In this article, Ankur Saboo, Legal Associate at Starlog Enterprises Limited discusses the procedure in case of Corporate Debtor under Insolvency and Bankruptcy Code, 2016.

I & B code is the codification of laws and its one of its kind which inter-alia shifts the control of the management of corporate persons as well as other persons defined under the Code from debtor driven to creditors driven.

Steps Involved as per latest amendments and judicially settled issues are

Application for initiation of Corporate Insolvency Resolution Process (CIRP) can be filed by following persons,

Financial Creditor, Operational Creditor and Corporate Debtor.

Default

The minimum amount of the default shall be one lakh rupees or more for matters relating to insolvency and liquidation.

Types of Creditors

There are three types of creditors:  Operational Creditor (including workmen and employees), Financial Creditors and creditors who do not come under the previous two categories. The third type of category of the creditors implied to be taken as the creditors as per the notification issued by the Insolvency and Bankruptcy Board of India via its Press release dated 16^th August, 2017 as The Insolvency and Bankruptcy Board of India has amended these regulations to provide for a form (Form F) for submission of claims by creditors other than financial and operational creditors. It is still not clarified whether this third type of creditor can initiate CIRP proceedings before the NCLT.

Filing of Application by financial Creditors

• A financial creditor either by itself or jointly with other financial creditors may file an application for initiating CIRP.
• The application before Adjudicating Authority has to be filed under Section 7 of the Insolvency & Bankruptcy Code, 2016.
• The Adjudicating Authority has to, within fourteen days of the receipt of the application either admit or reject the application.

Filling of Application by Operational Creditors

• The application before Adjudicating Authority has to be filed under Section 9 of the Insolvency & Bankruptcy Code, 2016.
• A mandatory demand notice to be served by an operational creditor to the corporate debtor demanding repayment of the operational debt in respect of which the default has occurred. Some of the key provisions brought in by the code as well as settled proposition by the Adjudicating Authorities regarding structure and mode of serving of demand notice are as follows:-
• It is mandatory for the operational creditor to deliver the demand notice in Form- 3 or invoice attached with the notice in Form-4.
• There is a provision of sending the notice by electronic mail to be serviced to a whole time director or designated partner or key managerial personnel, if any, of the corporate debtor in addition to the traditional method of servicing of the notice. This added-on method shall expedite the process.
• Aforesaid notice shall be sent by the person who holds any position with or relation to the ‘operational Creditor’. Thus persons independent of the operational creditor such as advocate/ lawyer or Chartered Accountant or a Company Secretary or any other person in absence of any authority and not holding any position or relation with operational creditor cannot issue the demand notice under Section 8 other code.
• All the propositions hereinabove stated have also been well settled by Hon’ble NCLAT, Delhi in the matter Macquarie Bank Limited v/s Uttam Galva Metallics Limited.
• Filing of a copy of certificate from the Financial Institution maintaining accounts of the ‘Operational Creditor’ confirming that there is no payment of unpaid operational debt by the ‘Corporate Debtor’ prescribed under clause (c) of sub-section (3) of Section 9 of the Code is to be mandatory followed. (NCLAT in the case of Smart Timing Steel Ltd. v/s National Steel and Agro Industries Ltd.)
• In the case of Vertiv Energy Private Limited v/s Tecro Systems Limited, in view of the section 11 of the code, it was held that the operational creditor has to become member of the committee of creditor for its claim if he may desire. The separate application under 9 of the code shall not be entertained.

Filling of Application by Corporate Debtor

In addition to the creditors as mentioned above, corporate debtor by its own can also file application for initiation of corporate resolution process under section 10 of the Code.

Proceedings before NCLT

• The ‘adjudicating authority’ is duty bound to give a notice to the corporate debtor before admission of a petition under Section 7 or Section 9, a part of rules of natural justice, as stipulated under Section 424 of the Companies Act, 2013. (A well settled proposition in the case of M/s Innoventive Industries Ltd. v/s ICICI Bank subsequently was reiterated in the case of Starlog Enterprises Limited v/s ICICI Bank by Hon’ble NCLAT).
• The Adjudicating Authority has to, within fourteen days of the receipt of the application either admit or reject the application.
• In case of financial application by financial creditor, occurrence of default has to be ascertained and satisfaction shall be recorded by the Adjudicating Authority.
• In case of operational Creditor, the adjudicating shall see that there is no existence of dispute before filling of the application. If there is, the corporate debtor shall bring it to the notice of operation creditor within 10 days of receipt of the demand notice.
• After admitting the petition, NCLT inter- alia shall declare moratorium till the resolution process is completed, confirm or refer to the IBBI Board for the name of the IRP, direct public notice along with the submission of claims.

Appointment of Interim Resolution Professional

In case of financial creditor/ corporate debtor: It is mandatory on the part of the financial creditor that along with the application furnishes the name of the resolution professional proposed to act as an interim professional.

In case of operational creditor: Operational Creditor may or may not furnish the name of the resolution professional proposed to act as an interim professional.

However, Adjudicating Authority shall appoint an interim resolution professional within fourteen days from the insolvency commencement date i.e. name proposed by the financial creditor/ corporate debtor and operational creditor if no disciplinary proceedings are pending against the IRPs. In case of no name of IRPs proposed by the operational creditors, the adjudicating authority shall make a reference to the Board for the recommendation of an insolvency professional who may act as an interim resolution professional. Consequently, the Board shall, within 10 days of the receipt of such reference from the Adjudicating authority recommend the name of the insolvency professional which shall be appointed as the adjudicating authority.

The term of IRP shall not exceed thirty (30) days from date of his appointment. The same or replaced IRP (by committee of creditors) shall be appointed as resolution professional (RP).

Public Announcement

Public announcement of the CIRP shall be immediately made as will be directed by the Adjudicating authority after admission of the Application.

Submission of Claims

The financial creditors shall submit their proof of claims by electronic means only. All other creditors may submit the proof of claims in person, by post or by electronic means.

Formation of committee of creditors

The committee of creditors (COC) shall be constituted by the IRPs and the first meeting of the COC shall take place within a period of seven days of its constitution.

Appointment of Resolution Professional

The committee of creditors may, in the first meeting either resolve to appoint the interim resolution professional as a resolution professional or to replace the interim resolution professional by another resolution professional.

Preparation of Information Memorandum

Resolution Professional shall prepare information Memorandum as per the code.

Preparation of Resolution Plan

Resolution plan can be proposed by any person for insolvency resolution of the corporate debtor and shall submit it to the resolution professional. For this purpose, he shall be termed as “Resolution Applicant”.

The Resolution Professional shall present all the resolution plans before the committee of creditors and shall be subject to their approval fulfilling the requisite majority.

Time- line for completing corporate resolution process

The corporate resolution process shall be completed in 180 days from the date the petition is admitted. However, if the resolution to extend the process of resolution process beyond 180 days but not more than 90 days passed by committee of creditors having a vote of seventy-five per cent of the voting shares, such extension shall be valid and no other such extension can be granted thereafter.

Liquidation

If the resolution plan is put before the Adjudicating authority after the dead line or not in the manner prescribed under the Code may pass an order requiring the corporate debtor to be liquidated. It is interesting to note that during the existence of resolution process also, the committee of creditors may take direction from NCLT to liquidate the Corporate Debtor. The resolution professional will automatically perform the duties of the liquidator if not replaced. Proceeds from the sale of the liquidation assets shall be distributed in order of priority mentioned under the code.

Dissolving the Corporate Debtor

Upon the assets of corporate debtor completely liquidated and the liquidator making an application, the NCLT shall pass an order dissolving the corporate debtor.

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In this article, Arjun Pal discusses the impact of mediation in India.

Introduction

Mediation is a dynamically structured voluntary dispute resolution process where a neutral third party helps the disputing parties in resolving a conflict between them by using specialized communication and negotiation techniques. These techniques are in turn designed in a manner that facilitates the process of mediation and dispute resolution. The concept of mediation evolved in the latter half of the 20^th century, however, the roots of mediation can be traced way back to the ancient Indian legal systems, for example, the systems known as the “Gram Panchayats” and “Nyaya Panchayats” were popular and widely prevalent in ancient rural India.[1]

However, even though these systems are still existing in many parts of rural India, the people of the country, especially the ones that were still relying on these legal systems for justice, have lost their faith in them. This is so because these Panchayats are prone to influence from the influential and powerful people residing in these areas. These influential people often use these systems to mete out justice depending on their own whims and fancies and also exercising their bias/influence in the decisions of the Panchayats. This has played a hugely negative role in the dwindling of the popularity of the Panchayat systems. In the process of addressing these concerns, the Indian government is making incessant efforts to revive these indigenous justice delivery methods by allocating funds and trying to make better rules for their reinvigorated and unbiased functioning.[2]

Mediation through the Years

The Arbitration and Conciliation Act, 1996 was the first statute to introduce the Indian legal system to mediation. Introducing Sub-section (1) of Section 30 of the Arbitration and Conciliation Act, 1996, it encourages the parties involved to explore the option of mediation and conciliation despite arbitral proceedings having started and thereby empowers the arbitral tribunal to use mediation as a means of dispute resolution. Nevertheless, due to a lack of proper enforcement (or even formation) of any specific rules of mediation, this provision promoting mediation has almost been rendered defunct. This, however, was rectified to a certain extent by the introduction of Section 89 of the Code of Civil Procedure, 1908 (introduced first in Section 30 of the Arbitration and Conciliation Act, 1996), which was concerned with exploration of the different methods of dispute resolution. Also, the notion of “judicial mediation” was first introduced by this section”[3].

Relying on this, the Court, where satisfied that the circumstances are such that the parties can try and settle their disputes amicably in ways if tried, the Court may encourage the parties to seek out the methods of mediation, arbitration and other forms of alternate dispute resolution. Despite this, unlike other statutorily-recognized forms of non-binding alternative dispute resolution there is still no concrete statute that addresses the concern of and ensures “confidentiality” in mediations in India.

It was only recently in the year 2011 that the Supreme Court of India declared that mediation proceedings were confidential in nature, and only an executed settlement agreement or alternatively a statement that the mediation proceedings were unsuccessful, should be provided to the court by the mediator[4]. It is expected that in view of this judgment, the popularity of mediation as a method of resolving disputes in India will increase. In fact, it has been noted that during the proceedings of important cases such as the one regarding the demolition of the Babri Masjid, the Chief Justice of India himself has stepped in to facilitate mediation between the warring parties[5].

Following in the same footsteps, the Law Commission of India in its 129th Report recommended that it should be made obligatory for the Court to refer disputes to mediation for settlement[6].This was referred to in the landmark case of Afcons Infra Ltd v. M/S Cherian Varkey Constructions (2010)[7].In this case, the Supreme Court of India further held that all cases relating to trade, commerce and contracts, consumer disputes and even tortious liability could normally be mediated.

Another landmark decision by the Supreme Court was arrived at on 22^nd Feb, 2013 in the case of B.S. Krishnamurthy v. B.S. Nagaraj[8], wherein it directed the Family Courts to strive to settle matrimonial disputes via mediation and to also introduce parties to mediation centres with consent of the parties, especially in matters concerning maintenance, child custody, and the lot. In the few years since mediation centres in the cities of Delhi (in the year2005) and Bangalore (in the year 2007) were set up, around 30,969 cases have been through mediation process, and around 60% of these cases have been settled ever since[9]. One of the most famous recent cases where mediation was resorted to was the one (even though conciliation was rejected despite mediation) between Reliance bigwigs Mukesh and Anil Dhirubhai Ambani over the takeover of South African Telecom Major MTN.

Following this, various Supreme Court decisions in the recent past appear to point out that the Courts are gradually developing a favourable attitude towards mediation. Also, mediation seems to have become the most sought after means of dispute resolution with regards to the settlement of patent disputes. Further, it has been noticed that many Indian generic drug manufacturers are more frequently resorting to mediation as a method for dispute settlement involving “patents” including the recent famous cases of patent disputes between Hoffman La Roche and Cipla[10] (even though mediation between the two parties failed in facilitating dispute resolution) and Merck and Glenmark[11].

Usually it is expected that Generic drug companies operate whilst keeping public health concerns at top priority. However, it is also of concern that even though settlements via mediation may be mutually beneficial for the parties involved and would spare them the pain of going through lengthy legal proceedings, it might end up making the drugs manufactured more expensive for consumers in countries like India. This would definitely be disadvantageous for consumers in developing countries such as India. So, at the time of mediation, the mediator may like to address not only the interest of the disputing parties but also the concern of the parties likely to be affected by the outcome of the mediation to avoid prolonged appeals/ petitions in court.

