Written by Shilpa Nagral, pursuing  Diploma in M&A, Institutional Finance and Investment Laws (PE and VC transactions)  offered by  Lawsikho as part of her coursework.  Shilpa is a graduate in B. E. LLB and was working as an Associate in M&A, PwC. 

The menace of tax evasion is an issue which has been plaguing economies all over with India not being an exception. Countries all across the world are working overtime to achieve a balance between mitigating tax evasion and not interfering in day to day business of taxpayers. In this context, various anti-avoidance rules have been brought up by various countries. However, with various evolving business transactions, the measures are found to be lacking. For tackling the menace of tax evasion, nations like Australia, the Netherlands, New Zealand, Canada, China, etc. have adopted a wider approach known as the General Anti-Avoidance Rules (“GAAR”)
The introduction of GAAR is a watershed event in the evolution of India’s tax policy and legislation. As on date, any discussion of the structuring of business transactions will be incomplete without discussing the implications of GAAR. GAAR has been made effective in India from April 1. 2017. However, even before the GAAR provisions were made effective, Indian Judiciary dealt with tax avoidance cases by referring decisions pronounced by English courts in cases such as the Duke of Westminster. The English courts laid down that if the documents of any transaction are bona fide, the tax authorities are restricted from dissecting it to arrive at some other underlying substance.
The courts had adopted this principle in case of Azadi Bachao Andolan and the Vodafone case. However, the courts also ruled that, if the transactions are found to be “dubious” or “colourable”, such transactions can be disregarded by applying the doctrine of piercing of corporate veil and substance over form. Therefore, a codified law to address the widespread issue of tax avoidance was needed in India, and hence GAAR was introduced.

What is General Anti-Avoidance Rule (“GAAR”)

GAAR contained in Chapter X-A of the Income Tax Act is a set of rules which codifies the principle of substance over form implemented by courts in several cases. The procedure for application of GAAR and conditions under which it shall not be applicable is contained in Rules 10U to Rule 10UC of the Income Tax Rules. It empowers the tax authorities to re-characterise transactions and re-determine the resultant tax consequences, if such transactions are structured with the main aim of availing tax benefits or if they lack commercial substance.

Difference between Tax evasion and Tax Avoidance

Tax Evasion

Fraud, Illegality, misrepresentation, willful suppression of facts- all these activities constitute tax evasion which is strictly prohibited under law.

Tax Avoidance

Tax avoidance includes actions taken by the taxpayer, which are not illegal or forbidden by law but are considered as undesirable and inequitable, as they undermine the objective of an effective collection of law.

Run up to GAAR

GAAR was first introduced in the Direct Tax Code Bill, 2009 and a committee was formed by Central Board of Direct Taxes to give its recommendations on formulations of guidelines and circulars to ensure that ruling was not applied indiscriminately.
March 16, 2012: GAAR was introduced for the first time in the Finance Bill 2012 and was to come in effect from April 1, 2012. However, GAAR was deferred till April 1, 2014, on enactment of the Finance Bill 2012. GAAR was deferred to allow additional time for investors sentiments to improve and appropriately refine the law.
June 28, 2012: The Government of India released draft GAAR guidelines.
July 13, 2012: An expert committee headed by Dr. Parthasarathi Shome was constituted to review and rework GAAR guidelines.
September 1, 2012: The Shome committee report was published. Major recommendations of the Shome committee were as under:

• Defer implementation of GAAR for three years on the administrative ground;
• GAAR to be applicable only if the tax benefit to the party is beyond Rs. Three crores;
• GAAR should not be evoked to determine the genuineness of residency of Mauritius taxpayer and Tax Residency Certificate (TRC) as accepted by CBDT should be retained;
• GAAR should only be applied in cases of abusive and artificial arrangements;
• The panel of GAAR should consist of five members- Chairman: retired HC judge, two members outside government drawn from the field of accountancy, economics or business with wide knowledge in matters of Income Tax; 2 members should be Chief Commissioner of Income Tax or 1 Chief commissioner and one Commissioner

January 14, 2013: GAAR was postponed for another two years and was to become applicable from April 1, 2016.
2015: Implementation of Finance Bill 2015 deferred GAAR for one year. It has become effective from April 1, 2017

Impermissible Avoidance Agreement (“IAA”)

GAAR authorises the income tax authorities to tax impermissible avoidance agreements (“IAA”). Moreover, under the provisions of GAAR, certain provisions are deemed to lack commercial substance. As per Section 96 of the IT Act, impermissible agreements are arrangements whose main purpose is to obtain a tax benefit in addition to the satisfaction of at least one of the four tainted elements test as listed below:

• creates rights, or obligations, which are not ordinarily created between persons dealing at arm’s length;
• Results, directly or indirectly, in the misuse, or abuse, of the provisions of Act;
  lacks commercial substance partly or wholly;
• is entered into or carried out by means or in a manner, which is not ordinarily employed for bona fide purposes.
• The term “arrangement” has a wide ambit and also includes a step or part of any arrangement. Hence, even if the main purpose of a step of arrangement is to obtain a tax benefit, the provisions of GAAR would be applicable even if the main purpose of the arrangement is commercial in nature.

What are the arrangements that lack commercial substance?

If apart from the motive of availing tax benefit, an arrangement or any step in arrangement does not have any significant effect on net cash flows of the parties to the arrangement or the business risks, the arrangement will be deemed to be lacking commercial substance under the GAAR provisions. The following factors can be referred to determine if, an arrangement lacks commercial benefit:

• The substance or effect of the arrangement as a whole differs significantly from the individual step taken
• It does not have any significant effect on the business risk or cash flow of any party other than the tax benefit to it
• Round-trip financing, accommodating party, elements that offset or cancel each other, transactions conducted through one or more persons to disguise the value of the deals, location, source, ownership, source or control of an arrangement
• Involves the location of asset, transaction or residence of any party without any substantial commercial purpose

The factors that are relevant but not adequate for a decision if arrangement lacks commercial substance or not are:

1. The period for which an arrangement has existed
2. Payment of taxes, directly or indirectly, in an arrangement
3. The existence of an exit route

Safe Harbour

Safe harbour rule (exemptions from GAAR) apply to:

1. Where tax benefit arising to all parties in an arrangement does not exceed Rs. Three crores in a financial year;
2. Arrangements due to which income accrues or arises to person from transfer of an investment prior to April 1, 2017. However, it should be kept in mind, even if investments prior to April 1, 2017, are grandfathered, any corporate arrangement which is implemented starting April 1, 2017, can come under the scrutiny of GAAR provisions.
3. Foreign Institutional Investors (FIIs) and Non-residents investors who are directly or indirectly investing in offshore derivate instruments such as P notes issued by FIIs. However, FIIs claiming the benefit under the Double Taxation Avoidance Agreements (DTAA) can be scrutinised under the GAAR provisions.

Consequences of invoking GAAR

While applying GAAR, tax authorities may deny benefits available to parties in arrangement under double taxation avoidance agreement, deem connected parties as one and the same, reallocate expenditure and income between the parties to the arrangement, treat debt as equity and vice versa, alter tax residence of the parties involved and also the legal situs of the assets involved in the transaction.

Procedure for invoking GAAR:

Tax Officer: The Tax officer may examine an arrangement for an IAA enquiry. If he feels the need, he can refer the arrangement to Principal Commissioner or Commissioner of Income Tax (CIT) to declare an arrangement as IAA.
Principal Commissioner/ Commissioner of Income Tax (CIT): The CIT will issue show cause notice to the taxpayer if he is satisfied that GAAR is to be invoked. The taxpayer has to furnish his objections within 60 days. If still satisfied that the arrangement is IAA shall refer it to the approving panel or pass an order favouring taxpayer for non-applicability of GAAR.
Tax office and CIT can recommend invocation of GAAR not only for the tax year for which the proceedings are pending but also for past and future years.
Approving Panel: If approving panel is satisfied that the arrangement is IAA, it shall issue directions declaring arrangement as IAA or pass an order favouring taxpayer for non-applicability of GAAR. Panel to provide the taxpayer with the opportunity to be heard. The declaration is to be passed within six months from the date on which reference was received from the CIT. The decision of the Approving Panel is binding on CIT, and no appeal is permitted against its order.

Redressal Mechanism

The taxpayer can either appeal to Income Tax Appellate Tribunal (“ITAT”), or a writ can be filed before the jurisdictional High Court against the decision of Approving Panel if the decision violates the principle of natural justice or there is any misapplication of the law.

Advance Ruling Authority:

The GAAR provisions also provide for setting up advance ruling authority, where there would be a mechanism on obtaining an advance ruling on whether the arrangement is permissible or not.

How will GAAR affect M&A transaction?

M&A transactions are undertaken mostly for commercial purposes and not for the sole motive to derive tax benefits. To ensure that the transactions remain away from the purview of GAAR implications, certain issues should be carefully considered and included in transaction structuring. Some of the ways in which M&A transactions would be affected by

GAAR invocation are listed below

1. Invocation of GAAR in cases where the appointed date is prior to April 1, 2017: Tax authorities may choose to invoke GAAR provisions in case of Scheme of Arrangements, which are post-April 1, 2017 but have appointed date before April 1, 2017. Tax authorities may choose to invoke GAAR provisions in such scenario and deny any tax benefits accruing to the parties to the arrangement. However, in doing so, the tax officers must bear in mind, that they would be going contrary to the principle of appointed date as laid down by Apex Court in the case of Marshall and Sons Ltd. Upholding the concept and relevance of “Appointed Date” in Scheme of Arrangements.

2. Set off of tax losses against tax profits: In order to promote the revival of loss-making entities, the IT Act, subject to fulfilment of certain conditions, allows the continuity of losses after consolidation with other company. Hence, the consolidation of loss-making companies with profitable companies is a common structuring arrangement undertaken. Post the GAAR becoming effective; the tax officers can strike down such arrangements as lacking commercial substance if the parties to the arrangement are unable to prove the commercial substance of transactions leading to set off of tax losses against the tax profits.

3.Share buyback from overseas: Companies usually do share buybacks for their capital reorientations. In the context of an Indian company doing share buyback from overseas investors, it has to be kept in mind that buy back from tax-friendly jurisdictions such as Mauritius, Singapore, Cyprus, etc. is tax-free. In such a scenario the tax officer can choose to invoke GAAR provisions as he can put forward a contention that the buyback is undertaken to save the dividend distribution tax but at the same time distribute profits to its overseas investors. The same view has been taken in the case of Otis Elevators even before the GAAR became effective, which gives an idea of the times to follow.

4. Conversion of Company into LLP: To better facilitate the conversion of a Company into Limited Liability Partnership (LLP), the IT Act provides various incentives one of them being that such conversions are to be considered as tax neutral. Many companies convert into the LLP form as the LLP structure provides the benefit of limited liability alone with the benefit of providing of providing flexibility in doing business. LLP is also a beneficial structure as profit distribution is not taxed and only is very specified conditions can its book profits be taxed.

Post the GAAR regime such conversions to be considered tax neutral would be very difficult. Unless the parties do not establish the commercial rationale for conversion to LLP, the tax authorities may contend that it is done for the sole purpose of availing tax benefits and may disregard tax neutrality on conversion.

5. Thin capitalisation situation: In the present scenario there are no thin capitalisation rules in India. Thin capitalisation rule is reducing the investment through debt instruments so that the investee company does not maximise tax break on interest payout. The interest reduction benefit would not be available to investee company if the investment was made in the form of equity. After the GAAR provisions becoming effective, the tax authorities are now empowered to regard debt as equity or vice versa. Hence if a strategic investor plan to invest in form of convertible debts so that the promoters share is not diluted, the tax officer can disregard such an investment unless the commercial rationale for debt investment is proved.

6. Investments by Private Equity (PE) or Angel Investors (AI): Many PE and AI investments are done at a very high premium. The high premium is not based on the underlying asset base or to even predicated cash flows of the company. The investment in the startup is purely on the idea. In such cases, the investee company will have a very hard time explaining to the tax officials the commercial rationale behind the high premium on the share capital and to prove the fact that the amount paid is not in excess of the fair value of the company.

7. The interplay between GAAR and SAAR: Through recent clarification circular issued, the government has clarified that GAAR and SAAR will co-exist. They will be applicable according to the facts and circumstances of each case. While the CBDT has said that GAAR and SAAR will operate simultaneously, the court in certain cases has held that certain provisions of SAAR will override GAAR. Hence courts may hold GAAR and SAAR mutually exclusive. This aspect of law may be strongly litigated.

8. Tax treaty benefits: One of the major issues that could arise is the benefits that investors enjoy under the tax treaties especially countries such as Mauritius, Singapore, Cyprus, etc. Vide a recent amendment, the India- Mauritius tax treaty was amended, and it was stated that investments prior to April 1, 2017, would be grandfathered and no capital gain tax would be levied on such investments. Also, any investments made post-April 1, 2017 would be taxed as per the Limitations of Benefit (LoB) clause. Even though the government has clarified that if LoB adequately addresses the issue of tax avoidance, GAAR provisions cannot be invoked. This means only if and when the tax authorities are satisfied that the LoB clause addresses the issue of tax benefit satisfactorily, the GAAR provisions will not be evoked. However, scrutiny of LoB clauses should not be open to tax authorities when they are mutually discussed and settled between the countries. Tax treaties is a commitment made by Indian Government, and if such treaties are overruled by unilateral amendments done by Government of India to the domestic tax laws, then it would be a matter of great concern for the international investors.

Concluding Thoughts

The government has to come up with more clarifications and better guidelines, to maintain a balance between investors interest in the Indian economy and at the same time fight with the anti-abusive provisions. This has to be done keeping in mind that no these provisions do not result in unnecessary hardship to investors. At the same time, the tax authorities and the taxpayers have to get accustomed to the provisions of GAAR as they evolve gradually. The tax authorities should also keep in mind the ground realities while doing business and not arbitrarily invoke GAAR provisions. If the government wants to attract foreign investments and at the same time maintain positive sentiments among the investors, it should provide clarity on the ambiguities in the GAAR provisions and most importantly, adopt the global best practices in the implementation of GAAR.

The post What is GAAR and How Does it Impact M&A Transactions appeared first on iPleaders.

Written by Porus Confectioner, a career banker with 25 years experience in banking/ financial services and has completed the DEABL from NUJS Kolkata.

Introduction

The Companies Act, 2013 which came in effect from April 1, 2014, as well as SEBI Rules, Securities Contracts Regulation Act and Sectoral laws cover the matters related the maximum shareholding that may be held by a single entity in a company or banking or Insurance company in India.   To get an idea on this law we would need to understand the types of companies allowed under the Act and the intent and purpose in incorporation and charter documents of the company.  Here, we will look at the Control aspects as per the new Companies Act 2013.

Main Discussion :

The Companies Act 2013 includes new enactments which are required, given the need to keep pace with a fast an ever-changing corporate scenario.  The legislation has included, for the first time, the One Person Company, to encourage entrepreneurship and a start-up culture.

One Person Company:

Section 2(62) defines One Person Company (OPC ) as a Company which has only one person as a member, with all the provisions applicable to a Private Company also applicable to the One Person Company. The single member entity indicates that, though the number of Directors could be increased to 15, the One Person is the single shareholder who owns 100 % of the shareholding of the company.  Though owned by a Single person, the Act treats the Company as a separate entity and includes limited liability. For the sake of stability the Companies Act states that an OPC must nominate a Person to which all the shareholding passes in the event of his death.  Further, once turnover is above INR 2 Crores or an INR 50 lakhs Capital is reached, the OPC must convert into a Private Limited Company.

The OPC would be useful for existing proprietorship companies to convert to OPC’s with limited Liability and 100 percent Control whilst gaining the credibility and protection afforded to a Company.

Private Limited Companies:

The most commonly incorporated structure in India is the Private Limited Company.  The Companies Act under Section 2 (68) requires Private Company Ltd to have a minimum of two members.  Here, the minimum number of members required is two. So, while a Single person or entity may hold 99 % of the shareholding, it is necessary that another person/entity owns the balance 1 %.  The Private Limited company requires that there are restrictions on transferability of shares in charter documents with not more than 200 persons/companies being its’ members. Here the intent of the promoter is to have the shares “ closely held “ and “restrict transfer-ability “ with adequate measures to allow existing shareholders to exit at share prices as per registered valuers appointed for the purpose. The Private limited company enjoys the most flexibility to increase or decrease shareholding, dividend declaration, and fundraising as well.

Subject to other Sectoral provisions, The Private Limited Company is the most popular investment structure for foreign investors, given the lesser compliance requirements than a limited company.

The Companies Act 2013, earlier legislation had brought Private companies on par with Public Limited companies for the purposes of Corporate Governance, Reporting requirements and other onerous laws which constrained the operational flexibility available to private companies under the earlier Act of 1956.  Owing to representations from industry associations, the Act has been amended in 2017 to reinstate the more relaxed policy regime for private companies.

Public Limited Companies :

The term “ Public Company “ is defined under Section 2(71 ) of The Companies Act 2013. It means a company which has a minimum Paid-Up Share Capital of INR 5 Lakhs and which is not a private limited company. Public Limited Companies do not restrict the transfer of shares, require at least 7 members to form a company with no restriction on the maximum number, has at least 3 directors and may accept deposits and invite subscription to its shares and debentures.

There is no law which prohibits a person or persons from holding more than a certain percentage of a company.  It is permissible for evolved companies to have No promoter holdings. The SEBI regulations require a minimum of 25 percent public shareholding though there is no legal requirement for minimum promoter group holdings.  Notably, among the S & P CNX 500 companies, there are some companies which have no considered promoter holdings, including HDFC, L & T, ICICI Bank, and IDFC. As per law, a company is managed by The Board of Directors. If it has no promoter or group which is discernible, the Board, shareholders and the Articles of Association would be guiding factors in day to day management of the company.  During the Initial floatation of the Company SEBI requires that promoters should hold at least 20 percent of the post-issue Paid Up Capital of the Company and there should be a lock-in for 3 years. After the 3 years, promoters may reduce their stake. The Companies Act 2013 and SEBI regulations state that “ Control “ of the Company as a key factor to decide as to whether one is a promoter.  It is pertinent to note that, today, the Original founders of Infosys are no longer active in the day to day management of the company and there is a possibility that they will be possibly de-registered with SEBI as promoters.

Promoter and promoter groups have “ Controlling Interests “ or “ Significant Influences” in Associate or Group Companies” to ensure management control remains in their hands. At the same time, potential investors always do look at promoter interest in companies to ensure they have enough skin in the game to continue their commitment to the company.

Let us look at the definition of “ Control“ under the Companies Act, 2013 – Control  “ shall include the right to appoint the majority of the directors or to control the management or policy decisions exercisable by a person or persons acting individually or in concert, directly or indirectly, including by virtue of their shareholding or management rights or shareholders agreements or voting agreements or in any other manner. “

The definition of Control allows an indication of how management may retain control over a company. The definition of “Control “ in India has been a subject of much debate, especially in the area of takeover regulations.  The Supreme Court in SEBI vs Subhkam Ventures Pvt Ltd. had left the question of “ Control ” relatively undecided.  The Companies Act 2013 and the SEBI Takeover Code has clarified the attributes to be considered in decisions of Control :

• The Right to appoint a majority of Directors
• The Right to Control the Management
• The Right to Control Policy Decisions

Such rights may be exercisable by one person or by more than one person or persons acting in concert. These rights may be exercisable Directly or Indirectly.

The Right may accrue in any of the following manners :

• Shareholding
• Management Rights
• Shareholders Agreements
• Voting Agreements or Any Other manner

Multiple Regulatory bodies as Insurance, Competition Commission and erstwhile FIPB may also use the above definitions in decisions of determination of companies with regard to Takeovers and Subsidiary/Associate Companies. Whilst, defining Control the new Companies Act 2013 has also brought in certain checks to ensure that financial investments of investors are not necessarily for the takeover but necessary to protect financial rights on pure financial investments in Companies.

Whilst Clarifying aspects of Control the Companies Act 2013 has also brought inadequate checks to ensure the protection of various classes of shareholders. The following have been included now under the Companies Act 2013 and Amendments 2017 :

Minority Shareholders have statutory Rights to Requisition a General Meeting, by a minimum of 100 persons or 10 % of minority shareholders, to requisition and AGM, approach NCLT for cancellation or variation of rights, approach the tribunal in case of Oppression and Management, as well as initiate a class action suit in specified circumstances.

Entrenchment provisions have also been provided subject to their being included in the Memorandum and Articles of Association, for shareholders consent in Extraordinary General Meetings on the following matters :

• Amendment of Charter Documents of the company
• Issuing sweat Equity or Bonus shares
• Buyback of shares and reduction of share capital
• Appointment and removal of directors
• Issuing of debentures with an option to convert in shares.

The New Companies Act 2013 has also allowed for Differential Voting Rights. Indian Companies may issue equity shares with Differential Voting Rights. The Differential Rights could be with respect to Dividend Payments, voting at meetings or otherwise.  The issue of such shares has been capped at 26 % of the post-issue paid-up equity share capital of the company. The Voting Rights would be subject to ensuring that there was equality of treatment and opportunity to all shareholders to exit in case of disagreement.

Ordinarily, promoter groups i.e. Birla, Singhanias, Mahindra, etc. would have a significant shareholding in their group companies through “ Holding” companies to maintain management control at all times whilst having access to public funds.  Historically, Companies in India have had on the average at least 30 % to 50 % shareholding in their companies to ensure management control. While retaining control most companies have brought in professional management over the years have given increased business complexity, performance needs, as well as transparency and compliance.

Sectoral Guidelines :

Apart from the SEBI Rules and Companies Act, 2013,  there are Sectoral Guidelines in case of Banking or Insurance and other industries like Real Estate, Retailing, etc. which would need to be followed i.e.  Reserve Bank of India* Act, Banking Regulation Act, Insurance Act, and other relevant sectoral regulations which may have caps on maximum permissible  shareholding of persons acting in concert.  For example, Ordinarily, for banking companies, the permitted promoter/promoter group shareholding is maximum 15 % of the Equity Capital of the bank. Further, Foreign Institutions are allowed to hold a maximum of 74 % of private bank equity shares. The various sectoral caps in each case would need to be observed.

