XXII explained individually below. Originally there were only 22 parts but more were added through amendments.

PART I

Article (1 to 4)

The Union and Its Territory

The first part of our Constitution deals with the States and Union territories of India. It starts by describing the country “India that is Bharat, Shall be a Union of States” and then frames the laws under which the States can be divided or merged with a simple Parliamentary Majority. The boundaries can be altered and the names of states can be changed. It also gives a clause in which territories can be annexed into the Union. Currently there are 28 States in India and 7 Union Territories.

This part itself is a part of the Basic structure of the Constitution and hence cannot be amended via article 368. However small amendments can be made like the Constitution (40th amendment) act, 1976, substituted a new Article 297 so as to vest in Union of India all lands, minerals, and other things of value underlying the ocean within the territorial waters or continental shelf or exclusive economic zone of India. Sikkim was admitted as a state in India on 26 April 1975. The latest effect of this law can be seen in Andhra Pradesh Reorganization Act, 2014 where Telangana was formed as a new state.

PART II

Article (5 to 11)

Citizenship

This Article decides whether a person can carry the Blue Indian passport or not. It has 7 articles which are given below:

5. Citizenship at the commencement of the Constitution.
6. Rights of Citizenship of certain persons who have migrated to India from Pakistan.
7. Rights of Citizenship of certain migrants to Pakistan.
8. Rights of Citizenship of certain persons of Indian origin residing outside India.
9. Persons voluntarily acquiring citizenship of a foreign State not to be citizens.
10. Continuance of the rights of citizenship.
11. Parliament to regulate the right of citizenship by law.

Using the power vested in Parliament by Article 11 of the Constitution of India, a comprehensive law “The Citizenship Act, 1955” was passed by the Parliament. This act has been amended from time to time to make space for provisions as and when required. Primarily India was a country which only allowed Single citizenship, but the Citizenship Bill 2003 allows people of Indian origin lining in 16 specific countries to acquire dual citizenship. Citizenship can also be acquired by the following ways:

(a) Person who was born in the territory of India or

(b) Either of whose parents was born in the territory of India or

(c) Who has been ordinarily resident in the territory of India for not less than five years.

PART III

Article (12 to 35)

Fundamental Rights

The most important part of the Constitution. The Fundamental Rights are the core rights citizens enjoy and all laws are made around them to either protect them directly or indirectly. Although this part has been prone to various contraventions, amendments and political debates, it was settled in the Kesavananda Bharti case that this Part is included in the “Basic Structure” of the Constitution and can be only amended positively and progressively. However these rights are subject to reasonable restrictions imposed by law e.g. Like some Rights can be taken away in case of Emergency.

14. Equality before Law

Everyone Including a Non Citizen is equal in the eyes of law. The State ensures equal protection of the laws within the territory of India.

15. Prohibition of Discrimination on grounds of Religion, Race, Caste, Sex or Place of Birth

The makers of our Constitution wanted an egalitarian society. Hence, they ensured that the State did not discriminate against any citizen on grounds only of religion, race, caste, sex, place of birth or any of them. But then nothing shall prevent the State from making any special provision for the advancement of any socially and educationally Backward Class of citizens or for the Scheduled Castes and the Scheduled Tribes as also given in Part 29 (2) holds good.

16. Equality of Opportunity in matters of Public Employment

Much similar to Article 15 which prohibits discrimination, in this case from public employment. Hence a person can very much be from Bihar and work in Mumbai.

17. Abolition of Untouchability

The social abuse of untouchability practiced in ancient India which was prevalent in many parts of the country was totally abolished under this article.

18. Abolition of Titles

Only Military or Academic distinctions can be held as Titles. No citizen of India shall accept any title from any foreign State either.

19. Right to Freedom of Speech

A much debated article especially with the ongoing clamor and barrage of news channels and the unregulated Social Media. We ought to remember that this freedom is not absolute and no one can stop the State from making any law which imposes reasonable restrictions on the exercise of the right conferred by the said sub-clause in the interests of the sovereignty and integrity of India, the security of the State, friendly relations with foreign States, public order, decency or morality, or in relation to contempt of court, defamation or incitement to an offence.

20.  Protection in Respect of Conviction for Offences

A person cannot be convicted of any offence except for violation of a law in force at the time of the commission of the Act, nor be prosecuted and punished for the same offence more than once. No person accused of any offence shall be compelled to be a witness against himself.

21. Protection of Life and Personal Liberty

The ambit of this law is the largest among all Fundamental Rights. It says that no person shall be deprived of his life or personal liberty except according to procedure established by law.  Article 21(A) added by the Right to Education 2005 makes it compulsory for the State to provide free and compulsory education to all children of the age of six to fourteen years.

22. Protection against Arrest and Detention in certain Cases

Every person who is arrested and detained in custody shall be produced before the nearest Magistrate within a period of twenty-four hours of such arrest. The writ of Habeas Corpus enumerates from this article.

23. Prohibition of Traffic in Human Beings and Forced Labor

24. Prohibition of Employment of Children in factories

Children below the age of fourteen years cannot be employed to work in any factory or mine or engaged in any other hazardous employment.

25. Right to Freedom of Religion

Freedom of conscience and free profession, practice and propagation of religion.

26. Freedom to Manage Religious Affairs

This right is Subject to public order, morality and health.

27. Freedom as to Payment of Taxes for Promotion of any Particular Religion

28. Freedom as to Attendance at Religious Instruction or Religious Worship in certain Educational Institutions.

29. Cultural and Educational Rights

Protection of interests of minorities. Any section of the citizens residing in the territory of India or any part thereof having a distinct language, script or culture of its own shall have the right to conserve the same. No citizen shall be denied admission into any educational institution maintained by the State or receiving aid out of State funds on grounds only of religion, race, caste, language or any of them.

30. Right of Minorities to establish and Administer Educational institutions.

31. Right of Compulsory Acquisition of Property was repealed by the Constitution (Forty-fourth Amendment) Act, 1978 and is now only a legal right in Article 300A.

32. Right to Constitutional Remedies

Also describes by Dr. Ambedkar as the “Heart & Soul of Indian Constitution” Remedies for enforcement of rights are conferred by this Part. A person can move to the High court or Supreme Court to ensure his rights. The Court shall have power to issue directions or orders or writs, including writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari, whichever may be appropriate, for the enforcement of any of the rights conferred by this Part.

33. Power of Parliament to modify the rights conferred by this Part in their application to Forces.

34.  Restriction on Rights conferred by this Part while Martial Law is in force in any area.

35. Legislation to give Effect to the Provisions of this Part.

PART IV

Article (36 to 51)

Directive Principles of State Policy

These are Directives to the Union and state governments to make laws for a more healthy, law abiding and idealistic society. These were inspired by the Irish Constitution. They promote general welfare of people but cannot be enforced by the means of Writs in the Courts of law.

The directives are,

38. State to secure a social order for the promotion of welfare of the people.
39. Certain principles of policy to be followed by the State are,

a) that the citizens, men and women equally, have the right to an adequate means of livelihood;

b) that the ownership and control of the material resources of the community are so distributed as best to subserve the common good;

c) that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment;

d) that there is equal pay for equal work for both men and women;

e) that the health and strength of workers, men and women, and the tender age of children are not abused and that citizens are not forced by economic necessity to enter avocations unsuited to their age or strength;fs

f) That children are given opportunities and facilities to develop in a healthy manner and in conditions of freedom and dignity and that childhood and youth are protected against exploitation and against moral and material abandonment.

g) Equal justice and free legal aid to be provided by state (39A) .

(Articles 40 – 51)

• Organization of village Panchayats as units of self-government.
• Right to work, to education and to public assistance in certain cases.
• Provision for just and humane conditions of work and maternity relief.
• Living wage for workers and 43A. Participation of workers in management of industries.
• Uniform Civil Code for the citizens.
• Provision for early childhood care and education to children below the age of six years.
• Promotion of educational and economic interests of Scheduled Castes, Scheduled Tribes and other weaker sections.
• Raise the level of nutrition and the standard of living and to improve public health.
• Organization of agriculture and animal husbandry.
• Protection of monuments and places and objects of national importance.
• Separation of Judiciary from Executive.
• Promotion of International peace and security

PART IV-A

Article (51A)

Fundamental Duties

Inspired by the Russian Constitution the Fundamental Duties are the responsibilities of a citizen towards the nation. Though the duties cannot be enforced in a court of law but the Constitution expects the people of India to follow them duly. These were not part of the original Constitution they were added on the recommendations of Swarn Singh Committee by the 42nd Constitutional Amendment Act, 1976. These are,

• To abide by the constitution and respect its ideal and institutions
• To cherish and follow the noble ideals which inspired our national struggle for freedom
• To uphold and protect the sovereignty, unity and integrity of India
• To defend the country and render national service when called upon to do so
• To promote the spirit of common brotherhood amongst all the people of India
• To preserve the rich heritage of our composite culture
• To protect and improve the natural environment
• To develop the scientific temper, humanism and the spirit of inquiry
• To safeguard public property
• To strive towards excellence in all spheres of individual and collective activity

Further under 86th Amendment of the Constitution in 2002 one more Fundamental Duty has been added to the Indian Constitution which is Right to Education which says it is the duty of parent or guardian, to provide opportunities for education to his child.

PART V

Article (52 to 151)

Government at the Union Level

This part deals with duties and functions of the President, Prime Minister, Ministers, Attorney General, Parliament, Lok Sabha and Rajya Sabha, Comptroller and Auditor General.

Articles 52 to 62 outline the Powers of the President and the Executive. The election, re-election, eligibility, manner, qualifications and also the procedure of impeachment of the President. Articles 63 to 71 in the same manner talk and regulate the position of the Vice President. Article 72 lays down the power of the President to grant pardons in certain cases. Article 73 gives the extent of Executive powers of the Union. Article 74 tells how the aid and advice of the Council of Ministers is binding on the president.

Article 75 says that the Prime Minister is to be appointed by the President and also the other ministers to be appointed by him on the advice of the Prime Minister. It also lays down some other provisions as to the Ministers.

Article 76 lays down the appointment and duties of the Attorney General of India. Articles 77-78 regulate the conduct of Government Business.

Articles 79 to 122 lay down details of the Parliament. The Constitution and Composition of both the houses, duration, sessions, prorogation of these houses. Further the qualifications and appointment of members, their salaries, the appointment of speakers and deputy speakers. The legislative procedure of the Parliament is also described in these articles. Article 123 lays down the power of President to promulgate Ordinances.

Articles 124 to 147 details the Union Judiciary. The establishment of Supreme Court, The appointment of Judges, their salaries and powers. It also lays down the procedures of the working, powers, jurisdiction of the Supreme Court of India.

Articles 148 to 151 describe the role, powers, procedures and duties of the Comptroller and Auditor general of India.

PART VI

Article (152 to 237)

Government at the State Level

This part of the Constitution deals with the duties, functions of a Chief Minister and his Ministers, Governor, State Legislature, High courts and the Advocate General of the State.

Article 152 to 164 details the Governor of the State. It describes the executive powers, appointment, term of office, qualifications and the methodology and procedure to discharge the powers of the Governor. It describes how the advice of the council of minister is binding to the Governor. Article 165 lays down the duties of advocate general of the state.

Article 168 to 195 details the state legislature, the formation, composition, duration and desolation of legislative assemblies and councils. It also talks about the qualifications, nominations and disqualifications of the members of these houses. The appointment of the Speaker and the Deputy Speaker, their powers and their salaries are also detailed in these Articles.

Articles 196 to 212 detail the legislative procedure of the State Legislature. These Articles define bills, money bills, appropriation bills and how these bills are tabled to become law. Article 213 talks about the power of Governor to promulgate ordinances during the recess of legislature.

Articles 214 to 231 detail the establishment of High Courts of States. The appointment of Judges, their salaries, their transfers, appointment of Chief Justice and acting Judges, jurisdiction of High Courts, their power to issue writs, their extension to some Union Territories and/or States is also provided in these Articles. Articles 233 to 237 describe the procedures and application of Sub-ordinate Courts and its Judges.

PART VII

Article (238)

This part dealt with States and was repealed by the Constitution (Seventh Amendment) Act, 1956.

PART VIII

Article (239 to 242)

Union Territories

Articles 239 to 242 lays down the procedures of administration and provisions in Union Territories and special character of Delhi as National capital Territory. It details the power of the Lieutenant Governor. Article 242 was repealed by the Constitution (Seventh Amendment) Act, 1956

PART IX

Article (243 to 243 O)

The Panchayats

Articles 243 to 243O describes the Constitution of Panchayats and Gram Sabha, their working duration, qualifications and disqualifications of memberships, powers, authority and responsibilities of a Panchayat. This part also gives procedures of financial management, audits and applications of the Panchayats. Schedule 11 was added by the Seventy Third Amendment in 1992.

PART IX-A

Article (243P to 243 ZG)

The Municipalities

Articles 243P to 243ZG describes the Constitution of Municipalities their working duration, qualifications and disqualifications of memberships, powers, authority and responsibilities of the Municipality. This part also gives procedures of financial management, composition of committee for metropolitan planning, audits and its applications. Schedule 12 was added by the Seventy Fourth Amendment in 1992.

PART X

Article (244 to 244A)

Scheduled and Tribal Areas

Article 244 and 244A describes the procedures of administration for Scheduled and Tribal areas. The provisions of the Fifth Schedule control the Scheduled areas and Tribes with the exception of Assam, Meghalaya, Tripura and Mizoram where the provision of Sixth Schedule shall apply.

PART XI

Article (245 to 263)

Relations between the Union and States

Articles 245 to 261 details the distribution of Legislative powers between the Centre and the States. They describe the extent of laws which can be made by the Parliament and by the Legislatures of States. The power of Parliament to legislate in the State list for national interest, in proclamation of emergency is prescribed in this part. The obligation of States and Union towards each other and the control of the Union over States in certain cases is also provided. Article 262 provides for adjudication of disputes relating to waters and interstate rivers while Article 263 gives provisions with respect to an interstate Council.

The 101st Amendment Act, GST inserted two important articles to this Part,

Article 246 (A)

It states that (1) Notwithstanding anything contained in articles 246 and 254, Parliament, and, subject to clause (2, the Legislature of every State, have power to make laws with respect to goods and services tax imposed by the Union or by such State. (2) Parliament has exclusive power to make laws with respect to goods and services tax where the supply of goods, or of services, or both takes place in the course of inter-State trade or commerce.

PART XII

Article (264 to 300A)

Finance, Property, Contracts and Suits

This part deals with the distribution of revenue between Union and States, appointment of the Finance Commission (under Article 280), contracts, liability, taxes, consolidated funds, public accounts and grants etc.

Here also the GST has made a few important amendments,

Article 269A

This article says that in case of the inter-state trade, the tax will be levied and collected by the Government of India and shared between the Union and States as per recommendation of the GST Council. The article also makes it clear that the proceeds such collected will not be credited to the Consolidated Fund of India or state but respective share shall be assigned to that state or centre. The reason for the same is that under GST, where centre collects the tax, it assigns state’s share to state, while where state collects tax, it assigns centre’s share to centre. If that proceed is deposited in Consolidated Fund of India or State, then, every time there will be a need to pass an appropriation tax. Thus, under GST, the apportionment of the tax revenue will take place outside the Consolidated Funds.

Article 279A

This Article provides for Constitution of a GST Council by President within sixty days from this act coming into force.

The GST Council will constitute the following members,

• Union Finance Minister as Chairman of the council
• Union Minister of State in charge of Revenue or Finance
• One nominated member from each State who is in charge of Finance or Taxation.

PART XIII

Article (301 to 307)

Trade, Commerce and Intercourse within the Territory of India

This part talks about freedom of Trade, Commerce and Intercourse throughout the territory of India. It also mentions the power of the Parliament to impose restrictions and also the power of States to do the same. Article 307 appoints an authority for carrying out Trade and Commerce for the purposes of Article 301 to 304. Article 306 was repealed by the Constitution (Seventh Amendment) Act 1956.

PART XIV

Article (308 to 323)

Services under the Union and the States

Article 308 to 314 details the Union Public Service Commission and its appointments, tenures, dismissals and reduction in ranks. Articles 315 to 323 detail the State Public Service Commission and its functions, appointments, tenures, dismissals, and reduction in ranks.

PART XIV-A

Article (323A and 323B)

Tribunals

This part deals with administrative tribunals, their composition, working, jurisdiction, procedures, powers and exceptions exercised by Tribunals in different States. It was introduced to hear disputes and complaints regarding the Union, States or Local Government employees in the year 1976 by the 42nd Amendment.

PART XV

Article (324 to 329A)

Elections
This part deals with the conduct of Elections and the Election Commission. It gives the right of Superintendence, Direction and Control of Elections to be vested in the Election Commission. Three Election Commissioners are to be appointed with one of them as the Chief Election Commissioner who will be responsible for the conduct of Elections. Article 329A was repealed by the Constitution 44th Amendment Act 1978.

PART XVI

Article (330 to 342)

Special Provisions relating to Certain Classes

This part deals with certain provisions for Schedule Castes, Schedule Tribes and Anglo-Indian representation. Article 330 and 332 reserve seats for Schedule Castes and Schedule Tribes in the house of people and Legislative Assemblies respectively while Article 331 and 333 reserve them for Anglo-Indian community. Article 338 details the establishment of a national commission of a Schedule Caste while Article 339 to 342 lay procedures to investigate the conditions of Backward Classes.

PART XVII

Article (343 to 351)

Official Language

Article 343 of this part says that the Official Language of the Union shall be Hindi in Devnagri script. Article 344 provides for a commission and a committee of Parliament on Official Language. Article 345 to 347 describes the roles of regional languages while Articles 348 to 351 lay down Languages to be used in Supreme Court, High Court, in Acts and Bills. These Articles also contain some directives of development for Hindi and other languages.

PART XVIII

Article (352 to 360)

Emergency Provisions

The provisions of Emergency have been borrowed from the German Constitution. Article 352 describes the procedure and other details of procurement of Emergency while Article 353 describes the effect of Emergency. Article 354 to 359 detail the application, the duties, provisions and the exercise of the legislative powers during Emergency. Article 360 provides provisions for a Financial Emergency.

PART XIX

Article (361 to 367)

Miscellaneous

Article 361 provides for the protection of the President and other Legislators. Article 362 which was repealed by the Constitution (Twenty Sixth Amendment) Act 1971 had rights and privileges of rulers of Indian States. Similarly Article 363A abolishes any recognition granted to rulers and cessation of their privy purses. Article 366 gives some common definitions of words used in the Constitution.

PART XX

Article (368)

Amendment of the Constitution

One of the most important Articles of the Constitution provides the power to the Parliament to amend the Constitution and procedure thereof. Here we must take into consideration the famous case of Kesavananda Bharati v/s State of Kerala in which the Supreme Court stated that the basic structure of Constitution cannot be amended.

PART XXI

Article (369 to 392)

Temporary, Transitional and Special Provisions

Article 369 gives temporary power to the Parliament to make laws with respect to certain matters in the state list and concurrent list. The much debated and controversial Article 370 gives special but temporary status to provisions with respect to the state of Jammu and Kashmir. This Article does not permit the state to make matters given in the State list. The Article also gives special powers to the State Legislature.

Article 371 and 371A gives special privileges and provisions to the state of Gujarat, Maharashtra and Nagaland respectively. Article 371B for Assam, 371C for Manipur, 371D and E for Andhra Pradesh, 371F for Sikkim, 371G for Mizoram, 371H for Arunachal Pradesh and 371I for Goa.

PART XXII

Article (393 to 395)

Short Title, Commencement, Authoritative Text in Hindi and Repeals

The Constitution in its “short title” form may be called the Constitution of India. Article 394 says that the Constitution shall come into force on 26th January 1950. Article 394A talks of authoritative text in Hindi language. Article 395 repeals the Indian Independence Act 1947 and the Government of India Act 1935 together with all enactments supporting the same.

Conclusion

I have tried to give a concise analysis of all parts contained in the Constitution and what aspects they deal with. The Indian Constitution is a comprehensive draft of framework a sovereign country needs to administer and run with. Though it is 67 years old it still supports and gives a great foundation for any modern laws the Parliament wants to enact with upcoming challenges.

The post What are the Different Parts of the Indian Constitution and what do they deal with? appeared first on iPleaders.

In this article, Abhishek Singh pursuing Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, discusses how to handle overbearing and difficult clients.

Be a Business Psychologist

“Deal with ‘Difficult’ Clients, Keep Business Relationships Healthy and Fix the ones which Deteriorate.”

“Love is a tricky thing. We stick with people we deem worth it, and when we seem like it’s too much effort, chances are it isn’t meant to be.”

Haha, I feel like I am acting as a relationship consultant, trying to sort out differences between the estranged couple.

You can’t blame me though; business relationships are a lot like normal relationships. We have a wide array of relationships that we maintain on a daily basis, and it surprises me just how many people immediately assume an air of professionalism or importance the second they expect to deal with a relationship of a professional nature.

I’m writing this to explain how you can do a better job managing your relationship with clients, especially difficult ones, and yet I would encourage you to consistently notice how my advice stands coherent with relationships of a non-professional nature as well, as this would trigger your intuitive thinking and help you come up with unique solutions for yourself when you face similar problems in your professional career.

Before anything, it is of paramount importance to understand that a business relationship, no matter how professional it is, involves human collaboration just like any other relationship you establish or maintain in your daily life. There are two parties who expect some mutual benefit or gratification from each other, thus creating a symbiotic relationship in which both intend to stay happy.

Understanding that simple principle alone brings about an astounding level of clarity in the sense that embodying the same would automatically solve the majority of your problem. Seriously; the entire solution of the problem of handling difficult clients lies in the simple truism stated above.

Another thing to understand is that almost no one in the professional world behaves in an irrational way or holds grudges against another person without a plausible reason. Mostly, there is a very pertinent reason why a client behaves in a way that makes you deem that client ‘difficult’, and it is up to you to adopt a problem solving attitude as opposed to a reactive attitude, because the latter almost never solves the problem; in fact in most cases it worsens it.

Before discussing how to circumvent the problems that these ‘difficult’ clients pose, it is important to understand how a healthy and well rounded attitude on our part can help us avoid being wound up with such a client in the first place.

Be the Best Version of Yourself

All of us are on a personal journey in our own lives. All of us have a vision of who we want to be and on some level, we all believe that we are working towards it.

When it comes to handling clients, there could be a ton of advice that you could gather from the internet or from other experienced people you connect to, but none of that can bring a complete transformation unless you take up the lifelong task of working to be self-disciplined.

How well we manage our professional lives is a very accurate and brutal mirror of how well we manage our entire life, and the better you are at being productive and effective on a daily basis, year by year, the lower are your chances of being overwhelmed with problems like this one because in the end, there are always certain things you can do to solve every single problem you face.

I am currently reading ‘Getting Things Done’ by David Allen, and I find it to be an amazing resource if you want to learn to be productive while also being stress free so you can perform at optimum levels at everything you do. I highly recommend reading it.

After you get your personal life in order, there are certain habits that you can adopt to make sure that you can minimise the instances you end up facing such problems.

Assess the Other Side

Have you read ‘Rich Dad Poor Dad’? You should.

About ten pages in the first lesson, the author discusses how he, at the tender age of 9, was taught by his ‘Rich Dad’ (his best friend’s dad who taught the former how to be financially independent) a tough lesson – working for a pay check is never a sound idea in the long run.

He discusses how Rich Dad thought that working for a simple, material benefit without paying much attention to the surrounding circumstances offering that benefit inhibits free thinking and prevents us from coming up with original, creative and profitable ideas we would be in a position to perceive if only we were more broad minded.

This is a very beautiful lesson, and is fortunately scalable to a higher level of generalisation.

“Getting into a relationship with an agency while keeping in mind only the possible benefits in terms of increase in financial strength; is a fool’s way of bonding. A sound professional treats his own party as a living, breathing organism who has certain characteristics and features, and gives an appreciable amount of importance to how well the other party can compliment them in a professional environment.”

Pick your relationships very carefully, while keeping a sagacious disposition to the prospect of the same.

Once You Love, Give it Your All  

Sometimes being Cheesy does Work

Once you do pick up a partnership with another party, give that relationship your full attention. This will obviously require a fair bit of discipline, but it is worth it. That will necessarily include establishing clear ground rules about what and how you two are going to play your respective parts in the whole venture, anticipating the needs that might arise that you can satisfy from your side beforehand and then doing the needful o preparing a coherent and exhaustive documentation of all the proceedings that you two undertake during the tenure of you two working together to minimise confusion.

Keeping a well-documented journal of every single conversation that you’ve had with the other party is a great idea, because not only will that help you be more accurate and focussed in your work, but it will also help in solving disputes while also avoiding awkwardness to creep in the relationship.

Keep in touch with the other party and talk about their expectation and perceptions regularly. Just like a social relationship, a professional relationship will fare much better if both sides care about the other side enough to want to understand the other side’s thinking and mitigate any differences discovered subsequently.

This will also help both sides avoiding setting unreasonable expectations and focussing on getting the work done sans the unnecessary hurdles caused by a communication gap.

Even if you exercise due caution and do everything you’re supposed to do in your personal and professional sphere to the T, you might still wind up with a client you’re facing troubling differences with.  When that happens, it is very important to ascertain what the core issue is; what exactly is the source of the differences between you two.

There could be a ton of Differences, but generally, the problem is either of the following three:-

1. Anxiety

In your professional career, no matter what your job is chances are you will come across clients from a variety of spheres of life, and every one of them wants to do a great. However, handling the ambition and the restlessness that comes with it is not everyone’s cup of tea, and some become extremely anxious and cynical, expecting things to start fall apart at any minute.

This is why these kind of ‘difficult’ clients are the ones, who called in incessantly, confirm every single piece of information multiple times and ask a ton of irrelevant questions that stem purely out of their own insecurities and not general doubts.