Despite being successful in various countries, mediation has not been able to make much headway in India mainly due to the lack of awareness regarding mediation and its benefits. It does seem to appear that there has been a lack of initiative on the part of the government, including that on part of the legal fraternity to spread awareness about mediation across the country. In India, even though the judges have been quick to identify the increasing usage of mediation as a helpful means for reducing case backlogs and delays, yet, lawyers in India have not been able to respond to mediation fast enough. Also, the current court assisted mediation centers hardly cater to this aspect of reaching out to the people. However, the famous Malimath Committee Report[12]  addressed certain aspects to be kept in mind while making efforts for opening a wide range of different justice delivery mechanisms which will have long term effects in resolving and decreasing the number of disputes involving the common man. Also, the 129th Report of the Law Commission has identified certain new methods which may help facilitate the speedy disposal of cases in urban areas.

These are as follows[13]:

• Establishing the Nagar Nyayalaya with a professional Judge and two lay Judges in the same manner as the Gram Nyayalaya and having comparable powers, authority, jurisdiction and procedure. However, the Nagar Nyayalaya will resort to mediation first and then initiate proceedings (only if mediation fails);
• Having cases heard in Rent Courts by a Bench of Judges, minimum two in number, with no appeal but only a revision on questions of law to the district court;
• Setting up a Neighbourhood Justice Centres involving people in the vicinity of the premises in the resolution of dispute; and
• Conciliation court system, presently working in Himachal Pradesh.

The efficient implementation of a system like this will most definitely help in addressing the problems related to court delivery system. Such a system would also benefit the common man in a substantial way. However, even in the present day, the lawyers in India still continue to be as traditional and conservative as they have been over many years. They hardly tend to support any new changes and at the same time, hesitate while venturing into exposing their clientele to the unknown risks that may be involved in an ADR or mediation process, about which they are not well aware.

The lawyers always have an apprehension that delving into mediation would probably deprive them of income by encouraging the settlement of cases prematurely and thereby significantly reducing the legal fees that could otherwise be earned during the on-going and prolonged judicial proceedings. On, the other hand the adversarial system (current court system) too cannot be totally dispensed with. The adversarial system (involving litigation proceedings in the courts) is often the most relevant method in a many different variety of situations especially, those needing authoritative interpretation or establishment of rights or which manifest severe negotiating imbalance. It is also required as one of the last resorts of dispute resolution. However, its haphazard and unchanging application across a wide range of conflict ridden situations is a major cause of the several maladies beleaguering the Indian legal system.[14]

It has been noticed that up till now mainly companies and institutions in the field of insurance, banking and trading have relied on mediation and ADR as means of settling disputes. Hence, encouragement is very much needed for making provisions mandatory for ADR especially mediation to be used as the most commonly sort after means of dispute resolution is much needed. Awareness has to be aimed at the common people with countrywide publicity in various media. Thus, there is an urgent need to identify people or community-based initiatives for taking up the cause of spreading awareness about mediation across the country. It now seems that we need new ways of looking at conflict resolution and the legal profession and hope that we discover a new way that will help in bridging bonds between the ethics of practice, the values of the law and the demands of public policy. The process has started, but slowly. Creating awareness in the society of the mediation process and its benefits, and developing capacities for the same will help expedite the shift from adversarial litigation to methods of alternate dispute resolution in a big way. This will also help in reducing the backlog of long pending cases in Indian courts and usher in a new era.

References

[1] Anil Xavier, Mediation: It’s Growth and Origin in India, available at http://www.arbitrationindia.org/pdf/mediation_india.pdf

[2]Madhu S, Mediation in India, available at http://cppradr.blogspot.in/2008/07/mediation-in-india.html

[3] www.indialawjournal.com/volume4/issue_1/article_by_desia_kanuga.html

[4] Held in the case of, “Moti Ram (D) Tr. LRs and Anr. Vs Ashok Kumar and Anr (Civic Appeal No. 1095 of 2008)”

[5] Dr M. Ismail Frauqui And Ors. vs Union Of India (Uoi) And Ors AIR 1995 SC 605

[6]http://practicalacademic.blogspot.in/2012/08/guest-post-mediation-and-conciliation.html.

[7] 2010 (8) SCC 24

[8] S.L.P. Civil) No(s).2896 OF 2010

[9]Forbes India, Mediation in Indian Courts, available at http://www.forbes.com/2010/09/28/forbes-india-judiciary-encouraging-mediation-reduce-baclog.html

[10] F.Hoffman La Roche Ltd. and Anr v. Cipla Ltd. 2015 SCC OnLine Del 13619 : (2015) 225 DLT 391 (DB)

[11] Glenmark Pharmaceuticals Limited v. Merck Sharp and Dohme Corporation and Anr 2015 (6) Supreme Court Cases 807:2015 SCC OnLine SC 493

[12] lawcommissionofindia.nic.in/reports/report238.pdf

[13] lawcommissionofindia.nic.in/101-169/report129.pdf

[14] http://lawcommissionofindia.nic.in/adr_conf/sriram17.pdf

In this article, Prateeksha Gupta discusses the reasons why housing complexes are structured as co-operative societies.

Housing Complex basically means a type of complex in which people live. It may be a  three, or four storeyed apartment or perhaps a townhome community that has two or more units with adjoining walls.

What is a Co-operative Society?

The term co-operation is derived from the Latin word co-operari, where the word co means ‘with’ and operari means ‘to work’. Thus, co-operation means working together.

So fundamentally, persons who need to cooperate with some basic financial goal can frame a society which is named as “co-operative society. It is an intentional relationship of people who cooperate to advance their monetary interest. It works on the principle of self-help and mutual-help.

A Co-operative Society is a type of business where people having a place with a similar class join their hands for the advancement of their shared objectives. These are for the most part shaped by the destitute individuals or weaker segment individuals in the general public.
It reflects the desire of the poor people to stand on their own legs or own merit. The philosophy of the formation of co-operative society is “all for each and each for all”.[1]

A Co-operative Society is a society which has its objectives as the promotion of economic interests of its members in accordance with co-operative principle.[2]

Dr. H.N.Kunzen define Co-operatives as “ Co-operative is self-help and mutual help. It is a joint enterprise of those who are not financially strong and cannot stand on their legs and therefore come together not with a view to get profits but to overcome disability arising out of want of adequate financial resources.”

In India, co-operatives are begun by the weaker segments of society for shielding its individuals from the grip of profit hungry business people.

One of the best examples that can relate to the concept of cooperative society is a government bank or a dairy. The motive behind the formation of these two is the welfare, promotion of the people in need.

The main objectives for the formation of a co-operative society are:

• Render service rather than making profit
• Mutual help instead of competition
• Self help instead of dependence
• Developing moral solidarity instead of unfair business practices

CHARACTERISTICS OF A CO-OPERATIVE SOCIETY

A co-agent society is a unique kind of business association not the same as different structures

of organization you have learnt prior. Let us discuss about some of its basic features and characteristics:

• Open Participation

The enrollment of a Co-Operative Society is interested in each one of those who have a typical interest. At least ten individuals are required to frame an agreeable society. The Co–operative Society Act does not indicate the greatest number of individuals for any co-operative society. Be that as it may, after the arrangement of the society, the member may indicate the greatest number of individuals.

• Willful Association

Any member my decide to join the society at any time on his wish. He may continue for as long as he wants and can leave the society whenever he wants. It is totally upon his discretion to be a part of the society.

• State Control

To ensure the enthusiasm of individuals, co-operative societies are set under state control through enrollment. While getting enrolled, a general public needs to submit details about the individuals and the business it is to attempt. It needs to keep up books of records, which are to be evaluated by government evaluators.

• Sources Of Finance

In a co-agent society capital is contributed by all the members. However, it can without much of a stretch raise credits and secure stipends from government after its enlistment.

• Service as its Objective

Co-agents are not shaped to augment benefit like different types of business association. The fundamental reason for a Co-operative Society is to give benefit to its individuals. For instance, in a Consumer Co-operative Store, products are sold to its individuals at a sensible cost by holding a little edge of benefit. It moreover gives better quality merchandise to its individuals and the overall population.

BENEFITS OF A CO-OPERATIVE SOCIETY

• Simple Arrangement

Formation of a co-operative society is an easy process compared to that of a joint stock company. Any ten members can arrange and form an association and can get it registered under the Co-operative Societies with the Registrar.

• Open Membership

Persons who have a similar intrigue may form a co-operative society. The society has a feature and benefit of providing open membership to any person who may like to join the formed association of this society.

• Democratic Control

A co-operative society is controlled in a vote based way. The individuals make their choice to choose their delegates to frame an advisory group that cares for the everyday organization. This board of trustees is responsible to all the individuals from the general public.

• Limited Liability

The obligation of individuals from a co-operative society is restricted to the degree of capital contributed by them. Dissimilar to sole proprietors and accomplices the individual properties of individuals from the co-agent social orders are free from any sort of hazard in view of business liabilities.

• Stable life

A co-agent society has a genuinely stable life and it keeps on existing for a drawn out stretch of time. Its reality is not influenced by the demise, bankruptcy, lunacy or abdication of any of its individuals.

TYPES OF CO-OPERATIVE SOCIETIES

Although a wide range of cooperative societies take a shot at a similar guideline, they contrast with respect to the way of exercises they perform. Followings are diverse sorts of cooperative societies that exist in our nation.

• Consumer’s Cooperative Society

These societies are framed to ensure the intrigue of general purchasers by making buyer products accessible at a sensible cost. They purchase merchandise straightforwardly from the makers and along these lines dispose of the middlemen during the process of distribution.

Examples for such cooperative society are Kendriya Bhandar, Apna Bazaar etc.

• Producer’s Cooperative Society

These societies are shaped to secure the intrigue of little makers by making accessible things of their requirement for creation like crude materials, devices and supplies, hardware, and so on.

Examples for such societies can be handloom societies like APCOO, Haryana Handloom etc.

• Co-operative Marketing Society

These societies are shaped by little makers what’s more, makers who think that its hard to offer their items separately. The general public gathers the items from the individual individuals and assumes the liability of offering those items in the market.

Gujarat Co-operative Milk Marketing Federation that sells AMUL milk products is an example of marketing co-operative society.

• Co-operative Credit Society

These societies are framed to give budgetary support to the individuals. The general public acknowledges stores from individuals and gifts them advances at sensible rates of enthusiasm for time in need. Village Service Co-operative Society and Urban Cooperative Banks are examples of co-operative credit society.

• Housing Co-operative Society

These social orders are framed to give private houses to individuals. They buy arrive, create it and build houses or pads and dispense the same to individuals. A few social orders additionally give credits at low rate important to individuals to develop their own homes. The Employees’ Housing Societies and Metropolitan Housing Co-operative Society are examples of housing co-operative society.

SOCIETIES WHICH MAY BE REGISTERED

This clause enumerates the societies which may be registered as a co-operative society under the provisions of this Act.[3]

The society which has as its goals the advancement of the monetary interests of its individuals as per cooperative principles and comprises of at least ten individuals and is established with the object of facilitating the operations of a society[4] and incorporates among its individuals no less than two enlisted cooperative societies can be registered as a cooperative society under The Cooperative Societies Act.

This article highlights the need of structuring housing complexes as cooperative societies. The aim of building housing complexes lies in the provisions under this act, as they focus on providing private houses to individuals at a comparatively low rate so that people who have low incomes can also build their own houses.
This works as the welfare of the people of the community, which is why housing complexes fall under the category of “Cooperative Societies.”

Now arises the question of how these housing complexes can be structured as cooperative societies?

Following are the provisions which are subject to the provisions of The Cooperative Societies Act which enumerates the procedure in which Housing Cooperative Societies can be formed and registered.

FORMATION OF A COOPERATIVE SOCIETY

A Housing Cooperative Society can be formed as per the provisions of The Cooperative Societies Act, 1912. The minimum requirement of the members for the formation of such society is ten, who have in them similar goals, motives and objectives for which they enter into a contract for the formation of such said society. These members may be the residents of the same locality, employees of the same organization, belonging to some group having affinity etc.

The basic idea that lies behind the formation of such Housing Cooperative Society is the achievement of the common motive and objective.

