In this article, Kinjalkini Rai Choudhary, pursuing a Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, and Anith Johnson, pursuing a Diploma in Companies Act, Corporate Governance and SEBI Regulations from LawSikho.com discuss Practical and Procedural Aspect for Conveying and Conducting Board Meetings and General Meetings.

Introduction

The object of a company is to ensure good corporate governance by increasing the transparency and the accountability of the company. Section 118 (10) of the Companies Act 2013, makes it necessary on companies to observe a secretarial standard regarding all the general and board meetings as The Institute of Companies Secretaries of India mentions it. The process of board meetings is first held then it relates to the general meetings.

Meeting Procedures

Board Meetings

The Board meetings or the Management meeting is the part where one can play their part in the governance of the body. As it is given in the rules all the Directors or Committee acts as a whole, mainly the board or the committee should think and do all the activities as one particular body and not like collection of individuals. Any directors or committee persons are not allowed to make any decision outside their meeting unless they are given authorization about such meeting in some way.

The members of the board or the committee must make it sure to meet regularly and to have an effective control over the work and executive management of the company. The Board when having their meeting should have decided a formal schedule of matter to discuss and take any such decision so that the control of the company is totally in their hands.

Convening of Board Meeting

SS-1 provides the guidelines for convening a board meeting. Any director, company secretary or a person authorized by the board can convene a meeting of the board in consultation with the chairman, or in his absence with the managing director or in his absence with any whole-time director. Each board meeting shall have a serial number. Directors can also participate in the board meeting through video conferencing or other audio visual means unless it is prohibited by the Companies Act, 2013.

Chair

Chairman is the head of the board of directors and is expected to be independent while taking decisions. The term Chairman is not defined under the Companies Act, 2013. AOA of the company provides the manner and procedure for the appointment of Chairman. If AOA doesn’t provide for the appointment of Chairman then the board of directors will appoint among themselves a person who will be the chairman. The chairman has to maintain high standards of corporate governance in the company. 

According to SS-1, chairman has to ensure the required quorum is present at the board meeting. If the chairman is interested in any item of business then he/she shall entrust the proceedings to other non- interested director. This is only applicable to public companies and not private companies. In the case of Related Party Transaction, the chairman must disclose his interest and shall not participate or vote in the meeting.

The Directors are elected in the way for one of their own to preside and rule. The articles of the constitution states that the chair which is elected if not present within 10 minutes of the appointment meeting, then one can choose someone else to chair that meeting.

The primary work of the chairperson is to see through the meeting and be in a greater position and authority than the other directors, though there is not any legal support for such view.

The article of constitution gives the chairperson a casting and deliberative vote in the cases where there is equal voting rights, but it should be kept in mind that this right can only be given by the articles. The casting vote shall not be used so as a result might not be an unjust or inequitable.

Frequency

As per section 173(1) of the Companies Act, 2013 a company is required to hold a meeting with the board of directors within 30 days of its incorporation. Each company will hold at least 4 board meetings in a year and not more than 120 days shall intervene between 2 board meetings. 

According to SS-1, all independent directors are required to meet once a year to review the performance of non-independent directors and the board. The Company Secretary shall facilitate such a meeting if it is desired by the independent directors. 

Quorum

Quorum means the minimum number of directors required to hold a meeting. The presence of directors is very important to make important decisions for the company. As per section 174 of Companies Act, 2013 the quorum for a board meeting shall be one-third of its total strength or two directors whichever is higher. The Articles of Association (AOA) can also provide for a larger quorum but then board meetings should be held as per AOA.  If there is a lack of quorum then the board meeting shall be adjourned unless the articles state otherwise. The meeting shall be adjourned to the same day in the next week and if the adjourned date is a national holiday then it will be conducted on the following day.

As per SS-1, if the quorum is reduced below the minimum fixed number then no business decision shall be taken. Every company shall maintain an attendance register for the meetings. It shall contain the details of the meetings and it shall be signed by the directors. If the directors are attending through electronic means then the chairman shall take a roll call.

If the company is a public company then it must have at least two directors who will have the right to vote relating to the matters at a board meeting or else a quorum cannot be present.

If the company is a proprietary company, then the decision lies up to the director to set up the number of members which are necessary to form a quorum at a board meeting, but if it is not done so then most of the articles state that it is two other than those with single director companies.

Usually, many of the companies may disqualify any director from voting because of any interest, which might be there before any meeting takes place and is not counted towards the quorum. Such many other bodies might not make such similar provisions.

What one cannot do is willfully stay away from boards meetings to prevent the quorum and hamper the business. For example where there is a board of two which two forms the quorum, of those two one cannot stay away or avoid the business to take place.

Attendance

The general duty of the board is to work and care with diligence. The duty shall not bind one to attend all the board meetings but one has to attend whenever there is a reasonable circumstance. One cannot refuse to attend board meeting to do away with business by denying the quorum. The directors must report how many board meetings were held in the year and how many meetings each director has attended. It is important to attend the meeting when possible by the director and try not to be excluded from such board meeting.

When a director takes part in excluding him improperly from the boardroom of a fellow director then he may be sued penalized personally for such act.

Notice

Section 173(3) of Companies Act, 2013 mandates that all directors must be informed through a notice at least 7 days before the board meeting. The notice shall be in writing and has to be sent to the registered address of the director through hand delivery, registered post or by electronic means. A board meeting can also be called on a shorter notice period provided that at least an independent director should be present at the meeting. If the independent director is not present then the board decision shall be circulated and it shall be final only after ratification from the independent director. An OPC, small company or dormant company shall have at least one meeting in each half of the calendar year and the gap between 2 meetings shall not less than 90 days. 

As per SS-1, the notice shall be issued by the Company Secretary and if there is no Company Secretary any director or any person authorized by the board will be responsible for it. The notes on the agenda of the meeting shall also be provided to the directors seven days before the meeting. The notes will cover relevant facts regarding the items which require approval by the board. If the board meeting is adjourned then the notice shall be given to all the directors.

Just and reasonable notice of the board meeting should be given to all the directors and committee persons as required. If the meeting is invalid then all the members of the board who are actually present will be saved for the next meeting or the notice might be simply waived. For example in 1993 it happened that of not giving notice when the board of the church had met to decide an important issue which was involved about their membership. One of the members was then overseas and as not given such notice. When he had returned he complained that the meeting was invalid and the court upheld his claim.

A reasonable notice actually means that to have a usual practice of meeting by the body of members. If the board meets at a fixed time and fixed destination every month than a notice need not be given and may be considered unnecessary. If the company has a usual practice to give verbal notices than such notice would be reasonable.

It should be kept in mind that the notice must be given to all the directors. Notice, which is given to majority, shall not validate or help in the proceedings. Where notice giving becomes less important that is in the case of instant meeting. Sometimes there is a need to hold meetings instantly then notice may not be served. If the director feels that an instant meeting is foisted on him than he may complain about it instantly.

One may feel obliged to participate in the meeting, but if someone challenges the meeting later, then it will be accepted that your participation was an unwilling one.

Video Conferencing

According to Section 173(2) of Companies Act, 2013 a director is allowed to attend a board meeting either in person or through video conferencing. Rule 3 of Companies (Meetings of Board and its Powers) Rules, 2014 provide for the guidelines to conduct a board meeting through video conferencing or other audio visual means. The procedure for convening a board meeting through video conferencing is as follows:

• All necessary arrangements shall be made by the company to avoid the failure of video or audio visual connections. 
• The chairman or company secretary must ensure that security protocols are followed to safeguard the integrity of the meeting. The chairman shall ensure the availability of audio-visual equipment or other facilities required for the effective participation of the directors. The chairman shall also record proceedings of the meeting and prepare minutes of the meeting.
• The notice must be sent to the directors 7 days prior to the board meeting. The notice shall inform the directors about the option available to them to participate through video conferencing or other audio visual means.
• If a director intends to participate through video conferencing shall give prior intimation to the chairman.
• A roll call shall be taken by the chairperson at the commencement of the meeting. Every director participating through video conferencing shall state for the record the following:-

1. Name;
2.  Location of the director;
3. That the director has received the agenda;
4. No other director is attending the meeting or the having access to the proceedings of the meeting at the location mentioned in clause (b). 

• The chairman shall inform the directors that the required quorum is complete and ensure their presence throughout the meeting. 
• Each director shall identify himself for the record before speaking on any agenda or item. If the statement is interrupted due to any technical reason then the chairman shall request for a repeat by the director.
• If a motion is objected and a vote is required then the chairman shall call the roll and note the vote of each director. Each director shall identify himself while casting the vote.
• At the end of each agenda item, the chairperson shall announce the summary of the decision taken. 
• The chairperson shall prepare the minutes and it shall contain the particulars of the directors who attended the meeting. The draft minutes shall be circulated among all the directors within 15 days of the meeting either in writing or in electronic mode. Every director shall give his comments on the accuracy of recording of proceedings within seven days or within a reasonable time as decided by the board. 
• The minutes shall be entered in the Minute Book as specified under Section 118 of Companies Act, 2013.

Minutes

As per Section 118 of Companies Act, 2013 every company is required to prepare the minutes of a board meeting. It shall include the names of the directors present at the meeting and details of the resolution. The minutes shall contain a fair and correct summary of the board meeting and it is the discretion of the chairman with regard to the inclusion and non-inclusion of any matter. It is mandatory for every company to maintain a minute book and it should not be tampered. Section 118(12) of Companies Act, 2013 provides that if a person is held guilty of tampering the minutes of proceedings of a board meeting then he shall be liable with imprisonment for a term which may extend to two years and with fine which shall be not less than twenty-five thousand rupees and which may extend to one lakh rupees. 

According to SS-1, a company should follow a uniform method while recording minutes. It can be either in electronic form or any manner prescribed under the act as may be decided by the board. Minutes shall be pasted or attached in the minute’s book. The contents of the minutes are divided into two types:-

• General Contents
• Specific Contents

Powers of Board of Directors

Section 179 of the Companies Act, 2013 read along with Rule 8 of the Companies (Meetings of Board and its Powers) Rules, 2014 provide for the powers of the board and they are as follows:-

• To make calls on shareholders’ money
• Authorize buy-back of securities;
• Issue of securities
• Utilizing funds of the Company 
• Approving financial statements
• Expansion of business operations
• Acquisition of another company
• To make Political contributions
• Appointment or removal of Key-Managerial Personnel (KMP)
• Appointment of internal auditor

Resolution by Circulation

Section 175 of Companies Act, 2013 read along with Rule 5 of The Companies (Meetings of Board and its Powers) Rules, 2014 provide for the passing of resolution by circulation. The draft along with necessary papers needs to be circulated to all the directors who are entitled to vote on the resolution. The draft resolution shall be sent by hand delivery, courier or electronic means whichever is approved by the board of directors. If a director is interested in any transaction he/she will not be entitled to vote on that resolution. The resolution shall also be made part of the minutes of such meeting.

According to SS-1, each resolution shall be explained with a note setting out the details of the proposals. It shall include relevant material facts and details of the proposal so that the directors can take an informed decision. Note shall also signify how the director will give his assent or dissent. The director has to respond within 7 days after receiving the resolution. If the director has not responded within 7 days it shall be assumed that the director has abstained from voting. The resolution is passed after it receives majority acceptance by the directors.

Casual Or Instant Meetings

The directors may frequently meet in casual manner for the discussion and transaction of business. But there must be an intention that the intention of the instant meeting by the board must be there and there shall also be awareness by the members who are present that the directors are involved in the governing the company’s affair.

Directors with an Interest

If one has any interest in a particular matter than he must declare it before the board. This rule applies to other bodies also.

In case of public companies not only can one vote on a matter but also one shall not be present while there is a consideration of the matter. The board has to pass a resolution which will have the interest which the person has stated and it should also be given that the fellow directors are satisfied that the interest of the person shall not disqualify them, then they can stay and vote.

In proprietary companies one must declare their interest and stop from voting. One cannot assume that the members of board will have their own interest. It is important to declare the nature and need of the interest, which will be duly passed in the board meeting. If you are disqualified from voting than one must keep in mind not to break the fiduciary duty by accepting and closely associating with effort to get success. The secretary will record all such declaration.

Minutes

Minute is something, which must be kept for all proceedings of directors meetings. All the meetings must be entered in a minute within a month of that meetings date and that person who was the chairperson of that meeting must sign it. The minute book must be kept at the companies registered office or at the place where business is carried out.

Telephonic meetings and Video Conferences

The directors need to meet together in order to hold a valid meeting. In modern technology it is possible that the meeting can be held by telephone or video link. If one person is going to use electronic measure to hold meetings then they must make sure every participating person needs to be aware about the meeting and contribute towards it.