Footnote : *RBI Master Direction – Ownership in Private Banks, Directions, 2016

Conclusion

The recent Amendments in the Companies Act, 2013 and Amendment Act 2017 are laudable and have brought some clarity to erstwhile areas of doubt which existed under the earlier Act of 1956. Whilst allowing promoter and promoter groups maximum flexibility in management control of Companies, The Act has put in place several new clauses for investor protection including minority shareholder protection, Independent director requirements, statutory guidelines for a check on oppression and management, as well as opportunities for investor exits where the option is sought.   The experience of the efficacy of the new rules will be experienced over the next few years, though there is some precedent in certain existing practices. The new legislation has been generally accepted by the industry as progressive steps to a better corporate regime.

Readings :

• The Companies Act 2013, Amendments Companies Act 2017
• SEBI – Various Guidelines including the Takeover Code
• Discussions with existing legal practitioners
• Law website

The post Rules regarding maximum shareholding in a company. appeared first on iPleaders.

Written by Porus Confectioner, a career banker with 25 years experience in banking/ financial services and has completed the DEABL from NUJS Kolkata.

Introduction

Most Equity Share-holders look forward to a “Bonus” issue of shares, being a reward for their loyalty to the company and an opportunity to add to their wealth. Companies which have plowed back profits into accumulated reserves over many years may build up surpluses in excess of the company’s current and future operational requirements. These “ Retained Earnings “ or undistributed profits are used to issue “ Bonus Shares” to existing shareholders. The shares are issued at no cost to them and the additional shares are issued by Capitalising the amount from “Reserves and Surplus”. Capitalization of profits refers to the process of converting profits or reserves into Capital. The intent behind Bonus issue is to capitalize profits and “ bring nominal share capital in line with the true excess of assets over liabilities”.*

A Bonus Issue by a company refers to the further issue of shares to its’ existing shareholders, without consideration,  in proportion to the voting rights or pro-rata of their holding of shares in the company. Hence, none of the shareholders get diluted. A Bonus issue only raises the number of shares issued, though the Net Worth of the company remains the same. While Bonus shares may be Earnings Per Share dilutive, the additional liquidity created by the issue of additional floating stock, allows for better price discovery over time. A  1: 1 Bonus ratio means that the investor will receive one share for every share held by him.

Bonus issues are a strong success signal since the company shows the ability to service a larger equity base, add to the liquidity of the share in markets and most of all, add value to the shareholders. Additionally, there is no cash outflow in a bonus issue.

Main Discussion

Under the Earlier Companies Act 1956, there was no specific sections governing the issue of Bonus Shares. Earlier, there were norms issued by the Controller of Capital Issues which has now been abolished after the emergence of SEBI as a regulator.  The Companies Act 2013, Section 63 read with Rule 14 ( Companies Share Capital and Debenture ) Rules 2014 have encoded the law for listed and unlisted Companies. Chapter IX SEBI ( ICDR ) Regulations 92 to 95 also need to be covered for listed companies.

Conditions and Procedures

As per Section 63, (1) Bonus issue of fully paid up equity shares may be issued out of –

• Free Reserves of the company built out of genuine profits of the company ( not revaluation reserves )
• The Securities Premium Account – for listed companies the realizable cash portion of the Securities Premium Account and for unlisted companies whether in cash or others. (*Ramaiya, 17^th Ed., Part 1, Page 1255)

• Capital Redemption Reserve Account – which may be created from Buy Back of shares or redemption of preference shares out of profits, may be utilized for the issue of Bonus shares.

Notably, a company is not permitted to issue Bonus Shares in lieu of Dividend or from revaluation reserves of the company.

For a company to issue Bonus Shares the following conditions must be satisfied :

1. There should be a provision in the Articles of Association for a Bonus Issue. If not, a Special Resolution is to be passed at the General Body Meeting for the issue of Bonus shares.
2. If the subsequent Bonus issue shares exceed Authorised Share Capital of the company, A Special Resolution is to be passed at the general Body for raising the Authorised Share Capital.
3. Checks to ensure that the company has not defaulted in payment of Principal or Interest in respect of Fixed Deposits or Debt Securities or any other employee statutory dues i.e provident fund, gratuity, bonus, etc.
4. All partly paid-up shares are to be made fully paid up prior to the announcement of any Bonus Issue.
5. In accordance with SEBI (ICDR ) Regulations, the company must ensure that has outstanding fully or partly paid up are considered for the issue. Further, the issue to the holders of partly or fully convertible debentures should be converted on the same terms and proportions on which the bonus shares were issued.
6. Ordinary Resolution to be passed by the Board of Directors at Board Meeting for an issue of Bonus Shares, the decision on the ratio of share issuance and date time of General Meeting to be set.
7. Form E MGT within 30 days of Passing Board Resolution for Bonus Issue.
8. Hold General Meeting and get the resolutions for the issue of Bonus Shares passed by the members at General Body Meeting

Once the Company has announced the Bonus Issue, on authorization by the Board, it cannot be withdrawn. To put that in perspective, the shareholders are compelled to agree to the recommendations of the Board. Even at the General Meeting, shareholders will have to pass the Bonus Issue. The announcement is final and shareholder approvals are a mere formality.

1. Within 30 days of issue of Bonus Shares, file with the Registrar of allotment in Form Pas 3 along with fees as specified in Companies ( Registration of offices and Fees ) Rules.4
2. All share Certificates or allotment of share to be completed with two months from the date of allotment of Bonus issue as required under Section 56 (4), where shareholder requirements exist. The details of Allotment are to be intimated to the concerned Depositories.

Rule (12) 6 of the Companies ( Prospectus and Allotment of Securities Rules 2014 ), require form PAS 3 to be filed when such securities are allotted.

An issuer, announcing bonus, without the requirement of shareholder approvals or changes in The Articles of Association, needs to implement the Bonus issue within fifteen days from the date of approvals by Board of Directors.

For listed companies, Chapter IX of SEBI ( ICDR ) Rules, comprising Rules 92 to 95 need to be covered for Bonus issued with listed companies.  The gist of these requirements is already included in the above requirements set out.

There are no specific guidelines on the ratio of Bonus Issue.  So, companies are free to issue Bonus shares in any ratio.

Other Aspects to consider

FEMA provisions and RBI guidelines are to be adhered to in issuance of Bonus Shares to Non-Resident Indians. The company would need to check on any sectoral caps apart from Companies (ICDR) guidelines. The Issue of such shares to persons outside India has to be reported in Form FCGPR not later than 30 days from the date of issue of shares.

Listing Obligations

As per SEBI ( Listing Obligation and Disclosure Requirements ) Regulations, which came into effect on 2015, the provisions for listing have been aligned with the provisions of the existing Companies Act 2013.  As per Regulation 29 of the Listing Regulations 2015, the listed company needs to give prior notice to Stock Exchanges about the Board Meeting where the proposal for issue of Bonus shares is part of the Agenda. Also, as per Regulation 42, the listed entity needs to intimate the record date of issue of Bonus shares to the Stock Exchanges, at least 5 days before dividend or any cash bonus is declared.

Taxes 

Bonus shares, are not to be taxed on the allotment, but on sale, as decided in Sudhir Menon HUF Vs. ACIT 162 TTT 425 ( Mumbai ).  Section 56 (2) (vii) Income Tax Act does not apply to the issue of Bonus shares because there is a mere capitalization of profits by the issuing company and there is neither an increase or decrease in the wealth of the shareholder as his percentage holding remains constant. Thus, the cost of acquisition of shares to the investor in ‘Nil”. Bonus shares would be subject to capital gain tax depending on the holding period only when sold.

Note: Company law purists are still in doubt on the matter of selective issue of Bonus shares by companies. The existing Companies Act 2013 does have provisions for issue of shares with limited voting rights and hence selective bonus issues. However, there is still some doubt about whether such issue is appropriate or not, given the new legislation and the lack of precedent in the matter, though there have been instances of Selective Bonus issue in 2008 in case of Reliance Power to protect public shareholding. The selective bonus may also be permitted for listed companies to bring public share-holding in line with minimum public shareholding norms.

Conclusion

The Companies Act 1956, did not have any specific directions or rules for issue of Bonus shares by companies. The new Companies Act legislation of 2013 has included specific Section 63 and Rule 14 ( Companies ( Share Capital and Debenture Rules ) 2014 besides Chapter IX of SEBI ( ICDR ) Regulations 92 to 95, for an issue of Bonus shares by companies which has given clarity and process to the issue of these securities. While the “ Entrenchment guidelines “ have been brought into the Companies Act 2013, for protection of shareholder rights, the Rule that Bonus Shares, once recommended by the Board of Directors, cannot be withdrawn, even by shareholders at General Meeting, does appear to be at variance with the Rights of Shareholders. Further, if the Board is authorized to decide, why include a Share-holder meeting requirement, for the sake of formality? There also are some differences on reporting of resolutions as Special or Ordinary Resolution to authorities.  The new Legislation has brought a lot of clarity and procedure to the issue of Bonus shares, the experience of which is a success.

Readings

• Bare Acts: Companies Act 2013, SEBI (ICDR ) Rules 2014, SEBI ( Share Capital and Debenture Rules).
• Various articles and papers on internet.
• Discussion with Company Secretaries at various Companies

The post Provisions with respect to the issue of Bonus Shares under The Companies Act, 2013 appeared first on iPleaders.

Written by Porus Confectioner, a career banker with 25 years experience in banking/ financial services and has completed the DEABL from NUJS Kolkata.

Introduction 

Experiences of the past few years have reinforced the need for strengthening of Corporate Governance globally and in India for companies and institutions. The audit function remains one of the pillars of Corporate Governance in companies and auditors remain the keystone in enforcement and maintenance of standards of Governance.

The most critical purpose of an audit is to provide company stakeholders as an expert, independent and true and fair view of the financial affairs of a company. Auditor independence is, therefore, the central critical element for auditors to perform their role “ freely, fearlessly and objectively”  to protect the larger interests of all stakeholders.

While the previous Companies Act 1956 had codified the auditor requirements, the Companies Act 2013 has set out in greater detail the law with regard to appointment, retirement, removal and other requirements for independence of the audit function by subjecting auditor decisions to more scrutiny by appropriate authorities. The set up of National Financial Reporting Authority to oversee audit performance is also an effort to cover the question “ who audits the auditors.”

In this paper, we explain relevant Companies Act 2013 legislation on audit including the rights of a Retiring Auditor.

Main Discussion

The law relating to Audit in India is covered under the following Acts and Rules :

• Companies Act 2013 – Sections 139 to 148 and amendments 2017
• Companies ( Audit and Auditors Rules ) 2014
• Companies ( Management and Administration Rules ) 2014
• Audit Standards – Issued by Central Government, Institute of Chartered Accountants of India and requirements of +National Financial Reporting Authority.

Section 139 states that in following cases a company would require to constitute an Audit Committee which would recommend to the Board the individual or firm for audit purposes after taking in to account relevant experience and qualification of auditor :

• Companies with Paid-up Capital of INR 10 Crores or more
• Public Companies with turnover of INR 100 Crores or more
• Public companies with any outstanding borrowings of INR 50 crores or more

Appointment

( Sec 139 ) – First Auditors to be appointed By Board of Directors within 30 days of Registration of company and they will hold office till first AGM. The same auditor may be reappointed up to the 6^th AGM or new audit firm appointed at Sixth AGM subject to shareholder approvals.  The same auditor appointment to be ratified at every AGM. This requirement for ratification by shareholders, which also came under scrutiny in SPC & Associates Vs. DVAK and Co & Anr by NCLT Hyderabad has since been removed by Amendment to Companies Act in 2017.  Henceforth, auditor re-appointment will not require shareholder ratification at each Annual General Meeting. The eligibility, qualifications, and disqualifications for an auditor appointment are set out in Section 141.

The procedures and requirements for Removal, retiring and the resignation of auditors is encoded in Sections 139 and 140. Section 139 restricts individual auditor appointment for a maximum term of 5 years and a firm for 2 terms of 5 years. Thereafter, they may be reappointed after a cooling off period of 5 years.  Let us understand who is a “Retiring “ auditor.

A Retiring Auditor  –  retires at the first AGM of the company and holds office till next AGM of the company.    At every AGM thereafter, the same auditor would be reappointed unless:

• He is not qualified for reappointment ( Disqualification )
• Has given the company notice of his unwillingness to continue ( Resignation )
• A Special Resolution is passed at AGM for non-reappointment of retiring auditor ( Removal ).

Section 139 (10 ) states that where at any Annual General Meeting, no auditor is appointed or re-appointed, the existing auditor shall continue as the auditor of the company.

Where an Auditor, being a firm, retires, on completion of a 5-year tenure, his appointment may continue for another 5-year tenure. In such a case, the auditor’s tenure may be extended for another 5 years by Ordinary Resolution passed at the Annual General Meeting each year. However, where the auditor is not to be reappointed, there would be a requirement for a *Special Notice procedure under Section 115, which would require to be moved, for subsequent Resolution to be placed at the next Annual General Meeting, in such a case.

Special Notice Procedure: Where a Special Notice is required to be given, the Special Notice of intention to move such  Special Resolution later, must be :

• moved by members holding not less than One Percent of the total voting power or holding shares of not less than five lakhs value of paid-up equity capital as on the date of moving of the Special Notice.
• the Special Notice must be sent between 3 months and 14 days prior to the date that the Resolution has to be moved so that sufficient time is available for the company to inform auditors and for the company for further action
• the company shall give its members notice of the resolution at least 7 days before the meeting  as per Rule 23 of Companies ( Management and Administration ) Rules, 2014.

In such a case, the following Rights would be available to the retiring auditor – Sec 140 (4) (iii) :

1. Right to receive a copy of Special Notice: Copy of Special Notice to be sent to the auditor immediately by Registered A/D.  The contents of the notification must be clearly stated or given to the auditor.
2. Right to make representation in writing and request notification to members: auditor may make a representation in writing to members of the company
3. Right to have the representation circulated to members – the company is obligated to forward the representation to all members unless it is received too late. In the representation is too late, the representation must be filed by the company with the registrar
4. Right to have representation read out at the meeting – if the above representation is late auditor has right to get the representation read out at The General Meeting.
5. Right to be heard orally at the meeting – it is imperative that the auditor is given audience to state his viewpoint which may be considered.

The following points may be noted :

• Where the Auditors have requested for representation at the meeting, their representation may be read out to the members of the company. The company is bound to represent only if requested for by the auditor.
• In such a case the Auditor should be given “ Reasonable opportunity to be heard “ before any action is taken by shareholders or Central Government. In Basant Ram & Anrs.vs Union of India & Ors* it was held that “ there is considerable merit, as there is no statutory bar on a prior meeting held, wherein the shareholders or the members approve the resolution for making the application to seek the previous consent of the Central Government.” Hence,  any action would be operative only after the approvals of shareholders. “

Principles of Natural Justice demand that an auditor is given an opportunity to state his case before retiring or being removed from office. The auditor is a critical functionary in the in the corporate eco-system and it would be inappropriate to remove them without giving ear to their viewpoints and comments. Accordingly, the requirement of intimating the members about representations being made in the notice to members and the right of auditor being heard at the meeting may not be dispensed with in any circumstances.

The company, which has concerns on the continuation of the auditors’ services, may apply to the NCLT with a request to avoid the requirement of sending of the representation or having the same read out in the meeting on the ground that the rights conferred by the section are being misused by the auditor.

The High Court, in the case of SPC & Associates, Chartered Accountants Vs DVAK & Co., observed that the provisions of the Companies Act 2013 underscore that the statutory auditor cannot arbitrarily be removed and the statutory procedure has to be followed. Auditors are expected to function as independent professionals and not simply toe the line of the management of the concerned company.

Removal of an auditor prior to the expiry of his term, under Sec 140 (1), requires the company to obtain Shareholders approval, Central Government approvals and reasonable opportunity of being heard before any action is taken. The Removal of Auditor is Special business and requires a Special Resolution for the purpose.

Conclusion 

The Companies Act 2013 has laid out comprehensively the law with regard to audit and auditors from Sections 139 to 148.  The Act has also allowed for protection of auditors rights through various safeguards including shareholder approvals, central government approvals and opportunity of being heard before any action lies which may be prejudicial to their rights as auditors. This three-tier audit protection structure has been brought in to ensure that the auditors’ act  “freely, fearlessly, objectively and independently” and without any influence from the companies they audit, in pursuit of high Corporate Governance standards.

Footnote

*Special Notice – Explanation: Resolutions requiring Special Notice and Special Resolutions. The former is the procedure that precedes the placement of Resolution proposed by certain members for approvals of members at General Meeting whereas the latter is a resolution passed under Section 114 of the Companies Act 2013. In general, matters which require special notice under Companies Act 2013 are Ordinary Resolutions.

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Written by Porus Confectioner, a career banker with 25 years experience in banking/ financial services and has completed the DEABL from NUJS Kolkata.

Introduction 

A major source of stable financing of a companies activities is the raising of capital from owners through the issue of equity shares.  The Memorandum and Articles state the amount of capital in terms of shares and their value and number.  The maximum amount of share capital that may be raised by the company from the public is called “ Authorised “ capital. Generally companies issue only a part of this authorized capital for the public subscription which is termed “ Issued Capital”. A part of this issued Capital may be subscribed to by public and is  “ Subscribed Capital “.    The subscription could be “Fully” or “Partly Paid” which constitutes “ Paid Up Capital “.   A portion of the share capital may be Partly Paid and the balance called up at a future date.

It is that portion of Capital that being “Called Up “ and payable by the shareholder at a Future Date that is the focal point of this discussion.  Whenever a particular amount is “ Called Up “ and a shareholder fails to pay the amount, it is known as Unpaid Calls or Calls in Arrears. Such calls may be paid within the stipulated time or the shares may be canceled or forfeited. Here we discuss the legal implications of equity shares which are Called Up and may not have been paid in time and therefore may be forfeited.

Main Discussion 

The law relating to Forfeiture and Reissue of shares in India is covered under the following Acts and Rules :

• Companies Act 2013 – Sections 61 – 68 and amendments 2017, Sections 13 – 18 Table F of Schedule I and 28 – 36 Table F Schedule I or Provision is to be included in Articles of Association of the Company.
• SEBI ( Disclosure and Investor Protection ) Guidelines, 2000.
• Stock Exchange – Listing Agreements

Forfeiture of Shares is the policy and process by which a members name is struck off the register of shareholders by virtue of non-payment of sums payable on calls on shares or any other reason as may be prescribed in the Articles of Association. Please note that forfeiture is penal in nature.

In accordance with Sections 28 – 30, if a member fails to pay any call or installment of a call, on the day appointed for such payment, the board may at any time thereafter, subject to being authorised by the Articles of Association, by resolution, send a notice to the shareholder stating as follows :

1. A future date, not more than 14 days from the date of the notice, by which time payment must be made, including any interest thereon,
2. In the event of non-payment of calls as per notice, the shares may be forfeited

Where the requirement of the notice of payment are not complied with, by defaulting shareholders, the Board of Directors may, thereafter, take next steps to arrange for forfeiture and subsequent cancellation and forfeiture of shares or by notice. The Board is also empowered, by resolution, to give further time where necessary.   The notice to the shareholder should unequivocally state that the effect of failure to pay by share-holder would result in forfeiture of the share.  Any irregularity, either in the content or service of the notice would invalidate forfeiture of shares – Bhagwandas Garg Vs. Canara Bank Ltd (1981) 51. Comp.Cas. 38 A.P.    Forfeiture should also be for a Bonafide purpose and not to relieve the shareholder from liability Abdul Karim Vs Sirpur Paper Mills (1969 ) 1 Comp LJ 144 39 Comp. Cas. 33 A.P.    It is advisable to state in the notice clearly that shares will stand forfeited in the event of no payment. All appropriate details should be included.

It is also a common practice for Companies to publish the information in a prominent newspaper with all details of payment to be made by the shareholder ( Notice of Forfeiture ). Further, by way of caution, once forfeiture is decided on, the company can also give all details of forfeited shares in the newspaper as a final announcement.  SEBI disclosure rules require that all calls should be structured in such a way that the entire subscription money is called within a maximum of 12 months of allotment.

The effect of forfeiture is as follows :

1. The shareholder, on forfeiture of shares, ceases to be a member of the company and any amounts already received on the shares are not repayable to shareholder
2. The company if it deems fit, may sue the member for recovery on unpaid calls
3. The shares may be disposed of and resold at discount ( the discount must not exceed the actual amount forfeited on the shares.) The share may also be re-issued at a premium, par value or discount.  Again, the amount of discount on re-issue cannot exceed amount forfeited on shares.
4. In the event of company liquidation, the shareholder who has not paid calls can be put on the list of contributors to the company.

A verified Declaration, by the Director, Manager or Secretary of the company that the shares in the company have been forfeited on a date stated in the Declaration, will be the “ conclusive “ evidence of forfeit of shares, against any claims made on the securities. Once forfeited, shares become company property.

The process to re-issue is as follows :

The shares, thus forfeited, may either be canceled or re-issued.  The forfeiture of shares does not necessarily reduce the share capital since they may be re-issued.  In accordance with Listing Agreements, the concerned Stock Exchanges where the shares are listed may need to be notified of the details of the shareholders whose names have been forfeited along with the appropriate enclosures, including a copy of the announcement in the newspapers.

According to the Articles of Association, Articles 29 to 32, the Board of Directors have the power to Re-issue the shares, and this power cannot be delegated by the Board of Directors to any committee.