The application for the registration of such society falls under Section 6 of the Act.
The Act states that, for the purpose of the registration, a signed application by the members has to be made to the Registrar of The Cooperative Societies. The application has to be joined by three duplicates of the proposed tenets of the general public and the people by whom or for whose benefit such application is made should outfit such data with respect to the general public as the

Registrar may require. Further, the application should be made along with the registration fee.

The application form must contain the following information:

• Name and address of the society.
• Aims and objectives of the society.
• Names and addresses of the members of the society.
• Share capital and its division
• Mode of admission of new members
• A copy of the bye laws of the society

The Registrar examines the records, if these are according to necessities then the society’s name is entered in the enlist. A testament of enrollment is additionally issued to the society. The society will turn into a corporate body from the date said in the declaration.

References

[1] http://www.publishyourarticles.net/knowledge-hub/business-studies/what-do-you-mean-by-co-operative-society/759/

[2] The Indian Co-operative Societies Act, 1912

[3] Section 4,The Cooperative Societies Act

[4] Section 4 (b), The Cooperative Societies Act

In this article, Rajesh Tandon pursuing Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, discusses who can become an STP unit and how.

Introduction

Information technology and information technology enabled industries have contributed phenomenally to the growth of Indian economy, GDP, foreign exchange earnings and employment generation. A large part of this growth is dependent on India’s outsourcing/shoring provided by Indian IT companies.

Software Technology Parks (STPs) are export oriented projects catering to the needs of software development for exports. STPs can be set up by the Central Government, State Government, Public or Private Sector Undertakings or any combination thereof. An STP may be an individual unit by itself or it may be one of such units located in an area designated as STP Complex by the Ministry of Information Technology. Software exporters are served by software technology Parks of India i.e STPI through single window clearance. In addition, a number of IT enabled services are provided under STP I which encourages entrepreneurs to enter an IT arena. The software technology Parks coupled with hardware technology and high speed data communication have played a seminal role in the IT growth in India.

A Software technology Park provides the resources for consulting, training and implementation services. Services cover Network Design, System Integration, Installation, Operations and maintenance of application networks and facilities in varied areas.

Software technology parks have played an important role in development of the software export industry. Under STP Scheme, a software development unit can be set up for the purpose of development of software, data entry and conversion, data processing, data analysis and control data management or call centre services for exports.

The STP has got excellent infrastructure and a statutory support for furthering the growth of information technology industry in the country.

STPI

Software Technology Parks of India (STPI) is an autonomous body owned under Ministry of Electronics and Information Technology, Government of India and  was set-up in 1991, with an objective of promoting the Software Exports from the country and has played a seminal role in this regard having promotional role viz. implementation of STP/EHTP (Electronic Hardware Technology Park) scheme, set-up and manage infrastructure facilities and to provide other service like technology assessment and professional training. STPI offers leased line services to premium segment, where quality is of utmost concern.

STPI has a presence in many of the major cities of India including the cities ofBangalore, Chennai, Hyderabad, Kanpur, Kolkata, Mumbai, Nagpur, Lucknow, Pune and Surat.

STPI provides physical hosting for theNational Internet Exchange of India.Besides regulating the STP scheme, STPI centers also provide a variety of services including high-speed data communication, incubation facilities, consultancy, network monitoring, data centers and data hosting.

The tax benefits under the Income Tax Act Section 10A applicable to STP units has expired since March 2011. While the Government has chosen not to extend the Sec 10A benefits against the demand by the IT units, most of the STP registered SME units shall be affected, who now will have to pay Income Tax on profits earned from exports.

Aim of STPI.

• To provide statutory and other promotional services to the exporters by implementing Software Technology Parks (S.T.P)/ Electronics and Hardware Technology Parks (E.H.T.P) Schemes and other such schemes which may be formulated and entrusted by the Government from time to time.
• To promote micro, small and medium entrepreneurs by creating conducive environment for entrepreneurship in the field of IT/ITES.
• To provide data communication services including value added services to IT / IT enabled Services (I.T.E.S) related industries.
• To promote the development and export of software and software services including Information Technology (I.T) enabled services/ Bio- IT.

Discharge of necessary functions for achievement of the aim by STPI. 

The  STPI in order to achieve its aim discharge is following functions:-

• Establishes software technology Park/centres at various locations in the country and in doing so it further carries out following actions :-
• Establishes Infrastructural resources such as integrated infrastructure including International communication / Data center / Incubating facilities etc. for 100% export oriented units.
• Promotes secondary and tertiary locations by establishing S.T.P.I presence to promote S.T.P/E.H.T.P Scheme, and promotional schemes announced by Government.
• Promotes entrepreneurship through incubation programmes / seed funds / IP development and other awareness programmes.
• Works closely with respective State Government and act as an  interface between Industry and Government.
• Promotes quality and security standards in the I.T industries.
• Works jointly with venture capitalists for providing financial assistance to the I.T industries.
• Promotes entrepreneurship through incubation programmes / seed funds / IP development and other awareness programmes.
• Assist State Governments in formulating I.T policies and liaison for promoting the I.T industries in respective states to achieve an exponential growth of exports.
• Provide Project Management and Consultancy services both at national and international level in the areas of expertise of S.T.P.I.

Perform financial management functions which comprise of the following activities.

These are as under :-

• Maintaining of a fund for crediting of the following:-
• All fees and other charges received by the S.T.P.I.
• All money received by the S.T.P.I  by way of grants,  gifts, donations,  benefactions, bequests or transfers.
• All money provided by the Central Government, State Governments,    Corporations, Universities etc
• All money received by the S.T.P.I in any other manner or from any other source.
• Obtain or accept grants, subscription, donations, gifts, bequests from Government, Corporations, Trusts, Organizations or any person for fulfilling the objectives of the S.T.P.I.
• Deposit all money credited to the Fund in Scheduled Banks / Nationalized Banks or to invest for the benefit of the S.T.P.I  as may be prescribed. At least 60% of the funds shall be placed with the Public Sector Banks or in such a manner as may be prescribed by the Government from time to time.
• Draws, makes, accepts, endorse sand discounts cheques, notes or other negotiable instruments and for this purpose, to sign, execute and deliver such assurance and deeds as may be necessary for the purposes of the S.T.P.I.
• Acquires, holds and disposes of the property in any manner whatsoever for the purposes of the S.T.P.I, with the prior approval of Governing Council as per the procedure laid down by Government.
• Paying out of the funds maintained by S.T.P.I  or part thereof, the expenses incurred by the S.T.P.I  from time to time including all expenses incidental to the formation and reorganization of the STPI and management and administration of any of the foregoing activities including all rents, rates, taxes, outgoings and the salaries of the employees.

Quality Policy and Quality objective of STPI.

STPI has got a quality policy and quality objective which is achieved as under :-

• By having state of art data communication services as per acceptable standards.
• By having comprehensive service including project approvals, import attestation, oftware export certification in a time bound manner.
• Technology upgradation to meet customer requirement in ever-changing market.
• Achieving customer satisfaction through combined efforts of planning and execution of the projects through dedicated workforce.

STP Scheme

The scheme integrates the government concept of 100 percent Export Oriented Units (EOUs) and Export Processing Zones (EPZs) and the concept of Science Parks/Technology Parks. The salient features of this STP scheme are as under :-

• Approvals given under single window clearance scheme.
• 100% foreign equity permitted.
• All the imports of Hardware & Software in the S.T.P units are completely duty free, import of second hand capital goods also permitted.
• Re-Export of capital goods is also permitted.
• The sales in the Domestic Tariff Area (D.T.A) shall be permissible up to 50% of the export in value terms.
• A company can set up S.T.P unit anywhere in India
• The capital goods purchased from the Domestic Tariff Area (D.T.A) are entitled for benefits like exemption of excise Duty & reimbursement of Central Sales Tax (C.S.T).
• Capital invested by Foreign Entrepreneurs, Know-How Fees, Royalty, Dividend etc., can be freely repatriated after payment of Income Taxes due on them, if any.

The items like computers and computers peripherals can be donated to recognized non-commercial educational institutions, registered charitable hospitals, public libraries, public funded research and development establishments, organizations of Govt. of India, or Govt of a State or Union Territory without payment of any duties after two years of their import.

• 100% Income Tax Holiday as per section 10A of the IT Act. (Foreign Currency Earnings).
• 100% Customs duty exemption on imports.
• 100% excise duty exemption on indigenous procurement.
• Central Sales Tax reimbursement on indigenous purchases.
• Green card enabling priority treatment for Government clearances.

Who can become an STP unit?

STPs can be set up by following:-

1. The Central Government,
2. State Government, Public or
3. Private Sector Undertakings or any combination thereof.
4. An STP may be an individual unit by itself or it may be one of such units located in an area designated as STP Complex by the Ministry of Information Technology.

The mechanism for setting an STP.

Following actions need to be undertaken to become a STP :-

• Obtain Permanent Account Number (PAN) of your company from the income tax office.
• Obtain Importer-Exporter Code (IEC) fromdirector general of foreign trade.
• Getting RBI permission in case of foreign equity.
• Legal agreement with STPI
• Prepare a project report in a specified format to include the following :-
• Background of company and promoters.
• Area of expertise in software development and IT-enabled services.
• Profiles of key personnel in the organization
• Strengths and achievements of the company like potential market for software products, projects developed by the company and in-house expertise in the area of specialization.
• Financial arrangements of the proposed setup
• Export performance for last three years in cases of existing firms & last years Balance Sheet
• Space Requirement / Built up Land.
• Brochures of the software products / company or Annual Report for the previous year.
• Having a set of start-up approvals as under :-
• Approval to start a STP under SEZ
• Approval to start a STP under STPI
• Attestation of list of capital goods to be imported/purchased duty-free.
• Issue of leased line/shared Internet connection.
• Execution of various agreements/undertaking at the time of STP registration.
• Having a day-to-day compliances and approval as under :-
• Filing and Registration of contracts/purchase orders,
• Completing various formalities for the export of Software-manual or electronic.
• Filing of Softex Forms.
• Re-imbursement of Central Sales tax from STP
• Filing of Monthly Progress Report, Annual Progress Report, periodical forms, returns and statements with STP authorities.
• Obtaining Approvals from STPI authorities as under :-
• Purchase of Excise Duty Free Local equipments/goods.
• Import of second hand capital goods, import of goods for replacement, and import of goods repaired abroad.
• The enhancement/modification of imported goods limit.
• Inter-unit transfer and temporary removal of goods for repair/testing
• re-export of duty exempted capital goods.

Conclusion

Software technology Parks have made a major contribution in the country. It creates incubation space in most of the centres with Plug & Play facilities for start-up companies. These incubation services enable small and medium enterprises to set up operations at minimal fixed costs with low start-up investment, thereby encouraging entrepreneurship and creating jobs. The services offered covers network design, system integration, operation and maintenance of application networks and facilities. The end result is that these software technology Parks have given a phenomenal quantum jump to the country technologically.

BIBLIOGRAPHY

https://www.stpi.in/l1010l2020S301880l40222

https://en.wikipedia.org/wiki/Software_Technology_Parks_of_India

http://www.doitpunjab.gov.in/pdfs/projects/STPI.pdf

http://egov.eletsonline.com/2013/07/software-technology-parks-of-india/

https://www.youtube.com/watch?v=0qach-F3Xvw

http://www.letscomply.com/SEZ-and-STPI-Compliances.php

http://www.powershow.com/view1/d254f-ZDc1Z/Software_Technology_Parks_Of_India_powerpoint_ppt_presentation

Goa Chamber of commerce and Industry.

Information Technology department,Government of Meghalaya.

In this article, Pratyusha Kar pursuing Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, discusses the structuring advice will you give to an entrepreneur from the Middle East who wants to expand his business to India.

Introduction

India considers the Middle East as an influential source of investment in manufacturing, service and infrastructure development. In April 2016 during his visit to Riyadh Prime Minister Narendra Modi persuaded Saudi Companies to invest in infrastructure sector of India and to take part in developing smart cities and industrial corridors.  India procures 58% of crude oil from Middle East countries[1] with highest supply from Saudi Arabia followed by Iraq and Iran was the sixth highest in the period April 2015 to January 2016. World Bank data of 2015 reported that India received payment of US$ 12.57 billion from UAE, US$ 10.51 billion from Saudi and in the range of US$ 3 to US$ 5 billion from Kwait, Oman and Katar. Similarly more than 88% of liquefied natural gas also comes from Middle East States[2]. UAE is our one of the most important trading partner and several important UAE base companies like Dubai Ports World, RAK Ceramics, Emaar MGF, TECOM Investment etc. are having business relationship with India. Correspondingly, India’s fourth largest trade partner is Saudi Arabia. 2014 data showed that India is the 5^th largest export market of Saudi Arabia[3].