2. Distrust

No one in this world is liked equally by everyone else. People fit in perfectly with some people while the same people face a ton of difficulties relating or being comfortable with the other person. This lack of trust could stem out of their inhibitions about a certain part of your technical expertise or even a discouraging review that they have heard about your general disposition towards the different elements of your work or personal environment. These are the kind of people who would constantly ask for feedback as to how you’re carrying out the different parts of your task, thus creating an atmosphere where they end up validating or striking down your every development even if their judgement might not be based on sound reasoning.

3. Condescension

Some people are just the worst at collaboration. They believe they have read a little bit of everything (which is actually an amazing accomplishment; and one that’s sorely needed in the modern world) but they start assuming that the entire world needs a bit of advice on how to do their work by these people. These are the people who will continuously ask you to do things that are daily activities for you (and hence know a lot about practically) in a way that I ‘optimised for maximum efficiency’. I highly stress the need of adopting an attitude wherein you appreciate all opinions regardless of the source, but these people have a habit of behaving in a way that makes you feel like you’re being put down.

There could be other reasons as well, but majority of differences generally stem out of these three problems. To deal with such problems, there are some things one can do to salvage the situation.

Pick your Fights

Before you do anything, you need to make absolutely sure that the problem isn’t one that isn’t fundamentally unsolvable by you. If it is, it would probably be a better idea to hand over the client to someone who is in a better position to handle the client.

For example, if the client has a personal grudge against you, or your ad his style of working are polar opposites, both you and the client would be much better off separating ways.

Once you make sure that it’s definitely something fixable by you, you can employ a plethora of techniques to deal with the client, keeping in mind the exact reason why you are facing this problem in the first place.

Keep Calm and Fix Things

If you want to deal with clients that should be the banner of your firm’s flag.

As we discussed in the beginning of this article, it is a much better idea to be in a mental state wherein you focus on solving the problem and not reacting to the stimulus that either the other party or the situation sticks to you, because the client is being reactive himself/herself. Once you adopt that methodology, it would be easier for you to identify the core issue and solve it.

Another thing that you need to keep in mind in this regard is to refrain from getting personal. Not only is it highly unprofessional, it is a very weak and juvenile attempt to solve a problem that probably has you overwhelmed. Instead, focus on the issue and hand and avoid holding personal grudges in view of the longer professional perspective.

Ask Harder Questions

No one likes hard questions, but they work.

Thus, that is what you need to do. Whenever you’re having difficulty ascertaining the core issue because of the unwillingness of the client in your conversations, you need to make sure you listen to whatever they have to say fully, intently and sincerely. After you do that, ask harder questions that eventually prevent them from giving you a callous or weak answer and reveals the core issue expressly or impliedly. That is how trained psychologists treat people who are distressed, and that is how you can be your own personal relationship doctor and be good at it.

Find a Middle Ground

After everything is said and done, it is simple. Your ability to stick with your client is depends solely on how far both of you are willing to go to find a middle ground and work things out.

Involve your client in the process; make sure your client is absolutely convinced that whatever you’re doing is the best that can be done to obtain the desired results. Whenever they are in doubt about any component of their or your work which is actually fine, make sure you show compelling evidence as to how that element has no problems with it. As I said before, talk to the client regularly to identify any and all discrepancies as and when they occur.

When either of the parties go wrong, acknowledge the mistake and make sure both of you find ways to reach a fair compromise. That is how you find the middle ground; by collaborating with the other person and by forming a true connection.

Know When to Let Go

Dignity is Everything

You do have a moral duty to be compassionate and understanding, but the world also demands you to be firm and assertive in your actions. Understand the difference between a fair compromise and knuckling under and never let your or your staff’s dignity stoop down to satisfy a single client. If after trying everything you still hit a brick wall, fire the client. You and your staff’s integrity and confidence is the greatest asset that you will ever possess, and no client, no matter how big is not worth compromising it.

Nothing I stated above was rocket science. True, I did research a bit to gather the experts’ views on the issue so that I could create a comprehensive guide for your reference, but all this is still essentially modified ways that you generally undertake to mend relationships in your personal sphere.

I could add thousands of more pages, creating more subsections filled with things you can keep in mind and that still won’t be enough because in this new world, intuitive thinking cannot be substituted. In the end, you will need to be confident and effective enough to come up with unique solutions that improve things to a great extent.

Regardless, the tips and ideologies shared above will push you a lot further this road if you embody them faithfully. Just don’t consider them as the entirety of the situation you need to keep in mind; instead use these as tools and keep an open mind, and I promise, you will find dealing with these clients effortless and fun.

The post Best practices – How to handle overbearing and difficult clients? appeared first on iPleaders.

In this article, Aishwarya Sujay Kantawala pursuing Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, discusses the Major Legal Issues in Corporate Leasing.

Accommodation/Housing are one of the pressing issues in this decade. An increased growth in people has demonstrated the urgent need not for land but housing, wherein a large influx of the population has moved into urban or metropolitan areas for job prospects. Housing means to roof people which can be stretched to the definition of a business or enterprise. The cycle behind a higher population is that it demands more jobs, on such happening more investments occur in businesses, corporates and enterprises. These businesses, corporates and enterprises require SPACE i.e. physical area. Many start-up companies or large franchises cannot afford to invest high amount of money into real estate. Purchasing power is relatively stagnant and immovable property is a less appreciating asset, this has resulted in astronomical prices. Real estate has become a potent part of any business, where India is yet warming up to virtual entities and might take longer.

Simply, every business or enterprise, profession or consultancy requires an office space. A space depending on the nature of business, type and requirements. For instance, a lawyer’s office would need space for conferences, storage of papers, computers, reception, personal cabins, pantry, associate desks, files, etc. This office would require enough space to accommodate people as well as the enormous paperwork that comes with duty calls. On the other hand, a doctor’s clinic would require space for storage, medical checks, apparatus, medicines, equipment, records etc. Further, a business being a retail entity would mainly require less office space and more storage space. Hence, it would be easier to term any kind of space required for commercial and not personal purposes as commercial space. This essay will ponder about primarily corporate leasing of real estate/property, the major legal issues while corporate leasing, as well as an interesting angle to corporate leasing of movable property such as vehicles, machinery etc.

Firstly, it is important to understand corporate leasing from renting, borrowing etc. In common parlance, we initiate a leave and license agreement for tenants or as tenants when we rent immovable property residentially for a short period of time. The difference between leave and license and lease is that a license agreement results in no transfer of ownership or possession of the property to the licensee, whereas a lease agreement causes the lessee to have exclusive possession of the property. License agreements do not directly make an interest in favor of the licensees. Now, the amount payable for such leave and license is known as rent, the amount payable for lease is called as consideration/lease amount. In relation to corporate leasing, which is more of a commercial characteristic of letting property, it would be more efficacious for a lease agreement as one would have exclusive possession of the property instead of a leave and license. The general outlook for a lease period depends anytime between 12 months onwards. Although, commercial entities when leasing a space would rent for nothing less than 3 years as they would be functioning out of there, basing their commercial address, visiting cards, clientele, orders from that location. One must not forget that corporate leasing involves expenditure in interiors, maintenance as the premises has to be in accordance with the function it is being leased for. Hence, for shops they would require shelves, storage space, mirrors, vents, air conditioners, demonstration tables, changing rooms etc.  On research, I came across this company Jones Lang LaSalle which mentioned how corporate leasing is about long-term tenant relationships. This helps bring a deeper meaning as to the purpose of such kinds of transfers of immovable property.[1]

Shortly, one can term Corporate Leasing as the following

Corporate Leasing is a part of the rental industry, this kind of leasing could be commercial as well as residential. Corporate lease is also known as Commercial Lease, Commercial Lease Agreement, Business Lease and Industrial Lease. A Corporate lease is initiated by way of a Corporate Lease Agreement. This agreement is essentially a legal contract structured when renting immovable property to or from a corporate when renting business property. This could be residential or commercial. Further, corporate leasing also involves the lease of assets such as vehicles, machinery etc. A commercial lease would entail the owner/ landlord of the property also legally known as the lessor’s details and specifications and the lessee’s desire and purpose of such corporate leasing. Seldom, a lease would require a guarantor who would stand as a guarantee for such non-payment of the lease amount. The agreement also contains the lease amount payable, duration of the lease, any such information required at the discretion of the parties. Corporate leasing is often availed by companies to put a roof over their employees’ heads, especially when transferring from a hometown or previous location. This would save a major chunk on accommodation overheads in hotels, guest houses etc. The same ideology can be used for commuting individuals who spend weekends in different cities.[2]

On scuttling to the meaning of a lease, it is important to make it clear that commercial leasing of property is of immovable property as well as moveable property. It can be argued that, tangible as well as intangible property can be leased. However, for the sake of clarity, at the instant immovable property leases will be defined. The General Clauses Act, 1897 defines “immovable property” as shall include land, benefits to arise out of land, and things attached to the earth, or permanently fastened to anything attached to the earth;[3]

Hence, land, building or apartment are immovable property. Leasing of this property in India requires the execution of a lease deed. Further, the person leasing the property has to be the true owner of such leased property. Lease can be defined as the transfer of interest, such interest in an immovable property. Such transfer of interest is subject to conditions set out and agreed upon between parties in a lease deed. The person leasing or giving the immovable property who is the owner or acting on behalf of the owner is known as lessor, he also receives the consideration amounting from such lease. The lessee is the individual who obtains possession of the immovable property and pays consideration to the lessor. The main factor between leases and other forms of renting or letting is that the former creates an interest in the property. [4]

At the instant, the premise of this essay deals with the major issues with corporate leasing in India. India as a huge republic and regional based laws conferred by the Indian Constitution lays down certain powers in Union Lists, State Lists and Concurrent Lists. Transfer of Property Act, is a Central Legislation, however, States have the power to enact provisions relating to Stamp duty, taxes, rents etc. Maharashtra has various laws such as The Maharashtra Rent Control Act, 1999[5], The Maharashtra Tenancy And Agricultural Lands Act, 1948[6], The Real Estate (Regulation And Development) Act, 2016[7] (RERA) etc. Now, why is it that many foreign or inter-state corporates are adversely repulsed to invest in property by way of leasing?

Further, I will be discussing Legal Issues as well as Non-Legal issues which contribute to setting back Corporate Leasing, reasons being  as follows-

1.Demand

The demand for immovable property outweighs its supply inevitably. Corporates look to invest in large commercial areas with a variety of facilities and maintainable conditions and are often struck by the overwhelming demand that already exists. Real estate in itself is and has become a competition due to the exponential demand for leasing. The investments in India are multiplying with our current flexible investment policies. This has illustrated the booming welcome to corporates from every curve of Earth to invest in India. Needless to say, every corporate needs adequate space to function especially close to its business operations or customers. Most businesses come to either of the metropolitan cities and generally have headquarters close to where financial intuitions are present and functional. A mainstream example of H&M and ZARA shopping companies which effectively only leased premises in the most congested and busy places in Mumbai such as Fort, Lower Parel and in Delhi. The core reason behind this is the demand generated by the public vis a vis the demand in property. On locking down leases here, it has become easier for the company to function. On the other hand, smaller enterprises which are not million-dollar capital backed companies cannot afford to lease premises in such highly demanded areas. Also, it is worth wondering why would a corporate lease in areas not in demand? They wouldn’t.

2. Expenditure

Real estate in Mumbai, Delhi, Bangalore, Chennai is extremely expensive. Being the hub of activity for business, manufacturing, services, tourism, professions etc. these cities are pressurized by the large influx of population and with it the demand of more branches of the company arises. Now real estate can be expensive especially when compared to the ready reckoner rate for the property wherein such property is expensive. This colludes a restraint in the minds of investors especially where capital and budgetary allowances are at a minimal. The expenditure incurred when leasing is astronomical. One of the main reasons is land or buildings or apartments to be leased commercially or otherwise will always be in commercial areas or the central business districts. For Example- In Fort, every bank from HSBC, Standard Chartered, HDFC, State Bank of India, Central Bank of India etc. have leased gigantic premises. This can be incurred by such entities however what about startups and small or micro business entities. They wouldn’t be able to afford a spot of this property. Now, it is often argued that investment of big entities is enough rather than concentrating on smaller shops/industries or businesses i.e. the business generated from these large corporates is more beneficial. At the end of the day, on viewing the spectrum of entities in India everybody corporate matters. Needn’t it be, that one can neglect smaller companies as they cannot afford such expensive corporate leasing.  Expenses, costs and such lease overheads are a huge impediment to corporate leasing in India.

3. Inter-State Legislation

The reasons will be discussed further on however, one primary issue is the inter-state legislations that stem as an immense challenge. The legality of leases in Maharashtra would be different from Delhi, Bangalore would be different from Chennai. Due to the lack of uniformity in inter-state legislations, body corporates are likely to be revolted and repelled from investing in India. A noteworthy point is that due to inter-state legislations and various jurisdictions vested in High Courts in India, in case of disputes the cause of action varies by location. This essentially results in a tug of war when litigation is initiated in any of the forums. Hence, there is lack of much clarity on where, which and how many legal forums are to be approached in case of a major deadlock or disagreement of a lease.

4. Stamp Duty

One of the major legal concerns of body corporates is the paying of stamp duty on leases. The stamp duty varies from place to place, time to time. Further, Stamp duty can be a very expensive phenomenon especially in Mumbai. Often, legal practitioners in the field of property or civil law are well aware of the procedural requirements of corporate leasing, this entails hiring of a property lawyer. Over and above, stamp duty is payable generally by the lessee of the property. In case of queries on stamp duty, an RTI (Right to Information) can be drafted to the appropriate authority which would in effective time share the details of the amount to be paid by the entity. This can indeed be a long-drawn process for body corporates who are on deadlines to commence business in India.

5. Political Instability

One can view this as a legal issue or otherwise, but political instability is one main reason for the lack of any investment in India. Now it is worthwhile to think that corporate leasing would be for a minimum of 36 months onwards, this being a long period of time is a huge risk entangled with legal obligations. In the event of any political instability, much less legal issues but more safety issues would be a priority. India due to its vibrant politics results in economic losses recurrently. No entity in its right mind would want to risk such instability in India where the environment can turn hostile and less efficacious. Now leasing can be highly affected due to this kind of patterns wherein legality would be rudimentary to the game of politics.

6. Forum Shopping

Litigation can be extremely commercial and marketable for practitioners who intern become con-artists. They often guide such big corporates to initiate proceedings in various forums unnecessarily. Forum-Shopping is a core legal issue for corporate leasing as this results in string being tied in litigation for long periods of time in various forums unnecessarily. A frivolous complaint can be filed in the Consumer Dispute Forum against the lessor or lessee, a complaint can be filed in the Debt Recovery Tribunal which would end up tying the assets of the lessor and the lessee being unaware of this non-debt free immoveable property would lose out on its heavily paid lease. This becomes highly inconvenient; besides one can never dig out current litigations against entities these days. It is easy to fool and be fooled.

7. Legislations

India has over 60 acts/statutes only dedicated to property by way of transfers such as rent, gift, lease, leave license etc. Now, for a body corporate to adhere to ample procedural ties and sustain in the market with the updating nature of legislations comes as a severe disinteresting enigma.

8. Registration

The duration requirement for a lease has to be for a bare minimum for 12 months onwards which upto 36 months requires registration. Now, this provides as a safety measure for many individuals who wouldn’t want to take up the precarious and tenacious and tedious procedure of registration. This requires photographs, affidavits, proof of citizenship if not a citizen then a letter from the government or consulate, in case of foreign body corporates the procedure is extremely complex and often foreign funds are under strict regulation of the Indian Government. Further, registration might require certain permissions from departments as well as witnesses. This ordeal for every lease agreement coupled with security checks serves as a major setback for corporate leasing procedures.

9. Fraud

Often, when a body corporate leases property it does so through brokers, agencies or based on word of mouth. Fraud occurs more often than one can imagine, everyday someone gets cheated for leasing property that either does NOT exist or that exists in descriptions appears different. Sometimes, people lease out property that does not belong to them or is owned otherwise by another individual. It is not uncommon to hear that there are multiple lessees for the same property i.e. cheating tenants. In such a case, institution of a suit is the only remedy where the body corporate would get tangled with various investigations etc.

10. Execution of Projects

Projects leased often take longer to execute than to negotiate, the reason being that generally the culture of execution is lax and laidback. This forms a chain of slipshod foundations wherein the execution is poor and time consuming wherein body corporates hard pressed on time lose interest.

11. Discrimination

Our Multi-cultural, Secular, Democratic country pays way too much heed to religious sentiments than moralistic values. In the process, discrimination is avid and prevalent. Often, attractive properties do not get leased due to various sentiments of people as they prefer body corporates owned, managed or run by favored castes. Yes, this is prevalent in India, vegetarians prefer leasing commercial as well as residential property to only vegetarians. The same for castes. This absurd phenomenon despicable as it is causes a major setback leading to outright discrimination towards corporates. Further, as no courts would like to intertwine in personal right issues, this major and most important legal hostility lie unnoticed and unsolved.

Movable Corporate Leases

According to the General Clauses Act, “Movable Property” shall mean property of every description, except immovable property.[8] Examples of movable property is vehicles, furniture, machines etc. Unlike the Western culture of leasing, Indians believe in buying new and avoiding second hand items. Concurrently, firms are looking at leasing moveable property such as vehicle, machinery and other assets. This offers as a more feasible option than to be flooded with outstanding dues, payments and nightmare generating EMIs. Consumers should have the flexibility to recycle their desires, and should be able to invest partially and generate on use. The mentality of ownership is disappearing and interest is rising. [9]

Also, people are making money steadily, revenue is being generated and companies require space. Space has to be created. A potential next United States of America, India is booming in IT, engineering, manufacturing, pharmaceutical, e-commerce, retail, research etc. This requires commercial space to grow and expand. Encouraging corporate leasing is important for functionality of the nation. Body corporates will always have been averse to purchasing property, leasing being the only option has to be thrived. And why should it only be that Multinational corporations should occupy the highest stake in the corporate leasing market. [10]

Bibliography 

1. “Agency Leasing.” JLL. N.p., n.d. Web. <http://www.jll.co.in/india/en-gb/services/investors-and-developers/agency-leasing>.
2. Schmidt, Diana. “Is Corporate Housing the Right Choice for Your Move?” The Spruce. N.p., n.d. Web. <https://www.thespruce.com/what-is-corporate-housing-2436015>.
3. General Clauses Act, 1897
4. “Leases – Understanding the Concepts.” Net Lawman. N.p., n.d. Web. <https://www.netlawman.co.in/ia/lease-understanding-concepts>.
5. The Maharashtra Rent Control Act, 1999
6. The Maharashtra Tenancy and Agricultural Lands Act, 1948
7. The Real Estate (Regulation and Development) Act, 2016
8. “Leasing for Corporate Customers at Sixt.” Corporate Leasing. N.p., n.d. Web. https://www.sixt-leasing.com/corporateleasing
9. Goyal, Malini. “How a Boom in Corporate Office Leasing Reflects India’s Solid Economic Base.” The Economic Times. Economic Times, 24 Jan. 2016. Web. <http://economictimes.indiatimes.com/news/company/corporate-trends/how-a-boom-in-corporate-office-leasing-reflects-indias-solid-economic-base/articleshow/50700291.cms>.

Citations

[1] http://www.jll.co.in/india/en-gb/services/investors-and-developers/agency-leasing

[2] https://www.thespruce.com/what-is-corporate-housing-2436015

[3] Section 3 (26) of The General Clauses Act, 1897

[4] https://www.netlawman.co.in/ia/lease-understanding-concepts

[5] The Maharashtra Rent Control Act, 1999

[6] The Maharashtra Tenancy And Agricultural Lands Act, 1948

[7] The Real Estate (Regulation and Development) Act, 2016

[8] Section 3 (36) of The General Clauses Act, 1897

[9] https://www.sixt-leasing.com/corporateleasing

[10]http://economictimes.indiatimes.com/news/company/corporate-trends/how-a-boom-in-corporate-office-leasing-reflects-indias-solid-economic-base/articleshow/50700291.cms

The post What are the Major Legal Issues in Corporate Leasing? appeared first on iPleaders.

In this article, ABUL KALAAM AZAD A.S. pursuing M.A, in Business Law from NUJS, Kolkata discusses the bindingness of International treaties entered into by India.

Introduction

This article will discuss the treaties entered into by India, whether those are binding on our country, the difference between binding and non-binding treaties[1], the difference between MOUs and Treaties, and finally about the enforcement of obligations. International treaties are entered between two or more nation-states or between nation-states and intergovernmental organizations. Most of the intergovernmental organizations were established by treaties entered into by two or more nation-states to achieve a particular goal. (Example: NATO, etc)

Treaty

Treaty is an agreement under International Law entered into by two or more nation-states or between nation-states and International (intergovernmental) Organizations. Treaty is also called as International agreements, protocols, conventions, pact and covenant. Based on the nature of treaty, it can be classified as Binding and Non-Binding treaties. Based on the number of countries ratified the treaty, the treaties can be classified as Bilateral treaties and Multilateral Treaties. If the treaty is between two parties (two states or two intergovernmental organizations or between a state and intergovernmental organization), it is called as Bilateral Treaties[2]. If there are several countries (or Intergovernmental Organizations) participating in the treaty, such treaties are called as Multilateral Treaties. There is some important aspect to consider while classifying a treaty as either Bilateral or Multilateral. Some treaties may have more than two signatory countries, but still, those are considered as Bilateral Treaty. For Example The treaty between Switzerland and the European Union. In this treaty there are more than two parties (Switzerland and several states of European Union), but still it is considered as Bilateral. Because it is considered to be between two groups, Switzerland as one part and the European Union and its member states as another part. All treaties must be registered with the United Nations Treaty Collection under Article 102 of the United Nations Charter. Once registered, the UNTC will allocate a registered number for the treaty. (For Example: United Nations Treaty Series UNTS 49006/49007[3] is the treaty that established Euclid IGO).

Relationship between International Law and State Law

International law is a new concept of human history. State law (Municipal law) means the internal law of a sovereign state. International law and State law (Municipal law) are two separate legal orders, existing independently of one another. A state law cannot act as International law, but International law can act as Municipal (State) law in certain circumstances. State law has binding force within its territories of a sovereign state. But in certain circumstances, International law may not have such binding force, unless and until the sovereign state incorporates it in its state law.[4] Due to this, there can be controversy about whether the relations between these two laws are relations of coordination between self-existent independent orders or relations of subordination of the one to the other, or of the other to the one. Or again whether they are part of the same order but both subordinate to a superior order.

It is necessary that they should both be purporting to be, and in fact be applicable in the same field, that is, to the same set of relations and transactions.

Harris says “International law is a law of coordination, but not subordination. It is usually regarded as a law between, but not above several states.”

Indian Practice

Principally, Indian practice regarding the relationship between International Law and Internal law was emanated from British practice. From the beginning, Britain distinguished the customary rules of International Law and the rules laid down by treaties.[5] This was India’s pre-constitution situation.

After Indian Constitution was framed, India adopted the practice of adopting everything in accordance with Indian Constitution. In fact, the Indian Constitution framers had been inspired with the Charter of United Nations Organization.[6] This has been reflected in Indian Constitution’s’ Preamble, Part- I to Part- IV especially.

Article 51 [7] of Constitution of India provides as follows

• Article 51 – Promotion of International Peace and Security.

The state shall endeavour to:-

• Promote international peace and security;
• Maintain just and honourable relations between nations;
• Foster respect for international law and treaty obligations in the dealings of organized peoples with one another; and
• Encourage settlement of international disputes by arbitration.

Article 51 of Constitution of India reflects India’s State Policy and Practice regarding the relationship between the International Law and Municipal Law (State Law concerned to India).

Article 51 (c) stresses on “Pacta Sunt Servanda” principle[8]. Article 51 (b) and (d) explain how the relationship between India and other countries shall be maintained. Article 51 (a) provides that India is a peace-loving country, and it should promote International Peace and Security.

Article 51 is incorporated in Part – IV of the Constitution of India which is “Directive Principles of State Policy” which are not enforceable in a Court of Law.

Article 372 (1) of Constitution of India provides that the laws, which were existed at the time of the adoption of Constitution, shall continue in force and shall be adopted in future, unless they are altered or repealed or amended by a competent legislature[9]. That means the treaties, agreements etc.; entered into by the then British Government on behalf of British India shall be valid, until they are repealed, amended or altered.

Practically India adopted the customary International Law in her Internal Law. It is similar to that of British Practice. British follow dualistic view. India also follows dualistic procedure.

Berubari Case (1969)

Berubari was a small piece of land of 9 square miles in West Bengal having about 12,000 populations. The Indian Government entered into an agreement with Pakistan to give Berubari to Pakistan in exchange of Cooch-Behar enclaves. Political agitation started against this agreement.

The President of India referred the matter to the Supreme Court of India under Article 143 of the Constitution of India[10].

The President of India asked two questions,

• Was any legislative action necessary for the implementation of agreement?
• Was Article 3 of the Constitution sufficient or an amendment was needed?

Decision

The Supreme Court gave its opinion under Article 143 that if the Government of India would want to cede a part of the territory of India to a foreign state, it can do so only by an amendment of the Constitution.[11]

Supreme Court held “Ordinarily an adjustment of a boundary which International law regards as valid between two nations, should be recognized by the courts and the implementation thereof can always be with the executive unless a clear case of cession is involved when Parliamentary intercession can be expected and should be had. This has been custom of nations, whose constitutions are not sufficiently elaborate on this subject. A settlement of a boundary dispute cannot be held to be a cession of territory. A treaty really concerns the political rather than the judicial wing of the state. When a treaty or award after arbitration comes into existence it has to be implemented and this can only be if all the three branches of Government to wit the legislature; the Executive and the Judicial; or any one of them, possess the power to implement it. If there is any deficiency in the constitutional system, it has to be removed and the state must equip itself with the necessary power. In some jurisdictions, the compromise read with the Award acquires full effect automatically in the Municipal Law, the other body of Municipal Law notwithstanding. Such treaties and awards are self-executing. Legislation may nevertheless be passed in aid of implementation but is usually not necessary. “

Result

As a result of the Supreme Court’s decision in Berubari case under Article 143, Ninth Amendment of the Constitution of India, 1960 was passed by the Parliament[12], which redefined the boundary of the State of West Bengal and made necessary changes in the First Schedule so as to cede the Indian Territory of Berubari to Pakistan as provided in the Indo-Pakistan Agreement.