General Meetings

A company other than those who are proprietary company must hold an AGM at least every year and not more than five months after the ending of the company’s financial year. In case of newly formed companies the time period is bit relaxed which is 18 months is given to hold their first AGM. If the company cannot or fails to hold an AGM then the company itself or the officers who are defaulters will be guilty of an offence. The main work of an AGM is:

• To declare dividends.
• To keep an account and reports of the directors and auditors.
• To elect directors in place of who are retiring.
• To appoint and remunerate auditors.

Requirements to hold an AGM

There is a difference between the first and all other AGMS. The first one must be held within 18 months of incorporating or within 5 months after the ending of the first financial year whichever is earlier for the company. Other AGMS must be held once in every year. In an AGM each member must be given a copy of the company’s financial statement and the director’s statement, which contains the financial statement, and auditors statement.

Informing and Giving Notice

To convey about the AGM is usually in the hands of the director. The notice of the meeting should have

1. The date, time and place of the meeting.
2. To mention the nature of business.
3. To be transparent and clear.
4. The notice must be issued on proper authority.
5. To give it all those who are entitled to get it.

It is the duty of the director’s to see that the members are not misleading and that the notice should not create any breach or confusion in the company. If the notice misleads a member then legal action may be taken.

Chairperson

A person who is elected by the directors of the company usually heads the general meeting. The person who will be the chair of the general meeting needs to maintain an effective hand and remain neutral at the meeting and during a debate needs to act as a referee. The main duties of the person who will be the chairperson needs to:

• Preside the meeting in the proper manner.
• To conduct everything according with the article or constitution.
• To see that there is proper order during debates in the meeting.
• To maintain correctness of the minutes by signing then.
• Declare the end of meeting at the end of the business.

Voting

Usually, every shareholder has one vote and the method of voting are:

1. By the show of their hands.
2. By raising the voices.
3. By the way of ballot.
4. Poster way of voting (it is only permitted by the article of the constitution).

Any person who is attending a meeting if given the right to vote and to demand a poll, though the article can guide the way in which the poll may be taken.

Minutes

The minutes of general meeting must be maintained and put into the minute book within the month of the meeting. The main need of the minutes is

1. To tell them those who did not attend the meeting what had happened.
2. To advise future officer and member to understand the work of the body.
3. It should be available for the inspection by the members.
4. To maintain a record of debates.

Procedure at a meeting

The formal rules for holding a meeting as directed by the Chairperson shall be followed:

• Any discussion will not be allowed until there is a motion before the meeting
• The discussions which are held must be relevant to the matter before the meeting, either be it a motion or any amendment or any point of order or any explanation needed to be given personally.
• The speakers who are present at the meeting shall rise up and address to the Chair.
• The Chair at any time can rise up to address the meeting or to address any person who is then speaking and after that shall resume his or her seat.
• Any person shall not speak more than one time to a motion except any proposer of substantive motion who is given the right to reply.
• Any previous speaker to the motion can speak again on an amendment or for the debate, on any point or order and by seeking the permission of the Chair.
• The Chairperson will take decision that which speaker will be given the priority if the meeting is made by resolution and he will also decide which person will or will not be heard, and a motion will be moved to that effect and not debated.
• In the meeting the speaker who will not be heard will be decided by resolution.
• The Chair in the meeting will be impartial but in case of small formal meeting but in case of small informal meeting he or she might take part in the discussion of meeting and may also move any second motion or amendment. The person will not need to vacate or leave the chair. In case of formal meetings to preserve the impartiality, the Chair should take no part in formulating the motion.
• The business of the meeting should be done according to the order of the agenda, until and unless the meeting decides to take things in some other order.
• In the meeting the voting will take place according to the articles or constitution or by the laws.
• The motion is the Chair declares either lost or won.

After the end of one meeting, the Chair will again discuss and arrange for the next meeting if it thinks it to be appropriate. The Chair declares the meeting either to be adjourned till the next meeting or closed.

In this article, Khalid Khan pursuing Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, discusses the exit route available to companies who have deemed public issues.

The development of company law in India has undergone pragmatic changes evidencing the shift in corporate-centric approach to investor friendly cum fair practices-centric approach. The lacunas existing in the law always give chances to the companies in carrying out the malpractices. Owing to the malpractices and hidden illegal agendas there was an urgent need of government attention. Hence, we can see the number of new laws being passed in order to bring regulation, transparency and healthy development of Indian market. Similarly, one of the recent developments has been in terms of the public offer of securities.

A public company may issue securities[1] through prospectus[2], private placement[3] or rights/bonus issue[4] whereas a private company[5] by way of only private placement[6] or rights/bonus issue[7].  The issue of securities through prospectus which is made to public is known as the ‘Public Offer’[8] whereas private placements can only be made to the persons whose names are already recorded by the company before inviting the subscribers to subscribe to the securities and no advertisement to public at large is permissible. The private companies cannot use any distribution channel or media to advertise its securities for public issue in any manner whatsoever.

The private companies are prohibited from issuing its shares to the public and therefore cannot raise capital through public offer.[9]And the public companies who are issuing securities to public are mandatorily required to fulfil certain listing obligations i.e. listing the shares and debentures on any recognized stock exchange and disclosure requirements to public.

As per the Companies Act, 1956[10] any offer which is made to more than forty-nine persons shall be considered as a public offer and not private placement.Thus, the companies offering securities via private placement to less than fifty allottees would be within the purview of law but the companies issuing to more than forty-nine allottees would be considered as a public issue. This provision was inserted via the Companies Amendment Act, 2000 to prevent companies from issuing securities to public under the disguise of private placement. As per law there is a bar on the private and unlisted public companies[11] to issue securities to more than forty-nine persons. Thus, in any case, an offer made by companies to more than forty-nine persons would constitute a public offer automatically i.e. deemed public offer.

This limit of forty-nine persons was increased to two hundred persons after passing of the Companies Act, 2013[12].Therefore, any company which offers securities to more than 200 persons (excluding certain class of subscribers), that offer shall be considered as a public offer (deemed public offer).

A number of companies were found making offer of securities without complying with the relevant provisions of the Companies Act and SEBI guidelines. The companies invite subscription from public more than the threshold limit prescribed by law. Many complaints were received by SEBI against the companies violating the law related to the offer of securities. Therefore, SEBI vide its circular dated December 31, 2015 notified all the recognized stock exchanges that the companies offering the securities-shares and debentures-before 1st April 2014 to more than 49 persons to 200 persons (deemed public offer) are offered an exit route.

Therefore, the offer of securities before April 1^st April 2014 to more than forty-nine persons and less than two hundred persons and the offer of offering securities after April 1^stApril 2014 to more than two hundred persons would be deemed public offer and hence the transgressing companies shall be liable to penal action.

SEBI provided an exit opportunity to the companies facing penalisation which issued securities before 1^st April 2014 to more than forty-nine persons and less than two hundred persons. The exit route which the companies are provided is that they may avoid penal action by the following ways:

1. If the companies give the option to investors to surrender the securities; and
2. refund the amount at a price not less than the amount of subscription money paid along with 15% interest per annum thereon or such higher return as promised to the investors.It is pertinent to note that the term used is “amount of subscription money”. So, it appears that if the holder of the security on the date of the refund is a subsequent transferee from the original subscriber, the base refund amount is to be the original subscription price and not the price at which the security was transferred to the current holder. This position seems to be reasonable.[13]

The Circular has also provided the procedure (‘‘Refund procedure’’) to be followed by the companies. It is explained below:

1. The process for the surrender of securities and refund has be supported by a proof of dispatch either through Registered or Speed Post by India Post or if any other mode is used then the proof of delivery of letters;
2. The refund shall only be made through proper banking channels via crossed account payee cheque/crossed demand draft or via internet banking channels in order to facilitate documentary evidence of the transactions.
3. The amount already paid to the allottees can be adjusted by the companies as interests/dividends or from the amount refund payable to them.
4. In case the securities have been transferred by the original allottees then the amount shall be refunded to the current alloottees of that security.

Additionally, the Securities and Exchange Board mandated a certification requirement for the companies. After complying with the above requirements, the companies shall obtain a certificate to the effect that the company has complied with the obligations of the refund. This certificate has to obtained from a practicing Chartered Accounted. The certificate must clearly mention that every document has been verified including but not limited to, proof of dispatch of surrender of securities, responses and complaints from the investors, bank statements of the company.

In the end SEBI had instructed to bring this notice to the knowledge of the listed entities and thereby require them to publish the same on their websites.

There are a number of companies which came into the clutches of law. As on as on January 10, 2017SEBI took out a list via press release in 2017 naming 256[14] companies for issuance of securities to larger number of public as against the prescribed limit of private placement. Some of them were Kunnamkulam Paper Mills Ltd Kerala, Sahara India Real Estate Corporation Ltd Uttar Pradesh, Sahara Housing Investment Corporation Ltd, Prayas Projects India Limited.

In 2012, the Supreme Court of India ordered the Sahara Group and its subsidiaries Sahara India Real Estate Corporation Limited (SIRECL) and Sahara Housing Investment Corporation Limited (SHICL) to refund around ₹ 17,400 crore to their investors within 3 months from the date of the order with an interest of 15% because both the companies were unlisted and had offered securities for public subscription under the garb of private placement to more than fifty persons.[15] One of the landmark orders before the before the Securities And Exchange Board of India was the order against the Prayas projects India limited (PPIL).[16]

On receipt of a Show cause notice dated 5th October, 2013 against PPIL by the Office of the Sub–Divisional, Magistrate, West Tripura for the non-payment of amounts to the Secured Redeemable Non– Convertible Debenture (NCD)[17] holders, the Securities and Exchange Board of India ordered PPIL to furnish the relevant documents and details of the debenture holders. SEBI analyzed the documents and the list of allotees and observed that in 2011 PPIL had issued securities under the name of private placement. But these securities have been issued to 154 allottees thereby exceeding the limit of private placement of forty-nine persons. PPIL received around ₹ 86.32 Lakhs during the two financial years. Therefore SEBI found that the offer of Non-Convertible Debentures[18] by PPIL was a public offer under the pretext of private placement. SEBI in its order reiterated the Sahara case and mentioning how the offer of securities to more than fifty persons would attract the first proviso to Section 67(3) of the Companies Act, 1956. Therefore SEBI barred PPIL from issuance of any further securities till further orders.

Similar order was passed against M/s Lokmangal Agro Industries Limited[19] in 2016. Lokmangal agro had issued equity shares to 3626 holders and mobilized around ₹ 72.52 crores in 2011 under the garb of private placement. Therefore SEBI passed the orders against the company barring them from further issuance of securities imposing penalties on it.

In Prayas Projects India limited the number of allotees fall between 50 to 200 whereas in the case of Lokmangal Agro Limited it is way beyond the threshold limited. Therefore only Prayas Projects India Limited could be benefitted by the SEBI circular facilitating an exit route to companies.

Therefore if a company whether listed or unlisted or intends to lists or not list its securities offers the securities in the market and the number of allottees falls above the prescribed threshold limit then that allotment shall be deemed to be a public offer. Therefore much has been achieved to fill the gaps in the law and most importantly the interest of the investors has been into consideration. This law has been an eye opener for the investors who were lured by the companies issuing securities without complying with the relevant provisions of law. By providing an exit option the investors have been facilitated with the free option to stay invested or not. But not many companies have benefitted from he exit route as it attracts less number of companies because most of the companies have allotted securities to more than 200 persons. It is hoped this was certainly not the intention behind the law.

References

[1] The companies Act,2013(Act 1 of 1956), s. 23(1).

[2] The companies Act,2013(Act 1 of 1956), s. 23(1)(a).

[3] The companies Act,2013(Act 1 of 1956), s. 23(1)(b).

[4] The companies Act,2013(Act 1 of 1956), s. 23(1)(c).

[5] The companies Act,2013(Act 1 of 1956), s. 23(2).

[6] The companies Act,2013(Act 1 of 1956), s. 23(2)(a).

[7] The companies Act,2013(Act 1 of 1956), s. 23(1)(b).

[8] V.K. Bhalla, Fundamentals of Investment Management 175 (S. Chand & Co. Pvt. Ltd, New Delhi, 3^rd edn., 2013).

[9] Section 42 the Companies Act, 2013.

[10] The Companies Act, 1956 (Act 1 of 1956).

[11] In case of an unlisted public company there is no bar on the number of members and such companies may have more than 50 members. However, there is bar on unlisted public companies from inviting public for subscribing to its securities. The Unlisted Public Companies (Preferential Allotment) Rules, 2000 prohibit an unlisted public company from inviting more than 49 persons from subscribing to its shares and debentures.

[12] The Companies Act, 2013 (Act no. 18 of 2013).

[13]Amit Robin Singh, ‘Exit Routes for companies who have made deemed public offer’ available at: http://indiacorplaw.blogspot.com/2016/01/exit-route-for-companies-who-have-made.html (Last visited on June 24, 2017).

[14]SEBI Press Release available at: http://www.sebi.gov.in/media/press-releases/jan-2017/caution-to-the-investors_34109.html (Last visited on June 24, 2017).

