Have you ever wondered why all the products have different shapes may be in packaging or prodcution ? what if someone starts selling the same product or similar product with same or similar name or same shape or similar shape which is in more demand & has value. If this is the case, the original seller who owns the product will incur losses & its brand value will decrease as the others will not think of building brand value but only encashing upon others brand by selling cheap products. To protect the rights of owners & consumers interest, we have various laws, one of them is Trade Marks Act, 1999. In this article we will learn about the meaning of shape mark and how courts protect the rights of shape mark owners. The readers will also know about punitive damage and does the court have power to order punitive damage in favour of the shape mark owner or not. Such explanations have been made taking into consideration the landmark decision of Zippo v. Anil Moolchandani (2006).
What are shape marks
Shape marks are three dimensional shapes which can be registered under the Trademarks Act, 1999. It should be distinctive in nature and should help in identifying a product by its distinctive packaging shape. Trademark Act, 1999 does not provide any particular definition of shape mark but with growing times, the same has been well recognised as a non-conventional trademark.
As per the EUIPO Trademark Guidelines 9.3..3, “a shape mark is a mark consisting of, or extending to, a three-dimensional shape, including containers, packaging, the product itself or its appearance. The term ‘extending to’ means that shape marks cover not only shapes per se, but also shapes that contain other elements, such as word elements, figurative elements or labels.”
By going through the above definition it can be said that shape marks includes shape of goods, packaging, combination of colours and also it should be remembered that a shape mark cannot be registered if the shape is generic in nature i.e. the shape is because of the nature of the goods or the shape is necessary to obtain a technical result or it gives only substantial value to the goods. For example, the shape of Coca Cola Bottle & shape of Pepsi Bottle is different because it has been protected as shape mark under Trademarks Act, 1999 and no other brand can copy each other’s shape, if they do so it will amount to infringement.
Why should we study shape marks with respect to the Zippo v. Anil Moolchandani case
The case of Zippo v. Anil Moolchandani (2006), was one of its first kind, where the Delhi High Court protected the rights of shape mark owner thereby providing a positive interpretation of the Trademark Act, 1999.
Facts of the case
The Plaintiff was a company registered in the USA, dealing with manufacture and trade of lighters under its invented trademark ‘Zippo’. Plaintiff also used the same trademark to other various products manufactured by it and therefore claimed that their trademark became a well known trademark due to the promotion of the different products under the name Zippo across 120 countries.
The Plaintiff further claimed that the shape of the lighter is unique & different from others having windscreen chimneys attached are unique and have acquired a secondary meaning, which denotes plaintiffs cigarette lighter.
The product was sold across 120 countries including India under the trademark named Zippo at Duty free shops, embassies, consulates and brought into the country by tourists.
The Plaintiff had also claimed to be the proprietor of a registration of a 3 dimensional shape of its lighter by registration No. 714368 since 10th May 1996.
In February 2006, the Plaintiff got to know that the Defendant was selling counterfeit Zippo Lighters from its various outlets in Delhi. Those lighters not only bore the word mark Zippo, but also constituted infringement of the plaintiff’s shape mark.
It was also alleged by the Plaintiff that defendants infringed the trademark and was also responsible for passing off the cheap quality lighters in the name of Zippo which has caused unquantifiable damage to the Plaintiff.
Observation given by the court
The Court observed that even if the Defendant does not use the mark ‘Zippo’ on the lighter and continues to sell, the customers may get confused between the lighter sold by Defendant with that sold by the Plaintiff.
The Court further observed that the Defendant sold the lighter which appeared to be deceptively similar with the Plaintiff’s lighter, as the lighter sold by the Defendant did not have distinguishing features, therefore the Plaintiff had a strong case from their end.
The Court had opined that the Plaintiff has been marketing the products through various means by prominent magazines, including in-flight magazines and that the goods of the Plaintiff-company are available in India in a number of outlets in most major cities. The Defendant on the other hand had been trying to encash upon the Plaintiff’s goodwill by selling the lighter at a cheaper rate thereby degrading its quality. This ipso facto was responsible for causing damage to the Plaintiff. Thus protecting the rights of the Plaintiff alongside the interest of the consumers was indispensable.
The Court observed that even if it presumes that the registration of the three dimensional device (lighter) will not be equivalent to the registration of the shape of lighter depicted on the registration certificate, the case of infringement subsists on account of the word mark, ZIPPO.
Court also observed that the Plaintiff failed to prove the actual damage suffered by him, due to the act of the Defendant, thereby failing to decide the amount of damages he requires. Owing to such a scenario, it would be the Court who will decide the amount to be offered as damages.
Judgment
The Court awarded the punitive damage of 5 lakhs in favour of the Plaintiff, to be paid by the Defendant.
The Court further passed a decree of permanent injunction against the Defendant from selling, distributing & marketing lighters under the trademark ‘Zippo’ and/or having a three dimensional shape identical or similar to that of the lighter of the Plaintiff company along with proportionate cost of the suit.
Conclusion
As has been rightly observed by the court of law in the discussed case above, shape marksare 3 dimensional, unique and should be of distinguishable shapes which helps in identifying different products thereby also developing brand value. It is important to protect the rights of the shape mark owner in order to protect the consumers interest in the long run. Thus, courts should not restrict themselves from awarding punitive damages in order to curb the future infringement of other trademark & shape marks.
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This article is written by Ms. Sushree Surekha Choudhury, a law graduate from KIIT School of Law, Bhubaneswar. The article gives a detailed overview of Division I of Schedule III of the Companies Act, 2013 which contains regulatory provisions and instructions for the preparation of financial statements for companies complying with the Companies (Accounting Standards) Rules, 2006. It talks about the steps, diligence, and compliance requirements that companies must follow while preparing their balance sheet, statement of profit and loss, and consolidated financial statement as per Division I of Schedule III.
It has been published by Rachit Garg.
Table of Contents
Introduction
Schedule III of the Companies Act, 2013 provides guidelines and instructions for the preparation of financial statements, which include the balance sheet, the statement of profit and loss, cash flow statements, notes to accounts or notes to financial statements, and related statements of a company. Any company incorporated under the Companies Act, 2013 is required to prepare its annual financial statements as per the provisions of Schedule III and Section 129 of the Act. It is mandatory to prepare and file the annual financial statement because it contains a true record of the company’s state of affairs and a reflection of its financial health. Further, a financial statement is used for taxation and auditing purposes, and is a record of the company’s financial and investment activities.
The preparation of financial statements for a company is an integral part of their financial management and disclosure as per regulatory requirements. Schedule III refers to Section 129 of the Companies Act, 2013, and both provisions are read along and integrally complied with. Schedule III provides guidelines for the preparation of the balance sheet and the statement of profit and loss of the company, and Section 129 talks about the preparation of the annual financial statement by the companies.
Division I of Schedule III contains instructions for the preparation of financial statements for companies complying with the Companies (Accounting Standards) Rules, 2006. Division I deals with the instructions for the preparation of balance sheets, statements of profit and loss, and consolidated financial statements for companies complying with the 2006 regulation.
In this article, we will learn more about the preparation of financial statements for companies that comply with Division I of Schedule III of the Companies Act, 2013.
Components of financial statement
Mentioned below are the various components of a financial statement:
Balance sheet
The main component of the financial statement is the balance sheet of the company. The balance sheet contains information about the equity and shareholding pattern of the company and the money involved in these activities, an account for the assets and liabilities of the company, and notes on the accounts providing all such details as may be necessary and essential.
Statement of profit and loss
The statement of profit and loss reflects the overall (net) profit made or loss incurred by the company. It also includes factors like unit economics, logistics, and operational charges, all other expenses of the company, and the revenues generated by the company from different sources. Finally, it provides an account for the net profit and loss statement after adding the gains and deducting the expenses, taxes, depreciation, etc. It also provides information about the equity structure of the company, including the total equity given up by the company (in amount and number) and such relevant information as may be necessary.
Cash flow statement
A cash flow statement reflects the company’s inflow and outflow of cash in a given financial year. Inflow and outflow of cash are accounted for from the state of affairs of the company in the form of financing, investment, operations, etc. It also accounts for dividends paid and the value of repurchased shares of the company.
Note to financial statements
A note to financial statements, or note on accounts, is a list of detailed information provided by the company in relation to its revenue, expenses, and other heads under the profit and loss statement as well as the balance sheet. For every entry made in these statements, the note to the financial statements provides a detailed description as and when necessary.
Equity statement
The equity statement provides the equity structure of the company and the changes that have occurred to it over time. It makes a part of the balance sheet as well as the statement of profit and loss to provide data for the equity diluted by the company, shareholders’ equity (in number, nature and amount), buybacks, forfeited shares, etc.
Consolidated financial statement
When a company owns one or more subsidiaries or associate companies, they are required to file a consolidated statement of profit and loss and a consolidated balance sheet providing details for the holding company as well as its subsidiaries, associate companies, and joint ventures, etc. These companies must comply with the requirements of Division I of Schedule III while doing so.
Section 129 of Companies Act, 2013
Section 129 of the Companies Act, 2013, talks about the annual financial statement that a company is required to publish. These are treated as records of the company’s businesses and used as evidence of their activities.
Section 129(1)
Section 129 of the Companies Act, 2013 reflects upon the nature of a financial statement by stating that a financial statement shall be a “true and fair view of the state of affairs of the company.” The financial statement will comply with the requirements of Schedule III of the Act, and the accounting standards set forth under Section 133 of the Act.
Section 129(1) provides that the provisions of this Section will not apply to companies whose financial statements are prepared under the direct regulations of the Central Government or a specific Act of Parliament. For instance, the provisions of Section 129 shall not be applicable to banking companies, insurance companies, or companies engaged in the generation, supply, or distribution of electricity. Thus, if a company has refrained from sharing any information that is not statutorily required to be disclosed, the financial statements of the company will not be considered incomplete or deceiving for not disclosing a true view of its state of affairs. Section 129 (1) applies in the cases of:
the Electricity Act, 2003, for companies in the supply or distribution of electricity.
Similarly, for any other class of companies being governed under special statutes, the regulations under those statutes will be applicable in the preparation of their financial statements.
Section 129(2)
Section 129(2) states that the annual financial statement prepared by the company as per Schedule III and other provisions of the Act will be presented by the Board of Directors at the Annual General Meeting (AGM) of the company under Section 96 of the Act.