Treaties entered into by India

India entered into various treaties with several countries. There is a database called “Indian Treaties Database”, maintained by the Ministry of External Affair’s Legal and Treaties Division. It has a complete database of all treaties entered by the Government of India with various countries and intergovernmental organizations since 1950. You can also read complete text of the treaties entered into by the Government of India. There is also a facility to search the database using a search string to find the treaty you are looking for. There are 500+ treaties entered into by India as listed in United Nations Treaty Series.

Are these Treaties binding on our Country

Any Country has to follow the obligations of the treaty which they entered into and ratified. In fact, the Country should follow the International Law in the same manner as the country would expect its own citizen to follow the domestic law. In case if it is not observed, then the courts may order to implement such international law if it is not inconsistent with the domestic law enacted by the Parliament. In case, if the international law is not consistent with the domestic law enacted by the Parliament of India, the court will follow the domestic law. The leading case is: Gramophone co. of India Ltd vs. Birendra Bahadur Pandey[13].

In India, the Parliament, that is the legislative body can only enact laws. Indian Courts cannot enact laws or make legislations since the powers to enact laws are vested with legislatures according to the Constitution of India. Separation of Powers is a great feature of Constitution of India. In India, Courts can only interpret the laws made by legislatures, the Courts in India interprets the obligation of Government of India under International Law related to various treaties entered into by Government of India by issuing judgments and verdicts in domestic cases in which the issues are related to or concerned with treaties entered into by Government of India. As like the Judicial Activism, the Judiciary in India is playing very important and crucial role in fulfilling the obligations of Government of India under various treaties entered into by Government of India.

Application of International Law in India

As mentioned earlier, the Constitution of India has a provision regarding International Law under article 51. It is in the Directive Principles of State Policy (DPSP) which are in directive nature and cannot be enforced by a Court (under Art 32 or Art 226). But still this Article 51 clearly shows the intention of the framers of the Constitution of India. The Founding Fathers of the Constitution of India had clear vision about the International Law. Article 51 reads as

Promotion of International Peace and Security.

The State shall endeavour to-

(a) Promote international peace and security;

(b) Maintain just and honorable relations between nations;

(c) Foster respect for international law and treaty obligations in the dealings of organized peoples with one another; and

(d) Encourage settlement of international disputes by arbitration.

In the leading case of Kesavananda Bharati v/s State of Kerala[14], the Chief Justice Sikri opined that: “It seems to me that, in view of article 51 of the directive principles, this court must interpret language of the constitution, if not intractable, which is after all a municipal law, in the light of the United Nations Charter and the solemn declaration subscribed to by India”.

In the above judgment, we can understand that in case the language of domestic law (law enacted by the Parliament or State legislatures) are not clear, then the Court must rely on the International law (parent authority based on which the domestic law was enacted). In the above judgment, we can understand that even if the language of the constitution is not intractable, then the court must interpret it in the light of the United Nations Charter, and the solemn declaration subscribed to by India.

Article 253 of Constitution of India confers power upon parliament to enact laws relating to treaties, to give effect to such treaties, protocols, covenants, agreements and conventions entered into by India with one or more countries and intergovernmental organizations or any decisions concluded at international conferences in which India was a participant.

Article 51 is just directive in nature. It directs the Country to give due respect to International Law. This Article 51 is not saying that International Law is at par with or equal to or part of law enacted by legislature (Parliament or State Legislatures) in India.

Any Article under Part IV (Directive Principles of State Policy) of the Constitution of India must be read with Article 37 of Constitution of India[15].

Article 37 in the Constitution of India, reads as follows,

37. Application of the principles contained in this Part

The provisions contained in this Part shall not be enforceable by any court, but the principles therein laid down are nevertheless fundamental in the governance of the country and it shall be the duty of the State to apply these principles in making laws.

Hence if is there any inconsistency between the International Law and the Domestic Law, the Court has to interpret and construe in harmonious manner to protect the interest of both the laws.

In Krishna Sharma vs. State of West Bengal[16], the Calcutta High Court has decided the case considering the above view. But in ADM, Jabalpur vs. Shivakant Shukla[17], which is a Writ of Habeas Corpus case, the Honorable Supreme Court of India clearly opined that “nothing which conflicts with the provision of our constitution could be enforced here under any disguise”

The Honorable Supreme Court of India interpreted with liberal construction in the case of Gramophone Co of India vs. Birendra Bahadur Pandey. The Supreme Court of India in this instant case opined that “the comity of nations requires that the rules of international law may be accommodated in the municipal law even without express legislative sanctions provided they do not run conflict with the acts of parliament …the doctrine of incorporation also recognizes the position that the rules of international law are incorporated into the nation’s law and considered to be part of national law , unless they are in conflicts with an act of Parliament.”

Judicial Activism paved the way for various good and noble things in India. Polluter Pays Principle, Principle of Sustainable Development, Precautionary Principle are the brainchild of Judicial Activism in India.  In Vellore Citizens Welfare Forum vs. Union of India, the Supreme Court has laid down that “once these principles are accepted as part of customary International law, there should be no difficulties in accepting them as part of our Domestic law. It is almost an accepted proposition of law that the rules of customary International law, which are not contrary to the Municipal Law shall be deemed to have been incorporated in the Domestic law and shall be followed by the court of law.” The Honorable Supreme Court decided in the same manner in the case of People Union for Civil Liberties vs. Union of India[18]. Hence we can come to an understanding that the Courts in India has interpreted and applied the International Law if it is not inconsistent with the Domestic Law and if is there any inconsistency between the International Law and Domestic Law, the Courts have construed harmoniously.

Enforcement of Treaty Obligations

Here, the first and foremost question, in case of enforcement of International Law Treaties, Conventions etc, is whether those treaties and conventions are binding on India automatically or will they become binding once ratified by the Government (according to Article 253, the power to ratify international treaty is vested with the Government and there is no need to place the treaty before Parliament, even if the treaty has monetary obligations) or do they need any legislation enabling the treaty.

Article 253 reads as follows

“Article 253. Legislation for giving effect to international agreements:

Notwithstanding anything in the foregoing provisions of this Chapter, Parliament has power to make any law for the whole or any part of the territory of India for implementing any treaty, agreement or convention with any other country or countries or any decision made at any international conference, association or other body.”

The question, whether the treaties are binding automatically or do they need any legislation enabling it was answered in the judgment given by the Honorable Supreme Court of India in the leading case of Jolly George Varghese and Others vs. Bank of Cochin[19]. In this case, the Honorable Supreme Court of India, in the words of Justice Krishna Iyer had opined that “The positive commitment of the State Parties ignites legislative action at home but does not automatically make the covenant as enforceable part of the corpus juris of India “.

In general, we can observe that the International Treaties and Covenants are being used to support the Domestic laws. Usually the treaties are used, to fill any discontinuity in the domestic law, to interpret the domestic law in case of ambiguity in the language, to justify and fortify a decision taken in any case related to Domestic law or International law, to implement international conventions, decisions of international conferences and treaties, covenants and protocols if such treaties or conventions are not inconsistent with existing domestic laws, to fulfill and help achieve the noble cause of the conventions and treaties, to interpret the domestic law so that it will reflect the developments and changes at international level.

Another leading case relating to the enforcement of International treaty obligation is Vishaka vs. State of Rajasthan[20]. Judicial Activism again paved way for guidelines for protecting women from sexual harassment. In this case, the Honorable Supreme Court of India laid down the guidelines for protection of women against sexual harassment and opined that “in the absence of domestic law, occupying the field to formulate effective measures to check the evil of sexual harassment of working women at all work places, the contents of international conventions and norms are significant for the purpose of interpretation of the guarantee of gender equality, right to work with human dignity in Article 14, 15, 19(1)(g) and 21 of the constitution and the safeguard against the sexual harassment implicit therein. Any international convention not in consistence with the fundamental rights and in harmony thereof to promote the object of constitutional guarantee”.

Hence we can understand from the above case that the Court can apply International Treaties along with the domestic law, if the treaty is not in conflict with the domestic law.

In the leading case of Nilabati Behera alias Lalit Behera vs. State of Orissa[21], the Honorable Supreme Court of India granted compensation for custodial death and it has justified the decision based on the Article 9(5) of the International Covenant on Civil and Political Rights (ICCPR). In the case of Chairman, Railway Board and Others vs. Chandrima Das[22], the Apex Court while interpreting the scope of Article 21 of the Constitution of India and referred to the Universal Declaration of Human Rights to provide protection to foreign rape victim. In this case the court has observed that “the application of UDHR, and principles thereof may have to be read, if need be, into the domestic jurisprudence.”

Conclusion

Based on the above-discussed provisions of the Constitution of India, judgments in various leading cases, we can conclude that the International Treaties and the treaty obligations are enforceable by the Courts in India, if such treaties are enabled by legislating an act by the Parliament of India. There are several such legislations which are enacted by the Parliament of India, once India became signatory to the related treaties and conventions. Example: The Diplomatic Relation (Vienna Conventions) Act 1972. SAARC Convention (Suppression of Terrorism) Act 1993, Protection Of Human Rights Act 1993[23]. Similar acts are enacted on the subjects of territorial waters, exclusive economic zone etc.

In the past few years, the Courts in India decided based on, or justified based on International Treaties and Conventions in various leading cases in case, if such treaties and conventions are not inconsistent with the Domestic laws in India.

References

1. BINDING AND NON-BINDING INSTRUMENTS IN INTERGOVERNMENTAL RELATIONS – EUCLID PUBLICATION
2. Modern Treaty Law and Practice – Anthony Aust
3. https://treaties.un.org/Pages/showDetails.aspx?objid=08000002802f011f
4. Developments of International Law in Treaty Making –  Rudiger Wolfrum, ‎Volker Röben
5. India and international law – Nagendra Singh – 1969
6. India and International Law: Introduction – Bimal N. Patel
7. Constitution Of India, 10/e – Bakshi, ‎P M  
8. Introduction to the Constitution of India – Durga Das Basu
9. Constitution Of India, 10/e – Bakshi, ‎P M  
10. The Bengal Borderland: Beyond State and Nation in South Asia – Willem van Schendel
11. Indian Administration (Sixth Edition) – Maheshwari
12. Reconstitution of the Constitution of India – Kanhaiyalal Sharma
13. Creative Activities and the Law: Human Rights Approach – Shive Datta Sharma
14. Landmark Judgements That Changed India – Asok Kumar Ganguly
15. Commentary On The Constitution Of India – PK Agrawal , K.N. Chaturvedi
16. Digest of Constitutional Law – Simhambhotla Subrahmanya Sastry
17. The Supreme Court Versus the Constitution: A Challenge To Federalism – Pran Chopra
18. The State Practice of India and the Development of International Law
19. Nationality and International Law in Asian Perspective – Swan Sik Ko
20. Need for Judicial Activism – Dr. Moreshwar Kothawade
21. International Human Rights Law and Practice – Ilias Bantekas, ‎Lutz Oette
22. Tools of Justice: Non-discrimination and the Indian Constitution – Kalpana Kannabiran

1. The Indian Journal of International Law: Official Organ of the Indian Society of International Law, Volume 32 – M.K. Nawaz

The post All you need to know about International Treaties and Agreements appeared first on iPleaders.

In this article, Alric Tirkey of Institute of Law, Nirma University discusses the grounds on which a doctor can refuse to perform an abortion in India. 

Legal definition of abortion

The term abortion is derived from the latin word ‘aboriri’ which means to detach from the proper site. According to medical language, abortion is termination of pregnancy before the period of viability or extraction or expulsion or extraction of all or any part of the placenta or membrane without an identifiable fetus or stillborn infant. Legally abortion the premature expulsion of the product of conception from the uterus at any time before the full term is reached. The law of abortion in India are governed under the medical termination of pregnancy act 1971.

Grounds for termination of pregnancy

Section 3 of medical termination of pregnancy act, 1971 provides on which termination of pregnancy is valid –

• Pregnancy can be terminated in a case where the length of the pregnancy does not exceed 12 weeks if such medical practitioner is,
• Where the length of the pregnancy exceeds 12 weeks but does not exceed 20 weeks, if not less than 2 registered medical practitioners are of opinion, formed in good faith or bona fide that:

1: The continuance of the pregnancy would involve a risk to the life of the pregnant women.

2: A risk of grave injury to her physical or mental health; or

3: If the pregnancy is caused by rape.

4: if is there is a presumption of the risk that the child was born it would suffer from some physical or mental abnormalities so as to be seriously handicapped.

5: Failure of any device or method used by the married couple for the purpose of limiting the number of children.

6; Risk to the health of the pregnant woman by the reason of her actual or reasonably foreseeable environment.

Consent for abortion

According to Section 3(4) of MTPA 1971 which clarifies as to whose consent would be necessary for the termination of pregnancy.

(a)according to the MTP act  no pregnancy of a woman is allowed who has not attained the age of 18 years or who have attained the age of 18 years is a lunatic shall be terminated except with the consent in writing of her guardian.

(b)  no pregnancy shall be terminated without the consent of the pregnant woman.according to MTPA 1971 the consent of the woman is the essential factor for the termination of the pregnancy. The consent of the husband or other is irrelevant if the woman wants an abortion and her husband objects it, abortion can still do.only if the pregnant woman is lunatic or mentally ill, the abortion can be done only with the consent of her guardian.

Abortion Permitted on Therapeutic Grounds

An abortion which is done with the aim to preserve the health of the mother when her life is in danger or when it is found that the child if both will be a disabled one at a time it is termed as therapeutic abortion.

Section 312 of the MTPA 1971 permits abortion only on therapeutic grounds with the aim to protect the life of the mother. According to law,  the unborn child, must not be destroyed except for the purpose of preserving its life of the mother. The provision by implication recognizes the fetus’ has the right to life. The threat to life, however, need not be imminent or certain. If the act is done in good faith the person is entitled to the protection of the law. But good faith is deceptive and ambiguous enough to protect most therapeutic abortions so long as they are conducted ostensibly to preserve the mother’s life. In fact, what constitutes good faith is not a question of law, but it is a question fact to be decided in each and every case according to the facts and circumstances.

Abortion has been legal in India since 1971 when the Medical Termination of Pregnancy Act was passed. The law is quite liberal, as it aims to reduce illegal abortion and maternal mortality.

The Act which legalizes abortion in India up to 20 weeks if it fulfills the following conditions:

• Abortion is  Performed by a registered medical practitioner as defined in the MTP Act.
• Abortion is performed in a place which is approved under the medical termination of pregnancy Act 1971.
• Other requirements such as gestation period, consent, and opinion of registered medical practitioners are fulfilled. According to the act, Abortion can be legally performed by the doctor up to 12 weeks gestation on prescription by one medical doctor and abortion performed up to 20 weeks gestation with the concurrence of two medical doctors.

Other Condition

Abortion has been legal in India since 1971 when the Medical Termination of Pregnancy Act was passed. The law is quite liberal, as it aims to reduce illegal abortion and maternal mortality. An abortion can be performed in India until the 20th week of pregnancy. The opinion of a second doctor is required if the pregnancy is past its 12th week. The Medical Termination of Pregnancy Act was amended which is aim to allow doctors to provide mifepristone and misoprostol (also known as the “morning-after pill”) on prescription up until the seventh week of pregnancy. An abortion is permitted in the following cases:

• A woman has a serious disease and the pregnancy would endanger her life.
• A woman’s physical or mental health is endangered by the pregnancy.
• The fetus has a substantial risk of physical or mental handicap.
• A woman contracts rubella (German measles) during the first three months of pregnancy.
• Any of a woman’s previous children had congenital abnormalities.
• The fetus is suffering from RH disease.
• The fetus has been exposed to irradiation.
• The pregnancy is the result of rape.
• A woman’s socioeconomic status may hamper a healthy pregnancy.
• A contraceptive device failed.

Procedure

Abortions can be performed in any medical institution that is licensed by the government to perform medically assisted terminations of pregnancy under the MTP Act 1971. Such institutions must have to display a certificate issued by the government. Abortions must be performed by a doctor with one of the following qualifications:

• A registered medical practitioner who has performed at least 25 medically assisted terminations of pregnancy.
• A surgeon who has six months’ experience in obstetrics and gynaecology.
• A person who has a diploma or degree in obstetrics and gynaecology.
• A doctor who was registered before the 1971 Medical Termination of Pregnancy Act and who has three years’ experience in obstetrics and gynaecology.
• A doctor who registered after 1971 and has been practising in obstetrics and gynaecology for at least a year.

Punishment

• According to Section 312 to 316 of the Penal Code provided that any person performing an illegal abortion was subject to imprisonment for three years and/or payment of a fine.

Section 312: ‘causing miscarriage’

“Whoever voluntarily causes a woman with child to miscarry, shall, if such miscarriage be not caused in good faith for the purpose of saving the life of the woman, be punished with imprisonment of either description for a term which may extend to three years, or with fine, or with both, and, if the woman be quick with child, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine. Explanation: A woman who causes herself to miscarry, is within the meaning of this section.”

• if the woman was “quick with child”, the punishment was imprisonment for up to seven years and payment of a fine.
• The same penalty applied to a woman who induced her own miscarriage.

Section 314: Death caused by act done with intent to cause miscarriage

“Whoever, with intent to cause the miscarriage of a woman with child, does any act which causes the death of such woman, shall be punished with imprisonment of either description for a term may extend to ten years, and shall also be liable to fine.”

Section 315: Act did with intent to prevent child being born alive or to cause it to die after birth

“Whoever before the birth of any child does any act with the intention of thereby preventing that child from being born alive or causing it to die after its birth, and does by such act prevent that child from being born alive, or causes it to die after its birth, shall, if such act be not caused in good faith for the purpose of saving the life of the mother, be punished with imprisonment of either description for a term which may extend to ten years, or with fine, or with both.”

Section 315: Act did with intent to prevent child being born alive or to cause it to die after birth

“Whoever before the birth of any child does any act with the intention of thereby preventing that child from being born alive or causing it to die after its birth, and does by such act prevent that child from being born alive, or causes it to die after its birth, shall, if such act be not caused in good faith for the purpose of saving the life of the mother, be punished with imprisonment of either description for a term which may extend to ten years, or with fine, or with both”.  

Sources referred

http://www.ili.ac.in/pdf/p10_bhavish.pdf

http://www.legalservicesindia.com/articles/pregact.htm

http://www.medindia.net/indian_health_act/medical_termination_of_pregnancy_act_1971/list-of-acts.htm

http://thelegiteye.in/2017/02/04/law-abortion-india/

The post On what grounds can a doctor refuse to perform an abortion in India? appeared first on iPleaders.

In this article, Harsh Vardhan Tiwari of Rajiv Gandhi National University of Law discusses Section 124A of IPC. Is the sedition law an Anathema to Freedom of Speech and Expression?

This article discusses the impact of sedition law in India and questions the state power in using it. This law has been in news recently with JNU student leader arrest on the charge of sedition, Allahabad High Court quashing summon sighting to Finance Minister Arun Jaitley to Harki Patel parole where Supreme Court has been requested to re-examine Sedition law in the country. The article will cover what is section 124A? What is the constitutional history of sedition law? What are the reasonable restrictions imposed under Article 19(2)? What is the way forward? Should the law on sedition be repealed? Is it unconstitutional and does it compromises freedom of speech and expression assured under Article 19(2)? Is the Law on sedition an anathema to the freedom of speech and expression? There has been a demand made by the public activist in India to re-examine law on sedition. The article delves into the law itself, its use and misuse and on a larger question of the right to question the state.

What is the law on Sedition in India?

Section 124A of the Indian Penal Code, 1860[1]  in Chapter VI deals with the law on Sedition. It is considered as “Offense against the State”. There is no mention of the word “Sedition “in the particular section.  The sedition law in independent India has colonial origins being enunciated by the English Government in the year 1870 i.e. ten years later than the original Code due to reluctance of Macaulay to include it in the original code. It stipulates that –

“Whoever, by words, spoken or written, or by sign, or by visible representation, or otherwise, brings or attempts to bring into hatred or contempt. Or excites or attempts to excite disaffection towards, the Government established by law in India, Shall be punished with

• Life Imprisonment with/without fine

• Imprisonment up to 3 years with/without fine

• Is a non-bailable, non-compoundable ,cognizable offense”

There are three explanations attached to section 124A.[2] Explanation 1 highlights the expression “disaffection [3]“ includes disloyalty[4] and all feelings of enmity[5]. Explanation 2 and 3 states what does not constitute an offense under this section, it includes comments expressing disapprobation of the measures of the government with a view to obtain their alteration by lawful means, without exciting of attempting to excite hatred, contempt or disaffection (Explanation 2). Comments expressing disapprobation of the administrative or other action of the government without exciting or attempting to excite hatred, contempt or disaffection, do not constitute an offense under this section.(Explanation 3)

Simply put the offense of sedition under Section 124A is the doing of certain acts which would bring the Government established by law in India into hatred or contempt or create disaffection against it. [6]

Sedition law – Constituent Assembly Debate 1948

When the initial draft of the Indian Constitution was being debated on, sedition was included as one of the restriction on freedom of speech and expression. But, after deliberations took place, the scope and restrictions on the free speech was made, sedition was eventually excluded from the ambit of Article 19(2).

Numerous Members of the constituent assembly took oppositions to this and recapped the assembly that Indians had suffered greatly due the misuse of the sedition laws.

Shri Rohini Kumar Choudhari said ,” I must congratulate the House for having decided to drop the word “sedition” from our new Constitution. Unhappy word “sedition” has been responsible for a lot of misery in this country and had delayed for a considerable time the achievement of our independence.”[7]

Seth Govind Das stated, “I would have myself preferred that these rights were granted to our people without the restrictions that have been imposed. But the conditions in our country do not permit this being done. I deem it necessary to submit my views in respect to some of the rights. I find that the first sub-clause refers to freedom of speech and expression. The restriction imposed later on in respect of the extent of this right, contains the word ‘sedition’. An amendment has been moved here in regard to that. It is a matter of great pleasure that it seeks the deletion of the word ‘sedition’. [8]

Conflict between Article 19(1) (a) & Sedition law?

Article 19(1) (a) – guarantees the freedom of speech and speech as fundamental rights subject to “reasonable restrictions “mentioned under Article 19)2)

Article 19(2) – Reasonable restrictions can be imposed on the following grounds-

• Security of the State,[
• Friendly relations with Foreign states,
• Public order,
• Decency and morality,
• Contempt of court,
• Defamation,
• Incitement to an offence, and
• Sovereignty and integrity of India.

The right to freedom of speech & expression constitutes one of the essential foundations of a democratic society.^[9] Overbroad restrictions on freedom of expression are invalid.^[10] Each person has a right to hold & articulate opinions;^[11] any overbroad restrictions on this fundamental right of expression should therefore be carefully scrutinised.^[12] When a State party imposes restrictions on the exercise of freedom of expression, these may not put in jeopardy the right itself.^[13] The government’s interest in public order must be balanced with the people’s interest in preserving free expression.^[14]

Criminal sanctions are the most severe sanctions that society can impose on a person[15], both in terms of the restrictions that they place on his freedoms & the damage they do to his reputation. There must be proportionality between the effects of the measures responsible for limiting the right or freedom, & the objective which has been identified as of “sufficient importance.”^[16] This test has been relied in a number of other jurisdictions.^[17] Moreover, the act which has been curtailed should be of such a nature so as to create a clear & present danger & that it will bring about substantive evils that the legislation seeks to prevent.^[18]

According to the Johannesburg Principles,^[19] the freedom of expression or information cannot be restricted unless the government can demonstrate that the restriction is prescribed by law & is necessary in a democratic society to protect a legitimate national security.^[20]

While international instruments can only be enforced in a country if the country has ratified it, they still have an overbearing significance and influence law-making. As a member of the United Nations General Assembly, India has ratified the UDHR[21] and ICCPR[22] and, therefore, has enforcement value in the country. In India, while the offence of sedition is per se not in violation of international standards, any restriction on the freedom of speech and expression needs to be justified as recognized by international covenants and treaties.

Constitutional History of Sedition law

Tara Singh v State of Punjab[23]: Section 124A was struck down as unconstitutional being contrary to Freedom of Speech and Expression guaranteed under Article 19(1).

Ram Nandan v State[24] : Allahabad High Court overturned Ram Nandan conviction and declared Section 124A to be unconstitutional because –

If criticism without having any tendency in to bring about public disorder, can be caught within mischief of section 124A of the Indian Penal Code, then the Section must be invalidated because it restricts freedom of speech, and is capable of striking at the very root of the Constitution providing right to speech and expression with certain limitations provided under Article 19(2) of the Constitution of India.

Kedarnath v State of Bihar[25] : The Supreme Court overruled the 1958 judgment and held that the Sedition law was constitutional but at the same time observed that the sedition law must be narrowly interpreted and if given wider interpretation, it would not survive the test of constitutionality.

The apex Court sustained the constitutionality of Section 124A, but at the same time limiting its connotation and restraining its application to acts linking intention or propensity to create chaos, or disturbance of law and order, or provocation to violence. The Supreme Court distinguishing clearly between unfaithfulness to the government and remarking upon the actions of the government without inciting public disorder by act of violence.

