Download Now
Home Blog Page 1752

From Dreams to Goals

0
From Dreams to Goals

big-goals-earl-quote

What is the difference between dreams and goals?

Dreams are too far away to chase at the moment. You can start working away on a goal right now.

When you start achieving your goals, you know you are getting closer to your dreams.

Don’t confuse dreams and goals – you love what would happen when your dreams come true – you may not like working on the goal at all.

Your goal may involve doing hard work, or work that you don’t enjoy. Achieving a goal often involves a sacrifice or two – unlike a dream.

Be prepared to make those sacrifices – a person who walk towards his goals surefooted is unlikely to ever live his dreams.

Do you what are your goals and what is your dream? Are you aware of the sacrifices you need to make to reach your goals?

 

Download Now

Top 5 Selfish Reasons Why You Should Start A Blog Today

0
Top 5 Selfish Reasons Why You Should Start A Blog Today

It will help you to build an authority on the subject you write on – only if you write about the right things.

Write about what you are expert at, something that you love to talk about, something that gets you thinking, something you are passionate about and people will engage you, question you, and ask you for help. That’s the first step to building authority and a professional circle through a blog.
It is not necessary to write a professional blog, even if you write funny things about politicians or your Sunday cooking or suburban photography, it still has the same effect describes above.

Writing a well-executed blog demonstrates many qualities in you – it is you living resume the world can read.

It will be found very easily by anyone who wants to find out who you are and if you are worth their time. When they google, if they find your writing on what is relevant to them, you get a chance to impress them with good writing skills, your critical thinking, arguments, passion or whatever is important to you. Then some of them subscribe and become followers and Facebook fans – by that they accept your authority and say that they want to know whatever you may have to say in future again. That’s something quite serious, isn’t it?

Blogging really develops writing skills and thinking skills

It makes you think about things you’d miss out otherwise. It teaches you to think from the perspective of your audience – which is a rare and valuable ability in almost any profession – to be perceptive about the client, the buyer, or the guy dealing with you.

Blogging leads to great networking – inevitably

There are a lot of intelligent, smart, attractive people online – writing and reading. They are eager to discover something valuable, and to build relationships. Blogging makes it easy as you share some of your knowledge and personality with your readers. It helps people to know and understand each other, it encourages people to get in touch with you. And when they finally talk to you, somehow they think they already know you.

 

 It helps you to get out of the rut

We work at our best when our mind is active, everyone knows that. But getting the mind active is no easy task. My experience says that blogging can be used as a crutch when you are at a low point, when you are stuck, when you just can’t dare to get out of your comfort zone.
So many people tell me that it doesn’t make sense to start a blog for them because they have nothing to write about. What they mean is that they are not comfortable writing about what excites them, they are not sure people will find it worth reading, they feel vulnerable to lay open the flaws in their writing and thinking for scrutiny of other people, and of course, there is an inertia which has to overcome if you are going to write a bloody good blog. It’s a good opportunity to flip things around, and just start getting out of the comfort zone. It’s infectious and very rewarding, it fuels a cycle as you go along the path of getting better.

Download Now

What Are The Grounds For Divorce In India

1

In this blog post, Harsha Asnani, student, NIRMA University, Ahmedabad writes about the grounds for divorce in India. The article also covers various personal laws that govern the divorce procedures depending upon the religious sect of the two parties to the case.

IMG-20160222-WA0007-1

A cursory glance at the Indian legislative setup with respect to marriage and divorce laws reflects that marriage in India can be dissolved based on two grounds, either by mutual consent or by contested divorce. Divorce petitions filed under the former category need to be coupled with the consensus of both the parties with respect to the amount payable as alimony or maintenance and the over the matter of child custody. Whereas in the latter category where mutual consent lacks, there are several grounds on which a divorce petition can be filed. In the Indian legislative setup, due to the secular mindset, people belonging to different religious faiths are governed by separate laws on marriage and divorce. Therefore, Hindus, Muslims and Christians are governed by separate personal laws.

Grounds for divorce under the Hindu Marriage Act, 1955

Judicial Separation and Divorce is defined under Section 10 and 13 of the Hindu marriage Act, 1955 respectively. A petition for divorce can be made by either of the parties by specifying the ground on which decree of divorce can be passed. After passing of the decree for judicial separation, it will no longer be obligatory for the petitioner to live with the respondent in future. According to it, there are several grounds over which a solemnised marriage can be dissolved.

Firstly, if the other party, after the solemnisation of marriage had sexual intercourse with any person other than his or spouse or in other words has committed adultery, then a valid ground for divorce exists. An amendment brought by this law in 1976 specifies adultery need not be continuous in its course of occurrence. Even a single act of indulging in a sexual relationship with another person shall be enough under this section.

Secondly, if after the solemnisation of marriage, the petitioner has been treated with cruelty, mental or physical, being dangerous for his/her life, limb or health then a petition for divorce can be filed. Unlike adultery, under this ground, it is important that a series of acts be committed in furtherance of cruelty. Such acts may include denial of food, continuous ill behaviour or maltreatment, continuous demand for dowry etc.

Thirdly, if any one of the spouses has deserted the other for a period not less than two years, and the desertion of the petitioner by the respondent was without a reasonable cause and absence of consent or against the wishes of the former then the other partner can file a petition for divorce on the ground of desertion.

Fourthly, if any one of the partners converts his or her religion and has ceased to be a Hindu then the other partner can file a divorce based on this ground of conversion.

Fifthly, a divorce petition can be filed if one of the partners is suffering from a terminal or an incurable or a venereal disease which is easily communicable or mental disorders. Sexually transmitted diseases like HIV-AIDS can be accounted as venereal diseases. The concerned disease should be of such a kind that that the petitioner could not be reasonably expected to live with the respondent. Mental disorders under this section could be of such a kind which may include mental illness, arrested or incomplete development of mind, psychopathic disorder or any other disorder or disability of mind or schizophrenia. Psychopathic disorders may include continuous disorder or disability of mind which causes abnormal, aggressive or irresponsible conduct of the other party.

Sixthly, a divorce petition can be filed on the ground that the respondent has renounced the world affairs by embracing a religious order.

Seventhly, if after the passing of the decree of judicial separation, there has neither been a resumption of cohabitation between the two parties nor observance of conjugal rights for a period of one year or more, it becomes a ground for divorce.

Eighthly, if either of the partners is not heard of being alive by those persons who would have naturally have heard of it for a period of seven years or more, a divorce petition can be filed.

Apart from these grounds, there are several other grounds under the Indian statute that provide for additional grounds for divorce. An important distinction between the former category of grounds and the grounds of divorce under the present heading is that these grounds are available to wives only. They consist of firstly, indulgence of the husband in rape or sodomy, secondly, if a marriage has been solemnized before the Hindu Marriage Act, and the husband has remarried in spite of the fact that the first wife was alive then the first wife can file a divorce petition, thirdly, if a girl has been married before the attainment of 15 years of age and renounces her marriage before she has attained 18 years of age, fourthly, in cases of non cohabitation for a period of one year and the husband has neglected the judgement of fulfilling the maintenance awarded to the wife by the court. Considering any one of the above grounds, a wife can file a divorce petition.

Grounds for divorce under the Indian Divorce Act, 1869

Under the said legislation following are the grounds on which a divorce petition can be filed. According to Section 10, a husband may file a petition for dissolution of marriage on the ground that since the solemnization of marriage, the wife has been guilty of adultery. Under the same section a wife can file divorce petition on the ground that her husband has converted his religion from Christianity to any other religion and has married another woman or is guilty of incestuous adultery or bigamy coupled with adultery or is guilty of rape, sodomy or bestiality or is guilty of cruelty or has committed adultery coupled with desertion without providing a reasonable excuse for two years or more. Apart from this there are certain additional grounds available under this act where any one of the partners can file a divorce petition such as one of the partners suffering from mental illness, leprosy or a communicable or lethal disease for two years before the filling of the petition of divorce or non observance of conjugal rights and their corresponding restitution for a period of two years.

Grounds for divorce under the Muslim Marriage Act, 1939

Under the Muslim Marriage Act of 1939, any woman married under the Muslim law can claim for a divorce if any one or more of the following grounds are fulfilled. Firstly, if the whereabouts of the husband are not known for a period of four years, secondly, the husband has not paid or neglected the payment of maintenance for a period of two years, thirdly, the husband has been convicted and sentenced for a term exceeding seven years, fourthly, the husband has failed to comply with his marital obligations for three years, fifthly, it is found that the husband was at the time of solemnization of marriage and continues to be impotent, sixthly, insanity or suffering from leprosy for a period of two years, seventhly, if it is found the husband is guilty of cruelty i.e. prevents his wife from exercising her legal rights or disposes off her property or does not respect her equally in cases where he has more than one wives or restrains her from following her religious practices or habitually assaults her etc., eighthly, if a girl has been married before fifteen years of age and  has decided to renounce her marriage before attainment of eighteen years of age. In addition to all these grounds a necessary condition which exists with respect to this section is that the marriage should not have been consummated.

Grounds for divorce under the Parsi Marriage and Divorce Act, 1936

Section 32 of the Parsi Marriage and Divorce Act, 1936 lays down the grounds of divorce with respect to parties belonging to the Parsi community. Under this section, any married person can claim divorce against his or her partner if any one or more grounds stand to be fulfilled. The grounds for divorce under this section are first, that the marriage has not been consummated within one year of solemnization of marriage due to willful denial on the part of defendant to consummate it; secondly, at the time of marriage the defendant was of unsound mind and remains so till the date of filing of petition, provided that the plaintiff was not aware of this fact at the time of marriage and that the divorce petition has been filed within three years of marriage. Also this mental disorder should be of such a kind that it cannot be reasonably expected on the part of plaintiff to live with the defendant; thirdly, the wife is found to be pregnant by a man other than her husband provided that the husband was unaware of this fact at the time of marriage and on realisation has restrained himself from any sexual intercourse with his wife; fourthly, the defendant is guilty of cruelty, adultery, bigamy, rape or any unnatural offence; fifthly, the defendant has caused grievous hurt, infected the plaintiff with some venereal disease or the husband has compelled his wife to enter prostitution; sixthly, the defendant is convicted and undergoing a sentence of more than 7 years; seventhly, desertion; eighthly, the defendant has converted his religion and has ceased to be a Parsi.

Download Now

Emergency Provisions: History, Types and Duration in India

0

This article was written by Shivam Saxena, a student of Tamil Nadu National Law School, in which he discusses about the historical background of the provisions related Emergency under the Constitution of India. 

The thought of emergency has passed into political hypothesis. The basic idea, to make specific emergency provisions in the Constitution, was to protect against unintended emergence of autocracy as a result of internal disorder, external attack or battle. In the Indian Constitution, there is a separate part present for the emergency provisions. Part XVIII, therefore, is a component of innovation in our Constitution.