Section 129(3)
Section 129(3) states that companies with one or more subsidiaries that are required to prepare a consolidated financial statement shall do so in accordance with Schedule III of the Act in the same manner as a financial statement under this Section is prepared, in addition to following the relevant and applicable accounting standards. These companies preparing a consolidated financial statement will additionally disclose all necessary information as required in their balance sheet, statement of profit and loss, and notes on accounts in the consolidated financial statement. These companies will be required to comply with the additional rules or mandatory regulations that the Central Government can prescribe from time to time.
Section 129(4)
The preparation, adoption, and audit of the consolidated financial statements of subsidiaries or associate companies will be similar to those of their holding company.
Section 129(5)
The regulators have given importance to compliance, and as such, every company filing a financial statement or consolidated financial statement is required to comply with the relevant Accounting Standards formulated by the Ministry of Corporate Affairs (MCA).
Section 129(5) states that companies that deviate from the prescribed accounting standards will disclose information about such deviations in their financial statements. They shall also provide the reasons for such a deviation.
Section 129(6)
Section 129(6) talks about the discretionary powers of the central government. Any class or classes of companies can be exempted by the Central Government from complying with certain regulations and rules in relation to the preparation of their financial statements. The Central Government can do this suo moto via notification, or on an application by these classes of companies. Such an exemption must be backed by appropriate reasoning, and it can either be unconditional or contingent on notified conditions.
Section 129(7)
Section 129(7) talks about the penalty and punishment for contravention of this Section. When a company fails to comply with the rules, regulations, and standards set forth under the Act and thereby contravenes the provisions of this section, the managing director, the whole-time director (in charge of finance), the Chief Financial Officer (CFO), or any other person in charge of complying with the regulatory requirements shall become liable. In the absence of all these officers, all the directors of the company will become liable and punishable with imprisonment up to one year, a fine of fifty thousand rupees, extendable to five lakh rupees, or both.
Accounting standards for the preparation of financial statements : Section 133 and Indian Accounting Standards (Ind AS)
A financial statement acts as evidence for the company’s affairs and helps creditors, investors, and other shareholders understand the business and growth of the company. The financial statement is important because it helps evaluate the earning potential of the company. Schedule III of the Companies Act, 2013, read along with Section 129 and additionally complying with the Accounting Standards set for under Section 133 of the Act, and by the Ministry of Corporate Affairs (MCA) provides guidelines and regulates the preparation of the financial statement of a company.
The Ministry of Corporate Affairs, with the approval of the Central Government and as per the recommendation of the Institute of Chartered Accountants of India, prepared the Companies (Accounting Standards) Rules, 2006. The regulation prescribes accounting standards that companies are mandated to comply with while preparing their financial statements as per Division I of Schedule III of the Companies Act, 2013. As per the ICAI recommendation, Accounting Standards1–7 and 9–29 are applicable to companies preparing their financial statements as per Division I of Schedule III. These accounting standards deal with different compliance requirements by the companies in filing their financial statements, such as disclosure requirements, valuation standards, preparation of cash flow statements, an account for employees’ benefits, an account of investments, and equity earnings, among others. These are ethical standards and regulatory requirements that companies must comply with while preparing their financial statements as per Division I of Schedule III of the Act.
Division I of Schedule III of the Companies Act, 2013 : an overview
Division I contains information about the preparation of the balance sheet and provides a format along with general instructions for its preparation in the first part. Further, it provides instructions for the preparation of the statement of profit and loss in a format that includes accounting for the company’s revenues, expenses, depreciation, taxes, and other heads to obtain a final statement that indicates whether the company is profitable or making losses. Finally, Division I instructs on the preparation of consolidated financial statements for companies that are required to file them as per the 2006 regulation. Division I also contains instructions for the addition of notes on accounts for each of these components containing relevant information.
Mentioned below are the provisions for the preparation of financial statements as per Division I of Schedule III following the Companies (Accounting Standards) Rules, 2006:
Preparation of balance sheet and statement of profit and loss of a company : general instructions
Division I of Schedule III of the Companies Act, 2013 talks about the manner in which financial statements should be prepared by a company that complies with the provisions of the Companies (Accounting Standards) Rules, 2006. It is mandatory for companies registered under the Companies Act, 2013 to comply with the regulatory and statutory requirements for preparing and filing their annual financial statement. Division I of Schedule III is specifically applicable to companies that comply with the Companies (Accounting Standards) Rules, 2006.
Compliance with the 2006 regulation
Division I of Schedule III begins with a set of general instructions for companies to prepare their balance sheets, and profit and loss statements for each financial year. For the purposes of this Schedule, companies that require compliance with the provisions of the Companies Act, 2013 and the Companies (Accounting Standards) Rules, 2006 will also continue to comply with the requirements for the preparation of balance sheets and financial statements as per the provisions of this Schedule unless any addition, amendment, substitution, or deletion is made by any amendment. When any addition, substitution, deletion, or change is made under this Schedule, the same shall become applicable to all the companies under the ambit of this Act or the Companies (Accounting Standards) Rules, 2006 as well.
Disclosure requirements
The disclosure requirements set forth under Division I of Schedule III of the Companies Act, 2013 are in addition to all the other provisions for disclosure requirements under the Companies Act, 2013 and the accounting standards prescribed under the Companies (Accounting Standards) Rules, 2006. The provisions of Division I of Schedule III cannot be substituted with those of these regulations regarding disclosure requirements. Whenever any additions are made to these rules and regulations or when the companies need to make additional disclosures in their financial statements, they must do so under the head of “notes to accounts” in their financial statements, along with complying with all the mandatory disclosure requirements under Division I of Schedule III and the interrelated rules. These “notes to accounts” will contain information in addition to that disclosed in the financial statement, such as:
Details of the items listed in the financial statements for a particular financial year and disaggregation of those recognised items.
A list of those items that do not qualify as recognised items in the financial statement and information about the same.
Notes to accounts
The preparation of the balance sheet and the statement of profit and loss should be done in such a manner that a balance is maintained in the disclosure of information on list items for those listed in these records and those mentioned in the “notes to accounts.” The information should be disclosed in such a way that a perfect amount of information is shared, neither more than what is needed to be disclosed nor keeping any important information from being disclosed. Each item on the face of the balance sheet and statement of profit and loss shall be cross-referenced to any related information in the notes to the accounts. The relevant data or additional information that is required to be disclosed is added in detail to the notes to accounts.
Turnover and rounding off
The total income made by the company or the revenue generated by them in a given financial year is referred to as the annual turnover of the company. For ease of making calculations, these values are rounded off in a manner provided by Division I of Schedule III. Division I of Schedule III of the Companies Act, 2013 also provides instructions about rounding off the turnover of a company during the preparation of financial statements based on the turnover of the company. For ease and accuracy of calculations, the turnover of a company can be shown in the financial statements after rounding off in the following manner:
When the turnover of the company is less than one hundred crore rupees, it shall be rounded off to the nearest amount of hundreds, thousands, lakhs, millions, or decimals thereof while making an entry in the financial statement of the company.
When the turnover of the company is one hundred crore rupees or more, it shall be rounded off to the nearest lakhs, millions, crores or decimals thereof while making an entry in the financial statement of the company.
Additional information
The manner in which these numbers in the financial statement are rounded off will be maintained uniformly throughout the report. Further, when a company files a financial statement, it should also provide data regarding the previous reporting period’s financial statement for the items listed in the current financial statement. This information is provided as comparative data to assess the health of the business and its financial growth over the years. An exception to this general rule is the very first financial statement filed by the company after its incorporation, since there has been no previous reporting period. All the terms used in Division I of Schedule III will be applicable as per the relevant accounting standards applicable for the preparation of the financial statements of a company.
Division I Part I : preparation of the balance sheet
Part I of Division I under Schedule III provides guidelines for the preparation of the balance sheet of a company. A balance sheet should begin with the name of the company, the financial year for which the balance sheet is being prepared, and the amount in rupees for which the accounts in the balance sheet are provided. For each item listed in the balance sheet, the company shall provide information (in figures) for the current reporting year as well as the previous reporting year.
A simple balance sheet is an account of the assets, equity, and liabilities of a company and makes a sum total calculation of each to figure out the health of the business. In simple terms, a balance sheet accounts for the total assets (current and non-current assets), total liabilities (current and non-current liabilities), and total shareholders’ equity, which includes share capital and retained earnings.
Equity and liabilities
The balance sheet of a company should have a detailed description of the equity owned or shared by the company and the liabilities borne by it in the given financial year. The equity and liabilities item will contain detailed information about the following:
Information about the shareholders’ funds that include details about the share capital, money in the company’s reserves and surplus fund. It also contains information about the money received in shareholders’ funds against share warrants.
Information about the amount pending allotment against share application.
Details about current liabilities like short term borrowings and trade payables, and non-current liabilities like long term borrowings, deferred tax liabilities (a tax liability that is created in one financial year but becomes due in the next financial year. This is due to the difference in the time of its accrual and the due date.), and other long term provisions such as long term loans, securities, etc. Trade payables under current liabilities include outstanding dues from micro and small enterprises, outstanding dues other than these enterprises like dues to creditors and other short term provisions like loans taken for a shorter time period, temporarily rented equipment, etc., and current liabilities.
A total account of all these details is mentioned in the equity and liabilities column.
Operating cycle
Companies regularly engage in buying goods, preparing finished products, selling these products, and receiving cash or cash equivalent against the sale. This whole procedure, from buying the goods or raw materials to receiving cash against the sale, is one whole cycle. The complete cycle is known as the operating cycle of a company’s products or services.
Trade receivable and trade payable
Trade receivables refer to the amount that the company will receive from its customers or vendors for the goods sold or services provided by them in an operating cycle.
Trade payables refer to the amount that the company is billed to pay to its suppliers and other vendors for the goods bought by them during an operating cycle.
Current liabilities in the balance sheet
Further, for the purposes of Division I of this Schedule, an item can be classified as a liability if it fulfils the following criteria:
A current item becomes a liability if the company intends to settle it in its usual ongoing operating cycle.
A current item can be re-classified as a liability when it is held primarily for the purpose of trading.