Indra Das v State of Assam[26] : the Supreme Court reiterated that all laws, including Section 124A, have to be “read in a manner so as to make them in conformity with the Fundamental Rights”. In Arup Bhuyan v State of Assam[27] , Supreme Court reiterated that the speeches which amounts to “incitement to imminent action “can only be criminalized. Recently in the Shreya Singhal v Union of India[28], the Supreme Court clearly drew distinction between “Advocacy” and “incitement”, in which only incitement can be punished.

Therefore, only the words and speech which cause incitement to “imminent violence” can be criminalized and punished. Mere using words however distasteful, do not constitute sedition.

Laws dealing with Offense of Sedition

Apart from section 124A of the IPC, 1860, there are some other legislations too which deals with the offense of the sedition in India.

1. Indian Penal Code, 1960 – Section 124 A.
2. Criminal Procedure Code, 1973- Section 95.
3. Unlawful Activities (Prevention) Act, 1967- Section 2(o) (iii) and Section 13.
4. Prevention of Seditious Meetings Act, 1911- Section 5.

The use and abuse of Sedition law in Colonial and post-colonial era

In the 19^th and 20^th century, there took place several high profile trials in cases involving the sedition laws in India which also comprised of several Indian Freedom fighters. The most famous of such trial was that of Bal Gangadhar Tilak- (1897 killing of plague commissioner Rand). Strachey J. stated the law in the following terms;

“The offence consists in exciting or attempting to excite in others certain bad feelings towards the government. It is not the exciting or attempting to excite mutiny or rebellion or any sort of actual disturbance, great or small. Whether any disturbance or outbreak was caused by these articles is absolutely immaterial.”[29]

The vital ethical question that Tilak raised was whether his trial constituted sedition of the people against the British Indian Government (Rajdroha) or the government against the Indian people or of the government against the Indian people (Deshdroha).

The most famous sedition trial after Tilak’s was the trial of Mohandas Gandhi in 1922. “Section 124A under which I am happily charged is perhaps the prince among the political section of the IPC designed to suppress the liberty of the citizen. Affection cannot be manufactured or regulated by law. If one has no affection for the person, one should be free to give the fullest expression to his disaffection, so long as he does not contemplates, promotes or incites to violence. I have studied some of the cases tried under it, and I know that some of the most loved Indian patriots have been convicted under it, I consider it a privilege, therefore to be charged under that section.”[30] Stated Gandhi.

In the post-independence era, its record of use since independence of India points out repeated instances of misuse. It has been used arbitrarily to curb dissent. Its main target have been writers, journalist, activists who question government policy and projects, and political dissenters.

From people objecting to the nuclear plants at Kudnakulam, to writers like Arundhati Roy, to journalists and cartoonists ( like Aseem Trivedi ) and to social activists like Binayak sen, there is sufficiency of evidence to exemplify the indiscriminate manner in which this provision has been used.

Recent Cases at a Glance

Aseem Trivedi, Cartoonist (September 2012): Arrested for offense of sedition on the complaint that his cartoons made mockery of Indian Constitution and the National Emblem.[31]

Hardik Patel (October 2015): Man behind spearheading protest with the demand of reservation for the quota. Arrested by police on charge of sedition in two separate cases. [32]

Kanhaiya Kumar, Student JNU (February 2016): Arrested for voicing anti-national slogans.[33]

Conclusion and Suggestions

We need to understand that there lies a difference between populist opinion and constitutional morality. The Indian Judicial System should be allowed to interpret the law, trial by media is uncalled for. Dr. Ambedkar observed: “the question is, can we presume such a diffusion of constitutional morality? Constitutional morality is not a natural sentiment. It has to be cultivated. We must realize that our people have yet to learn it. Democracy in India is only a top dressing on an Indian soil which is essentially undemocratic. [34]“Thus, the father of the Indian Constitution had a premonition that in the absence of constitutional morality, democracy may flounder in India.

There is an urgent need to narrow down the interpretation of the section 124A of IPC and prevent its indiscriminate use in the frivolous arbitrary manner as the instance of misuse of section 124A has a “chilling effect “on freedom of speech and expression.

Sedition as a crime has been disfavored in many States. It has either been repealed ( UK and News Zealand) , is rarely being used, punishment is only fine or less punishment than the death penalty, further efforts are being made to repeal such law.  Indian law should be brought in consonance of accepted international principles and most contemporary democratic outline like that of UK, USA and New Zealand.

It is hereby recommended to

1. Repeal Section 124A of IPC, 1860.
2. Remove reference to section 124A from Section 95 of CrPC (Criminal Procedure Law), 1973.
3. Repeal the Prevention of Seditious Meetings Act,1911
4. Repeal the Criminal law Amendment Bill, 1961.
5. Remove the reference to Disaffection from Section 2(o) (iii) of the Unlawful Activities (Prevention) Act, 1967.
6. Make Speech related offenses bailable.
7. Make speech related offenses non-cognizable.
8. Extend Section 196(1) of CrPC to Section 124A of IPC i.e. Prior sanction of government required.
9. There should be action against malicious complaints.
10. There is time to raise the burden of proof on person claiming that his sentiments got hurt.

The freedom of speech and expression is a fundamental right and also a basic human right. It gives an opportunity to an individual to express himself, dissent, self-improvement and free flow of information both imparting and receiving. The restriction on it have to be constitutionally valid and reasonable not arbitrary.  Section 124A of IPC needs a relook in the present scenario. There is need to maintain proper balance between the sedition laws and freedom of speech and expression.

[1] K.D Gaur, Textbook on the Indian Penal Code, Universal Law Publishing, 2009, pg. 229.

[2] Kedar Nath Singh vs State Of Bihar, 1962 SCR Supl. (2) 769.

[3] Ratanlal and Dhiraj Lal, Law of Crimes, 24^th Edition, Vol. 1 ,Pg. 505-506.

[4] Queen Empress v. Amba Prasad, (1897) ILR 20 All 55

[5] Emperor v. Bhaskar Balwant Bhopatkar,(1906) 8 Bom LR 421.

[6] Bilal Ahmed Kaloo v State of Andhra Pradesh, (1997) Supreme Today 127.

[7] Constituent Assembly debate on 2 December, 1948, Part 1 (Available at: https://indiankanoon.org/doc/1389880/ ; last accessed on 15^th April, 2016 at 04:12 PM).

[8] Ibid.

[9] Handyside v UK (1976) 1 EHRR 737; M Janis, R Kay & A Bradley, European Human Rights Law: Text & Materials (Clarendon Press, Oxford 1995) 157; DJ Harris, M O’Boyle & C Warbric+k, The European Convention of Human Rights (Butterworths, London 1995) 373.

[10] Amnesty International v Sudan (2000) AHRLR 297 (ACHPR 1999) ¶ 80.

[11] International Covenant on Civil & Political Rights (adopted 16 December 1966, entered into force 23 March 1976) 999 UNTS 171 (ICCPR) Art 19(1).

[12] Amnesty International v Sudan (2000) AHRLR 297 (ACHPR 1999), ¶ 80.

[13] UNHRC ‘General Comment 34’ in ‘Article 19: Freedoms of Opinion & Expression’ (2011) UN Doc CCPR/C/GC/34, ¶ 21.

[14] Zana v Turkey (1999) 27 EHRR 667, ¶ 55.

[15] Ariel L. Bendor, Prior Restraint, Incommensurability, and the Constitutionalism of Means, 68 Fordham L. Rev. 289 (1999); Available at: http://ir.lawnet.fordham.edu/flr/vol68/iss2/2( Last accessed on 18^th April 2016).

[16] R v Oakes [1986] 1 SCR 103 (Canada); R. v Big M Drug Mart Ltd., [1985] 1 SCR 295 (Canada); Leary v United States 395 US 6 (1969); Singh v Minister of Employment & Immigration 1985 1 SCR 177 (Canada).

[17] Nyambirai v National Social Security Authority & Anr 1995 (9) BCLR 1221 (Zimbabwe).

[18] Schenck v United States 249 US 47 (1919).

[19] The Johannesburg Principles on National Security, Freedom of Expression & Access to Information, UN Doc E/CN.4/1996/39 (1996). Principle 1.1.

[20] The Sunday Times v United Kingdom App No 6538/74 (ECHR, 26 April 1979); Albert Womah Mukong v Cameroon Communication No 458/1991, UN Doc CCPR/C/51/D/458/1991 (10 August 1994) (HRC); Surek v Turkey App No 24122/94 (ECHR, 8 July 1999); Herrera-Ulloa v Costa Rica Petition No 12367 (IACHR, 2 July 2004); UN Human Rights Committee, ‘General Comment 34’ in ‘Art 19: Freedom of opinion & Expression’(2011), UN Doc CCPR/C/GC/34/CRP.2; UN Human Rights Committee ‘General Comment 10’ in ‘Art 19: Freedom of Opinion & Expression’ (1983) UN Doc CCPR/C/GC/10/REV.1.

[21] Article 19, Universal Declaration of Human Rights, 1948 (UDHR).

[22] Supra 2.

[23] Tara Singh v State of Punjab, AIR 1950 SC 124.

[24] Ram Nandan v State, AIR 1959 All 101.

[25] Kedarnath Singh v State of Bihar, AIR 1962SC 955.

[26] Indra Das v State of Assam, (2011) 3 SCC 380.

[27] Arup Bhuyan v State of Assam, (2011) 3 SCC 377.

[28] Shreya Singhal v Union of India, AIR 2015 SC 1523.

[29] Queen Empress  v. Bal Gangadhar Tilak, (1898) ILR 22 Bom 112.

[30] M.K Gandhi , The Voice of Truth, Part 1 , Navajivan Publishing House , Pg. 14-24; Available at : http://www.mkgandhi.org/ebks/voice_of_truth.pdf( Last Accessed on 15^th April,2016 at 01:21 PM).

[31] Mail Today, IndiaTodayi.n, September 9, 2012; Available at: http://indiatoday.intoday.in/story/anti-corruption-cartoonist-aseem-trivedi-arrested-on-sedition-charges/1/216643.html (Last accessed on 15^th April 2016 at 4:36 PM).

[32] IndiaToday.in, October 19, 2015; Available at: http://indiatoday.intoday.in/story/hardik-held-for-insulting-national-flag-charged-with-sedition/1/502402.html (Last accessed on 15^th April 2016 at 03:46 PM).

[33] PTI, New Delhi, The Indian Express, February 12, 2016; Available at: http://indianexpress.com/article/india/india-news-india/afzal-guru-event-jnusu-president-arrested-after-anti-india-slogans-in-campus/ (Last Accessed on 15^th April 2016 at 05:03 PM).

[34] Ramchandra Guha, ‘Makers of Modern India ‘, Penguin Books India, Pg 316.

The post The impact of Sedition law in India appeared first on iPleaders.

In this article, Ashwini Gehlot of Institute of Law, Nirma University, Ahmedabad discusses the legality of online pharmacy in India. 

What Is Online Pharmacy?

At an age where everything is going on the web and individuals are purchasing nearly everything from staple to contraptions on web stores, it is the time that the medical and pharmaceutical market makes up to the trend and without a doubt it has. You would now be able to satisfy all your medical needs online, at well, an online pharmacy.

Legal Status of Online Pharmacy in India

The Drugs and Cosmetics Act, 1940 and it’s given provisions, have set rules on the offer of Schedule H and Schedule X drugs, which can be sold with a legitimate prescription only. Along these lines, in India, where online drug store is taking control over, the administration’s laws have kept up; ensuring no unlawful medication utilization is practiced online. Ayurveda and nutraceuticals likewise have laws that regulate and govern their use.

Formalities to be made when opening an online pharmacy

• As expressed over, specific laws are to be followed while opening an online drug store and these rules are very stringent.
• The sum total of what laws have been settled and any online drug store must agree to every one of the standards and directions, nonetheless, there are numerous escape clauses that these drug stores are using for their benefit and illicit medications have been on the ascent.
• In light of its inconceivability, medical laws can’t be extensive henceforth causing the flow of illicit medications and pharmaceuticals.

How Many Online Pharmacies Are Present

• The number can’t be precisely assessed, in any case, in light of a pursuit, around 3000 online drug stores were found, and half of them were situated in the USA and 19% in the UK and the adjust in different nations like India, Canada, and so forth. In another discovering, B-2-B organizations additionally offered online pharmaceuticals of which 19% are from India.
• All the western nations are affectionately utilizing this astounding facility. Likewise, in India, the development of online Pharmacy is altogether heightening. In spite of the fact that India should work harder in persuading individuals about the originality of medications, the extent of an online drug store in India is as still huge.

An Online Pharmacy In India Can Be A Successful Venture If It Can Lure Its Local Audience By

• Making them acquainted with the way that medicine eCommerce’ exist
• Guaranteeing them that payments on such site are agreeable and safe
• Offering aggressive discount like that of physical chemist expert stores
• Keeping medications of well-respected brands
• Housing other health care items for purchasing
• Offering a freedom to pick the sort of payment alternative relying upon person’s comfort
• Conveying the service to all aspects of India.

Legality Of Online Pharmacy

The essential contention about the legitimacy and viability of the online pharmacy has been with respect to the sale of prescription drugs. Numerous e-drug stores have received a strategy where the customers are required to upload a virtual copy of their e-prescription or prescription This virtual remedy is then confirmed by the online drug store and appropriately the medications are given to the clients. Such a prescription can be utilized just once to buy the endorsed medicine and can’t be re-utilized.

The law in regards to e-pharmacies is loaded with ambiguities, and accordingly has been translated in an accompanying way and partitioned into three categories:

Green Zone

1. In this zone fall the prescriptions which must be sold -out by a registered pharmacy having a drug specialist (pharmacist) on its payroll.
2. The orders of the offer must be taken from areas where the retail permit is legitimate and registered. For instance, if the permit for retail is legitimate just in Karnataka, at that point orders might only be engaged for Karnataka.

Grey Zone

1. Each state has a state drug department that issue licenses for the sale of the medical drug just in that specific state.
2. There is uncertainty with respect to the sale of medications between various states, in light of the fact that there exist no provisions for an inter- state permit available for sale of medicinal drugs.
3. There is additionally some uncertainty in connection with the collection of cash before the conveyance of medicines. This raises the question to the legitimacy of the payment through credit/charge card choice given on the sites, where one can make the payment before the conveyance of the prescriptions ordered.

Red Zone

1. Sale of physician recommended drugs without a prescription from a specialist is prohibited.
2. Sale of medications at a cost higher than the value given as the maximum retail price (MRP) is an offense.

The legitimacy and lawfulness of e-prescriptions fall into a gray area of the law and accordingly, acknowledgment of these prescriptions by e-drug stores for providing drugs against such prescription has been under the scanner.

Section 4 of the Information Technology(IT) Act manages “Legitimate acknowledgment of electronic records” and Section 5 of the IT Act accommodates “Lawful acknowledgment of electronic signature”. sec 5 likewise gives the three essentials for legitimate acknowledgment is that there ought to be a law that requires data, matter or report should be signed by a man, in place of such signature, an electronic signature is affixed and such an electronic sign ought to be appended in a way recommended by the central government. Run 65 of The Drugs and Cosmetic Rules, 1945 provided that “a prescription ought to be in writing and signed by the individual giving it with his typical sign and be dated by him”.This perusing of sections 4 and 5 of the IT Act alongside Rule 65 of the Drugs and Cosmetics Rules fulfill the lawfulness and legitimacy of an e-prescription, that is to be composed and signed electronically.

The position of law on the legitimacy of e-prescription has been settled by the currently enacted Pharmacy Practice Regulations, 2015. Sec 2(j)(3) of the Regulations give the meaning of a prescription as a “written and electronic bearing from a Registered Medical Practitioner or other appropriately license experts to a pharmacist to compound and apportion a particular sort and nature of arrangement or prefabricated medication to a patient”. This definition clarifies that e-prescription is substantial and legitimately recognizable.

Subsequently, it can be inferred that doctors can prescribe medication to their folks through an electronic remedy also, yet the issue remains regardless of whether the present Indian laws consider these e-prescriptions to be utilized for purchasing prescriptions online too or just to buy from a physical pharmacy.

In India, the sale of professionally prescribed medications is controlled by laws detailed under “the Drugs and Cosmetics Act, 1940, Drugs and Cosmetics Rules, 1945, and Drugs and Magic Remedies (Objectionable Advertisements) Act, 1954”. Every one of these Acts is pre-colonial and in this way couldn’t have expected the online offering of pharmaceutical items through e-pharmacies. Subsequently, these laws are quiet on the issue of e-drug stores and don’t have any laws to direct online selling of professionally prescribed medications. Since the Indian laws are silent on the working and controlling of online drug stores, numerous online pharmacy sites have taken the directions given under the Drugs and Cosmetics Act for running physical pharmacy as being appropriate to online drug stores too, building them to be lawful in essence.

In July 2015, the health ministry of India requested the constitution of a subcommittee to investigate the issue of online drug stores. The Committee has been constituted under the headship of the Food and Drug Administration (FDA) Commissioner of Maharashtra, Harshadeep Kamble. The issue before the subcommittee was the examination of the online sale practices practiced by developed nations and how they have affected public health in these nations and whether their usage is conceivable in India. The committee has welcomed remarks and contributions from different stakeholders, for example, public organizations, trade bodies among others. The subcommittee has not presented its report yet.

On October 29, 2015, the Bombay High Court pronounced that the online offer of medicines provided under schedule H of DCA without a cash memo or a prescription is illicit and requested that the Maharashtra government make the strides important to avoid unapproved and unlawful selling of scheduled drugs on the internet. This was an outcome of a PIL looking for a prohibition on e-pharmacies selling doctor prescribed medications without prescription or money memos.

The rules on control of e-drug stores proposed by FICCI ought to be placed in the drive to guarantee purchaser security while completing the transaction of pharmaceutical items online. Execution of these rules will likewise make obligations with respect to the e-drug stores to ensure that they don’t sell unlawful or fake pharmaceutical items and furnish the consumers with all the fundamental information for purchasing prescriptions online. The VIPPS accreditation program presented by the NABP in the US can be merged in India also to make e-drug stores safe for Indian customers. The idea of planning a protected application for obtaining medicine online will likewise contribute to expanding the ease of access to the buyers to medical supplies.

References

1. Verma, N. (2015). Online pharmacy business in India– Past, Present and Future – Better Health with Care, Fitness and Remedy. [online] Better Health with Care, Fitness and Remedy. Available at: http://www.mchemist.com/blog/online-pharmacy-business-in-india-past-present-and-future/ [Accessed 10 Aug. 2017].
2. Gupta, A. (2016). Legal status of Online Pharmacies in India. [online] The Law Blog. Available at: https://thelawblog.in/2016/11/07/legal-status-of-online-pharmacies-in-india/ [Accessed 10 Aug. 2017].

The post Legality of Online pharmacy in India appeared first on iPleaders.

In this article, Anubhav Pandey editor at iPleaders blog and an academic at Rajiv Gandhi National University of Law discusses how to settle a case out of court. All you need to know about out of court settlement.

Out of Court settlement

Consider the situation of your case getting settled without getting into the nitty-gritty of court procedure. The idea is not only impressive from a litigant perspective but the Court nowadays are more oriented towards settling cases out of court. Let us understand the complexities involved in out of court settlement.

In what cases can we undergo out of court settlement?

The route of out of court settlement can be exercised in both criminal as well as civil matters. Although, in civil matters, complexities are relatively very less compared to criminal matters. Out of court settlement in criminal matters involves lots of issues. For illustration, only those criminal offences can be settled out of court which is not very grave in nature such as criminal defamation.

In addition to the above cases, out of court settlements are observed in cases involving Family disputes, Motor vehicle claims, Industrial disputes and more.

Legal validity of out of court settlements

Out of court settlement in civil matters – (Section 89, & ORDER 23, Rule -1) CPC

Section 89 of the CPC talks of out of court settlement through the means of Alternative Dispute Mechanism. Mediation, Conciliation, Lok Adalats are the new tools of the justice dispensing system. It is to be understood here that, it will be wrong to infer from the provision that if the parties agree they can take the case completely out of court’s court. Still, the case will be regulated as per the provisions of the relevant ADRs Act. ^[1]

Order 23 Rule 1 of CPC talks of withdrawal of suit or a part of the claim in a suit. The order of CPC discusses out of court settlement without naming it.

Thinking of out of court settlement in civil matters. Do follow the checklist below.

• Make it sure you mention your clear intention of out of court settlement before the court.
• Under Order 23 Rule 1 of CPC when a suit is withdrawn for an out of court settlement, litigants are precluded from initiating fresh proceedings of the matter withdrawn.
• Out of court proceedings can be quashed by the court. Court can do this only under special circumstances.
• In the following case, the parties opted for an out of court settlement. The settlement was later found out to be malafide. The parties filed a Civil Miscellaneous Appeal (C.M.P) to quash the settlement results.^[2]

Out of Court Settlement in criminal matters

Criminal cases which are mostly concerned with private wrong can be settled out of court. These categories of offences are termed as compoundable offences. Therefore only compoundable offences can be settled out of court.

Offences arising from commercial, financial, mercantile, civil, partnership, relating to matrimony or dowry can be opted for out of court settlement.^[3] The court observes that the offence should not be of such grave nature to harm the society at large.

The list of the criminal cases which can be settled out of court is listed below.

Different ways of settling a case out of court

Alternate Dispute Resolution is the need of the hour. It is more convenient to settle a case outside the court in a regulated mechanism than to fight the same in the court of law. The concept of ADR comes as a rescue to help people settling their cases out of court.

The most common types of ADRs are

1.  Arbitration
2.  Conciliation
3.  Mediation
4.  Neutral Evaluation

Arbitration as a mechanism of ADR is used mostly by corporate entities. Mediation is mostly used to settle matters relating to family disputes. Conciliation is a form of arbitration but it is less formal in nature. It is the process of facilitating an amicable resolution between the parties, whereby the parties to the dispute use conciliator who meets with the parties separately to settle their dispute.Neutral Evaluation is a new mode of ADR introduced in India in 2007.

Defining Neutral Evaluation in Robert A Goodin’s words. “ Early neutral evaluation is a technique used in American litigation to provide early focus to complex commercial litigation, and based on that focus, to provide a basis for sensible case management or offer resolution of the entire case, in the very early stages”.^[5]

To read more on ADR VISIT. https://blog.ipleaders.in/adr-alternative-dispute-resolution/

Do we need court’s permission to do out of court settlement?

In case of civil suits, out of court settlement can be brought at any stage of the suit. The only requirement to formalise the settlement is a compromise Agreement in Civil Cases.

The complexities arises in criminal cases. But the same is settled by the new guidelines issued by the Supreme Court.^[6] In case of compoundable offences, court permission is not required. But when there is compromise between the parties or out of court settlement in non-compoundable offences, prior permission of court is required. Although court holds a discretionary power to cancel the settlement anytime.

What to do when out of court settlement does not works out? What if any parties to the agreement retract from the settlement?

In civil cases, only those settlements made out of court and involving the elements of fraud or coercion or made with malafide intent can be called off. For more detailed answer to the provision, please refer to the following judgment, “Ghulam Nabi Dar v State of J&K, (2013) 3 SCC 353”. In usual sense, if any parties to the agreement retract from the settlement one can always approach the appropriate court for the grant of specific performance of the compromise agreement.

Out of court settlement in cases of Property Disputes?

Cases relating to property disputes usually take years to settle. Therefore, an alternative of mediation is always available to settle the dispute. This is a form of out of court settlement the only condition is, all the parties to the dispute must agree to out of court settlement.

Family Settlement Deed

By agreeing to Family Settlement Deed, the family members mutually work out and distribute the property among themselves. Family Settlement Deed is an out of court settlement to which the court agrees. There is always a discretionary power available with the court. Using this discretionary power the Court can anytime declare the agreement null and void if there is presumptive essence of fraud or coercion.Disputes relating to Real Estate, Jewellery or money in bank accounts.

Only disputes relating to common property or joint family property can be settled with a Family Settlement Deed.

The following is the procedure for undergoing a Family Settlement Deed.

• The settlement must be signed by all the concerned family members to the settlement. This is formally called the Memorandum of Partition.
• The memorandum consists respective shares of particulars in each schedule.
• A usual practice is to get the deed attested by two witnesses.
• Registration according to Section 17 of the Indian Registration Act.

Out of court settlement in divorce matters? Say no.

Indian court does not accept out of court settlement in divorce matters. Mediation is a way to settle the dispute but if the couple wish to simply call off the marriage without letting the court know of their intention, this is not an intelligent way to separate. If you are legally married, you can apply for and avail a decree of divorce dissolving your marriage, Out of court divorce is not accepted by the courts in our country.

Couple cannot enter into a compromise deed wherein the wife forgoes her maintenance rights and settle for a divorce out of court via an agreement. Justice, Akil Qureshi in a case illustrated this point clearly. The same goes with prenuptial agreements. The couple cannot get a prenuptial agreement as it is not valid in India. Prenuptial agreements have no binding value in the Indian Courts.^[7]

Out of Court Settlement in case of Industry Disputes?

Collective Bargaining – Out of Court settlement of Industrial Disputes

The term ‘Collective Bargaining’ is to be understood by its etymological sense. Lengthy court procedure is not a solution nowadays. Both the management as well as the workers are not in favour of lockouts or strikes. The Industrial sector depends on manpower and labour. An alternative to court procedure is the option of ‘Collective Bargaining’.

Stages of Collective Bargaining

Collective Bargaining is a very organised way to settle Industrial disputes without going into litigious processes. The stages to collective Bargaining are as follows^[8] –

Step 1 – Preparation for Negotiation

The first step includes the overall process of forming a team both from management’s and worker’s side. The workers decide the demands to put forth before the management. The management decides the extent to which they will accept the demands put forwarded by the workers.

Step 2 – Negotiations between the management and union

This stage is excessively a complicated one. It requires a protracted and complex interchange of ideas combining argument, horse-trading, bluff, cajolery and threats. The result of the overall negotiation is the actual settlement reached between the workers and the management. When the terms of the negotiation is formally decided, this results in the final third step.