The Board of Directors may take up the Reissue of shares at the same Board Meeting as a forfeiture or at a subsequent Board Meeting. The Board may pass an Ordinary Resolution at the meeting for such forfeited shares to be re-issued to other persons.  The shares may be issued at a discount which does not exceed the amount already paid on such shares such that the total of the sum paid by the original owner and re-issue price is not less than the par value.  Since this is a reissue of shares and not an allotment, there is no requirement to file an application for Reissue with Registrar of Companies ( Sri Gopal Jalan V Calcutta Stock Exchange Ltd (1963 ) 33 COM. Case 862: AIR 1964 SC 250).

The company can receive the consideration given for the share resale to the new shareholder and issue to the shares to him. The transferee shareholder may then be registered as the holder of the shares in the register of members and other records. The validity of the shares held by the transferee will not be affected by any previous irregularity or invalidity in the proceedings for forfeiture or resale.

It is important to note that, where the shares are being reissued favoring an existing shareholder, whose name appears on the list of members,  no further approvals are required. However, where the shares are sold and re-issued to members whose names are not on the existing member list, the Board has to obtain the consent of the appropriate stock exchange on which shares are listed and the approval of existing shareholders in General Meeting before such securities may be re-issued.

It is important that the company and the auditors concerned check the following :

1. Ascertain that Articles of Association authorize Board to reissue forfeited shares
2. Check and ensure Board Resolution passed by the Board of Directors at meeting for forfeiture and re-issue are accurate
3. Ensure correct accounting entries for forfeiting and re-issue
4. Check and certify the Return of Allotment to be filed with Registrar and other Regulatory Bodies

Conclusion

The above summarises the law relating to forfeiture and reissue of securities.  From a viewpoint of actual practice, companies prefer to have the shares fully Paid up along with premiums at the time of issue rather than stretch the share payment over one or two calls as has been the practice in the past. Accordingly, the need for follow up and failure to pay is considerably reduced or is non-existent. Even in cases where shares Monies are “ Called Up “ and remain outstanding, companies wait for such cases to accumulate and then pass a resolution, obtain Stock Exchange approvals and general body approvals once a year at the Annual General Meeting. However, today the option also exists to have the same voting process done by electronic voting (  e-voting ), for which appropriate provisions have been incorporated in the Companies Act 2013. The practice with regard to forfeiting and re-issue is fairly established in law and practice and there is no substantial change in practice or laws relating to this in Companies Act 2013 or the earlier Act of 1956.

Readings:

• Companies Act 2013 and explanations
• SEBI: Disclosure and Investor Protection) Guidelines 2000
• Listing Agreement Excerpts
• Discussions with practicing Companies Secretaries and Chie Financial

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How to Apply for Permanent Driving License

Nowadays everyone wants to have a driving license. Many people feel that the vehicle is very common for everybody who has a permanent driving license in the background. Some people may want to have a Lerner license. But this is very wrong. Learners license is a license to learn a motor vehicle. So everyone who has taken the license is required to apply for a permanent driving license within six months from the month after the scheduled examination. And what tests must pass.

Two types of driving license

There are usually two types of driving licenses.
1. The license of private vehicles (non-commercial)
2. Commercial Vehicle Licensing (Commercial)

This means that non-commercial driving licenses should be licensed 30 days beyond the license. Age should be 18 years old. Non-commercial licenses are issued by a 20-year time limit. Every five years should be renewed.

Permanent Commercial Delay needs to have a two-year driving experience already taking a simple driving license. Only those who have 20 years old will issue it. The commercial license is issued for a three-year period. Should be renewal.

How to apply Online

You can go directly to the Department of Transport and apply for Permanent License. Or online you can book a moment on the date of a certain date and then go to the test.
https://aptransport.in/apcfstonline/ (Andhra Pradesh website)
https://aptransport.in/tgcfstonline/ (Telangana website)

Transportation Department website

If the AP candidates, Select first link for AP Transport Department & second link to visit Telangana Transport Department. On the top left of the page appears the option of the left-handed license. There are options for driving test slot availability and driving test slot booking. First, go to slot availability and see if any slots are available on any dates.

Slot booking

Then go to slot booking and book a date by selecting a date and entering details. Then print it out. The scheduled date is to go to the Department of Transportation office hours before time. All documents should be taken while travelling to the Department of Transportation.

Documents 

• Take the form, date, residence, identification certificates, learners license and 4 passport size photographs along with application form number 4.
• For issuing a duplicate license, the existing license card will have to attach the Form No. 5 Training Certificate and Medical Certificate issued by a recognized Driving School. Along with the vehicle, along with all types of documents including RC, Insurance, Pollution.

Fingerprints & photo

The fee is to be paid before departure to the Department of Transportation. The subsequent checks will be checked by the documents in the counter. In the biometric process, finger prints, photo and carry a band of hand. Then the Motor Vehicle in Specter driving test will be conducted. After failing in the driving test, you may be able to attend the exam once again a week later.

Exam method

Two-wheelers walk off their vehicle and have to trip an 8 round road.

Do not be charged under the leg until it reaches there starting from the beginning. You will have to complete this driving time.

The driver should be able to drive the vehicle in an 8-shaped road as part of a driving test for the same light motor vehicles (car) licenses. Drive down the road on the elevated slope of the vehicle. Similarly, the 8-shaped road will have to drive a reverse direction (reverse direction).

Get Leaning License LLR

In order to take a driving license, you must first apply for LLR (Learner license). For those who are 18 years old, they should go to your next service center. Before going there for non transporter vehicles should be taken along the Aadhaar card and Birth Certificate. School certificate is not required. But reading and writing should be known. At least eighth-grade school certificate with Aadhaar card should be taken for the same Transport (Yellow Board) Vehicle. Your service staff will be registered on the Transport website. After that, the government has to pay the fixed fee.

After that, the date and time will be given to the LRR for the computer test (road rules). On that day the RDO office has to go to the original certificates where the crew will look at them and put the computer test. The test will be given to the LLR with a six month period. If the LLR is in the test, then you can pay a fixed fee and resume in the mud rides. The LLR MacTest is available in its website (AP Transport.ORG), to avoid failing. This can increase awareness of any kind of questions.

Learn driving a vehicle less than 30 days without getting the LLR. When you believe that the vehicle is properly running, go to your service center and book a slot to pay the government-appointed amount. On the day of the receipt, the driving test will be put to the Transport Office. Does the vehicle run according to the rules? Tested. If it is true, there is a fixed amount of money that can be returned to the test after a week. The card of the driving license is issued by the post in a 10-day period after passing the driving test. More details can be found through the AP Transport.

If the license card is Lost

Even if the original license has been lost, the license holder has to make changes in the layout and can be updated with a new photo or a new license card can be taken if the card is damaged. For this purpose, go to the Department of Transportation and submit the LLD Farm in the respective counter. They will issue a new license after taking photographs and photographs of a different counter on the counter after paying a fixed fee and paying the residence, photo certification documents, a passport size photograph and a damaged card.

Renewal

The license term should be renewed in the course of the expiration date. For this, go to the Department of Transportation and submit Form 9. According to the Physical Ability, Farm 1 and 50 Years, Commercial Vehicle Licenses, Form 1A (Medical Certificate), Original Driving License Card, Two Passport size photographs are to be submitted on the counter. You have to pay a fixed fee. If the card expires after five years of expiration, you must pass it again in the driving test.

The post How to Apply for Permanent Driving License in Telangana & Andhra Pradesh appeared first on iPleaders.

In this article, Anusha Chand discusses Interpleader Suit, section 88 read with Order XXXV of CPC.

INTRODUCTION

Not every suit which is civil in nature follows the same course of trial and proceeding. A few civil cases do not follow the regular course and are comparatively different in nature in terms of the parties and their involvement in the suit. One such kind of suit is the interpleader suit. Interpleader suits are very different from the ordinary suits that are filed before the Hon’ble Court between two parties, the plaintiff and the defendant. The dispute in such suits is instead between two defendants who fight for a claim over a particular good, debt, or chattel.[1] The plaintiffs in such suits usually do not have any real interest in the subject matter of the suit and institute the suit to only make sure that the property in dispute is put in the custody of the actual owner. In Halsbury’s Laws of England, interpleader suits have been defined as follows,

“Where a person is under liability in respect of a debt or in respect of money, goods, or chattel and he is or expects to be, sued for or in respect of that debt or money, or those goods or chattels, by two or more persons making adverse claims thereto, he may apply to the court for relief by way of interpleader.”[2]

For an interpleader suit to be filed there must be a property or a sum of money that is in dispute over ownership and possession. The person currently in possession should not claim any right over the property in dispute and should rather be ready to deliver it to the respective owner once decided by the court.[3] Section 88 of the Code of Civil Procedure, 1908 governs suits of such nature and Order XXXV lays down the procedure to be followed in case of interpleader suits.

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LEGAL PROVISIONS FOR INTERPLEADER SUITS IN INDIA

According to Pomeroy in his book Equity Jurisprudence[4], for an interpleader suit to be filed there are certain essential conditions which should be fulfilled. He stated that

“i. The same thing, debt or duty must be claimed by both or all the parties against whom the relief is demanded;

1. All their adverse titles or claims must be dependent, or be derived from a common source;

iii. The person asking the relief must not have or claim any interest in the subject-matter;

1. He must have incurred no independent liability to either of the claimants; that is, he must stand perfectly indifferent between them, in the position merely of a stakeholder.” [5]

The general principle on which such suits are based is that the person in possession of the res having no interest in it should not be compelled to be involved in multiple suits filed by the prospective owners of the property in dispute.[6] He should be relieved of this burden by approaching the court and putting the res in the custody of the court. The burden then shifts on the court to ensure that the said property reaches the bonafide owner.  Thus suits of such nature were made legit to protect the person in possession of the said res from ‘double vexation’ when there is only a ‘single liability’.[7]

The person is possession files the interpleader suit and becomes the plaintiff while the parties claiming rightful ownership become the defendants. The plaintiffs in such suits are referred to as applicants and defendants as claimants. If the applicant is sued by the claimant in a regular suit then he would have to bear all the cost of the suit. But in the case of interpleader suits, the applicant does not bear any cost to the suit and whatever cost is incurred by the plaintiff is reimbursed to him by the Court.[8]

According to Rule 4 of Order XXXV, the Plaintiff may either be discharged of all his liabilities or may be retained till the suit has been disposed.[9] For an interpleader suit to be maintainable before the Court of law, the plaintiff should not have any interest in the subject matter of the suit.[10] The Calcutta High Court, in Asaan Ali v Sarada Charan Kastagir[11]  held that for a suit to be an interpleader suit, the applicant should be willing to handover the property to the claimant and should not have any interest in it. When suits with the applicant having an interest in the res are filed then such suits shall be dismissed on the discovery of the fact that the plaintiff has an interest in the subject matter of the suit.[12] With the passage of time, the courts in the United States now have a different approach when it comes to the Applicant’s interest in the subject matter. The approach adopted by the Courts of US has been discussed in the latter half of the paper.

If the subject matter of the suit or the res is suitable to be placed in the custody of the court, then the court may order the Applicant at its own discretion to deposit the same.[13] The applicant is bound by the Court’s order and cannot contest it as the key requirement in such suits is the absence of Applicant’s interest in the subject matter. In accordance to Rule 4 of Order XXXV, an applicant may be either dismissed from the suit at the first hearing or he may be retained till the suit is finally disposed at the discretion of the court depending on the facts and circumstances of the case.

Tenants and agents are barred from instituting an interpleader suit under Rule 5 of Order XXXV against their landlord and principal respectively.[14] This rule prohibits the tenants from questioning the ownership or title of their landlords during the period when the tenancy is in effect.[15] Regardless of that, there are certain circumstances when the tenant can file an interpleader suit during the subsistence of tenancy. In case of a fight between the legal heirs of the deceased owner or the landlord over the ownership of the property, the tenant gets the opportunity of filing an interpleader suit to determine the actual owner of the property and the rightful recipient of the rent to be paid.[16]

It was held in Neeraj Sharma v The District Sangpur Khadi Gram, by the Punjab and Haryana High Court that an interpleader suit by a tenant will be maintainable if the other person claiming a right over the disputed property is doing so through the original landlord and such suits will not be maintainable if the person independently claims ownership over the property and rent from the tenant.[17]

The Punjab and Haryana High Court held a suit instituted by a tenant to be maintainable where after the landlord’s death two parties were claiming ownership over the property.[18] In Om Prakash Kapoor v Nirmala Devi[19] the ownership over the rented property was claimed by the deceased’s nephew and a lady who had purchased the said property from the deceased’s wife. The court held that the tenant in this case was entitled to know to which of the two parties rent was to be paid and hence the suit filed by him should be maintainable.[20]  

The situations under Rule 5 where the tenants are not allowed to file an interpleader suit against the landlord do not include circumstances where someone, other than the real owner by misrepresentation makes the tenant believe him or her to be the owner. There is no special provision permitting the tenant to institute a suit under such circumstances in a state of confusion about the identity of the true owner of the property.

INTERPLEADER SUITS IN THE US

The Supreme Court of United States has brought in a major change in case of interpleader suits by relaxing one of the essential conditions enlisted by Pomeroy in his book Equity Jurisprudence[21] on which the entire genre of such suits is based. The condition which required the plaintiff to not have any interest or claim in the subject matter or the res of the suit was relaxed and even abolished by many courts across the United States. Earlier, before such modification came into effect, plaintiffs were completely barred from instituting an interpleader suits if they had any interest in the subject matter in question. Such suits if filed would be dismissed by the Court. In existence of any kind of interest in the subject matter, the plaintiff was compelled to file a regular suit and was not benefitted with this option of interpleader suit. As the plaintiff did not have any claim, he could not also deny the transfer of ownership to any of the claimants or question the Court’s decision. [22] Such restriction on the plaintiff became problematic because not in every case the claimants had a bona fide interest.

In a case where a person has a life insurance policy and it does not cover for suicide, the insurance company can deny from paying the claimants any money if the cause of death is suicide. Here in the given case, the insurance company has an interest in the money which is being claimed by the legal representative of the deceased. The insurance company believes the death to be caused by suicide while the claimants believe it to have been caused by accident. If we go by the former rule, the insurance company’s interpleader suit will fail to be instituted but by the relaxation or the abolition of the said requirement, the applicant that is the insurance company can file an interpleader suit and deny the claims brought up by the claimants at the same time.[23]

In India, under the Code of Civil Procedure the requirement for the applicant to not have any interest in the subject matter of the interpleader suit in very uncompromising.[24] The Bombay High Court in the case of Mangal Bhikaji Nagpase v State of Maharashtra in 1997 held that it is mandatory for the plaintiff to affirm that he has no interest in the subject matter of dispute other than costs and charges.[25] Provisions which are so resolute in nature make it difficult for plaintiffs to institute an interpleader suit as the satisfaction of the essential conditions become non-viable. On failure to file an interpleader suit, the plaintiff is deprived of the various benefits he could have a enjoyed by filing a suit of such nature.

In the United States Federal Courts, interpleader actions are divided into two categories, the statutory interpleader and the rule interpleader. Minimum diversity between the claimants or the defendants is an essential requirement under 28 U.S.C (United States Code) § 1335 which governs statutory interpleader suits.[26] The provision of statutory is unavailable when the claimants to the res belong to the same state. This section also permits an individual to bring a ‘singular action’ against the claimants while the Federal Rules of Civil Procedure which establishes rule interpleader suits gives a remedy for people who are exposed to multiple litigations.[27] The Federal courts are also authorised to discharge the plaintiff from any kind of liability in such suits by 28 U.S.C § 2361.[28] Indian courts also have similar provisions under Rule 4 of Order XXXV of the Code of Civil Procedure. Further, the U.S.C also sets a minimum requirement for the value of the suit to be of $500 for an interpleader suit to be instituted before the court.[29] The Indian law on the other hand does not have any such requirement under any provision of the CPC.  The second kind of interpleader action, the rule interpleader is governed by Federal Rule of Civil Procedure 22.[30] Rule interpleader actions are available in situations where there is absolute diversity and the pecuniary value of the said property in dispute is $75,000.[31] Rule interpleader actions are mostly brought up when the claimant and the applicants belong to different states.

CONCLUSION

The provisions for interpleader suits in India are rustic and do not take into consideration the changing needs and demands of the society. Comparison with the provisions of US on the same matter reflects the absence of the much needed revamp in the provisions under the Code of Civil Procedure.

[1] Takwani CK, Civil Procedure (6th edn, Eastern Book Company 2009) 425.

[2] Halsbury’s Laws (4th edn, 2001) vol 37, para 200.

[3] Takwani CK, Civil Procedure (6th edn, Eastern Book Company 2009) 425.

[4] Chafee Z, ‘Modernizing Interpleader’ (1921) 30 The Yale Law Journal 814.

[5] Ibid.

[6] Ibid.

[7] Chafee Z, ‘Modernizing Interpleader’ (1921) 30 The Yale Law Journal 814.

[8] Code of Civil Procedure 1908, Rule 6 order XXXV.

[9] Code of Civil Procedure 1908, Rule 4(1) Order XXXV.

[10] Code of Civil Procedure 1908, Rule 1 Order XXXV.

[11] AIR 1922 Cal 138.

[12] Takwani CK, Civil Procedure (6th edn, Eastern Book Company 2009) 426.

[13] Goel S, ‘Interpleader Suits – Section 88 Read with Order XXXV of the Code of Civil Procedure, 1908: Analysis’(2016) SSRN < https://ssrn.com/abstract=2880116> accessed 10 October 2018.

[14] Code of Civil Procedure 1908, Rule V order XXXV.

[15] Takwani CK, Civil Procedure (6th edn, Eastern Book Company 2009) 427.

[16] Bharat Bhushan Vij v Arti Techchandani, 2008 (153) DLT 247.

[17] (2006) 142 PLR 791.

[18] Om Prakash Kapoor v Nirmala Devi, CR No. 2770 of 1987.

[19] Ibid.

[20] Ibid.

[21] Chafee Z, ‘Modernizing Interpleader’ (1921) 30 The Yale Law Journal 822.

[22] Chafee Z, ‘The Federal Interpleader Act Of 1936: I’, (1936) 45 The Yale Law Journal 963.

[23] Jaiswal N, ‘Interpleader Suit – Section 88 and Order XXXV of CPC’, (2018) 2 Jus Imperator 1.

[24] Code of Civil Procedure 1908, Rule 1 Order XXXV.

[25] (1997) 99 BOMLR 91. 

[26] Vincent J, ‘Protecting Financial Stakeholders: Using Rule and Statutory Interpleader’ (Lexology, 29 September 2014) <https://www.lexology.com/library/detail.aspx?g=9b5654fb-6265-49d1-b929-e022fd073438> accessed 13 October 2018

[27] 28 U.S.C § 1335

[28] 28 U.S.C § 2361

[29] 28 U.S.C § 1335

[30]Vincent J, ‘Protecting Financial Stakeholders: Using Rule and Statutory Interpleader’ (Lexology, 29 September 2014) <https://www.lexology.com/library/detail.aspx?g=9b5654fb-6265-49d1-b929-e022fd073438> accessed 13 October 2018

[31]Ibid.

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In this article, Chirali Jain discusses why duty to rescue should be made a legal duty under the penal laws.

In a recent case, Kanhaiya Lal desperately cried for help but motorists swerved straight past him where the splayed bodies of his wife and infant daughter lying next to the mangled motorbike. A young cyclist in Karnataka lay bleeding on a road and cried for help after being hit by a speeding vehicle but none came forward to help and resulting in his death. According to Doctors, help given earlier could have possibly saved the boy.[1]

When a road accident occurs, bystanders will usually try to help the injured, or at least call for help. But in India it’s different. In a country with some of the world’s most dangerous roads, victims are all too often left to fend for themselves. Is India a nation of heartless Indians? Why are people in India reluctant to help someone in conspicuously dire need of it?

The Law Commission of India states that 50% of those killed in road accidents could have been saved had timely assistance been rendered to them but instead people prefer to click selfies at such incident spots and create fuss which makes one wonder if India should have a legal code that makes it mandatory for people to help accident victims.

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Where people are left to die, raises questions about the intrinsic nature of human beings and civil society. Most human beings find it hard to connect with sufferings happening at a distance, we don’t consider it our obligation to help unless we see someone dying first hand, but do if the person is dying in front of us. The impediment is whether it is wrong to not offer help to someone dying? There have been more public displays of dehumanization in recent months and no justified explanation could be given for the inane humanity and total lack of empathy.[2]

There are some countries in the world that already have such legal arrangements. In Quebec, it is a criminal offence not to provide assistance to someone in need. Its Charter of Rights states, “Every person must come to the aid of anyone whose life is in peril, either personally or calling for aid, by giving him the necessary and immediate physical assistance, unless it involves danger to himself or a third person.”[3]

In German Criminal code, whoever does not render assistance during accidents or common danger or need, although it is required and can be expected of him without possessing any substantial danger to himself shall be punished.[4]

Northern Territory Criminal Code Act imposes a general duty to rescue, stating that any person who is able to provide rescue, resuscitation, medical treatment, first aid or succor of any kind to a person who is urgently in need of it.[5]

In France, anyone who fails to render assistance to a person in danger will be found liable before French Courts (civil and criminal liability). The penalty for this offence in criminal courts is imprisonment and a fine while in civil courts judges will order payment of pecuniary compensation to the victims.[6]

In certain countries, where there is a “no duty to rescue” rule, a BPL analysis by Judge Learned Hand’s can show how inefficient it can be. The burden (B) to the potential rescuer can be slight; the loss to the potential victim (L) will probably be great; and the probability of the loss occurring (P) shall be greater. Thus, the probability of harm being caused to the victim shall be much more that it cannot be outweighed by the trivial difficulties being caused to the rescuer.

In the criminal law, failure to act, i.e. an omission, will constitute an actus reus and give rise to liability only when the law imposes a duty to act and the defendant is in breach of that duty.[7] So, creation of such a legislation is necessary to impose a “duty to rescue” in order to give it a criminal character.

If social contracts were created for the purpose of peace and justice in society, where people live harmoniously with one-another, then perhaps introducing a “duty to help” law that punishes people for inaction should be introduced to keep the vices of human beings in check. Also, there is a very strong possibility that the rescues might become the victim one day in future.