A vast middle class base with growing domestic consumption makes Indian market one of the most appealing consumer markets in the world. Moreover, cost-competitiveness, well-trained educated manpower and parliamentary democracy make India a perfect destination for investment.

Under these circumstances, it is very much needed to provide guidance to the entrepreneurs from Middle East to expand their business in India pertaining to entry options for business in India, entry procedures, investment routes, repatriation of investment and several restrictions.

Entry Options

A Middle East company willing to do business in India may have a non-corporate entity or corporate entity.[4]

To Set Up Non-corporate Entity

Liaison Office

Liaison office or an office representing the foreign company can be opened after getting permission from the Reserve Bank of India. The liaison office works in place of the principal and undertake the following activities apart from general liaison work.

1. To represent principal company or group of companies
2. To develop import/export in India
3. To build up technical and financial collaborations on behalf of parent as well as group companies.
4. To coordinate intercommunication among parent company, group companies and Indian companies.

Branch Office

A Middle East investor can operate in India by opening branch offices after taking specific approval from the Reserve Bank of India. A Branch Office is responsible for following activities.

1. Commodity import and export.
2. Delivering of consultancy services.
3. Building up of technical and financial collaborations for parent company and overseas group companies.
4. Representing principal and group of companies as buying and selling agent in India.
5. Promotion of software development and IT services.
6. Contributing technical support for the commodities, goods and products received from the principal company or group.

Branch offices may be on Stand Alone Basis where they are located in the Special Economic Zone (SEZ) alone and are not permitted to do any business outside the SEZ including the branches, subsidiaries or other offices of the principal Middle East Company. In order to set up branch office in the SEZ no permission from the RBI is required provided the branch office is located in the 100% FDI permitted SEZ, part XI of the Companies Act (Section 592 to 602) is obeyed by the unit, the unit acts on stand-alone basis and at the time of winding up process the branch approached an authorized foreign exchange dealer with supporting documents to transfer the revenues from wrap up as per FEMA.

Project Office

A Middle East company doing business in India may set up a Project Office in India without taking any permission from the Reserve Bank of India but the company must comply with some reporting formalities. Like branch offices the project office is also considered as an extension of the parent company and is taxed in line with the principal overseas company.

To Set Up Corporate Entity

Wholly owned subsidiary

Middle East overseas companies can establish wholly owned subsidiary companies in areas where 100% foreign direct investment is permitted under FDI policy. In order to register the company applications are to be submitted to the Registrar of Companies (ROC) as well as RBI. As soon as the company is registered under ROC and approval from RBI is obtained the company will be guided by the Indian laws and regulations like any other domestic Indian company.

The benefits of such companies are dissemination risk minimisation, powerful control over the subsidiaries and reduction in transaction costs, cost of negotiation, cost of transferring information, and cost of training.

Joint Venture (JV)

Investors of Middle East may set up joint venture companies with the Indian Companies or with the foreign companies in India. The laws controlling the domestic joint venture companies are also applicable for Middle East joint venture companies.

Benefits of JV companies are they can avail the existing marketing and distribution network of the Indian partner; they can get the financial support from its Indian companions, manipulate the tested contacts of the Indian partner, more flexibility to fulfil the demands under competitive environment. In all, it lowers the cost of entry in a foreign market.

The demerits of JVs are two companies are of different backgrounds, nationalities, experiences and ability and may cause problems in day to day activities and to ascertain long term goals. Chances of leakage of technical secrets bringing about future loss of the Middle East Company can occur.

Foreign Institutional Investor

Foreign Institutional Investors of the Middle East or their power of attorney holders can contribute in Indian financial markets covering the areas of mutual funds, pension funds, asset management companies and investment trusts. They can invest in the primary and secondary market securities which includes the company equities and other instruments of the companies that are already enlisted in the Stock Exchanges of India or to be listed.

Entry Procedure

As mentioned earlier that Middle East companies can set up their Liaison Office, Branch office and Project offices in India but their set up processes are as follows:[5]

Liaison Office

Permission for setting up of a liaison office of the Middle East business house is granted by the Reserve Bank of India initially for three years and thereafter the approval can be renewed further.

Branch Office

Branch Offices of the Middle East companies are set up taking approval from the RBI. No manufacturing activities are allowed in the branch office but are permitted to sub-contract with an Indian production unit. They may remit branch office profit to Middle East after paying Indian taxes as per RBI guidelines.

Project Office

Normally a project office is set up under automatic route without taking prior approval from the Government of India (GOI) or RBI. But they are required to inform regional office of the RBI and file the documents asked within 30 days of receipt of inbound remittances.

The Branch offices / Liaison offices / Project offices must obtain a certificate from the Registrar of Companies. Moreover, the Branch / liaison offices set up taking approval from the RBI are allotted a Unique Identification Number (UIN). These offices must have Permanent Account Number (PAN).

Company Incorporation

For incorporation of a Middle East company in India an application is to be submitted to the ROC for registration and once the company is registered it must abide by the rules and regulations like domestic companies. There may be two types of companies

1. Private Company

There must be at least two members in the company with minimum paid up capital of one lakh.

2. Public Company

A public company is a company which is not a private company. It may be subsidiary of a public company. There must be minimum seven members and three directors with minimum paid up capital of 5 lakh. Maximum number of directors can be extended to twelve ore more provided approval is accorded by the Government.

Process of Incorporation

Acquiring Director Identification Number(DIN) à To apply for name availability à Drafting of Memorandum of Understanding (MOU) and Articles of Association (AOA) à Court stamping of AOA and MOU à MOU and AOA signing à Filing with ROC à Vetting by ROC à Collection of Certificate of incorporation.

Subsequent Business Compliances

Depending on the business nature registrations for permanent account number (PAN), tax deduction account number (TAN), service tax, value added tax (VAT), excise, foreigners regional registration office (FERO) registration and obtaining import export code (IEC) are required.

Investment Routes

Foreigners are allowed to invest in India directly or through JV with some limitations related to investment amount and investment sector. Sectors where Govt. approvals are required[7] are (i) Mining and mineral separation of titanium bearing minerals and ores (100% Govt. approval), Food Product retail Trading (up to 100% Govt. approval), Defence (beyond 49%), Publishing/printing of scientific and technical magazines/specialty journals/ periodicals (up to 100 %), Publication of facsimile edition of foreign newspapers (up to 100%), Print Media – Publishing of newspaper and periodicals dealing with news and current affairs (up to 26%), Print Media – Publication of Indian editions of foreign magazines dealing with news and current affairs (up to 26%),  Air Transport Service – Scheduled, and Regional Air Transport Service (beyond 26%), Investment by Foreign Airlines (up to 49%), Satellites- establishment and operation (up to 100%), Telecom Services (beyond 49%), Trading SBRT (beyond 49%), Pharma – brownfield (beyond 74%, Banking – Private sector (beyond 49%), Banking – Public Sector (up to 20%), Private Security agencies (beyond 49%), Broadcasting Content Service a) FM Radio b) Up-linking of ‘News & Current Affairs’ TV Channels (up to 49%) and Trading MBRT (up to 51%).[6]

Sectors with automatic routes with conditions[8] are Agriculture, Plantation Sector, Mining of metal and non-metal ores Mining – Coal & Lignite, Manufacturing, Broadcasting Carriage Services (Teleports, DTH, Cable Networks, Mobile TV, HITS), Broadcasting Content Service – Up-linking of Non-‘News & Current Affairs’ TV Channels/ Down-linking of TV Channel,  Airports – Greenfield, Airports – Brownfield, Air Transport Service – Non-Scheduled, Air Transport Service – Helicopter Services/ Seaplane Services, Ground Handling Services, Maintenance and Repair organizations; flying training institutes; and technical training institutions, Construction Development, Industrial Parks -new and existing, Trading – Wholesale, Trading – B2B E-commerce, Duty Free Shops, Railway Infrastructure, Asset Reconstruction Companies, Credit Information Companies, White Label ATM Operations, Non-Banking Finance Companies, Pharma – Greenfield, Petroleum & Natural Gas – Exploration activities of oil and natural gas fields, Petroleum refining by PSUs, Infrastructure Company in the Securities Market, Commodity Exchanges, Insurance, Pension and Power Exchanges.

Investments which are not under automatic approval, the proposal is considered by FIPB. Technology collaborations with Middle East companies are allowed provided there are agreements on technical knowhow fees, payment for design and drawings, for engineering services and other royalty payments.

Repatriation of investment and several restrictions

Middle East investments are freely repatriable with some sectorial policies. Shares of non-residents can be sold without RBI approval. For selling of shares through own arrangements and not through authorised dealers permission is needed from RBI as per Regulation 10B of Notification No. FEMA. 20/2000 RB dated May 2000.

Restrictions

Locational restrictions are there in India and environmental clearances are needed before setting up of a unit.

Conclusion

An entrepreneur from Middle East having desire to expand his business in India has decide first whether he or she would go for non-corporate entity or corporate entity. Setting up of Non-corporate entity may require liaison office, branch offices and project office whereas setting up of corporate entity may be of Wholly Owned Subsidiary or Joint Venture Company or Foreign Institutional Investor. Although it is easy to set up non-corporate entities in comparison to corporate entities it is better to set up corporate entities because of operational clarity and greater control over the company.

References

[1] ^{http://internationalrelations.org/india-middle-east-relations.}

[2] ^{http://wwwcnbc.com/2016/05/19modi-news-trade-inveatment-diaspora-and-seccurity-factors-in-indias-middle-east-push.html}

[3] ^{http://www.indianembassy.org.sa/Content.aspx?ID=867}

[4] ^{http://investindia.gov.in/entry-options/}

[5] http://investindia.gov.in/entry-procedures/

[6] ^{http://investindia.gov.in/entry-and-investment-routes/}

[7] ^{http://dipp.nic.in/English/Policies/Sectors_Where_Government_Approval_Is_Required.pdf}

[8] ^{http://dipp.nic.in/English/Policies/Sectors_Under_Automatic_Route_With_Conditions.pdf}

In this article, Ramanuj Mukherjee, Co-Founder, and CEO at iPleaders discusses five most important qualities of a lawyer who want to set up a law firm.

Being a lawyer is a difficult job. You have to wear many hats, be different things for different people and go through different phases in your career working yourself upwards learning entirely different set of skills.

However, towards the beginning of establishing your practice (as a solo lawyer or as a partner in a startup law firm), there are certain skills and qualities that are critical. Everyone probably will offer their own lists here with some variation or the other, but I prepared this list taking into account Indian lawyers seeking to set up their own practice, either as a solo practice or starting their own law firm with some partners.

#1

Commercial awareness

This is number one skill for any lawyer, but especially those who want to set up their own practice as opposed to working under another lawyer. Think of all the studly lawyers from college who excelled academically and everyone expected them to excel in the practice of law. Many of them have not really done well in the long run.

Well, they are hardworking, with excellent legal knowledge or at any rate the ability to pick up new knowledge and skills. They make excellent entry level lawyers when working under guidance of a successful senior, but when it comes to starting their own practice, they really crash. Why is that?

Very often it is the critical element of commercial acumen.

All legal practice is limited by financial limitations. You can grow almost any practice to a very large scale and profitable level if you can work out the right unit economics. Unit economics, in basic terms,  is the sum of what you spend for doing any task and what you are able to charge your clients for the same. No matter how good you are at legal work, if you can’t figure this out well, your practice/ firm is unlikely to get far.

It is the unit economics that decide which work you accept, on which kind of work you specialize and how many people you hire.

Let me give you an example. I discovered that a lot of people are willing to pay upto 10k for getting a police complaint registered. This requires a lawyer to spend a lot of time in the police station, and 3 visits on an average. If the average number of visits can be brought down to 2, and 6 hours, filing a police complaint is feasible at 10k fees if you are hiring freelance lawyers in Delhi after keeping a 20% profit margin. It is even better to hire a lawyer at 30K salary per month if you are getting 10 such cases a month or expect to get them over time with minimal (negligible) marketing cost provided that those matters are within a smaller geographical area. If you are doing the work yourself, it is even better, but don’t expect to cross a monthly earnings of 1 lakh with this work. If you can get more work and hire several lawyers who can do this, you can expect to earn a lot more.

That’s unit economics. However, if your clients expect that you will get the FIR registered too, it can get tough, and the unit economics will be upturned.