[II.1.] HISTORICAL BACKGROUND

The conditions, which were at that time of framing the Constitution, played an important role for that the provisions of emergency were included. The framers of the Constitution compelled to think about such provisions after facing many incidents after and before of independence period.[1]

The disruptive forces of casteism, regionalism, communalism, and languish[2] created cacophony and disturbed the peace and harmony of the country. The communal riots were happening between Hindus and Muslims which were disintegrating dangers for the establishment and maintenance of democracy in India. Kashmir problem came up with the lapse of the Crown at the time of making of our Constitution. Danger from Pakistan was coming up. There was the recalcitrant attitude of some of the Native States (Junagarh and Hyderabad) towards joining the Indian Union. It was a biggest challenge for the government of India at that time because the government could not permit such separatist conduct Military action in Junagarh and Hyderabad was necessary as a matter of geographical compulsion. This all motivated to need of Art. 352.[3]

The early years of independence witnessed a spurt in the communist activities among the workers and peasants in Telengana. The revolution of the communists was a probable danger to the harmony and democratic order of the country. This led to the inclusion of stringent emergency provisions in the Constitution. Government of a province. Thus, the Constitution- makers were worried of the regular and successful functioning of the State governments. So they included Art. 356 to take care of the breakdown of Constitutional machinery in a State.

There was also marked decline in the economic condition of the country due to the circumstances created by fall in foreign exchange reserves and partition. Dr. Ambedkar wanted to avoid all legal difficulties and thus came Art. 360 of the Constitution.[4]

[II.2.] TYPES OF EMERGENCIES UNDER THE INDIAN CONSTITUTION:[5]

To protect the active order in the nation, Constitution provides the laws for emergency action. The unusual circumstances are to be dealt with by the provisions contained in Part XVIII of the Indian Constitution. These situations can be broadly classified under three head, which are given below[6]:-

  1. National Emergency- Emergency due to war, external aggression or internal disturbance – ( Art. 352 ),
  2. State Emergency- Emergency in case of failure of Constitutional machinery in States – ( Art. 356 ); and
  3. Financial Emergency- Emergency due to financial crisis (Art. 360).[7]
  1. NATIONAL EMERGENCY (Art. 352)

PROCLAMATION OF EMERGENCY:

If the President is satisfied that a grave emergency exists whereby the security of India or of any part of the territory thereof is threatened, whether by war or external aggression or armed rebellion, he may, by Proclamation, make a declaration to that effect in respect of the whole of India or of such part of the territory thereof as may be specified in the Proclamation.”[8]

A proclamation of emergency under Article 352(1) may be made before the actual occurrence of war, external aggression or armed rebellion.[9] Moreover, the forty fourth amendment introduced another innovation : where a notice in writing, signed by not less than 1/10th of the total members of the Lok Sabha has been given of their intention to move a resolution disapproving the proclamation of emergency, to the speaker if the house is in session or to the president, if the house is not in session, a special sitting of the house is to be held within 14 days from the date on which such notice is received by the speaker or the president, as the case may be, for the purpose of considering such resolution.[Article 352(8)][10]

CONSEQUENCES OF A PROCLAMATION OF EMERGENCY[11]

(a) There is a transformation in the behaviour of the Indian federalism. The normal fabric of the Centre-State relations undergoes a fundamental change. Parliament becomes empowered to make a law with respect to any matter in the state list, and such a law operates till six months after the proclamation ceases to operate [Art. 250][12]

(b) Further, the Centre can give directions to the state as to the manner in which it is to exercise its executive powers [353(a)].  [13]Since parliament can make a law even in the exclusive state field, it means that the centre can give directions even in the area normally allotted to the states. Parliament may confer powers and impose duties upon the Centre or its officers or authorities even though the law pertains to a matter not in the Union List [Art. 353(b)].[14]

(c) When emergency is declared not in the whole of India but only in a part of India, the executive power of the Centre to give directions, and the power of Parliament to make laws as mentioned above, extend not only to the State in which the territory under emergency lies, but also to any other state, “if and so far as the security of India or any part of the territory thereof is threatened by activities in or in relation to the part of the territory of India in which the Proclamation of Emergency is in operation ” [Proviso to Art. 353]. [15]

(d) While the proclamation of emergency is in operation, the President may by order direct that any provision (Arts. 268 to 279) relating to the distribution of revenue between the Centre and the States, shall take effect subject to such exceptions or modifications as he thinks fit [Art. 354(1)].[16]This provision frees the Centre from its obligation to transfer revenue to the States so that’s own financial capacity remains unimpaired to deal with the emergency.

(e) During an emergency, Parliament can also levy any tax which ordinarily falls in the Sate list [Art. 250][17]

(f) As has already been pointed out, during the operation of the proclamation of emergency, the life of the Lok Sabah may be extended beyond its normal five year period by parliament by law for a year each time, up to a period not extending beyond six months after the proclamation of emergency ceases to operate.[18]

(g) Parliament may by law extend the life of the state legislators by one year each time during an emergency, subject to a maximum period of six months after the emergency ceases to operate.[19]

INVOCATION OF NATIONAL EMERGENCY[20]

In India, national emergency has been invoked three times so far.

First time, on October 26, 1962, in the wake of clash with china. It remained in force during the Indo-Pak conflict in 1965, and was revoked only in January, 1968.

Second time, on December, 1971, as a result of the India and Pakistan dispute on the ground of external aggression.

While the 1971 was still effective, another proclamation was issued on June 26, 1975. This time the proclamation was issued on the ground of “internal disturbance” threatening the security of India. Bothe these proclamations were revoked in March 1977.

One of the major result which come out after the proclamation of the emergency in 1975was the amendment of Article 352 by 44th Constitutional amendment so as to introduce some more safeguards therein against any unwarranted declaration of emergency in future. The main purpose of this amendment was that what happened in 1975 should not repeat in future.[21]

  1. STATE EMERGENCY

PROCLAMATION OF EMERGENCY

Article 356 and 357 provide for meeting a situation arising from the failure of the Constitutional machinery in a state.[22]

“If the President, on receipt of a report from the Governor of a State or otherwise, is satisfied that a situation has arisen in which the Government of the State cannot be carried on in accordance with the provisions of this Constitution, the President may by Proclamation

(a) Assume to himself all or any of the functions of the Government of the State and all or any of the powers vested in or exercisable by the Governor or anybody or authority in the State other than the Legislature of the State;

(b) Declare that the powers of the Legislature of the State shall be exercisable by or under the authority of Parliament;

(c) make such incidental and consequential provisions as appear to the President to be necessary or desirable for giving effect to the objects of the Proclamation, including provisions for suspending in whole or in part the operation of any provisions of this Constitution relating to anybody or authority in the State.”[23]

CONSEQUENCES OF INVOKING STATE EMERGENCY

Article 356(1) has been invoked a number of times since the advent of the Constitution.[24]Reading Art. 356 along with Art. 357 a pattern has thus come into existence, whenever the centre takes over a state government. The centre has acted only when the governor has reported failure of the Constitutional machinery in the state and in no case has the centre acted ‘otherwise’. The governor makes the report to act in this matter on the advice of the council of ministers.

The proclamation issued by the President under Art. 356(1) is placed before parliament. If it is expected to remain in force only for two months, then no further action is necessary. But if it is proposed to keep it in force for a longer period, it is to be ratified by both houses.

Under Art. 356(1) (a), the President can assume to himself the powers of the Governor. One of the Governor’s powers is to dissolve the Legislative Assembly. Consequently, when the. President issues a proclamation and assumes the governor’s powers, the powers to dissolve the assembly and hold fresh elections is automatically transferred to the president. Therefore, the Presidential proclamation may dissolve the State Legislature and arrangements for holding fresh elections are set afoot.

INVOCATION OF NATIONAL EMERGENCY

The sweep of the phrase, “the government of the State cannot be carried on in accordance with the provisions of this Constitution” in Art. 356(1) has indefinite connotations. Failure of the Constitutional machinery in a State may arise because of various factors; these factors are diverse an imponderable. Nevertheless, some situations of the breakdown of the Constitutional machinery may be as follows:

(1) No party in the Assembly has a majority in the State Legislative Assembly to be able to form the government.

(2) A government in office loses its majority due to defections and no alternative government can be formed.

(3) A government may have majority support in the House, but it may function in a mar ner subversive of the Constitution. As for example, it may promote fissiparous tendencies in the State.

(4) The State Government does not comply with the directions[25] issued by the Centre Government under various Constitutional provisions.[26]

(5) Security of the State may be threatened by a widespread breakdown of law and order in the State.

(6) It may be debatable whether Art. 356(1) can be invoked when there are serious allegations of corruption against the Chief Minister and the Ministers in a State.[27]

Reading Articles 355 and 356 together, it can be argued plausibly that the Constitutional machinery breaks down in the State when the government indulges in corruption.

Article 356 has been invoked in the State of Uttar Pradesh because it did not appear to be feasible to form a stable government. [28]

  1. FINANCIAL EMERGENCY

Article 360 makes a provision concerning financial emergency. “If the President is satisfied that a situation has been whereby the financial stability or credit of India, or any part thereof, is threatened, he may by a proclamation make a declaration to that effect.”[29]

When such a proclamation is in operation, the centre can give directions to any state to observe such canons of financial property as may be specified in the directions. It may give such other directions as the President may deem necessary and adequate for the purpose [360(3)].[30] Any such directions may provide for the reduction of salaries and allowances of all. Or any class of persons serving in the state. [Art. 360(4)(a)(i)].[31]

The centre may require that all money bills, or financial bills or those which involve expenditure from the state consolidated fund, shall be reserved for the President’s consideration after being passed by the state legislature [Art. 360(4) (a) (ii)].[32]

The President may also issue directions for reducing the salaries and allowances of persons serving the union including the Supreme Court and the high court judges [Article 360(4) (b).][33]

A proclamation issued under issued under Art. 360(1) may be revoked or varied by a subsequent proclamation [Art. 360(2) (a)], and has to be laid before each House of Parliament [Art. 360(2) (b). The proclamation ceases to have effect after two months unless in the meantime it is approved by the Thirty-Eighth Amendment of the Constitution, the Presidential ‘satisfaction’ in Art. 360(1) was declared to be ‘final and conclusive’ and not questionable in any court on any ground. No court was to have jurisdiction to entertain any question, on any ground, regarding the validity of —

  1. A declaration made by proclamation by the President to the effect stated in Article 360(1); or
  2. The continued operation of such Proclamation. This provision has now been deleted by the Forty-Fourth Amendment of the Constitution.