Even though letting someone bleed to death on the side of the road does not necessarily disrupt the “greater good”, it does, however, cause upset. It leads one to wonder about the values of its society and whether they will be helped in the time of need[8].

Given our past experiences with police and courts, many of us think it is prudent to stay clear of trouble, including accident sites and victims. But the excuse is no more valid. Last year, the Supreme Court approved the guidelines for the protection of Good Samaritans at the hands of police or any other authority. Under the new law, people who volunteer to help victims can no more be harassed by the authorities. Sadly though, the fine piece of law is being undone by our selfishness.[9]

The counter argument would be that one might say whether or not to perform a good deed is a personal decision, a private matter for an individual and her conscience and that to invade that sphere is a threat to individual autonomy. Moral issues and legal duties are distinct and should stay that way but then, law and morality cannot be separated from each other.[10] Duty to Rescue should not only be followed in one’s conscience but also a fear must be created in the minds of the people in order to achieve the greater good of the society.

To create such a law where people are punished for not extending help when they can is the need of the nation in the present times. Though this can be said to be a restriction on their “liberty” but constitution has the power to impose reasonable restrictions for the protection of society. No human being can be dutiful without the hand of governance looming over them. Though we are standing up to the national anthem in rapt attention these days, but we have let our humanity slip. In order to protect this mortality, a strong deterrent towards criminal apathy is what we need.

[1]http://www.hindustantimes.com/opinion/help-be-human-it-s-time-law-punished-people-who-watched-cyclist-bleed-to-death/story-zeN2gJweqTjtHQV8SjW1DL.html

[2] http://www.lifeofthelaw.org/2013/05/wait-what-no-duty-to-rescue/

[3] Quebec Criminal Code, 1985

[4] Section 323c, German Criminal Code, 1998.

[5] Clause 155, NT Criminal Code, 1983.

[6] Article 223-226, French Penal Code, 1810.

[7] Section 120, Indian Penal Code, 1860.

[8] https://www.sydneycriminallawyers.com.au/blog/is-it-a-crime-not-to-help-someone-in-danger/

[9]http://www.indiatimes.com/news/india/two-bleeding-people-left-to-die-in-one-week-does-india-need-a-duty-to-help-law-270772.html

[10] Law, Ethics, and the Good Samaritan: Should There Be a Duty to Rescue?, Santa Clara Law Review, Vol. 40, Page 16.

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In this article, Priyanka Gupta discusses Human Rights and Disability Laws in India.

Abstract

Individuals with physical or intellectual discrepancies in all sections of the world are considered to be of lower nature, they are seen as objects of charity and welfare. While it has been observed that despite the physical, mental or sensory deficiencies, these people are the owners of some kind of amazing (supernatural) talent and qualities (God Gifted). There are many instances where these people have proved themselves in many areas of life by intellectual or positive attitude, such as in the field of art, fine art etc. Due to increasing discrimination against these people, due to inferiority, inequality, human rights for their disabled persons and their enforcement have become the main topic of discussion around the world. This article wants to focus attention on whether the Centre has such schemes that reduce the diversity towards the disabled people? Do we have a career coaching program that provides a safe, convenient, rewarding and accessible environment for people with disabilities, which is essential for their respect to human dignity? This article is briefly related to those major laws and their enforcement which has been enacted to protect the rights of disabled people.

Introduction

Human rights, a citizen receive from his birth, separate rights were not announced for him, then why was the announcement of human right separately for disabled persons? Disabled is also human; it is not an item to be divided into primary and secondary. Therefore, the rights that an ordinary citizen receive from his birth, likewise a disabled person also receives same rights, since he also comes in the category of citizen of a country, not a secondary person. Therefore, The Constitution of India is equally applicable to every legal citizen of India, even if they are in any way (physically or mentally) healthy or disabled. Yes, it is of course that the disabled person needs some privileged rights rather than a normal person which should be given them. The reason is that they are special (Special child, special person). The second reason is, we ignored disabled persons, they are kept away from their rights, understood as problems, and seen as burden and abhorrence.

Due to the physical, mental, sensory deficiency, someone comes in the category of disability. But in order to overcome that one weakness, they have some special talents and divine qualities. For example, in one case, I met a child who was neglected by the family due to low intelligence but he was a genius in sketching and painting that made him special. He needed only support, to bring his skills/ talent to the society. He was admitted to the special school; teachers there recognized his skills and helped him. In another case, mentally retarded person (age 35 year) who was often neglected by his family but also had this virtue, he used to do all the work at home very well. It meant that there was a sense in him. But unawareness and due to small thinking, he was lost in the darkness of oblivion.

It is clear from these examples that the disabled person has the divine qualities and talent. The United Nations is struggling to get the platform for the achievement of their skills, to bring them in front of the society, to give them recognition and rights.

A new round in the era of disability

There was a time when disabled persons were not included in the census of India’s population. PWD was kept out of the census population till the 1980s. In the 1981 census, 3 types of disability were included. And the disabled cadre of the 1991 census was completely abandoned. After a long battle, disability was included in the 2001 census, which resulted in not being able to get accurate statistics due to minimum awareness and training and mathematicians found that 2.1% of the population was PWD. Although in the census of 2001, only 5 categories of disability were included, many disabled categories, including mental and intellectual handicapped people were kept out completely. In the census of 2011, it was found that 26.8% of people in India suffer from various types of disability and this is 2.1% of the population. Out of the total disability in the country, 14.9 million are men and 11.8 million are women. In rural areas, 18.6 million are disabled, whereas in urban areas, 8.2 million are disabled.

Disability rights movement in India is more than four decades old. In the beginning of 1970, persons with disabilities had demanded rights for themselves. However, their movement did not catch momentum because they lacked integration. In the 1980s, various organizations came together with same intention, representing the interests of incompetent people. In this decade the Disability Rights Movement got momentum and after the many protests the government passed “The Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995”. As a result, people with disabilities have got a place in government services, educational institutions etc. This act came to be known as the beginning of a new era for disabled persons. But due to some of its deficiencies and the lack of implementation it failed to achieve its goals.

The Current Decade and the new Disability Act

In order to ensure all the rights of persons with disabilities, the United Nation convened a conference on the Rights of Persons with Disabilities in 2006, during which UNCRPD included 50 articles of different aspects of disability related issues, which was reaffirmed by the 160 member states including India in the year 2007.

UNCRPD is based on eight principals:

1. Non-discriminatory treatment of persons with disabilities
2. Full participation and involvement of persons with disabilities in society
3. Freedom of persons with disabilities and disabled persons towards their inherent dignity and personal autonomy
4. Respect for the difference and acceptance of persons with disabilities as part of humanity and diversity
5. Equality of opportunity
6. Accessibility
7. Equality between man and woman
8. Respect for the rights of special children for the development and identification of children with disabilities.

Keeping in view the principles of the United Nations Conference 2006, a new Act was passed while making necessary amendments in the provisions of the Act 1995. The right of the person with disability, Act of 2016 received the pronunciation of the President on December 27, 2016 and was published in the Official Gazette on 28 December 2016, which came into effect from 15 June 2017. Section 102 of this Act speaks of cancellation of comprehensive law in that it means that the Act of 1995, the persons with disability (equal opportunity, protection of rights and full participation) The proposal of this Act clearly states that its purpose is to maintain the dignity of every person in the society and prevent any kind of discrimination. It speaks about the acceptance of people with any type of disability and ensures their full participation in such persons and society. Since India is the signatory of the Conference on the rights of people with disabilities of the United Nations General Assembly, such a domestic law for India was in fact mandatory.

Key Features of Disability Act, 2016

1. Classification of persons with disabilities-

• persons with disability
• persons with benchmark disability
• persons with disability having high support needs

2. Contrary to the definition of the person with disability provided by the Act 1995, under this Act, a complete definition has been provided including 21 types of specific disability.
3. Most of the liability under this Act has been put on appropriate government and local authorities. With this (some private sector) establishments, some obligations have also been imposed.
4. Act 2016 prohibits discrimination against persons with disabilities unless it can be shown that the act of discrimination was a proportional means of obtaining legitimate objectives.
5. The government is entitled to facilitate the rights of disabled people. Therefore, it is the duty of the government to make necessary laws, rules and plans and strictly enforce them for the convenience of the disabled people; the onus has been placed on the government. The government is required to secure the rights of the disabled person towards equality, dignity and respect as normal people get; Do not discriminate against the right of personal liberty; The right to live in a community; Right to safety and security in situations of risk, armed conflict, human emergency, natural disasters etc.; Access to materials related to polling stations and electoral processes; The right to access judicial or semi-judicial or investigative powers without any court, tribunal, authority, commission or body; Ownership or successor of property (movable or immovable); The right to access one’s own financial matters and other forms of bank loans, mortgages and financial credits; The right to obstruct free access to health care institutions and centres; The right to attain cultural life and participate in recreational activities and sports activities etc.
6. All establishments (including the private sector) need to frame and publish the same opportunity policy.
7. Additional benefits such as rights for free education (between the ages of 6 to 18 years), reservation in education, government jobs, land allocation, poverty alleviation schemes etc. have been made available to people with benchmark disability.
8. Reservations in Government vacancies Establishments have been increased from 3% to 4% for the persons with disability.
9. In order to ensure speedy trial, provision of special courts has been made in each district to handle matters related to violation of rights of persons with disabilities.

New disability law affects the principles of the United Nations Conference on the basis of persons with disabilities. Disability Law 2016 protect disabled persons from various forms of discrimination, Increases their effective participation and inclusion in the society and ensures equality of opportunity and adequate accessibility.

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Persons with Disabilities Act, 2016 and Persons with Mental Illness

In the 2016 Act, the disability list has been extended to 7 to 21 situations. Under this, disabilities such as chronic neurological disorders and blood disorders have been included. Terminology mental retardation has been replaced by intellectual inefficiency, which is defined as “the basis of critical limitations in both intellectual functioning and adaptive behaviour, in which there is a series of social and practical skills each day, including specific learning disabilities and autism spectrum disorder.” This act provides a detailed definition of mental illness, which is a major disorder of “thinking, mood, perception, orientation, or memory that can identify the reality, or identify the ability to meet the normal demands of life, and reduces the capacity but it does not include retardation, which is the position of arrest or incomplete development of a person’s brain.

Although Mental Illness has been included in the Act as a disability but the special needs of mental sick persons and their families have not been properly addressed. Person with disability with mental illness requires special attention and care due to various types of illnesses and often a person with mental illness is not in a position to become aware of his illness due to lack of vision. Under these circumstances, support from his family plays an important role.

In our country where the health care centre, mental health care centre, care worker is extremely rare, it requires family support in the management of mental illness. So it is necessary that members of the family should actively play a role and encourage family support, since it provides ethical, emotional, mental and physical support to person with mental illness. But most of the time it is seen that in the family, the sick person is left helpless, what can be the reason for the first low mentality, a lack of awareness, a burden to the sick person. On the other hand if we study section 7 of Person with Disabilities Act, 2016 is the address that Section 7 has been introduced for a good cause at protecting person with disability from act of abuse, violence and exploitation but sometimes such a situation arises, when a family or auxiliary person, who is trying to control the person mentally ill, or who treats them with strictness, then provision 7 turns upside down on such people and such people Come across the perpetrator. So Section 7 needs to address this problem with proper amendment.

In one third of the country, mental health services operated by government are not available. Due to this shortage, family and social bonds in our country are only helpful for mentally ill people. While the section 38 of the Personal with Disability Act, 2016 emphasizes the support of the PWD, Act for this depends heavily on Non-Government Organization, while failing to see the importance of family.

Area of concern

1. It is largely believed that this act is insufficient till “reservation” for disability
2. Loose language used in discrimination and guardianship provision.
3. Regardless of the number of disabilities covered under this Act, it has turned 21 to the previous Act of 1995, yet many disabilities are not covered under this Act.
4. Under the Disability Act 2016, there is no transit framework or timeline provided to ensure its compliance, its implementation.
5. Disability law does not provide any kind of incentives for private establishments to provide training to disabled people, to ensure accessibility criteria, to provide accessory equipment, etc. so that they may be able to determine the cost.
6. Although disability law prevents discrimination against disabled person, the law does not provide an effective and strong grievance redress mechanism.
7. The Act 2016, ignoring the role and importance of the family in the care of PMI, is silent on how to create a huge support system for the people with high support, which has millions of people suffering from severe mental illness.
8. The success of this law will largely depend on the measures taken by the government, because it is the responsibility of the government to ensure the safety of the disabled under disability law and to implement the schemes.

Challenges in implementation

1. The biggest challenge is to change the mindset of people towards a large level of disability, change their mentality. Make people aware about disability law and its benefits.
2. A large part of the disabled population lives in rural India. Their literacy levels are very low. Therefore, the most important challenge is to educate the primary stakeholders about the disability law so that they can take initiative for rights of disabled person both with the State as well as with the civil society.
3. India is a country full of various complexities. This is a multi-lingual, multi-cultural and multi-ethnic state, due to which the right motive of the related act does not reach the concerned person in the right way. This is both a challenge and a barrier to work; this obstacle is due to factors like resource crunch, poverty, illiteracy, etc.
4. Orientation to various stakeholders is important for the implementation of this Act, such as media persons, bureaucracy etc., is also a challenging challenge in view of the country’s diversity.

Suggestions and Recommendations

1. People must be aware of disability and disability laws. They must change their mentality. They have to explain that disability is not a burden; PWD is also human like us. They also have sensations and if proper attention is given to them, their skills can be brought before the society. By working hard with them, they can also be put on their feet, they can be made independent.
2. Families with disabilities should be encouraged by the government, so that the family can come forward to support the disabled. Not only this, members of such family should be specially trained, necessary/helpful equipment should be provided to them. Whether it is normal or disabled, family is its first school. The family is the first stair from where he learns to climb. Family support is the biggest support for any individual, so it is important that their families should support the children with disabilities in every way.
3. In today’s fast-paced world where multi-national companies are looking for multi talented professionals, why would the companies come forward for the employment of disabled people, where they have to spend extra for them? It is therefore necessary that the companies should be invited with the help of beneficial schemes and incentives by the government.
4. Where the benefits of reservation for disabled persons in educational institutions have been made, syllabus should be made in accordance with them. In addition, emphasis should be on easy education methods and language of education.
5. To spread awareness to village to village and city to city, it is necessary that school/college students make street shows in this regard. In this connection, electronic media, print media, coaching centres should actively participate.
6. Just as ADA (American disabilities act) has clear and specific guidelines for implementation of effective dates, time limits, alternate arrangements, temporary relief etc., in the same way these facilities have to be provided by PDA.
7. ADA Watch “is an effective surveillance system for monitoring the implementation of the law. Under PDA the surveillance system should be made highly effective. All agencies receiving ADA are required to comply with positive action programs. PDA should start and maintain positive action program.

Conclusion

The values (dignity, equality, autonomy and liberty) supported by human rights law form the basis of the basic freedom of the individual, which provides protection against misuse of power and creates a place for the development of human emotion. It would not be wrong to say that human rights are the power that gives a person the power to stand up with respect to society. Human rights are not just rights but self-respect for any person. Therefore, a person with disabilities is a special person who needs special attention, so he should be given special human rights.

Before the enactment of the PWD Act, 2016, the rights relating to persons with disabilities, various acts, the Constitution of India, persons with disabilities (Equal Opportunities for Equality and Full Participation) Act, 1995, Mental Health Act, 1987, Rehabilitation Council of India Act and National Trust (for the Welfare of Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities) Act, 1999 Were scattered in. Although the purpose of these laws are to protect the rights of people with disabilities, but these laws did not provide equality of opportunity, especially regarding employment. PWD Act 2016 has tried to reconcile these laws and the equality of opportunity has been provided.

For people with disabilities, a piece of law is a boon and not less. This act is widely related to the rights of persons with disabilities. It also orders the government to perform its duties in the most diligent manner and to make plans and programs in the direction of community welfare. This act is definitely a good step in that direction.

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This article is written by Ramanuj Mukherjee, CEO, iPleaders.

I am noticing a very interesting dynamic in Bombay’s old legal district, Fort and Nariman Point this time.

Suddenly the area has become cheap to live in. Isn’t that insane? It used to be the most expensive real estate in India.

But now entire office buildings are lying empty. The business district has moved away.

Take AZB & Partners for example. It was one of the last big law firms to have a Nariman Point office. It moved to Lower Parel like everyone else in 2016.

Of course, the high court is still here at Fort. But it cannot accommodate more judges and there is no place to create new courtrooms. The whisper in the air is that the court will move to Pahadi Goregaon now or later. Apparently, a parcel of land has been identified.

Of course, many old people are stalling the move, but for how long?

Lower Parel is the now undisputed capital of legal profession in Mumbai. But things may move further north. Anyway, a lot of law firms are now located in places like Powai, Borivali, Thane and Malad, places to which clients have moved on in search of large spaces. Where will a JP Morgan find space for 3500 employees in Lower Parel?

So the incredible is happening. People who work in Lower Parel are living in Colaba. The rents are cheaper than I could find 8 years back.

Most people are yet to catch on to the trend. Only very junior lawyers looking for PGs are discovering that they can get a room without sharing at the same budget! Old couples in South Bombay who rent out flats for their income are suddenly seeing a drop in house hunters looking for a place close to their office to stay in.

Some people are going to hate me for leaking their secret.

Anyway, realities shift. Economy changes. Even the citadel moves on. It is important to see the shift ahead of time and position yourself to take advantage of it.

Realities of law practice are shifting too. A lawyer from Shardul Amarchand Mangaldas, for example, was telling me how he needs 2 juniors now to do due diligence now where he required 4 thanks to an AI tool the firm invested in.

AZB now has a transaction support group where they pay much less to the lawyers who are expected mostly to do due diligence.

A software developer showed me software used by many big companies which enable executives to use templates for small contracts and therefore not bother the legal team for every small contract.

Companies are hiring us to train labour and employment law to their HR managers so that the legal team is not asked to interfere in every small issue.

I recently spoke to the head of a major corporation who showed me how they are using chatbots to answer queries of various teams rather than using the time of their substantially big legal team each time. This use to add up to hundreds of hours of lawyers work each year earlier. This work used to be done by the most junior lawyers.

Earlier the junior most hires were put on due diligence. It was the training ground. Now it’s done by a transaction support group to lower costs. Sometimes it is being done with fewer people thanks to artificial intelligence and amazing software products.

Basically, the space for hiring untrained lawyers hoping that a firm or a company will teach them how to do their first job is shrinking.

It will be harder to succeed as a young lawyer unless you equip yourself with the necessary knowledge and train yourself in the skills that are most valuable to your potential employers.

Reality is shifting for the practice of law. If you take note and take the right set of action, you will emerge at the top. Don’t miss the bus.

We do all the hard work for you to think where the legal market is headed and prepare courses that will bridge the gap for you. Your college is probably not doing it and continuing to teach what it used to teach 20 years back.

Don’t be caught off-guard like the uncles and aunties in Colaba Causeway or Tardeo who never thought that rent can ever go down in those areas.

Here are a few upcoming courses you can enroll in right now:

For those looking to make a career in technology law (high demand, great industry projection, industries of the future):

• IP, Media and Entertainment law (fastest growing industry across the world)
• Labour and employment law (as India shifts from informal to the formal economy, demand is rising sharply)
• Company law and corporate governance (evergreen, and with regular amendments, keeping corporate India on its toe)
• Real estate law (the industry is recovering, but lawyers have insane amount work, only to grow in future)

The post The legal world is changing. How can you take advantage of these trends? appeared first on iPleaders.

In this article, Akshita Gopal discusses hearing by first appellate authority under the Right to Information Act. 

Working mechanism of RTI

• An RTI can be filed to a Central Public Information Officer (CPIO) or State Public Information Officer (SPIO). Proviso of section 5(2) states that, in cases where the application is filed to Central Assistant Public Information Officer or State Assistant Public Information Officer, the respective officer shall forward the same to the CPIO or the SPIO respectively and in this case, five days should be added to the stipulated 30 days period of response that is required by the Act.
• The PIO is not bound to disseminate the information which the applicant requires. According to section 7 of the Act, he has to either provide the information or reject the application within 30 days from the receipt of the application.
• If PIO without any reasonable cause or malafidely refuses to receive application or provide information within the stipulated 30 days period of time, then the  Central Information Commission or the State Information Commission shall impose a fine of two hundred and fifty rupees each day on such PIO.
• If PIO does not reply to the request within 30-45 days from the receipt of the application or if the applicant is not satisfied by the decision of the PIO, then he or she may file for an appeal to the First Appellate Authority.
• If the applicant is not satisfied  by the decision of the FAA then he may file a second appeal with the Central Information Commission or the State Information Commission within 90 days from the date when such decision was made or was actually received.
• The decision of the CIC or the SIC would be final and binding.

Filing an RTI request

• When submitting an application under RTI Act 2005, there is no specific format that an individual needs to follow.
• It is also pertinent to note that applicant is not required to mention purpose or reason for filing an RTI.
• He also need not mention any other personal details except for the information that may be necessary for contacting him.

Rejection of RTI application by the PIO

When you file an application for seeking information under RTI Act, there are chances that your application may be rejected. There are various grounds upon which an application may be rejected.

When application is incomplete

The PIO may send back your application on the ground that it lacks specificity.

For example – You filed an RTI seeking details of meeting that was held by a public department but you did not specify the date and time of such meeting. In such a case your application may be sent back by the PIO.

It is important for the applicant to draft his or her application in very precise manner which leaves no scope of ambiguity in it. In such a case the applicant will be given an opportunity to re-draft the application which was sent back.

When application is rejected outrightly

Under Section 8 of the Act there are conditions under which the public authorities are exempted from the obligation of disseminating information to the citizens. In such cases the Act requires that the PIO should mention the following in the rejection notice:

• It should mention the specific exemption clause mentioned under section 8, by virtue of which the application was rejected.
• The period within which you can lodge an appeal.
• The details of the appellate authority under which such appeal should be filed.