A current item converts into a liability when it is due for settling within 12 months from the reporting date.
A current item is seen rather as a liability when the company does not have an unconditional right to deviate from setting or trading it for a period of 12 months beyond the reporting date.
Except under these conditions, assets that fall within any other category are classified as non-current liabilities while preparing the balance sheet of the company. When any asset or liability under these provisions is intended to be traded, such “trade receivables” are considered in reference to the amount due for goods sold or services rendered in the regular and usual course of business. Similarly, when the amount due is in reference to any goods purchased or services availed, the items are classified as “trade payables.” All this information shall be notified by the company in “notes on accounts” while preparing the balance sheet.
Share capital
For the purpose of listing and totalling the share capital of the company, the following shall be taken into consideration and computed to obtain the net data:
Total shares authorised by the company (in numbers and amount).
An account for the issued shares (in number) and an account for the subscribed and fully paid up shares, and subscribed but not fully paid up shares.
The par value of each share.
An account for the number of shares that were outstanding at the beginning of the reporting period and those outstanding at the end of it.
The kinds and nature of shares allotted – rights, preferences, and limitations attached to each of those shares or share categories. Other details may be necessary for the distribution of dividends or repayment of capital, as and when necessary and applicable.
Division of shares among different classes in the company and the number and nature of shares held in each class is to be taken into consideration in reference to the holding company, its subsidiaries or the associates, and the aggregate of the values including those held by the ultimate holding company.
An account for shares held by individual shareholders when the total shares held by them accounts for more than 5 percent of the total share capital of the company.
An account for shares that are kept aside or reserved for options, contracts, commitments, or sale or shares/disinvestment.
An account of the aggregate shares allotted (in number and class) as fully paid up contracts in advance without receiving a payment in cash is to be provided. Additionally, an account of the aggregate shares allotted (in number and class) as fully paid up bonus shares, and the shares that are bought back are taken into consideration. All this data is accumulated for the previous 5 years from the date on which the balance sheet is prepared.
An account for any convertible (to equity/preference shares) securities issued by the company.
An account for the unpaid called up shares (including those by directors and other officeholders).
An account of shares forfeited by the company.
An account for total shares held by the promoters of the company (in number, value and nature).
Reserves and surplus
For the preparation of the balance sheet, the amounts accounting for the different reserves of the company need to be included. A company and its different departments maintain a reserve account with the bank, and the amount in these reserves is part of the company’s financial statement. Different reserve accounts of the company include:
Capital reserves account
Capital redemption reserve
Securities premium account (now omitted)
Debentures redemption reserve
Revelation reserve
Share options outstanding account
Any other reserves or accounts that may be maintained by the company.
Further, the company keeps an account for the surplus amount left at the end of a financial year. This is the balance amount after allocating different payables to the company. This part of the balance sheet shall account for all other additions and deductions that are computed for that financial year.
Non-current liabilities : Long term borrowings
Borrowings can be short term or long term depending on the nature of the borrowing and the number of years for which they are availed. Borrowings of the company are added as a liability in the company’s balance sheet. Further, long term borrowings fall into the category of non-current liabilities. Long term borrowings include debentures or bonds, loans from banks, investors, or other parties, deposits, deferred payments, maturities, advances of any nature, etc. All these outstanding payables shall be clubbed together to constitute the long term borrowings of the company for the purpose of preparing the balance sheet.
Once all the borrowings are accounted for, they will be classified further. The classification is done in order to determine the priority of repayment of loans and advances. Thus, borrowings are divided into secured or unsecured loans and advances. The nature of security involved in the case of secured loans and borrowings should be further mentioned. Other borrowings, like debentures and bonds, shall be listed in the order of their date of maturity, repayment, or redemption. The company can also reissue these bonds and debentures after redemption. In that case, it shall be disclosed in the financial statements of the company.
Borrowings also include trade payables of the company and any other amount that is due payment from the company to an institution, investor, or otherwise. Apart from these, the company is also obliged to pay certain benefits or bonuses to its employees, whenever promised and applicable. This includes stock options, bonuses, or other provisions made by the company with regard to employees’ benefits. These are all considered ‘payables’ of the company in a given financial year.
Short term borrowings
Companies frequently make short term borrowings. These borrowings form part of the current liabilities of a company as they are required to be repaid in a shorter period of time as compared to long term loans and advances. Short term borrowings are in the form of loans and advances from different sources like the bank, investors, third parties, related parties, and deposits, among others. These borrowings are usually payable at a predetermined future date or on demand. Further, similar to long term borrowings, short term borrowings, too, are classified on the basis of their nature and collateral security. Secured borrowings are given priority in repayment over unsecured borrowings. These borrowings are entered into the balance sheet in the order of their repayment on the basis of nature, a predetermined date, and/or demand.
Trade payables
Further, the notes on accounts for these borrowings and current liabilities shall disclose information relating to trade payables of Micro, Small and Medium Enterprises (MSMEs). These notes shall contain information such as the loans or advances availed by these enterprises and an account of those that remain unpaid at the end of an accounting year. Such amount due and interest paid/due by the MSME company to its seller as per the provisions of Section 16 of the Micro, Small and Medium Enterprises Development Act, 2006. These notes shall carry such other information related to the MSME companies and their repayment of loans and interest as per the provisions of Division I of this Schedule of the Companies Act, 2013 as well as the Micro, Small, and Medium Enterprises Development Act, 2006. The notes on accounts shall also contain information about the dues and payables by the creditors of the company.
Other current liabilities
Further, current liabilities also include certain other forms of liabilities, such as interest accrued on borrowings (due/not due), current maturities of obligations, advance incomes received, as well as dividends due payment. It also includes application money due for refund, which was charged during allocation of securities. Further, current liabilities are inclusive of matured deposits or debentures that are due for payment. Other short term provisions, like the amount allotted for employees’ options and benefits, also form part of current liabilities for the purpose of preparation of the balance sheet.
Assets
The company must share accounts of its assets for a given financial year on the balance sheet. These accounts shall include information regarding both current and non-current assets. A total of these current and non-current assets will form part of the assets column in the balance sheet.
Current assets include:
Current investments
Inventories
Trade receivables
Cash and cash equivalents
Loans and advances (short term)
Other current assets.
Non-current assets include:
Property, plant and equipment
Intangible assets
Capital work-in-progress
Intangible assets under development
Non-current investments
Net deferred tax assets
Loans and advances (long term)
Other non-current assets.
These items shall be followed by notes in the financial statement with relevant information. As per the provisions of Division I of this Schedule, an asset will be considered a current asset when it fulfils certain criteria.
Current assets in the balance sheet
Criteria for classification as current assets are:
When the asset is intended for sale or consumption or is to be realised by the company in its normal operating cycle, it will be classified as a current asset.
When an asset is classified primarily for the purpose of being traded, it will be classified as a current asset.
When an asset is prepared to be realised within 12 months from its reporting date, it will be classified as a current asset.
When an asset is considered for cash or a cash equivalent, it will be classified as a current asset, unless this asset is restricted from being exchanged or used for setting off a liability (till 12 months from the date of reporting).
For the purposes of Division I of this Schedule, an operating cycle refers to the time between the purchase of the asset or its acquisition and the time it is realised for value in cash or cash equivalent. In cases where it is difficult to determine the operating cycle in these terms, it is then considered to be twelve months.
Plants, property and equipment
Assets are classified into current assets and non-current assets for the purpose of preparing the balance sheet. Plant, property, and equipment owned by the company form part of the non-current assets, as these assets are retained and used by the company over a long period of time.
Tangible assets
Assets include land, property, buildings, plant, machinery, equipment, furniture, fittings, vehicles, and other office equipment. However, while preparing the balance sheet, separate lists or mentions shall be made for assets with complete ownership of the company and those that are brought under a lease. This part of the balance sheet shall also disclose information relating to depreciation charged on each class of asset and the gross and net values of the asset before and after making deductions, repairs, value additions, etc., and the revaluation obtained thereafter.
Intangible assets
Non-current assets further include intangible assets, whose details must be entered into the balance sheet of the company. Intangible assets like trademarks, copyrights, goodwill of the company, mining rights, branding, software, patents, formulae/recipe, franchises, etc. all form part of intangible assets owned and utilised by the company. These are accounted for on the balance sheet of the company since they create revenues. The gross revenue generated by these assets will be mentioned in the balance sheet. Furthermore, the net revenue shall be computed and mentioned too. This is done after considering the amortised value of these assets due to repairs, acquisitions, combinations, destructions, or other adjustments. The revaluation amount is mentioned in the balance sheet after considering these factors and the written-off values (if any).
Non-current investments
Companies make regular investments in their different operating cycles. These investments are trade investments or any other kind, such as investments in property, shares, and equity, government securities, mutual funds, debentures, bonds, and investments in partnership firms, among others. When a company makes these investments, which involve an investment in any other company or body corporate, such details shall be added to the balance sheet. Information such as the nature of the company, whether a holding company, subsidiary, associate company, joint venture, or otherwise, shall be mentioned in the balance sheet. The company shall also add information such as the name and nature of the investment and the extent to which it has been made (in monetary value and time). Finally, this part of the balance sheet shall reveal the aggregate values of quoted and unquoted investments made by the company, along with the market value of those investments. It shall also contain information about the depreciation or reduction in value of any of these investments and the provisions thereof.
Long term loans and advances
A company’s non-current assets also include the long term loans and advances made by the company, the directors, or other officers. These can be loans and advances to related parties, third parties, and capital advances, among others. These loans are classified by the company as secured, unsecured, and doubtful/bad loans. This data shall be entered into the balance sheet along with all other necessary and relevant data.
Further, the balance sheet shall also contain information about certain other non-current assets, such as trade receivables (long term, good and undisputed/doubtful and disputed), security deposits, unbilled dues (secured, unsecured, or doubtful), and debts due by directors or other officers.
Current investments
Current assets are an integral part of the overall assets of the company. Such current assets include current investments in the form of investment in shares, securities, bonds, debentures, government instruments, property, mutual funds or other systematic investments, partnership firm investments, etc. These investments shall be reflected in the balance sheet as current investments, and such other information as the nature and amount of investment in the kind of company (holding, subsidiary, associate, or other body corporate) made shall be disclosed by the company. Information such as the basis of valuation, the provisions for depreciation or other deductions, and the aggregate amount of quoted and unquoted investments of the company along with their market values shall be disclosed in the balance sheet.