In India, there has not been financial emergency imposed till now.

[II.3.] DURATIAN OF EMERGENCY PROCLAMATION

The Constitution specifically provides that a Proclamation of Emergency made by the President shall be valid for a period of two months only in the maximum within which it shall be laid before each House of Parliament and approved by them. But if within that period, Lok Sabha is dissolved, the proclamation shall be laid before Rajya Sabha only. On its approval, it shall continue beyond two months till the new Lok Sabha are elected, and it ratifies the proclamation within thirty days of its first session. Fixed time limit is always qualified by clauses like, “as soon as”, “for the time being”, etc. The Constitution also does not provided for the contingency of Parliament disapproving the proclamation. Parliament has three options before it – (a) it may approve the proclamation by a resolution; (b) it may take no action; or (c) it may reject or disapprove the proclamation. If the President feels the necessity of continuance of the proclamation beyond two months, and Parliament is opposed to its continuance, there is a deadlock. Its tenure can be extended by Parliament alone.[34] Ordinarily, the wishes of the legislature will prevail. If the executive persists in its view, it may issue another proclamation which shall remain valid for another two months. The issue of another proclamation is not barred by the Constitution. It is difficult to agree that the President will take advantage of this gap. In practice, there is no room for conflict between the executive and the legislature especially, the lower house in a parliamentary democracy. If at all such a conflict arises, it will result in the resignation of the ministry and/or dissolution of the Lower house.[35]

CHAPTER-III: EMERGENCY PROVISIONS: HISTORY, TYPES AND DURATION IN GERMANY AND U.S.A.

[III.1.] IN GERMANY:-

[III.1.i.] HISTORICAL BACKGROUND

In Germany there are two important things i.e. the state and the federation which are called Landers and bund respectively. The German Constitution is called “only a week Constitution” due to the various historical reasons. There were no laws of emergency at the time of enactment of The German Basic Law of 1949.

[III.1.ii.] TYPES OF EMERGENCY

Basic Law of Germany provides three types of emergency in toto. Which are given below:-

  1. STATE OF DEFENCE- it exists when the nation is under attack or threat of imminent attack by an armed force. [36]
  2. STATE OF TENSION- It covers the situations that precede a state of defence. For instance a “situation approaching preparation for international war or civil war “.[37]
  3. INTERNAL STATE OF EMERGENCY- It mainly covers the threats to the free democratic order in the federation or the Lander, grave accidents, natural disasters, or dangers to public security or order.[38]

Similarly to India, Germany has also two types of emergency i.e. national which includes state of defence and state of tension and state emergency.

PROCLAMATION OF EMERGENCY

In Germany, similar to India there are two legislative houses which are called the Bundestag and the Bundesrat. For declaring the state of tension and the state of defence, it is necessary that it must be declared by a two-thirds majority of both the Bundesrat and the Bundestag.[39] The government may request the Bundestag to initiate the state of defence. The decision must then be promulgated by the Federal President. [40] The state of tension may also be commenced by a two-thirds majority of the Bundestag. [41] The internal state of emergency may be initiated without a formal resolution of the Bundestag. In the internal state of emergency the Federal Government may place the police in that Land and the police forces of other Länder under its own orders and deploy units of the Federal Border Police.[42]

CONSEQUENCES OF EMERGENCY

During a declared emergency period all significant organizations and authorities work under the joined direction and hierarchical obligation of the competent authority. The authority can take every measure which is necessary to protect the emergency situation or to fight it. It lies within its discretion to define what is necessary and what is not. But all the measures are in principal subject to judicial review. The powers are not really strange but follow the powers of the “normal” police forces, whereas the police powers remain in-tact but subordinated to orders by the catastrophe authority

There is a provision relating to urgent and preliminary help in cases of damages. In most cases the federation and the Landers constitute a fund, granting financial help for losses caused by a particular emergency situation, for example earthquake and floods etc.

The German Constitution consists of many provisions related to prospective emergency. It is impossible to systematically cover them and some general insights were put forth above. [43]

INVOCATION OF EMERGENCY

There are many conditions and situations when the emergency can be imposed. One of such situation is nuclear disasters. With regard to nuclear disasters, in the non-binding guiding principles several possible measures, that the authorities can adopt, are mentioned below which more or less typical also for other disasters are:

  • Analyzing existing measuring devices (see above) and installation of mobile ad-hoc measuring devices.
  • Distributing iodine tablets in accordance with a special plan and requesting to take iodine tablets,
  • Evacuation in accordance with a special plan,
  • Establishing and operating emergency stations for decontamination and medical care of the population and task personnel affected,
  • Warning the population not to eat freshly harvested groceries and to not use water
  • Blocking contaminated water catchment points. [44]

[III.2.] EMERGENCY PROVISIONS IN U.S.A.:-

[III.2.i.] HISTORICAL BACKGROUND: [45]

The effect of emergency powers had long been an apprehension of the traditional political theorists, including the eighteenth-century English philosopher John Locke, who had a strong persuade upon the Founding Fathers in the United States. A greatest proponent of a government of laws and not of men, Locke argued that occasions may arise when the executive must apply a wide discretion in meeting special requirements or “emergencies” for which the law-making power provided no support or existing law granted no essential solution. He did not regard this privilege as restricted to wartime, or even to situations of enormous exigency. It was enough if the “public good” might be advanced by its implement.[46] One authority has summed up the situation in the following words:

“Emergency powers are not solely derived from legal sources. The extent of their invocation and use is also contingent upon the personal conception which the incumbent of the Presidential office has of the Presidency and the premises upon which he interprets his legal powers. In the last analysis, the authority of a President is largely determined by the President himself.”[47]

There are many stand-by laws that express particular emergency powers once the President officially declares a national emergency activating them. In 1973, a Senate special committee studying emergency powers published a compilation identifying some 470 provisions of federal law delegating to the executive extraordinary authority in time of national emergency.[48] The vast majority of them are of the stand-by kind — dormant until activated by the President. However, formal procedures for invoking these authorities, accounting for their use, and regulating their activation and application were established a while ago by the National Emergencies Act of 1976.[49]

[III.2.ii.] TYPES OF EMERGENCIES

The US Constitution includes just three types of emergencies.

  1. Habeas Corpus is to be suspended only in instance of rebellion or the invasion of the Republic.[50]
  2. Congress has the right to declare war. [51]
  3. A limitation on trial by grand jury in times of service during wartime or “public danger.”[52]

But basically, there are two types of emergencies which are national emergency explained under national emergency Act and financial emergency described under the International Emergency Economic Powers Act.[53]

  1. NATIONAL EMERGENCIES ACT, 1976:-

PROCLAMATION OF EMERGENCY

The preliminary draw up of the NEA provided that the President would only be authorized to proclaim a national emergency if he finds that the proclamation of a national emergency is essential to the maintenance, security, and protection of the Constitution, and is essential to the common defence, safety, or wellbeing of the territory and people of the United States.[54]Any emergency powers activated by “provisions of law” authorizing certain actions in a national emergency may only be used if the President declared a national emergency in accordance with the Provisions of the NEA and otherwise complied with the Act. Both the initial and final versions also specify that the President may only exercise those emergency powers that he specified when declaring a national emergency.

Section 201 of NEA provides a right to president to declare a national emergency. The proclamation of a national emergency must be communicated to Congress and must be published in federal register.[55]Statutory emergency authorities permitted by the national emergency announcement cannot be exercised until the president specifies the provisions of law under which the president or other officials will act. Such specification may be made either in the declaration or in subsequent Executive Orders published in the Federal Register and transmitted to Congress.[56]

CONCEQUENCES OF EMERGENCY

When the president declares the national emergency so it restricts many legal authorities to do their work properly. Which means, Any conditions of law presenting rules and authorities to be exercised during a national emergency shall be effective and stay in effect

(1) Only in accordance with the chapter which is described under NEA, and

(2) Only when the President exclusively declares a national emergency.

When the President declares a national emergency, no authorities or powers made existing by statute for use in the event of an emergency shall be exercised unless and until the President specifies the provisions of law under which he suggests that he, or other officers will act.[57]

INVOCATION OF EMERGENCY

U.S. legislation does not allow the restrictions of any human rights in different from that at other times. But only exception for this is habeas corpus. Any such restraint must be introduced throughout legislation passed by Congress.[58] In some cases such violation of rights must be permitted by a judicial instance.[59]

This does not imply that in practice instances have not occurred in which rights have been violated in emergencies. The most well-known examples of such violations are the internment of US citizens of Japanese origin during the Second World War and the Trading with the Enemy Act, 1917 (TWEA), which on occasion led to the seizure of merchandise and the violation of the right to property. [60]

It should be noted that the Act uses the term “citizen” in restricting the authorities’ powers. In a different context, this aspect has been the subject of discussion in various articles raising the criticism that US law does not sufficiently restrict the violation of the human rights of non-citizens in emergencies.

  1. THE INTERNATIONAL EMERGENCY ECONOMIC POWERS ACT,1977

Likewise NEA, 1976 Congress passed the International Emergency Economic Powers Act (IEEPA) in 1977 to “revise and delimit” the president’s emergency authority.[61]The main aim to introducing this Act was to protect and prevent the nation from any economic situation. The IEEPA mainly alarms international financial transactions[62] and transactions that otherwise “involve an interest” of a foreign national.[63] But the federal government has normally applied the emergency powers decided by the statute to “U.S. persons”, people and organizations with legal status in the United States, including U.S. citizens.

PROCLAMATION OF EMERGENCY

The IEEPA states that the President may use powers to declare these type of emergency only when,

“unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy, or economy of the United States, if the President declares a national emergency with respect to such threat.”[64]

The statute further provides, somewhat ambiguously, that the President may only use IEEPA powers activated by a declaration of national emergency to “deal with” that specific emergency.[65]

CONCEQUENCES OF EMERGENCY

Therefore, the IEEPA grants the power to the president to freeze the assets of, and forbid monetary transactions involving, individuals selected by Executive Order. This includes the power to prohibit bank payments and transfers of credit insofar as they “involve” an interest of a designated country, entity, or person and to prohibit the use, holding, or transfer of property implicating a relevant foreign interest. The President may exercise these powers over property belonging to any person within the jurisdiction of the United States.