When application is partially rejected

Where the applicant seeks disclosure of documents and some part of information in such documents fall under the exemption clause, then according to Section 9 of the Act, the PIO may reject the disclosure of such sensitive information but the remaining documents or information should be disclosed to the applicant. The Act provides that when an application is partially rejected, the applicant must be given a notice comprising of following points:

• That only a portion of document is being disclosed.
• The reasons for the decision, including any finding on which such decision is based.
• The decision maker’s name and designation
• The details of fees
• His or her rights with respect to review of the decision regarding non-disclosure of part of the information.

Situations where First Appeal can be filed along with time limits for filing the same

Sample of application to the First Appellate Authority

Date

To,

The First Appellate Authority,

Road Transport Authority of Nagpur, Civil Lines, Nagpur- 440013

District. Nagpur, Maharashtra, India

Subject: First Appeal upon reply to RTI application under section 19 of the RTI Act, 2005

1. Kindly refer to my RTI application dated 04.12.2017 (copy enclosed in Appendix A). The RTI application was received by the PIO of the department on 07.12.2017.
2. That PIO has given no response to the application within the stipulated time of 30 days, hence I am filing this appeal before the First Appellate Authority under section 19 of the RTI Act.
3. I humbly request you to forward this appeal to concerned First Appellate Authority keeping me in loop, if in case the subject of this appeal does pertain to you. Kindly acknowledge the receipt. If you need any clarification, you can reach me on my phone number xxxxxxx.

(Appellant’s name)

(Appellant’s address)

NOTE: Point no. 2 in the above sample application can be modified in case PIO had responded to the RTI application but the appellant was not satisfied by the decision of the PIO or in case the PIO demanded for excess fees.

Format of First Appeal according to the Form-D, Rule 7(1) is attached in annexure 1 attached at the end of the article.Click Here

Requirement of Natural Justice: Personal Hearing

• If an appellant desires to be heard by the FAA, he/she shall mention the same in the at the end of the appeal.
• In such a case the FAA is under an obligation to grant the permission of personal hearing so as to comply with the principles of natural justice.
• If in case the appellant will not be able to attend the hearing then he may not not include it in the appeal, as it is not mandatory to be present for the First Appeal hearing.

Points to be included in the prayer

• If the appellant wants to be personally heard then he must ask to grant personal hearing before the FAA.
• Direction to the PIO to supply information within a stipulated time from the date of the First Appeal.
• Direction be given to the PIO to supply full and correct information, free of cost because of his failure to supply information.
• PIO be directed to supply certified copies of information or the documents asked for.
• PIO should be asked to furnish reasons as why he declined to provide information that was asked for.

Fees for RTI First Appeal

• In case of RTI First Appeal is made to a public authority under the Central Government of India, no fees is required for the same.
• In certain states, however, there is a prescribed fees to be given for the First Appeal.

Documents to be attached with the first appeal

• Photo copy of RTI Application
• Photo copy of response of PIO (if any) or any other document may be attached to support the appellant’s contention.
• Both the above documents should be self attested. Self attestation means that ‘Attested’ written at the bottom of the sheet with full signature of the appellant.

Mode of submission of RTI First Appeal

• RTI First appeal is filed before the FFA, whose rank is higher than the rank of the PIO.
• The appeal should be delivered through Speed Post or Registered Post and the delivery status if the same can be checked on the India Post website.
• Appellant should never use courier services for submitting RTI documents.

Drawbacks of RTI First Appellate Authority

• The RTI Act does not mention any special qualification for the PIO or the First Appellate Authority as it is mentioned for the Second Appellate Authority i.e the  Chief Information Commissioner and Information Commissioners. Section 12 talks about the qualification required for Chief Information Commissioner and Information Commissioners, while section 15 talks about  the qualification required for State Chief Information Commissioner and State Information Commissioners.
• Since there is no qualification required, the FAA would not function efficiently as the personnel do not have the expertise in the field.
• There is no special position or cadre created for the PIO or the FAA. The Act simply mentions that the FAA would be an officer of senior rank to the PIO. This creates a sort of burden on the PIO and FAA as they do not get any salary or incentive for these engagements. However, section 13(5) of the Act mentions salary and allowances payable to the Chief Information Commissioner and Information Commissioners and section 16(5) State Chief Information Commissioner or a State Information Commissioner.
• The mechanism laid in the Act relating to the appeal to the First Appellate Authority may in all possibilities become infructuous because practically PIO while responding to an application of RTI would consult an officer of senior to him regarding the disclosure of an information. Further, if an appeal is filed under such senior officer or the FAA, then there is high probability of the decision not being changed because the FAA has already applied his mind to decide whether the information is to be given or not.
• Under section 20 of the Act if the Central Information Commission or the State Information Commission finds out that the PIO has malafidely given incomplete, incorrect information or has without any reasonable cause denied to give information or did not give information within specified time or destroyed any information which was subject of the request,  it shall impose a penalty of two hundred and fifty rupees each day on the PIO. In such case burden of proof lies on the PIO to show that he acted reasonably and diligently. This can be misused by the applicants which will again create a burden on the PIO who might be innocent but for no reason he will have to disprove his guilt.

Annexure 1

FORM-D

See Rule – 7(1)

Form of Memorandum of Appeal to the First Appellate Authority u/s 19(1) of the Act

From _________________________________

(Applicant’s Name & address)

Before      The First Appellate Authority

1. Full name of the Appellant
2. Address
3. Particulars of Public Information Officer
4. Date of receipt of the order appealed against
5. Last date for filing the appeal
6. Particulars of information:

(a) Nature and subject matter of the information required

(b) Name of the office or department to which the information relates

7. The grounds for appeal (Details if any to be enclosed in separate sheet)

Verification

I, ________________________________________ Name of the appellant, son of / daughter of / wife of _______________________________________ hereby declare that the particulars furnished in the appeal are to the best of my knowledge and belief, true and correct and that I have not suppressed any material fact.

Signature of the Appellant

Place:

Date:

To ________________________________________________

           Name and address of Appellate Authority

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In this article, Akshita Gopal discusses the laws relating to Medical examination of rape victims.

Medical examination of rape victims: What everyone should know

According to National Crime Records Bureau’s Crime report of 2016, total of 38,497 rape cases were reported in 2016, which means over 105 rapes in one day, i.e., almost four rapes in one hour, and these are only the number of cases reported, rest remains a scary mystery.

Merriam- Webster’s Dictionary of Law defines rape as, “unlawful sexual activity and usually sexual intercourse carried out forcibly or under threat of injury against the will usually of a female or with a person who is beneath a certain age or incapable of valid consent because of mental illness, mental deficiency, intoxication, unconsciousness, or deception.”

Punishment of Rape under the Indian Penal Code

Rape is the most heinous violence against an individual’s sexuality. It is an act which violates the autonomy over one’s body, it infringes the very private sphere over which an individual has absolute control. Section 375 of Indian Penal Code defines rape rather narrowly. It says,

“A man is said to commit “rape” if he-—

1. penetrates his penis, to any extent, into the vagina, mouth, urethra or anus of a woman or makes her to do so with him or any other person; or
2. inserts, to any extent, any object or a part of the body, not being the penis, into the vagina, the urethra or anus of a woman or makes her to do so with him or any other person; or
3. manipulates any part of the body of a woman so as to cause penetration into the vagina, urethra, anus or any part of the body of such woman or makes her to do so with him or any other person; or
4. applies his mouth to the vagina, anus, urethra of a woman or makes her to do so with him or any other person, under the circumstances falling under any of the following seven descriptions:—
   • Against her will
   • Without her consent.
   • With her consent, when her consent has been obtained by putting her or any person in whom she is interested, in fear of death or of hurt.
   • With her consent, when the man knows that he is not her husband and that her consent is given because she believes that he is another man to whom she is or believes herself to be lawfully married.
   • With her consent when, at the time of giving such consent, by reason of unsoundness of mind or intoxication or the administration by him personally or through another of any stupefying or unwholesome Substance, she is unable to understand the nature and consequences of that to which she gives consent.
   • With or without her consent, when she is under eighteen years of age.
   • When she is unable to communicate consent.”

Section 375 eliminates the possibility of the offence of rape being committed against a male, transgender and marital rape. Sexual violence against a male shall not be constituted as an offence of rape, but would come under the purview of unnatural offences, section 377. In National Legal Services Authority v. Union of India, Supreme court identified transgender as the third gender and they are also entitled to the fundamental rights provided in the Constitution. But the irony is that on one hand where Constitution is accepting them, on the other hand other laws like IPC are gender specific to man and woman, and fails to consider other classes of the society.   

The underlying notion of not treating marital rape as rape is that after marriage, wife is a property of husband, and he is “entitled” to have access to her body. But an act does not become “not rape” just because it happens with a woman carrying the tag of marriage. It is equally heinous and grave. Rape is not just a violent act against woman but it also violates the fundamental right of life and personal liberty and no relation between the victim and the wrongdoer could justify these violations. The definition given in IPC is indeed narrow and strongly reflects patriarchal roots.

Before discussing what you must know about the medical examination of rape victims/ survivors, let us briefly discuss the points you must know beforehand.

Medical examination of Rape victims

In case Bodhisattwa Gautam v. Subhra Chakraborty, Supreme Court said that rape is a crime against basic human rights and a violation of the victim’s most important fundamental right, namely, the right to life in Article 21. In Francis Coralie v. Union of Territory of Delhi, Supreme court said that the right to live is not just about animal existence. It does not limit itself to protection of limb and life; it is much more than this. It also means right to live with human dignity. Right to live with human dignity is the most basic element of right to life under article 21. An act of rape not just violate the one’s right of physical body, the person’s autonomy over body but also her dignity, mental stability. It is a crime against basic human rights.

It becomes more important and crucial that how a rape survivor is treated. The machineries like police and medical needs to be more gentle and careful while interacting with them. We shall now look into various guidelines, victims’ rights and obligations of the medical examiner.

Click Here

State of Karnataka v. Manjanna

Prior to Supreme court’s judgement in 2000, the procedure for medical examination of rape victims was very lax. Doctors would proceed with the examination, only after the request of the police. Due to this, it became necessary for rape victims to file an FIR for getting a medical treatment. This attitude towards the rape victims was very unjust and unfair, because the doctors forgets about the intensity and heinousness of the offence and the human aspect, and only focuses upon the procedural aspect.

In the State of Karnataka v. Manjanna, said that medical examination of rape victims is a “medicolegal emergency.” It is the right of every victim and a duty of every hospital to medically examine the victim before filing of a legal complaint, and the hospital at the request of the victim, can afterwards file a complaint. A hospital may receive a victim of rape when victim voluntarily reports to the hospital, on requisition by the police or by the court.

2005 Amendment and Section 164A

Prior to the insertion of Section 164A by 2005 amendment in Cr.P.C., the position of  the procedure was unclear. The questions like- whether a male or a female doctor should examine? To what extent the examination is to be done?- kept lingering.

Procedure for Medical Examination of Rape victims

Section 164A, Criminal Procedure Code says:

1. The woman against whom the offence of rape has been committed shall be sent for medical examination within 24 hours of receiving the complaint
2. The medical examination shall be conducted with the consent of the victim or with the consent of a competent person on her behalf

In Samira Kohli v. Dr. Prabha Manchanda and Another, Supreme Court held that the person giving the consent must be competent to give consent and it must be voluntary and based on adequate information provided by the doctor, like nature of the treatment, all the risks involved etc.

1. Rape victim shall be examined by a registered medical practitioner employed in a hospital run by the Government or a local authority and in the absence of such a practitioner, by any other registered medical practitioner
2. The medical examiner, to whom the woman is sent, shall examine without any delay and shall prepare a report containing following information:
   1. Consent of the woman or the person competent to give consent on her behalf
   2. exact time of commencement and completion of the examination
   3. Name and address of the woman and the person who brought her
   4. age of the woman
   5. the description of material taken from the person of the woman for DNA profiling
   6. marks of injury
   7. mental condition of the woman
   8. Any other information/ detail required
   9. Reasons for arriving at the conclusion from point e. -h.
3. Consent is the key to proceed for further examination. If the consent is not obtained, the examination shall not be deemed to be lawful.

Guidelines and Protocols Issued by the Ministry of Health and Family Welfare for medico Legal care for the victims of sexual violence

To supplement the procedure laid in Section 164A, after the Nirbhaya case, Ministry of Health and Family Welfare in 2014 gave certain guidelines and protocols for medico legal care for the victims of sexual violence:

1. Basic details and Consent: Medical examiner shall record the name, age, address, sex, name and relationship of the person who brought the rape victim/ survivor and the consent of the victim
2. Before taking the consent of the victim, victim shall be informed of the nature of medical examination. Only in life threatening cases, the doctor may proceed with the examination without the consent as given in Section 92, IPC.
3. Identification marks: Two marks of identification should also be recorded, for example moles, scars or any mark.
4. Menstrual and vaccination history is to be recorded, and if the victim is menstruating at the time of the examination then a second examination is required on a later date in order to record the injuries clearly.
5. History of incidence: Medical examiner shall record the history of the incidence in survivor’s own words, which shall have evidentiary value in court of law. If the history is narrated by a person other than the survivor, his/her name shall be noted.
6. Details of the clothing, medical and surgical history should be recorded.
7. General Physical examination: response to doctor’s questions, space and time awareness, pulse rate, blood pressure, temperature, pupil and stain or semen mark on the clothes of the victim should be examined and recorded.
8. Examination of injuries: the entire body surface should be examined for any injuries, fractures,  nail abrasions, teeth bite marks, cuts, boils, lesions, any discharge, weapon infection or stain on the body and shall be recorded with particular details of these injuries.
9. Examination of genital parts and orifices: External genital area and Perineum is observed for evidence of injury, seminal stains, stray pubic hair, foreign material. Sample of pubic hair, and matted pubic hair is taken and preserved.
10. Examination of vagina is done with the help of sterile speculum lubricated with warm saline/ sterile water to check the internal bleeding, bruises or any injuries. Such examination is not required in cases of minor where there are no signs of penetration or visible injuries. If at all the examination is required, it shall be done under the effect of anaesthesia.
11. Two- Finger Test: Per vaginum examination must not be conducted for establishing rape/sexual violence and the size of the vaginal introitus has no bearing on a case of sexual violence. The guideline was given after the Supreme court’s judgement which held that the test is a violation of a woman’s right to privacy. The two finger test, is a way to determine whether the hymen of the woman is intact or not.it is based on the assumption that hymen can rupture only when a female undergoes sexual intercourse. The method is unscientific, against human rights and has no bearing on determination of commision of rape.
12. Any injury, swelling, bleeding, discharge or stain near anus, anal opening and oral cavity should be examined and recorded.
13. Collecting samples: if requested by police, radiographs of wrist, elbow, shoulders, dental examination etc. are be advised to be collected for age estimation.
14. Urine sample: to determine the pregnancy
15. Blood test: blood sample is collected for evidence of baseline HIV status, VDRL and HbsAg
16. Post examination: After examination, medical practitioner should document the report, formulate opinion and sign the report. A copy of report must be given to the survivor, as it is her right to know about the information.
17. All the evidences collected during the examination, like clothes of he woman, swabs from vagina, anal opening etc, pubic hair sample, foreign material, nail scrapings, swab sticks along with the report must be placed in an envelope and handed over to the police or judicial magistrate.

Doctors cannot do two-finger test

Two- Finger Test also called, per vaginum examination is a way to determine whether the hymen of the woman is intact or not.it is based on the assumption that hymen can rupture only when a female undergoes sexual intercourse. The method is unscientific, against human rights and has no bearing on determination of commision of rape. Supreme court in  Lillu @ Rajesh & Anr vs State Of Haryana held that the two finger test is unscientific and it violates woman’s right to privacy, physical and mental integrity and dignity.

After the judgement, guidelines were passed by the Ministry of Health and Family Welfare in 2014 which also condemned the test, and said that it must not be performed. Instead of the two finger tests, various tests are performed which are discussed above.

Laws and their Enforcement

Guidelines are laid, provisions are amended in the interest of the victims, but what really is the ground reality? Not always the medical examination is conducted in accordance with the guidelines and policies. In a study conducted by an NGO “Partners for law in development” along with the Department of Justice, Ministry of Law and Justice and UNDP (United Nations Development Programme) showed that the victims, despite of the guidelines, were facing hurdles in filing of an FIR. The report also said that medical examinations were not carried out within the guidelines set by the Ministry of Health and Family Welfare such as consent is not formally taken, thumb impressions are taken much later, clothes of the victim not even connected with the crime were taken as evidences.

The guidelines of 2014 after the Nirbhaya case mandates doctor to be sensitive towards the victim while examining. But even after the guidelines of 2014 and Supreme court’s judgement in State of Karnataka v. Manjanna of 2000 which held two finger test in violation of women’s fundamental right, there are number of cases where such tests were performed. In one of the cases, the medical report said that the victim is habitual to sexual intercourse as her vagina easily admits two fingers.

Even after 2002 amendment which disallowed the defence to question the prosecutrix about her past sexual conduct for determination of commission of rape, still the two finger test pave way to the same thing. In Vinay Krishna Ghatak versus State of Rajasthan, Rajasthan High court held, “That the fact that the prosecutrix was an unmarried girl and she was habitual to intercourse further goes to show that she was a consenting party.”

Conclusion

Today, we are living in the 21st century, but still we are being pulled back by the harsh patriarchal, orthodox norms. Narrow provisions similar to “kachchi sadak”, i.e., weak roads, if not changed with the time will make us fall in the pit of patriarchy. At places, where guidelines and provisions are strong, their enforcement is poor. After the case of Nirbhaya, Ministry of Health and Family Welfare in 2014 gave certain guidelines and protocols for medico legal care for the victims of sexual violence, but very few states like Madhya Pradesh adopted them, and it is no wonder that even in those the condition is still vulnerable.

Today, it is required that we must stop seeing people through various filters of gender, race, caste etc, and treat them as a being, as an individual, who has basic human rights and need like any other person.

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In this article, Akshita Gopal discusses the legal definition of free consent in India. 

What is the legal definition of free consent in India?

Mind is a complicated organ, it does a lot of work and affects our daily lives greatly. Before doing any act, there is thought in our mind, we process and analyze it, we may agree with the thought and then we commit that thought into action. The stage of agreeing with thought, in layman language, can be called as consenting.

Merriam- Webster’s Dictionary for Law defines consent as, “the voluntary agreement or acquiescence by a person of age or with requisite mental capacity who is not under duress or coercion and usually who has knowledge or understanding” Deciphering the definition, we can extract the essentials and thus, consent is:

1. Voluntary agreement or acquiescence
2. Person must be of:
   1. Required age by law/ Major age
   2. Sound mind
3. Not given under coercion or duress
4. Knowledge or understanding of the act for which consent is given

But the question is, what is the legal definition of Free consent in India? Law is broadly divided in two categories: Civil law and Criminal law. We shall look into what does free consent mean in these spheres in India.

Civil Law in India

Indian Contract Act, 1872 (ICA)

The basis of any transaction is an agreement , a contract which binds both the parties, then may it be employment contract, or lease or sale agreement. Contract law is the foundation of other civil laws like Transfer of Property Act, Succession Act, Family laws, Company Act etc. Therefore to have a clear picture of what free consent is in civil law in India, we shall look into Indian Contract Act for the same.

Section 13 of ICA defines consent as, “Two or more persons are said to consent when they agree upon the same thing in the same sense” which means, to consent it is necessary that both the consenting parties are consenting over same subject matter, and in the same manner.

To decipher the definition, we must look closely into certain terms. What does the term “thing” mean in the definition? The same thing must be understood as the whole content of the agreement, i.e., from delivery of object materials, payments, or to any acts or execution of promises. For an effective contract, there must be ad idem, which is meeting of minds.

If there is no consensus ad idem, meeting of minds, on the material terms of the contract, then such contact will be void.

Raffles v Wichelhaus

Parties came into the contact for delivering of cotton. The terms were such that the cotton would be delivered to the defendant on Liverpool port by the ship named, “Peerless” departing from Bombay. There were two ships named Peerless, one departing in October andone in December. Claimant delivered the cotton on the December ship, but the defendant did not pay as they contended that they thought that cotton would be delivered on the October ship.

Claimant’s suit for breach of contract was dismissed by the court by stating that there was no consensus ad idem on the material term of the contract, therefore there is no binding contract.

However, not every contract where parties do not agree in same manner and same subject shall be non- binding.

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Smith v. Hughes

Queen’s Bench decided that irrespective of the real intention, if the man (A) conducts himself in such a manner that a reasonable man (B) would believe that A is assenting to the terms proposed by B, and upon such beelief B is entering into the contract , then A would be bound as if he had intended to agree upon B’s terms. The gist been, that even if there is no meeting of mind, but A’s conduct is such that B believes that A is assenting to B’s conditions, the contract shall not be voidable.

Section 14 in furtherance of Section 13, defines free consent as consent which is not caused by coercion (section 15), or undue influence (section 16), or fraud (section 17), or misrepresentation (section 18), or mistake (sections 20, 21 and 22).

It is important to note, that not every consent is a free consent. Agreeing on same subject and in same manner may constitute “”consent”, but if such consent is caused by certain external force like coercion, fraud, etc, iit shall not constitute free consent.

“Caused by”, meaning and importance

The definition given in Section 14 uses the term ‘caused by.’ it has the implication that if consent is due to, or because of, coercion, fraud, undue influence, misrepresentation or mistake, such consent will not be called as free consent.

It is important that such external factors mentioned in the section, must be instrumental for giving consent. If there were such external factors available, but the they were remote or non-instrumental in obtaining consent, or such consent was given irrespective of coercion or undue influence, such consent will fall under the definition of free consent.

Coercion (Section 15): Committing, or threatening to commit the any act forbidden by IPC, or unlawful detention, or threat to detain any property to obtain the consent of the party.