Step 3 – Drafting Agreement

Drafting of agreement must be in such a manner as to respect the real intention of the parties. The provisions mentioned in the agreements are supposed to be clear and definite and should explicitly cover the subject matter in accordance with the intent of the agreement.

Enforceability of Collective Bargaining Agreement

In India, collective bargaining agreement can be enforced under Section 18 of Industrial Disputes Act, 1947, as a settlement arrived between the workers and the employers. Under Section 18 (1) of Industrial Dispute Act, 1947, a settlement arrived at by an agreement between the employer and workmen otherwise than in the course of conciliation proceedings is binding only on the parties to the agreement.^[9]

Settlement of Motor Accidents Claims through Compromise

JALD RAHAT YOJANA

Steps to be taken for implementation of the Scheme General Insurance Corporation has prescribed certain steps as follows:

1. Calling for application from claimants who desire to secure compensation at pre litigation stage.
2. For this purpose, it may be necessary to insert public notice so that the claimants who are having complete documents may apply for compensation in the prescribed form which can be obtained from the address indicated in the public notice.
3. The claimant has to submit the prescribed application duly completed along with the supporting documents as enumerated in the application.
4. The application along with the documents may be scrutinised to confirm that the application so received can be considered for payment of compensation at the pre-litigation stage.
5. Motor Policy of the involved vehicle is required to be verified to ensure that accident has fallen within the policy period.
6. There is a valid insurance at the material time of the accident due to compliance of Section 64 V B of the Insurance Act, 1938.
7. To ascertain that the liability about the accident reported is established under the policy.
8. Vehicle documents and driving licence of the person driving at the material time of accident needs to be verified.
9. On considering the foregoing, if the application is found in order, the amount of compensation can be estimated.
10. A panel to recommend the quantum of compensation consisting of retired judge and medical practitioner as nominated by the State Legal Aid Board may be constituted.
11. A retired Insurance Executive to work on the panel may also be nominated by Chairman, GIC/CMD of the company.
12. Notice about the date of the session may be given to claimant and issued to remain present before the panel to negotiate compensation.
13. Once the amount is agreed in the presence of the claimant, insured and representative of the Insurance Company, a prescribed form of agreement may be signed by the concerned parties. A discharge voucher in the prescribed form may be obtained from the claimant so as to disburse the amount of compensation as agreed.
14. An intimation of the agreement and the amount agreed may be furnished to the concerned MACT to record with them the compromised settlement.^[10]

References

^[1] Salem ADvocate Bar Association v Union of India, AIR 2003 SC 189

^[2] Ghulam Nabi Dar v State of J&K, (2013) 3 SCC 353

^[3] Gian Singh v. State of Punjab and another (2012) 10 SCC 303

^[4] For the complete list you can visit – http://devgan.in/crpc/section/320/

^[5] Bawa Masala Company vs. Bawa Masala Company Pvt. Ltd. (OS No.139 of 2002).

^[6] Narinder Singh & Ors V State of Punjab & Anr. (SLP Criminal 9547 of 2013)

^[7]http://timesofindia.indiatimes.com/city/ahmedabad/Out-of-court-alimony-settlement-not-final-HC/articleshow/6616323.cms

^[8] 47 Indian Law Institute, Labour Law and Labour Relations, 1968, p. 30.

^[9] Marysur, Collective Bargaining, 1965, p.4.

^[10] http://shodhganga.inflibnet.ac.in/bitstream/10603/8947/14/14_chapter%2010.pdf

The post How to settle a case out of Court? appeared first on iPleaders.

In this article, Arunava Bandyopadhyay pursuing M.A, in Business Law from NUJS, Kolkata discusses how to Participate in Government e-Market (GeM) as a Seller.

Introduction

“The Government is committed to curbing corruption. One of the key aspects of this objective is to minimize Government’s human transactional interface. Accordingly, public procurement is being transformed by leveraging technology such as online marketplaces and e-tendering. The Government E-marketplace (GeM) also offers other advantages such as minimizing prices while maximizing ease, efficiency and transparency. It will help enhance processes in ways such as demand aggregation, real-time price discovery, and prompt automated payments.” – Shri Narendra Modi, Prime Minister of India.

The above quote of the Hon’ble Prime Minister of India summarizes the whole objective of the Government of India noble Initiative to bring in transparency and curb corruption. Public procurement forms a very important part of Government’s work and as such it involves significant amount of money and goods transaction. The bureaucratic ways of Government processes led to various loopholes and ultimately the cancer of corruption has eaten up a big amount of government’s exchequer. To curb this corruption and bring transparency and efficiency reform in Public Procurement is one of the top priorities of the Indian Government. Government e-Marketplace (GeM) is an exceptionally intense stride of the Government with the hope to change the way in which acquisition of merchandise and ventures are executed by the Government Ministries/Departments, PSUs, Autonomous bodies and so on. This initiative expects to upgrade straightforwardness, effectiveness and speed in public procurement. It gives the instruments of e-bidding, reverse e-auction and demand aggregation to encourage the government users to accomplish the best incentive for their cash. In short, it is government’s initiative for Procurement made smart.

Background of Government e-Marketplace

The Government e-Marketplace initiative owes its beginning to the proposals of two Groups of Secretaries made to the Hon’ble Prime Minister in January 2016. They suggested setting up of a devoted e-market for various products and services procured/sold by Government/PSUs other than improving DGS&D. Along these lines, the Hon’ble FM in his Budget discourse for FY 2016-17, declared setting up of an innovation driven stage to encourage procurement of products and services by different Ministries and offices of the Government. DGS&D with expert help of NeGD (MeitY) has created GeM portal for procurement of both Products and Services. The portal was launched on 09th August 2016 by the Hon’ble Commerce and Industry Minister. Procurement on GeM has been approved by GFR by including Rule 141A (DoE OM dated third May 2016). Presently more than 7400 products in about 150 product categories and hiring of transport service are available on GeM POC portal. Transactions for more than Rs 140 Crore have already been processed through GeM. It is a totally paperless, cashless and framework driven e-commercial center that empowers acquisition of regular use merchandise and services with negligible human interface.

Benefits of GeM

Government e-Market place has several benefits to the Government, Sellers and Indian Industry and economy. Let us explore the benefits for different stakeholders:

Buyers

1. Offers rich posting of items for singular classes of Goods/Services
2. Makes accessible hunt, think about, select and purchase facility
3. Empowers purchasing Goods and Services on the web, as and when required.
4. Gives straightforwardness and simplicity of purchasing

5.Guarantees ceaseless merchant rating framework

6. Progressive easy to understand dashboard for purchasing, checking supplies and payments
7. Arrangement of simple merchandise exchange

Sellers

1. Accessibility to all Government offices in one go
2. One-stop search for showcasing with insignificant endeavors
3. One-stop search for offers/reverse auction on items/services
4. New Product Suggestion facility accessible to Sellers
5. Dynamic pricing: Price can be changed based on market conditions
6. Seller cordial dashboard for offering, and checking of supplies and payments
7. Consistent and uniform purchase procedures

Common Benefits to all Stakeholders

Transparency

GeM disposes of human interface in seller enlistment, arrange position and installment preparing, all things considered. Being an open platform, GeM offers no entry barriers to bonafide suppliers who wish to do business with the Government. At each progression, SMS and email notices are sent to both purchasers, his/her head of association, paying specialists and additionally merchants. On the web, cashless and time bound installment on GeM is encouraged through combination with PFMS and State Bank Multi Option System (SBMOPS); web-administrations incorporation is being stretched out to installment frameworks of Railways, Defense, major PSUs and State Governments. Seamless processes and online time-bound payment, which is also mandated by the OM issued by Department of Expenditure, has given confidence to the sellers and reduced their ‘administrative’ cost involved in pursuing officers for timely payment.

Efficiency

Coordinate buy on GeM should be possible in a matter of minutes and the whole procedure in on the web, end to end incorporated and with online instruments for evaluating value sensibility. For acquirements of higher value, the offering/RA office on GeM is among the most straightforward and proficient, in contrast with e-acquisition frameworks in vogue inside the Government segment. For making an offer/RA, the purchaser does not have to make his/her own particular specialized details as they have been institutionalized on GeM. The offer/RA can be made in a matter of minutes and concluded inside at least 7 days. The offer/RA is advised by means of email and SMS to all the qualified providers; new providers are additionally told once they get themselves enrolled online on GeM and are resolved as “qualified” by the framework. Diamond offering/RA along these lines guarantees rivalry, reasonable play, speed and effectiveness and prompts appropriate value disclosure. The sensibility of the rates can likewise be affirmed through online correlation with advertise cost on driving internet business entryways. Soon, GeM will likewise begin getting nourishes from different other open acquisition gateways keeping in mind the end goal to guarantee that a similar thing has not been obtained at a lesser rate by some other Government office, from the same or an alternate seller.The sensibility of cost would be additionally fortified by method for incorporation with GSTN and ICEGATE that will empower the purchaser to find out the cost of a thing when it left the plant entryway or when it got transported in into the nation. These would make GeM a greatly capable device in the hands of Government associations to arrange and obtain.

Secure and Safe

GeM is a totally secure platform and every one of the archives on GeM are e-Signed at different stages by the purchasers and dealers. The predecessors of the providers are confirmed on the web and naturally through MCA21, Aadhar and PAN databases. What’s more, SEBI empaneled FICO assessment offices are likewise being utilized for directing third party appraisal of providers. This would additionally reinforce due diligence about the veracity of providers planning to work together on GeM. For high value bids/RA on GeM, an e-Bank Guarantee is likewise being presented.

GeM is an obviously better framework than the current one which depends more on money related instruments (EMD if there should be an occurrence of tenders for extensive acquirements just) to ensure great lead by the providers. In the current framework, there is zero keep an eye on the predecessors of the providers for little value acquirements (upto Rs. 1 lakh) whose total value is huge across the Government organizations. GeM does a 100% online check of all sellers independent of the estimation of procurement.

Potential to Support Make in India

On GeM, the channels for choosing merchandise which are Preferential Market Access (PMA) consistent and those produced by Small Scale Industries (SSI), empowers the Government purchasers to acquire Make in India and SSI products effectively. Effortlessly available MIS additionally empowers the executives and arrangement creators to effectively and adequately authorize the Government directions on PMA and SSI sourcing.

Savings to the Government

The straightforwardness, effectiveness and convenience of the GeM portal has brought about a significant diminishment in costs on GeM, in contrast with the delicate, Rate Contract and direct buy rates. The normal costs on GeM are bringing down by at least 15-20%, and now and again even upto 56%. Jewel is additionally doing Demand Aggregation for things that are to be secured by different Central/State Government Departments. Request Aggregation is relied upon to additionally minimize the costs, by method for institutionalization of details and economy of scale. Request conglomeration for the greater part of the basic utilize products and services is evaluated to bring about yearly funds to the tune of Rs 40,000 Crore per annum. On the off chance that sought after to its coherent decision, GeM would, in the end, rise as the National Public Procurement Portal, keeping tuned in to the Global accepted procedures; the greater part of the OECD nations, similar to USA, South Korea, UK, Singapore and so on, have a single NPPP and as a result annual savings of billions of dollars are made in public procurement, besides giving a fillip to the domestic industry.

How to Start Business as a Seller on GeM

As General Financial Rules, On GeM, for purchases upto Rs.50,000/-, “Purchaser (s)/Buyer(s)” are authorized to source required items through any of the available sellers on the GeM meeting requisite quality, specifications and delivery period. However, for purchases above Rs. 50,000/-, “Purchaser (s)/Buyer(s)” are authorized to source required items through the supplier having lowest price amongst the available suppliers on the GeM meeting requisite quality, specifications and delivery period. Aforesaid, powers have been vested in the Government user departments so that they can meet their requirement of common user goods and services with the flexibility and speed of e-market place and relieve them from repeated mundane activity of bid management. The primary registration to the government users is granted at the level of Deputy Secretary/equivalent officer in respective government departments.

The terms “Sellers” or “Sellers” has been defined as the firm(s) a proprietorship/partnership firm/Limited Liability Partnership/Private Limited/Limited company/Society registered under Society’s Act that offers its Good(s)/Service(s) on GeM and agree to accept the contract placed by “Buyer(s)” for supply of the Good(s)/Service(s) as per the terms and conditions of GeM. The Sellers on GeM will be the OEMs (Original Equipment Manufacturers) and/or their authorized channel partner(s)/ resellers (having any general authorization/dealership of the OEM to sell their product in open market) and e- Marketplaces.

The Steps for Starting Selling on GeM Portal are broadly as follows

1. Business Registration

The firm willing to sell on GeM portal or generally starting a legal business model would require to incorporate a new Private Limited Company or LLP, if required.

2. Tax Registration

Aadhar, PAN, GSTN registration numbers needs to be obtained.

3. Bank Account Link

A Bank account needs to be opened and registered with name of the business firm.

4. GeM Registration

GeM Seller or service provider registration to be completed by registering online and providing required information and documents.

5. E-Sign Terms and Conditions

After all requisite forms are filled up, GeM terms and conditions needs to be e-signed.

6. Knowledge

Learn selling on GeM portal, usage of GeM Dashboard and procedures.

7. Begin Selling

Now let us look into details of the Seller registration process and documentation required:

The following documents are required for Seller Registration:

1. PAN CARD
2. UDYOG ADHAR or COMPANY REGISTRATION or LLP REQUIREMENTS
3. VAT/ TIN NUMBER (of applicable)
4. BANK ACCOUNT & SUPPORTING KYC DOCUMENT
5. IDENTITY PROOF
6. ADDRESS PROOF
7. CANCELLED CHEQUE COPY

The Following links are applicable for Online Registration as Seller / Service Provider

• https://gem.gov.in/register/provider/register

After registration, the firm will be issued a userID and password from GeM portal to access the seller account. Afterwards, the listing & pricing of the products or services are done which are to be offered. The sellers have freedom of pricing the product as per the cost involved. But the final price should include the costs like cost of logistics, duties, packing & taxes, etc. along with a reasonable margin to arrive at the selling price on all-inclusive basis- indicating percentage of GST, as applicable at site basis. Once registration and listing is complete, the products of the seller are visible to the buyer and orders can be placed. If any order is placed the seller will find it in its dashboard and the GeM portal will also send an email alert to sellers registered email id.Buyer shall award the digitally signed/e-signed on-line Contract(s) in the GeM after due diligence to meet their requirements including the requisite specification and delivery period. The Buyer shall satisfy them that the price of the selected offer is reasonable. In case of Services, the agreed SLA (Service Level Agreement) would also constitute the integral part of the Contract(s). For award of Contract(s), Buyer is at liberty to utilize all the data/information and tools made available in the GeM including e-bidding and reverse e-auction. On award of the Contract(s), it would be construed that the Buyer has obtained all necessary Administrative & Financial sanctions of the competent authority and adequate funds are available indicating the relevant Head of accounts in the awarded Contract(s). These Contract(s) in the GeM shall be governed as per terms and conditions specified in the Order document.

After order receipt then it is the seller’s responsibility to pack and deliver the goods safely to buyer’s delivery address on time. The payment will be processed directly to the registered bank account of the seller after ten days if the buyer is not availing the return policy.

Some Important Guidelines for Sellers

• Any number of products can be offered by a seller subject to the condition that more than one OEM is not represented.
• Seller enrolled with GeM shall be required to furnish requisite information regarding them and their offered product(s) on GeM as per template prescribed in the GeM.
• Sellers are required to keep GeM refreshed with changes/revisions in any of the particulars outfitted by them. Updates towards such changes would entirely be required to be made by Seller inside a time of 15 days from the date of such change(s). The rebelliousness of moment condition might equivalent to disguise of truths and make them obligated of evacuation of their enrolment with GeM and/or corrective action(s) as valued fit.

Seller would likewise be at risk to be suspended from GeM and/or correctional activity, on the off chance that they neglect to comply with any of the terms and conditions stipulated for GeM or on the accompanying grounds. In the event that the seller:-

• Supplies products of second rate/substandard quality.
• Executes services without fitting in with prerequisite given in Service Level Agreement (SLA).
• Neglects to execute a request/contract or neglect to execute it palatably.
• Is pronounced bankrupt or wiped out.
• Neglects to deliver the essential records/data over the span of review/evaluation at any stage; and,
• On some other ground for which, in the sentiment of GeM, the maintenance of the seller or any of its offered item in GeM is not in Public Interest.

The grounds mentioned above are illustrative only. The Appellate Authority for any representation or grievance on account of seller’s removal would be vested with the Director General.

• DGS&D maintains all authority to review and to survey fabricating/testing/quality control arrangement(s) of assembling premises and/or any of the premises identified with assembling procedure of offered result of the Seller. DGS&D additionally maintains whatever authority is needed to investigate nature of the offered item through archives, test reports/authentications, testing at any free lab or through review/testing by its approved delegate/s at Association’s premises or at client’s premises as chosen by DGS&D, for which the dealer should give important offices and labor to such reason.
• If any firm has been de-registered or debarred from business dealings with DGS&D then such firm or their agent/partner shall not be permitted to register and offer/sell their products on GeM in terms of DGS&D Circular No.112 dated 19-09-2016.
• The individual(s) registering on GeM and/or offering or buying Goods/Services and/or participating in e-bidding/reverse auction on GeM, must ensure that they have the requisite authorization to enter into contract with Buyer(s)/Seller(s) in GeM for and on behalf of the concerned legal entity, failing which such individual(s) shall be individually liable for its actions and also for any liability arising out of such actions.
• All sellers on GST needs to be mandatorily GST complaint from 1st July 2017.

Conclusion

There is no doubt that it is a noble initiative and will curb corruption and bring transparency in system in immense way, however as soon as the rules are known to the users, in no time it will be bent to serve the purpose of any miscreant. Government should strengthen the mechanism of periodic audit of buyers and sellers to stop any type of curtail formation and price control. The appellate authority needs to be strong and swift in handling complaints. While curbing corruption is one facet, the quality control mechanism in India needs to be strengthened to become world class. As per directive Government always tries to go for lowest bids, however it needs to be understood that best quality will seldom accompany lowest price. It is a misnomer to assume that with lowest bid the government is registering savings, on proper investigation, it will be found out that lowest bid parties rarely complete their scope and also provide poor quality service and supply which leads to repeated ordering and increased rectification cost. The GeM somehow promises to control the quality aspect but the overall solution is not visible. Strong analytical setup for quality control and fraud identification needs to be structured along with identification of minimum allowable price for entry of sellers needs to be processed. On part of the seller, getting approval to sell on GeM portal itself is a proud moment and provides sufficient recognition for future business development. This opportunity should not be wasted with poor workmanship and giving scope to criticism of a noble initiative. With vigilant buyer and honest sellers only the e-Market place can be successful and progress the nation in the right direction.

References

1.      https://gem.gov.in/aboutus
2.      http://pib.nic.in/newsite/PrintRelease.aspx?relid=157610
3.      https://gem.gov.in/register/provider/register
4.      http://legaladda.myonlineca.in/government-e-marketplace-registration-guide/
5.      https://gem.gov.in/userRegisterGuide
6.      https://gem.gov.in/termsCondition

The post How to participate in Government e-Market as a Seller appeared first on iPleaders.

In this article, Akshita Rishi pursuing M.A, in Business Law from NUJS, Kolkata discusses Rules & Regulations Related to Road Tax in India.

Introduction

Road tax as the name suggests means the tax levied on any vehicle before it is used in public on the road. It is a state level tax, i.e. it is imposed by various states at their individual level, which leads to a varying percentage of taxes in different states.

Road tax is one of such taxes, which are very important for every individual tax paying citizen of India.

It is nowadays important because approximately one person amongst three owns a vehicle. Also, Road tax is a compulsory tax paid by the person when he purchases it.

So, it is paramount to know about tax, which is popularly paid by many.

Let us Understand the Concept and Related Rules Framed by Government

Vehicles Liable to Pay Road Tax

This tax is paid on all the vehicles including two-wheelers and cars. The tax is levied on all private and commercial vehicles.

Authorities who Levy such Taxes

Road Tax is levied by,

• Central Government
• State Government
• Local Authorities

Reason Behind the State Levying Road Tax in India

In India, all the roads are not made by the Central Government. Around 70% to 80% roads in the state are constructed by their respective state governments. So, obviously the cost is borne by the state government due to which they are given the responsibility to impose road tax for their state. This is the reason behind different rates in different states.

So, the reason behind such different rates is clear but still due to variation in the tax rates, the common man faces a lot of problems in transfer of vehicles or goods from one place to another.

The transfer process is also time consuming, thus, creating complications for the common person.

Time of Payment of Road Tax

Road Tax is paid when the registration of the vehicle takes place. It is paid either on a yearly basis or once in a lifetime. This payment depends on the various criteria of the state governments. However, if the owner of the car uses it in some other state, i.e. not in the state where the vehicle is registered and the owner has paid the road tax for the lifetime, then in this case, the person has to pay the road tax again in the new state.

• Like in Delhi, the Road Tax is paid at once at the time of registration.

Place of Payment of Road Tax

The Road Tax is paid at the Regional Transport Office i.e. RTO.

Calculation of Road Tax

The calculation of Road Tax is done on the basis of ex-showroom price of the vehicle purchased.

Following Points are taken into Consideration while Calculating Road Tax,

• Age of the vehicle
• Seating capacity of the vehicle
• Weight of the vehicle

Rates of Road Tax in India

In India, Road Tax is imposed by three bodies of the Central government, State government and local authorities. Customs duty, Central excise and central sales tax are levied by central government, motor vehicles tax, passenger and goods tax, state vat and toll taxes are charged by state government and local bodies collect Octroi.

When a vehicle is purchased Central Excise Duty, Central Sales Tax and state VAT are applicable at 10%, 3%, 2% and 12.5% respectively.

For example, The rate of tax in Gujrat is 6% while in Tamil Nadu, it is 10% for the cars amounting to ₹10 lakhs and onwards.

As per Central Motor Vehicles Act, if a car is being used for more than a year, then it is compulsory to pay the whole amount of road tax at once.

Refund of Tax Paid

If the vehicle is used for less than 15 years and the owner decides to scrap or discard it, then he needs to cancel the registration of his vehicle at the Regional Transport Office in which the vehicle was registered. In case of transfer of registration of vehicle from one place to another, then the refund of tax can be claimed from the RTO in which the vehicle was initially registered and not in the RTO in which the vehicle was subsequently transferred.

Following Steps are Taken to Cancel the Registration

1. Either the Engine or Chassis number is removed from the vehicle and it is submitted at the RTO.
2. The number plate is also submitted after removing it from the vehicle.

On successful completion of these steps, the refund can be claimed after submission of other relevant documents which the authority may deem fit.

Online Payment of Road Tax in India

Online payment of Road tax can be done for the transport vehicles which are registered with the respective Transport Department. Any user can pay the tax by entering and submitting the Vehicle Registration Number and the Chassis number. They have to then select the mode of payment of tax and complete the payment process.

Role of GST i.e. Goods and Services Tax on Road Tax

Goods and Services Tax is the new tax replacing all the Indirect taxes. However, it is to be noted that some of the taxes like Road tax, Property tax, Stamp duty is outside the ambit of GST.

Thus, there is no effect of GST on road tax in India.

As the Rate of Tax of Different States is Different, So Let us Understand the Rules and Regulations of a few States

DELHI

Delhi, the Capital region levies Road tax as per Delhi Motor Vehicle Taxation Act, 1962.

The Road tax is paid under Section-3 of the above-mentioned act at the time of registration of the vehicle at RTO.

Rates of road tax

Different types of vehicles pay different percentage of tax. The number of drivers also plays a major role while calculating tax for commercial vehicles.

The Amount is as follows,

• Maximum passengers excluding the driver are liable to pay ₹305. However, more than two but upto 4 are required to pay ₹605. This amount increases as the number of passengers also increases. If the passengers are more than 18 or above excluding both driver and conductor, the owner is liable to pay ₹1915 plus ₹280 per passenger.

• The rates for airlines and staff vehicles are same as that of commercial passenger vehicles as mentioned above.
• The loading capacity of the goods vehicles plays a dominant role for commercial goods vehicles.
• If the loading capacity of the vehicle is less than 1 tonne then the road tax is ₹665. As the loading capacity increases, the amount liable to be paid by the owner also increases. For the vehicles of more than 1 tonne and less than 2 tonne the amount of tax is ₹940. The maximum tax which the owner is liable to pay is ₹3790 plus ₹470 per tonne. For trailers the amount increases as per the additional 10 tonnes and per trailer. In such a case, the maximum amount which the owner is liable to pay is 3,790.00 +@ Rs.470/-per Tonne + Rs.925/-
• It is to be noted in the case of the trailer that the road tax is charged to the corresponding registered vehicle only.
• For auto rickshaws ₹305 per annum is to be paid by the owner and in case of taxis ₹605 per annum is to be paid.

Payment of Road Tax

For personal use of vehicles, the Road tax is paid at once only, but in case of commercial vehicles, the Road tax can be paid on monthly, yearly and half-yearly basis as well. Such vehicles include all autos and taxis also.

Place of Payment

For private vehicles, the Road tax is paid at the respective Zonal Registration Office. Such payment is one-time payment only.

In case of commercial vehicles, the tax is deposited at the Headquarters of the Transport Department in the Account branch.

Time of Payment of Road Tax

The tax is to be paid at the time of registration of the vehicle. This provision is covered under Section 3 of Delhi Motor Vehicle Taxation Act,1962.

Tax Payment

The tax is paid at once and not on yearly basis.

Registration

In case the same vehicle if already registered either in Delhi or some other state, amount of one-time tax will be “amount specified in column (2) of part B of Schedule I and subtracting the proportionate amount of one-tenth of the tax which is calculated on each completed year from the month in which the vehicle was registered. If the vehicle is more than 10 years old, then this rule is applicable if the owner applies to the taxation authority for an endorsement and inform them that, as the motor vehicle is more than 10 years of age so the use of vehicle will not attract any tax.