Even the president of U.S.A. has the authority to block the basic life necessities. Although one section of the IEEPA excuses from the President’s authority “donations, by persons subject to the jurisdiction of the United States, of articles, such as food, clothing, and medicine, intended to be used to relieve human suffering,”[66] another section permits the President to regulate or prohibit the donation of these items if “the President determines that such donations. Would seriously impair his ability to deal with” a declared national emergency.[67]

INVOCATION OF EMERGENCY

There is a specific punishment regarding the violation of rules and restrictions relating to economic emergency. It states that anyone who violates the IEEPA is subject to a civil penalty up to $250,000;145 a wilful violation may incur a criminal penalty up to $1,000,000 and up to twenty years in prison.146 Every President who has declared a national emergency and exercised IEEPA powers pursuant to that emergency has prohibited such donations.147

[III.2.iii.] DURATION OF EMERGENCY

National emergencies are to end after six months unless Congress voted by concurrent resolution to extend the emergency; it could also vote at any time to end the emergency[68].  The draft bill also required that the President transmit to Congress all regulations, rules and orders circulated pursuant to a declared emergency. The final bill preserved this obligation.[69] It also required that, every six months following a declaration of national emergency, the President must submit to Congress an accounting of expenditures “directly attributable to the exercise of powers and authorities conferred by such declaration.” The NEA still imposes a requirement that “not later than six months after a national emergency is declared, and not later than the end of each six-month period, thereafter, each House of Congress shall meet to consider a vote on a concurrent resolution to determine whether that emergency shall be terminated.”[70]

The NEA specifies that declared emergencies will terminate automatically after one year unless renewed by the President[71], and that the President may terminate a national emergency at any time.[72]

This article was originally published on Racolb Legal. It can be accessed here.

[1] See R. P. Dutt, India Today and Tomorrow , 267 (1955).

[2] B. C. DAS, The Indian Journal of Political Science, 237-252, (1977), http://www.jstor.org/stable/41854792.

[3] Ibid.

[4] Supra Note 4.

[5] Jain M.P., Indian Constitutional Law, 700 (7th Edition, 2011), Lexis Nexis, New Delhi.

[6] Articles 352, 356 and 360, the Constitution of India, 1950.

[7] Ibid Note 7.

[8] Article 352(1), the Constitution of India, 1950.

[9] Naga people’s Movement of human rights V. Union of India, (1998) 2 SCC 109.

[10] Art. 352 (8). The Constitution of India, 1950, Where a notice in writing signed by not less than one-tenth of the total number of members of the House of the People has been given, of their intention to move a resolution for disapproving, or, as the case may be, for disapproving the continuance in force of, a Proclamation issued under clause (1) or a Proclamation varying such Proclamation,—

(a) to the Speaker, if the House is in session; or

(b) to the President, if the House is not in session,

a special sitting of the House shall be held within fourteen days from the date on which such notice is received by the Speaker, or, as the case may be, by the President, for the purpose of considering such resolution.

[11] Supra Note, 7.

[12] Art. 250. (1), The Constitution of India, 1950, Notwithstanding anything in this Chapter, Parliament shall, while a Proclamation of Emergency is in operation, have power to make laws for the whole or any part of the territory of India with respect to any of the matters enumerated in the State List.

(2) A law made by Parliament which Parliament would not but for the issue of a Proclamation of Emergency have been competent to make shall, to the extent of the incompetency, cease to have effect on the expiration of a period of six months after the Proclamation has ceased to operate, except as respects things done or omitted to be done before the expiration of the said period.

[13] Art. 353, the Constitution of India, 1950. While a Proclamation of Emergency is in operation, then—

(a) notwithstanding anything in this Constitution, the executive power of the Union shall extend to the giving of directions to any State as to the manner in which the executive power thereof is to be exercised;

[14](b)the power of Parliament to make laws with respect to any matter shall include power to make laws conferring powers and imposing duties, or authorising the conferring of powers and the imposition of duties, upon the Union or officers and authorities of the Union as respects that matter, notwithstanding that it is one which is not enumerated in the Union List:

[15] Provided that where a Proclamation of Emergency is in operation only in any part of the territory of India,—

  • the executive power of the Union to give directions under clause (a), and
  • the power of Parliament to make laws under clause (b),

shall also extend to any State other than a State in which or in any part of which the Proclamation of Emergency is in operation if and in so far as the security of India or any part of the territory thereof is threatened by activities in or in relation to the part of the territory of India in which the Proclamation of Emergency is in operation.

[16] The President may, while a Proclamation of Emergency is in operation, by order direct that all or any of the provisions of articles 268 to 279 shall for such period, not extending in any case beyond the expiration of the financial year in which such Proclamation ceases to operate, as may be specified in the order, have effect subject to such exceptions or modifications as he thinks fit.

[17] Supra Note 12.

[18] Proviso to Art. 83(2), The Constitution of India, 1950, Provided that the said period may, while a Proclamation of Emergency is in operation, be extended by Parliament by law for a period not exceeding one year at a time and not extending in any case beyond a period of six months after the Proclamation has ceased to operate.

[19]Proviso to Art. 172, The Constitution of India, 1950,  Provided that the said period may, while a Proclamation of Emergency is in operation, be extended by Parliament by law for a period not exceeding one year at a time and not extending in any case beyond a period of six months after the Proclamation has ceased to operate.

[20] Supra, Note 7.

[21] See  https://books.google.co.in/books?id=PEE8BAAAQBAJ&pg=SA3-PA26&lpg=SA3-PA26&dq=imposed+emergency+in+india+so+far&source=bl&ots=5cLUzplV7j&sig=c4RZMgrhC_XQMVNr_rnhBJsXz1o&hl=en&sa=X&ved=0ahUKEwiS9beQ9rHLAhXEmpQKHZg9ALwQ6AEIWDAJ( Last Visisted Mar. 12, 2016, 6 PM (N.T.M.).

[22] Shetty, President’s power under Art. 356 of the Constitution- theory and practise, Constitutional Developments Since Independence, 335 (1975).

[23] Article 356(1), the Constitution of India, 1950.

[24] See Gopal Subramaniyum: Emergency provisions under the Constitution.

[25] K. Co-op. Building Society V. State of Andhra Pradesh, AIR 1985 AP 242.

[26] Art. 256 and 257, The Constitution of India, 1950.

[27] Supra Note 7.

[28] In the general elections held for the State Legislature, the public gave a fragmented verdict with no party having a majority in the House; and no party wanted to support any other party to form the government. The leader of the Samajwadi Party staked his claim as the single largest party to form the government. He claimed that he would prove his majority on the floor of the House. Implicit in the statement was the fact that being in power, it would be easier for him to engineer defections from the other parties. The Governor was not satisfied with his claim. On the recommendation of the State Governor, the Central Government imposed the President’s rule in the State on March 9, 2002. This is an instance of President’s rule being invoke in a State because it was not possible to form a viable government in the State due to the politically fragmented legislature.

[29] Art. 360 (1), the Constitution of India, 1950.

[30] Art. 360 (3), The Constitution of India, 1950.During the period any such Proclamation as is mentioned in clause (1) is in operation, the executive authority of the Union shall extend to the giving of directions to any State to observe such canons of financial propriety as may be specified in the directions, and to the giving of such other directions as the President may deem necessary and adequate for the purpose.

[31]Art. 360 (4), The Constitution of India, 1950, Notwithstanding anything in this Constitution (a) any such direction may include (i) a provision requiring the reduction of salaries and allowances of all or any class of persons serving in connection with the affairs of a State;

[32] (a) (ii). A provision requiring all Money Bills or other Bills to which the provisions of article 207 apply to be reserved for the consideration of the President after they are passed by the Legislature of the State.

[33]Art. 360 (4) (b), The Constitution of India, 1950. it shall be competent for the President during the period any Proclamation issued under this article is in operation to issue directions for the reduction of salaries and allowances of all or any class of persons serving in connection with the affairs of the Union including the Judges of the Supreme Court and the High Courts.

[34] The resolution approving the Proclamation is worded as follows:

“That this House approves the Proclamation issued by the President on clause (1) of Art. 356 of the Constitution in relation to the state of….”

[35] May be revoked by a subsequent Proclamation 352(2) or given a resolution disapproving it 352(7).

[36] Title X a, the German Constitution.

[37] Article 80a, the German Constitution. (1)If this Basic Law or a federal law regarding defence, including protection of the civilian population, provides that legal provisions may be applied only in accordance with this Article, their application, except when a state of defence has been declared, shall be permissible only after the Bundestag has determined that a state of tension exists or has specifically approved such application. The determination of a state of tension and specific approval in the cases mentioned in the first sentence of paragraph (5) and the second sentence of paragraph (6) of Article 12a shall require a two thirds majority of the votes cast.

(2) Any measures taken pursuant to legal provisions by virtue of paragraph (1) of this Article shall be rescinded whenever the Bundestag so demands.

(3) Notwithstanding paragraph (1) of this Article, the application of such legal provisions shall also be permissible on the basis of and in accordance with a decision made by an international body within the framework of a treaty of alliance with the approval of the Federal Government. Any measures taken pursuant to this paragraph shall be rescinded whenever the Bundestag, by the vote of a majority of its Members, so demands.

[38] Article 91, the German Constitution. (1) In order to avert an imminent danger to the existence or free democratic basic order of the Federation or of a Land, a Land may call upon police forces of other Länder, or upon personnel and facilities of other administrative authorities and of the Federal Border Police.

(2) If the Land where such danger is imminent is not itself willing or able to combat the danger, the Federal Government may place the police in that Land and the police forces of other Länder under its own orders and deploy units of the Federal Border Police. Any such order shall be rescinded once the danger is removed, or at any time on the demand of the Bundesrat. If the danger extends beyond the territory of a single Land, the Federal Government, insofar as is necessary to combat such danger, may issue instructions to the Land governments; the first and second sentences of this paragraph shall not be affected by this provision.

[39]115a (2), The German Constitution. If the situation imperatively calls for immediate action, and if insurmountable obstacles prevent the timely convening of the Bundestag or the Bundestag cannot muster a quorum, the Joint Committee shall make this determination by a two-thirds majority of the votes cast, which shall include at least a majority of its members.

.[40] 115a (3), The German Constitution. The determination shall be promulgated by the Federal President in the Federal Law gazette pursuant to Article 82. If this cannot be done in time, promulgation shall be effected in another manner; the determination shall be printed in the Federal Law Gazette as soon as circumstances permit.

[41] Supra F.N. 34.

[42] 90 (2), The German Constitution. The Lander, or such self-governing corporate bodies as are competent under Land law, shall administer the federal motorways and other federal highways used by long-distance traffic on federal commission.

[43] See C. C. Schweitzer, The Western Political Quarterly, 112-121 (1969), http://www.jstor.org/stable/446151.

[44] Ilana Gimpelson, Law and Emergency: An overview.

[45] See Harold C. Relyea, National Emergency Powers.

[46] See Thomas I. Cook, Two Treatises of Government 203-207, (1947). See also,http://www.lawnotes.in  (last visited Mar. 9 2016, 4 PM (N.T.M)).