Ammiraju v. Seshamma court held that a release executed as a result of a threat of committing suicide does not fall under coercion because an act of suicide is not punishable under IPC, and forbidden is construed only in light of what is punishable.

Undue Influence (Section 16): Contract shall be deemed to be affected by the factor of undue influence when one of the parties is in dominant position to influence the will of another and obtain an unfair advantage over other.

A  person shall be considered in a dominant position when,

1. He holds an apparent or real authority over other
2. He is in a fiduciary relationship with another
3. He contracts with a person whose mental capacity is temporarily or permanently affected due to illness age, mental or bodily distress

Mannu Singh v Umadat Pande, spiritual advisor induced the plaintiff to  transfer him his whole property with the promise of securing a benefits in the next life. Such contract was held to be affected by undue influence.

Fraud(Section 17): an act of:

1. active concealment of fact
2. suggestion of a fact, which he knows to be not true
3. Promise made without any intention of performing it
4. Any act or omission, which law considers as fraudulent
5. Any other act to deceive

Shall be deemed to be a fraudulent act under section 17.

RC Thakkar v Gujarat Hsg Board, Court held that the cost estimates given by the authorities in the tender notices were held to be fraud because authorities, in real, did not calculated the estimated cost of work, and such material representation knowing to be false, is a fraudulent act.

Misrepresentation (Section 18): any act of:

1. Positive assertion made on the belief that such assertion is true, however it is false
2. Breach of duty without an intent to deceive
3. Causing a party to an agreement, to make a mistake as to the substance of the thing, however innocently

Shall be deemed to be an act of misrepresentation.

In Nokhia v. State of Himachal Pradesh, Court held that when a consent is given on the strength of the representation regarding payment of compensation, and such payment is not made for an unreasonably long period shows that the party never had the intent to act upon such representation, therefore it falls under misrepresentation.  

In gist of the above discussion, the consent in civil law shall be deemed to be free when:

1. Both the parties assent on the same subject manner
2. When there is consensus ad idem, that is, both parties consent in the same sense
3. When the consent is not caused by coercion, fraud, misrepresentation, undue influence, mistake of material fact by both the parties, or mistake of fact by one party

Criminal Law in India

Like contract act, Indian Penal Code is said to be the foundation of criminal law in India. Penal code defines various offences and penalizes them. Similar to the above discussion, we shall look into the definition of free consent in IPC.

In the code, free consent is nowhere defined. However Section 90 does elaborates upon what does not amount to a free consent under the Code.

Section 90 says, “a consent is not such a consent as is intended by any section of this Code, if the consent is given by a person under fear of injury, or under a misconception of fact, and if the person doing the act knows, or has reason to believe, that the consent was given in consequence of such fear or misconception; or

Consent of insane person.—if the consent is given by a person who, from unsoundness of mind, or intoxication, is unable to understand the nature and consequence of that to which he gives his consent; or

Consent of child.—unless the contrary appears from the context, if the consent is given by a person who is under twelve years of age.”

This means, that every such consent which is either obtained:

1. under fear of injury, or misconception, or the wrong does is aware that the person is under the fear of injury or misconception, or
2. by an insane person, or
3. by a child under 12 years of age, shall not constitute as consent under the Code.

• Fear of injury or misconception of fact

Unlike contract law, fraud or undue influence shall not vitiate the consent. Offences regarding the same are being dealt under different sections. However, the consent obtained under fear of injury shall vitiate the consent given under the fear. In R v Day court held that an adult submitting to an outrage is similar to the child submitting to a strong man, because both are overpowered by fear, and such submission will not be equated with consent.

Similarly, a consent has no value if it is based on misrepresentation of fact. Suppose, a doctor misrepresented a medicine and told the patient that the medicine would cure him, believing the representation made by the doctor, patient consumed it and died, here the doctor cannot take the defence that the patient consented for the act because such consent was based upon misconception, misrepresentation.

In Deelip Singh @ Dilip Kumar vs State Of Bihar, the court pointed out that section 90 has two parts. First part says that the person must have consented under fear of injury or misconception of fact. And second part says that the wrongdoer was aware that the consent has been given under such circumstances. When both the elements would be established/ proved, only then such consent shall not amount to free consent. The same has been pointed out in Deepak Gulati v State of Haryana.

1. Insane person and a person under the age of 12 years.

Consent by a lunatic or a child under age of 12 years shall not be construed as a free consent. The roots can be traced to section 82, 83 and 84 of IPC, which states that any wrong doer under the age of seven years, between the age group of 7- 12 years who have not attained the maturity and of unsound mind, shall not be tried under the Code because the law assumes that such category do not have the capacity to understand the nature and intensity of the act that they are committing. On the same lines, such persons are unable to judge the nature of acts they are consenting, and therefore they cannot give free consent.

It must be noted that Section 90 says that consent by a person under the age of 12 years is not valid. Section 87 says, consent given by a person above the age of 18 years for an act which can cause harm shall be a valid consent. The consent by a person between the age of 12 and 18 years is not clearly stated by any provision and is ambiguous.

Rape: Consent or no consent?

The explanation clause of section 375 states, “—Consent means an unequivocal voluntary agreement when the woman by words, gestures or any form of verbal or non-verbal communication, communicates willingness to participate in the specific sexual act:

Provided that a woman who does not physically resist to the act of penetration shall not by the reason only of that fact, be regarded as consenting to the sexual activity. ”

Section 114A of Evidence Act, puts the onus of proving consent on the accused once the commission of sexual intercourse by the accused is established. Section 146 of Evidence Act says that questioning the general moral character of the victim is not allowed and it shall not be a key to determine commission of rape. Despite of such progressive provisions, there is alway a loop hole from where the injustice peeks in.

Where there is express consent or denial, there is no much sphere left for ambiguity. But the part of definition which says ‘agreement by gestures or any form of nonverbal communication’ it is upto judiciary to interpret whether there was consent or not. This sphere of implied consent, or nonverbal communication leads to a grey area, where judiciary has to decipher the consent or denial.

Despite of the progressive in Tukaram v State of Maharashtra, Supreme court acquitted the accused from the charges of rape on the ground that the person against whom the rape was alleged, was found to be habitual to sexual intercourse, and therefore her voluntary consent was implied.

In Jindal University gang rape case, the judgement of Punjab and Haryana High court reflects the patriarchy at peak, prevalent in the society. The victim’s character and denial to such sexual intercourse was questioned on the ground that she smokes, consumes alcohol and has condoms and sex toys.

In Mahmood Farooqui v. State, Delhi High Court held that the sexual intercourse shall not amount to rape under section 375 because, “an expression of disinclination alone, that also a feeble one, may not be sufficient to constitute rape… Instances of woman behavior are not unknown that a feeble no may mean a yes.” Such decision of Delhi High court interpreting a woman’s feeble no into a yes, is rather a shocking and disastrous precedent.

Judiciary’s such interpretation makes one wonder that where really are we heading? How can habits play a key role in determining a woman’s consent?

Medical treatment: Informed consent?

Medical treatment or medical facilities has an important and necessary presence in an individual’s life because during such treatment one gives away his/ her autonomy over his body and lets the doctor treat. Therefore, it becomes more important that the patient must be well informed regarding what he is consenting to.

Supreme court in Samira Kohli vs. Dr. Prabha Manchanda and Another discussed the essentials regarding the informed consent of the patient. Supreme court said that it is the duty of the doctor to provide information to the patient before treating. The information must be about the nature of the treatment, its benefits, its consequences, risks, is there any alternative method, and the risk involved if the patient do not undergo the specific treatment.

In addition to this, the consent of the patient must be voluntary and he must have capacity and be competent to give such consent.

Supreme court in Martin F. D’Souza v. Mohd. Ishfaq held that doctor will not conduct any experiment on patient’s body without his written consent. Moreover, the consent for a specific treatment shall not be constituted as consent for some other treatment.

Exception: Section 92, IPC

Section 92, IPC serves as an exception. It says that any act done in good faith and for the benefits of the person without his consent, shall not be considered as an offence.

Illustration: A, a surgeon, sees a child suffer an accident which is likely to prove fatal unless an operation be immediately performed. There is not time to apply to the child’s guardian. A performs the operation in spite of the entreaties of the child, intending, in good faith, the child’s benefit. A has committed no offence.

Organ Donation: Expressed and Implied authority

An act with consent and against the consent, which shall determine whether the act is of organ donation or organ trafficking. Section 3 of Transplantation of Human Organs and Tissues Act, 1994 discusses “Authority for removal of human organs or tissues or both.” the authority is given by the donor of the human organs/ tissues. The section talk about expressed as well as implied consent for donation.

Section 3(1) and section 3(2) of the Act says that the donor, in presence of two or more witnesses, in writing authorizes the donation of organs before or after his/ her death, it shall be considered as an authority.

Section 3(3) of the Act says that when there is absence of expressed authority as mentioned above, if the donor has not raised any objection for donating his organs or tissues after his death, the person in possession of the dead body may donate the organs or tissues.

The scope of consent in the Act is very wide. What shall be constituted implied authority is vague, and needs to be more defined.

Conclusion

Free consent in civil law in India, is given expressly in the provision, but to specifically point out what the legal definition of free consent is in Criminal law in India is a little difficult, because there is no express provision for the same. However, the definition of free consent in criminal law can be extracted from different judicial pronouncements and section 90 which says what does not amount to free consent.

With the recent judgement of Delhi High court in Mahmood Farooqui v. State, reflecting the peak patriarchal psychology, it raises a need to reform criminal law in order to give a clear picture of what free consent is, so that there is less grey area left for the society to interpret a woman’s no into a yes.

The post Legal definition of free consent in India appeared first on iPleaders.

In this article, Amruta D. G discusses 10 Things to know about Facebook’s New Data Policy.

After the controversial Facebook-Cambridge Analytica scandal, where the personal data of over 87 million Facebook users was shared with the Cambridge Analytica, there was a steep downfall in the popularity and the shares of Facebook worldwide. In light of such events, to regain the popular user base and shares in the market, facebook has introduced the new data policy.

Facebook is a social networking and service company, which has purchased various services. Facebook products include facebook itself, instagram, whatsapp, messenger etc. Facebook collects your data, not only from Facebook but across all the Facebook products.

In today’s time, where even “deewaron ke bhi kaan hote hain”, i.e., even walls have ears, how safe you think you are with the information you share on Facebook? Here are the 10 things you must know about Facebook’s new data policy.

Kinds of data collected by Facebook

Activities and Information shared by you

1. Did you just shared a secret with your friend?

Facebook collects the data of all the activities and information shared by you on the facebook products including all the details given by you while you sign up, or the content of the message you send and even the location of a photo or the date a file was created that you shared.

Facebook has an eye on all your activities, which features you use most, which pages and hashtags you visit, with which groups and people you are connected with and if you have uploaded your contact details on messenger, then facebook even has the access to your sms, call log history, address book.

Have you ever engaged in a financial transaction on any of facebook products, like purchasing energy bars while playing a game on facebook or giving a donation? Facebook keeps a record of your card information, account authentication, billing and delivery details and the contact details while you make such transaction.

Information shared by others

Facebook also collects and analyses the data shared by others about you, like, your contact details uploaded or synced by others, or message sent to you or any comment made on your post.

Device information

Facebook collects the information about the device from which you are using facebook and all nearby devices connected to such device. The information is about:

1. 1. Operating system of your device
   2. Hardware and software versions
   3. Battery left
   4. Signals strength on your device, bluetooth signals, nearby WiFi network
   5. available storage space
   6. browser type,
   7. app and file names and types,
   8. Plugins
   9. IP address, mobile number, time zone, language
   10. Cookies stored on your device, including cookie IDs and settings

In addition to all these information, facebook also keeps a track of behaviour and operations performed on the device such as if any window is opened in the background or even, where the mouse cursor is moving.

Are you wondering about a pop up that shows up when you open facebook seeking permission and asking for some changes in settings menu? The pop up only asks for permission for access to certain features like GPS, camera and photos. For the rest of the things mentioned above, your permission is implied.

Non- Facebook users and off- Facebook activities

If you are wondering that only information shared across facebook products are under facebook’s control, then you are wrong. All the information (off facebook) received by the partners directly or through third party is provided to the facebook, like, information about your device, websites you visit, purchases you make, the ads you see and how you use their services, irrespective of whether you have facebook account or not.

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Now next important question is, how this information is used?

Majorly, facebook uses this information to:

1. 1. Give you suggestions, relevant news feed and advertisements: Have you ever noticed that how come the newsfeed of facebook or instagram is very similar to your likes, or how the ads on the facebook products are so accurate? Facebook, as it says, collects and analyzes the data in order to personalize your experience with facebook products.
   2. The collected data is researched upon to improve the products: have you wondered why some popular filters on instagram camera are constant and others, not so liked, keep changing? And how the Instagram also incorporated gif feature like WhatsApp?
   3. Facebook shares the information with advertisers and sponsors so that they can test the effectiveness, distribution of their ads and services, what kind of users access them.

In what manner your information is shared?

The data is shared or transferred globally, whether it may be internally within the facebook companies, or externally with its partners. Data can be shared in following manner:

1. 1. You choose: You choose the audience which can see the information you shared, you can either choose public or friends or friends of friends or only me. Information open to public can be seen across the products, without any restrictions, by anyone.  If you choose to share it with a specific audience, but someone among the specific audience reshares it publically, then again such shared post will have same effect as a public post, even if it was only for a specific audience initially.
      1. People in your network, based upon the access to you network, can know whether you are active or not, including whether active on instagram and messenger. When you are using third party apps, services or websites which use or are integrated with facebook’s products, then such third parties can receive information about what you post or share.
   2. Sharing with Third Party partners: facebook shares the data with the third-party partners who help us provide and improve our Products or who use Facebook Business Tools to grow their businesses. Facebook emphasizes that it do not sell its data, but only share, that also with certain restrictions and in specific manner. For example:
      1. To Partners who use facebook’s analytics services, are provided aggregated statistics and insights that help people and businesses understand how people are engaging with their posts, listings, Pages, videos and other content on and off the Facebook Products.
      2. To advertisers the reports about the kinds of people seeing their ads and how their ads are performing, but we don’t share information that personally identifies you unless the permission for the same is given.
      3. Detailed information and content is given to research, academicis, vendors and service provider.
      4. Facebook, in its policy tried to explain that not all personal information is given, but it is provided according to the needs of the third party.
   3. Shared with regulators, law enforcement or others in legal matters:
      1. when there is a legal request or obligation, governmental investigation or investigations of possible violations of our terms or policies, or otherwise to prevent harm is made.
      2. In good-faith that it is necessary to: detect, prevent and address fraud, unauthorised use of the Products, breaches of our Terms or Policies, or other harmful or illegal activity.
      3. Information of the accounts who are disabled for term breaches for at least a year are retained to prevent repeat abuse or other term breaches.

At this point of time, are you a little intimidated and plan to delete you account?

1. Deletion of account: there is no direct way to delete the account. If you wish to delete, facebook would deactivate your account, and if you do not log in within 14 days, the account will be deleted. However, if you do login, you will be asked whether you still want to delete the account or not. There is a period of 14 days, during which time Facebook still has your data, and the data is permanently deleted once the account is deleted after 14 days.
2. Deactivation: through deactivation of your account, you can temporarily stop using the Facebook products, but this does not ensure that your information will not be accessed by the facebook.

Basically, you cannot have your data deleted or facebook’s access to you data terminated immediately.

Facebook and Censorship

Facebook has been censored in number of countries. In the list of countries imposing complete censorship, North Korea stands on the first position. Iran, China, Egypt, Syria and Cuba also banned facebook in order to curb the protests and resistance against the government. Mauritius, Pakistan and Bangladesh also banned the social networking giant because some content was shared which was against the moral police of the country. The ban in Pakistan wa lifted within two weeks. Vietnam has also blocked facebook, but the reasons are unknown.

Status of Facebook in India

Facebook – WhatsApp case

Special Leave Petition against Delhi High court’s order was filed by Karmanya Singh Sareen and Shreya Sethi in the Supreme court. In 2010, when the WhatsApp was launched, it assured users about strict privacy policies. Even in 2014, when Facebook acquired WhatsApp, the latter did not change its data policy. However, in 2016 WhatsApp announced that under new data policy, the WhatsApp data shall be shared with the Facebook. The petitioner contended, that Facebook, who already collects data of users from various third party, if will get access to the private and confidential information shared on WhatsApp, it will be a severe violation of Right to Privacy.

The case is pending in the Supreme court, it would be interesting to note the effect of Justice (Retd.) K.S. Puttaswamy v. Union of India which held Right to privacy as a component of Article 21 and a fundamental right.

Facebook data policy tries to give you as clear a picture as it can, by using subtle language and phrases like “tailored experience” to divert your attention from the point that a lot of your personal data is being accessed without asking for your express permission. But now that you are a well aware facebook user, you are ready to make an informed decision.

The post 10 Things to know about Facebook’s New Data Policy appeared first on iPleaders.

This article is written by Komal Shah, Content Head, iPleaders.

OK, I might be giving you the key to the mint here. Most of us struggle with getting clients. At the beginning, nobody knows us and are much less willing to try our services.

It is common knowledge that for anything to kick off, what you need is the first break. So how exactly do you get that first golden client?

Here are a few tips on how you can initiate a company law practice.

You never start it from scratch

I am yet to meet any practising professional who did not initiate their practice from what they already had ongoing – whether this was college, employment, training or another existing business.

I started off my practice in my initial years with a retainership which was passed on to me by the management consultant I was training with.

My ex-partner started with a profit-sharing arrangement on specific assignments from the professional he was training with.

A friend of mine started off her practice since people whom she was dealing with in her employment recognised her special skill and encouraged her to start up.

If you are thinking you can complete your studies and your training and then start up, it does not work that way.

You need to start shining right from where you are, whether that is training or employment. The path to venturing out on your own starts right here.

Look for your circle of trust

Remember your chance meeting with a friend who is employed in a software company with crazy working hours and now wants to break free and start up on his own?

Here’s where your practice starts. There isn’t a specific place where you go look for clients – they are right here, in your network, in the people who know and trust you.

Your advice begins right at the moment the friend expresses that wish, not at the time when he has already come to know about what a company is and wants to set up one.

It should be you who counsels him on whether it is advisable to go for incorporation or not. Even better if you turn out advising him that it is probably not the right time to incorporate. Then he will listen to you when you tell him that it is the right time now.

Clients whom you begin to advise long before incorporation seldom leave you. They come a long way, so its difficult to cut the cord.

Your objective, therefore, should be to get as many clients who are in very early business stages as possible. Proprietorships may not seem attractive currently, but these are tomorrow’s corporate clients.

Don’t let them go. Help a proprietor file an income tax return may be or complete that shops and establishments registration, and tomorrow when he is looking to incorporate a company, he will think of you.

Focus on the skills – the ‘how tos’ long before you begin

Your brain should be a laboratory. Yes, you can make inventions and discoveries in law, but for that, you should be ‘trying out’ what you learn.

Unless you actually get your hands dirty with doing the things, rather than reading about them, there is no great learning in it.

The trick, however, is to not lose focus on the learning and simply go on doing. If you want to actively advising the clients and providing real solutions to their problems, you must know the ins and outs of your assignment.

Hence, while you are studying, maybe offer to work for someone for free. Or enroll in courses which provide simulators such as the Diploma in Companies Act, Corporate Governance and SEBI regulations.

Do anything which would give you a taste of the real thing. When you actively engage in doing, the way you read your textbooks or your study materials changes completely.

You’re not reading them as an essay or knowledge gathering exercise any more. You’re looking for real solutions to the problems – the ‘how-tos’. Chances are that you may not find the solutions in the textbooks and then you begin to look beyond them.

Develop a niche

If you are intent on starting a company law practice, you probably are already training with a corporate law firm or a practising company secretary or anyone who gets to do this work.

If you are also a student, even better, since you have more time to research on what exactly it is that you see yourself doing.

For instance, do you see yourself appearing before the National Company Law Tribunal or Securities Appellate Tribunal?

Or do you see yourself incorporating companies, advising founders on strategic issues and being the entrepreneur’s constant trusted guide?

Or do you see yourself specialising in handling mergers and acquisitions, right from locating the perfect partner to the integration?

Or do you see yourself as an IPO specialist?

I know people who have built their homes and offices working in one niche area in company law. You don’t increase your chances of getting clients by having a practice with a wide ambit, but by narrowly specialising.

If you are looking to engage in incorporation matters, you must be very well versed with business structuring and not just the MCA procedures. There are different things that you include in the constitution documents of a closely held domestic private company, a section 8 company and a company which is the subsidiary of a foreign company.

Understand the different structures and provide for the ‘what ifs’ accordingly. Whatever documents you create must be done thinking not only of the current scenario but also possible future scenarios.

If you are looking to advise listed companies, you need to be making a name for yourself long before you start – and as mentioned in the first point, you need to be seen with people who advise listed companies.

Large entities seldom trust beginners – they will most likely hire people with a proven track record.

Hence, it is necessary that they see you as being associated with someone who has that track record. Same for someone handling NCLT matters or an IPO – people rarely trust newbies in these areas.

Gain visibility

There is this constant substance over form debate. People believe that if they have expertise over a particular area, they will get clients and that they do not need to engage in the show.

Well, it’s true that all that glitters is not gold, but gold definitely glitters. A little bit of self-advertisement, some articles here and there, some sessions at some places, some competition judging – everything is required if you want to be and stay relevant to the people who will use your services. It isn’t an accident that brand and image building is an industry in itself.

Even if you are a technical pro, how do you expect people to come to know about it without bumping into you somewhere? They must have had a chance encounter with you to know you exist – whether it’s on platforms like LinkedIn or in professional journals or on some websites or in some seminar or conference.

Listen!! And then get the ability to predict the future

There cannot be more golden advice to any consultant or practising professional than just ‘Listen’. Listen for what someone is saying, how they are saying it and what is not being said. Just drop everything and listen, and then, think like your client.

Where exactly is the shoe pinching? What’s the next stage he sees his business at?