Inventories
The current assets of the company also include inventories used by the company in everyday business and operation cycles, such as raw materials for goods, work-in-progress, finished goods, stocks put in trade or transit, running stores, tools, machinery, and others.
Trade receivables
Current assets also include trade receivables due to the company. Trade receivables can be disputed or undisputed, depending on the nature of the transaction. These undisputed receivables are considered to be good, and those that are disputed are considered to be doubtful receivables, and both are separately and specifically mentioned in the balance sheet. Similarly, unbilled dues to be received by the company also form a part of receivables, and these are either secured, unsecured, or doubtful in nature.
Cash or cash equivalent
Assets that are in the form of money, cash, and/or cash equivalents form part of the current assets of the company, and a detailed account is mentioned in the balance sheet for the same. This includes the money that the company has at hand with banks in the form of cheques, drafts, or any other form of monetary instrument. Conditional or restricted cash or cash equivalents, such as earmarked balances, money as security against loans taken or otherwise, long term deposits exceeding 12 months, etc., will be mentioned separately and specifically in the balance sheet.
Short term loans and advances
Current assets of the company include loans and advances made by the company for a short period of time to related parties, other third parties, etc. These advances can be secured, unsecured, or doubtful, depending on the nature of the advances made.
All the current assets that do not fall into any of the aforementioned categories are added to a separate heading for “other current assets” in the balance sheet.
Additional entries in the balance sheet
Apart from those mentioned so far as assets, liabilities, equity, share capital, and others, the balance sheet shall contain certain other heads with information or items that are not accounted for in any of these categories.
The balance sheet shall include information about contingent liabilities and commitments. Contingent liabilities include the liabilities which are due from the company such as guarantees, or claims. These liabilities are not included as debt. Similarly, commitments refer to the approximate amount accounted for by the company which are not yet fixed or executed for payment. It also includes partially paid up shares or uncalled shares.
Other miscellaneous heads include dividends which will be paid for equity or preference shares held by such shareholders of the company. Notes relating to partially utilised or paid up amounts against different assets or liabilities shall be included here.
The balance sheet shall also include information on title deeds held against immovable property. However, this title deed is not held directly in the name of the company, rather it is held in the name of a director, promoter or a related party to the company. It shall be accompanied by additional information such as the name and details of the person in whose name the property is held, their relationship with the company, the value of property held by them and the reason why such property is not directly held in the company’s name.
Similarly, when the company extends loans or advances to their directors, promoters, key managerial personnel, or such other officers, it shall be disclosed in the company’s balance sheet. It shall be accompanied by information such as the period of loan or advancement, nature and amount, and name, details and relationship of such officer with the company.
Further, the balance sheet shall disclose information about the work-in-progress projects of the company in which capital expenditure is made or estimated to be made in the go. It shall be accompanied by information such as the nature of the project, amount estimated, and time period for the completion of the project.
Further, additional information shall also include information about intangible assets of the company under development, along with the nature of the asset or project, the amount due or estimated, and the estimated or predetermined time period for the project.
Further, the balance sheet shall also account for any benami properties held by the company that are undergoing proceedings under the Benami Transactions (Prohibition) Act, 1988. The company shall disclose information such as details, amount, beneficiaries, and other details relating to the property, the transaction, and the status of the legal proceeding.
The company shall also disclose information in their balance sheet if and when it makes a willful default against any amount due to the bank, any financial institution, or otherwise.
The balance sheet will include information about the relationship of the company with any other struck off company if there exists any monetary overdue with the company which has been struck off. Such information shall disclose the nature of the amount due, the nature of the relationship between the two companies, the amount due and all other relevant information.
The balance sheet shall disclose information about any registration charges made or due to be made by them to the registrar of companies.
When the company makes inter-corporate loans and advances, they need to disclose such information in the balance sheet such as compliance with the number of permitted layers and such other regulatory requirements under the Companies (Restriction on number of layers) Rules, 2017.
The company shall disclose information about certain ratios maintained by them and comparative data of these ratios in the previous accounting years. Such ratios include debt-equity ratio, net profit ratio, inventory turnover ratio, returns on investments, etc.
When any scheme of arrangement is made and approved for the company under Sections 230 – 237 of the Companies Act, 2013, such accounts in the books of the company shall be disclosed in the balance sheet as well.
At times, companies invest funds, either from borrowed money or money from share premiums. These investments can be made to foreign entities, intermediaries, or to a person. When this is done, the company shall disclose all relevant information in the company’s balance sheet. This shall include information such as the amount invested, date of investment, date of maturity, kind of investment made, entity invested in, and all such other details which are deemed necessary and relevant to these transactions. Similarly, when the company has received any fund in the form of investment from any foreign entity, intermediary or otherwise, it shall further share all such details relating to the transaction as may seem necessary and appropriate.
Division I Part II : preparation of statement of profit and loss
For providing a detailed financial report, a company will prepare a statement of profit and loss for each financial year. This profit and loss statement will provide a detailed revenue structure of the company, the expenses incurred by them, the revenues generated, and finally, the profit made or loss incurred by them after making all deductions in a given financial year. A typical statement of profit and loss will begin by stating the name of the company, the amount that the statement is accounting for, and the financial year for which the statement is prepared. The statement of profit and loss will contain the following details and calculations:
First, the revenue generated by the company in operations is written in value. Thereafter, income generated by the company from different other sources is clubbed together as “other income.”
The revenue generated and other income values are added to obtain the “total income” of the company in that financial year.
i.e., revenue (operations) + other income = total income.
Further, the total value of expenses made by the company is determined. This includes the following:
The total cost of the materials used by the company in the given accounting year.
Stock-in-trade purchases made during that particular year.
Inventory costs including that used for work-in-progress goods, finished goods and stock-in-trade.
Expenses made for employees’ benefits and options.
Finance costs incurred by the company.
Depreciation and amortisation in the value of assets.
All other miscellaneous expenses.
These costs are grouped together under the head of “expenses” for the purpose of the statement of profit and loss.
The total expenses are deducted from the total income of the company to obtain an initial profit value.
I.e., total income – expenses = profit before exceptional and extraordinary items, and tax.
Value for “exceptional items” is deducted from this to obtain “profit before extraordinary items and tax.”
Further, the costs incurred for “extraordinary items” are deducted to obtain “profit before tax” or PBT.
Further, the tax to be paid for that particular year is computed for a deduction.
Further, tax is calculated separately for continuing and discontinuing operating expenses.
When this is calculated and tax is deducted, two separate values are obtained of profit/loss by continuing/discontinuing expenses.
These values, profit/loss from continuing operations and profit/loss from discontinuing operations are clubbed together, i.e.,
Profit/loss from continuing operations + profit/loss from discontinuing operations = total profit/loss.
This value is the total amount of the company, regardless of whether they have made profits or incurred losses in the given financial year. A positive figure denotes profit and a negative figure denotes loss, while 0 indicates a neutral stage where the company has neither made profits nor incurred losses.
Finally, the statement of profit and loss also indicates details about the equity shares of the company, such as the earnings made by the company by diluting their equity (in monetary values).
Notes for preparation of the statement of profit and loss
Mentioned below are certain general instructions for the preparation of the statement of profit and loss of the company:
The provisions of Division I, Part II of Schedule III of the Companies Act, 2013 apply alike to companies running businesses in India, as well as to companies running a non-profit company or activity as under Section 2(40)(ii) of the Companies Act, 2013.
Except for finance companies, all other companies shall disclose the revenue generated from the following operations:
Sale of products
Sale of services rendered
Donations or grants received (in reference to Section 8 of the Act)
Other operating revenues.
These four values will be clubbed together, and excise duties paid will be deducted from this summation to obtain the “revenue from operations” value for a particular financial year.
In the case of a finance company, the revenue from operations shall be obtained by adding revenue in the form of interest, and from other financial services.
In computing financial costs, the following shall be included:
Expenses as interest
Borrowing costs
Gain/loss from foreign currency transactions (if applicable).
“Other income” will include the following sources of revenue:
Income as interest (other than finance company)
Income as dividend
Sale of investments (net gain or loss)
Others.
“Notes on accounts” after the statement of profit and loss shall contain certain additional information. One such piece of information will be about the money put aside for employees’ benefits. This includes salaries paid to the employees, wages, bonuses, provident funds, welfare benefits like medical protection, and other benefits like employee stock options (ESOPs) and employee stock purchase plans. These are expenses made by the company and shall be maintained separately in the statement of profit and loss.
The notes on accounts will further contain information about the depreciation and amortisation computed costs of the company for different and all classes of assets. Depreciation refers to the loss in the monetary value of an asset (tangible) at the end of its useful life and amortisation is a similar calculation for intangible assets.
The notes shall contain information about any and all sources that contribute more than 1 per cent or Rs. 1,00,000/- to the company’s revenue.
The notes will contain additional information such as income as interest, expenditure as interest, dividends to be paid by the company, gain/loss (net) from the sale of investments of the company, adjustments made by the company, gain/loss (net) from foreign investments and transactions.
The notes will contain information about payments made to auditors for their services like auditor’s services, services on tax matters, management, company law subjects, reimbursement of expenses, etc.
The notes will additionally cover information related to the Corporate Social Responsibility (CSR) activities undertaken by the company when the company falls within the ambit of Section 135 of the Companies Act, 2013.
The notes shall contain the list of items that fall into the category of extraordinary items and exceptional items.
When the company is involved in the manufacturing business, the notes will contain a list of raw materials purchased by the company and goods purchased in the given financial year.
When the company’s business is primarily in trading, the details and list of goods traded shall be maintained in the notes.
When the company’s primary business is rendering services, the details of services rendered and income generated from those services shall be maintained in the notes.
All details and updated data on work-in-progress projects shall be contained in the notes on accounts.
The notes will also contain information about the materials set aside to reserve them for future use and not as a liability or contingency. Further, if any such materials are taken back, the details shall be mentioned in the notes. If the materials set aside form part of any liability or contingency, they shall be mentioned separately.
Additional expenses incurred by the company, such as rent, store maintenance, reparations, fuel, power consumption, insurance, taxes, etc., shall be made a list in the notes.