[15]The first proviso to Section 67(3) was inserted by the Companies (Amendment) Act, 2000 w.e.f. 13.12.2000, which clearly indicates, nothing contained in Sub-section (3) of Section 67 shall apply in a case where the offer or invitation to subscribe for shares or debentures is made to fifty persons or more. Resultantly, if an offer of securities is made to fifty or more persons, it would be deemed to be a public issue, even if it is of domestic concern or proved that the shares or debentures are not available for subscription or purchase by persons other than those received the offer or invitation. It may, therefore, indicate, subject to what has been stated above, in India that any share or debenture issue beyond forty nine persons, would be a public issue attracting all the relevant provisions of the SEBI Act, regulations framed thereunder, the Companies Act, pertaining to the public issue.

[16] SEBI order available at:  http://www.sebi.gov.in/sebi_data/attachdocs/1451387390365.pdf  (Last visited on June 24, 2017).

[17] Listing of Secured Debenture available at: http://www.indiainfoline.com/article/companies-circulars-bse/listing-of-secured-redeemable-non-convertible-debentures-of-manappuram-finance-limited-114081203455_1.htm l(Last visited on June 24, 2017).

[18] From the brochure circulated by PPIL for the Offer of NCDs, it was observed that the invitation for subscription to the Offer of NCDs extended to “Individual, Trust, Financial Institution, Bank, Mutual Fund, Karta of HUF, Firm and Body Corporate”. Such a generalized category of investor(s) cannot be said to satisfy the condition of specificity as required under Section 67(3) of the Companies Act, 1956.

[19]SEBI order available at:   http://www.sebi.gov.in/sebi_data/attachdocs/1470047410344.pdf (Last visited on June 26, 2017).

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In this article, Tirumala Chakraborty pursuing M.A, in Business Law from NUJS, Kolkata discusses Valuation of a manufacturing unit.

Introduction to the Term Manufacture

In India, Manufacturing Sector has emerged and developed as one of the high growth sectors and has become one of the most attractive sectors for investment by foreign concerns. In India, various initiatives have already been taken by the Government to promote the advancement of manufacturing sectors.

In general terms, the process of manufacture involves conversion of raw materials or components into a finished good or product as per the expectation of the customers. In this process, man labor and various equipment or machineries are employed. The term Manufacture has been defined under various Acts. According to Section 2(k) of the Factories Act, 1948, manufacturing process means making, altering, finishing and packaging of any article or substance with a view to its use, sale, transportation and delivery. This process of manufacturing also includes washing, cleaning, oiling, repairing, preserving and demolishing of any substance or article. Power generation or transmission also comes under the process of manufacturing. Any composition types such as printing, lithography, book binding or other similar process are also considered as manufacturing process under this.

The Apex Court has repeatedly recommended the revenue department to consider and examine the process used for making the product as the dictionary meaning of manufacture is not enough for deciding the issue in regard to benefits under the provision of the Income Tax Act, Excise Act and the Customs Act. The Apex Court has dismissed various appeals and clarified that one has to examine the process adopted by the assessee to decide whether the process would constitute “manufacture” or not. The Court further added that the structure, features and the use of the good has to be taken into consideration for deciding the process.

As per Section 2(29BA) of the Income Tax Act, manufacture process means a physical change in a non-living object or thing or article. It transforms the object and brings into existence a new and discrete object with a different name, characteristics such as structure and use.

Valuation of a Manufacturing Unit

The valuation of a business is an idiosyncratic process mainly based on extensive financial analysis and prediction of future performance in regard to that business. Manufacturing businesses are the most challenging to value among other types of business considering its nature of operations and the high level of definite assets. The worth or the valuation of a particular business is not only required to be projected at the time of closing or selling off such business or when the owner quits or leaves the business. Apart from these, valuations are also useful such as for planning out the succession, merger and acquisition and for complying with the regulations made by the Government. It is very important to understand the value or the worth of the business as it plays a vital role in decision making.

Valuation helps in making smart business choices and it is expected that the owner must understand the maximum value of the business or the amount to be paid by an investor at the time of sale. Unlike the private companies, the value of a public traded company can be calculated by the stock value of that company.  Valuation determines the amount of cash a company generates or expects to generate in future. It also evaluates how much an investor would have need as a return on the investment made by him. The process of calculation is not any scientific mechanism but it depends on data and investigations and assumptions to be made by the valuator.  In order to estimate the goodwill, the valuator must make an assumption of the intangibles of the concerned business which includes the reputation of the business, its client base, employee loyalty, patents and its strategies. Goodwill is determined as the excess price a buyer is willing to pay for a company over the book value of the company. Book value is the cost of assets listed on the balance sheet and it is shown in the equity of the company’s owner or stockholder. Intangible assets of a company add value and make a company worth more than the value shown in the financial statements.

In most of the cases, the valuation is done by an independent valuation expert hired by the company and has a comprehensive idea of the company and its operations. The scope of valuation and methods to be applied for the purpose of valuation must be spelled out in an engagement letter at the initial stage and it should also contain the responsibilities of the parties involved. The engagement letter must detail out the reason behind such valuation and the concerned authority for preparing the final report of the valuation. The methods that are usually adopted at the time of valuing a manufacturing unit are market- based valuation, income-based valuation and assets-based valuation. Market-based method of valuation is the most well known method and also referred as the comparative transaction method. Under this method, the value is ascertained by comparing the business with that of its similar kind been sold in the recent past and helps in determining the fair market value of the business in a compelling way. Income- based business valuation is done by forecasting the cash flow of the business and the discount rate and risks involved and this method is commonly known as the Discount cash flow method. Under the assets-based valuation category, Capitalized excess earnings method is the frequent and the classic method applied to evaluate a manufacturing business. This assesses the goodwill of the business.   

A site visit must be conducted by the valuator and he must readily review the financial statements, the tax returns and all the contracts and agreements. Once the investigations are done and the necessary information collected, the valuator after analyzing produces an estimated value. The estimated value is then recorded in the final report of the valuation and is considered as the best price.

Key aspects of Valuing a Manufacturing Business

It is a real challenging task to assess the value of a manufacturing unit considering the nature of its operation and its high level of tangible assets. There is always a scope of committing unintentional errors by the appraiser while valuing the manufacturing unit and such result can be extremely devastating for the owner of that unit. To get an authentic valuation result, there are certain specific areas to be given special consideration to, which are discussed below briefly:

All Income Producing Assets and Excess Assets

Usually, a large number of assets are used and involved in a manufacturing unit and a large portion of investment is represented by its assets such as property, machinery and equipments. A manufacturing unit may have some assets recorded on books but they do not always give away to income generation. But off- balance sheet assets such as intellectual property, product and technologies used for process can be accredited to generate additional income which further contributes to increase the business worth or value.

In case of a distressed unit, valuation is likely to be done using the earning-based methods and in such a case projected earning is either divided by a capitalization rate or it is multiplied by an earnings multiple. It helps in recognising the risk factors involved in the said unit. This approach provides goodwill and value to the staple or core operational assets of the unit. Manufacturing units in general are more likely to have excess assets because of improper and weak management control along with their purposive intent to avoid stock-outs. These excess assets are not part of the core asset structure and are often left unnoticed within the balance sheet. But it is important to recognise these excess assets of the unit as failure to such may result in a heavy undervaluation of the concerned unit.

Cash Flow Forecast and Assessment of Risk Factors

Globally heavy amount is invested in developing new products and their development processes by the manufacturing units. Due to lack of innovation, technology obsolescence takes place quickly and it reduces the income to be derived from the sale of the products manufactured by the unit. This affects the income prospects. To avoid these problems in terms to evaluating a manufacturing unit, accurate projection of sale and proper forecasting of cash flow are to be done along with risk assessment.

Real Estate

Unlike many other service businesses, manufacturing businesses usually operate from the real estate owned by them. Real estate holdings by the unit can create complication at the time of assessment of valuation. All these real estate are usually considered as discrete assets. This kind of discrete assets can be separated from the businesses and can be utilized for different purposes. But its application or use may not be contributing to the unit’s earnings at maximum possible. Real estate does not capture the same risk that of the business which is an essential factor in ascertaining the worth or value of the unit. Depreciation accounting can have a significant imprint on the reported earnings of the unit and especially in small businesses where real estate forms a major portion of the total value of the entity. Thus the involvement of real estate is almost always prone to complicate the valuation result. The correct approach is to evaluate the real estate separately by a commercial real estate appraiser with specialized skills. The business appraiser should consider and gather the leases and adjust the normalized earnings accordingly.

Expense in relation to Depreciation

The value or worth of a unit can be easily deteriorated by the depreciation accounting. This has become an issue of concern for many manufacturing units considering the heavy amount of depreciation relating to equipments and machineries that hits the income stream. But this distortion in regard to valuation can be avoided by adjusting the depreciation expenses appropriately.

Minimum Turnkey Value

The earning based method of valuation gives relevant result only when a business generates earnings at such level that substantiates the capital investment of the same. But this method is not useful when a business operates at or below a stage where the books reflect neither profit nor loss. This method returns the value that is less than the net asset value which is absolutely not reasonable. A business that satiates the essentials of a going concern has a minimum turnkey value as it has already formed a structure capable of operating or conducting a business. Minimum turnkey value means the fair market of the net assets plus the goodwill of the going concern. Minimum value is based on reality and thus eliminates the start up period of the business at the time of valuation. This period can be eliminated by acquiring a business already operating even without earnings. A start up period is required at the time of launching a business for various purposes such as compiling resources, hiring and training their employees and establishing a customer base.

Minimum turkey value has to be recognised by the appraiser at the time of valuing a manufacturing unit, failing which may result to undervaluation. It is applicable even for the small businesses and businesses that are operating with marginal profitability.

Research and Development

Research and development is a key aspect for valuing a manufacturing unit and may have a major impact on the estimated value of a unit. It is usual to ignore the incidental research and development in process of valuation of a manufacturing unit. But it is much essential to adjust the significant expenses in regard to research and development from the normalized earnings of the unit as it will diminish the fair value of the unit. Normalized earnings do not include discretionary expenses such as research and development. Only the reasonable expenses that are necessary for the operation of the manufacturing unit are listed as normalized earnings. If new product gets introduced in the market as an outcome of research and development, the increment earned for such outcome will be reflected in the projected earning structure and such shall be considered for valuation.

Legal Issues on Valuation in India

The process and methods used for the assessment of valuation by the valuators are scrutinised and governed by the various courts and judicial forums in their respective jurisdiction but no Court has been given the power of issuing orders or directions in contravention to any statutory provisions. The Supreme Court and High Courts and other judicial forums in India have discussed and considered the issues arising out of a valuation process adopted by the valuator. From time to time the Courts have faced various issues in regard to valuation such as correct valuation, circumstances under which a valuation can be challenged etc. Usually, any problem in regard to valuation is solved as an issue of fact. In Duncans Industries Ltd. vs. State of UP, it was held by the Apex Court, that the question of valuation is a question of fact and the Court is unwilling to interfere with the finding if the methodologies adopted for such valuation is based on relevant material on record. This was later followed by the Supreme Court in many other cases such as Balco’s Employees Union vs. Union of India, Ram Kishun vs. State of U.P.  The process of valuation is subjective and sometimes technical issues are raised in relation to valuation which may have its roots in the question of law. It was further held by the Supreme Court in CGT vs. Executors and Trustees of the Estate of Late Shri Ambalal Sarabhai, that the correct principle of valuation is recognised by law and it is considered as a question of law, while the actual valuation would be a question of fact. In case the parties are available with two or more principles, the parties are permissible to make a choice of any of the alternative modes of valuation.

In G. L. Sultania and Another vs. SEBI & Another., it was held by the SC, that any valuation which involves technical and tangled issues must be left to the prudence of the experts. The method of valuation can be only challenged and criticised if it is proved that such valuation was assessed on a fallacious manner or that the method adopted by the valuator was wrong, or some grave mistake was committed.

Conclusion

The economic condition and the forecast of a manufacturing unit, its future financial potential, its background and the intangible assets are the key issues to be considered by a valuator for gaining the acumen necessary to make an assessment of value of that unit.  The valuation also reflects the strengths and the weaknesses of the concern and provides guidance for increasing the value or the worth of that concern. The valuator should be given an extensive knowledge about the in and outs of the concern given for valuation to ensure a worthy valuation.

To determine the valuation or worth of a manufacturing unit, it is important to lay down a precise picture of the unit’s assets and income and this can be done through the process of recasting of the financial statements and the balance sheet of that unit. It is important to reconstruct the balance sheet accurately by removing the excess cash levels of operating essentials in case of assets.  The value of the real estate owned by the concern has to be considered separately at the time of valuing the unit. All kind long term assets have to be adjusted and the current value of any prepaid expenses has to be determined. While recasting the balance sheet, all the currently owned amounts are to be recorded in the accounts payable and all the accrued expenses such as tax dues are to be confirmed. Any loan including loans from the owners and real estate has to be removed. At the time of determining the value, it is also needed to prepare a future cash flow forecast and provide a concrete image of the business earning potential.