Payment of Tax

The Registered owner of the vehicle or the person having control of such vehicle, either used or kept for use in Delhi is under obligation to fill up and sign the form, prescribed under the act stating all particulars. This form is then delivered within the prescribed time to the taxation authority.

Token

After successful payment under Section 3 of this Act and the owner has proved to the authority that no amount is due on such vehicle, the Taxation Authority will issue a token to that person. The token will be valid only for the period for which the payment has been done. This will also be mentioned in the Certificate of registration.

Alteration

In case the vehicle is used or kept for use in Delhi, is either altered or is propounded to be used in such a manner in which the owner or the person in possession is liable to pay additional tax, in this case the person is required to disclose all the related information and pay such tax with respect to such vehicle.

Certificate of Insurance

The Certificate of Insurance is compulsorily required to be presented at the time of payment of Road tax by the owner of the vehicle or the person in possession of such vehicle.

Arrears of Road Tax

If there is arrear of tax and the person before payment of such tax has either transferred the vehicle to another person or has terminated the ownership, then in such a case, the person currently in possession or the legal owner of the vehicle is liable to pay such road tax.

Penalty in Case Road Tax is not Paid

When the person in possession of the vehicle or the registered owner of the vehicle makes default in making payment of Road tax, then the Taxation authority may direct such person to pay the arrears of tax along with an amount not exceeding the annual tax payable with respect to such vehicle. This amount will be recovered as penalty from such person.

MAHARASHTRA

Calculation of Road tax

Following things are taken into consideration while calculating Road tax in the state of Maharashtra:

• Age of the vehicle
• Manufacturer of such vehicle
• Fuel type i.e. petrol or diesel
• Measurement of such vehicle i.e. it’s length and width
• Seating capacity
• Number of wheels of the vehicle
• Engine capacity of such vehicle….and many more

Schedule A (III)

This schedule mentions the tax rate with respect to the weight in kilograms. For less than 750 kg, the tax rate per year is ₹880. The amount increases with the increase in weight, like if the weight is equal to or more than 6000 but less than 7500 then the amount of tax will be ₹3450. The maximum tax to be paid shall be ₹8510 plus ₹375 to be paid for every 500 kilograms and part with respect to increase in excess of 16,500 kilograms.

Schedule A (IV) (1)

This schedule explains the tax rates with respect to the vehicle type. The vehicles which are licensed to carry 2 passengers is ₹160 per seat per year. With the number of passengers, the rate per seat per year also increases. The maximum tax is ₹600 per seat per year for a vehicle which carries 6 passengers.

The vehicle type differs and so as the rate of tax for,

1. a) air-conditioned taxi
2. b) Tourist taxis for AC or non – AC taxi or foreign make.

There are other schedules also like:

Schedule A (IV) (3) (A) stating the tax for inter-state route.

Schedule A (IV) (4) states the special permit vehicle covered under Central Motor Vehicles Act

Schedule A (VIII) deals with tax for transport of goods excluding for agricultural purposes.

Assessment of Tax Rate

The Taxation Authority shall verify all the particulars filled in the application form of registration and shall determine the rate of tax which will be imposed on the vehicle. This is applicable on all the vehicles registered in the state. In case the Taxation authority and registering authorities are different, the registering authority after verifying the particulars furnished by the person will intimate and forward the fact of such registration to the taxation authority so that it can also ascertain the rate of taxation applicable to such vehicle.

Payment of Tax

The tax can be paid with a government treasury also. Mode of payment can be as follows,

• Cash
• Cheque
• Demand draft
• Money order

This payment is done to the Taxation Authority in whose jurisdiction the vehicle is brought to be registered. In case of Government Treasury, the payment is done.

Change in Address or Transfer of Ownership

In Case of Change of Address

The owner has to inform the taxation authority in writing within 30 days but only in case if the transfer of the vehicle is in the same jurisdiction. If the transfer of vehicle is in another jurisdiction, then the owner shall forward the certificate to the jurisdiction in which the vehicle is being transferred so that the new address may be entered therein. The owner shall also intimate the taxation authority in which the vehicle was previously registered.

In Case of Transfer of Ownership

The transferor should within 14 days of such transfer, inform the taxation authority in form ‘TCR’ and also send a copy of this form to the transferee. The transferee, on the other hand, should inform about such transfer to the taxation authority in the jurisdiction of which the vehicle is being transferred (i.e. either at the place of residence or business) in form ‘TCA’ and shall forward to them, the certificate of transfer along with the copy of documents received by him from the transferor so that the particulars of transfer of ownership can be amended in the certificate of taxation by the authority.

Certificate in Case of Non-User of a Vehicle

The owner in whose name the vehicle is registered or the person in use have to make a declaration to the appropriate authority in writing on the following matters:

• The name and address of the registered owner or the person in possession of the vehicle, as the case may be.
• Registration mark of the vehicle.
• The starting and the end date during which the vehicle will not be used.
• The address of the place where the vehicle will be kept in the duration of its non-use.
• Reasons behind non-use of the vehicle.
• A declaration stating that the owner or the person in possession of the vehicle will not use the vehicle sans prior approval from the Tax Authority.
• A declaration stating that the certificate of taxation will be surrendered along with the declaration.

The above-mentioned declarations shall be made before the period of non- use of the vehicle is commenced and before the termination of current period in which the tax is to be paid.

Declaration for Payment of Tax

The following declarations shall be made in Form ‘AT’ stating-

• The registered trade mark on the vehicle, if any
• In case of advance payment of tax, the period of payment of tax
• The type of fuel used for the vehicle i.e. petrol or diesel
• In case the vehicle is covered under Clause A in the first schedule of the act and the mentioned tax rates are applicable to it then, it is compulsory to mention if the vehicle is,
  • Used only in the limits of the local authority which has imposed tax on the vehicle.
  • Used both in or out of the limit of local authority.

It is to be noted that a fresh declaration is required to be made each and every time the tax payment is done.

Refund Procedure

Under Section 9, the person claiming a refund is liable to submit an application to the appropriate authority in Form ‘DT’ mentioning all the relevant grounds to claim the refund along with the certificate of taxation. However, the authority will not entertain any application if such application is made after the expiry of six months from the date,

1) Mentioned on the “certificate of non-use” for the last date of non-use of the vehicle.

2) Cancellation, expiry or suspension of the certificate of registration of the vehicle.

The refund can also be claimed if the vehicle is permanently discarded or has been removed from the state.

After the application is received by the Taxation Authority under Rule 12, the amount of refund is calculated and a certificate is issued to the applicant in Form ‘ET’. Also, the Certificate of Taxation is returned to the applicant after entering the details of refund paid by the authority.

Such refund is claimed by the applicant within 90 days of issue of such certificate, by presenting Part II and Part III of the certificate at The State Bank of India, The Reserve Bank of India or any other bank which undertakes the cash business of the State Government. Part III of the certificate will be returned by the Taxation Authority with a “P stamp” to the Tax Authority, after the refund is done.

Vehicles Exempted from Levy of Road Tax

The Registered Owner or the person in possession or control of the vehicle can claim exemption from tax under Section 13 by making an application in “Form MT.

Any application made by the applicant can be entertained by the Regional Transport officer only if the application for the vehicle is made in respect of the following issues:

1. The vehicle is covered under sub-section (1)of Section 13.
2. The vehicle is a tractor which is used for drawing trailers solely for the purpose of conveying goods used for agricultural purpose. Any tractor used for transportation of agricultural produce from the farm to any godown, marketplace or the residence of the owner.
3. The vehicle belongs to the United Nations International Children’s Emergency Fund, New Delhi and is given to the Government of Maharashtra on the basis of a loan to execute schemes under the Community Project Programme. Also, it is mandatory that it should be registered in the State of Maharashtra.
4. The vehicle either belongs to The Government of India or The Government of Maharashtra
5. The vehicle belongs to the Consular and Diplomatic Officers
6. The vehicle belongs to the Cooperative for American Relief Everywhere Inc. (CARE). Also, it should either be imported or locally purchased and is used solely related to the work of a specific organisation in State of Maharashtra.

KARNATAKA

The Karnataka Road Tax Rules are stated under the Karnataka Motor Vehicles Taxation Act, 1957. The act has been amended several times thereafter.

Certain provisions with respect to Karnataka road tax are: –

Tax Percentage

• The cost of the vehicle and the age plays an important role.
• For 2 wheelers, the new vehicles which cost less than ₹50,000 or more than 50,000 are liable to pay 10% and 12% of the cost of such vehicle respectively. Vehicles that run on electricity have to pay 4% of the cost of such vehicle. Vehicles less than 5 years old are liable to pay 73% to 93% as covered under clause A and those of 10 to 15 years old have to pay 45% to 25% under clause A.
• For 4 wheelers, new vehicle which cost less than 5 lakhs have to pay 13% of the cost of such vehicle and those above 5 lakhs upto 10 lakhs pay 14%, and 17% and 18% is paid by those owners owing vehicles ranging 10 lakhs to 20 lakhs and more than 20 lakhs respectively. Vehicles which run on electricity have to pay 4% of the cost of such vehicle. With respect to age, the rate of tax is same as of 2 wheelers.  

Life Time Tax Payment

If the vehicle is registered in some other state but is currently operating in Karnataka, then such vehicle owner is not liable to pay lifetime tax again if such vehicle is used for less than one year in this state.   

Levy of Tax

The Tax is imposed on all the vehicles which are considered feasible to be used on road. The rates applicable on such vehicles are specified in Part A of the schedule.

Payment of Tax

The payment of tax is done within 15 days of the commencement of each quarter, year or half-year, as required under Section 3. This payment is done in advance by either the person in possession of such vehicle or the registered owner.

Taxation Card

After payment of tax which is levied on vehicle under Section 3, the Taxation authority will issue following to the applicant:

1. A receipt specifying the amount of tax paid
2. A Taxation Card mentioning both the rate of tax levied and the period for which the tax has been paid.
3. It is to be noted that in case of no Taxation Card with the owner or person in possession of the vehicle, such vehicle which is liable to pay tax under Section 3, cannot be held in custody unless the owner obtains Taxation Card.

Conclusion

Here we have discussed only a few states and their Road tax rules and regulations. However, as we discussed above, different states in India have different rules and regulations. This can clearly be concluded from the above provisions specified and followed by different states.

As per a news report by Economic Times, Karnataka is charging the highest tax amongst all the states in India. Even Delhi and Maharashtra are not that behind. They both charge the highest tax on diesel vehicles.

However, Maharashtra, on the other hand, charge lowest tax rate for CNG-run cars. The Road tax is found is to lowest in North Eastern region.

Thus, for every layman, knowledge of road tax is crucial, according to the current scenario.

References

1) National implementations of road tax- Wikipedia

https://en.wikipedia.org/wiki/Road_tax

2) Blog post on “road tax is refundable on transfer and cancellation of registration”

http://www.livemint.com/Money/cu4zP3mtdcs16SXDzqaxCN/DYK-Road-tax-is-refundable-on-transfer-and-cancellation-of.html

3) Delhi government transport department official web site

http://delhi.gov.in/wps/wcm/connect/doit_transport/Transport/Home/Road+Tax/Where+to+Pay

4)National portal of India – Government of India official website

https://india.gov.in/pay-online-road-tax-transport-vehicles-registered-delhi

5) Delhi Motor Vehicles Taxation Act, 1962

http://it.delhigovt.nic.in/writereaddata/egaz20177559.pdf

6) The Maharashtra Motor Vehicles Tax Rules, 1959

https://transport.maharashtra.gov.in/Site/Upload/GR/The%20Maharashtra%20Motor%20Vehicles%20Tax%20Rules,%201959.pdf

7) Bank bazaar.com

https://www.bankbazaar.com/tax/maharashtra-road-tax.html

8) The Karnataka Motor Vehicles Taxation Act, 1957

http://dpal.kar.nic.in/pdf_files%5CMOTOR%20VEHICLES%20TAXATION%20ACT-new%20(Final).pdf

9) Bank bazaar.com

https://www.bankbazaar.com/tax/karnataka-road-tax.html

10) Blog post on “Road tax in Karnataka is the highest, North East levies the least”

http://www.businessinsider.in/Road-tax-in-Karnataka-is-the-highest-North-East-levies-the-least/articleshow/46932140.cms

The post Rules & Regulations Related to Road Tax in India appeared first on iPleaders.

In this article, Harshita Punjabi discusses the legal framework regarding registration of marriage in India.

ABSTRACT

The article aims to examine the registration of marriages in India and legalities involved. The procedure for the registration of marriages under the Hindu Marriage Act, 1955 and the Special Marriage Act, 1954 has been analysed. The author has attempted to synthesize findings about the advantages of marriage registration, problems that could arise due to non- registration of marriages and the feasible solution for the same. The purpose of the study is to present a systematic review of legal framework regarding the marriage registration in India and the situation abroad. It is hoped that the study will help to analyse need for reform in marriage registration and pinpoint the loopholes in making registration of marriages compulsory.

INTRODUCTION

Marriage is the very foundation of a stable family and civilised society. It is considered as a sacred institution and a bond between two people, who agree to spend their lives together. Marriage in Hindu law acts as a fundamental canon of social organization, being a sacrament or sanskara it holds an exigent and imperative character.[1] It lays out legal and spiritual obligations on two individuals entering a sacred union through performing certain rituals enunciated in the Dharmashastras to pursue Dharma, Artha, and Kama.[2] Sociologically, marriage can be defined as the union between two people. In legal terms, it is defined as a contract by which a man and a woman engage with each other so as to live together.

In India, there are different marriage acts for different religions. For Hindus, there is the Hindu Marriage Act, 1955, also applicable to Jains, Sikhs & the Buddhists. Section 8 of the Hindu Marriage Act, 1955 talks about the registration and makes it recommendatory for the states to have laws for registration of marriage, stating that failure to do so will in no way affect the validity of marriage. Muslim marriages are contractual in nature and Muslims have their personal laws for marriage and divorce. For an Indian Christian, there is Indian Christian Marriage Act, 1872 and for the Parsis, there is The Parsi Marriage and Divorce Act, 1936 that make registration of marriages compulsory.

There are quite a few marriage registration laws in India. There are certain requirements to be fulfilled, after the solemnization of marriage between the bride and the groom, to make it valid. There is no provision for compulsory registration of marriage under Hindu Marriage Act, 1955. However, various states have made amendments to the Act and laid down rules for marriage registration. At present, registration of marriages is already mandatory in certain states and union territories. The Law Commission of India told the Government that registration of marriages should be made compulsory under law to prevent marriage frauds, bigamy, child marriages, desertion of women by their husbands. The courts in its repeated judgments have emphasised making registration of marriages compulsory. In Seema v. Ashwani Kumar[3], the Supreme Court has issued directions that marriage of all persons who are citizens of India belonging to various religions, should be made compulsorily registrable in their respective states where the marriage is solemnised.

At present there are two legislations framed for registration of marriages in diverse cultures, they are-

• The Hindu Marriage Act, 1955
• The Special Marriage Act, 1954

It is important to note that Hindu Marriage Act, 1955 deals with marriage registration in case both husband and wife are Hindus, Buddhists, Jains or Sikhs, or where they have converted into any of these religions whereas the Special Marriage Act, 1954 lays down the procedure for solemnization of marriage and its registration, where either of the husband or wife or both are not Hindus, Jains, Buddhists or Sikhs.

ESSENTIALS FOR REGISTRATION OF MARRIAGE UNDER THE HINDU MARRIAGE ACT, 1955

Under the Hindu Marriage Act, 1955, the conditions that have been specified under Sec. 5 and Sec. 7 have to be fulfilled in order to make it a valid marriage. As per the Section 5 of the Hindu Marriage Act, 1955, a marriage will be valid only if both the parties to the marriage are Hindus. In case of Vijayakumari vs. K. Devabalan[4] it was held that a marriage between a Hindu man who converted as Christian and a Christian lady in a Hindu form is not a valid marriage as marriage can be solemnized between two Hindus according to section of Hindu Marriage Act, 1955.

Section 5 lays down following conditions for solemnization of marriage between two Hindus-

• Neither party has a spouse living at the time of marriage;
• Neither party is incapable of giving a valid consent to it in consequence of unsoundness of mind; or
• Though capable of giving a valid consent, has been suffering from mental disorder of such a kind or to such an extent as to be unfit for marriage and procreation of children; or
• Neither party has been subject to recurrent attacks of insanity;
• The bridegroom has completed the age of twenty-one years and the bride, the age of eighteen years at the time of marriage;
• The parties are not within the degrees of prohibited relationship unless the custom or usage governing each of them permits of a marriage between the two;
• The parties are not sapindas of each other, unless the custom or usage governing each of them permits the marriage between the two [5].

Degree of prohibited relationship[6]- Two persons are said to be covered under the degrees of prohibited relationship if –

• One of them is the lineal ascendant of the other,
• If one was the wife or husband of lineal ascendant or descendant of the other,
• If one of them was wife of the brother or of the father’s or mother’s brother or of the grandfather’s or grandmother’s brother of the other,
• If the two are brother and sister, uncle and niece, aunt and nephew, or children of brother and sister or of two brothers or of two sisters.
• A marriage falling within the above categories shall be considered void.
• By the virtue of Section 7 of The Hindu Marriage Act, 1955, a Hindu marriage may be solemnized in accordance with customary rites and ceremonies of either of the parties, where such rites include the saptpadi, the marriage becomes complete.

ESSENTIALS OF MARRIAGE UNDER SPECIAL MARRIAGE ACT, 1954

The act deals with both solemnization & registration of marriage. Section 4 of the Special Marriage Act, 1954 lays down certain conditions relating to solemnization of special marriages which are as follows-

• Neither party has a spouse living.[7]
• Neither party is incapable of giving valid consent to it in consequence of unsoundness of mind and is not subject to recurrent attacks of insanity.[8]
  The male has completed the age of twenty-one years and the female the age of eighteen years.[9]
• A marriage in contravention of any of above provisions will stand void. The Special Marriage Act cuts across all the barriers of caste, creed, community, religion and permits any two persons to marry without letting them change their religions.

PROCEDURE FOR REGISTRATION OF MARRIAGE

For registration of marriage[10] under the Hindu Marriage Act, 1955, one can apply at office of the Sub-Divisional Magistrate in whose jurisdiction the husband or wife resides for at least six months before marriage or where the marriage took place.

DOCUMENTS REQUIRED FOR REGISTRATION OF MARRIAGE

A marriage certificate is an official statement that two people are married and serves as a legal proof of marriage.

The Delhi Government’s official website enlists the following documents that are required to be duly attested by the Gazetted Officer and submitted-

• The application form duly signed by both husband and wife.
• Documentary evidence for support of date of birth of both the parties which can be in the form of matriculation certificate/passport/birth certificate.
• Residential proof of both husband and wife which can be in form of Ration card/Aadhar card/Election voter id/ PAN card/ Electricity Bill.
• Two passport size photographs of both the parties and one marriage photograph.
• Marriage invitation card, if available.
• In case marriage was solemnized at a religious place, a certificate from the priest is required.
• The affirmation by the parties that they are not related and do not fall within the degree of prohibited relationship as laid down under Hindu Marriage Act, 1955.
• Attested copy of divorce decree/ order in case of divorcee and death certificate of spouse in case of widow/widower.
• In case one of the parties belong to other than Hindu, Buddhist, Sikh, Jain religion, a conversion certificate is required from the priest who solemnized the marriage.
• Affidavit by both the parties stating the place of birth, date of marriage, date of birth, marital status, nationality at the time of marriage.
• Fees- Rs. 100/- charged as fees in case of registration under Hindu Marriage Act, 1955 and Rs. 150/- in case of registration under Special Marriage Act, 1954.
• After due verification of the documents submitted by the parties,a day is fixed for registration which is communicated to the parties. Both the parties, with the Gazetted Officer who attended the marriage are required to be present before the Sub- Divisional Magistrate on the said day. After the conclusion of process, if the Magistrate is satisfied, the certificate is granted on the same day.

TATKAL MARRIAGE CERTIFICATE

Tatkal Marriage Certificate was introduced by Delhi Government ensuring a single day authorisation of marriage under which registration process which will undertaken on priority. The service enables citizens to register their nuptials and get a certificate issued within 24 hours on payment of Rs. 10000/- as a fee.

CHECKING MARRIAGE CERTIFICATE STATUS ONLINE

• As for now, facility of getting marriage registered online is not available in all the states. But, below mentioned procedure can be used to check the status of marriage certificate
  Visit marriage registration portal of your state/area (let us know if you need help here)
• Look out for “Check Status” option there.
• Enter your marriage registration ID in the box provide
• You can search as per bride/groom name as well (limited to few states)
• Hit the Check Status button

The records would be matched with the ones available in the central database. Most of the states and union territories have the procedure and we can expect marriage registration to get digitalised seeing the pace of digital developments taking place in country.

IN CASE OF MARRIAGE UNDER SPECIAL MARRIAGE ACT,1954

The Special Marriage Act, 1954 deals with inter caste and inter religion marriages the conditions to be eligible for marriage under this Act-

• The bridegroom must be at least 21 and bride must be at least 18 years of age at the time of marriage.
• Both the parties must be unmarried at the time of their marriage.
• The parties should be mentally fit to decide for themselves.
• They should not be related through blood relationships.

The Act gives guidelines for marriage between Indian and Non-Indians when marriage is taking place in India. The necessary condition being that one of the two partners has to be at least temporarily residing in India.

The list of documents required for registration of marriage under Special Marriage Act, 1954 are as follows-

• A valid passport is a must requirement.
• Birth certificate
• A copy of divorce certificate in case of divorcees.
• Death certificate of deceased spouse in case of widowed partner.
• The certificate mentioning the stay of couple in India for a period of thirty days.
• Before submitting the above documents, both the parties have to give a 30- day notice to the sub-registrar in whose jurisdiction at least one spouse has resided[11].

After submission of documents for issuance of public notice for inviting objections, both the parties are required to be present. Registration is done 30 days after the date of notice, after deciding the objection that may have been received by the SDM. Along with three witnesses, both the parties are required to be present on the date of registration.[12]
The Special Marriage Act also covers the requirements of Court marriages in India. It removes the rituals and ceremonies that happen in traditional marriages. The interested parties can directly apply to Marriage Registrar for registration and will be granted marriage certificate by the registrar.

Court marriages can be done among these

• Both male and female are Hindus.
• Both male and female belong to different religions.
• Between an Indian and foreigner.

In case of a court marriage, registration takes place by following steps-

• An affidavit must be attested by Magistrate/ S.D.M.
• Application form duly filed in prescribed format.
• Age proof which can be any one out of Voter Id, Driving License and Matriculation certificate.
• Residence proof which can be any one out of Voter Id, Driving License, Matriculation certificate, passport.
• 7 passport size photographs of the bride and the groom.
• PAN cards & the residential proofs of the three witnesses.
• In case one of the bride or groom is/are divorced, a certified copy of decree of divorce granted by the court.
• In case of death of the last spouse of either of the party, a death certificate is required.
• If one of the partner is a foreigner then No Impediment Certificate/ NOC from concerned Embassy and Valid VISA required.

IF AUTHORITIES REFUSE TO SOLEMNIZE MARRIAGE

If the intended marriage is refused to be solemnized by the marriage officer, then within the period of thirty days of the intended marriage, either party can prefer an appeal to the District court within the local limits of whose jurisdiction the marriage officer has his office. The decision of the District Court, regarding the solemnization of the marriage, would be final and binding.

ADVANTAGES OF REGISTRATION OF MARRIAGE

• Extremely helpful in obtaining visas for both husband and wife.
• The foreign embassies in India and in other countries do not recognize traditional marriages, the marriage certificate is mandatory for the couple to travel abroad using a spouse visa.
• Enables a spouse in claiming life insurance return or bank deposits in case of demise of depositor without any nominee.
  For opening a bank account after the wedding, the marriage certificate is required.

PROBLEMS DUE TO NON- REGISTRATION

Nowadays, there has been a rise in number of NRI marriages. There have been instances where female married was abandoned before being taken by her husband, where wife was physically or mentally abused, assaulted, confined and ill treated and was forcibly sent back, NRI husband is found already married in other country , false information given by the husband to obtain consent for marriage. The precautions must be taken by party marrying the NRI which includes verifying information such as marital status, employment details, immigration details, financial status, family background from friends, relatives and contacts of spouse and Embassy/Consulate could also be approached for assistance about harassment, abandonment, ill-treatment.

There have been instances where due to lack of any proof of marriage, second marriage took place despite second marriage illegal under the Hindu law if the first spouse if living. The marriage registration laws in India have witnessed developments where rights of second wife have also been recognized by courts in various judgments. In case of Badshah v. Sou Urmila Badshah Godse[13], the court opined that a woman could claim maintenance from her husband under Section 125, CrPC, if she was kept in dark about a subsisting marriage of her husband. In order to claim maintenance under Section 125, CrPC, reliance is to be made upon voter’s identity card, wherein she has been referred to as wife, or the joint bank account, which proves her status as wife.

In the matter of children born out of illegal wedlock from the second wife, the Madhya Pradesh High Court has ruled in 1991 in case of Laxmibai vs. Ayodhya Prasad Alias Ramadhar[14] that where a husband having means to maintain himself and is able bodied, had married twice, he becomes legally obliged to maintain his second wife and the child born out of their wedlock.

The Supreme Court has ruled in B.P Achala Anand vs. S. Appi Reddy & Anr.[15], that a wife is entitled to be maintained by her husband. She is entitled to remain under his roof and protection. She is also entitled to a separate resident if by reason of husband’s conduct or by his refusal to maintain her in his own place of residence or for other just cause she is compelled to live apart from him.