The notes shall contain such relevant information about subsidiary companies as may be required, such as dividends to be paid, losses incurred (if any), etc.
Further, the notes on accounts will contain information about the imports made by the company for raw materials, spare parts, etc. It shall also contain details about foreign currency transactions, royalties, know-how, different professional fees, interests and dividends, or other forms of bank transactions and remittances. Similar transactions from exports shall be mentioned separately.
If and when the company omits from disclosing any information in their financial statements and such undisclosed income is later added and disclosed during the tax assessment under the Income Tax Act, 1961, details about such undisclosed information shall also be contained in the notes on accounts in the statement of profit and loss.
Corporate Social Responsibility (CSR) related information in the notes of accounts shall contain relevant information such as the total amount that the company is required to spend on CSR activities in that particular year, the amount actually spent by them, shortfallings (if any), the reason for such shortfalling, comparative data for previous year’s CSR activities, etc. It shall also state the kind of CSR activities undertaken by the company, related party transactions made (if any), and other relevant information.
Finally, the notes on accounts shall contain information about the virtual/digital currency and cryptocurrency owned by the company. This shall contain information about the currencies owned by the company, the transactions made using virtual currencies, deposits, payments, etc. made using virtual currencies, and other relevant information.
Consolidated financial statement : preparation as per Division I of Schedule III of Companies Act, 2013
The provisions of Division I of this Schedule apply mutatis mutandis (applies in a similar manner along with necessary changes)to companies which are required to prepare a consolidated financial statement for their company. A consolidated financial statement includes a consolidated balance sheet and a consolidated statement of profit and loss. A financial statement is one which consists of the balance sheet and the statement of profit and loss which reports about a standalone company’s financial health and operating stats. A consolidated financial statement is required to be prepared in the case of a company being a consolidation of a parent company and its subsidiaries or associates. When the financial statement containing the balance sheet and the statement of profit and loss covers consolidated data for the parent company and its subsidiaries or associates as a whole, such a financial statement is referred to as a “consolidated financial statement.”
In addition to preparing the consolidated financial statement as per the provisions of Division I of this Schedule of the Companies Act, 2013, companies preparing a consolidated financial statement must also adhere to the compliance requirements as per the Accounting Standards. The consolidated financial statement will disclose information such as:
Profit and loss in relation to “minority interest” in the company shall be disclosed. Additionally, information regarding profit and loss attributable to owners in the parent company shall also be included.
Information regarding the equity division and structure shall be included. Such information shall contain details about the equity attributable to minority interest in the company and those to the owners of the parent company shall be separately and specifically mentioned in the consolidated balance sheet of the consolidated financial statement.
The consolidated financial statement will contain information for the following companies:
Parent company in India
Subsidiary companies in India
Foreign subsidiaries
Minority interest in these subsidiaries (equity based)
Joint ventures as per proportion in consolidation (or equity based) – within India
Joint ventures as per proportion in consolidation (or equity based) – foreign JVs.
All this information shall be totalled and presented as the consolidated financial statement. While providing this information, the following details about each category shall be mentioned separately:
Name of the entities
Net assets of each entity (net asset = total assets – total liabilities)
In percentage
In amount
3. Shares of these entities (in profit or loss)
In percentage
In amount
This consolidated financial statement will cover all, Indian as well as foreign subsidiaries, associate companies, joint ventures, etc. If and when a company excludes any of its subsidiary or associate companies from the list in the consolidated financial statements, such information shall be disclosed by the company along with the reasons for making such an exclusion.
Amendments to Division I of Schedule III of Companies Act, 2013
The Ministry of Corporate Affairs, exercising powers under Section 467(1) of the Companies Act, 2013, issued an amendment via notification on 24 March, 2021, to the three divisions of Schedule III under the Companies Act, 2013. Division I of Schedule III was thus amended to include the following new provisions:
Amendment on rounding off
The previous regulation took into consideration the turnover of the company when rounding off values for the purposes of the preparation of the financial statement. The 2021 amendment modified this provision to consider the ‘total income’ of the company instead of the company’s turnover. While turnover referred to the revenue generated by the company by the sale of goods or the rendering of services, the total income of the company is the summation of revenue/income generated from the operations along with revenue from other sources,
I.e., total income = revenue from operations + other income.
Amendment on promoters’ shareholding
The 2021 amendment requires the companies to disclose information on the shareholding patterns of their promoters in the notes on accounts under the share capital head of the financial statement. Such information shall contain details of the shareholding of the promoters, along with necessary changes and updates.
Ageing schedule on trade payables
The notes on trade payables will contain additional information in the form of a schedule on ‘trade payables due payment.’ This schedule will contain information on the ageing of trade payables. This schedule will contain the time periods within which the company needs to clear its payments.
Ageing schedule on trade receivables
Similar to trade payables, the notes on accounts on trade receivables will contain an ageing schedule for the trade receivables of the company. This schedule will be added to the long term trade receivables head for non-current assets of the company.
Amendment on Property, Plant and Equipment / Intangible Assets
The head ‘tangible assets’ will be replaced with ‘Property, Plant and Equipment’ for the purpose of Division I of this Schedule.
Further, the notes on Property, Plant and Equipment will disclose information about the change in amount for the purpose of revaluation. Such change in valuation will be mentioned if and when the change amounts to 10 per cent or more of the previous value for Property, Plant and Equipment. This valuation is done in reference to the ‘net carrying value’ for these assets of the company.
Similarly, the notes on ‘intangible assets’ will disclose information about the change in amount for the purpose of revaluation. Such change in valuation will be mentioned if and when the change amounts to 10 per cent or more of the previous value for intangible assets. This valuation is done in reference to the ‘net carrying value’ for these assets of the company.
For the purposes of this Division of Schedule III, the net carrying value refers to the book value of assets after deducting depreciation at the end of an accounting year.
Current maturities
The head ‘short term borrowings’ in the financial statement of a company will include an additional clause on the ‘current maturities’ of the company. This will be mentioned separately as clause (v). Earlier, current maturities were mentioned as a part of ‘other current liabilities.’ After the 2021 amendment, it forms part of the ‘short term borrowings’ of the company.
Security deposits
The clause on ‘security deposits’ will be removed from the head ‘long term loans and advances’ and newly included under the ‘other non-current assets’ head.
Additional regulatory information
As per the 2021 amendment, the financial statement shall also include the following information:
On benami transactions
The financial statement notes on benami transactions (if any) of the company will mention information about any ongoing proceedings of the company for holding benami properties (if any) under the Benami Transactions (Prohibition) Act, 1988, and disclose all necessary information appropriately.
Title deeds
The company will also disclose information about all the title deeds that are not held in the name of the company and other relevant information.
Revaluation
When revaluation is made for the plant, property, and equipment of the company, the company shall disclose whether such revaluation is done by a registered valuer under Rule 2 of the Companies (Registered Valuers and Valuation) Rules, 2017.
Loans and advances
Information relating to loans or advances made to promoters, KMPs, related parties, and directors shall be disclosed by the company. Such information should specify whether the repayment will be made on demand or on a predetermined date.
Capital work-in-progress and intangible assets
The ageing schedule for capital work-in-progress will contain a separate heading with information about the work that has been suspended by the company.
Similarly, the ageing schedule for intangible assets will contain information about the projects that have been suspended by the company.
Willful defaulter
The company shall disclose necessary information, if applicable, on willful defaulters of the company. Such information will disclose whether the company has been declared a willful defaulter by the bank, financial institutions, or any lender. It will also disclose if the loans were diverted for other purposes than for which they were taken and details of such a deviation. Finally, the company will disclose whether short term loans have been diverted towards long term goals.
Solvency
When the solvency disclosure of the company is provided through information on different ratios, such as the debt-equity ratio, net profit ratio, etc., any change exceeding 25 percent in the ratio as compared to the preceding accounting year shall be disclosed separately.
Inter-corporate loans
The company shall disclose information about inter-corporate loans transacted by it. The company shall disclose if it has used funds to meet the obligations of its subsidiaries or joint ventures. If the company has raised any loan on security and the securities of the subsidiaries, associate companies, or joint ventures have been pledged in that regard, such information shall be disclosed as per the 2021 amendment.
Additional information
The financial statements will contain information about the company’s relationship with struck off companies (if any) in terms of transactions made with them and the amount that is outstanding.
Information about pending registrations or satisfaction of charges to be made to the registrar and reasons for delay.
Information about non-compliance, if the company has failed to comply with the ‘number of layers’ restriction under the Companies (Restriction on Number of Layers) Rules, 2017 and reasons for such non-compliance.
Information and declaration of compliance with accounting standards and other rules, if any scheme of arrangement has been approved for the company under the Companies Act, 2013 provisions for corporate restructuring.
Donations received by the company as per the provisions of Section 8 of the Companies Act, 2013 will be separately mentioned in the general instruction for the preparation of the statement of profit and loss.
Information about undisclosed income that was later disclosed during tax assessments.
Corporate Social Responsibility (CSR)
If the company is required to undertake CSR activities as per the provisions of Section 135 of the Companies Act, 2013, and, pursuant to that, puts aside funds in a separate account within 6 months after the expiry of the financial year, such information shall be disclosed as per the 2021 amendment.
Cryptocurrency or virtual currency
When the company uses, transacts with, invests in, or stores virtual currencies like cryptocurrency, it shall disclose such relevant information as per the 2021 amendment. Such disclosure shall contain information about the amount held virtually, profit or loss generated in virtual transactions, and deposits or advances made virtually.
Conclusion
A company incorporated under the Companies Act, 2013 is mandated to comply with the provisions of Schedule III unless they are specifically exempted by the government or an Act of Parliament. Thus, companies are required to prepare their balance sheet, statement of profit and loss, or consolidated financial statements as per the provisions of this Schedule. Division I of Schedule III talks about the balance sheet, statement of profit and loss, and consolidated financial statements separately in parts. As per the provisions of Division I of this Schedule, the balance sheet shall account for all necessary information related to the assets owned by the company, the liabilities of the company, and the equity and shareholding structure of the company. Further, the statement of profit and loss provides detailed data on the revenues generated by the company from the sale of its goods, services rendered, or income generated from any and all other sources. Therefore, the statement of profit and loss makes all necessary additions (revenue sources) and deductions in the form of expenses, depreciation, taxes, and amortisation among others.