In the year 2014, a program known as ‘Make in India’ was launched by Narendra D. Modi, the present Prime Minister of India. This program was launched to ensure a position on the world map as a manufacturing hub. Its main motive is to give global recognition to the Indian economy. By 2025, our country is expected to increase its contribution in the manufacturing sector by 25 to 30 percent of GDP and reserve its position as the 5th largest manufacturing country in the world. To encourage this initiative and to promote the growth of manufacturing sectors, India was showcased or casted as one of the business friendly manufacturing destination at the World International Fair held in Germany in the year 2015. The Government has also has introduced several policy measures for this purpose such as reduction of income tax for MSME’s, the Modified Special Incentive Package Scheme etc, removal of excise duty and special additional duty on machines in regard to manufacturing of point-of-sale, etc. One of the major investments made in this sector in recent past is the investment made by Apple in a plant in Bengaluru, owned by one of its partner for the purpose of assembling Apple iPhones.

References

Legislations referred

• The Factories Act, 1948
• Income Tax Act, 1961

Websites referred

• www.indiankanoon.com
• https://www.valuadder.com/blog/
• www.magellanadvisors-il.com
• www.hmwccpa.com
• www.ctconline.org

Dictionaries referred

• Oxford Dictionary
• Black’s law Dictionary                                

In this article, Anjali Karmakar discusses the need for reform in the legal profession and legal education.

Ancient Vision

In the ancient ages, India followed the notion of Dharma as the ultimate authority that rules over the man made laws. The Vedic period has seen many changes indeed. There was no imparting of formal education. However, the system of monarchy was followed both as the judicial and executive system. The role of a law student in the society fills in the function for a legal service to be provided in the administration of justice. Eventually, the monarchy administration shifted to democratic system which developed into major wings of judiciary, executive and legislative system. The government eventually developed a social vision for its people. The pre independence period saw the development of the legal studies. Calcutta, Bombay, and Madras were among the first states which have been providing prominent legal education to its students. The pre independence period aimed at imparting legal education to students who will have the basic capacity to represent the common people at distress. The lower courts and High courts were the only places where an Indian Lawyer could practise in good faith of an English Judiciary.

The Indian Judiciary system underwent major changes after the independence in 1947. The legal education gained a momentum and the lawyers established themselves as the major key points of the society. The Supreme Court was recognised as the epitome of Indian Judiciary. Now we are here, 70 years after Independence and we have yet to establish a foundation for the ultimate reorganization which will provide the common people justice. It may be cruel to say that the Indian law has failed India. Even though it has been through major phases of revolution, the Indian Judiciary and the legislative authorities are working hard to keep the significance of this nation homeostasis.[1]

Seven Decades of Reforms: The Good, the Bad and the Outcome

The de facto issue lies in the fact that how the legal system has led to the creation of a system of corruption and maladministration. The current system has been able to make us develop a feeling of disbelief and skeptical attitude towards this democratic government. The legal services widens to judiciary, lawyers, corporation and so much more. No matter how stringent the legal rules get, there will always be a loophole. The Right to Information Act, 2005 has several issues which contradict with the Right to Privacy. The Adhaar Card related cases which have surfaced in the recent past have shown that there are billions of Indians whose privacy are on the line because of lack of reformative and structural laws.

Adhaar (Sharing of Information) Regulations Act, in Section 6 states that:

The Adhaar number of an individual shall not be published, displayed or posted publicly by any person or entity or agency.

Recently, there was a case regarding the revealing of Aadhaar numbers of minors in a website. [2] Eventually, the website was taken down after a notice. However, there were at least one lakhs minors whose privacy was in jeopardy. The storing of biometric data which is used by the mobile service providers to sell SIM cards to customers was found as a cognizable offence. Three men were arrested regarding the stealing of the Adhaar information of the other customers and using the data for selling SIM cards. The Supreme Court regarding the Aadhaar card issuance has said that,

“We will also make it clear that the Adhaar card scheme is purely voluntary and it cannot be made mandatory till the matter is finally decided by this court one way or the other.”

The fact that there are fraudulent lawyers who take advantage of the poor and destitute is shameful. They tend to divulge their well known legal proceedings into making gains of the people who have tendency to fear from the law.

There is a saying that Justice delayed is Justice denied. This saying only reflects the true nature of the Indian judiciary. There are cases which have been pending since 1998. The appellate court will go on giving orders during the hearing date where either the petitioner or the defendant will ultimately give up. The legal profession has turned into a sour palate of malicious state of affairs. The wheels of justice move very slowly, and sometimes, this slow pace turns out to be not moving at all.

The recent cases regarding the beef ban in India has only showcased the behaviour of the masses. Cow slaughter is considered a sacrilege and a profane act against Hinduism. This does not justify the taking up of law in one’s hands and murdering of humans in the name of religion. This has been taken into the court of law, but it will only destruct the situation even more. Beef ban has been a poor judgement and included ambiguity which could not be termed as a constructive reform. The actual reform would include the inclusion of human rights more than religious sentiments. The protection of a single community cannot be the only reason for enacting a ban in several states of the nation.

Case laws

• The heartbreaking case of Ruchika Girhotra

The 19 year old molestation case of Ruchika Girhotra, which ended in a mere 6 month jail time of the DGP S P S Rathore, is an example of how the law can be easily bent and twisted by the superior authorities of the administration. The summons that was issued to them was challenged and appeal was made against the framing of charges. This way, the interim order of the trial court was delayed until the case went to Supreme Court. Ruchika Girhotra committed suicide aftermath her brother’s was false arrest and harassment by the police. There was even an attempt to murder by the police just so that the family of Ruchika gives up. [3]

“It is an isolated case that too involving a top police officer. The 19-year-long trial is not a common phenomenon. There are allegations against the police officer of having tampered the course of justice. So, this is not a regular case that would display the standard of justice delivery system,” the CJI said.

The police officials have been alleged to have been tampered with the evidence. The witnesses even turned hostile. They eventually grew tired of being summoned to court for the past two decades. This only advantages the defendant and delays the justice, ultimately killing the ultimate grounds of justice.

Man remains suspended for 30 years after stealing Rs. 57.60[4]

Umakant Mishra, a postman was accused of stealing Rs. 57 from the department. He was immediately suspended from his post on grounds of breach of trust. His senior colleagues lodged an FIR against him. After 29 years, 350 hearings and a huge financial debt, Umakant Mishra was finally able to clear his name. His retirement happened three months prior to his final testimony. With a broken soul, his wife thanked God that his husband was able to clear his name.

The role of legal education in shaping the society

In State Of Maharashtra v. Mahubhai Pragmatic Vashi:

The Hon’ble Supreme Court observed:

‘’The need for convincing and well organized legal education is absolutely essential reckoning the new trend in the world order, to meet the ever grooving challenges. The legal education should be able to meet the eves growing demands of the society and should be thoroughly equipped to cater to the complexities of different situations.”[5]

Valuable reform in legal education of India will not only require energy, imagination, and devotion, but also can reform alone resolve the dilemma in which the Indian legal order finds itself. There are lucrative positions available in reputed colleges and universities, yet the post graduate students eligible to become teachers will not be attracted to the be a member of the faculty. There is a need for reconstruction of policies from the grassroots.

Conclusion

The legal reforms that are needed in our beloved country are an obligation. The legislative structure of our country need to see the various dimensions of an act before it is passed on as an act. The mere construction of an Act, just to calm the voice of democracy is not what our fore fathers imagined it to be. We need to look through the evil and re-imagine a state where there are no loopholes, no superior authority, no one to rule, but just one Law. The government will slowly have to take initiatives to re structure the steps that are required for the functioning of the nation. The corrupt and the fraudulent must suffer the wrath of the law and there must be stringent actions taken against them. As far as legal education goes, the legislature must create a sub standard rule for the successful legal professionals to impart education among the law students who want to learn. Several conferences and seminars are a tactful method to reach out to the students who want to attain legal culture.

References

[1] Legal Services India, Legal Education a Need to Reform Role of Regulatory Bodies,

http://www.legalservicesindia.com/article/article/legal-education-a-need-of-reform-1977-1

[2] Scroll, Under the right to information law, Aadhaar data breaches will remain a state secret

https://scroll.in/article/830589/under-the-right-to-information-law-aadhaar-data-breaches-will-remain-a-state-secret

[3] Times of India, Classic example of the powerful exploiting legal loopholes, says CJI

http://timesofindia.indiatimes.com/india/Classic-example-of-the-powerful-exploiting-legal-loopholes-says-CJI/articleshow/5431602.cms

[4] Times of India, After 29 years, man acquitted of stealing Rs 57

http://timesofindia.indiatimes.com/india/After-29-years-man-acquitted-of-stealing-Rs-57/articleshow/26759288.cms?referral=PM

[5] Times of India, Legal Education A Need To Reform Role of Regulatory Bodies

http://www.legalservicesindia.com/article/article/legal-education-a-need-of-reform-1977-1.

In this article, Vincent Omwenga Kofi pursuing M.A, in Business Law from NUJS, Kolkata discusses Indian Law Firms with Maximum Online Presence.

Introduction

Throughout history, means by which humans communicate have evolved greatly. Ever since the invention of the internet, the number of people and businesses using it for communication is increasing staggeringly. In fact, as per Google’s determination, up to 97% of consumers search for local businesses on the internet before they interact with the businesses. In other words, in this context, more than 90% of legal consumers search Indian law firms online (Rampton, 2015). Given the fact, some Indian law firms have maximum online presence since their customers are mostly using the internet to search legal service providers. Having an online presence is undoubtedly important and determines the success of businesses in any industry. For most law firms, building an online presence is as easy as having a simple website showcasing their legal services and creating social media profiles on Facebook, Twitter, LinkedIn, etc. It is one thing following these two vital approaches, and another using the approaches extensively.

Google analyses how much a business uses these approaches to rank their online presence – one with maximum online presence appears top in search results (Rehman & Khan, 2013).

Searching online to find almost anything easily is like using a print directory to find information, but the former is much quicker and less tedious. Having online presence as opposed to listing in a physical directory or merely keeping a traditional office is more advantageous from many aspects. For instance, having presence in the virtual world ensures accessibility to a business’s information around the clock. In other words, customers can find information about a law firm with maximum online presence even after working hours. The firms have a benefit of knowing how they are doing through reviews on blogs and social media. It is also a great opportunity for the firms to interact with their potential customers, such as through posting on social media websites and in blogs (Wang, Guo, Zhang, Wei, & Chen, 2016). All these interactions would convince potential clients to doing business with law firms having maximum online presence, which makes the internet an easy and affordable way of marketing brands compared to print and outdoor.

Having maximum online presence is important to both consumers of legal services and the firms themselves. As legal help becomes astronomically expensive in the US, for instance, a growing number of its middle-class citizens are using the internet to reach out to lawyers in India for legal counsel and assistance. On the other hand, an increasing number of Indian attorneys are finding a commercial opportunity in assisting Americans in preparing legal documents (Lacity, Burgess, & Willcocks, 2014). More Americans are getting attracted to the services offered by the Indian lawyers mainly because of cheaper hourly rates. Therefore, having a maximum online presence for Indian lawyers makes legal services more accessible to Americans while empowering the enterprising lawyers. In an insignificant but budding segment of cases, appellants have hired online lawyers from India and other regions to draft litigation documents and to take them through legal processes. This article uses Google ranking to identify some of the law firms that have maximum online presence and hence, benefiting from the opportunities that come with the commitment.

Online Advertising of Law Firms

It is still contentious in many countries whether legal practitioners should be free to advertise their services (Gillers, 2014). Proponents to the contention submit that by showcasing their achievements creatively, lawyers enhance their own image in the media, as well as that of the country’s legal prowess. On the other hand, the Bar Council of India holds that advertising such a noble profession would be akin commercialization, which would taint the profession.

Accordingly, the Council’s regulations prohibit legal practitioners from advertising or soliciting.Through media directly or indirectly. With a recent amendment, however, law firms can have their own websites, but website need only to contain the firms’ basic information, including the numbers and names of the firms’ lawyers, areas of practice, and contact details. While many law firm websites have done much more than the Bar Council of India’s counsel, the scope of this article is to identify Indian law firms with maximum online presence. 

Indian Law Firms with Maximum Online Presence

This article identifies Kochhar & Co., Luthra Law Firm, Singhania & Co., Kachwaha & Partners, Dhir & Dhir Associates, Majmudar & Partners, S&R Associates, and Lakshmikumaran & Sridharan (L&S) as having maximum online presence in India.

Kochhar & Co.

Kochhar & Co. is among the largest and leading corporate law firms in India. The Indian firm is also the only one with full service existence in the seven eminent Indian cities, i.e.