 

[47] Albert L. Sturm, “Emergencies and the Presidency Journal of Politic”, 125- 126, 1949.

[48] U.S. Congress, Senate Special Committee on the Termination of the National Emergency,Emergency Powers Statutes, 93rd Cong., 1st sess., S.Rept. 93-549 (1973).

[49] The American Constitution, 50 U.S.C. 1601-1651.

[50]Ibid , Art. 1 S. 9.

[51] Ibid Note 51, Art. 1 S. 8.

[52] Ibid Note 51, Fifth amendment.

[53] Patrick A. Thronson, toward comprehensive reform of america’s emergency law regime.

[54] National Emergencies Act, Pub. L. No. 94-412, 90 Stat. 1255 (U.S.A.).

[55] www.law.umaryland.edu/marshall/crsreports/crsdocuments/98505_08302007.pdf. ( Last Visited on  Mar. 3, 2016, 7 PM (N.T.M))

[56] Ibid Note 56 Section 301.

[57] Supra Note 46.

[58] See the patriotic Act, 2000 (U.S.A.).

[59]See generally http://www.fjc.gov/history/home.nsf/page/courts-special_fisc.html (Last Visited on Mar. 4th , 2016, 4 PM (N.T.M)).

[60] In 1971 President Nixon used the legal framework of TWEA in order to enforce a de facto economic policy imposing a “tax” of tens of percent on imports to the US. In 1977 the International Emergency Economic Act was enacted, restricting the use of TWEA solely to the wartime.

[61] Supra Note 56, 1977 U.S.C.C.A.N. 4540, 4541.

[62] Ibid 50 U.S.C. S. 1702 (a) (1)(A) (2006).

[63] Ibid. Note 63 S. 1702(a) (1) (B) (C) (2006).

[64] Supra Note 56 S. 1701 (a) (2006).

[65] Ibid. S. 1701 (b) (2006).

[66] Ibid Note 66 50 U.S.C. S. 1702(b) (2) (2006).

[67] Ibid.

[68] National Emergencies Act, S. 301, (U.S.A.).

[69] Ibid, F.N. 70 S. 401(b), 50 U.S.C. S. 1641(b) (2006).

[70]Ibid, S.  202(b), 50 U.S.C,S. 1622(d) (2006)

[71] Ibid, 202(d) 50 U.S.C,S. 1622(d) (2006).

[72] Ibid, 202(a) 50 U.S.C,S. 1622(d) (2006).

Download Now

Difference Between A Trust And A Society

1

In this blogpost, Priyasa Patnaik, advocate and a student of Diploma in Entrepreneurship Administration and Business Laws by NUJS, writes about what is trust, what is a society and the difference between them.

received_893986527303460

Introduction

A business structure is important to decide to derive maximum benefit. Among the structuring options preferred by businessmen these days, trust and society constitute to be a few of the options. Both structures have similar purposes. However, their nature of the constitution, formation, taxations and dissolution are different.

What is a trust

Trust is an arrangement where two parties agree that one party will transfer his/her property to the other party who will hold the property for the benefit of another[1]. A trust is formed and registered under the provisions of the Indian Trusts Act, 1882 (ITA)

What is a society

Society is set of individuals who have come together for a common purpose. A society is incorporated under the provisions of Indian Societies Registration Act, 1860 (ISRA).

Difference between society and trust

Trusts are formed for any kind of lawful purposes under section 4 of the ITA.[2] There two types of trusts are depending upon the nature of segment of the public which is going to be benefited from the activities of the trust, i.e. private trust and public trust. The ITA governs the private trusts whereas public trusts are governed by The Charitable and Religious Trusts Act, 1920 and other respective state legislations on trusts[3]. Yet, trusts go on to be differentiated as revocable trust and irrevocable trust. A revocable trust can be revoked or modified by the grant or/settlor, however, the same cannot be revoked in event of the grantor’s/settlor’s death while an irrevocable trust cannot be revoked by the grantor since in this kind of arrangement the grantor has renounced his/her ownership of the trust property. For a trust to be determined as a revocable trust or irrevocable trust depends on an express or implied provision pertaining to revocation of the same in the trust deed. Society also has similar purposes like a trust but is not limited to charitable purposes[4] and is only governed by the ISRA. Further, winding up of society is possible when three-fifth of the members of the society decide to do so[5].

Minimum two individuals can form a trust by entering into and executing a trust deed expressly enumerating its objectives, property forming its subject matter, beneficiary and terms and conditions in detail. However, according to section 1 of the ISRA minimum requirement of members for society is seven. A family member can become a member of the trust whereas in a society a family member cannot become a member of society. However, in both trust and society residents of the foreign country can become trustees or members of the society subject to he/she not being a family member of the existing member of the society.

The members of the society form a managing committee which controls the affairs of the society whereas, in a trust, the settlor controls every single aspect of the trust[6]. The management of a trust is flexible compared to a society which involves a number of formalities ranging from its managing committee’s decision to approval from the Registrar of Societies.  Thus, trust is an effective means of succession arrangement where probate will not be required, thereby creating a framework wherein  the family property is protected and maintained efficiently while at the same time preserving the interests of family members[7].

In the case of incorporation of a society under the ISRA, the proposed society is required to prepare Memorandum of Association (MoA) and bye- laws of its own and file them with the Registrar of Societies along with other necessary documents. The MoA and bye- laws are the main documents of a society which specifically contain its objectives and terms and conditions for the cooperation of the society and conduct of business. The procedure for incorporation of society comprises of many steps unlike registration of a trust. Similarly, in the event of any change required to be done in the structure of the trust or the society, it is easier in the case of trust than society. This is so because in the case of a trust change has to be carried out only in the trust deed whereas in the case of society, changes has to be carried out by way of amendment to the MoA and accordingly in it bye- laws. Further, the title of the property in a trust is entrusted with the trustee/s whereas the title of the property in society is not with the members of the society but in the name of the society.

As far as taxation is concerned, a public trust is more tax efficient than society. A public trust, i.e. a charitable or religious trust under Section 11 to Section 13 of the Income Tax Act, 1961 (IT Act), is entitled to several tax exemptions and benefits. The income of the charitable or religious trusts and the donations made to these trusts are tax exempted subject to compliance with the conditions as provided by the IT Act. Otherwise, a private trust and a society registered for non- charitable or religious purposes are liable to pay income tax as any other organization in India.

Conclusion

Therefore, in view of the aforesaid points showing a comparison between a trust and society, it is hereby concluded that a trust as a business structure is advantageous over a society since it is hassle- free, accommodating and tax exempted (though in certain scenarios) without involvement of numerous procedures and formalities.

[1] H.C. Johari, Mukherjee’s on Indian Trusts Act, 1882, The Charitable & Religious Trusts Act, 1920 – Model Trust Deeds, Kamal Law House (2006), p. 4

[2] Section 4 of the ITA –  “Lawful purpose –A trust may be created for any lawful purpose-The purpose of a trust is lawful unless it is (a) forbidden by law, or (b) is of such a nature that, if permitted, it would defeat the provisions of any law, or (c) is fraudulent, or (d) involves or implies injury to the person or property of another, or (e) the Court regards it as immoral or opposed to public policy. Every trust of which the purpose is unlawful is void. And where a trust is created for two purposes, of which one is lawful and the other unlawful, and the two purposes cannot be separated, the whole trust is void. Explanation.–In this section the expression “law” includes, where the trust-property is immoveable and situate in a foreign country, the law of such country”.

[3]The Religious Endowments Act, 1863, the Charitable Endowments Act, 1890, and the Bombay Public Trust Act, 1950 are the relevant legislations for the recognition and enforceability of public trusts.

[4] Section 20 of ISRA – To what societies Act applies -The following societies may be registered under this Act:- Charitable societies, the military orphan funds or societies established at the several presidencies of India, societies established for the promotion of science, literature, or the fine arts, for instruction, the diffusion of useful knowledge, 2 *[the diffusion of political education] the foundation or maintenance of libraries or reading-rooms for general use among the members or open to the public, or public museums and galleries of paintings and other work of art, collections of natural history, mechanical and philosophical inventions, instruments, or designs”.

[5] Section 13 of ISRA – “Provision for dissolution of societies and adjustment of their affairs Any number not less than three-fifths of the members of any society may determine that it shall be dissolved, and thereupon it shall be dissolved forthwith, or at the time then agreed upon, and all necessary steps shall be taken for the disposal and settlement of the property of the society, its claims and liabilities according to the rules of the said society applicable thereto, if any, and if not, then as the governing body shall find expedient, provided that, in the event of any dispute arising among the said governing body or the members of the society, the adjustment of its affairs shall be referred to the principal court of original civil jurisdiction of the district in which the chief building of the society is situate; and the court shall make such order in the matter as it shall deem requisite.”

[6] S. K. Sarvaria, Commentary on the Indian Trusts Act: Including Model Trust Deeds & Forms, Universal Law Publishers(2007), p. 357

[7] http://articles.economictimes.indiatimes.com/2011-07-18/news/29787429_1_private-trusts-estate-planning-indian-trusts-act, accessed on 26th January 2016.

Download Now

How Can Founders Of A Trust Earn Money

1

 

In this blogpost, Shardool Kulkarni, Student of Pravin Gandhi College of Law, Mumbai and Diploma in Entrepreneurship Administration and Business Laws by NUJS, writes about what is trust and how can founders of a trust earn money.

-+91 98922 03755- 20150619_205341

Introduction

 Section 3 of the Indian Trusts Act, 1882 defines Trusts 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’ Trusts may broadly be divided into two categories, namely, ‘public’ and ‘private’. Public trusts may be further classified into ‘religious’ and ‘charitable’. The Indian Trusts Act, 1882 governs only private trusts.[1] Public trusts, on the other hand, are governed by central legislations such as the Religious Endowments, 1863, the Charitable Endowments Act, 1890, the Charitable and Religious Trusts Act, 1920, the Registration Act, 1908 and by state legislations such as the Bombay Public Trust Act, 1950. However, very few states have legislations, which govern public trusts.

A trust is said to be created when the author of a trust, with reasonable certainty of words or actions, indicates his or her intention to create a trust, the purpose of a trust, its beneficiaries, the trust-property and when he or she transfers the trust property to a trustee(s) unless the trust is declared by means of a will or the author of the trust himself or herself is to be the trustee.[2] Thus, the founder or ‘author’ of the trust can also become one of the trustees of a trust.