I was able to create a very good money recovery practice based on that. Most up and coming Supreme Court lawyers, for instance, will charge you between  25,000-30,000 to file a writ petition in the Supreme Court. They know it takes about 3-4 hearings. Some cases will get dismissed on day 1. Some will get 6 hearing. However, at 30,000, they can do 4 hearings, drafting and filing comfortably. So they try to charge that much to every client. If a few of them goes on for a while, it’s ok. Unit economics delivers.

Unit economics is although not the only place where the financial acumen counts. It is the same for client work.

I was referring some work to a lawyer who was going to file it before Delhi High Court. I suggested that he should charge less upfront and 3 times the upfront charge when he delivers a favourable judgment, all agreed upon at the beginning. He was worried, since he charges 2 times of what I was offering upfront and nothing afterwards.

I explained the commercial logic. The judgment is worth hundreds of crores to the business. They are not sure if they will win, so they are conservative about what they should pay before the judgment. If you, however, are willing to take most of the money you charge after the favourable judgment, they will be willing to pay a lot more. A lot, lot more. On the other hand, lawyers are worried about how much they get right in the beginning. When my lawyer  friend submitted a quote accordingly (ensuring there is no illegality in form of contingent fees, of course), he was able to earn 6 times more than what he wanted to charge in the beginning, and the client was more than happy to pay it.

If you are a lawyer, it is very important to understand the client’s economic perspective. It creates win all situations and loyal clients. Even in big law firms, I saw this again and again. Transactional lawyers often get paid after the deal is closed, and a much smaller advance in the beginning. If they insist on a hefty advance, the deal may not come to them at all. Smaller boutique firms are often willing to wait for months to get their fee and it creates a huge competitive advantage. However, they have to know the unit economics of paying lawyers every month while waiting for clients to pay later. Without that, they are doomed.

If a client is trying to recover 5 lakhs of unpaid bill, and you know how to recover it at a cost lesser than 1 lakh, you will find it very easy to bag that client. You also need to communicate the economics of recovering to him. If he thinks it is going to cost him a lot of money, upsetting his economic gains, he will either find a cheaper lawyer or let the matter go altogether. You need to create acceptable choices for your clients that makes sense for the, to go with. That gets you business, so it is better you figure it out.

A lawyer who is not good at law but good at figuring this out, can still have a good practice as he can find other good lawyers to do the work. One of the biggest law firms in India, which I don’t want to name but people in the know will understand anyway, was built by such a lawyer who was great at personal relationships, economics of the law business and getting good lawyers to work from him. However, someone with bad commercial awareness is doomed to work for other lawyers forever unless they find a partner who is good with this.

#2

Ability to make long term investments over short term gains

A few of the lawyers I spoke to thought that this is the most important point and I should begin the article with this. I feel this is second most important quality, and even a skill to an extent, to be able to work for long term success rather than quick wins as a law practice.

Most people start practice of law in order to earn good money. It is natural that you can’t wait to be a millionaire when you finally start your own practice after crossing all the hurdles. However, if you do it just for the money, life is tough my friend, because it is incredibly difficult to make good money as a lawyer when you begin. Also, working on only with eye on the money will make you miss big opportunities.

It takes a lot of time to get become really good at what you do as a lawyer (probably just a handful of legal services and subjects). You need to be willing to work for less money, sometimes even for free perhaps, till you make it as a lawyer or a law firm.

Finding work can be very difficult, and pricing can be incredibly competitive. It takes long term in such a market to build trust with key clients, earn a reputation, hiring the right people to work with you, learning various aspects running the practice and deal with unforeseen setbacks. However, a smart lawyer knows every good deed today sows the seeds of financial and professional success of tomorrow.

One of the major challenge is to identify a niche where significant money can be made, competition is less, but volume of clients in sufficient and you can charge sufficiently to cover your costs and then earn a profit. Every law practice and every lawyer with a solo practice spends some time in the marketplace testing hypotheses for a while to figure out the right practice for themselves.

All lawyers and law firms are constantly looking over their shoulders to see if any other lawyer is doing well in something that they missed out. If they see you have discovered a nice and profitable niche that has little competition, they are likely to immediately flock into that market, increase competition and make things difficult for you just about when you have begun to get a hold of things and see some financial success. This is the point where you either defend your turf by creating a strong organization and retain loyal clients or fail and get absorbed by another law firm.

If you survive such attacks by upstarts and bigger law firms in your niche, then you still may face scaling challenges. You have to decide if you are going to keep entering new markets or stay focussed on the niche you have already chosen. It is a key decision that will determine what your firm will look like in years to come. Add to this the massive threat that automatization of legal work and lifting of ban on advertisement and solicitation by lawyers holds for Indian legal fraternity. In coming years, these will either help you to grow or make your life difficult.

These cycles takes years, and usually a decade or two to complete. Hence, it is critical not to declare yourself winner early – that will make you slow and unprepared, and when market throws a surprise you may not have the strength to fight back. Remember, it takes a long long time to make an established law firm, or even a solo practice.

Aim for early success, celebrate it, but do not get fooled into complacency by it.

#3

Resourcefulness and Obsession with success of the clients

Think of James Bond. No matter how bad the villain, how terrible the situation and how big a threat is, James Bond remains utterly cool and comes up with a fitting response. Lawyers must rise up to the occasion and battle giants for their clients. Lawyers must be what Paul Graham calls Relentlessly Resourceful for their clients, and they get paid for this.

There is no textbook for winning a court case exactly for this reason. No matter what you prepare for, situation will throw something new that you as a lawyer must handle. This requires relentlessly resourceful lawyers. This is the kind of lawyer who gets paid well and gets referred by their existing clients.

Be that lawyer who is obsessing about his clients success. Be the one who is ready to handle anything and doesn’t back down. Be the sort of lawyer who is hired because the client can then sleep peacefully.

It is a mindset to cultivate, not just a state you reach by many years of practice. If you set out to be a lawyer like this by design, you will become one.

And don’t forget, the majority of lawyers are nothing like this. They are bureaucratic, egoistic, proud. If they are not so at the beginning, as they begin to get success their attitude often changes.

Don’t be like those lawyers. Always obsess about the success of your clients, and so focussed on that alone that everything else fades in comparison. Your clients will notice it and you will be rewarded for it, a bit in the short term but massively in the long term as that reputation spreads.

#4

Networking and building lasting relationships

Every Tom, Dick and Harry will tell you how important it is for a lawyer to do networking to succeed. Sure. However, many of them think networking means going to events and exchanging business cards.

If you amass a large number of business cards it is not much likely to help you. Nor will sending random requests and unsolicited mails. That is not networking, that is pestilence.

Instead, create lasting and deep friendships and alliances based on mutual interests with people. Always start by adding value to the people you want to build relationship with. If you are a taker, and always bothered about what you are getting out of it, you will not make lasting powerful alliances. Success in true professional networking requires the ability to give value without worrying about what you are getting back right now. Even here, ignoring short term results and focussing of long term relationships give disproportionately better results over the years.

There are many lawyers who are good at getting the first instruction from the client. However, one must learn how to convert such first time clients into long-term clients who give you work, refer you to their friends and family, and root for your success. If you want to build a law practice of your own and are not willing to develop this as a second nature, it is going to be very hard.

#5

Hiring people and creating a winning environment for them

Some of you want to create law firms with many lawyers as associates and a few partners. There are others who want to run a law practice as a solo lawyer. No matter what you do, hiring the right people and giving them an environment where they can succeed, and setting them up for success, is a skill you must develop.

Even those who don’t hire other lawyers and run a solo practice, will need to hire other support staff (administrative and secretarial) in order to fully develop your practice and achieve the full potential of your practice. On the other hand, if you are building a law firm, hiring talented lawyers, giving them effective training and ensuring that they deal with clients well is the key to success. How would you ensure that they do their job in time, they way that you need them to and without negligence? What will keep them motivated and focussed? Do you need an organizational structure? More importantly, how will they relate to you? What will make them proud about their work?

These are the questions that every leader must face. If you want to start a law practice, you are talking about leading a team into legal battles every day, make no mistake about that. You are going to be a leader, and if you are not a good one, your team may not have a fighting chance.

How do you learn these skills and develop these qualities?

Where do you learn these skills and how do you develop these qualities? Well, there is no way you can just read this and learn these qualities. Sorry, that is just not going to happen. Learning the law from a course is easy, but how do you learn leadership by reading some text or watching a video?

However, what we can do is instigate you to think, to anticipate, to plan out things so that you set yourself and your practice up for success.

Once we can make you present to the challenges of setting up a law practice, and we make you explore different issues related to it, and you begin to make strategies to prevail, our job is done. At that point, we have succeeded.

Your job is to make yourself aware about the challenges, and engage with them with courage, tenacity and creativity. Let us know what are you thinking in the comments. We look forward to knowing your thoughts. You can check out our course on Law Practice Management from which we shared this lesson for all of you. It is available at a very discounted price for some time.

If you want to strengthen your knowledge in any area of law check out these courses. All the best!

In this article, Prateeksha Gupta gives reasons on why every law student should moot in their law school life.

“It is fair to say that a lawyer who has participated in a moot court is rarely surprised by questions that he or she may receive from the bench!”

-Honorable Timothy K. Lewis and Nancy Winkleman

INTRODUCTION

Society needs good and efficient judges, advocates, lawyers. Producing a good legal professional is no easy task. It needs tremendous efforts and commitment to achieve this.

Moot Court is one such activity which helps any law student become a good professional as it is associated with the study of law.

What is a Moot Court?

The term ‘moot’, according to Oxford and Chambers dictionary means, to propose for discussion; argue for practice; a matter about which there may be disagreement or uncertainty.
For example, it is a moot point whether men or women are better drivers. 

A Moot Court is a mock court or a simulated court where law students, like lawyers in a court room, argue before a panel of judges. It is merely understood as a next level of debating.

-Moot court is a law school activity and competition during which students participate in the preparation and arguing of cases in front of judges. The case and sides are selected beforehand, and students are given a set amount of time to prepare for the eventual trial.

Moot court involves appellate cases as opposed to those at the trial level, which are often called “mock trials”; Judges are usually law professors, attorneys from the community, and even members of the judiciary.[1]

-It is an artificially created arrangement with a get up similar to that of a real court where the participating students argue on hypothetical cases.

Let’s discuss in detail all about what exactly a moot court is about.

What happens in a Moot?

A team of merely three people is being formed which includes two speakers and one researcher. The speakers have to act like a lawyer and are pitted against the opposing team to present and argue its case in front of the judges.
Moot Court involves the judges who judge the particular running case. These judges are usually the law professors, attorneys. The members who are performing the activity research their respective sides thoroughly and walk arguments against the opposing team. The judges may ask question by time accordingly about the case which the pleader is bound to answer. Therefore, is need of understanding the facts of the case, their arguments and especially the pertaining law which the particular case demands.

How are Moot Courts conducted?

Moot Court competitions are held by various law schools and law organizations of the country. Some of the moot court competitions are invitation based, which means only selected law colleges and organizations are being invited in them by the organizers. Mostly moot competitions are open competition, where any law college can register and participate for the same.

When a moot court competition is announced, the organizing committee release the moot problem, which contains the facts of the case based on which you are required to prepare the moot court memorial.

A Moot Court Memorial is a formal document which either of the parties of the case i.e., Petitioner as well as the Respondent has to prepare which consists of the facts of the case, the arguments and the relief prayer which you want from the court of law.

Moot Court is a court room which is to an extent, similar to that of an ordinary court room but no general proceedings are being held here. It is basically a type of demo court being made for law students so that they can practice how to present their case and argue in front of the judges.

Why should a law student participate in a Moot Court Competition?

Mooting is considered as an important thing for a law student as it provides the student with the immense knowledge and practical aspects of the legal system. It helps the student to apply the prevailing law in the particular case. By doing such an activity, a student enhances his analytical, research and writing skills that practicing lawyers have in the, so that they can argue in front of the judge for his case in the best manner possible.

Participating in a moot court competition develops skills that are crucial for growing into a successful lawyer:

Team Work

While preparing for a moot court, a team of three students work and practice for the case together between 2 weeks to 3 months. Such a team consists students from different ideologies, thoughts, states and thus, working with them together in a team for a common object increases compatibility, endurance, greater communication and interpersonal skills.