Mumbai, Agra, Bangalore, Hyderabad, New Delhi, Gurgaon, and Chennai, as well as four offices in Atlanta, Singapore, Jeddah, and Dubai (Nanda, Wilkins, & Fong, 2017). Kochhar & Co. is highly ranked for its client approval ethos through its clear, accessible, and responsive approach, in addition to business focused legal advice. As enumerated on its website, the law firm offers various legal services that pertain to corporate and commercial laws, particularly focusing on representing major overseas and local corporations with varied commercial interests in India. When searching “Indian law firms” on Google, Kochhar & Co. appears on the first page, linking to the firm’s corporate website, www.kochhar.com. Because of its high search

Ranking, the firm has attracted interests of various Fortune 500 companies and other large multinational corporations from Europe, Japan, and North America, which it has represented.

Besides its corporate website, Kochhar & Co. maintain social media profiles on Facebook, LinkedIn, and Twitter, as well as appears on such professional websites as Glassdoor, Legal500, and HG. Kochhar & Co. also appears on hundreds of other websites, including rag-india.com, legallyindia.com, lawctopus.com, chambersandpartners.com, superlawyer.in, legalbusinessonline.com, taglaw.com, livelaw.in, indianlawyer250.com, thelawreviews.co.uk, lawlex.org, etc. Kochhar & Co.’s appearance on several websites makes the firm’s services easily accessible even to potential clients outside India. Another law firm with comparable online presence is Luthra.

Luthra & Luthra Law Offices

Luthra & Luthra Law Offices (L&L) is a full-service highly ranked Indian law firm. The firm boasts a crew of more than 350 legal counsels and law offices in Bangalore, New Delhi, and Mumbai. L&L’s prominence is significantly felt in terms of its adoption of an innovative tactic towards the practice of law, which involves combining conservative practice areas with evolving industry sectors, setting standards, and upholding highest standards within the legal arena (Nanda, Wilkins, & Fong, 2017). As gathered from various online sources, such as Legal500.com, chambersandpartners.com, and rsg-india.com, L&L has a past of working with international clients. L&L has a well-designed and aesthetically appealing website, www.luthra.com, which highlights the firm’s understanding of the global general counsel’s sensitivities and expectations. The website also points out the firm’s years of experience collaborating with regulators and advising clients on adverse regulatory implications.

L&L is prominently on Google Maps, giving directions to three of its offices in Mumbai, Bengaluru, and New Delhi. The maps also show the firm’s phone numbers of the respective offices and links to the main corporate website. L&L also has an active profile on various social websites, such as Facebook, LinkedIn, Twitter, Olwer.com, and vccircle.com. Collectively, evanluthra.com, chambersandpartners.com, iflr1000.com, feedreader.com, legallyindia.com, and many other websites recognize L&L as offering aboveboard solutions to the intricate legal issues. Searching L&L on Google returns more than 53,800 results, most of which link the firm to such areas of specialization as legal advice on banking and finance, competition and antitrust, litigation and arbitration, mergers and acquisitions, health and pharmaceuticals, anti-corruption and compliance, international trade laws, intellectual property—patent and trademark, etc.

Google ranks L&L’s website top ten among law firms in India, indicating that the firm has invested heavily to ensuring it has maximum online presence. Singhania & Co. is another Indian law firm whose presence online is significant.

Singhania & Co.

Singhania & Co. is an Indian law firm that has expanded globally to also operate from London and New York. The firm provides advocates and solicitors who handle various attorney services in Asia, Europe, and America (Garth, 2016). On its website, which is also among the top ten results on Google search engine for law firms in India, Singhania & Co. recognizes that the world is struggling with dynamic economies that demand law firms that act responsively, valuably, and constructively. According to the information published on lawsociety.org.uk, Singhania & Co. areas of focus are mainly taxation, company registration, agency and franchise, corporate and commercial, anti-dumping, foreign exchange management, and admiralty, among others. Unlike many other Indian law firms, Singhania & Co. runs two main websites.

Singhania.com and singhanialaw.com, both of which show up when searching “Singhania & Co.” on search engines. More importantly, Singhania & Co. has its online presence on Google Maps, which give directions to two of the firm’s physical addresses and phone numbers in New Delhi and London. The maps also link to the firm’s website, singhania.com. Besides maintaining profiles on LinkedIn, Facebook, and vccircle.com, Singhania & Co. also appears on professional directories such as internationallawoffice.com, iln.com, waterlowlegal.com, attorneyintown.com, discoverthepages.com, and nlinebangalore.com. All these websites describe Singhania & Co. as comprising a big team of law practitioners familiar to and focused on diverse faculties of international business. In India, the law firm is focused on contributing valuable expertise relevant to the country’s economic and business arenas, particularly concerning maintenance and expansion. Kachwaha & Partners is another Indian law firm specializing in business and whose presence online is remarkable.

Kachwaha & Partners

Searching “Indian law firms” on Google also returns Kachwaha & Partners as one of the top 10 results. A further search of the term “Kachwaha & Partners” returns 3,340 results. The first on the latter list is “Kachwaha & Partners” linking to kaplegal.com followed by “Kachwaha & Partners – New Delhi – Law Firm Profile – Asia-Pacific” linking to chambersandpartners.com. Appearing online on 3,340 web pages makes Kachwaha & Partners one of the law firms with maximum online presence. According to the Chambers & Partners website, Kachwaha & Partners is a full-fledged law firm operating from Mumbai and Delhi offices and in liaison with associate lawyers across several Indian cities. Law Mantra (lawmantra.co.in) identifies the firm’s partners and members as senior professionals with many years of experience.

International Comparative Legal Guides (iclg.com) says of the firm’s partners and members as bringing the top level professional services to legal consumers besides the profession’s traditions, ethical practices, and integrity. From the internet, readers can learn that Kachwaha & Partners is a member of the International Business Law Consortium, Salzburg (IBLC), which is one of the leading law firm networks in the world. Dhir & Dhir Associates is also an Indian law firm that has significant online presence as described below.

Dhir & Dhir Associates

On its website, Dhir & Dhir Associates describes itself as a full-fledged law firm established in 1993 as a single-window provider of legal services in an ever changing commercial setting. For more than 20 years, Dhir & Dhir Associates has provided legal services in various sectors and specializations while creating symbiotic relationships with its clients (Kachwaha, 2013). Dhir & Dhir Associates holds specialization in antitrust & competition, corporate & commercial, banking & finance, corporate & commercial, intellectual property rights, capital markets and securities law, dispute resolution & arbitration, corporate restructuring & insolvency, infrastructure & energy, joint ventures and private equity criminal litigation, governance risk and compliance, employment, and environment.

Dhir & Dhir Associates appears on Google Maps and linking to the firm’s website as well as giving direction to its Mumbai and New Delhi offices. Some of the most popular websites on which the firm is listed include Chambers and Partners, Legal 500, Indian Lawyer (indianlawyer250.com), Bar and Bench (barandbench.com), indiamart.com, and The Law Reviews. Dhir & Dhir Associates has Facebook profiles in different languages including English, French, and Swedish. The firm also has an active Twitter account and maintains professional profiles on LinkedIn. Evidently, Dhir & Dhir Associates seeks to create long term rapport with its clients socially and professionally through consistent integrity, accountability, and honesty. Accordingly, the firm prides itself in providing highly responsive, creative, expert, and valuable legal services. From different online resources, Dhir & Dhir Associates keeps a portfolio of diverse clients, including NGOs, MNCs, Central and State Governments, government ministries and financial institutions.

Majmudar & Partners

Searching “Indian law firms” on Google returns Majmudar & Partners as one of the legal services providers that is evidently significant online. The term “Majmudar & Partners” appears on more than 4,000 web pages. Its website, majmudarindia.com, publishes so much information about the firm, including its practice areas, team, and clients. The Majmudar & Partners describes itself as a leading law firm in India and operating from its Mumbai and Bangalore offices. In addition to the two locations, the 1943 founded firm has affiliate offices in Hyderabad, Chennai, and New Delhi. Based on the information on RSG Consulting (rsg-india.com) website, Majmudar & Partners is a full-fledged law firm that focuses on providing legal, fiscal, and financial advice to businesses in the technology, real estate, manufacturing, infrastructure, financial, and insurance industries. American Bar (americanbar.org), on the other hand, describes the firm as offering clients a positive approach to meeting their goals and strategic business objectives. Majmudar & Partners achieves this by working closely with its clients, understanding their real business statuses and issues.

Being easily accessible through its Facebook pages in both English and French, and through professional networking via LinkedIn, clients find Majmudar & Partners approachable to discuss the commercial problems to which the firm provides practical advice and solutions.

Using its social media pages and contact forms online, the firm demonstrates its skills pertaining responsive and dedicated professional services. When necessary, potential customers can go online, particularly on Google Maps to find directions to the firm’s offices or even call on the numbers given on various listing websites. What is more, Legal 500, Practical Law Company, and Chambers & Partners rank Majmudar & Partners as a top-tier Indian law firm as published on the respective websites. Another law firm in New Delhi and Mumbai that is significantly online is S&R Associates.

S&R Associates

S&R Associates, in the firm’s self-description, provides legal services to both local and international clients from its New Delhi and Mumbai offices. The firm’s website, snrlaw.in, tops the list when searching “S&R Associates” and it links to the homepage which publishes that the firm’s law practitioners are permitted to practice within the country and many jurisdictions, such as the US, UK, and Singapore. Accordingly, S&R Associates maintains active Facebook profiles under the username “SRAssociatesllp,” which are published in English, Española, Polish, and Italian languages. The firm’s presence on more than 6,500 web pages makes its services accessible worldwide, which makes it possible to offer its clients an exclusive combination of Indian law expertise tied with intercontinental quality legal services.

Like many other Indian law firms that have maximum online presence, S&R Associates appears on some of the most popular contextual websites, such as RGS India, Chambers and Partners, Legal 500, Bar and Bench, Asia Law, Legally India, and Magic Lawyers. On its LinkedIn professional profile, S&R Associates highlights that its lawyers have been involved in advising some of the most remarkable Indian transactions and determinations in recent history. The firm associates its extensive presence on the internet to the high quality of legal advice and services it provides, which has elevated it to becoming the preferred law firm for its clients. The firm does not only have maximum presence online, but also widely published in leading industry publications, rankings, and surveys (Nanda, Wilkins, & Fong, 2017). Last in the list in this article is Lakshmikumaran & Sridharan.

Lakshmikumaran & Sridharan (L&S)

Lakshmikumaran & Sridharan (L&S) comes up among the top 10 Indian law firms on Google search, which is an indication that the firm has maximum online presence as much as the others discussed in the previous sections of this paper. Lakshmikumaran & Sridharan is also a full-fledged law firm that offers services in Corporate and Intellectual Property, Tax, and International Trade laws (Nanda, Wilkins, & Fong, 2017). “Lakshmikumaran & Sridharan” appears online on more than 21,300 webpages ranging from social to corporate sectors. Top in the list is the firm’s official website, lakshmisri.com. The second is a listing and description on Chambers and Partners, while the third is a link to the firm’s Facebook profile. As opposed to all other law firms discussed in this article, Lakshmikumaran & Sridharan is the most active and engaging on Facebook. In fact, there are 31 reviews of the firm’s service on Facebook with an average score of 4.7 out of 5.0. With more than 2,500 Facebook fans, Lakshmikumaran & Sridharan is undoubtedly one of the most significant law firms on the internet.

Lakshmikumaran & Sridharan is featured prominently on Indiatimes (indiatimes.com), Ionia (inovia.com), Bloomberg (bloomberg.com), Lexology (lexology.com), allindiantaxes.com, ACWL (acwl.ch), etc. Having served for more than 30 years, the firm is among the largest law practices in the country that focuses on providing advisory, litigation, and consulting services. Understandably, therefore, Lakshmikumaran & Sridharan’s clients include various Fortune 500 companies and industry leaders in the local market. Over that period, the firm has managed to open and run offices in ten cities in the country and it employs close to 600 people as chartered accountants, engineers, advocates, support staffs, and scientists.

Lakshmikumaran & Sridharan’s website, lakshmisri.com, publishes that the law firm has processed over 40,000 litigation cases, including more than 2,000 representations in the Supreme Court of India.

References

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Gillers, S. (2014). Regulation of Lawyers: Problems of Law and Ethics. Wolters Kluwer Law & Business.

Kachwaha, S. (2013). The White Industries Australia Limited–India bit Award: a Critical Assessment. Arbitration International, 29(2), 275-294.

Lacity, M., Burgess, A., & Willcocks, L. (2014). The Rise of Legal Services Outsourcing: Risk and Opportunity. A&C Black.

Nanda, A., Wilkins, D. B., & Fong, B. (2017). Mapping India’s Corporate Law Firm Sector. The Indian Legal Profession in the Age of Globalization, 69.