It is essential for companies to comply with the provisions of Division I of this Schedule and the Companies Act, 2013 as a whole, or any special legislation as notified by the Central Government. The balance sheet helps in evaluating the liquidity and solvency of the company by keeping an account of the assets, liabilities, and equity holdings of the company. On the other hand, the statement of profit and loss reflects the profitability of the company as well as the business growth by recording and comparing the data of the previous year to this year. Thus, Division I of Schedule III guides and regulates the preparation of these statements for companies, and a contravention of the laid down provisions leads to penalties.
Frequently Asked Questions (FAQs)
When was Schedule III made applicable?
The provisions of Schedule III have been applicable to companies since the financial years commencing on or after 1st April, 2014.
What is the difference between Division I and II of Schedule III?
Division I of Schedule III is applicable to companies that comply with the Companies (Accounting Standards) Rules, 2006, whereas Division II is applicable to companies that comply with the Companies (Indian Accounting Standards) Rules, 2016.
Is rounding off mandatory for both Division I and II entities?
Rounding off was not as mandatory for Division I companies as it was for Division II companies. However, after the 2021 amendment, the rounding off provision became mandatory for Division I companies as well.
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India was once a cash-based economy, and now it leads the world in real-time digital payments, accounting for almost 40 percent of all such transactions. The digital payment volume has climbed at an average annual rate of 50 percent over the past five years. As of June 2021, transactions more than doubled to 5.86 billion as the number of participating banks jumped 44 percent to 330. The increase in digital payments has spurred growth, especially after the COVID pandemic. One of the most commonly used platforms to make digital payments is an e-wallet which is easy to use and anyone with a smartphone can access it.
What are e-wallets
E-wallets, as the name suggests, are wallets in electronic form. Like a normal wallet, an e-wallet is an application that also stores cash and credit/debit card information to make transactions both online and offline. The buyer’s payment information is stored in the payment system, and as a result, the same information, like an account number or debit card number, need not be provided repeatedly to make transactions. E-wallets have done away with the hassle of carrying cash everywhere, and transactions can now be made with just one click. E-wallets are a form of PPI (Prepaid Payment Instruments), which are primarily governed by the RBI’s Master Direction on Prepaid Payment Instruments. The law that authorized the issuance of PPIs and gave the RBI the power to regulate the PPIs is the Payment and Settlement System Act, 2007.
Types of e-wallets
E-wallets are generally classified into three types- open wallets, closed wallets, and semi closed wallets. This classification is based on how widely or freely the wallet can be used. A closed wallet is one in which transactions have to be made with the wallet’s issuer. This type of wallet cannot be used to enter into transactions with other entities. For example, Ola Money. The funds stored in the Ola Money wallet can only be used for making payments with Ola and cannot be used with any other entity, for example, Uber or Amazon. A closed wallet thus has a limited scope of usage. Also, unlike the other two, a close wallet does not require authorisation by the RBI as it is not identified as a payment system under the Payment and Settlement System Act, 2007.
The other type of wallet is the open wallet, which can be used to conduct transactions in any part of the world, but both the sender and receiver should have the same account on the app. They can be issued by banks or institutions partnering with other major banks. Users of such wallets can also withdraw cash through ATMs.
The semi-closed wallets allow the users to make transactions at specific merchants and locations. For undertaking transactions through these types of wallets, there needs to be a contract or agreement with the issuer. Unlike open wallets, which allow cash withdrawals, the user of a semi closed wallet cannot withdraw cash. The most popular semi-closed e-wallets are Paytm wallet or Google wallet, which store the funds in electronic form, and once the user makes payment, the funds are transferred from the wallet to the merchant’s account.
The Payment and Settlement Systems Act, 2007
The Payment and Settlement System Act was introduced to regulate and supervise the payment system in India. According to this Act, “payment system” means a system that enables payment to be effected between a payer and a beneficiary. “Payment System” includes the systems enabling credit card operations, debit card operations, smart card operations, money transfer operations, or similar operations,and thus includes e-wallets as well. The Act gives power to the Reserve Bank of India to regulate and supervise the payment systems in India by forming a ‘Payments Regulatory Board‘. For commencing or operating a payment system in India, the authorization of the RBI is needed, except in the case of a closed PPI.
Firstly, an application has to be made to the RBI to obtain approval. Such an application has to be accompanied by a No Objection Certificate from the regulatory department within 30 days of obtaining such clearance. The eligibility criteria for non-banks seeking authorisation from the RBI is a minimum positive net worth of 5 crore rupees as per the latest audited balance sheet. Also, a minimum positive net worth of Rs. 15 crore has to be maintained by such a non-bank PPI issuer all the time. The non-bank PPI issuer shall also have to submit Form A to the RBI to seek its authorisation along with the requisite application fees.
After the receipt of the application, the RBI will conduct an inquiry regarding the genuineness of the application, having regard to various considerations such as the technical standard/design of the payment system, the need for the proposed payment system, the manner in which the transfer of funds will take place, and various other considerations. The RBI will then grant approval or refuse the application if an opportunity is given to the applicant to be heard. Also, such applications received by the RBI have to be disposed of within 6 months from the date of filing. In the event of a refusal by the RBI, the applicant can appeal to the central government within 3 months of receiving such a communication.
RBI Master Directions on PPI
The RBI has issued a master direction on Prepaid Payment Instruments (PPI) under the powers granted in the Payment and System Settlement Act. The master direction provides for the authorisation, supervision, and regulation of entities that issue and operate PPIs in the country.
Prepaid Payment Instrument has been defined as instruments that facilitate the purchase of goods and services, financial services, remittance facilities, etc., against the value stored therein. Further, the master direction has classified PPIs into two kinds- Small PPIs and Full KYC PPIs.
Small PPIs can be issued by both banking and non-banking entities by obtaining minimum user details. The minimum details include the mobile number of the user verified by an OTP and Unique Identification number of any ‘mandatory document’ or officially valid document. Such PPIs can only be used for the purchase of goods and services, and transfer of funds through these PPIs is not permitted. Further, the small PPIs are classified into PPIs with cash-loading facility and PPIs with no cash-loading facilities. The amount loaded in both of these PPIS cannot exceed Rs. 10,000 in any month, while the yearly limit is Rs. 1,20,000. PPIs with cash loading facilities are reloadable via bank account or full KYC PPI cash or credit card, while the latter is not reloadable and has to be converted into a full KYC PPI within 24 hours of such issuance.
Cross-border transactions
The Master Direction does not allow for cross-border transactions except in two cases. The first case pertains to cross border outward transactions, which can be undertaken through PPIs issued by banks with an AD-1 license only on the explicit request of the holder. Further, only current account transactions can be undertaken, such as business transactions between residents and non-residents or the payment of interest on a loan. The limit on such transactions is 10,000 rupees per transaction, and the overall monthly limit is 50,000 rupees.
The second case pertains to cross-border inward remittances. Such transactions can be undertaken through full KYC PPIs issued by banking or non-banking entities appointed as Indian agents of authorized overseas principals for beneficiaries of inward remittances. All the transactions will have to be in conformity with the MTSS Guidelines, which regulates the transfer of personal remittances from abroad to beneficiaries in India. The limit on such an amount is up to 50,000 rupees only.
Security measures and customer protection
The directions tend to protect the interests of the user by putting various security measures in place, such as restrictions on multiple log-in attempts by way of inactivity or timeouts. Further, the directions provide for two-factor authentication. The users are made aware of any transactions undertaken through their account by sending alerts via SMS and mentioning the balance in the PPI.
PPI holders will also have to disclose all important terms and conditions in clear and simple language to make the users understand the functioning of the PPIs and the limitations/benefits attached to their use. The purpose of this is to ensure that the users are not kept in the dark and are not exploited by the PPI issuers. The terms and conditions can include the charges, fees, and expiration of usage of such PPIs. Also, the customer care details shall be provided to the users by displaying the same on the app or the website. The complaint made by the user will have to be resolved within 48 hours of its receipt and not later than 30 days. If the consumer is still not satisfied with the response or has not received any response at all, he can file a complaint with the ombudsman within the jurisdiction of the office of the service provider. This is regulated by the Ombudsman Scheme for Digital Transactions. Some of the grounds can be failure to credit the merchant’s account within a reasonable time, failure to load the funds within a reasonable time, or any unauthorized electronic fund transfer. If the consumer is still not satisfied with the decision of the ombudsman, he can file an appeal with the appellate authority, which is the office of the deputy governor, and further to any consumer court or forum.
UPI
UPI has become one of the most commonly used digital payment platforms and is the flag bearer of India’s fintech revolution. The UPI is an instant real-time payments system that enables instant interbank peer-to-peer and person-to-merchant transactions through mobile devices. UPI was a response to the nation’s patchwork of rules and paperwork for payments. The goal was to make transfers easier and safer by allowing multiple bank accounts on the same mobile platform for individual and business use alike. It rapidly came of age. The master directions link UPI with wallets through interoperability. Interoperability, which means the technical compatibility that enables a payment system to be used in conjunction with other payment systems. The circular mandates that where PPIs are issued in the form of wallets, interoperability shall be enabled through UPI. Further, PPI holders shall be on-boarded for UPI by their own PPI issuer only.
Limited liability of customers
The customer will not be liable if there is contributory negligence, fraud, or deficiency on the part of the PPI issuer. Also, the customer will be abstained from any liability if there is a third party breach, meaning if there is no fault on the part of the customer or the PPI issuer and the customer informs the bank of the same within 3 days of receiving the communication of such an unauthorised transaction. The liability of customers in cases of unauthorised transactions caused by third party breaches will be determined by the transaction value and the time taken by the customer to report such an unauthorised transaction. The PPI issuer shall provide a toll-free customer helpline to report the transaction. Additionally, a direct link to lodge a complaint regarding fraudulent transactions will be provided on the issuer’s app or website.
Conclusion
With the rise in digital transactions, especially through wallets, a strong regulatory mechanism becomes indispensable. The Payment and Settlement System Act gives immense powers to the RBI to control and regulate payment systems, which include wallets. The RBI has ensured proper checks on the issuers of such wallets and provided a user-friendly framework for their regulation. The master direction issued by the RBI has put several mechanisms in place, such as alerts on transactions, the filing of complaints, and zero liability for customers. The RBI has put the burden on the PPI issuers to inform and make the users aware of the terms and conditions of their usage. Also, the grant of approval/authorisation to the entity interested in issuing PPIs has been a smooth and quick process. Overall, the mechanisms put in place provide convenience to both the users and the issuers of such e-wallets.