Research and writing skills

Moot court problems are drafted and made up by law graduates and lawyers which need a real effort for a student to crack it! For that, hours of research, proper knowledge about the subject matter is required to be attained so that the team can make the best memorial.  Putting your argument into a logically good write up helps you improve your writing skills to a great extent. The more you research, the more you study, the more you practice, the better it is for you as it increases your level of knowledge to a wide area and you’ll be able to improve and enhance your research and writing skills accordingly which will benefit you in the near future.

Speaking skills

After knowing that you’ll be judged by an experienced lawyer or a professor, one gets to display the speaking skills as proficiently he can. A student can not be expected to get away with the speaking fluff just like that. Participating in such competition and speaking lets you get your fear out of yourself so that you can speak as confidently as possible.

Thinking on your feet

A student can not always be prepared for every question that a judge puts in front of him. In a moot court activity, you are forced to think on your feet and answer to the judge’s question. It depends upon the judge and on his way of judging that how he takes your response. The best way to keep the ball in your court is to think and analyze and answer the question to the best of your knowledge. It anyway helps you to think fastly and smartly when you know there’s an experienced person sitting in front of you waiting for your response. Some judges likes an aggressive speaker, while some might consider it to be offensive and prefer a speaker who is soft spoken. You will have to adjust with the style your judge carries.

The Gained Experience

Working in a team for so long makes good friends or may be enemies. Participating in a moot court means traveling from one city to another and meeting and chatting with new people, which is in itself an experience to count, and so is competing with different students from different law schools from all over the country. And the level of hype you’ll get if you get a chance to argue in front of a reputed Supreme Court judge, or a big legal firm’s partner, or some other reputed, experienced attorney. In the end, what you’ll take back with you is knowledge over the legal system, learning, fun and experience!

Your Ability To Understand The Issues On A Given Arrangement Of Facts

Knowledge Of Existing Provisions Of Law, Applicable On Those Legal Issues

Capability To Apply The Law On Those Facts To Solve The Legal Problem

Moot court helps in applying the theoretical law in our practical lives. The students are practically taught honesty of purpose, industrious engagement rendering justice as a judge, and helping to render justice as an advocate, serving of the society and philosophical free thinking and solving legal problems independently.

How mooting can help you in your career?

If you wish to go for job after you graduate in a big legal firm, you must always keep in mind that there are high probability that they consider “Moot Courts” as a factor to hire you. This is because mooting helps you gain immense practical knowledge about various fields of law, and which in a way also highlights your research skills.
Even if you do not wish to opt for a job after you graduate and prefer practicing in a court instead, mooting will be beneficial in the best way possible. This is so because it merely gives you an idea on how to argue in front of the judge in a particular case.
There is a great level of enthusiasm and confidence being built in a law student when he participates in a moot activity.

“Youth is not an achievement, it is an opportunity. Don’t let it pass by”

– Dr. Zakir Hussain, Former President Of India

This phrase signifies that when a person its youth period, he should not consider it as an achievement that he has gained something in his life; rather he should consider it as a golden opportunity in which he can gain ample of opportunities that might come in his way and utilize and grab it in the best way and manner.
Similarly, admission into a professional course is not an achievement which should be celebrated. Instead, it should be looked in a manner of utter most responsibility and professionalism which can be achieved and improvisation of skills to a great extent.

Relating the above said to the importance of a moot court for a law student, it helps the student to enhance his knowledge and skill in the field of legality during his course of graduation where he is already undergoing the study of various fields of law which is in other way, will help him to gain practical applicability of laws in our country. However, it’s not easy to learn the art of Mooting as it requires experience which might be time consuming and one might not have enough opportunities to learn from the trial and error method which might come from participating in a plethora of moots. An easy way to cut down on this time and still ace the game is by taking this online course which is prepared by the mooting experts of the country.

It is an opportunity for a law student to learn and perform how the court room actually works.

Explore the best Online Mooting Course. Bring Law School right at your doorstep. Check out the MOOTING SCHOOL. Be an ace mooter in 3 month.

[1] lawschool.about.com/od/lawschoolculture/a/mootcourt.htm

In this article, Rupali S. Akolkar discusses the procedural intricacies involved in Anticipatory Bail Application (ABA).

Anticipatory Bail Application

ABA stands for an Anticipatory Bail Application. A person who apprehends arrest can approach the Competent Court and request for grant of Anticipatory Bail. Anticipatory Bail literally means a Bail in Anticipation of Arrest.

The Constitution of India, 1950 under Article 21 states that: “No person shall be deprived of his life or personal liberty except according to procedure established by law.” Thus the life and personal liberty of any person is considered to be of utmost importance and it cannot be taken away unless it is as per the procedure established by law. Unlike other rights granted under the Constitution, these two rights, i.e. Right to Life, and Right to Personal Liberty are guaranteed to all persons irrespective of their citizenship, thus they are not restricted in their application to Indian Citizens alone.

Roscoe Pound, an eminent jurist, chief advocate of “sociological jurisprudence” and one of the greatest American Law Professors, aptly observed in his book “The Development of Constitutional Guarantee of Liberty” that whatever, `liberty’ may mean today, the liberty as guaranteed by our bills of rights, “is a reservation to the individual of certain fundamental reasonable expectations involved in life in civilized society and a freedom from arbitrary and unreasonable exercise of the power and authority of those who are designated or chosen in a politically organized society to adjust that society to individuals.” – Siddharam Satlingappa Mhetre vs State Of Maharashtra And Ors on 2 December, 2010

The Right to various types of Freedom is defined under Articles 19 – 22 of the Constitution of India, 1950. Article 19 guarantees right to freedom of speech and expression, assembly, to travel and reside in any part of India or practice any profession. These are not absolute rights, but are to be exercised subject to certain restrictions. Article 20 provides protection in respect of certain offences and acts as, for example, a protection in case of ex post facto laws, and prevents double jeopardy. It can be expressed in the Latin Maxim: Nemo Debet Bis Puniri Pro Uno Delicto. It means that no man should be punished twice for one offence.

This Article also acts against self incriminating laws. Thus Article 20 (3) specifically states that “No person accused of any offence shall be compelled to be a witness against himself”. Thus, according to the criminal jurisprudence, the accused is presumed to be innocent till his guilt is proved. This is one of the basis on which the Person requesting for anticipatory bail approaches the court. One of the considerations here is that it is an apprehension that he will be arrested because someone has made a complaint against him with malafide intent, ALTHOUGH HE IS INNOCENT, and the Law specifically states that he will be deemed to be innocent until proved guilty, and hence he should be protected by means of an anticipatory bail order.

In such cases often, the Courts will consider the nature and gravity of the alleged offence, Antecedents of the Applicant, his age, educational or family background, the possibility of the accused likely to commit the offence again, possibility of the applicant fleeing from justice, and factual circumstances of the case. These weigh heavily on the Judge’s mind in case of granting an Anticipatory Bail.

Article 22 provides safeguard in case of detention and states specific rights of the accused to know the grounds of his arrest, and to have his family or friends informed about the arrest, and to consult a legal practitioner of his choice. It also speaks of safeguards and preventive detention under certain laws.

Going to the dictionary meaning, the Black’s Law Dictionary defines Anticipation as an “Act of doing or taking a thing before its proper time”.

The same dictionary goes on to define Bail as “The order of a Competent Court or Magistrate that a person accused of crime be discharged from actual custody upon the taking of bail.”

The term “Anticipatory Bail” is not defined in the Code of Criminal Procedure. But it can be simply said to be a pre-arrest order granted by the Competent Court to release a person on bail in case he is arrested on a complaint of committing a non-bailable offence. In other words, it is a grant of bail order before arrest, in anticipation of arrest.

The Order granted by the Court comes into effect only when the person is arrested. Thus, the moment a person who is anticipating his arrest in a non bailable offence, is arrested, he will be able to get himself released, i.e. secure his freedom guaranteed under the Constitution, by using the order of the Court, of the Anticipatory Bail, granted to him. The Court may specify the terms and conditions, the amount to be paid for executing the bond, etc. The Court may also specify that the person who is released on an Anticipatory Bail shall remain present in the concerned Police Station every week / or any designated date regularly, and co-operate in the investigation. The Court may also impose conditions that the person shall not intimidate the victim or the witnesses and shall not tamper with evidence. Sometimes the person shall be restricted in movement and may not be allowed to leave the country without the permission of the Court.

While Anticipatory Bail grants freedom to the person, and is a great protection to people who are falsely implicated in non-bailable offences just to fulfill the personal vengeance of their rivals, there are certain conditions attached to this freedom, which often times the applicant, when he fails to comply, results in cancellation of the Anticipatory Bail leading to his arrest.

However if we go to consider the factual matrix of the freedom which is being enjoyed by a person who is yet to approach the Hon’ble Court for grant of an Anticipatory Bail, we will realize that the person is actually paying a cost for his freedom, by willing to impose on himself the conditions laid down by the Court, as against the complete freedom he was enjoying before the Order was granted in his favor. Thus inspite of the presumption of his innocence the accused is willing to subject himself to restrains in consideration for the assurance that he shall be set free on bail, in the event of his arrest. Thus it can be said that the accused is willing to bear the cost in order to alleviate his fear of being arrested.

The Code of Criminal Procedure, 1973,under Sec. 438 makes provisions for applying for Anticipatory Bail.

Sec. 438 of CrPC reads :

Direction for grant of bail to person apprehending arrest.

(1) When any person has reason to believe that he may be arrested on an accusation of having committed a non- bailable offence, he may apply to the High Court or the Court of Session for a direction under this section; and that Court may, if it thinks fit, direct that in the event of such arrest, he shall be released on bail.

(2) When the High Court or the Court of Session makes a direction under sub- section (1), it may include such conditions in such directions in the light of the facts of the particular case, as it may think fit, including-

(i) a condition that the person shall make himself available for interrogation by a police officer as and when required;

(ii) a condition that the person shall not, directly or indirectly, make any inducement, threat or promise to any person acquainted with the facts of the case so as to dissuade him from disclosing such facts to the Court or to any police officer;

(iii) a condition that the person shall not leave India without the previous permission of the Court;

(iv) such other condition as may be imposed under sub- section (3) of section 437, as if the bail were granted under that section.

(3) If such person is thereafter arrested without warrant by an officer in charge of a police station on such accusation, and is prepared either at the time of arrest or at any time while in the custody of such officer to give bail, be shall be released on bail; and if a Magistrate taking cognizance of such offence decides that a warrant should issue in the first instance against that person, he shall issue a bailable warrant in conformity with the direction of the Court under sub- section (1).

Thus the main purpose of such a provision is to prevent undue harassment of the person by pretrial arrest or detention.

Besides the 41^st and the 48^th Law Commission Reports contributing significantly to the development of this section, the 203^rd report has also contributed by suggesting the following amendments to this section :

Amendment of section 438

In section 438 of the principal Act, for subsection (1), the following sub-sections shall be substituted, namely:-

“(1) Where any person has reason to believe that he may be arrested on accusation of having committed a non-bailable offence, he may apply to the High Court or the Court of Session for a direction under this section that in the event of such arrest he shall be released on bail; and that Court may, after taking into consideration, inter alia, the following factors, namely:-

• the nature and gravity of the accusation;
• the antecedents of the applicant including the fact as to whether he has previously undergone imprisonment on conviction by a Court in respect of any cognizable offence;
• the possibility of the applicant to flee from justice; and
• where the accusation has been made with the object of injuring or humiliating the applicant by having him so arrested, either reject the application forthwith or issue an interim order for the grant of anticipatory bail:

Provided that, where the High Court or, as the case may be, the Court of Session, has not passed any interim order under this sub-section or has rejected the application for grant of anticipatory bail, it shall be open to an officer in-charge of a police station to arrest, without warrant the applicant on the basis of the accusation apprehended in such application.

(1A) Where the Court grants an interim order under sub-section (1), it shall forthwith cause a notice being not less than seven days notice, together with a copy of such order to be served on the Public Prosecutor and the Superintendent of Police, with a view to give the Public Prosecutor a reasonable opportunity of being heard when the application shall be finally heard by the Court.

(1B) The presence of the applicant seeking anticipatory bail shall be obligatory at the time of final hearing of the application and passing of final order by the Court, if on an application made to it by the Public Prosecutor, the Court considers such presence necessary in the interest of justice.”.

If we go into the Sub Clause (1) it states WHEN a person can apply for an Anticipatory Bail.

The reason given is :

WHEN a person has a reason to believe that he may be arrested on an accusation of having committed a non bailable offence,

Then he can approach the Honorable Court for grant of Anticipatory Bail.