If you are able to foresee the difficulties your client is going to face or if everything is going smooth, how to expand their operations, you will become very valuable for your client. See where they are likely to encounter problems, try to predict and prevent or solve these.

When you get someone out from where they are stuck, you will seem reliable to them and they can then entrust you with what’s forthcoming.

Do you believe a collaboration between two of your existing clients would probably work best for them? Then bring them together and you get to handle a merger or a collaboration agreement.

Keep changing….

There’s an old saying that any business requires 1000 days to succeed. Though this has been defeated on many counts and in many ways by quickly successful startups, what it means is that you ought not to give up till that period.

That’s the time you need to give to develop clients, employees, network and last but not the least, internal systems. If you keep the practice lean and dynamic enough to grab new areas as they appear, or better still, before they appear,  growth is a certainty.

As a lot of businesses in India are moving from informal to the formal sector, this is an area whose demand is steadily increasing. Similarly, as more IPOs take place and more companies go public, the work related to SEBI regulations will dramatically increase.

Company law and SEBI regulations are very technical subjects that are also often found boring because it is taught in a very lousy way in law schools and textbooks.

Most law colleges do not teach these subjects in an interesting way. Actually, these subjects are very interesting and enjoyable when you begin the understand the practical aspects.

This is also a reason why most lawyers don’t go beyond the surface and are unable to develop significant expertise in company law. To get trained on different kinds of real-life work associated with company law and SEBI regulations that are required to be performed by lawyers and other professionals enroll for the Diploma in Companies Act, Corporate Governance and SEBI regulations. We would even help you to connect with potential clients or employers.

The post How to start a company law practice? appeared first on iPleaders.

This article is written by Shreyash Choudhary.

Trade License

Any form of a business being fostered requires an authorization from the local government of the place that is the respective municipal authorities of different states, where such business is being held, such an authorization is in the form of a trade license which is mandatory in nature and has to be procured before manufacturing, exchange or storage of any activity/commodity related to such business.

Who issues Trade Licenses?

Any place of business within the purview of a State, Corporation or Municipality will mandatorily require a trade license from their respective State Government, Municipality or Corporation for functioning and carrying out business. Rules and regulations pertaining to trade license varies from state to state. Hence, to obtain a trade license, the applicant should in the first place understand the jurisdiction under which he/she is operating or running a business and the concerned Act and statutes. In most of the states, the application for grant or renewal of a trade license will have to be made to the Commissioner in states respective Municipal Corporation. The application should be filed within 30 days of starting to operate a business. While applying for the trade license grant or renewal required documents need to be given along with the application to the concerned Officer who will ensure that the business is suitable for the proposed use, there should minimal possibility of danger or nuisance for any person concerned and he will also issue the license.

Trade license should normally be issued within a period of 7-15 days after the submission of application is successfully done.Trade licenses are issued by the respective licensing departments under the ambit of municipal corporations in different departments for instance the health department, industries department, engineering department etc… Such authorization is done in order to limit the liabilities of any license owners against any unethical/illegal practice being carried on which reinforces the credibility of the license owners. The process of procuring a trade license or renewal of the same is as mentioned above ‘state specific’ and varies in accordance with the local municipal rules and regulations.

What is the validity of Trade Licenses?

The issued trade licenses have a validity period of one year which has to be renewed on an annual basis. After the authorized period of a year the application for renewal of such a trade license is required. This is done with an aim that the business entities will be able to continue its businesses in compliance with the contemporary and applicable provisions of local laws.

Renewal of Trade Licenses

Before the commencement of the valid period of a trade license a duty is casted upon the licensee to get such a trade license timely renewed, According to the indian laws any trade license has to be renewed within the time period from January 1st to March 31st. Every renewal application for any trade license should be made a minimum of 30 days prior to the commencement of the year for which such renewal is sought. In case of any delays in the renewal process there are provisions for mandatory inclusion of fines that is 50 percent of the license fee so submitted which varies in accordance with the issuing authority in different states across the nation.

Documents required for license Renewal

At the time of submission of the application for renewal of trade licenses the following documents have to submitted:

1. Original License Copy
2. Previous year fees challans
3. Updated tax paid receipt

As stated earlier the process of renewal of trade licenses is state specific in nature through the broad procedure for them in every state is similar with variation in accordance with local municipal rules and regulations. With the advent of technology the procedure for renewal of trade licenses in more advanced municipalities like that of Bangalore or Mumbai have shifted to online application process whereas less developed states still accept the offline applications, in case of an offline process the applicant will have to get the application form from the local municipal authorities office or download it online and for further processing the filled application form will have to be submitted at the respective offices of different departments of the municipal corporations.

(NOTE: In some State, the trade license will only be issued after an in-person physical verification from the concerned authorities. However, majority of the states have already done away with any such requirement.)

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What is the expected average processing time?

In the entire procedure from submitting the application form to its acceptance and further processing it, in general, takes around 7-10 days of time in the more developed municipal corporations like those of metro cities while it takes more time for the same work in rural areas or rather less developed municipal corporations.

Application Process

1. Access the online portal of BBMP that is bbmp.gov.in in browser.
2. Select the tab mentioning ‘Trade License’.
3. Click on Online Trade License (For Public).
4. Go through the terms and conditions and agree with the same and proceed by clicking on Continue.
5. Following which one will have to select the financial year for which the following trade renewal application is to be generated if this is not done so and suppose one enter the previous financial year then in the next step a message will pop up with warning, “Kindly Pay 2016-17 trade license tax then proceed for current financial year”, so kindly enter the correct financial year.
6. In the next step the applicant has to pay then for current financial year trade license through the online payment gateways.
7. You will be required to enter the previous year application number.
8. Once an applicant is confirmed, the current application number for the renewal process will be generated.
9. After which one has to make the payment for current financial year. In case If the applicant chooses the previous financial year (suppose 2016-17) then it will be followed by another message stating a warning, “You have paid 2016-2017, Kindly select 2017-2018 for renewal your Trade License”.
10. In order to pay for the current financial year one will have to enter the previous year application number for the trade license.
11. If the applicant entered the application number correctly then he will be able to see all the details regarding the application and will have to confirm the same.
12. Once confirmed, the renewal application number will be generated.
13. After getting renewal application number online applicant will have to pay the trade license tax. He can do that by selecting the payment gateway and clicking on Proceed for payment button.

Payment Options

• There are two modes of payment:

1. Online: One can save the Application procured and then proceed with selecting the payment gateway type that can be Atom, Payu etc… and then clicking on Proceed to Payment.
2. At MOH Office/Bank: Once the procured application is saved, download the same application by clicking on Save & pay later at MOH/Bank office. Later one can submit the application form at MOH /Bank Office along with DD/Cheque /Cash (if trade fee is less 1000).

Steps for making the payment for Trade License Renewal

• Online Payment gateway page

1. Once you have selected the proceed for payment button it will redirect you to the payment page. Here you will have to enter the card details via which you would be making the payment and hence you can proceed further.
2. If the payment is successful it the gateway will redirect you to the Successful Transaction page. Acknowledge print can be also downloaded by clicking on the Print Acknowledge button.

• Steps to download the Acknowledgement.

1. For every successful payment made the trader can take the reprint acknowledgement online by clicking the “To Download acknowledgement for paid application”.
2. Following which one will have to select the download type as Acknowledgement.
3. Further, Click on the Download button and an acknowledgement copy will be generated.

• Steps to download the Receipt.

1. Once the applied trade application is approved by the concerned Medical officer, only then the trader will be able to generate the receipt through the online portal which can be done by selecting the download type as Receipt.
2. Enter the application number and click on the Download button to generate the Receipt.

• Trade License Certificate

1. Once the Trade is approved by the concerned Medical officer, then the Trader can collect the Renewal New Trade License Certificate through the online portal by clicking on to download the certificate button.
2. Enter the Application number and select the Trade type then click on Download button to generate the certificate.

• Steps to Know your Application Status

1. After getting the acknowledgement online the trader can also know their application status through the same online portal by clicking on “To Know your Application Status” button.
2. One will just have to enter the Application number and click on “Get Status” button.
3. Trader will now be able to view their Application details and status of the same.

Majority of the states now have an online portal for the facilitation of the process of granting the trade license or renewing the same which are easily accessible or one can always get the application form from their respective municipal offices and proceed with the offline option. Trade licenses have proven to be an essential part of the trading world which are responsible for the compliance of all businesses with the contemporary laws of the land so that in the entire process the citizens are safe and sound.

Important Links

BBMP Application Form for issue of Trade License

Application Form for Issue of Trading License

The post How to renew a trade license appeared first on iPleaders.

In this article, Shivam Goel discusses whether recovery of ‘arrears of lease rent’ can be claimed as ‘operational debt’ within the meaning of Section 5(21) of the I&B Code, 2016.

Preface

Section 2(a) of the Central Goods & Services Tax Act, 2017 (hereinafter referred to as the ‘CGST Act’) states that, “any lease, tenancy, easement, license to occupy land is a supply of services”, further, Section 2(b) of the CGST Act makes it clear that, “any lease or letting out of the building including a commercial, industrial or residential complex for business or commerce, either wholly or partly, is a supply of services”.

Section 5(21) of the Insolvency & Bankruptcy Code, 2016 (hereinafter referred to as the ‘I&B Code’) defines the operational debt as a claim in respect of the provision of goods or services including employment or a debt in respect of the repayment dues arising under the law for the time being in force and payable to the Central Government, any State Government or any local authority.

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Sarla Tantia V/s Nadia Health Care (P) Ltd.

NCLT (Kolkata Bench), CP(IB) No. 108/KB/2018 and CA(IB) No. 119/KB/2018, Date of Decision: 05.10.2018,

Coram: Madan B. Gosavi, [Member (J)]:

In the matter of Sarla Tantia (Supra), the Hon’ble NCLT Bench at Kolkata held that:

1. Receiving any consideration by way of lease rent from time to time or license fee for letting out the premises falls under the purview of providing services and the consideration that is receivable becomes operational debt.
2. ‘Arrears of rent’ are in the nature of ‘operational debt’ within the meaning of definition of operational debt defined under Section 5(21) of the I&B Code. An action as regards recovery of arrears of rent is maintainable under Section 9 of the I&B Code, 2016.
3. In the matter of: Mobilox Innovations (P) Ltd. V/s Kirusa Software (P) Ltd., (2018) 1 SCC 353, the Hon’ble Supreme Court of India extracted with approval Paragraph 5.2.1 of the Report of the Bankruptcy Law Reforms Committee as presented to the Government of India (November, 2015), which stated as follows:

“…the Code differentiates between financial creditors and operational creditors… Financial creditors are those whose relationship with the entity is pure financial contract, such as a loan or a debt security. Operational creditors are those whose liability from the entity comes from transaction on operations. Thus, the wholesale vendor of spare parts whose spark plugs are kept in inventory by the car mechanic and who gets paid only after the spark plugs are sold is an operational creditor. Similarly, the lessor that the entity rents out space from is an operational creditor to whom the entity owes monthly rent on a three-year lease. The Code also provides for cases where a creditor has both a solely financial transaction as well as an operational transaction with the entity. In such a case, the creditor can be considered a financial creditor to the extent of the financial debt and an operational creditor to the extent of the operational debt…”

The Hon’ble NCLT observed that a bare perusal of Paragraph 5.2.1 of the Report of the Bankruptcy Law Reforms Committee as presented to the Government of India (November, 2015) would make it clear that ‘arrears of rent’ are in the nature of ‘operational debt due and payable’, and a ‘lessor’ is an ‘operational creditor’ as regards arrears of rent due and payable.

Jindal Steel & Power Ltd. V/s DCM International Ltd

Citation – 2017 SCC Online NCLT 989

(Coram: R. Varadharajan, J., NCLT Bench at New Delhi)

In the matter of: Jindal Steel & Power Ltd. (Supra) it was held that:

1. Any amount claimed as due by a person representing as ‘operational creditor’ should demonstrate firstly that the said amount in default falls within the definition of ‘claim’ as defined in Section 3(6) of the I&B Code. Such a claim, secondly should be capable of being treated as a ‘debt’ as defined under Section 3(11) of the I&B Code, and, finally, the ‘debt’ should fall within the confines of Section 5(21) of the I&B Code, that is, it should be capable of being treated as an ‘operational debt’ and such an operational debt must be owed by the corporate debtor to a creditor who can then be considered as an ‘operational creditor’ as defined under Section 5(20) of the I&B Code.
2. Transactions as regards immovable properties cannot be considered as transactions falling under the term ‘operation’ and ‘operational debt’ unless such transactions have a correlation of direct input to the output produced or supplied by the corporate debtor. (See: Order of the Hon’ble NCLT (Bench at New Delhi) dated: 28.09.2017, in the matter of: Parmod Yadav & Anr V/s Divine Infracon (P) Ltd., IB-209/ND/2017)
3. Meaning given to the term ‘service’ as provided in any fiscal statute such as the Service Tax Act will not hold good so far as proceedings under the I&B Code are concerned. Fiscal statutes are meant for levying taxes and are often given broad interpretation, whereas, the I&B Code deals with insolvency which has serious and crippling consequences thereby requiring a strict interpretation.

(View taken by the Hon’ble NCLT was upheld by the Hon’ble NCLAT in appeal, namely, Jindal Steel & Power Ltd. V/s DCM International Ltd., Company Appeal (AT) (Insolvency) No. 288 of 2017, Order dated: 28.11.2017, Coram: S.J. Mukhopadhaya & Bansi Lal Bhat, JJ.)

Excursus

A perusal of Section 9 of the I&B Code would show that in order to maintain an application under Section 9 of the I&B Code, the applicant (operational creditor) has to satisfy the requirements of Section 5(20) and Section 5(21) of the I&B Code.

The Adjudicating Authority, when examining an application under Section 9 of the I&B Code will have to determine:

1. Whether there is an ‘operational debt’ as defined under Section 5(21) of the I&B Code exceeding Rs. 1,00,000/-?
2. Whether the documentary evidence furnished with the application shows that the aforesaid debt is due and payable and has yet not been paid?
3. Whether there is existence of a dispute between the parties or the record of the pendency of a suit or arbitration proceeding filed before the receipt of the demand notice of the unpaid operational debt in relation to such dispute?

If any one of the aforesaid conditions is lacking, the application under Section 9 of the I&B Code would have to be rejected.

• If the corporate debtor fails to give reply to the statutory notice issued to it by the operational creditor under Section 8 of the I&B Code despite due service made to it, then it would be deemed that the liability imputed upon the corporate debtor by the operational creditor is not only undisputed but is rather admitted and the corporate debtor has no defence, whatsoever, to put forth, provided that there is no dispute (suit or arbitration proceeding) pending for adjudication between the corporate debtor and the operational creditor before the issuance of the statutory notice under Section 8 of the I&B Code.

1. Recovery of ‘arrears of lease rent’ by invoking the provisions of the I&B Code is maintainable only when the operational creditor is in the business of letting out properties on lease rent. The view taken by the Hon’ble NCLT (Bench at Kolkata) is slightly on a different footing from the view taken by the Hon’ble NCLT (Bench at New Delhi). As per the former, ‘arrears of lease rent’ are in the nature ‘operational debt due and payable’ irrespective of the fact, whether or not, the lessor is in the business of giving properties on lease rent; but, as per the latter, ‘arrears of lease rent’ will be termed to be in the nature of ‘operational debt due and payable’ only when the lessor is in the business of giving properties on lease rent. Moreover, the former has relied upon the definition of the term ‘service’ as defined in the fiscal statutes to come to the conclusion that giving properties on lease rent is in the nature of ‘service’ and hence the lessor is an ‘operational creditor’; but, the latter has expressly stated that definition of ‘service’ as provided in the fiscal statutes has no bearing because purpose of fiscal statute is revenue generation for the Government in form of taxes whereas the purpose of I&B Code is to consolidate and amend the laws relating to reorganisation and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximization of value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders including alteration in the order of priority of payment of Government dues and to establish an Insolvency and Bankruptcy Board of India, and for matters connected therewith or incidental thereto. Thus, the view taken by the Hon’ble NCLT (Bench at New Delhi) seems to be more appropriate and just as compared to the view taken by the Hon’ble NCLT (Bench at Kolkata).

Endnotes:

1. Section 3(6) of the I&B Code: “Claim” means-

• A right to payment whether or not such right is reduced to judgment, fixed, disputed, undisputed, legal, equitable, secured or unsecured;
• Right to remedy for breach of contract under any law for the time being in force, if such breach gives rise to a right to payment, whether or not such right is reduced to judgment, fixed, matured, unmatured, disputed, undisputed, secured or unsecured.

2. Section 3(11) of the I&B Code: “debt” means a liability or obligation in respect of a claim which is due from any person and includes a financial debt and operational debt.
3. Section 5(20) of the I&B Code: “operational creditor” means a person to whom an operational debt is owed and includes any person to whom such debt has been legally assigned or transferred.
4. Section 5(21) of the I&B Code: “operational debt” means a claim in respect of the provision of goods or services including employment or a debt in respect of the payment of dues arising under any law for the time being in force and payable to the Central Government, any State Government or any local authority.

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In this article, Amy Jones discusses 6 major issues in M&A transactions that can derail a Deal.

Mergers & acquisitions are complex transactions that need to be handled carefully in order to close them successfully. Issues in M&A transactions can arise at all stages right from the beginning at the negotiation phase to even after the successful closure of a deal. There are various factors to be considered in such arrangements and enterprises need expert assistance to minimize risks and improve the chances of success. Pricing of the target organization is merely one aspect of M&A deals and numerous other topics like the structuring of the transaction or post-closure escrow details are intensely debated by both sides before they arrive at an agreement. Companies engage M&A law firms and other expert agencies to get assistance on the matter but even then the success rate of such deals is not too high. Let’s take a look at the major issues that organizations need to avoid for a successful M&A transaction.

Issue 1 –  Unsuitable Deal Structure

Many deals are called off right after initial negotiations because parties disagree on structuring the deal. There are three possible ways to structure a deal namely by stock purchase, asset sale or merger of both organizations. One of the biggest issues that cause a difference of opinion is the transfer of liability. In case of a stock purchase, complete liabilities are transferred to the acquirer. In a merger, the surviving entity has to take responsibility for the liabilities but in an asset sale, only specifically assigned liabilities are passed on to the buyer. There are tax consequences to be considered which affect both parties. Buyers prefer an asset sale as it provides them an opportunity to reset the basis. An unsuitable deal structure which is unfairly favoring one organization will lead to a breakdown of talks.

Issue 2 – Failure To Agree On The Final Price

Another common issue that can arise is differences over the final price of the target company. The method used to assess the worth of a business becomes important in such cases. It is not only buyers who conduct the valuation but sellers also do the estimation to get an idea about the value of their enterprise. There are various factors that are considered in order to assess a fair price. These include the future prospects of the business, the risks associated with it and the expected returns. Companies must engage advisors to get guidance on valuation so that there is not much difference between the estimates of both sides and the transaction can be closed successfully.

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Issue – 3 Mode Of Payment

The method of payment used for settling the deal can also be a potential cause for an issue. The easiest way to make payment is through cash. Sellers prefer this method as least risk is associated with it but it can affect the acquirer’s capital structure or debt rating. Another way is to pay the acquirer’s equity to the target’s stockholders at a determined ratio relative to the target’s value. This may positively affect the buyer’s debt rating. The final decision of the payment method depends upon whether the buyers feel their share is overvalued prompting them to use equity for closing the deal. They use cash if they feel that seller company is undervalued.

Issue – 4 Disagreement on Escrow Details

A part of the total purchase price amount is held in an escrow to protect buyers from losses occurring due to the breach of representation and warranties by the seller. The terms of an escrow can cause disagreement between both the parties. They can differ over the percentage of the final price that will be held in the escrow apart from the complete period of the holdback. Target company owners want the escrow to be the only remedy for all breaches but sellers want to exclude fraud from the arrangement. Negotiations can also break down on the composition of the escrow- whether it will be all cash, only stock or a combination of both.

Issue 5 –  Terms of Seller Representation and Warranties

One of the major issues in M&A transactions is caused by differences over the framing of representations and warranties. Sellers want to include detailed information on financial statements, tax, authority, liability, contracts, employee matters etc. covering all elements of the target organization. Sellers are wary of what is being included in the document as a breach will lead to indemnification claims by the buyer. Mergers and acquisition lawyers advising target company owners do not like the inclusion of broad terms that can have different interpretations. On the other hand, any hesitance in providing information by the seller will be treated with suspicion by the acquirer. Engaging experienced M&A specialists will help to remove doubts and inclusion of suitable terms in the document for both parties.

Issue 6 –  Differences Over Indemnification Provisions

One of the most intensely discussed topics in any M&A is the finalizing of target indemnification provisions. The conditions put in the document which will have to be fulfilled by sellers on breach of representations, warranties or other terms can significantly reduce their returns from the sale. While buyers want the scope of the indemnification to be wide and go beyond representations and warranties, sellers want it to be limited in scope as well as duration. They also want a cap on their obligations but buyers want different caps for specific matters like a higher one for intellectual property claims.

Conclusion

The best way to avoid issues in M&A transactions is to engage professionals who have considerable experience in assisting business organizations to successfully close such complex deals.

The post 6 Issues in M&A Transactions That Can Derail a Deal appeared first on iPleaders.

This article is written by Komal Shah, Content Head, iPleaders.

It is a common industry practice for any new entrant to an organisation to be informed about the business of an organisation, what it stands for, the objectives it is trying to achieve, the people, especially whom the new entrant will be required to deal with, and the policies, systems and culture prevalent within the organisation. There is no reason why this process should not be carried out for a new entrant on the board of directors. In fact, this process becomes all the more relevant for an incoming board member since he or she will be involved in the strategy formation of the company, which is not possible unless he or she is fully aware of the current strategy and resources. If you are offered an appointment as a director in a company, one of the things to check is if the company has a laid down induction process for directors. If it does not and you still accept the position, the first thing to do is to get a program installed.