Rampton, J. (2015). The 10 Most Common Small Business Marketing Mistakes. Forbes.com.

Retrieved 30 June 2017, from https://www.forbes.com/sites/johnrampton/2015/09/24/the- 10-most-common-small-business-marketing-mistakes/#120d11cd1f8c

Rehman, K., & Khan, M. A. (2013). The Foremost Guidelines for Achieving Higher Ranking In Search Results Through Search Engine Optimization. International Journal of Advanced Science and Technology, 52, 101-110.

Wang, H., Guo, X., Zhang, M., Wei, Q., & Chen, G. (2016). Predicting the Incremental Benefits of Online Information Search for Heterogeneous Consumers. Decision Sciences, 47(5), 957-988.

In this article, Tushar Dey pursuing M.A, in Business Law from NUJS, Kolkata discusses Legal issues that arise in succession planning in large conglomerates.

Introduction

Privately-held or family owned businesses form a majority of large businesses in India. The most famous examples are business groups such as the Tata, Birla, Ambani, Godrej etc. Tellingly, 15 of the top 20 business groups are family-owned. Between them, they controlled nearly Rs. 26 lakh crore ($390 billion) of assets at the end of the 2016 Financial Year, which made up 84 per cent of the total assets of the top 20 business groups in India. While certain groups were major players in the economy even at the time of independence, others have emerged later and seen a meteoric rise. The sectors in which these businesses operate are also very diverse in range and nature – from textiles to petrochemicals to information technology.

However, a point of convergence for all businesses is the planning and implementation of a succession plan. As the founders and older establishment gradually pass on, their successors will take over the reins of business. But owing to certain cultural factors there is often great hesitation on part of the families to discuss succession plans. This is part of a larger trend in Asian business. Even though the absence of a well thought out succession plan may appear to be a non- issue, it is in fact perceived as a business risk by investors, especially foreign ones.

Such is the significance of lack of a succession plan that Morten Bennedsen, professor of family enterprise at Insead Business School, stated, “The single most important factor facing Asian family businesses is the issue of succession.”

A couple of high profile business groups such as Birla and Ambani have already faced serious succession issues when the older generation started dying. In 2013, a report in The Financial Times laid stress upon the need for greater awareness for succession planning because a large portion of wealth remained stuck in family businesses and needed to be effectively handed over to the next generation. Therefore, effective estate and wealth planning through which family owned businesses can make a smooth inter-generational transition, is the need of the hour.

The Objectives of Succession Planning

Business Succession Planning involves considered transfer of management and control of business from one generation to other. Succession planning normally has three objectives: to efficiently and fairly distribute assets from older to younger generations; to pass control of the business in a way that will ensure effective business leadership, and to maintain and promote harmony. Finally succession planning is about preserving and building a company’s net worth by successfully navigating between family membership, company management and business ownership. A succession strategy articulates how the process will be carried out as well as the purpose and values guiding the choices that have to be made.

The major objective of succession planning can be summarized as follows:

1. Retaining Control: Retaining family control over business and managing overlap between family and business.
2. Governance – Effective governance of family and business holdings
3. Value – Maintaining Value of the business and individual shares of family members
4. Conflict – Exit options and dispute resolutions

Major Legal Issues in Succession Planning

RESIDENCE AND DOMICILE

Generally, determination of ‘residence’ and ‘domicile’ forms an important first-step in succession planning. In everyday usage, both these terms are often mistaken to mean the same thing. In most countries, residence is relevant for the purposes of determining liability to income tax whereas domicile is relevant in the context of other taxes (such as estate duty or inheritance tax) and in the context of non-tax considerations such as applicability of succession laws (particularly, in case of movable property. In India, the basis for imposing Indian tax and exchange control regulations is the residence of an individual as opposed to domicile or citizenship. Domicile is important in cases of succession, whether testamentary (i.e. under a will) or intestate (i.e. where the person dies without leaving a will).

SUCCESSION LAW

Succession law in India is based on personal law i.e. the law is based on the religion followed by an individual.

HINDUS

Hindus are governed by the Hindu Succession Act, 1956, which codifies the law of intestate succession i.e. where the deceased dies without leaving behind a will. Pertinently, under the said Act, the term ‘Hindu’ includes persons professing the Buddhist, Jain, and Sikh religions as well. The Hindu Succession Act provides for a method of distribution of property in case of intestate succession. In such a scenario, the general principle is that property gets automatically vested in the legal heirs or it vests in the Hindu Undivided Family.

The Heirs of a Dead Intestate Hindu Male Inherit Property in the following order of preference,

1. Class I heirs: Sons, daughters, widows, mothers, sons of a predeceased son, widows of a pre-deceased son, son of a pre-deceased sons of a pre-deceased son, and widows of a pre-deceased son of a predeceased son. It is important to note that all these heirs inherit simultaneously.
2. Class II heirs: Father, Son’s / daughter’s son, Son’s / daughter’s daughter, Brother, Sister, Daughter’s / son’s son, Daughter’s / son’s daughter, Daughter’s / daughter’s son, Daughter’s /daughter’s daughter, Brother’s son, Sister’s son, Brother’s daughter. In Class II Heirs, an heir in a higher entry is given preference over an heir in a lower entry.
3. In case there are no heirs in Class II, property will devolve upon the agnates (relatives through male lineage) of the deceased. If there are no agnates, the property will devolve upon the cognates (relatives through female lineage)

In case the rare case where there are no claimants the property gets vested with the state government.

In case of a Hindu Undivided Family, which is a joint family and is often, used as an unincorporated business vehicle, the interest of a deceased Hindu male devolves by survivorship upon other surviving members, and not as per the rules of succession as discussed above. An exception to this is the scenario where the deceased has disposed off his interest in the Hindu Undivided Family through a will.

Traditionally, the Hindu woman’s estate was limited in nature. By virtue of an amendment to the Hindu Succession Act in 2005, any property possessed by a Hindu female, is held by her as absolute property and she is given full power to deal with it and dispose of it by will as she likes. In case of death of a Hindu female, property devolves firstly, upon the sons and daughters (including the children of any pre-deceased son or daughter) and the husband; secondly, upon the heirs of the husband; thirdly, upon the heirs of the father; fourthly, upon the heirs of the father, and lastly, upon the heirs of the mother.

MUSLIMS

Under Muslim law, the heirs of the deceased intestate Muslim inherit a fixed share of the property. The son receives double the share of the daughter. The wife is entitled to one-eighth of the estate of the deceased. In case there are only daughters, they receive two-thirds of the estate and the remainder goes to the deceased brother or his son/s. If the deceased is a Muslim woman, the husband will inherit one – fourth of the property. In case the deceased’s parents are alive, they too will inherit a specified share.

Three Major Ways to Plan Succession

1) Family Settlement

One of the effective ways to plan a succession is via a family settlement. This takes place during the lifetime of the owner of the business.Shareholding of various family members may be re – arranged so as to ensure effective control by major shareholders and consequent maintaining of the health of the business.

While such an arrangement may be oral, it is advisable to have it reduced in writing and then registered under the provisions of the Registration Act. Registration will ensure a formal record of the arrangement and prevent any disputes from arising later. Family settlement may also be ordered by the Court but no separate registration is required in such a case.

A settlement must be bonafide in nature and a fair and equitable division or allotment of properties must be made between the various members of the business family. Furthermore, a family settlement must be voluntary. It must not be vitiated by factors such as inducement, fraud, coercion or undue influence. A family arrangement may be made in order to maintain harmony or bring about peace among family members.

Judicial decisions make it amply clear that the validity of the family arrangement does not depend upon whether or not the rights claimed by any disputing family members are sustainable in law.

A family settlement is also an excellent method to avoid tax. Where a settlement is reached in order to avoid disputes within the family and maintain good relations between family members, any transfer of assets between them does not attract capital gains tax liability as per section 47 of the Income-tax Act, 1961

In CIT v. Ramanathan 245 ITR 494, in a family dispute, an assessee was supposed to receive a certain amount of money and some specified lands in exchange for half of his shareholding in some companies. This arrangement allowed the assessee to avoid payment of Capital Gains Tax because the High Court agreed with the assessee’s contention that agreements were in pursuance of a family settlement and hence capital gains from these transactions could not be assessed to Capital Gains Tax.

2) Wills

Since large family owned business conglomerates in India now have up to three living generations, leaving assets to devolve upon heirs as per intestate succession can create friction between family members and may prove undesirable, and even harmful, for crucial and profitable decision making. With multiple heirs to a large business group, the division of property by way of a will is the preferable solution to avoid any possible squabbles and complications between family members. Though a will, the family patriarch may, if he wishes, bequeath property to heirs or certain other persons as well.

The Procedural aspects of Creation and Execution of Wills are provided under the Indian Succession Act, 1925. Section 2(h) of the said Act defines the term ‘Will’ as under:

“The legal declaration of the intention of the testator, with respect to his property, which he desires to be carried into effect after his death.”

A will, therefore, gives effect to the wishes of the deceased (called testator) with respect to his property. However, for a will to take effect, it must be proved in court. There are certain other rules which are applicable in accordance with the Indian Succession Act – testator must be of a sound mind while making the will; a will obtained by fraud, coercion or importunity which takes away the testator’s free agency, is void. A probate i.e. copy of a Will certified under the seal of a Court of competent jurisdiction with a grant of administration to the estate of the testator, proves that the will is genuine. A probate is required for claiming immovable assets spread across different states. An executor named in the will administers the estate of the deceased in accordance with the will, and is authorised to do so by the court.

In case a person dies intestate, an administrator is appointed by the court to administer the estate. An administrator is also appointed if the will is invalid, or an executor has not named in the will or is unable/ unwilling to act. The document issued by court granting authority to an administrator is known as “Letters of Administration”.

While under Hindu Law, a testator can dispose off his entire property by way of will, Muslims can dispose off property by will only to the extent of one – third of the total estate. More than this may be disposed of by will only if the heirs of the testator agree.

3) PRIVATE TRUSTS

Due to frequent changes to taxation and regulatory systems in India, an increasingly preferred vehicle for succession planning by large businesses is the Trust. A trust ensures separation of ownership and control. Assets managed via a trust are easier to protect and maintain, and the interests of family members also remain protected.

Trusts may be either public or private in nature. While public trusts are created mostly for charitable purposes, private trusts are created by families to care for wealth for their heirs.  Establishing a trust entails the transfer of property (trust property) by the owner (settlor/ donor) to a person (trustee) who holds it for the benefit of another person (beneficiary). The Indian Trusts Act, 1882, defines a “trust” as “an obligation annexed to the ownership of property, and arising out of a confidence reposed in and accepted by the owner, or declared and accepted by him, for the benefit of another, or of another and the owner.” Furthermore, private trusts may be either specific or discretionary. In case of the former, interest of each beneficiary is pre – defined. The latter may, however, either specify all the beneficiaries or provide an indicative list of beneficiaries, which may even be changed later. In this case, discretion is granted to the trustees to decide the manner or ration in which the distribution can be made between the beneficiaries.

A trust of immovable property is created by virtue of a trust deed signed by the creator of the trust or the trustees and duly registered. It may also be created by the will of the owner of the property or of the trustees. A similar procedure is followed for creation of trust of a movable property. Alternately, for a movable property, ownership of the property must be transferred to the trustee.

A trust should be designed carefully in order to guarantee control over all group assets, separation of economic interest from management control, simple income and assets distribution, and safety of assets from potential claims by creditors.

Exchange Control Laws

In India, exchange control laws are applicable to investment (equity/debt/otherwise) by non-residents (as defined for the purposes of such exchange control laws) in businesses and properties in India and vice versa (i.e., investment by residents in businesses and properties outside India). Exchange control laws also govern remittance of funds by residents and non- residents from India. From a succession planning perspective, this consideration becomes critical where family members, businesses, properties, etc., are spread in different jurisdictions. For example, if an Indian resident is considering setting up an offshore trust, he may be able to contribute only up to USD 250,000 per financial year into the trust, unless he has any accumulated funds outside India (earned when he not an Indian resident) or if his family members or friends are also willing to make contributions into the trust, etc. In case of persons who have been living outside India for a significant period of time and return back to India, they are generally allowed to retain funds outside India which they earned or acquired while they were non-resident. However, once they remit such funds to India, generally, limitations applicable to Indian residents in relation to remitting funds outside India get triggered.

Therefore, to the extent succession planning objectives can be achieved, often, there is a preference to create separate succession planning structures – (i) for Indian assets with Indian residents as beneficiaries and (ii) for offshore assets with non-residents as beneficiaries, with both structures operating in parallel and in such a manner that effectively similar benefits are given to beneficiaries under both trusts.