So when can a person have a “Reason to Believe”?

This can occur when a cause has arisen where someone has gone and lodged a complaint against him in the police station. Many times when a person is called by the Police for inquiry and is informed about the complaint against him, it is only then that he apprehends arrest in the matter and approaches the Court. Other times the person is already aware that a particular person has gone against him to lodge a Complaint. Here the “reason to believe” should not be a mere apprehension or illogical fear, but should be something which can be put before the Court to determine whether the person is likely to be arrested or not.  However a FIR is not a condition precedent for making an application for Anticipatory Bail. This can be seen from various cases like K. Rajasekhara Reddy v. State of A.P., 1999 Cri LJ 1933  (AP), Gurbaksh Singh Sibbia v. State of Punjab, AIR 1980 SC 1632,  etc. In Thayyanbadi Meethal Kunhiraman vs S.I. Of Police on 1 April, 1985, it has been stated that “It is true that in order to invoke the provision it is not necessary that a case has already been registered or even a first information has been lodged.”. In Digendra Sarkar and others, 1982 Crl.LJ. 2197 it has been held that “The filing of an FIR is not a condition precedent to the application for anticipatory bail and in such case, the person having reason to believe that he may be arrested on an accusation of non-bailable offence may appear before the High Court or the Court of Session, not for the purpose of being taken into custody of the Court but for getting an order for his release in case he is arrested.”

When are provisions of Anticipatory Bail likely to be used?

These provisions can be useful when people are :

1. Falsely implicated by their rivals.
2. Implicated by people who use other influential people in order to get even with someone.
3. Victims of family feuds which give rise to false complaints against each other.
4. Victims of Marital discord, especially in case of dowry, which inevitably lead to implication of in-laws and other relatives of the husband along with the husband.
5. Implicated due to Political rivalry.
6. Implicated due to Professional rivalry.
7. Implicated due to some frivolous case being lodged against them to defame or disgrace them in the society or to impair their professional / personal/ family life.
8. Subjected to legal consequences due to some malafide or hostile intention of a rival.

The Sub-Clause further states that such a person can approach the High Court or the Sessions Court, indicating that both the Courts have concurrent jurisdiction in case of granting an Anticipatory Bail Order.  Thus a person can approach the Sessions Court or the High Court with a prayer to grant Anticipatory bail.

Now, when the person approaches the Court, the Court has to consider several factors as stated above, and also in the amended provisions. The nature of offence, the gravity, likelihood of repetition of offence, the possibility of accused absconding, the antecedents of the accused, the possibility of threatening the victim or witnesses, etc. are factors which are most often taken into consideration. This is a major decision, because the Courts are facing a conflicting situation where they have to safeguard the Right of Liberty of the accused person, as he is presumed to be innocent till proved guilty, and at the same time they have to weigh the safety of the Society and the Complainant and also ensure the completion of investigation of the case. Thus, though the Article 21 guarantees liberty, yet the right to an Anticipatory bail cannot accrue from it as a Fundamental Right. It can be merely stated to be a Statutory right which can be given “Subject to terms and conditions/ restrains on freedom” if the Court “thinks fit”. Thus the discretionary power of the Court comes into play where the Court has to apply its mind to determine whether there are reasons to believe that the person is falsely implicated, and whether there is a likelihood that the person will be arrested and at the same time ensure that if released on bail he shall not misuse his freedom and stay present during the investigation and the trial.

Sub Clause 2 states the conditions which can be imposed on a person while granting Anticipatory bail. These may include imposing conditions of attendance at the police station and cooperating with the investigating machinery. It may include restrictions on movement outside the country. It may also include execution of bail bonds or third party sureties. Sometimes the bank accounts are frozen or the passports are deposited to prevent absconding from the Country.

Sub Clause 3 states when the Anticipatory Bail order will come into action. It states that it will take action the moment the person to whom the order is granted is arrested. If the arrest is made by a police officer, without warrant, then if the person is prepared to give bail, then he shall be released on bail, while if the Magistrate is to issue a warrant against such a person, the Magistrate shall issue a bailable warrant to comply with the directions of the Court.

The major consideration in such a case is whether the accused needs to be present at the time of final hearing of the Anticipatory Bail application. Although the Law Commission Report has suggested the same, it is feared that in such a case the accused may be arrested if his anticipatory bail application is rejected. However in Cr. M. P. No . 978 of 2014 Balmukund Dubey & others Vs. State of Chhattisgarh & another, it has been held that since the amendment to section 438 (1-B) has been inserted but not brought into force by means of a notification, hence the presence of the accused at the time of final hearing or the necessity of his being in custody at the time of final hearing is not a mandate and can be dispensed with. The same has been held in Sandeep Kumar Bafna Vs. State of Maharashtra and Another AIR 2014 SC 1745. It is stated that “The conclusion of the Law Commission, in almost identical words to those extracted above are that: “when the applicant appears in the Court in compliance of the Court’s order and is subjected to the Court’s directions, he may be viewed as in Court’s custody and this may render the relief of anticipatory bail infructuous”. Accordingly, the Law Commission has recommended omission of sub-section (1- B) of Section 438 CrPC.”

When an Anticipatory Bail may not be granted?

1. In case of repeated offences of heinous nature.
2. When the Gravity of Offence is high.
3. When the accused has past antecedents.
4. When the possibility of the accused absconding or tampering with evidence or witnesses/ victims/ Complainant is high.
5. When a warrant is already issued by the Magistrate.
6. When offences are under the Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Act, 1989.

Thus it can be said that the purpose of Anticipatory Bail is to protect the accused from pre-trial arrest and detention and to protect his liberty as assured by the Constitution of India. However the grant of Anticipatory Bail is always after consideration of many factors by the Court.

Further the Accused has a right to file application before the Hon’ble Supreme Court if his application for Anticipatory Bail is rejected by the Sessions Court and the High Court.

Further to the grant of the Anticipatory Bail, the same can be cancelled if the accused breaches any conditions laid down at the time of granting the Anticipatory Bail. For example, if the person tampers with evidence or threatens the witnesses or the victim, repeats the offence, or commits a heinous crime, or has misused the liberty granted to him by becoming a threat to the society, or misappropriates huge amounts of public funds, or does not co-operate in investigation leading to seriously hampering the progress in the matter, or commits similar such acts, then his anticipatory bail order may be cancelled. Further an application to commit the person so released, to custody, can be made by the Complainant or the Prosecution also. The Anticipatory Bail can also be cancelled by the Same Court or the Higher Court if the Court or Prosecution finds new material or circumstances against the person so released.

The Apex court has laid down certain guidelines for issuing Anticipatory Bail which can be studied further from the following cases :

Gurbaksh Singh Sibbia and others vs. State of Punjab (AIR 1980 SC 1632) states that the Court must consider the following while deciding an application for Anticipatory Bail :

1. If the proposed accusation appears to stem not from motives of furthering the ends of justice but from some ulterior motive, the object being to injure and humiliate the applicant by having him arrested, a direction for the release of the applicant on bail in the event of his arrest would generally be made.
2. On the other hand, if it appears likely, considering the antecedents of the applicant, that taking advantage of the order of anticipatory bail he will flee from justice, such an order would not be made.
3. The nature and seriousness of the proposed charges,
4. The context of the events likely to lead to the making of the charges,
5. A reasonable possibility of the applicant’s presence not being secured at the trial,
6. A reasonable apprehension that witnesses will be tampered with
7. “The larger interests of the Public or the State” are some of the considerations which the Court has to keep in mind while deciding an Application for Anticipatory Bail.

In Bhardresh Bibinbhai Sheth V. State of Gujarat & Anr 5 2015 (9) SCALE 403, the court has held that    

1. Just because a charge of a graver nature has been added at a later stage, the Anticipatory Bail cannot be denied.
2. It is a settled legal position that the court which grants the bail also has the power to cancel it. The discretion of grant or cancellation of bail can be exercised either at the instance of the accused, the Public Prosecutor or the Complainant, on finding new material or circumstances at any point of time.”
3. No inflexible guidelines or straitjacket formula can be provided for grant or refusal of anticipatory bail because all circumstances and situations of future cannot be clearly visualized for the grant or refusal of anticipatory bail. In consonance with legislative intention, the grant or refusal of anticipatory bail should necessarily depend on the facts and circumstances of each case.”

Similarly Siddharam Satlingappa Mhetre V. State of Maharashtra – CRIMINAL APPEAL NO. 2271 of 2010 is an apt case for the study of Anticipatory Bail.

In this article, Nabin Singha pursuing Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, discusses SEZ and its tax structure in Tamil Nadu.

Introduction

A Special Economic Zone (SEZ) is a topographical area that is created to export merchandise and give business. SEZs are excluded from government laws with respect to taxes, quotas, FDI-bans, labour laws and other prohibitive laws so as to make the products fabricated in SEZ at an all around focused cost. The Category SEZ incorporates Free Zones (FZ), Free exchange Zones (FTZ), Industrial Parks (IP), Industrial Estates (IE), Export Processing Zones (EPZ), Free Ports, Free Economic Zones and Urban Enterprise Zones.

SEZ in Global Context

The term “Special” literally means privileged economic system and policies. The creation of the term special zone was made by Spain in 1929 with the expectation of enhancing the exports by value addition to the raw materials available in the country. Mr. Deng Xiaoping who made Chinese Economic marvel which has been proved in the last three decades. China has actualized SEZ arrangement in 1979, through which it opens the entryways of local market for western capital and technology. They chose the measuring scale for the accomplishment of economic liberalization policy is the pattern of SEZ in that economy. Subsequent to seeing the effective SEZ story of China, a few different nations likewise selected Chinese way, for example, UAE, Malaysia, Jordan, Poland, Kazakhstan, Philippines, Russia and South Korea. A large portion of the nations in South Asia, for example, Nepal, Bangladesh, Sri Lanka and Pakistan have attempted to advance their exports and furthermore make employment by setting up SEZs.

All the creating nations are focusing on export advancement as it assumes imperative part in economic development. A few measures are being adopted to enhance trade aggressiveness by the administration of the individual nations. In this specific circumstance, Export Processing Zones picks up its significance because of their catalytic role in advancing the export by granting outward introduction to the economies. In 1986, there were 176 zones crosswise over 47 nations which have been expanded to more than 3000 zones crosswise over 116 nations. By and by, there are more than 4000 zones crosswise over 130 nations.

SEZ in Indian Context

India likewise adopted the export advancement measures through Export Processing Zones (EPZ). Truth be told India is the first nation of Asia to have begun an EPZ in Kandla, in 1965. It was trailed by the Santacruz Export Processing Zone (SEPZ) which came into operation in 1973. Afterward, the Government of India (GOI) began five more EPZ amid 1980s in five unique states Uttar Pradesh, West Bengal, Kerala, Tamil Nadu and Andhra Pradesh in the accompanying urban communities Noida, Falta, Cochin, Madras and Visakhapatnam respectively. Another EPZ came into operation in Surat in 1998.

However, EPZs have confronted a few confinements and bureaucratic bottlenecks in the advancement of exports. With a view to conquer the deficiencies experienced by virtue of the variety of controls and clearances; absence of world-class infrastructure, and an unsteady financial administration and with a view to attract larger foreign investments in India, in April 2000, the Special Economic Zones (SEZs) Policy was announced. Based in this, the EXIM policy, The Government Of India (GOI) has propelled another plan of Special Economic Zones (SEZs) in 2000. Under this plan, the EPZs at four spots, Kandla, Santa Cruz, Cochin and Surat were changed over into SEZs. Going forward, in 2003, the other existing operational EPZs at Noida, Falta, Madras and Visakhapatnam were additionally changed over to SEZs. Notwithstanding that, endorsements has been surrendered to set 26 SEZs in different places in India, which include SEZs at Positra (Gujarat), Paradeep (Orissa), Nanguneri (Tamil Nadu), Kulpi (West Bengal), Bhadohi and Kanpur (Uttar Pradesh), Dornagiri (Maharastra), Kakinada (Andhra Pradesh) and Indore (Madhya Pradesh).