Interestingly, there is no specific requirement in either the Companies Act, 2013 or the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR regulations) for induction of directors. However, the LODR regulations provide that one of the responsibilities of the directors shall be to encourage continuing directors’ training to ensure that they are kept up to date. However, a systematic induction process will increase the effectiveness of the training. Having a director secure information on the job can have really adverse consequences, since the authority and the liabilities vest right from day one.

What purpose should an induction process serve?

An induction process should aim at providing a director with all necessary information as would enable him to function and discharge his responsibilities as effectively as possible. A director will be a part of the board and the board is collectively referred to as the brain of the company. The information to be provided within an effective induction process should, therefore, be all-encompassing.

Induction has a higher degree of relevance for non-executive directors since they are not involved with the day to day operations of the company. For their part, non-executive directors should devote adequate time to the induction if they intend to contribute effectively to the board as well as be clear about the type and quantum of responsibility they are undertaking.

In case of managerial personnel i.e. Chief Executive Officer / Chief Financial Officer / Chief Operating Officer is appointed to the board, they should be briefed about the extension to their liabilities in terms of various legislations and the additional relationships with shareholders and regulators, on account of their appointment as a member of the board. However, they need not be briefed as extensively about the business and operations of the company since they can be expected to be well aware of these in view of their positions.

In fact, for a person who has been appointed as the Chairperson, one of the responsibilities would be to take the lead and ensure that a newly appointed board member receives appropriate induction and training.

What should be covered within a comprehensive induction program?

An ideal induction program should be capable of being customised in accordance with the category of the person being appointed as a director, contain a proper balance of written information, meetings and site visits. It should be spread appropriately so that there is no information overload resulting in missing out crucial information. Help and hand-holding can be secured from existing board members, however, care should be taken to see that the new entrant does not lose his individual perspective in this method. It may also be considered if the prospective director could attend a board meeting as an ‘observer’. This, however, should be done only when the appointment is certain.

Business and Entity level information

If directors are expected to contribute to the direction of the business of the company, they need to be made aware of the business sector in which the company operates i.e the industry and the segment(s). For instance, State Bank of India is in the banking sector in retail banking, while JP Morgan is in the investment banking and asset management segment in India. If you are to be appointed on the board of a company, the understanding of the sector in which it operates is essential. The spread of the operations of the company – geographic as well as departmental also needs to be known. Board members should also be aware of the infrastructure (particularly in the case of companies involved in manufacturing, processing or construction) and the human resources which the company possesses. The financial position of the company is something which a director would inevitably need to be aware of, given that the directors have the responsibility for the preparation of financial statements under the Companies Act, 2013. Finally, no one who is involved in the strategy formation of the company can afford to be unaware of the market for the company’s products or services and the competition and a director would, therefore, need information on this aspect too.

At an entity level, a director would need to be aware of the constitution of the company, the structure of the group within which it operates and the legislation to which it is subject. The constitution sets the boundaries within which the company operates and therefore, the director would need to function within those boundaries.

More often than not, directors would have specific responsibilities under sector-specific legislation and therefore, this is a crucial piece of information for them.

Information related to the directorship and governance framework

Non-executive directors, particularly those brought into the board by an investor or venture capital entity, a foreign collaborator or lender, will always be representing these specific interests on the board. As against this, independent directors are expected to be objective and deliver a ‘stand back’ insight on the matters being discussed at the board level. Obviously, directors and specifically independent directors must satisfy the qualification criteria, but beyond the statutory requirements, a director must be clear about the objective and expectations of him.

For this purpose, it is essential for a director being appointed to know the precise terms of his appointment and check out in depth the document appointing him – whether this is an appointment letter or an agreement. The due diligence to be conducted prior to accepting appointment as a director is dealt with in another chapter.

It would be very useful for a new appointee to understand the mechanics of the composition of the board – the division into executive, non-executives and independent directors, whether the Chairman is the executive or non-executive, the stance of the managing director and the various interests represented on the board.

Directors would also need to be aware of the governance framework i.e. matters to be handled at board level, committees formed and their purpose delegated authorities to the managing director or other key managerial personnel etc.

Information on key relationships

Shareholders:

Relationship with the shareholders of the company is of the utmost importance to a director. Directors have certain specific duties towards the shareholders under the Companies Act 2013, which have been covered in another chapter. Listed companies would have further requirements towards disclosures for the benefit of the shareholders and the interaction of the directors with the shareholders, at general meetings or through press conferences or through other media need to be carefully managed.

In case of unlisted entities and group structure, the shareholders of the flagship entity can most likely be angel or private equity investors while the shares of the unlisted subsidiaries will mostly be held by the flagship company and nominees. Relationships with the private investors who are the shareholders will be managed with a clear objective of ensuring that the obligations as laid down in the shareholder’s agreements are fulfilled and the investor gets a sufficient return for his investments. Directors of a subsidiary entity with a foreign holding company will consistently be geared towards the country franchise being able to generate and increase business and returns for the holding company.

The newly appointed director should clearly be made aware of the shareholding pattern and the channels used to communicate with the shareholders. They should also be well aware of the group structure and the company’s place within the group.

Key managerial personnel and second level management

Often key managerial personnel can be vested with delegated powers from the board for various purposes and therefore, it is important that the directors have a relationship with the KMPs which is based on trust and confidence. Trust enough for the KMPs to report any misses immediately to the board and confidence enough for the board to delegate high stake projects.

The second level management consisting of the heads of various departments also form an important relationship for the directors because they can be covered within the definition of ‘officer in default’ for their specific areas.

The induction process must always provide for one on one meetings of the new director with the KMPs and the second level management.

Regulators

Any director would need to be aware of the regulators governing the business sector in which the company operates. A formidable tip in maintaining the relationship with regulators is to always keep the records up to date and demonstrate voluntary efforts to comply and install governance systems in areas where these are not mandated by law. If the regulators see the directors as being proactive in compliance and governance, this will help a lot at a time the regulator does conduct an investigation for any reason.

A new director must clearly be briefed about the regulators, their powers and periodical interactions or submissions required to be made with the regulators. They must also be informed about the people within the relevant departments of the specific regulator.

Key customers and suppliers

For obvious reasons, key customers i.e. those falling within the 20% bracket of the 80:20 rule (the 20% customers which account for 80% revenue) need to be taken care of. For some customers, being given access to or being approached by a director of the company caters to their feeling of importance. Freebies work for some others and after-sales services for yet other customers. In any event, an active interest by the directors in maintaining customer relationships goes a long way towards winning customer loyalty.

Key suppliers, especially those which supply a crucial raw material are an equally important breed. Supply issues can hamper and put customers off the product or service.

Meetings can be set up for the new director with the key customers and suppliers as a part of the induction process.

An induction process document needs to be prepared and it should be tailor-made and customised based on the size and complexity of the organisation and business as well as the position of the director.

Here’s how a Director induction program works at Marks and Spencer.

Here’s a 2016 policy for the training of directors of Steel Authority of India Limited

Companies Act 2013 has introduced massive changes to corporate governance in India. It impacts all the big companies. It has generally increased compliance thresholds and made the life of directors and promoters quite difficult. However, it has increased work for lawyers.

Knowledge and skills around company law never go out of fashion. Industries and practice areas rise and fall in eminence, but they will all need company law experts.

If you have a good knowledge of company law, you can impress any corporate lawyer or a corporate litigator in an interview. Good knowledge of SEBI regulations is even rarer. If asked about what is your favourite area of law, you can say it is company law or securities law and then answer the barrage of technical questions that will follow, you will make the cut in any good law firm.

In every transaction, and almost in every commercial litigation, your knowledge of company law will come in handy. Whenever listed companies are involved, you will need knowledge of SEBI regulations.

LawSikho’s Diploma in Companies Act, Corporate Governance and SEBI Regulations provides a grip on this area from the perspective of work of a commercial lawyer as well as directors who wish to develop a legal and corporate governance acumen (and not merely secretarial work).

The course includes Case studies, drafting documents and preparation of action plans and strategies. The course will provide a ‘why to’ and a ‘how to’ kind of guidance. For those matters which are governed as much by best practices as by law, it will also provide a ‘what is the best way to’ kind of guidance (you will find these three types of chapters in all modules)

To get trained on different kinds of real-life work associated with company law and SEBI regulations that are required to be performed by lawyers and other professionals, enroll for the Diploma in Companies Act, Corporate Governance and SEBI regulations. We would even help you to connect with potential clients or employers.

The post Induction processes for Directors appeared first on iPleaders.

There is a big misconception about what is sales amongst most people working in sales. Many people think they are selling when they are not really doing sales, but merely taking orders. Some people in sales don’t even want to sell, they just want to take orders.

It is very important to understand that your job is not to take order. In the world of online payment gateways, smart landing pages and forms, if you just become a order taker rather than a sales person, your job will disappear, and you will never grow much in your career.

So if you are tempted to become the sort of sales person who does not do sales but merely takes orders from customers who came willing to buy something, then please reconsider. It is not a pretty path to walk down after some time. Focus your talent, energy and efforts towards learning sales and then selling. Do not fool yourself by being an order taker and then thinking that you are doing sales.

Here is an amazing article written by a very successful sales person about the distinction of order taking and selling:

Selling is the process of finding a buyer who has a need for our product or services and convincing him or her to make the decision of giving us their money in exchange for our product or service.

Selling is different from order taking.

Some companies, I find, have sales departments who do not sell. They take orders, but because those orders create an obligation for the buyer to pay, it is called “sales,” although the actual process of selling did not take place.

In explaining this distinction, I use the following analogy: The difference between an American salesman and a Turkish salesman in the Istanbul Big Bazaar.

Where is the American salesman standing? Inside the store behind a counter, waiting to take orders and recording sales done.

Where is the Turkish salesman? On the street in front of the store, stopping passersbys and pestering them till they agree to walk into the store where the salesman has a whole slate of reasons why you must buy a product in that store.

To me, the American was just order taking. The sales was done the Turkish way.

This distinction—what is sales, and that order taking is not sales— illuminates why organizations on the aging part of the lifecycle curve are dying. They have no sales function. They have order taking. They rely on marketing to bring buyers into the store, and the salesperson takes the order.

Take the banking industry. Who sells? No one. In my work, I cause every branch manager to have a sales KPI, which means, “Get out from behind the desk and go to the street (not literally). Go join the chamber of commerce, the rotary club, any community-based organization where you can fish for new customers to bring to your bank.”

What is wrong with marketing doing the selling function?

To me, marketing is analogous with ploughing the land, fertilizing it, and irrigating it so that seeding it will work the best. Seeding is selling, and harvesting is order taking.

Fertilizing is necessary for having a good crop, but while necessary, it is not sufficient. Seeding is needed.

Ask yourself who in your company does not do marketing, not order taking, but honest-to-goodness sales?

Be ready for a surprise: The sales function is either non-existent or very weak, while order taking—called sales—is big and flourishing.

Just thinking,

Ichak Kalderon Adizes

President of the Adizes Institute and is recognized by Leadership Excellence Journal as one of the top thirty thought leaders of America.

• Sales for us is leading people who are uninterested to become interested, and to take them through several stages to actually buying a product and then going on to use the same. In fact sales does not stop there, but it is to continue to engage, to keep a relationship alive, to get more referrals and repeat business.  Sales requires you to be creative, to find people who can buy the courses we offer.

• Sales for us is helping law students and lawyers to remember their dreams that they are struggling to pursue or even have forgotten and given up on, and show them that our courses can give them a path to realise those dreams.

• Sales for us is to show business people that they can be empowered with knowledge of law and regulations, acquire key competitive advantages through such knowledge and that they can save themselves a lot of trouble as well as money if they have that knowledge in the years to come as their business keeps growing.

• Sales for us is to make a professional/senior employee realise that if they know the law they can contribute in a bigger and more profound way to their organizations, impress their bosses and climb the corporate ladder faster.
• Sales for us is to listen for the greatness in people and influence them to notice that greatness. They must buy our courses to fulfill their own great dreams of becoming extraordinary lawyers or business leaders. Your job is to create an amazing context for why they want to do the course.
• Where is the sizzle? Where is the fun? Where is the satisfaction? If you are not having a great time selling, you are not doing it right, so talk to your boss.

What is there to unlearn about sales

1# Sales is not smooth talking, you need to be an expert and know your stuff

As a salesperson, you get to be an expert about what you are selling, and the entire world of the potential customer. It’s hard to believe, but if you are selling accounting software, you have to be an expert in accounting software from the first day itself. You also need to know a lot about who buys these softwares, who uses them, what problems they face, who makes the decision, who influences the decision maker, what keeps them awake at night. You are probably not going to know when you are starting, though. You have to know these things to be a top of your class sales person.

So, get ready for the ride of your life because this is the most challenging part. It’s funny because wherever you work, many of the non-sales personnel will think of you as the “talent.” Some people will think that we’re mindless actors reading a script. Some think we’re all BS artists. Truth is, some salespeople are, but they don’t make it, especially selling a product as complex as software or financial services or online legal courses to smart lawyers and successful professionals.

If you want to sell a course on mooting, knowing what the syllabus is not going to be enough. You need to know what problems young lawstudents face when they try their hand at mooting. You need to know their dreams, their fears and their embarrassments better than their best friends know. You need to know where they can reach as a mooter and how it can help them to become a better lawyer. You need to know what are the best moots in the world, and how they are different, and what it takes to win them. You need to know how judges grill mooters and what mistakes mooters make in such situations. When you know in and out of not only the product, but also about your customer – you can sell very easily. It will almost seem like you are doing a favour by talking to the customer and the customer will be very happy that they ever got to speak with you.

If you are a learner, if you have an unquenchable thirst for knowledge, sales may be the right career for you.

So forget the fantasy that sales is for ignoramus smooth talkers who can talk their way into the purse of customers. We do not want such people anywhere near our sales teams. And that is not because of some moral principle, but because such people never succeed in sales in the long term but destroys the reputation of the products that they sell.

2# Sales is not about conning your customers to get their money somehow

In sales, you get your biggest satisfaction in the end of the day from the fact that you get to help people. The most successful salespersons are motivated by helping the customers to achieve success, and customers can feel it. If this is not the case you will find it very difficult to survive in sales. Again, from the outside in, most customers think salespeople just want their money. Some of your co-workers will think that all you want is to sell as many courses as you can no matter who is in front of you. However, the easiest way to screw up a sell is by trying to sell. Don’t tell the person to buy. Don’t tell them they will benefit if they buy. Just guide them, give value to them, help them – and all the way gently nudge them to realise that the product is good for them, and make them ask how much they can benefit from the product. They must come to the conclusion that they need the product, and you asking them to buy will not help.

If you don’t care about your customers, if you are not genuinely trying to help them in their career, they will not buy from you.

We can never, never mislead our customers. It is a big sin at iPleaders and if any of us ever do this, it is the same as letting down the entire organization and all the good work done by everyone else.

3# Sales is not difficult

Sales is an easy, painless, inspiring process. However, sales people often screw it up by missing out or botching up steps while executing sales process. You need to follow through. You cannot say or do things that break trust. You must have a great time while you are selling. If you are having a bad time selling, then so is your customer. And then it is very difficult for you to succeed in sales.

Many salespeople seem to believe that you can sell by telling customers what they want to hear. This could not be further from the truth. Most customers want to be able to rely on what you tell them so they can plan and implement.

4# It is more important to listen than to talk

Salespeople think that they make the sales happen by talking. In reality, experienced sales people know, sales is all about listening. It is not just listening to the words, but everything – the tonality, the emotions, the inflections – you can learn to listen so intently that you can feel what the other person is feeling. That is very very critical. You need to ask questions, and then shut the hell up and listen. It helps you to discover the world of the customer. This is when you find out what you need to say to make a sales happen. If you can’t listen, if you cannot get inside the world of the person who you are trying to sell to, then you are just stumbling around like a blind person. The finest sales person knows how to get the information from the other side so they can learn, understand, construct in their mind the entire picture and then finally consult and present what they are selling as the solution.

5# You don’t have to sell to every person, it is a waste of time and energy

You cannot sell everything to every person. It is a waste of time to sell ice to an eskimo, though that is a praise for sales people. I do not believe in selling ice to the eskimo. If you have ice to sell, find a person who really needs the ice. And if you meet an eskimo while you are trying to sell ice, I will rather politely eject and find a better customer who really needs ice.

However, if you are stuck in alaska and left with no other product and a lot of time, you might as well give it a try to sell ice to an eskimo. Depending on how many leads and how much time and energy you have, decide how to spend it. Do not waste it with the wrong candidate.

When you are calling, some people will be like this eskimo. Move on. Do not brood over it. There are lots of people who really need your help. Sell to them. Spend your time and energy on the right people.

How do you know who is the right person? For this you must qualify your leads by finding out more about them. Find out if they are eskimo or bedouin, and what they really need. Once a boy called me from a village in Meghalaya. He wanted to do a course so that he can stop corruption by village panchayat and district administration. He was asking about the Diploma course in business laws. I told him that this course will not help him for the purpose he wants. Do not sell your ware to a person who doesn’t need it. If the sell happens, the person will be unhappy and maybe he will talk about it to others. This will ruin your good will and the products reputation. You will not remain trustworthy. If it doesn’t sell, then you will waste time. Neither is any good.

This is why qualifying your potential customers by asking them a few question is critical. It does not only help you to know who you should focus on, but it also gives you critical ideas on what should be your pitch to this particular person.

Case study: How Company Strategy aligns with sales strategy  

What is LawSikho.com’s corporate strategy, and what is the sales team’s part in that strategy?

LawSikho.com is India’s leading online legal courses platform. We make the best courses, but we are also amazing at sales. Our marketing is driven by content, but then we have to shepherd our interested leads towards buying. That is the role of the sales team.

How do we do it? Here is a brief outline of our strategy.

• Create amazing online courses that can help one to become extraordinary lawyer or business leader empowered with legal knowledge that can give them competitive advantage in the marketplace.

• In education industry, a fraction of the people who take up a course finish the course, find success in what they set out to do or feel satisfied with the course. We will ensure that a very high percentage of the people who take our courses become very successful and highly satisfied. People will benefit from these courses greatly. Therefore, they will say great things about our courses in private and public, generating more sales and fantastic good will in the market.

• However, this strategy works only if we rich a critical mass of people. In our estimate, once we reach 10,000 lawyers, law students and professionals in a year, that critical mass will be reached. At that point, taking up these courses will be no brainer, and not taking up will be a handicap in one’s career (just as PMP courses became virtually mandatory for software development professionals).  Until then, we have to tirelessly create awareness about these courses through marketing and sales.

• However, even now, what our customers say about us is critical. The sales people are usually the first people customers interact with. Their opinion about iPleaders is largely formed by your interaction with them (and to a smaller extent by the mails they read and the articles that marketing team writes). If you make a great contribution to their life and career through an amazing counselling session, it will make a world of difference to the way they will be interested in our courses, how actively they will participate in the course and what they will say about iPleaders to the people around them.

• In short, the success of a course depends on how people participate in it, and how well they participate depends to a large extent on the context you create for them. It is all about giving them a powerful why, an amazing dream as to why they will want to do a particular online course.

• Yes, you can set the tone and frame in which a learner will learn to course, how much effort they will put, how much zest they will bring to a course, and therefore how successful they will be in life. And by doing this, you can not only change the fortune of the learner, but the company’s and your own.

• iPleaders relies on the sales team to give such a memorable experience of interacting with iPleaders to the learners and potential customers, that it will brighten their day, and they will remember the amazing feeling they had during the call even later, ideally every time they hear the name iPleaders. This is key to our brand building strategy.

• We do not rely on discounts and freebies to sell products. As a company, we believe that giving discounts harm our brand. Our prices are fixed and will only keep increasing. Courses must be sold based on the great outcomes people will get when they finish the course. Reducing course price to sell more is a race to the bottom – when you start doing that, people expect you to reduce the price more and more, and it becomes difficult to provide a quality experience and good outcome for participants because we don’t have resources to do so if prices are low.

• There will be always cheaper courses offered by competitors. Some people will take those courses. However, we will get the smartest and most premium clients who prefer to pay more and get more value rather than getting a cheap product and little value.

• Our competitors have tried a lot to capture our market share by reducing prices, having larger marketing and advertising budget etc., but we have always prevailed over them because our unshakeable faith and observance of good practices like the above.

• We are compassionate towards everyone. We want our customers to get success above all and we go the extra mile to ensure that they get what they wanted. Our customers know this. This is why they take up one course after another.

• Our competitors are not able to beat us even when they offer courses at 1/8th the price. This is because it is not about how cheap a course it is, it is also about how much success a learner gets after doing a course. On that count, we must deliver.

• Our sales team members are not mere salespeople. They are wise men and women who can guide a person towards better career opportunities and better business decisions. They must know what they are selling in depth, and have a good grasp on customer psychology. You are like a consultant from Mckinsey or BCG on the call, you can demonstrate to the person on the line that you can produce fantastic results only if the person listens to you. Your knowledge, wisdom and brilliance will be evident from the conversation and you will take the potential through several stages of realisation – the end result being that he will realise that he wants to do the course we are offering. Based on your brilliance and wisdom, the person on the phone will be convinced that iPleaders is offering highly intelligent and evolved course that they will benefit from.

• If someone calls you from Harvard University, will you expect them to be brilliant? Similarly, when you call from iPleaders, our customers as well as iPleaders expect you to be brilliant, insightful, wise and very impressive. You are not only representing the brand, but you are the brand.

• Now think how you feel when people from airtel or credit cards call you. They are dull, boring, uninspiring, uninterested. We do not feel like talking to them. If you are dull, boring, uninspired, uninterested when you are making calls – the other person will feel it. They will instantly lose interest. You can even say hello in an amazing way or in a disengaged, dull way. Please do not make calls like those airtel callers – they can afford to do it, we cannot. We have to be amazing when we are on the phone. We have to bring in the energy, the charm, the mojo everytime we dial a number. After all this is what differentiates us from all other businesses.

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