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Pushkar Thakur is a managing partner at Corrida Legal. He has worked for Kochhar & Co, Emaar and was an AVP at Nomura.He has represented EMC (now Dell), International Air Transport Association, Lumata Digital, RaeBareilly Allahabad Highway Private Limited and over 50 international airline companies that include Lufthansa airlines, British Airways and United Airlines.
“While establishing alaw firm,you must knowthegapyouarebridginginthefield.” _Pushkar Thakur
In an interview with LawSikho, Pushkar Thakur shares insights on how to establish a law firm
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Tell us about your college days.
I’m a graduate of the West Bengal National University of Juridical Sciences, NUJS Kolkata. During my college days, I was mostly focusing on getting my internships right, and getting my grades right. Of course, college life is a mix of hits and misses for us. If I could roll back the hands of time, I would perhaps dabble with mooting. I was a sportsperson in my college so I used to represent my university in multiple sports, like basketball, football, and volleyball.
You’ve worked for such big names like Nomura and Emaar. Did you always know that you’ll get into corporate law or is it something that you discovered on the way?
Corporate law/ litigation is not a choice that one should be making in college. As college students, you need to explore the world before you really choose your path. Today, the world is not of super specialization unless you are working for a really large firm. Corporate law is not something that I decided in college.
Once I started my career, I realized that litigation has some positive and negative sides to it and so does corporate law. And today as I stand, I’m dabbling more with corporate law than litigation and we are a full-service law firm with specialized litigation counsels in our team.
Tell us your top achievements so far?
Any work that we do as lawyers has to have synergies. Whilst I can say that the achievements are mine, there is a lot of help that has come from my seniors and others in the fraternity. When I was with Kochhar and Co, one of the top 10 law firms in India, I got a chance to argue matters before various courts very early in my career. I was arguing matters before the National Company Law Tribunal, Delhi High Court, National Green Tribunal, etc.
I was one of the youngest Assistant Vice Presidents at Nomura. The third achievement perhaps is starting this law firm which is an achievement in progress
For the learners or young lawyers who want to get into emerging areas of practice of law, how important do you think internships are?
Internships should be started as early as possible for the simple reason that internships are a great way to understand the practical nuances of what lawyers actually face at law firms and as in-house counsels. Any new area of law or its application brings forward with it a lot of knowledge so if I’m advising, say, a blockchain entity or a crypto firm on setting up their operations or their compliances, I’m also somewhere getting aware of how a cryptocurrency system works, how a blockchain works and what are the modes, what are the requirements, how is a smart contract different from a general contract.
Students should try to do internships in all areas, be it NGOs, be it at a district court, at the state consumer disputes level, at a top-tier law firm, at a second-tier law firm, and then understand what they are trying to do or what they want to build.
How can one get an internship at Corrida Legal?
We keep two interns every month. If you intern with Corrida, you are going to learn nuances of corporate laws, perhaps data privacy, labour, litigation, real estate, IP, etc.
My intention is to give them practical exposure to all the types of laws that are there, and make them understand how they can add value and bring better service to the clients.
The procedure is fairly simple. They can just follow us on LinkedIn. We keep coming out with opportunities
What is it like to work at a law firm, and also what is your advice for students who aspire to one day establish their own law firms?
For me, working at a law firm was a slightly different experience. I was supported by a partner who let me jump into any kind of pool that I wanted to. And I was also getting a chance to appear on cases, draft plaints, replies, rejoinders, written statements etc. And once he left, I was also lucky to be given matters independently by different partners.
How to establish a law firm, always depends on the artillery that you are bringing to the battlefield. Different sets of people with different backgrounds have different strong points. For instance, I was more of a generalist and I did a range of things.
Young students and young law graduates should focus on what are they best equipped with, and what are their areas of strength.
Establishing a law firm is a capital-intensive process for the first two years, you have to spend 14 to 16 hours of your time working on the profession.
And as the old saying goes, you have to do $10,000 worth of job in $1,000 worth of billing. So all these things have to be kept in mind, and then the person should be taking that plunge.
And the last thing that I will leave all the young students with is that you have to understand what gap you are bridging.
What are some of the most critical skills that lawyers must have?
First of all, law is a profession, not a job. So that’s what we have to be most focused on. Your legal skills should not only come when you’re handling a case of the law. You need to have your analytical skills in place. Most of the time I have seen lawyers from top law firms giving legal jargon to businesses. That doesn’t suffice. Business wants solutions. You have to understand that. Always be curious. Always keep trying to learn new things.
Even if you want to specialize, have an idea of all aspects of law, and always be curious.
Thirdly, your presentation is important, not only in the way you dress but also in the way you communicate.
Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skills.
LawSikho has created a telegram group for exchanging legal knowledge, referrals, and various opportunities. You can click on this link and join:
An early-stage start-up company needs capital to build the idea or the product, which is often very challenging. These companies rely on raising funds through:
Loans from banks;
Debt instruments like Convertible Notes;
Investments through angel investors/ Venture capitalists in the form of:
a. Debts which includes debentures (CCD) or Convertible Notes (CNs), and
b. Preference shares (CCPS).
While CCPS or CCDs/CNs are the most preferred instruments of securities, they have their nuances and challenges. Angel investors are looking for easier and less time-consuming investment routes. One such investment model is SAFE notes.
What is a SAFE note
The word “SAFE” stands for Simple Agreement for Future Equity. A SAFE note is an instrument/ agreement issued by early start-ups to raise funds in their initial seed stage from individual angel investors. SAFE is a legal contract that entitles investors to receive a company’s equity securities contingent upon certain events, such as subsequent rounds of funding.
At the early stage of a start-up, it is difficult for the company to project costs/ revenue and assign value to its business. Revenue projections and valuations form an essential requirement for raising funds by way of the issue of securities. The start-up has to undergo the complicated process of due diligence and respond to the information requests of the investor/ their legal team. The founders, the company, and the investor need to enter into a complicated shareholder agreement and negotiate various terms of agreement, which is a time-consuming process. Hence, the founder is unable to focus on the business needs of the start-up while he is involved in fundraising activities.
Additionally, taking on debt can complicate the start-up life cycle, and the start-up may collapse due to financial pressure to adhere to deadlines and pay back loans and interest. In such a scenario, SAFE notes act as a convertible security note- a simple, easy, and fast fundraising agreement that requires no pre or post-money valuation without maturity dates.
A SAFE note is a financial instrument and is mostly used by people whose businesses are at an early stage. Investors find SAFE notes attractive as they allow them to invest in a business without losing any equity. These notes are also very flexible, as they allow the investor to choose the amount they want to invest and the date on which they want their money back. One of the main advantages of SAFE notes is that through them, companies can raise money quickly. Through traditional fundraising methods, companies have to negotiate with each investor individually, which can be very hectic and time-consuming but through SAFE notes, companies can raise money from many investors in a short span of time.
Difference between convertible notes (CNs) and SAFE notes
Convertible notes are designed as debt instruments that convert into equity based on the conditions in the agreement. The start-up may be required to repay the amount in case of failure of subsequent series funding.
SAFE notes are not debt instruments. It allows the investor to convert the SAFE notes into equity at a future funding round. SAFE notes are automatically convertible on the occurrence of specified liquidity events viz. next pricing/valuation round, dissolution, merger/acquisition, etc.
Difference between convertible preference shares and SAFE notes
Convertible preference shares are shares that can be easily converted into equity shares and have certain rights allotted to the investor. Under the CCPS route – CCPS is issued to the investor on the following terms as agreed between the company and the investor;
The company’s valuation is fixed;
Director/ observer to be appointed on the Board;
Reserved matters which require specific consent of the investor;
Founders’ shares are locked in for a few years and no transfer of shares of founders can take place without the investor’s approval;
Investors will have “tag along and drag along” rights;
In the event of liquidation, the investors will have a preference over the founders;
The investors insist on anti-dilution rights and down-round protection;
The investors get voting rights in proportion to their investment;
Receive MIS/ financial information from time to time;
If the founder, himself or through his relatives, has given any loan to the start-up, the start-up cannot repay the loan until the investor exits.
As a result of the above process, the investor is under tremendous pressure to complete and adhere to the agreed requirements, which impact the business’s day-to-day running.
On the other hand, under the SAFE note route- a simple agreement is entered into with the investor to receive equity shares contingent upon certain events, such as a subsequent round of funding. The company is not bound by the terms as usually agreed in the case of CCPS. The founders can focus
Advantages of SAFE notes to start-up
The advantages of SAFE notes to start up are:
SAFE notes do not rely on the valuation of the start-up. For an early-stage start-up, a concrete/ factual valuation cannot be done due to the absence of ample data. So, it’s almost impossible for founders and investors to agree on a valuation.
SAFE note is a simple 5-page agreement. It cuts down on expensive lawyer’s fees.
It takes 2-3 weeks to conclude the transaction.
The founder can focus on his business rather than worrying about the complicated process of execution of Shareholders agreements (SHA).
The founder will not be required to deal with the complex terms of SHA.
The founder is not required to dilute his stake in the company.
Unlike other investments, SAFE notes do not require much negotiation.
SAFE notes end up on a company’s capitalization table.
Investors can change their investment into equity later.
The company has complete freedom with no specific expectation because of a lack of pre defined terms.
There is no need to have an investor director on the Board; thus, management remains in the hands of the founder.
How do SAFE notes benefit the investor
SAFE notes benefit the investor in the following ways:
Until the valuation round, the stake of investors does not dilute.
Investors may get an option to invest at a discounted price for the next round.
Start-up founders are more comfortable dealing with angel investors willing to invest through SAFE notes. This way, angel investors can enter the right company by quickly closing the deal.
Issues with SAFE notes
SAFE notes, being more straightforward instruments to enter with the investors, lack protection for the investors, which makes it risky for them. SAFE investors do not have any shareholder’s rights which makes them a puppet in the hands of founders.