Taxation Issues in Succession Planning

ESTATE DUTY

Estate Duty in India was introduced in 1953 under the Estate Duty Act, 1953 (“Act”) with the object of imposing estate duty on property passing or deemed to pass on the death of a person. Estate Duty was abolished on June 16, 1985. The government cited excessive administrative costs as against the actual tax yields (only about 20 crores) as the primary reason for abolishing estate duty. Consequently, estate duty was not payable in respect of the estate of a person who died after March 16, 1985. It is anticipated that the government may consider re-introduction of estate duty in India, though there has been no formal announcement or other communication by the government in this regard.

Taxation of Family Settlement

In case a Family Settlement or a Family Arrangement is arrived at to avoid continuous family friction and to maintain family peace amongst the family members there would be no “Transfer” in terms of Capital Gains, hence no tax liability as per section 47 of the Income-tax Act, 1961.

Conclusion

No one goes through the work, risk, and sacrifice of starting a business without hoping it will last. Building value that endures is the dream that motivates entrepreneurs. Yet in many businesses, too little of that work goes into determining who will take over when the founders leave the stage. For a business, working without a succession plan can invite disruption, uncertainty, and conflict, and endangers future competitiveness. For companies that are family owned or controlled, the issue of succession also introduces deeply emotional personal issues and may widen the circle of stakeholders to include non-employee family members. Succession planning is a complex process that draws upon many business disciplines. Many privately held businesses display solid professionalism and enviable profits in their daily operations, yet fail to properly plan for and complete the transition to the next generation of leaders. An unprepared new management group, or even a poorly managed transition to competent management, can trigger significant loss in value. A lot of effort goes into every part of succession planning. None of it would be necessary if business lifespan and human lifespan aligned perfectly. The whole point of succession is to determine how one of those processes will continue after it disengages from the other. All of which is a clinical-sounding way to express a deeply personal thought: Business succession planning is about what persists of your effort, your stamp, your principles, and your hard work after you are no longer there to continue to shape it.

In this article, Karuna Santwan Baskar pursuing Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, discusses Legal framework and regulations concerning shift work in India.

Shiftwork is not new. People have worked on shifts through the years in the medical field, transportation, emergency services, the defence, the police force and so on. Factories and mines have also worked on shifts to maximise available resources. What is new is a whole range of industries spawned by globalisation, providing services across time-zones in a 24/7 economy. The IT and ITES industry, in particular, has created the need for ever-increasing numbers of people working on shifts through the day and night. A new breed of white-collar shiftworkers. For employees willing to work during the night or other non-traditional hours, there are a large number of job opportunities available. These jobs pay relatively well and can even benefit those who wish to combine their work with study or family care responsibilities. As a result, huge numbers, especially of young people, are now working on non-traditional shifts.

Types of work schedules

Shiftwork could follow various kinds of schedules, some of which are mentioned below.

Fixed schedules – some jobs involve working consistently on the same shift, although the hours may be non-traditional. This includes the so-called ‘graveyard shift’ during the night, evening shifts which end in the early hours of the night, and early morning shifts.

Rotating shifts –here employees change to a new shift periodically. In some cases, the shifts can change every few days, or after a few weeks or even months.

Extended hours – employees work for extended hours for example 12 hours a day for 4 days followed by 3 days off.

Weekly offs – some shiftworkers get the weekends off, others may have fixed weekly offs during weekdays, and yet others get their weekly offs by rotation, where the actual days off may vary but are scheduled ahead of time.

There are many other variations on this depending on the nature of the job.

Impact of shiftwork on health and safety

Working on these kinds of non-traditional hours does have clearly documented negative effects on employees. Human beings are basically diurnal creatures, in that their systems are designed to be awake, alert and active during the day and asleep during the night. The body’s natural circadian rhythms are disrupted when a person attempts to work during the night and sleep during the day. Since a lot of the bodily systems are governed by these ‘body clocks’ the disruption has effects on sleep, digestion, blood pressure, reproductive systems and also psychological reactions. Shiftworkers often have limited access to nutritious food, resulting in greater consumption of easily accessible junk food which further affects health.

Research has indicated that shiftwork results in digestive problems, weight gain, lowered immunity, sleep difficulties. Long-term health effects include increased risk of cardiovascular disease, hypertension, gastrointestinal disorders like ulcers, auto-immune disorders and infertility.

Shiftwork also affects psychological and emotional well-being. Shiftworkers tend to have mood-swings, be prone to depression, memory loss, are hyper-sensitive, and are prone to make more errors. These are a result of hormonal changes as well as sleep-deprivation which is very common among shiftworkers.

Shiftworkers are prone to make more errors when they are tired, especially towards the end of their shift. These can result in serious hazards, especially if they are working on machinery or driving a vehicle, either during their shift or returning home.

Shiftwork also disrupts family and social life since the shiftworker is out of sync with the routines of family and friends. This often results in relationship issues with spouse, children and even extended family and also tends to isolate the individual from his or her social circle because of non-availability during typical leisure hours.

A specific concern especially for women employees are security concerns of working during the night and travelling to and from the workplace in the night.

Laws related to Shiftwork

The ILO’s Night Work Convention (1990) defines night work as work that is performed over at least seven consecutive hours which include the period from midnight to 5 a.m. The Convention aims to ensure that night workers are compensated appropriately and to regulate a minimum level of health protection, opportunities for career advancement and assistance in fulfilling family and social obligations for the workers. While the Night Work Convention has only been ratified by 15 countries, it is an indicator of a basic standard of care that ought to be extended to all night-shift workers globally.

The Convention prescribes, among others:

• Regular health-assessments and access to medical advice on work-related health concerns;
• First-aid facilities and quick access to further treatment, if necessary;
• The option to transfer to a similar job, where possible, and other employment benefits if the worker is found unfit for night work for reasons of health;
• Alternatives to night work for women workers during pregnancy and for a period following childbirth;
• Rate of compensation that accounts for the peculiar nature of night work;
• Access to appropriate social services;
• Adequate consultation with workers’ representatives on matters relevant to night workers.

In the UK, employers must offer employees a free health assessment before they begin to work on night shifts. They must take into account that working at night could increase an employee’s stress levels, and if a doctor states that an employee has developed health problems due to night shift work, the employer is required, where possible, to offer suitable alternate work.

Legislation in India related to night shift work

In India the legislation pertaining to night shift mainly relate to restrictions on women working during the night.

The Factories Act 1948 states that no woman shall be required or allowed to work in any factory except between the hours of 6am and 7pm. The Factories Act was amended in 2005 permitting women to work at their required timings.

According to the Beedi and Cigar Workers (Conditions of Employment) Act, 1966, no woman shall be required or allowed to work in any industrial premise except between 6 a.m. and 7 p.m.

The Mines Act, 1952 prohibits employment of women in any mine above ground except between the hours of 6 a.m. and 7 p.m.

The Shops and Establishment Act states that no women shall be required or allowed to work in any establishment after 9:30 PM.

The IT and ITES industry were permitted to employ women after 8pm, on condition that they are provided with transportation upto their doorstep with adequate security measures in place.

Employer responsibilities: safety measures

While it is true that there are safety concerns for women working at night, the solution is not to ban night shift work, thereby depriving women of potential job opportunities. Instead, keeping in mind the safety risks for women, companies could adopt measures to protect women employees during night shifts. These could include:

• Arrangements to provide additional security for women employees who work before 6am or after 8pm
• Additional security measures for company-provided transport during the night including escorts, GPS based monitoring, alarm systems
• Restricted entry into the workplace
• CCTV cameras at important locations which are functional and monitored 24/7
• Training of women in self-defence and other safety measures
• Emergency numbers and designated authorities who can be contacted at any time
• Periodic and random checks of all security measures

Employer Responsibilities: Measures to protect employees against the negative impact of shiftwork

Besides security issues, it is clear that night shift work and rotating shifts have a negative impact on physical and mental health, social and family life irrespective of gender. Therefore measures to minimise the negative effects of shiftwork should be applicable not only to women but to men as well.

While more research is required as to precise ways in which risks associated with night shifts and rotating shifts can be mitigated, measures should include the following aspects:

Design of Work Schedules

Alternatives to permanent night shift, avoiding quick shift changes, evaluating start-end times (away from rush hour – minimise sleep disruptions, keep in mind family schedules), having suitable rest breaks, ensuring regular and predictable schedules.

Work environment

Importance of adequate lighting and temperature controls which affect circadian rhythms, access to hot and nutritious meals during evening and night shift, clean air and reduced exposure to toxic substances since circadian disruption increases sensitivity to toxic exposure.

Access to Health Care and Counselling

Non-traditional work schedules may not permit access to these facilities, so employers must make them available. This is particularly important since shiftwork itself is likely to cause increased physical health problems as well as problems in personal and family life as well as mental health issues.

Women, in particular, face additional risks related to their reproductive functions. Therefore, as far as possible, pregnant and nursing mothers should be offered alternative options.

Training Programmes

Companies must provide training to shiftworkers and their families on strategies to reduce the negative effects of shiftwork and to better manage a shiftworking lifestyle. Research has indicated that working for a long period does not automatically lead to better adjustment to shiftwork, whereas training can make a difference. Such training should be mandatory.

Social programmes

Since shiftworkers social lives are greatly impacted, efforts to organise social activities will greatly reduce the feelings of isolation experienced by most shiftworkers.

Keeping in mind all the hazards and effects of shiftwork, it is imperative that employers take the responsibility to provide adequate protection for their employees. Some employers proactively take measures and engage in good human resource practices to protect their employees and to minimise the effects of shiftwork. However, unless there is legislation related to this, such practices will not be followed by all employers.

LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join:  

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References:

Nightshifts for women: growth and opportunities – ASSOCHAM and NCW

https://spiritofhr.wordpress.com/labour-laws-for-night-shift/

International Labour Organisation C171 – Night Work Convention, 1990 (No. 171)

Plain Language about Shiftwork – Roger R. Rosa and Michael J. Colligan, DHHS (NIOSH) Publication No. 97-145

https://www.gov.uk/night-working-hours

In this article, Gupta Shubham Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, discusses New Trends in Indian Legal Services Marketplace.

“Indian legal services industry is growing at a rate of about 40% per annum”, according to a report by Daisy Khanna, of KPO Consultants, a New Delhi-based consulting company which provides business solutions exclusively to the Legal Process Outsourcing (LPO) industry.

• India’s legal profession is the world’s second largest, with more than 600,000 lawyers in more than 500 legal practices nationwide.
• In 2010, the total value of the Indian legal market was estimated to be approximately US$1.25 billion.
• Increasing numbers of firms are investing in technology to strengthen their knowledge management processes.
• To compete in an increasingly tough environment, a number of leading law firms are recruiting executives from overseas.
• Thanks to the widespread availability of high-quality and ambitious legal professionals, the industry has seen many partners leave existing firms to start their own enterprises.

The legal services sector in India is composed of three distinct sub-sectors:

1. Lawyers providing sophisticated, oftentimes cross-border legal work to corporate clients.
2. Lawyers providing primarily domestic legal services to individuals and small business, and
3. LPO’s, which provide “support functions such as documentation review and legal research”.

The profession of Advocates in India is governed by the Advocates Act, 1961 and also the rules prescribed by the Bar Council of India (BCI), which is the regulatory body for the legal profession of India.

India and General Agreement on Trade in Services

India is a member country to GATS (General Agreement on Trade in Services) which came into existence after the Uruguay Round of Negotiations on January 1, 1995, after the establishment of the World Trade Organization (WTO).

Prior to GATS, the General Agreement on Tariff and Trade (GATT) which governed trade in goods only was operative. When the World Trade Organization (WTO) came to existence, there came in existence many agreements annexed to it, one of them being GATS. Because GATT came into existence much before GATS, the legal profession became well aware of the trade in goods and had little idea about trade in services.

GATS govern trade in all kinds of services ranging from engineering, architecture, accounting, tourism, investment and also legal services. The GATS provides for different modes of supply of services through its framework.

1. In cases of cross border supply, both the service supplier and the user remain in their confined territories and only the service crosses boundaries.
2. By way of consumption abroad, eg. an Indian company travels abroad for seeking legal advice.
3. When the service provider establishes a commercial presence in the country where it seeks to provide the service. Such as an Indian law firm having its branch office in UK.

There are twelve sectors classified by GATS under which services can be provided. One being provision of business services, which is further divided into six categories. One of these sub categories is providing of professional services, which also includes legal services. Legal services can include within its ambit legal advisory and representational services, drafting or legal documentation with respect to criminal law, pleading before a court of law and out of court work like interviewing of witnesses.

Major Drawbacks deterring the opening up of legal service sector

Surveys have shown that the Indian consumers of the services provided by law firms are relatively satisfied with their share of services. The first issue is that the entry of foreign law firms in the country has been subject to controversy since 1995 when, firms like Asherst of UK and White and Case and Chadbourn and Parke of the US, set up liaison offices in India and were granted permission under Foreign Exchange Regulation Act, 1973 to start liaison activities only and not active legal practices. In 1995, the Lawyers’ Collective, a public interest trust set up by the advocates to engage in free legal aid, moved the Bombay High Court challenging the right of foreign law firms to practice law in India. Their main contention was that practicing law would include not only appearance before the Court as pleaders, but also drafting legal documents and advising clients. The Central government, on the other hand, contended that the Advocates Act prevented foreign lawyers from practicing law in court, and from giving advice to clients. However, the Bombay High Court gave a wide interpretation to “practice of law” and gave the judgment in favor of the petitioners.