Modes of earning money for founders of a trust:

Trusts may be set up inter Vivos, i.e. during one’s lifetime or through wills. It is obvious that only the founders of trusts, which are established inter Vivos, would be able to reap financial benefits from the trust. Founders or settlors or authors of a trust may earn money through the following means:

Settlor as Beneficiary

The most direct method by which the settlor of a Private Trust may earn money through it is by naming himself as a beneficiary in the instrument of the trust. For instance, an individual who creates a trust to ensure segregation of his wealth among his descendants may name himself as one of its beneficiaries to safeguard his financial interests during his own lifetime. Moreover, trusts are particularly useful for high net worth individuals to manage their wealth while also assuring asset protection. They are a means of investing and safeguarding wealth for families who conduct business together and are likely to continue doing so in the future as well.[3]

Remuneration drawn as Trustee

The founder of a trust may also be its trustee. Under the Indian Trusts Act, 1883, a trustee has no right to remuneration unless a provision for such remuneration has been laid down in the instrument of the trust. Thus, if the founder of a private trust wishes to earn money through a trust as its trustee, he or she must lay down express provisions for the same in the trust’s instrument.

However, in case of a public trust created for charitable and religious purposes, Section 13 (1) (c) of the Income Tax Act states that if any part of such income or any property of the trust or the institution is used or applied, directly or indirectly for the benefit of any person referred to in Section 13 (3), then the tax exemptions given to the trust shall be revoked and it shall be treated as an ordinary Association of Persons and not as a charitable trust. Section 13 (2) (c) states that the income or property of the trust shall be deemed to have been applied for the benefit of a person if any amount paid as salary or allowances to the person is in excess of what would reasonably be paid. Section 13 (3) (a) specifically includes the author of a trust within the ambit of the aforementioned provisions. Thus, if an inordinate and unreasonable amount of money is paid as remuneration to the author of a public trust, then all taxation benefits extending to such trust may be revoked. Moreover, Section 36A (4) of the Bombay Trusts Act disallows trustees of public trusts from borrowing money for their own use from the property of the trust. Section 41D (1) (d) of the Bombay Trusts Act empowers the Charity Commissioner to suo moto suspend, remove or dismiss a trustee of a public trust on the ground of misappropriation of or improperly dealing with the property of the trust.

Irrevocable trusts: Safeguards against future creditor claims

By creating an irrevocable trust, the settlor ceases to have title over the property, thereby safeguarding it from any future claims by creditors in case of bankruptcy in the future. Moreover, the settlor or founder can retain implicit or indirect control through the terms of the trust deed.[4] However, any such safeguards are incidental in nature. A trust created solely with the intention to escape claims by creditors by a person who is bankrupt or may foreseeably become bankrupt at the time of creating a trust is void as the purpose of a trust must be lawful.[5]

Income Generation Through Mutual Funds and Venture Capital Funds

Trusts are pooling vehicles for investments such as mutual funds and venture capital funds.[6] These, in turn, can generate income for the founders or settlers.

[1] Preamble, Indian Trusts Act, 1883 (Act 2 of 1882)

[2] Id, S. 6

[3] J. K. Maheshwari, Trust: An effective vehicle for succession and estate planning, Economic Times, 2011.

[4] Id

[5] S. 4, Illustration (c), Indian Trusts Act, 1883 (Act 2 of 1882)

[6] Hanisha Ameseur & Bijal Ajinka, India, World Trust Survey 275 (2009).

Download Now

What Is The Strucutre Of The Board Of Control For Cricket In India

1

 

In this blogpost, Sayan Mukherjee, Student of University of Calcutta and the Diploma in Entrepreneurship Administration and Business Laws by NUJS, writes about the history of the board of control for cricket in India, its structure and reason why it was registered in Tamil Nadu. 

IMG_0504

Cricket in India at all levels is governed and managed by the Board of Control for Cricket in India (hereinafter B.C.C.I.), the wealthiest Board in the cricket world. Yet it was formed in December 1928 as a Charitable Society, registered under the Tamil Nadu Societies Registration Act.

History

Birth of Cricket took place in England during 1300 as an aristocratic pastime. Indians embraced it during the colonial period mainly because it helped in the socialisation process and allowed the commoners to meet with the aristocrats as well as their rulers, i.e., the britishers as equals on the fields of play. With the entry of  Indian team into the Imperial Cricket Conference , the then ICC and eventually to international cricket through the efforts and support of the elites, viz, Arthur Gilligan (English Captain- 1924-25), the Maharaja of Patiala, a British businessman named R.E. Grant Govan and Anthony De Mello, B.C.C.I. was formed as a consortium of six associations- Southern Punjab Cricket Association, Cricket Association of Bengal, Assam Cricket Association, Madras Cricket Association and Northern India Cricket Association. Govan was elected as the first President and Anthony De Mello as the Secretary. Initially, it was functioning as an unregistered association but on November 28, 1940, it got registered under the central legislation of the Societies Registration Act, 1860. Eventually after the enactment of Tamil Nadu Societies Registration Act, 1975, B.C.C.I. stood deemed registered under it (as per section 53 of the act)

Business structure

B.C.C.I. being an autonomous body, keeps its financial matters out of public scrutiny. The Board does not take any grant or financial assistance from the government and hence the ministry has not declared it as a public authority under the RTI Act, 2005. The B.C.C.I. only seeks government approval for sending teams abroad and inviting foreign teams within the territory. The sole revenue of the Board is generated mainly from broadcasting, merchandising, ad sales, sponsorships, and donations which it receives from various sources. Due to the rise of world media and popularity of the sport in the country by leaps and bounds, B.C.C.I. has been successful in arranging funds in huge amount, especially in the last decade. For example, Air Sahara was the official Indian cricket team sponsor for a period of four years at INR 475 crore.

B.C.C.I. claiming exemption as a charitable society had avoided taxes on its income. This is accepted only because of the fact that the Board cannot appropriate its profits among members even upon its dissolution (vide section 42- TN Societies Registration Act, 1975), but its debts and liabilities may, however, be satisfied. The whole revenue generated should be utilised in the development of the game of cricket and betterment of infrastructure at both state and national levels. These facts are expressly declared in the B.C.C.I. Rules and Regulations registered with the registrar of Societies.

According to the provisions of Tamil Nadu Societies Registration Act, the tax would be exempted only to the extent of charitable activities of the society. Thus, the Income Tax Department was justified when it withdrew this exemption in 2007-08 as B.C.C.I. commercialised its operation by promoting Indian Premier League (IPL) to hold the dying popularity of the game after India’s poor performance in 2007 WC, where Indian team failed to qualify for the top 10 teams in the world. Unfortunately, the Board failed to pay tax amounting to INR 373 crore, having paid only INR 41.9 crore in the 2009-10 financial year.

In the case of B.C.C.I., its legal framework is governed by TN Societies Registration Act, 1975. This was effected on and after April 22, 1978, when the act came into force.

The day-to-day activities of B.C.C.I. are governed under the supervision of the Board members comprising of:

(a) President

(b) Five Vice-Presidents, one from each zone

(c) An Honorary Secretary

(d) An Honorary Joint Secretary

(e) An Honorary Treasurer

(As per B.C.C.I. Rules and Regulations clause 7, pg.-15).

In addition, B.C.C.I. had to comply with the regulatory requirements as per the provisions of the said state enactment, such as:

  1. Accounts and audits (vide section 16)
  2. Maintaining a list of members (vide section 14)
  3. Memorandum of Association to be printed or typewritten and signed (vide section 7)

Now, when we have learnt about B.C.C.I.’s financial structure along with the basic legal requirements, abiding by which the Board operates; the organizational structure of B.C.C.I. is our next target.

Structure of BCCI

The main working of B.C.C.I.’s daily affairs is looked after by the Working Committee. The President is mainly questioned about its working, and he leads the Board officially. The Secretary helps in the operation of the bank accounts as a sole signatory and also his name is used when the Board sues or is sued by an outsider if disputes arise.

But in recent past, on Supreme Court of  India’ appointment, the  Lodha Panel has recommended reshuffling the organizational structure of  B.C.C.I. and a model structure is also made public by such authority, but the same is yet to be considered.

Why is B.C.C.I registered in Tamil Nadu

The reasons for B.C.C.I.’s registration in Tamil Nadu backdrops to the pages of history. When the Board was established, Bombay got the upper hand and became it’s headquarter. This was because Bombay was facilitated with an advanced port which the English cricket administrators used for transport and communication purpose. But along with Bombay, eventually, two other offices were established, viz., Madras and Delhi, so that the Board can have better control over the game of cricket in India. Yet, B.C.C.I. continued to operate as an unregistered body.

During the phase of Second World War, Mr Paramasiva Subbarayan, the former Chief Minister of Madras Presidency, was appointed as the 5th President of B.C.C.I. (term: 1938-46). He was Madras-based administrator and operated all the important affairs of the Board from the Treasury Office of B.C.C.I. in Madras. Thus, it was during his tenure and under his initiation that B.C.C.I. got registered under the Central Legislation- Act XXI of 1860 at Madras on 28/11/1940.

During the term of 17th President of B.C.C.I. (Mr M Chinnaswamy), the body was deemed registered under Tamil Nadu Societies Registration Act, 1975, when the act came into force on 22/05/1978. This was in accordance with the provisions of section 53 of the said statute. Other reasons for such registration may be stated herewith:

  • Simple process of registration (current provision- Chapter II of Tamil Nadu Societies Registration Act, 1975)
  • Guided by its own Rules and Regulations.
  • The limited scope of interference by an outsider.
  • Tax exemption due to charitable nature of operation- affiliation to certificates 12A and 80G of the Income Tax Department

Now, here it is. The Structure and Registration of B.C.C.I. has been just laid down before you. But wait! Did we just miss something? It was only one side of the picture. B.C.C.I. is much more than a charitable organisation both structurally as well as administratively. We just cannot miss the entire buzz that’s going around regarding B.C.C.I.’s legal status. Is it a “public authority”? In Zee Telefilms Ltd v. Union of India, the majority out of five-judge Bench observed that B.C.C.I. was not an instrumentality of State as under Article 12 of the Constitution of India. But in another case, the Central Information Commission (hereinafter C.I.C.) was asked by the government to treat B.C.C.I. as a “Public Authority”. The government reasoned that:

  • The Central or State government provides security in any B.C.C.I.’s sporting event.
  • The construction of stadiums by B.C.C.I. is often made on lands provided by the State governments at concessional rates.
  • C.C.I. performs public duty by selecting ‘India’ team for international events.

Thus, the Centre claims that B.C.C.I. is financed substantially by the government and should qualify as a “Public Authority.” We expect, the legal status of B.C.C.I. will be clarified on completion of this hearing.

References

Download Now

Comparison of Striking off And Winding Up Of A Company

2

In this blogpost, Pavitra, Student of University College of Law, Osmania University and  Diploma in Entrepreneurship Administration and Business Laws by NUJS, writes about, what is a company , what is striking off and winding up and the procedure for winding up of a company. 

my pic

What is a company

A company may be defined as an association of persons which has been registered under section 3(20) of the Companies Act, 2013(“The Act”) or any other previous act in force and has the characteristics of a separate legal entity, perpetual succession, limited liability ,share capital, common seal, transferability of shares and a distinction between ownership and management.