It was pronounced by Madras High Court that the second wife has a legal right to pension even though the couple was not married validly, they were living together since 1976.[16]It conferred legal rights upon the wife and Court directed the authorities to pay monthly pension to the second wife. It can be said that the judiciary has created an exceptional class of women who were deceived into marrying an already married man.

COMPULSORY REGISTRATION OF MARRIAGE: NEED FOR REFORM

In July 2017, the Law Commission of India submitted a report on Compulsory Registration of Marriages, which has the social relevance with implications for welfare of children and women. Recognizing the importance of marriage, the United Nations suggested for civil registration of birth, death and marriage.

To handle various, registration of marriage has critical importance. Some of such issues are as follows-

• To ensure minimum age of marriage and to prevent child marriage.
• To prevent marriage without the consent of parties.
• To enable married women to live in the matrimonial house and to claim their right to maintenance.
• To check social practices such as bigamy and polygamy.
• To prevent men from abandoning women after marriage.
• To deter parents and guardians, under the garb of marriage, from indulging into trafficking of women.
• To enable widows to claim their right of inheritance and other benefits after the death of husband.
• Due to diversity from marriage customs, personal laws play a major role in India in governing family matters. There is lack of consensus for making marriage registration compulsory. There are conflicts among the existing laws governing the matter which is also a major concern for policy makers.

SITUATION IN ABROAD

In many countries, the registration of marriage is compulsory and official recognition to marriage is only granted when it has been reported and registered in the family or civil register. For instance Japan acknowledges a marriage as legally valid only when household register is updated with the knowledge of the event. In case of Germany, where such register is known by the name Familienbuch, and in France, where it is called as livret de famille, such registers contain records for all family events which include births, deaths, marriages and even expatriations.

In Pakistan, marriage which is solemnized under the Muslim law is compulsorily required to be registered under the Muslim Family Law Ordinance, 1961. After passing of Hindu Marriage Bill in March, 2017, even the Hindus in Pakistan are required to get their marriages registered.
Though in many countries, registration of marriages is not compulsory, India became a country that took the step to advance protection to women’s right.

IS COMPULSORY REGISTRATION OF MARRIAGE ATTAINABLE IN INDIA?

The National Commission of Women proposed The Compulsory Registration of Marriages Bill, 2005 which contained a provision for compulsory registration of all marriages in the country within 30 days of solemnization of the marriage. It was intended that it would help in prevention of child marriages and would ensure that minimum age prescribed for marriage is complied with. Not only such a law would prevent non-consensual marriages in the country but would also check polygamy.

But there are greater hurdles faced by the wives than non-compulsory registration of marriage. There have been instances where maintenance could not be claimed due to lack of proof of husband’s income and even due to non-compliance with the maintenance order. Presenting registration as a solution would not help in solving the legal hurdles. Instead of making registration as a compulsory step, emphasis should be laid on broader interpretation of the term ‘wife’.

Even after the enactment of the compulsory registration of marriage in many states, implementation remains the issue. For instance, in Tamil Nadu Registration of Marriages Act, 2009, the document needed is either a mark sheet or a birth certificate [17] for the proof of valid age to marry and there is high possibility of documents being forged. Punitive measures have been included by State legislations for failure in case of registration of marriage. For instance, The Mizoram Compulsory Registration of Marriages Act, 2007 observes that any person who wilfully omits or neglects to get his or her marriage registered will have to serve a sentence of imprisonment of six months and fine of Rs. 1000.[18]

The most landmark judgment in case of Seema v. Ashwani Kumar[19], the Supreme Court made an observation that in a large number of matrimonial suits over the years, unscrupulous people denied the existence of marriage by taking plea of unavailability of record solemnization of marriage. It was held by division bench of Justices Arijit Pasayat and S H Kapadia that registration of marriages would be a step in right direction and issued directive to state governments and union territories to take measure in direction of compulsory registration of marriage within span of three months.[20]

The intent of the verdict seems to be uncertain as it was held “Though, the registration itself cannot be a proof of valid marriage per se, and would not be determining factor regarding validity of marriage, yet it has great evidentiary value in the matters of custody of children, right of children born from wedlock of two persons whose marriage is registered and the age of parties to the marriage.” On one hand, the recommendation were given to states and territories for making registration compulsory to advance protection to women but at the same time the motive was to keep a uniformity of marriage records in the country.

CONCLUSION

Amidst the complexities involved, the 211th Law Commission report recommended a law for compulsory registration of marriages and has also recommended for amending the Registration of Births & Deaths Act, 1969 to include marriage registration under its purview which would definitely aid in eliminating forced marriages and could also be helpful in achieving gender equality. Undoubtedly if a marriage is registered, the dispute concerning its solemnization is avoided. Not only it has evidentiary value in matters of custody and rights of children, it would also help the government in fighting the battles against marriage related crimes and would bring accuracy in married people’s census.

But having a central law backed with punitive fines would be alarming in our nation as it would not be consistent with present laws dealing with marriage in our country. In a nation where gender equality is still not achievable and there is lack of literacy and awareness about laws, the thing to ponder upon is “Will the compulsory registration of marriage practical in India at present time?” It is not very feasible in a vast country like India with its variety of customs, religion and level of literacy to make registration of marriage compulsory.

Footnotes:

[1] PRINCIPLES OF HINDU LAW: S.A. DESAI, MULLA, 20 ed. Lexis Nexis publication, New Delhi pg.1
[2] Hindu Samskaras(Sacraments): Vivaha ( Marriage) http://hinduonline.co/HinduCulture/Vivaha.html
[3] Seema v. Ashwani Kumar 2006(2) SCC 578
[4] M. Vijayakumari vs. K. Devabalan, AIR 2003 Ker 363
[5] S. 5, The Hindu Marriage Act, 1955
[6] S. 5(4), the Hindu Marriage Act, 1955
[7] S. 4(a), the Special Marriage Act,1954
[8] S. 4(b), the Special Marriage Act, 1954
[9] S. 4(c), the Special Marriage Act, 1954
[10] delhi.gov.in
[11] http://timesofindia.indiatimes.com/business/personal-finance/How -to-register-your-marriage/articleshow/2242776.cms
[12] delhi.gov.in
[13To get it delivered ] Badshah vs. Sou Urmila Badshah Godse, 2014 1 SCC 188
[14] Laxmibai vs. Ayodhya Prasad Alias Ramadhar, AIR 1991 MP 47
[15] B.P Achala Anand vs. S. Appi Reddy & Anr. AIR 2005 SC 986
[16] S. Suseela@ Mary Margaret vs. The Superintendent of Police, Writ Petition No. 15806 of 2015 and M.P. No.1 of 2015
[17] http://www.tnreginet.net/english/tel02.asp
[18] The Mizoram Compulsory Registration of Marriages Act, 2007
[19] 2006(2) SCC 578
[20] Flavia Agnes, ‘Hindu Men, Monogamy and Uniform Civil Code’, Economic and Political Weekly, 16 December, 1995

The post Registration of marriage in India – Procedure and Documents required appeared first on iPleaders.

In this article, Mishika Bajpai discusses Constitutionally taming prejudice dealings in the context of Public Procurement.

Abstract

The note analyses the concept of public procurement in the light of transparency and accountability on part of the Governmental agencies and the right to equal opportunity and freedom of trade granted to business entities as enshrined in the Constitution of India, 1950. This note has been written with the intent of familiarizing businessmen with the rationale behind a fair and competitive bidding procedure deployed by the government for procurement of goods and services. The note invites the attention of the quintessential businessman to be acquainted with the rights that are protected in the course of business and trade with the government. A level playing field is considered to be the keystone to the edifice of government procurement and any departure from the same has been met with widespread criticism. This is where judicial supervision plays its vital role in curbing any inefficient and opaque approach in selection of the bidders which may have been overlooked by the purchaser i.e. the Governmental entity.  While examining the General Financial Rules, 2017, the author draws attention to possible difficulties and offers solutions. The issues which may augment the violation of the equality clause under Article 14[1] and the possible encroachment on fundamental right of the class of intending tenderers under Article 19(1)(g)[2] have been addressed by suggesting certain recommendations.

Introduction

1. Procurement is an activity of finding, acquiring, buying goods, services or works from an external source. Public procurement[3] as defined in the Public Procurement Bill, 2012 – means the acquisition by purchase, lease, licence or otherwise of goods, works or services or any combination thereof, including award of Public Private Partnership projects, by a public procuring entity, whether directly or through an agency with which a contract for procurement services is entered into, but does not include any acquisition of goods, works or services without consideration. Most governmental procuring entities opt for tendering or competitive bidding processes by inviting prospective and eligible bidders.
2. This expenditure undertaken by the government is not only for meeting the its day to day needs but also for supporting various services expected from it such as infrastructure, national security, public utilities, employment and educational services and an overall economic development. This way, the private sector too has significant number of opportunities to benefit by supplying various products and services to the government – from hired taxi services[4], hotels[5] and hospitality services[6], building of roads[7], offering professional services and technical support[8], etc. It is noteworthy that this power to spend is derived from the Constitution which vests the executive powers of the Union of India in the President of India[9]and the President, by his order and issuance of allocation rules of the Government of India[10], vests the financial powers of the Indian Government in the Ministry of Finance.
3. The requirement of due process and equal treatment are not only restricted to the Central or State governments but include government owned entities as well such as public sector undertakings, statutory corporations, municipalities and local bodies, etc. Article 299[11] of the Constitution of India stipulates that all contracts made in the exercise of executive power of the union or state shall be supposed to be made by the President or by the Governor. Public procurement is, thus, an all pervasive function across the government machinery. It has grown phenomenally over the years in scale, variety and complexity and is a major activity within the Government.
4. While there are no definitive estimates of total size of India’s public procurement at any place, an Organization for Economic Co-operation and Development (OECD) estimate puts the figure for public procurement in India as high as 30 per cent of India’s GDP.^[12] There is no gainsaying that since the Government allocates a large share of taxpayers’ money to public procurement, the onus, is on the Government to make sure it gets greater value for its money. The policies framed by the Government dole out the ultimate goals of serving public interest.

An example to depicting how differently a private party enters into a contract

1. For instance, let’s suppose that a renowned private motel chain is looking for a local consultant to construct a hotel in a town. This company enters into a typical engineering, procurement and construction contract with the consultant and decides to invite proposals from interested consultants. These consultants will pitch before the management of the company. Out of the 15 consultants who were invited to the pitching session with their bid, the company was specifically overwhelmed with the 7th bidder and wants to award the contract to him. The rest of the program was called off and the remaining 8 bidders were asked to return, without any hearing or evaluation of their proposals.
2. As arbitrary as it sounds, this process if challenged before a court of law shall not be held to be invalid for the simple reason that private business entities are allowed to enter into contracts freely without requiring them to observe any specific procedures before entering into the contract. With near complete immunity for their decisions, private parties will not be held liable for not letting the participation of each and every bidder. Hence, the above procedure might be upheld as perfectly valid, since it has been entered into between two consenting business entities, none of which have alleged either fraud or misrepresentation or any other illegality with the contract.
3. However, cancellation of a contract midway by the government without providing a fair opportunity to party might be successfully challenged before the courts. The rights which a businessman has over fair play and equal opportunity, fundamental rights enshrined in Part III of the Constitution of India, cannot be ignored while responding to the final awarding of contracts. The need for an unbiased and non-arbitrary bid evaluation regime cannot be overstated, which might also form subject matter of challenge before a court of law. In the present example, the Government could have only been able to award the contract only after granting audience to each and every bidder and then selecting the most eligible (financial and technical eligibility) one of them.

The key to understanding how public procurement takes place is to differentiate it from an entry into a private contract agreement.

1. This is because when most private individuals or companies intend to procure, they are free to choose the suppliers and have full autonomy and immunity to choose which procedure shall guide their procurement mechanism. There is no such initiation to any tender or bid for potential suppliers, and entry into a contract is direct. While it is true that an initiation to bids might reduce the prices a private procurer may have to pay for a given project, given the advantages of a competitive bidding process, a private entity still never feels the need to follow specific rules for the evaluation course of action.
2. The Government on the other hand cannot practice or procure without any rules or regulations – this is premised on the rationale that it may give rise to allegations of bias, favoritism and not giving equal opportunity to the eligible and unheard Article 14 of the Constitution prohibits the Government from arbitrarily choosing a contractor at its will and pleasure. It has to act reasonably, fairly and in public interest in awarding contract. Undisputedly, the legal position which has been firmly established from various decisions of the Apex Court is that government contracts are highly valuable assets and the court should be prepared to enforce standards of fairness on the Government in its dealings with tenderers and contractors.^[13] The Constitutional principles of equal opportunity to all and level playing field[14] in governmental contracts has to be followed throughout the procedure of the bidding and eventual allotment. Wherever a contract is to be awarded or a licence is to be given, the public authority must adopt a transparent and fair method for making selections so that all eligible persons get a fair opportunity of competition. To put it differently, the State and its agencies/instrumentalities must always adopt a rational method for disposal of public property and no attempt should be made to scuttle the claim of worthy applicants. When it comes to alienation of resources it is the burden of the State to ensure that a non-discriminatory method is adopted for distribution and alienation, which would necessarily result in protection of national/public interest.[15]
3. The aforenoted concept is adorned with Part XIII of the Constitution deals with Trade, Commerce and Intercourse within the Territory of India which under Article 301 specifically provides for freedom of trade, commerce and intercourse throughout the territory. The freedom to trade throughout the territory is not only derived from this article but also from Article 19(1)(g) which grants the right to a level playing field. Certain restrictions in favor of public interest and prohibiting any discrimination are also set out in the aforesaid chapter.^[16]
4. Though nobody has any right to compel the State to enter into a contract, everybody has a right to be treated equally when the State seeks to establish contractual relationships. The effect of excluding a person from entering into a contractual relationship with the State would be to deprive such person to be treated equally with those, who are also engaged in similar activity.[17]
5. This does not imply that the government is devoid of fixing the rules of the game[18] and does not have the freedom to choose from the potential bidders, however, it must follow a definite and a fair regime to procure goods and services. The Government is also given the independence to choose who it wants to contract with, and one can only challenge unfair treatment and discrimination in the selection process, which has been held to be detrimental to public interest. Once it is proved that the procurement was in fact illegal due to its opaqueness, the Courts will not and has not shied away from nullifying the effects of even mega-scale procurements such as the coal scam case[19] and the 2G spectrum allocation case[20]. At the same time, no person can claim a fundamental right to carry on business with the Government.[21]

Are Governmental contracts only applicable for big businesses? What about small business entities?

1. All kinds of opportunities are open to all potential business entities, including small businesses, which are not kept outside the realm of public procurement and are equally eligible to participate in the procurement process. Like big business entities benefit from supplying to the government, giving huge boosts to their business reputations, small businesses are not deferred from entering into contract which might also result in huge cash flows, as the government usually procures on a large scale. The cushion against any economic downturn is also saved when the demand from the private sector falls.
2. Resurrecting the Small and Medium Enterprises (SME’s) by meeting the transparency requirements can support and promote them immensely. In order to overcome the digital divide between the SME’s and the bidding information, there needs to be an efficient communication mechanism in place. Such paucity of notifications, inability to access market information and business opportunities, not only hampers their market penetration but also creates monopoly of certain regular big players. A channel for wider dissemination between such SME’s and the Government needs to opened, such as an e-portal, where registered SME’s are alerted of the daily updates of bidding invitations. This shall require an e-registration system which sends updates through emails to all the registered bidders preparing them well in advance to apply for the bids they are eligible for. This way an increased participation can be seen from the SME’s towards public procurement. Automated invitations to bid specifically for small and medium businessmen will be seen as a welcome change following with an efficient bidding pool.
3. Likewise, the government cannot outcast private and foreign firms which could again amount to discrimination. The concentration of profits cannot merely reside with the local business entities while the foreign entities suffer. This would not only result in an imbalance in the pool of potential and suitable bidders, but would also affect the profits of private and foreign competing firms. Thus, it is the government’s duty to look out for any discrimination against players in the bidding sphere and encompass optimal policy regimes for both private & public[22] and local & foreign bidders. The aforenoted issue was discussed by the Apex Court in the Assn. of Registration Plates case[23] wherein the petitioners had challenged the condition laying down a prescribed minimum turnover of business (Rs. 12.5 crores). It was alleged that fixing a high turnover for such a new business was only to advance the business interests of a group of companies having foreign links and support but it was impossible for any indigenous manufacturer of security plates to have the same. The Court, while rejecting the claim, noted that the clauses requiring experience in the field of supplying registration plates in foreign countries and the quantum of business turnover were not intended to keep indigenous manufacturers out of the field.[24] It was held that selecting one manufacturer through a process of open competition did not amount to creation of any monopoly, as contended, in violation of Article 19(1)(g) of the Constitution read with clause (6) of the said article specially when the tender conditions were formulated taking into account the public interest consideration and aspects of high security.[25]
4. Whilst the above view, it is also true that India has adopted a tit for tat policy against nations who do not entertain Indian suppliers. Nations excluding Indian suppliers shall face similar curbs in participation and competing in bids for the government procurement in India.^[26]

Judicial decisions on the Governmental autonomy and accountability and businessman’s right to fair bidding process

Since the above dialog has given a brief description to the difference between a private and public procurement, it shall now follow with a legal rationale that is followed by the courts while assessing cases challenging government procurements.

1. Where the Government formulated a new scheme by which offered invites from intending purchasers of kendu leaves but the invitation was restricted to those individuals who had carried out the contracts in the previous year without default and to the satisfaction of the Government, the Court held that this was ex facie discriminatory and imposed unreasonable[27] restrictions upon the right of persons other than existing contractors to carry on business.[28]
2. While limiting the course to challenge the Courts have found that a mere disagreement with the decision making process or the decision of the administrative authority is no reason for a Court to interfere.[29]
3. In fact, it has been laid that the threshold of mala fides, intention to favour someone or arbitrariness, irrationality or perversity must be met before the constitutional Court interferes with the decision making process or the decision.[30]
4. While the courts have given enough leverage and standing to the tenderers or contractors seeking damages in a civil court. Attempts by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some technical/procedural violation or some prejudice to self, and persuade courts to interfere by exercising power of judicial review, have been resisted. Such interferences, either interim or final, the courts have found, may hold up public works for years, or delay relief and succour to thousands and millions and may increase the project cost manifold.[31]
5. The Supreme Court of India in the case of Michigan Rubber (India) Limited State of Karnataka[32] while observing the issue of the formulation of tender conditions, held that their interpretation was also a matter falling within the domain of the executive agency. And unless the process adopted or decision made by the authority was mala fide or intended to favor someone, no judicial interference would be warranted.
6. The grasp of Article 14 in government contracts is not only to secure propriety, maximization of economy and efficiency, but also to promote healthy competition among the tenderers, to provide for fair and equitable treatment of all tenderers, and to eliminate irregularities, interference and corrupt practices by the authorities concerned.[33] Although equality and justice cannot take a backseat there may be situations compelling reasons necessitating a departure from the rule. However, these reasons must be rational and should not be suggestive of discrimination.[34]
7. The law is well-settled that contracts by the State, its corporations, instrumentalities and agencies (government entities) must be normally granted through public auction/public tender by inviting tenders from eligible persons and the notification of the public-auction or inviting tenders should be advertised in well-known dailies having wide circulation in the locality with all relevant details such as date, time and place of auction, subject-matter of auction, technical specifications, estimated cost, earnest money deposit, etc.[35]
8. In another case, the Supreme Court was concerned with a tender which set forth certain “minimum qualifying requirements” and also went on to require some documents ‘along with the application for issue’ of tender documents. The court held that if the tendering authority had in its wisdom decided to relax some non-essential or ancillary conditions or to grant extra time for furnishing the same, that would not by itself render its conduct objectionable or the bids received consequent to such deviation bad.. It held that such deviations (if made) should not result in arbitrariness or discrimination or substantial prejudice to any of the parties involved or to the public interest in general.[36]
9. Where it was found by the Cyber Crime Cell that some modifications were made to the technical evaluation clause in the bid document, but which clause did not form part of the mandatory criterion for opening the financial bid, the Court held that it warranted no interference. The Court further held that in the absence of mala fides or arbitrariness, court interference should be slow as re-tendering would delay the projects.[37]

General Financial Rules, 2017

For the purposes of this paper, the General Financial Rules, 2017 (GFR) have been analyzed in terms of the check and balances that have been offered therein and how they acknowledge the need for equality, probity and propriety in the procurement procedure. [38]

The GFR framed by the Ministry of Finance notified on 8^th March, 2017 lay down the principles for general financial management and procedures for Government procurement. The rules have the status of subordinate legislation. All government purchases must be in accordance with the principles outlined in the GFRs.

Certain salient features and loopholes present in the GFR, 2017 have been discussed below

1. By way of Rule 144, the Government has enshrined the fundamental principles of public buying (for all procurements including procurement of works) which provides that every authority delegated with the financial powers of procuring goods in public interest shall have the responsibility and accountability to bring transparency and efficiency in matters relating to public procurement[39] and for fair and equitable treatment of suppliers and promotion of competition in public procurement.
2. The GFR 2017 also preserves the concept of transparency vide Rules 159, 160 and 167. The encouragement of use of digital technology is likely to make the procurement process much more efficient, transparent and impartial.[40] This enshrinement of digital systems in public procurement system puts India on par with global best practices in transparency in public procurement.[41]
3. GFR 2017 also enables prospective bidders to formulate and send their competitive bids with confidence and all government purchases be made in a transparent, competitive and fair manner, to secure best value for money.[42] This includes the criteria for eligibility, description of the goods or services required, procedure of sending bids, responsiveness, evaluation, etc.[43]
4. It is interesting to note that the UK’s Public Contracts Regulations (PCR) 2015 under its Regulation 12 mentions where a contracting authority awards the contract to an entity which it controls, such a contract is exempt from the purview of the regulations, the Indian Public Procurement Bill, 2012 and GFR 2017 do not provide for this exception. This speaks volumes of the thorough transparency that is being ensured by the government disallowing any exceptions to the formalities even to its own subsidies.[44]
5. The right to know the reasons for rejection have also been included vides Rule 173(iv) –by stipulating that the reasons for rejecting the tender or non-issuing a tender document to a prospective bidder must be disclosed where enquiries are made by a bidder.[45]
6. Another aspect that has been added to the GFR 2017 is the Competitive Dialog Mode vide Rule 164, GFR, 2017. In case a contracting authority is not able to define the technical means to satisfy its needs or is not able to identify in advance the legal and/or financial make up of a project, it can enter into a ‘competitive dialogue’.[46] A similar issue arose where a challenge as sought against the negotiations held between the government and two competitive contracts regarding the allotment of land for the construction of hotels to boost tourism. The Court noted that the State did not commit any breach of any constitutional or legal obligation if it negotiated with such party and agreed to provide resources and other facilities for the purpose of setting up the industry. [47]
7. India vide GFR 2017, has kept open the foreign participation open to public procurement. However, this operates only in exceptional circumstances, i.e. in case goods of the required quality assurance or specifications are not readily available domestically or it is feasibly necessary to look for suitable competitive offers from abroad.[48] It is nonetheless, the prerogative of a government as to whether and to what degree its government procurement market should be kept open to foreign participation. Recently, enthused by the response received from overseas developers for the station redevelopment programme, the Indian Railways has intended to hold roadshows abroad to showcase the financial robustness of the scheme and attract more investors.^[49]
8. The Rules are also wary of any collusion, bid rigging or anti-competitive behavior that may impair the transparency, fairness and the progress of the procurement process; improper use of information provided by the procuring entity to the bidder with an intent to gain unfair advantage in the procurement process or for personal gain.[50] However, Rule 175(1) does not make an independent or an impartial party in power in order to check for misappropriations and misconduct. The present position would turn out to be disadvantageous since there might be collusions between the bidders and the procurer. The position of an independent external monitor would be crucial for the enforcement of the Code of Integrity[51].

Conclusion

Now what is keenly awaited is the action of the Government in enacting the Public Procurement Bill 2012 which provides Grievance Redressal Committees for the mechanism for quick redress of the grievances of bidders an aspect missing in the GFR 2017. International examples, such as the UNCITRAL Model Law on Public Procurement and the Government Procurement Agreement of WTO have also upheld the independent administrative review mechanism for this purpose.[52]

With the given autonomy for its decision and the stakes being exceedingly high, the cardinal principle which the Government ought to follow is that procurement of material and/or services ought to be done at the most competitive prices in a fair, just and transparent manner. The right to audience of businessmen ought not to be whittled down. There can be no question of infringement of Article 14 if the Government tries to get the best person or the best quotation. The right to choose cannot be considered to be an arbitrary power.[53]

The above must be done keeping in mind that public procurement has a significant economic impact, considering governmental procurement contracts, inclusive of Defence[54], by the Centre, States and local bodies are valued annually at almost 30 percent of India’s GDP, and cover almost every sphere of government activity. As has been discussed, the praiseworthy General Financial Rules, 2017 are a step towards the right direction in India’s need for proper procurement laws serving well against the transparency and equality drive in the business sector. The concept of equality is all the more important when India is pacing towards, Indigenization i.e. local preferences for the ‘Make-in-India’ drive boosting economic growth and generating jobs for our local suppliers. A legitimate tool under our multilateral commitments with a number of major government initiatives can leverage and promote value addition, create employment and give a much needed boost to the manufacturing and economic expansion.

References

[1] Article 14, Constitution of India, 1950 – Equality before law – The State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India.

[2] Article 19, Constitution of India, 1950 – Protection of certain rights regarding freedom of speech, etc. – (1) All citizens shall have the right— (g) to practise any profession, or to carry on any occupation, trade or business.