The lack of political will of the Indian government and that of the Bar Council of India to come up with updated policies and regulations so that the legal service market can be opened up to foreigners. The government did come up with the Limited Liability Partnership Act, 2008, which provided for foreign investment but till date there is no clarity as to how much stake can be offered to foreign investment.

 Similarly, the Bar Council of India’s approach has been not clear. It is still against foreign law firms setting up offices in the country as it apprehends that there might be stiff competition from foreign firms owing to their better infrastructure, better knowledge and developed skills of legal drafting and documentation. This is why the Indian government did not enter into successive rounds of negotiations as mandated by the WTO rules.

 The stringent provisions of the Advocates Act, 1961 and the BCI regulations are too strict. So far as the Advocates Act is concerned, Section 24 is the key deterrent. The Section states that only advocates recognized under the Act can practice law and a person shall be qualified as an advocate on a state roll, provided that the person is a citizen of India and has obtained a law degree from a BCI recognized college/university. Subject to other provisions of the Act, a national of another country may be permitted to practice law, if citizens of that country, duly qualified are allowed to practice law in that other country. Similarly, Section 33 of the Act states that except for situations provided for in the Act, or any other law for the time being in force, no person shall on or after the appointed date be entitled to practice law unless he is enrolled as an advocate under the Act. The Advocates Act, 1961 allows only natural persons to practice law as advocates and not juristic persons.

In addition to the above, the Bar Council of India regulations prohibit entry of foreign firms into the country.

There is an absolute bar on advocates from advertising and soliciting for any purpose and indicating area of specialization.

It is interesting to note that the Law Commission of India had recommended in one of its reports for amendment of certain sections of the Advocates Act, 1961 so that regulations put forward by the BCI could be eased.

Changing Legal Service Sector

• Globalization in the legal industry has expanded the need and scope of legal practitioners across the globe.
• Specialized lawyers and Law firms have turned the way legal profession worked, the use of internet has made give and take of legal services and easy and cost efficient as far the consumer of these services is concerned.
• The new updated lawyers and law firms providing legal services offer more effective and efficient solutions to consumers leaving stronger control over the market.

Upcoming challenges

• Firms remain cautious about setting up alliance with foreign companies engaged in providing legal services.
• Also, the profession is losing its best talent to foreign law firms based in other countries.
• Firms abstain from setting themselves off according to Liberalization with fear of effects of Liberalization faced by the accounting firms of the country some time ago.
• Growth and expansion remain a dream for firms and lawyers due to their inability to manage talent, creating and implementing business strategies, implementing proper processes, and instituting business support functions.

Conclusion

Opening up of legal services sector is going to lead to a flow of expertise in sectors where local firms and lawyers are deficiently delivering services. Accepting ‘trade’ facet of legal services would develop the profession qualitatively.

The Raghavan Committee has summed up the effect of the existing regulatory system in professional services. The legislative restrictions in terms of law and self regulation have the combined effect of denying opportunities and growth of professional firms, restricting their desire and ability to compete globally, preventing the country from obtaining advantage of India’s considerable expertise and precluding consumers from opportunity on free and informed choice.

Either today or tomorrow, we have to open up out legal service, but if should not seen as a threat but an opportunity to compete in more & more countries.

There lie many challenges for the India Legal Service Sector as far as globalization, liberalization and technological advancements are concerned. It is strictly in the hands of the Government and the Body governing the Legal profession in the country that it BCI to frame laws or not to assist or deter in opening up of Indian Legal Sector with international market and to build the confidence of the international legal community in the Indian legal marketplace.

Simply put, how globalised the world may became, & how professional peddle may became, that in race of globalization and professionalism, they (the lawyers and legal professionals) shall continue to remain agency through which people can get justice.

In this article, Shagun Bahl discusses the Prison Laws in India.

Prison Laws in India – The forgotten Law

The Prisons law of India is amongst the forgotten laws of this country which has lost its existence so significantly that neither the law makers of this country nor the mighty political system gives it any value in order to get reformed within today age and time. There is lacuna of stringent legislation for prisoners who also deserve life to be led with the basic human respect which we all are entitled to being citizens of this country despite the wrongdoings they have committed. The prisoners kept in jails are kept in inhuman conditions and are deprived of even basic human amenities like healthy sanitary conditions and lack of proper food, bedding and clothing facilities. The real pragmatic change in criminals kept in prisoners and solitary confinements can be brought by using reformative measures in prisons rather than trying to tame them by authoritative means like animals kept in zoo.

The Prisons Act, 1894

The Prisons Act 1894 is one of the oldest piece of legislation in India dealing with laws enacted in relation to prisons in India. This Act was enacted on 22^nd March , 1894 and enforced  on 1^st July, 1894.This act contains 62 sections and XII Chapters and it is an exhaustive act which contains law relating to smooth functioning of prisons.

• This act defines the term prison inclusively as buildings maintained by state governments with the purpose to detain prisoners. The act also categorizes prisoners as “criminal “, “civil” and “ convicted” prisoners.
• The Chapter II of the Act deals with maintenance and officers of prison. It deals more with appointment of staff including superintendent, medical officer, jailer and officer like inspector general under whose charge the prison will work efficiently. The inspector in – charge will be bound to carry the functions to run the prison in manner as directed by the state authorities. The state authorities have to make proper arrangements for accommodation of prisoners and this act also make provisions to deal with natural calamities like epidemics wherein the prisoners are provided safe custody and temporary shelter during that period on directions of inspector- in charge.
• The Chapter III of the Act deals with duties of officers of the prison as enumerated under Section 8 to 20. Superintendent, jailer and medical officers shall constitute officers of the prison who all are responsible to run the prison in an efficient manner. Superintendent of the prison who is ought to comply orders of Inspector General shall look into matters relating to labour, discipline , punishment , expenditure of prison as well has to maintain records of prisoners. Medical officer of prison shall be in subordination to superintendent and is responsible to carry out following functions with respect to sanitary conditions, health, treatment of prisoners, reporting to superintendent with respect to prisoners seriously affected with a disease etc. Apart from this medical officer shall also keep record of all particulars such as health, diet, diseases and date of death of deceased prisoner. Jailer of the prison who is subordinate to Superintendent shall maintain all records and shall be in-charge of prison and documents. Jailer shall also be assisted by deputy or assistant jailer. The Jailer of Prison is also responsible to always reside within the premises of prison and shall not leave prison without prior intimation.
• The Act also creates posts for prisoners such as convict prisoners who shall function and carry responsibilities within prison premises and shall deemed to be public servants. Section 9 of the Act strictly prohibits jail officers to carry commercial activities within jail premises.
• The Chapter IV of the act deals with admission, removal and discharge of prisoners. The essentials of this chapter covers that convicts entering into prison shall be thoroughly checked and all their belongings shall be kept in custody of jailer and the female convicts shall be checked only by female officers. The criminal convicts shall be examined by medical officer and marks and wounds on his body shall be recorded.  Prisoner shall only be removed from prison premises if in the opinion of medical officer he suffers with acute disease.
• Chapter V deals with discipline of prisoners, it lays few essentials i.e. that male prisoners shall be separated from female prisoners, convicted prisoners from under trial prisoners, prisoners under age of 21 shall be kept separately, prisoners sentence with death sentence shall be kept separately from all others.
• Civil or an under trial prisoner shall have an access to commodities from outside the prison subject to examination of the goods being received. Such prisoners shall provide themselves with clothing’s and bedding\’s. No part of food, bedding or clothing belonging to civil and under trial prisoner shall allow to be transferred to convicted prisoners.
• Chapter VII deals with employment of prisoners. Civil prisoners are permitted to work after permission from superintendent and shall receive earnings for the work done. A criminal prisoner shall not work for more than nine hours and shall work only in case of emergency. All prisoners convicted for simple imprisonment shall be made to work within the premises.
• The Act also lays directions as to taking care of health of prisoners within the prison premises. Prisoners shall be subject to regular medical check-up and sick prisoners shall be provided with proper medical care and attention.
• Sections 42 to 54 deals with offenses relating to prison. Section 42 lays out that any person who being into or removes from prison prohibited articles, abets offenses prohibited under act or communicates with convicted prisoners shall be punished with imprisonment of six months or with fine of rupees two hundred or with both.
• Prison offence are enumerated under section 46, which shall include wilful disobedience of prison rules, use of criminal force or threatening language, indecent behaviour, refusal to work, causing damage to prison property or documents, preparation or conspiring for escape etc, offenses committed under the section shall be punishable under sections 46 and 47 of the Act.
• Section 52 lays out that in case a prisoner is in a habit of committing heinous crime time and again, he shall be forwarded to District Magistrate or any other Magistrate of first class by superintendent.
• The act under section 54 lays punishment for offenses committed by prison subordinates.

Critical analysis of The Prisons Act, 1894

The Prison Act 1894 deals more with the smooth functioning of prison rather than reformation and rehabilitation of prisoners. This act has colonial approach which deflects with the contemporary ideology of reformation of prisoners on humanitarian grounds in order to change their heart and mind to become responsible citizens rather than to advocate punitive and disciplinary measures of taming them in prisoners like animals in zoo . The prisoners should not be just left on its own in prison to just languish and suffer like dead creatures but should be  treated with respect of a human being.

Incompetencies – The real picture of Prison

According to the statistical reports given by http://www.hrln.org/hrln/prisoners-rights/the-initiative.html , 80% of prisoners are victims are under trials who are kept in inhuman conditions where they have to face poor conditions , lack of proper medical facilities and are subjected to torture by jail authorities .

There are statutory legislation such as the Prisoners Act, 1894 and various precedents which have been laid down in landmark cases which provide for the rights which these prisoners are entitled to but the time again it has been proved that these centurion old laws are futile in today’s age and time to deal effectively with prisoners right and to reform them in a humanitarian manner. Nobody thinks about the social stigma the prisoners have to face all their life and perhaps they can never become as normal citizens of this country ever after some because of the path they chose for themselves and other because of lack of reformatory measures in jails which never reform them as individuals who can contribute to the society in the outside world.

Issues of concern

• 80% prisoners are under trials
• Even though bail is granted, prisoners are not released.
• Lack or insufficient provision of medical aid to prisoners
• Callous and insensitive attitude of jail authorities
• Punishment carried out by jail authorities not coherent with punishment given by court.
• Harsh mental and physical torture
• Lack of proper legal aid
• High amount of surety ordered by courts which indigent prisoners can’t pay
• Rejection of surety bonds due to lack of money or verification of addresses, as indigent prisoners don’t have houses.
• Corruption and other malpractices.

Reformatory measures – Prisoners Rights

The rightful treatment to the prisons can be achieved by the law makers by implementing the rights given to them by virtue of acts like Prison Act , 1894 and other precedents in confluence with advocates , social activists and NGO initiatives by safeguarding their access to free legal aid services by filing their bail applications and legal assistance to under trails who are languishing in jails without proper trials which is the most gross injustice to the prisoners inside jail who have to fight for their survivals in jails without a legal trial , maternity help given to female prisoners in jail so that they can carry  the child safely, therapy sessions should be conducted in jails for prisoners in order to ensure that they don’t break psychologically inside the prison cells, monetary assistance given to indigent prisoners and their families to fight for their survival inside the jail.

The prisons are made for reformatory purposes not to break their inner self so blatantly that they can never fit into their normal self in outside world ever after .The reformation is not seen in prisoners when they get released out of jail cells as they become absolute misfits in the society after suffering from inhuman tortures and adding to their misery the social stigma they have to live with as they are never accepted neither by society nor by their own families. It is hard to picture their plight in light of the incompetent infrastructure present in prisons and inhuman treatment they have to suffer at the hands of prison authorities.

Positive Outlook – The Approach to be

As the famous quote given by father of our nation Mahatma Gandhi as “Hate the crime not the criminal” shall be the approach kept in mind in reforming prisoners. A prisoner shall be sent to prison for the punishment and not as a punishment to deprive his personal liberty and privacy. The punitive punishment system should not reach the pinnacle level of destructiveness for human beings from which they can never be reformed. It is also essential to ameliorate environment of the prisons and to value humanitarian needs of prisoners so as to ensure that prisons do not create hardened criminals .It is essential to rehabilitate and socialize prisoners in view to help the prisoners to become responsible and potential citizen of this country.

The time has come to unlock the colonial Indian prison system and amend the centurion old Prison Act 1894 as its obsolete and not in tune with modern day and age where the reformation is required not only of prisons but also the prisoners who shall be equipped with basic fundamental rights which this nation grants to its every citizen.