A company may be formed for the purpose of carrying on business to earn profits or can be formed even for non-business purposes. Thus irrespective of the object or business every company shall come into existence only after incorporation under the Act and on completion of registration, the Registrar shall issue the Certificate of Incorporation and the Companies name shall enter into the Register of Companies.

Once a Company is incorporated, it shall continue to exist and shall operate on going concern basis until it is wound up or declared defunct by the Registrar according to the provisions of the Act. This is because the company has come into existence by the process of law, law alone can dissolve it. The various modes in which a company can cease to be in existence are:

  • Members voluntary winding up
  • Voluntary winding up
  • Winding up by the Court
  • Striking off on application made by the Company
  • Striking off by the Registrar
  • Creditors voluntary winding up
  • Winding up subject to supervision of the Court

Striking off and winding up

The process of striking off and winding up may either be done voluntarily by a company or can be initiated under the process of law, without any application by the company. Since the  Act, has not yet notified the provisions relating to striking off or winding up, the same shall be governed by the provisions of the Companies Act ,1956, which prescribes the rules and procedures for the same.

Striking off as a method is followed in case of defunct companies as an alternative to winding up. Here a defunct company means a company which has never commenced any business nor carrying on any operation. Striking off can be done in two ways:

  1. Striking off by the Registrar :

Where a company had not been carrying on any business, the Registrar is given the power to remove the name from the Register provided he sends notices to the company which includes the Letter of Enquiry, Notice threating striking off and a final notice of removal. The notice shall be published in the Official Gazette unless a sufficient reason has been shown to him within the expiry of three months the Registrar shall strike off the name of the Register, and thus, the company shall be dissolved by law.

  1. Striking off on application made by the Company:

 This method is initiated by the company where the company:

  • Has got no adequate realizable assets or has such assets as shall not be sufficient to meet the costs of liquidation.
  • Does not maintain any bank account as on date.
  • Does not have any assets and liabilities as on date.
  • The Company has been inoperative from the date of its incorporation / The company commenced business/operations/commercial activity after incorporation but has been inoperative in the previous year(s) due to reasons as specified
  • As on date, the Company does not have any statutory dues towards Income Tax / Sales Tax / Central Excise/ Banks and Financial Institutions; any other Central or State Government Departments/Authorities or any Local Authorities.
  • There is no litigation pending against or involving the company.

Liability after striking off

The creditors shall not be affected by the striking off of the company because

  • The creditors can claim their dues from the Directors, Secretary and Treasurers because in the case of voluntary striking off if they gave a personal guarantee to indemnify any loss caused.
  • The creditor can also apply to the court for the winding-up of the Company even though its name has been struck off.
  • The creditors can apply to the court at any time within twenty years from the date of publication of notice that the name has been struck off.

Procedure for winding up of a company

According to Halsbury’s Laws of England, “Winding up is a proceeding by means of which the dissolution of a company is brought about and in the course of which its assets are collected and realised; and applied in payment of its debts; and when these are satisfied, the remaining amount is applied for returning to its members the sums which they have contributed to the company in accordance with Articles of the Company.”

Though the Act has got provisions for winding up under Sec 270 since it has not been notified the procedure followed is still being governed by Sec 484 of the Companies Act 1956. Under the old Act the powers are conferred to the High Court whereas under the New Act National Company Law Tribunal is being constituted with the powers of Company Law Board, Official Liquidator Office, Company Court in High Court and BIFR.Thus as a result of NCLT a lot of time can be saved.

Modes of winding up of a company

  1. Voluntary winding up:

A company may voluntarily wind up its affairs if it is unable to meet its financial obligations due to difficulties faced in carrying on its business operations or if it was formed only for a limited purpose. A company may voluntarily wind up itself either by passing:

(i)An Ordinary Resolution, where the purpose for which the company was formed has completed or the time limit for which the company was formed has expired or by way of Special Resolution by obtaining the consent of at least  3/4th shareholders. The special or ordinary resolution must approve (i) the winding up of the company,

(ii) the appointment of a liquidator to wind up the company and

(iii) fix the liquidator’s remuneration.

  1. Winding up by tribunal:

A Company may be wound up by the Tribunal if it is

  • unable to pay its debts or
  • If the minimum number of shareholders as prescribed in the below 7 in the case of public company and 2 in the case of private company.
  • by a Special Resolution resolved that the company is wound up by the Tribunal or
  • If the Tribunal has ordered the winding up of the Company.

For the purpose of Winding up of the Company by the Tribunal, it shall at the time of the order of winding up appoint an Official Liquidator from the panel as the Company Liquidator.

The expenses of the Liquidator shall be borne by the Company and shall be paid off after the assets are being disposed of and he shall be placed after the Creditors in the order of repayment.

Comparing striking off with winding up

A striking similarity between these two is that the company legally ceases to exist. But when compared to striking off, winding up is a more elaborate process which is necessarily implemented when the company has assets and liabilities. Striking off is preferred by those companies which have relatively no or less outside liabilities and is a much easier process. Another difference between striking off and winding up is that when a company is wound up, a liquidator is appointed by the court in charge of the winding up the process and manage the affairs of the wound up company. The liquidator takes full control of the Company and is responsible to collect and realize all assets of the

company, settle all the creditors’ claims and distribute the surplus asset (if any) to the

Company’s shareholders according to their entitlements. On the other hand, the striking off process entitles the Registrar to exercise his power under the Act to strike, the name of a defunct company, of the register if he is satisfied that the company is dormant in accordance with the requirements of the Act. Further, unlike winding up, the creditors of the company cannot apply to the Registrar or Court to strike off the name of a company of the Register. Further striking off is preferable because of the huge expenses which shall be incurred due to liquidation because all the expenses such as fees of the Liquidator, Court fees and other formalities shall be at the cost of the company and should be distributed from the assets when realised. Winding up is also a tedious and a time-consuming process as it almost takes a year or two to finish all the formalities of liquidation. As the previous act has been implemented, new types of Companies such as One Person Company, Nidhi Companies have come into existence. The procedure for incorporation of these companies has also become quite easy. But in the case of winding up of these companies to the same procedure shall be required to be followed.

Thus, the new legislation should make the procedure easy and depending upon the size of the company and the amount involved respective procedures should be adopted.

References

  • Companies Act 2013/1956
  • Ministry of Corporate Affairs Website
  • ICAI Publications
  • ICSI Web Modules

Download Now

What Is The Legal Procedure To  Structure An E-commerce Buisness In India

1

In this blogpost, Hari Manasa Mudunuri, Student of  University College Of Law, Osmania University and Diploma in Entrepreneurship Administration and Business Laws by NUJS, writes about what is e-commerce, steps needed to start an e-commerce business and the legal procedure to structure an e-commerce busines in India.

FullSizeRender 4

With the technological advancement in the information technology, it’s user friendliness, along with reduced broadband prices, westernization, modern lifestyles have increased the dependence and use of internet in day to day life in some form or the other. With the prolific innovations happening in the digital arena, the world too has adopted, the use of the internet as a medium for business.

What is E-commerce

In the traditional sense, trade is the exchange of  goods and services between the buyer and seller at a common place for consideration. The buying and selling of goods and services through the internet is called Electronic commerce or E-commerce.  There is no standard definition for e-commerce. It is a process where trade in goods and services will be done through online medium. E-commerce  has been classified by some authors into:

  • Consumer-to-consumer (C2C)
  • Business-to-consumer (B2C)
  • Business-to-business (B2B)

E-commerce includes both retail and wholesale trade and a wide range of services. Though it has impacted the traditional modes of trade and business, allied businesses of e-commerce like the banking, investments, Warehousing, logistics, information technology, advertisements, etc. have expanded. It contributes to the growth of the economy and helps bring in new talent and entrepreneurs. India too adapted to this change and E-commerce is now a multi-billion dollar industry in India. According to one study, as of 2011, India’s e-commerce market was worth Rs.50,000 crores out of which 80% was contributed by travel-related transactions, 15% by online retailing, with electronics and apparel the biggest contributors to sales.

For starting e-commerce business the following steps are needed:

  • Registration as per the extant laws
  • The IT architecture for doing business
  • Access to the source of goods
  • Storage, quality control and delivery mechanisms
  • Payment mode, safe payment gateways to ensure reliability.

               With increased E-commerce business  law is needed to regulate it in order to protect the interests of consumer and trader, the UN adopted the United Nations Commission on International Trade and Law (UNCITRAL),  passed by a resolution by the General assembly in 1997. India became a signatory to the UNCITRAL and to comply with its provisions, India modified its existing laws and also enacted the Information Technology Act,2000 (IT Act).  Therefore for structuring e-commerce the statutory filing and following requisite laws relevant to the model are to be followed. First and foremost the provisions of the Indian Contract Act,1872 need to be complied with to make the transactions lawful and binding on the parties.

Any type of business can step up e-commerce platforms. Like :

  • Sole Proprietorship.
  • Partnership
  • Company- private and public
  • Limited liability Partnership

Legal requirements for an E-commerce business

To ensure limited liability, it’s advisable for companies to engage in online business to get registered as required under the Companies Act, 2013. Similarly, the Consumer Protection Act, Laws relating to intellectual property, taxation, RBI rules, Evidence Act, CPC ,IPC etc. are also applicable to the online transactions. E-commerce players are also required to comply with cyber laws, Labour laws, various state laws as applicable.

The E-commerce business needs to obtain a tax ID number from tax authorities,  a Permanent account number, Tax deduction account number, Value Added Tax, Registration and Tax Identification number, professional tax if applicable, Service tax, etc .

The rules laid down by the RBI need to be followed when payments are made to sellers outside India and when investment is made by foreigners.  The business must also comply with the Payments and Settlements Systems Act,2007.

The typical modes of payment for the online transactions are:

  • Cash on delivery (COD).
  • Credit and debit cards
  • Online wallets
  • Smart cards
  • Net banking/ electronic fund transfers
  • Encashing Reward points, etc.

Another requirement the business needs to fulfill before starting its trade is to create a secure payment gateway. In India business can choose from two types of gateways that will be applicable to their websites:

  • Payment gateways with no setup fees– where a third party service that has tie-ups with many banks will provide a gateway. Example the PayPal, Payumaney, which will charge a higher transaction fee.
  • Payment gateways with setup fees- which are faster in processing. It’s where a Bank of the business’s choice will provide a payment getaway.

It’s also crucial to ensure that the mode method used is in accordance with RBI rules and the Gateway has acquired licenses from RBI.