[3] Section 2(r), Public Procurement Bill, 2012 available at http://www.prsindia.org/uploads/media/Public%20Procurement/Public%20Procurement%20Bill,%202012.pdf last seen on 20/06/2017 [A Bill to regulate public procurement with the objectives of ensuring transparency, accountability and probity in the procurement process, fair and equitable treatment of bidders, promoting competition, enhancing efficiency and economy, maintaining integrity and public confidence in the public procurement process and for matters connected therewith or incidental thereto]

[4] In India’s cities, public transport run by private operators makes for a happy ride – if done right (20/04/2017) available at https://scroll.in/article/834542/in-indias-cities-public-transport-run-by-private-operators-makes-for-a-happy-ride-if-done-right, last seen on 20/06/2017

[5] Sachidanand Pandey v. State of W.B., (1987) 2 SCC 295

[6] Debabrata Das, Building blocks of a monopoly, (23/05/2017), Fortune India, available at http://fortuneindia.com/2017/may/building-blocks-of-a-monopoly-1.10862, last seen on 20/06/2017

[7] Sharmistha Mukherjee,  Toll-operate-transfer: Private tolls to fund new roads, (05/08/2015) available at http://indianexpress.com/article/india/india-others/toll-operate-transfer-private-tolls-to-fund-new-roads/

[8] Infosys to take over MCA-21 project from tomorrow (16/01/2013) Business Line available at http://www.thehindubusinessline.com/economy/economy/infosys-to-take-over-mca21-project-from-tomorrow/article4312484.ece, last seen on 20/06/2017 (for continuous improvement and up-gradation to the electronic service delivery of the Corporate Affairs Ministry.)

[9] Article 53, Constitution of India, 1950 – Executive power of the Union.

[10] The Government of India (Allocation of Business) Rules 1961, http://cabsec.nic.in/shownewpdf.php?type=allocation_aob_a1&id=29&special, last seen on 20/06/2017 ; Also, Article 77, Constitution of India – Conduct of business of the Government of India.

[11]  Article 299, Constitution of India, 1950 – Contracts.

[12] Public procurement needs to be opened up (03/03/2017) available at http://www.thehindu.com/business/public-procurement-needs-to-be-opened-up/article17395912.ece, last seen on 20/06/2017

[13] Assn. of Registration Plates v. Union of India [(2005) 1 SCC 679 at para 43; Michigan Rubber (India) Ltd. v. State of Karnataka, (2012) 8 SCC 216 at para 23; See Air India Ltd. v. Cochin International Airport Ltd., (2000) 2 SCC 617; Asia Foundation & Construction Ltd. v. Trafalgar House Construction (I) Ltd., (1997) 1 SCC 738; Krishnan Kakkanth v. Govt. of Kerala, (1997) 9 SCC 495; Ugar Sugar Works Ltd. v. Delhi Admn., (2001) 3 SCC 635; Sterling Computers Ltd. v. M&N Publications Ltd., (1993) 1 SCC 445; Union of India v. Dinesh Engg. Corpn., (2001) 8 SCC 491

[14] United India Insurance Co. Ltd. v. Manubhai Dharmasinhbhai Gajera , (2008) 10 SCC 404

[15]  Centre for Public Interest Litigation v. Union of India, (2012) 3 SCC 1 at pg. 59, para 95

[16] Articles 301-307 of the Constitution of India, 1950

[17] Patel Engineering Ltd. v. Union of India and Anr. (2012) 11 SCC 257 @para 14

[18]  See Mohd. Fida Karim And Anr vs State Of Bihar, (1992) 2 SCC 631

[19] Manohar Lal Sharma v. Principal Secy., (2014) 9 SCC 614

[20] CPIL, supra 11, at 59

[21]  Michigan Rubber (India) Limited v. State of Karnataka and Others, (2012) 8 SCC 216 at para 23

[22] United India Insurance Co. Ltd. v. Manubhai Dharmasinhbhai Gajera , (2008) 10 SCC 404 at pg. 424-427

[23] (2005) 1 SCC 679

[24]  Ibid at para 38

[25] Ibid at para 40

[26]Government unveils tit-for-tat public procurement policy (16/06/2017) available at  http://www.thehindu.com/todays-paper/tp-business/government-unveils-tit-for-tat-public-procurement-policy/article19078600.ece, last seen on 20/06/2017

[27]  See Tata Cellular v. Union of India, (1994) 6 SCC 651 [the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides.] See Associated Provincial Picture Houses Ltd.v. Wednesbury Corpn., (1948) 1 KB 223 : (1947) 2 All ER 680 (CA)

[28] Rashbihari Panda v. State of Orissa, (1969) 1 SCC 414

[29] Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corporation Ltd., (2016) 16 SCC 818 at pg. 825, para 11-13

[30]  Ibid at pg. 825, para 11, 13

[31] Jagdish Mandal v. State of Orissa [(2007) 14 SCC 517, pp. 531-32, para 22

[32] (2012) 8 SCC 216, at para 23-24

[33] Nagar Nigam v. Al Faheem Meat Exports (P) Ltd., (2006) 13 SCC 382 at page 395, para 16

[34]  Sachidanand Pandey v. State of W.B., (1987) 2 SCC 295 at page 326, para 35

[35] Nagar Nigam v. Al Faheem Meat Exports (P) Ltd., (2006) 13 SCC 382 at page 395, para 16

[36] G.J. Fernandez v. State of Karnataka (1990) 2 SCC 488 at p. 501, para 15

[37] Chhattisgarh State Industrial Development Corpn. Ltd. v. Amar Infrastructure Ltd., (2017) 5 SCC 387 at p. 403-405

[38] The General Financial Rules (GFR) 2017, framed by Department of Expenditure, Ministry of Finance, Government of India. Available at http://mof.gov.in/the_ministry/dept_expenditure/GFRS/GFR2017.pdf, last seen on 20/06/2017

[39]  Rule 174, GFR, 2017

[40] “Transparency Mechanism”, Chapter III of the Public Procurement Bill, 2012 available at http://www.prsindia.org/uploads/media/Public%20Procurement/Public%20Procurement%20Bill,%202012.pdf, last seen on 20/06/2017

[41] Rule 173, GFR, 2017. See generally Regulation 22(5) of the Public Contracts Regulations, 2005– the contracting authority is duty bound to “…ensure that the integrity of data and the confidentiality of tenders and requests to participate are preserved” (Regulation 22(11) of the Public Contracts Regulations, 2005; Read generally “Business Recommendations For Public Procurement Policy In India White Paper” by GCNI-CEGET (04/05/2017) available at http://ceget.in/white-paper-business-recommendations-for-public-procurement-policy-in-india/, last seen on 20/06/2017

[42]  Rule 173, GFR, 2017

[43]  Ibid

[44]  Ibid

[45] Rule 173(iv), GFR, 2017

[46] Also see Rule 173 (xiv), GFR, 2017 – Negotiation with bidders after bid opening must be severely discouraged. However, in exceptional circumstances where price negotiation against an ad-hoc procurement is necessary due to some unavoidable circumstances, the same may be resorted to only with the lowest evaluated responsive bidder.

[47] Sachidanand Pandey v. State of W.B., (1987) 2 SCC 295 at page 327, para 37; Kasturi Lal Lakshmi Reddy v. State of J.&K. [(1980) 4 SCC 1, para 14

[48] Rule 161(iv), GFR 2017

[49] Saurabh Kumar, Railways station redevelopment drive: Public sector giant to hold road shows abroad to attract investors,  (17/06/2017) http://www.financialexpress.com/economy/railways-station-redevelopment-drive-public-sector-giant-to-hold-road-shows-abroad-to-attract-investors/722957/

[50]  Rule 175 (1) – Code of Integrity , GFR2017

[51]  Ibid

[52] Supra 38, at 16

[53] Tata Cellular v. Union of India, (1994) 6 SCC 651 at page 675 para 70; Food Corporation of India v. Kamdhenu Cattle Feed Industries, (1993) 1 SCC 71 at page 76, para 7

[54] Amrita Nair-Ghaswalla, Indian defence manufacturers cautiously optimistic on defence partnership policy (26/05/2017)  available at http://www.thehindubusinessline.com/economy/indian-defence-manufacturers-cautiously-optimistic-on-defence-partnership-policy/article9713540.ece,  last seen on 20/06/2017

The post Constitutionally taming prejudice dealings in the context of Public Procurement appeared first on iPleaders.

In this article, Harshal Joshi pursuing M.A, in Business Law from NUJS, Kolkata discusses how will RERA, 2017 impact Indian real estate industry in the long term.

INTRODUCTION

“RERA is going to be a game changer for buyer and developers and the wider industry. With its implementation, the act will bring in greater transparency and further consolidation of the industry. A more regulated market means that the lines of laws and policies will no longer be blurred and for the first time, every developer will be on a level playing field that puts the interests of the consumer above everything else.”[1]

From the time we obtained independence, the citizens of the country are aware that the builders/promoters have been cheating customers in various ways, and the general public has endured incalculable suffering and have been facing injustice while trying to buy an apartment/plot/building. This has been due to the lack of an effective and suitable law to control, regulate, and monitor the activities/dealings of builders/promoters in the Real Estate industry.

The Real Estate Regulatory Act, 2016, popularly known as the “RERA” Act, is a unique legislation made by the Central Government led by our Honourable Prime Minister Shri. Narendra Modi. The purpose and objective of this Act is to reduce the mental and financial distress that consumers have suffered from the fraudulent builders/promoters and the Real Estate lobby. The RERA Act will help the consumers to get possession of their units in a timely manner as per time schedule, with better condition and without much hassle with the fraudulent builders and promoters. This Act will also bring complete transparency in the Real Estate Sector benefitting both the home buyer’s community and the Developer’s Community. This article briefly states various aspects of RERA and its impact on the Real Estate Industry.

SOME OF THE KEY PROBLEMS FACED BY CONSUMERS AND BUYERS OF APARTMENTS, PLOTS, SITES AND BUILDINGS ARE AS FOLLOWS.

1. Long term delays up to 3-5 years, in handing over of units has been common in most of the projects related to Apartments, Sites, buildings in layouts in contravention to the agreement of sale with the home buyers;
2. Decamp and abscond after collecting substantial deposits and funds from the home buyers;
3. Abandon the projects during construction;
4. Modify and change building plans without any information to the consumers;
5. Dishonor some or all the terms and conditions laid and signed by the home buyers and builders in the Sale Agreement/Memorandum of Understanding without any explanation or compensation resulting in not providing the amenities and facilities in the project/individual units;
6. Even though the Sale agreement has clauses for withdrawal or cancellation of the agreement by the home buyers, the builders refuse to adhere to these clauses and refuse to refund the amount invested by the home buyers;
7. Construct homes, flats, apartments on illegally encroached government land/lake beds;
8. Poor quality of project execution;
9. At the time of construction, grossly violate all the approved building plans and sanctioned project plans, deviate from the original plans, and thereby penalize and fail to provide the consumers with Occupancy Certificate and Completion certificates;
10. Obtain illegal permissions from BESCOM, BWSSB, and other government controlled bodies to get power, water and other legally required utilities by producing forged documents which will put the consumers in great difficulty after occupying the units.

MAIN PROTECTION TO CONSUMERS FROM THE CENTRAL RERA ACT

The promoters

1. Cannot register their proposed duly sanctioned project by the Local Authorities/Planning Authorities under RERA without obtaining a Commencement Certificate of the project from the sanctioning authority. Cannot advertise or sell the units of the proposed project before Registering with the RERA Authority;[2]
2. Must complete the project before the completion date mentioned in the Agreement and hand over the project to the home buyers, in case of delay, the promoters are required to pay the agreed upon fair compensation to the purchasers of the units, for the period of delay;[3]
3. Promoters have to sell the units on carpet area basis which can be easily measured by purchasers.[4]

The RERA Act recommends and provides the framework for formulating an effective Regulatory Authority in the Real estate sector.[5] The RERA Act also provides an effective resolution mechanism for resolving disputes between home buyers and promoters, by appointing of Adjudication Officers and constitution of the Appellate Tribunal at the state level[6].  All disputes must be resolved within a period of 60 days from the day of complaint.[7]  The home buyers and promoters cannot approach the High Court, before obtaining the decision and judgment from the Appellate Tribunal constituted under the RERA Act.[8]  As per the provisions of the RERA Act, civil cases cannot be filed by Promoters and consumers in any of the lower courts.[9]

The primary objective of the Central RERA Act is to bring in the much-needed transparency, effective management, efficiency and adequate quality control in Real Estate Industry so that the home buyers are benefitted and protected as consumers and investors.[10]

This RERA Act has been enforced all over Indian States and Union Territories (except Jammu & Kashmir) from May 01, 2017 by the Notification issued by Government of India on April 19, 2017 but the same has been only implemented so far by 13 States.[11] RERA cannot be implemented in other states as they have not framed rules and notified the same to enable the implementation of the Act.

                                                                                                                                    Rest of the Governments by failing to implement such a pro-buyer, pro-consumer RERA Act is only contributing to the hardships of the poor, middle and lower middle classes, who have invested their life time savings in the hope of owning a home. The delay in implementation of the RERA act is also hampering the business activity of the honest Promoters who are unable to register their new projects and ongoing projects due to non-constitution of required RERA Authority in the States. This inordinate delay in notification and implementation of RERA in other States and Union Territories is highly condemnable as the entire Real Estate Industry will come to a grinding halt which will affect all homebuyers.

                                                                                                                                   In this Central RERA Act, there are 92 sections, of which 60 sections were notified and enforced by the Ministry of Home Affairs from May 01, 2016.  While enforcing 60 sections of the RERA Act, the Central Government has given a hint to all States that entire RERA act will be enforced from May 01, 2017, and hence has asked all state Governments to facilitate the implementation of this Act, by fulfilling the following responsibilities in a timely manner.[12]

1. Immediately appoint a senior officer of the State, the Principal Secretary of the State Housing Department, as the designated Authority for the State, until such time the Regulatory Authority is functional under this Act; (by June,2016);[13]
2. Diligently frame the State Government Rules, and notify the final Rules under RERA Act, by October 31, 2016;[14]
3. As directed in this RERA Act, form the Selection Committee inclusive of the Chief Justice of the High Court to select the Chairman of the State Regulatory Authority and the remaining two members before April 30, 2017, in the process of establishing the State Regulatory Authority;[15]
4. In consultation with The High Court Chief Justice, appoint the present or retired judge to the State Appellate Tribunal as president before April 30, 2017;[16]
5. Complete the Appointment of the remaining two members of the Appellate Tribunal by the Select Committee inclusive of the Chief Justice of the High Court before April 30, 2017;[17]
6. Appoint Adjudicating Officers before April 30, 2017;[18]
7. Provide all facilities and infrastructure facilities and staff to The State Regulatory Authority, Appellate Tribunal and Adjudicating Officers to effectively carry out their functions and duties.[19]

Unfortunately, most of the state governments have not fulfilled any of the above-mentioned responsibilities in the last 15 months. These Governments have failed totally to implement RERA Act since its inception and we are not sure how many more months it would require for implementing the Act by following various procedures mentioned above.

There is no evidence to see the desired level of interest and intentions of these governments to firmly implement this Act for providing the relief and redress the issues of defrauded and cheated apartment/site/building buyers, who have been suffering from the last 5-6 years. These governments have failed to safeguard the financial interests of the lakhs of already suffering home buyers and provide remedy to their financial problems.

Only the Karnataka government’s housing department’s secretariat on October 24, 2016, issued a draft of appropriate RERA Rules, and Karnataka was the country’s first state to issue a draft rule. As per standard process the Government of Karnataka provided 15 days’ time for public to give their suggestions on the draft rules and promised to notify finalized rules by the end of November 2016. However, the citizens have been disappointed by the inordinate and inexplicable delay and frustration has set in among the existing buyers of home property and the persons planning to buy home property.

IMPACT OF RERA IN THE LONG RUN

After enforcement of RERA act legally no registration of sale deed of any unit of the project in planning areas of the state can be done in sub-registrar’s office without obtaining the Completion Certificate/Occupancy certificates of the project by the promoter. Currently, registrations of units in the project are occurring unchecked in contravention of the Central RERA Act without obtaining completion/occupancy certificate and without fear of legal consequences. Though the senior officials of the Department of Stamps & Registrations are aware of the implications of the Central RERA Act on such illegal registration activity taking place, they have not initiated any steps or passed any orders to stop the illegal registration of sale deeds of such property. This has resulted in more blatant corruption in the already corrupt Registration Offices, across the state.

The Central Government has notified model and sample RERA Rules and Agreement of Sale eight months back, but very few States have taken the initiative to notify their State Rules/agreement of sale in accordance with the central government guidelines. In a classic example of feet dragging, the Government of Karnataka instead of adopting the model Rules/Agreement of Sale notified by the central government has taken a different decision in the Cabinet meeting held on 30 May 2017. It is reported that the Cabinet has decided to study the RERA Rules of different states, that too after delaying the notification for more than 7 months. Instead of becoming the torch bearer and model for the whole country by notifying strong RERA rules, the Government of Karnataka seems to resort to an easy way of studying RERA Rules of states where the RERA Act has been diluted, resulting in anti-consumer, and anti-home buyer approach to the issue.

According to Media Reports, many state cabinets are contemplating the exclusion of projects promoted by Housing Boards, Cooperative Housing Societies etc (all government controlled organizations) to keep outside RERA and challenge the Central RERA Act on this issue in the High Court/Supreme Court.[20]

The Central Government after analyzing and understanding that the projects developed by institutions like the BDA, Housing Board, Cooperative Housing Societies throughout India are poor in the Project management, unsatisfactory quality control and inordinate delay in completing the project had taken a long-term solution approach to include all housing project developments of such entities within the purview of the RERA Act. These institutions and their projects were also included even in the RERA bill introduced to Rajyasabha 2013 by UPA government during August 2013. On March 10, 2016, when passing RERA bill in the Rajyasabha where NDA government has no majority, the Congress Vice-president Mr. Rahul Gandhi agreed to support the bill only if the bill is not diluted from earlier RERA bill introduced by UPA government in Rajyasabha. As a classic example of the Government Apathy, the Cabinet Ministers of Government of Karnataka have forgotten the stand taken by their own Congress party and its Vice-president while passing the RERA bill in Rajyasabha within 15 months.  To say the least the present stand of Cabinet Ministers of Government of Karnataka to challenge these provisions of the RERA Act at Higher courts is laughable, and highly condemnable. Citizens are losing faith in the congress party, its policies and its leadership, because of such decisions of the Cabinet of GOK.

IMPACT

Fewer Project launches

The number of projects launched by builders and promoters will drastically come down initially as the Real Estate Industry will study and analyse the impact of regulations and policy change and its resultant impact on the business. However, those honest developers/builders/promoters that are known for timely delivery of their projects will only benefit from this situation as there will be lesser competition for them in the market.[21]

Fly-by Night Builders to disappear

Many fly-by-night builders, who dupe innocent investors/homebuyers, will be thrown out of market and only genuine builders will sustain, post RERA implementation.[22]

Beneficial for developers with sound financial status

The newly added 32 sections to the Real Estate Regulations Act will induce a financial discipline in the real estate sector. Before RERA implementation, Developers would normally circulate money/advance collected from one project to the previously initiated project thereby increasing the chances of defaulting on the new project for which the advance was collected. However, this is not possible with the provisions in RERA.[23]

Increased Compliance for Developers

Compared to pre-implementation, post RERA implementation, Developers will be required to follow many formalities if they happen to make any changes in the projects post initiation. Proper reporting to the authorities will be required for any minor changes in the project.[24] This will create short term chaos in the industry but in the long term this will increase the customer confidence in the industry and customers will invest more.

Increased Cost

Timely completion of projects will have its own side effect on the cost of the project. The developers/builders will pass on the cost of timely completion to its customers in turn raising the cost of the apartments. As developers will be required under RERA to timely notify completion of every stage of the project, the cash starved developers will borrow money from lenders at higher rate of interest and pass on such cost to their customers. Increase in the construction cost will be passed on to the buyers. “Seeing the current scenario of uncertainty, property rates may rise for home buyers. After notification of these sections, the number of project launches will be limited and this will affect the demand supply equilibrium in the market”.[25]

Demand Supply Equilibrium will be affected

The number of projects launched will come down and the demand supply equilibrium in the real estate market will get affected. This will also result in increased rise in the cost of the projects.

Transparency

With the registration of project and property being compulsory with the Regulatory Authority under RERA sections, there will be increased transparency in the marketing and execution of the projects. If any developer fails to comply with the provisions of RERA, it may cost him 10% of the total cost of the project in terms of penalty and a repeat offence would land him in jail.[26]

Protection of Homebuyer’s Interest

Real Estate Projects and Real Estate Agents are mandatorily required to register with the Regulatory Authority under new sections of the RERA. There are severe penalties under RERA with respect to project delays and completion time. This will have a positive effect on the Homebuyer’s confidence while investing in real estate. Further, the developer is also required to put 70% (seventy percentages) of the advance collected from the buyer in a separate escrow account. This is to stop the developer from diverting money collected for the project for any other purposes and to ensure timely completion and delivery of the project. “Due to strict regulations and norms, now it will not be easy for developers to skip from their due commitments. Right from project approvals to delivery and later possession, developers will now be seriously responsible and answerable.”[27]

Healthy Competition

Apart from the Home buyers who are the direct beneficiaries of RERA implementation, Developers who are genuinely interested in the business of Real Estate will certainly gain from the timely delivery of projects. It will instill customer confidence in to the projects and in turn will help them build developers their brand and reputation in the market. The presence of the projects of reputed builders will increase in the market creating a healthy competition. This will immensely help credible developers and weed out unorganized and fly-by-night developers who thrive on the innocent homebuyers.[28]

Lower Equity Cost

Due to lack of trust amongst the lenders towards developers, developers end up taking huge amount of loans at a very high rate of interest. . Once the real estate regime is organized post RERA implementations, Private Equity Players (PE), Banks and other Non-banking financial Companies (NBFCs) will not hesitate in funding projects proposed by developers. Institutional Funding will play a major role in real estate. Developers having all the requisite permits will find it easy to fund their project through these lenders. This will in turn amount to lower cost of equity and lesser debts for the developers.

Impact of RERA on the residential under construction Projects

There will be huge impact on the on the ongoing projects due to RERA. Pre-launches by developers are barred under RERA, so developers will find it difficult to channelize liquidity. This liquidity crunch will delay the ongoing projects.[29]

Developers’ Rush to get completion Certificate

Many developers are rushing to acquire Completion Certificate as they do not want to default under the provisions of RERA Act. Some of the large township developers are rushing to procure partial completion certificate from authorities in order to avoid default on the completed blocks of apartments. As per some media reports, some unscrupulous developers have obtained Completion Certificate from Authorities by producing fake and fraudulent permits.[30]

RERA Impact on Ready to Move Residential Market

As the effect of RERA on the real estate market is uncertain, many home buyers refrained from taking the plunge. There is a significant drop in the ready to move in residential market. However, as compared to under construction projects, ready to move in projects observed increased inquiries. This has further fueled the rental activities across major cities like Bangalore, Delhi, NCR, Chennai and Pune.[31] The ready to move in residential properties will remain major attraction for homebuyers as opposed to the under construction projects.[32]

Impact on Retail Investors

Retail investors who rely heavily on under construction projects for assured returns will have more clarity and confidence in to the project owing to strict regulations under RERA. They will now have access to the transparent information about the developer, developer’s track record and his financial stability.[33]

Impact on the Commercial Space Occupiers

Those who occupy Office Space will not worry about the clarity in terms of building layout plans, statutory approvals etc. The competition between the developers will lead to availability of better quality office space in the future.[34]

Conclusion

While RERA promises to transform the Real Estate Industry in to an organized, transparent and a profitable Sector, one has to wait and watch to really understand, the impact it will have in the long run. The initial hiccups in the implementation of RERA are unavoidable but the holistic impact of this revolutionary Act will definitely be positive and beneficial for the homebuyer’s community.

References

[1] Gaurav Sawhney, President Sales Piramal Realty @ http://www.99acres.com/articles/expertsonrera-gaurav-sawhney-president-sales-piramal-realty.html

[2] Section 4(2) (C) of THE REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016

[3] Section 14(1), Section 15(2) and Section 18 (1) of THE REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016

[4] Section 1(k), Section 4(2)(h) of THE REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016

[5] Section 20(l) of THE REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016

[6] Section 43 of THE REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016

[7] Section 29(4) of THE REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016

[8] Section 58(1) of THE REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016

[9] Section 56 of THE REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016

[10] Preamble of THE REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016

[11] http://profit.ndtv.com/news/property/article-rera-comes-into-force-from-today-only-13-states-notify-rules-1687960

[12] http://realty.economictimes.indiatimes.com/news/industry/ministry-of-housing-notifies-remaining-sections-of-rera/58264133

[13] Section 20 (1) of THE REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016

[14] http://timesofindia.indiatimes.com/city/ahmedabad/Realtors-request-Gujarat-government-to-frame-rules-under-RERA/articleshow/54760270.cms

[15] Section 22 of THE REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016

[16] Id

[17] Id

[18] Id

[19] Section 22 Supra of THE REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016

[20] http://realty.economictimes.indiatimes.com/news/regulatory/are-on-going-realty-projects-being-covered-under-rera-in-your-state/58164948

[21] http://www.99acres.com/articles/rera-implementation-immediate-and-long-term-impact.html

[22] Id

[23] Id

[24] http://www.99acres.com/articles/rera-implementation-immediate-and-long-term-impact.html

[25] As quoted by Suresh Garg, Chief Managing Director, Nirala World in RERA Implementation: Immediate and Long Term Impact.

[26] Id

[27] As quoted by Jetaish Gupta, Director Adore Realtech in RERA Implementation: Immediate and Long Term Impact.

[28] Id

[29] In Focus RERA by 99 Acres.com

[30] Id

[31] Id

[32] Id

[33] In Focus RERA by 99 Acres.com

[34] Id

The post How will RERA, 2017 impact Indian real estate industry in the long term? appeared first on iPleaders.