The policy proposed to make SEZs a motor for economic development bolstered by quality framework supplemented by an alluring monetary bundle, both at the Center and the State level, with the minimum possible regulations. SEZs in India worked from 1.11.2000 to 09.02.2006 under the rules of the Foreign Trade Policy and fiscal incentives were made viable through the rules of relevant statutes. To ingrain trust in speculators and flag the Government’s commitment to a stable SEZ strategy administration and with a view to give strength to the SEZ administration along these lines producing more prominent financial movement and employment through the foundation of SEZs, a far reaching draft SEZ Bill arranged after extensive discussions with the stakeholders. Lots of meetings were held in different parts of the nation both by the Minister for Commerce and Industry and additionally senior officials for this reason. In May, 2005 The Special Economic Zones Act, 2005, was passed by Parliament which got Presidential consent on the 23rd of June, 2005.The draft SEZ Rules were broadly talked about and put on the site of the Department of Commerce offering proposals/remarks. Around 800 proposals were gotten on the draft rules. After broad interviews, the SEZ Act, 2005, upheld by SEZ Rules, became effective on 10th February, 2006, providing for drastic simplification of procedures and for single window clearance on matters relating to central as well as state governments.

The principal destinations of the SEZ Act are:

1. Generation of additional economic activity
2. Advancement of exports of goods and services;
3. Advancement of investment from domestic and foreign sources;
4. Formation of employment opportunities;
5. Improvement of infrastructure facilities;
6. Maintenance of sovereignty and integrity of India, the security of the State and friendly relations with foreign states

Status of SEZ in Tamil Nadu

A Substantial development of export execution has seen the achievement of Tamilnadu Special Economic Zone (TSEZ). Tamilnadu Special Economic Zone refers the specified area within the territory of the state of Tamilnadu where the recommended standards and other customary administrative practices and limitations are not applicable. With the end goal of setting up of numerous Special Economic Zones (SEZs) in Tamilnadu, the state government has encouraged the SEZ Developer by means of exemption from federal laws, taxes, quotas, etc.

The government of Tamilnadu has expanded their assistance in setting up of SEZ so as to enhance the economic development, Industrial improvement and to create greater work openings. The Special Economic Zones helps in bringing the residential speculation as well as the outside venture which thusly enhance the framework, fast development in export, formation of greater work openings, giving world class items and expanded remote income. As the focal government open entryways for changed cross national speculation, the state government Tamilnadu has catalyzed the Foreign Direct Investment (FDI) for enhanced export execution. Tamilnadu has different SEZ in Chennai and Kanchipuram district and many other places where SEZs are being set up in the condition of Tamilnadu, are Coimbatore, Hosur, Tuticorin, Ennore, Thirunelveli, and Vandalur.

The Tamilnadu SEZs which are being set up in the state would suit organizations from different divisions, for example, Information innovation, Electronic Hardware, Pharmaceuticals, calfskin ventures, Engineering businesses, Textiles industry, nourishment preparing industry, Bio innovation, multiproduct, multi administrations, transport supplies, footwear industry and automobiles.

There are different motivations that the Tamilnadu government gives to TSEZ are that the SEZ is cleared through Single Window Clearance (SWC), the engineers of SEZ and the mechanical units with the SEZ are exempted from assessments, for example, Turnover Tax, Sales Tax and Value Added Tax (VAT). Notwithstanding that all the modern units in SEZ won’t need to pay enrollment charges and stamp obligation towards land Transaction. Further there are numerous different motivations given to TSEZ by the Tamilnadu state government are, the work principles will be rearranged for the SEZ, the legislature my give extra offices like Post Office, Police Station and Fire benefits yet the cost of such offices should be caused by the create of the SEZ and all the mechanical units that are situated inside the SEZ will be announced as Public Utility Services. The state power board guarantees the constant supply of energy to every one of the units inside the state, adequate supply of water and upkeep of lawfulness inside the SEZ.

Fiscal benefits to TSEZ

The monetary strategy concerning TSEZ refers that the administration has planned tenets and directions for SEZ that identifies with financial movement, pay circulation and asset allotment. The Tamilnadu government has embraced an effective and gainful policy for SEZ to upgrade the development of TSEZ in the state to go up. This is for the most part because of that SEZ brings more cash and business openings in the state which brings about monetary development and industrial improvement of the state.

The following support was given with a specific end goal to draw in more organizations to set up their units in the SEZ in the state.

• Import of goods for the purpose of operation, development and maintenance of the units in SEZ are duty-free.
• Exemption of 100% income tax on export income for the units that are within SEZ for the period of five years.
• 50% income tax exemption for next five years.
• Exemption from all other kinds of taxes – Sales tax, Excise duty, Customs duty, Mandi tax, Purchase tax and Electricity cess.
• All the units within the SEZ are exempted from paying the Minimum Alternate Tax (MAT).
• Industrial units in the SEZ can receive 100% Foreign Direct Investment (FDI).
• VAT and Sales Tax is applicable for the goods produced in SEZ when they are sold in local market.

The financial support gave by the State legislature of Tamilnadu has urged the designer to set up increasingly SEZ in the state. This has brought about the quantity of SEZ in the state, expanded in procures and limits in the most recent couple of years and numerous new SEZ has come up soon. It is important to proceed such amicable Fiscal arrangement by state government for the successful execution of SEZ keeping in mind the end goal to get positive Net Foreign Earnings (NFE). Thirty-three operational SEZ are there in Tamilnadu including Central government approved, Prior to SEZ Act and under SEZ policy 2006.

Conclusion

The present SEZ scenario proved that they are performing well. Therefore, both the central government and the state government have to continue the encouragement for more exports and constant support for the developer to reach the position of industrial sustainability in order to generate more employment opportunities.

The best improvement area of Indian Industries is Special Economic Zones (SEZ). The SEZ Policy was executed from 1.11.2000 to 9.2.2006 under the provisions of Foreign Trade Policy (FTP), gives monetary motivations through the provisions of SEZ Acts and Rules. The Indian SEZ arrangement means to make SEZs as a powerhouse and fare motors for financial development. These SEZ are upheld with world class framework alongside appealing financial motivating forces and tax rebates, both the union and the state level. The present SEZ situation proved that they are performing admirably. In this way, both the central government and the state government need to proceed with the consolation for more fares and steady support for the engineer to achieve the position of modern manageability keeping in mind the end goal to produce greater work openings.

In this article, Nehal Nikhil Wagle pursuing Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, discusses Ten must-have clauses in an advisor agreement for a business advisor who will receive equity in exchange for advisory services in the context of fundable startups. 

In recent years it has been observed that the traditional approach towards the business industry has changed drastically and has resulted in great revolutionary change and overhaul. Thus, nowadays structuring of the business has become more liberal and creative. One such recent development is what is known as start-ups. Since then, start-up models have been widely and open mindedly accepted by the market. However, lack of prior knowledge and experience has given rise to a number of problems. As a result of which the idea of Advisory board has evolved.

An advisor is a person who possesses specialized knowledge, expertise and on field experience. Such a business advisor becomes a valuable addition when the entrepreneur has little or no knowledge about the market and its reactions. A business advisor aids in overcoming the difficulties or challenges likely to be faced by startups. As a result of which most of the markets in current market era tend to strike a deal where in advisors are offered equity in return of the services rendered by them. The first hurdle that the entrepreneurs need have to come across is to zero in about the equity to be offered coupled with the services expected and the role of the advisor. This leads entrepreneurs to the need of an agreement between advisor and startups. It has been rightly said that agreements arose when there is a need to draw line of limitation. Result of which is known as advisors Agreement. The advisor`s agreement addresses the details about the equity to be offered to the advisors along with the roles that they are expected to play and the rights they will have a vis-a-vis the company. Following are 10 most important clauses in an agreement.

Following are the 10 most important clauses

1. Services

Where a particular service is being offered, accepted, promised and delivered upon a consideration it becomes extremely difficult to draw the lines pertaining to nature and extent of services to an agreement. Advisors agree to act as an advisor for the company and extend their advisory services on matters prescribed within the agreement. The services rendered by an advisor cannot be exhaustively specified or laid down in the agreement. Thus to overcome this inability it is important to mention and specify the nature of services that have to be rendered by the business advisor under normal circumstances. However such normal circumstances must also include not so obvious conditions in a flexible manner so as to include a provision to expand the same in times of need.

2. Term and Termination

This clause specifies the tenure for which a business advisor is required to render service. It is important for all kinds of agreements to include lock in period so as to avoid any kind of losses. Determining the exact period will help the advisor to know the tenure for which he will be rendering the service.

Under this particular type of agreement, it is required to mention the termination clause. Notification clause comes along and finds its place as a sub clause under term and termination clause.

From point of view of advisor it is very important that he knows the exact tenure for which he has to dispense his advisory services to the company.

3. Compensation

The popular choice of the day is equity based compensation. This implies that advisor is not paid remuneration or entitled to cash compensation. Almost all startups recently have adopted this way of compensation policy and the same is mentioned in agreement. Provisions of companies act, 2013 has mandated every shareholder to buy share for or at a minimum face value. So vogue in this regard is allotting shares at face value. This is one the most important clauses in agreement. The usual method is to seek approval of board of directors to authorize the compensation that advisor will receive. The advisor has to buy these shares at face value as opposed to the premium rate fixed according to valuation that investors or other buyers have to pay.

4. Expenses

A company has to reimburse an advisor for reasonable travel and related expenses incurred by him while working for the company. Thus comes the expense clause. This clause contains the mode and manner in which expenses have to be reimbursed to a business advisor. It is also to be noted that this clause also lays down the limit of reimbursement so as to bring reasonableness from part of company as well as advisor. This clause is generally incorporated in an agreement so as to avoid any further conflict of interest. This clause is beneficial to business advisor as it helps him to know the extent as well as nature of expenses for which he would be reimbursed.

5. Confidentiality

The term Confidentiality is a set of rules or a promise that limits the access or places restrictions on certain types of information pertaining  to sensitive information such as technical data or know-how(whether disclosed  before or after  signing the advisor`s agreement) including but not limited to, information relating to business, products, manufacture process, trade, research, designs ,process, Designs, drawings, marketing or any other information which under certain conditions or circumstances appear to be confidential.

Information in wrong hands and at unfortunate times can be deadly and cause severe losses to an entity. One of the important facets of company is to protect its sensitive information, policies or strategies. Thus, a confidentiality clause is the one where parties to an agreement agree not to share information obtained from certain course of business or any other party. This is in short a restraint clause in a sense it restrains an advisor from disclosing certain sensitive information of the company which can be misused to case huge damage or losses to the company.

6. Nature of relation

An advisor in no manner is an employee of the company; neither the advisor assumes the nature of service provider or a shareholder who holds sweat equities. It is extremely important to draw an outline and limitations defining the nature of relationship. This avoids the tussle over the claims that may arise when advisor claims in another capacity or when company turns around and starts treating the advisor in a manner which is likely to be contrary to conditions specified in agreement.

7. Intellectual property

Intellectual property is a legal concept which refers to knowledge, techniques, writings, and images that are intangible but often protected by law via patents, copyrights, and trademarks. It is important to expressly lay down the rights vested in advisor in dealing with the assets of the company which includes intellectual property. Along with the agreement of confidentiality, the advisors agreement should also emphasize on the intellectual properties developed by the advisor or through his advice. It is to be noted that the advisor has access to the intellectual property of the company as long as he is in connection with advisory services rendered to the company. Thus, this particular clause emphasizes the extent to which advisor has right over aforementioned properties of the company.

8. Dispute Resolution

The Apex Court through various precedents have emphasized on adding arbitration and other alternate dispute resolution methods such as negotiation and mediation in an agreement. The existences of such clauses have become a necessary concomitant in all bilateral agreements in the field of business. It aims at speedy settling of disputes and avoids heavy litigation cost and long time-consuming process involved in the court of law.

9. Governing law and Jurisdiction

It is expedient to mention the laws that were or are applicable to when the agreement was entered into. It is necessary to add in clear and plain terms the governing law as well as the jurisdiction within of the court where the parties intend to pursue the case in case the arbitration fails or is not opted for. It is important to note here that the apex court through various precedents has established that use of words and expression such as the dispute resolution mechanism, governing law as well as jurisdiction are important clauses in an agreement.

10. Conflict of Interest

The advisors agreement specifies the duties and the rights of advisor in relation to his dealings with the company. This is done to avoid unnecessary conflict. It is the duty of the advisor to make a disclosure before the company immediately when he is himself working with any competing business or company. To understand this concept let us take an example, where an advisor is asked to be part of the company which is prime competitor of already engaged business or company. Such a situation may put the interest of both the companies in jeopardy. After such a disclosure is put forward by advisor the company shall put it under review as to whether the advisor`s working with such a competitor company is in conflict with the interests of the company.

The above-mentioned clauses are pertinent to a service agreement and are likely to prevent unforeseen complications that may arise in the future.