The IT Act, uphold and strengthens the provisions of the Contract Act with respect to E-contracts. The act provides for penalties for the wrongful disclosure of personal information and financial information.

The Indian Contract Act, 1872 is applicable to all oral and written contracts entered into within the territory of India. Therefore it’s applicable to the Electronic transactions also. The Act provides for certain essentials to make the contracts legal, they are:

  1. there must be free consent of the contracting parties;
  2. There should be a lawful consideration for the contract
  3. The parties should be competent to execute contract;
  4. The object of the contract should be lawful

E-Commerce is based on electronically made contracts, which are executed through a software and known as E-Contracts.  E-contracts are very similar to traditional commercial contracts. The seller presents his goods and services at certain prices and terms to prospective buyers and the buyers consider and negotiate prices and terms, place orders and make payments, upon which the seller delivers the products.

However, there are certain new challenges that arise with E-contracts.

  • Contract with a minor excluding exceptions given in the Act are not binding. But it becomes very difficult to verify if the person who wants to buy the goods and services by entering into a contract is a major.
  • The terms and conditions provided in the E-contracts must be fair, and the customers need to be given an opportunity to understand them.
  • The contracts are also in relation to data security, privacy, data regulation and electronic payment security. Right to Privacy is recognized by the Supreme Court as a fundamental right and hence the website must be careful to prevent unauthorized access to personal information of the consumer and also refrain from misuse of such information themselves, the maximum penalty for failing to protect customers’ data is Rs. 5crore.

The buyer will accept the conditions and terms to contract by clicking on the option only when he is satisfied and want to go ahead with the contract. The businesses must also have a contract with the sellers listed on their websites if the business is not selling its own goods. Such contracts will define the roles of the contracting parties, their responsibility, liability and remedies upon infringement of such contracts. Contracts must also be clear about the return policy of goods by the consumer and replacement of goods by the business in case of damage to goods.

The purchased goods need to be delivered to the consumer by the E-commerce business within the agreed time, upon the completion of the sale. Business will  usually enter into specific contracts with logistic companies to deliver their goods to the consumer. Recently the Indian Post declared Rs.1000 cr revenue for the 2015-16 financial year for the delivery of consignments for the online sellers. In India cash on delivery option is  popular therefore an agreement with the delivery company must be specific about such requirements

The CONSUMER PROTECTION ACT,1986 (CPA) will be applicable in the case of online transactions only when actual sales take place and the person buying or rendering the service will be called a consumer within the definition the Act. However, the act isn’t applicable when the customer isn’t charged by the online platform. The liability arises under the CPA when there is a deficiency in service or defect in goods or occurrence of unfair trade practice. The CPA provides for redresses of disputes by:

  1. Removal of defects
  2. Replacement of goods.
  3.  Return of price paid.
  4. Compensation.
  5. Discontinue the unfair trade practice

Issues related to IT architecture

For a business to use online platform for trade, they must use licensed technology or their own technology.  The license must be taken from the rightful owner, and if the technology is self-developed, then the business must patent it.

The business must register it’s domain name by completing the required formalities with the National Registrar. A domain name is an internet address, example Google.com. A domain name is a form of trademark. The domain names must be distinct and can’t be similar only then will they be registered. Apart from the trademarks other intellectual property laws of India like the Copyright Act, Patent Act, Geographical indications need to be complied with.

Care should be taken to ensure that the merchandise sold the website is authentic, in order to prevent infringement of the brand’s rights.

Tax regime

Sales tax- Central sale tax is payable when the sale of goods is interstate to the central government at 2%. VAT is payable to the respective state government for intra-state trade, and the rate differs from state to state.

Service Tax for the purpose of levying this tax its assumed that the location of the buyer is where the service is provided, and the tax rate is 12.36% on value of the service provided

CUSTOMS ACT, 1962 is applicable on imports and export, and the duty is calculated as a percentage of value

Income Tax is payable by the business website in accordance with the Income-tax act,1961

Jurisdiction

The Delhi High Court , in the case of WWE Inc V. M/S Reshma Collection held that a company is deemed to carry on business in a place where the people purchase the goods from a website. Meaning that in E-commerce cases jurisdictions is the buyer’s place of residence

REFERENCE:

  1. www.firstdata.com
  2. hhtp://corporatelawsforindia.blogspot.in
  3. http://blog.qburst.com
  4. nishitdesai.com
  5. ey.com
  6. theresolveguru.com

Download Now

What Structuring Advice Would You Give To An Indian Entrepreneur Who Wants To Expand To China

0

In this blogpost, Kriti Kakkar, Student of Lucknow University and Diploma in Entrepreneurship Administration and Business Laws by NUJS writes about who is an entrepreneur and gives advice for an entrepreneur who wants to expand his business to China.

P_20160415_161250

Who is an entrepreneur

Let’s start by putting light on what an entrepreneur means and if there is a difference between an entrepreneur and a business owner. Practically no, a business owner expanding or venturing in the new field of work is an entrepreneur.

An entrepreneur is defined[1] as a person who initiates a venture to make benefit of an opportunity, he may decide the produce of the product as a decision maker and risk taker.

In India, the existence of entrepreneurs has a tremendous impact on the global economy. Though they are governed by the principles of law and have a contractual relationship with others but they also carry the certificate of incorporation of their company to get easy recognition in the world. An entrepreneur always wants to accelerate the business globally, but this decision cannot be taken lightly. A business owner would have to go over several factors before venturing out of the country.

  • Did they build a solid foundation at home?
  • Do they have bench strength for International expansion?
  • Is the talent pool at par in another country to what is available at home?
  • Will he be able to grasp cultural implication in a sale process?
  • Can he do better and offer a better product than the local competition?
  • Would an overseas expansion require investors?
  • Would the entrepreneur require an International partner in the country he is looking in expanding to?

Chinese market investment

China’s entrepreneur market (e-commerce) currently is doing much better. It is valued at 300 billion in 2014 whereas India is valued at 10 billion. It is the fastest growing economy. Hence a lot of Indian entrepreneurs are looking to invest in their business to expand in China, for example Make my trip was invested with 1,204 crores by a Chinese online travel major Ctrip.com[2]. Since there are quite a few similarities between the Indian and the Chinese market investment and venturing in a new market is quite favourable to entrepreneurs.

As an advisor I would advise my client who is looking to expand his entrepreneurship to the trade free zones with potential investors in China, the trade free zones have been established by the government in 2013 and offers relaxed rules regarding foreign investment, setting up of overseas companies and tax exemptions compared to the rest of the country which is overridden with red tape.

A trade free zone is a block requiring the cooperation of countries having signed a free trade agreement (FTA).  The aim of such FTA’s is that so there would be easy and free trade between the countries. The trade free zones of china are Tianjin Free Trade Zone, Guangdong Free Trade Zone, Fujian Free Trade Zone and Shanghai Pilot Free Trade Zone.

The trade free zones offer huge opportunities

  • Overseas suppliers use the opportunity of the online trading platforms such as Kua Jing Tong to sell products to Chinese the consumers directly without setting up any sort of commercial presence in the Chinese
  • Direct Imported Goods Market is another option for overseas suppliers wanting to find a way around agency fees.
  • Overseas alcoholic beverage producers and retailers can take advantage of new exhibition and trading centres to explore the Chinese market.(http://www.china.doingbusinessguide.co.uk/the-guide/free-trade-zones/)

It is better for an entrepreneur to have the business set up as a Private Limited Company as per Section 2(68) Companies Act,2013 as it removes personal liability from the board of directors, the investors are more willing to invest in the company.

The Indian Entrepreneur can also target the expat community for business growth in cities like Shanghai and Hong Kong it ensures certain acceptance at the beginning of the expansion while the entrepreneur is easing into the market culture of the another country.

I would further advise the client to

  • Be fluent in the Local Language of the Country

It always helps to understand and speak the language of the country you are looking to expand to especially where English is not spoken widely eg, China. It is not always feasible to be fluent in a foreign tongue; it helps to know the basic words of the language and showcases a sense of sensitivity for the cultural towards any potential partner.

  • Do market research before launching the product-

It is one of the crucial parts of advertising the product and getting genuine feedback on the reaction of the consumers. If one is say reinventing a cosmetics line and wants to research the impact of the product. The company can launch their product in few parts of the region. If the feedback is positive, then one can go ahead and launch the product, If the reaction is overwhelmingly negative, the board can take a decision on it. This strategy saves the company a lot of time and money.

  • To test if the product offered can seize the local competition –

A very good example of this point is IKEA, a major furniture brand offering affordable pieces. IKEA wanted to expand to China, they studied the structure of the people’s live in China and realized, and homes are much smaller than that in America and modified their designs to a more multifunctional and modular pieces. Now, this was at the time not been offered by any of the local competitive markets.

  • Respect the culture driving the society-

Product offered by a company only works if the people accept it and are willing to buy it. Hence, it is of utmost important to understand the culture of a society and to brand the product around it. One must also make policies of the company as per the culture of the society. Policy which worked back home may not necessarily work for employees in another country. Hence, the policies of the company must always be culture appropriate.

  • Import and Export-

It may not be necessary to ‘set shop’ in China to sell a product or expand one’s business. An e-commerce retailer may also sell their products on websites or target expat community specifically through websites such as www.shanghaiexpat.com.

As the e-commerce market is growing by leaps and bounds ,If an e-commerce retailer can utilize free trading sites , he can also import commodities from FTZ like shanghai and Hong Kong and sell the products at home.

  • Hire a distributor –

If one does not want to go through the hassles of ‘setting up shop’ or has no time to look into the sales of a foreign country, then one can hire a distributor whose sole job would be to look after everything on your behalf and shall simply report back to you.

Conclusion

I would advise the above-mentioned points to an Indian Entrepreneur, who is looking to expand in china depending on the nature and structure of the business he is looking into for expansion.

I would advise the above-mentioned points to an Indian Entrepreneur, who is looking to expand in china depending on the nature and structure of the business he is looking into for expansion.

[1] http://www.businessdictionary.com/definition/entrepreneur.html

[2] http://articles.economictimes.indiatimes.com/2016-01-08/news/69615415_1_online-travel-market-travel-company-market-share

Download Now
logo
FREE & ONLINE 3-Day Bootcamp (LIVE only) on

How Can Experienced Professionals Become Independent Directors

calender
28th, 29th Mar, 2026, 2 - 5pm (IST) &
30th Mar, 2026, 7 - 10pm (IST).
Bootcamp starting in
Days
HRS
MIN
SEC
Abhyuday AgarwalCOO & CO-Founder, LawSikho

Register now

Abhyuday AgarwalCOO & CO-Founder, LawSikho