SAFE notes can remain outstanding indefinitely, preventing the investor from realising any gain on the investment. In case the company fails to close a funding round, the SAFE investment will remain stuck with the company until it is wound up or liquidated. Upon liquidation, investors may receive up to their original investment back only if the company has enough assets to liquidate after paying off its debts.
Though the SAFE note agreement is a simple-to-execute instrument, it does not surpass the need for legal consultation. The founders need to understand the complicated mechanics of the Contract. Otherwise, it can lead to non-compliance issues.
The founder needs to be careful while issuing SAFE notes to multiple investors. This can result in a significant diminishment of equity in the hands of founders. By the time they go for the next round of funding, they have far less equity than anticipated.
Also, issuing SAFE notes to multiple seed investors can lead to initial investors holding substantial investments in the start-up. The company may find it difficult to raise funds through other series making it difficult to scale up the business. The founders and the SAFE note Investors may get struck and may have to wind up the company to release their investments.
SAFE notes in India
To comply with applicable Indian laws, SAFE note takes the legal form of compulsorily convertible preference shares (CCPS), which are convertible into equity on the occurrence of specified events. In India, iSAFE was pioneered by 100X.VC in July 2019. iSAFE stands for India’s Simple Agreement for Future Equity. Like an option or warrant, an iSAFE note allows the investor to buy shares in a future priced round.
Many start-ups issue iSAFE notes by entering into an iSAFE agreement with the investor. iSAFE notes carry a non-cumulative dividend @ 0.0001%.
Types of SAFE agreements
Fixed conversion at a future date: SAFE is converted into equity at a future date to be decided.
Valuation cap; no discount: Higher the valuation cap, the better it is for the founder as it will result in lower dilution of the equity for the founder provided the founders are confident to close the next round of funding at a much higher than the valuation cap;
Discount, no valuation cap: There is no valuation cap applicable. However, a discount is offered to the investor in the next round of funding.
Valuation cap with discount: Both a valuation cap and a discount are provided to the investor based on terms agreed upon with the founders and the investor.
MFN only (most favoured nation), no valuation cap, no discount: An MNS clause allows the investor to elect to inherit more favourable terms offered to any subsequent investor before the next equity round. This is done to bring all investors at par with each other.
Conclusion
In this article, we have explained the overview of SAFE notes, the advantages they offer to start-ups, founders, and investors, the challenges they may face, and the precautions to be taken to mitigate the risks. Though SAFE notes are simpler, easier, and more cost-effective (in terms of legal fees) and don’t have the same level of cumbersome rules that other types of securities have, they still do have their risks and challenges. The start-up needs to carefully evaluate the fundraising process, as any wrong move can jeopardise the growth plans of the company.
Therefore, it is advised that companies consult legal advisers who have worked in the start-up and early stage business ecosystems and then decide on ways of funding, keeping in mind the legal compliances.
The founder is not required to dilute his stake in the company.
There is no need to have an investor director on the board; thus, management remains in the hands of the founder.
Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skills.
LawSikho has created a telegram group for exchanging legal knowledge, referrals, and various opportunities. You can click on this link and join:
This article has been written by Sushant Biswakarma from Symbiosis Law School, NOIDA; and Diksha Paliwal, a student of LLM (Constitutional Law). It talks about the concept of divorce by mutual consent under the Hindu Marriage Act, 1955, its essentials and procedure for the same. Difference between judicial separation and divorce has also been discussed, followed by judicial pronouncements and some FAQs.
It has been published by Rachit Garg.
Table of Contents
Introduction
Marriage forms the basis of the most important institution of a civilised society, i.e., the family. Family is considered to be an indivisible part of a civilised society, be it the evolution of human culture or preserving morality. A happy and stable family forms the foundation of a strong and sound community. The importance of the institution of family to form a civilised society is non-debatable. However, the foundation of family is formed on the institution of sacramental value, namely, marriage.
The institution of marriage is considered to be of sacramental value and is thus treated as an inseparable bond. However, with the changing social conditions and the evolution of society, this idea of the inseparable bond between husband and wife has also evolved.
Marriage has always been considered as a holy relationship in every religion around the world. It is said that relationships are made in heaven and couples just meet each other on earth. It is not just a relationship between two people, but a relationship between two different families. Two different people from two different families come together to get married and start a new family. Anyhow, marriage is still an agreement and like all other forms of agreements, it can also be brought to an end.
There are multiple legislations in India regarding marriage such as The Indian Christian Marriage Act, 1872; Muslim Marriage Act, Special Marriage Act, and Hindu Marriage Act. In this article, we are going to deal only with the Hindu Marriage Act, specifically how to end a marriage by mutual consent as per the Act.
Divorce under old Hindu Law
In the early ages, the concept of divorce was alien to the laws of Dharamshastra, since marriage was a holy union of two people, and hence, the bond was unbreakable. Marriage was contemplated as being an indissoluble union of the wife and husband. The people back then were of the opinion that the marital tie between a couple could not be severed under any circumstances. Manu was expressly against the concept of marriage and hence stated that the union of husband and wife should be continued till death. Not only this, it even stated that the duty of a wife does not end after the death of her husband, and thus, she is not allowed to have a second husband.
From the above discussion, it is pretty clear that the old Hindu law did not follow divorce, however, some people say that the concept of divorce did find a place in the customs of certain communities, for example, shudras. In the 1940s, there existed certain laws which recognised the concept of divorce, like the Bombay Hindu Divorce Act, 1947, and the Madras Hindu Bigamy Prevention and Divorce Act , 1949. All these legislations were repealed after the enactment of Hindu Marriage Act, 1955.
Dissolution of marriage under the Hindu Marriage Act, 1955
The concept of divorce in the early ages was non-existent as the marriage between two people was considered to be an inseparable bond. However, with the changing times, the concept of divorce was given due consideration by the legislature in order to cope with the changing scenarios of the society. Divorce is basically the termination of marriage by legal means. By way of divorce, the spouses seek separation from each other, when they are not in a situation to live together as a married couple. The legislations brought upon by the Indian Legislature have come out as some of the most important radical changes in the then existing laws pertaining to marriage and divorce.
If marriage solemnized under the Hindu Marriage Act is valid, and there is a reason to end it – it can be ended by way of either Judicial Separation under Section 10 or Divorce under Section 13 and Section 13B. Section 13A provides alternate reliefs in divorce proceedings.
In the earlier period, i.e., in Shastric Hindu Law, the notion of judicial separation was not known, or at least not practised. However, the courts established by the British, up to a certain extent, permitted providing the wife with maintenance along with a separate residence from her husband. The wife could seek separate residence and maintenance if the husband was suffering from some loathsome disease, or if the husband treated her with cruelty, or if the husband had a concubine living with him in the house, or some other justifiable reason as the courts at that time deemed fit. The provision of judicial separation as corroborated under Section 10 of the Hindu Marriage Act, 1955, is similar to that provided under the earlier repealed Hindu Married Women’s Right to Separate Maintenance and Residence Act, 1946. This Act gave a statutory right to married Hindu women to claim maintenance and separation from their husbands.
Judicial separation is an alternative to divorce; however, it does not put the marriage to an end. The parties do not cohabit, but other obligations of marriage still exist. The parties still remain husband and wife, even though they might live separately and do not have a sexual relationship. One cannot remarry in the case of judicial separation. This Section even applies to Hindu marriages that have been solemnised before the commencement of this Act. To put it simply, the remedy of judicial separation puts an end to the conjugal duties of both spouses and allows them to live separately.
Even though the parties remain spouses, sexual intercourse must be with consent, even in the case of marriage. Section 376B of the IPC states that if a man tries to have sexual intercourse with his wife without her consent during judicial separation, he may face a prison sentence of up to 2 years and/or fine.
Section 10 of the Act mentions that the grounds for judicial separation are the same as the grounds for divorce provided under Section 13(1) of the Act. No separate grounds are enunciated in the HMA, 1955, and hence the Act provides that Section 10 of the Act has to be read with Section 13 and Section 13-A, which provide for grounds of divorce and the court’s power to grant judicial separation where divorce is prayed by the parties.Also, as per sub-section (2) of Section 10, the court can rescind the decree of judicial separation if it is satisfied to do so, on the petition of either of the parties.
After the amendment made in 1976, by which the grounds of divorce and judicial separation were made identical, it has been observed that the petitions for judicial separation have become comparatively less frequent. The reason being that no couple would prefer judicial separation if they could rather opt for divorce on the same grounds. Since divorce will release the couple from the marital tie entirely, judicial separation won’t.
With the grounds of judicial separation and divorce being similar, the question that arises is, whether judicial separation can be granted by the court at its discretion where the petitioner has instead sought divorce. The Delhi High Court dealt with this question in the case of Vinay Khurana v. Shweta Khurana (2022). The Court, while dealing with the matter, stated that it is not at the court’s discretion what relief is to be granted. The court cannot substitute the relief prayed for by the petitioner. It further emphasised the fact that the concepts of judicial separation and divorce are entirely different. In the present case, the family court, while adjudicating the matter, granted the decree of judicial separation when a decree of divorce was sought by the petitioner. The High Court further stated that the family court has not been conferred with the power to substitute the reliefs prayed.
Etymologically, the term “divorce” which is derived from the Latin word “dovortium” is a mixture of two words, namely, “dis” which means “apart” and “vertere” which means “to turn.” The term “divorce” denotes the separation of the parties to the marriage, i.e., husband and wife. It is the dissolution of the marital relationship. By breaking the marital ties, the husband and wife are released from the responsibilities and obligations that they would otherwise be bound to perform together.
In the case of divorce, the marriage is brought to a permanent end. All marital obligations are lifted, and the parties are free to remarry. The parties no longer remain husband and wife.
The parties are free to choose whether they want a decree of judicial separation or divorce, and the court may grant the decree if satisfied.
The Hindu Marriage Act, 1955, was the first legislation that granted a divorce under Hindu law, as the same concept found no place in Hindu Shastric Law. Section 13 of the Hindu Marriage Act, 1955, provides for the circumstances in which either of the spouses can opt for divorce. It is important to note that, as enumerated in Section 14, parties cannot file a petition for divorce within one year of their marriage. However, Section 14(1) states that parties can seek divorce within one year if the petitioner faces exceptional hardships or otherwise if it becomes a case of exceptional depravity on the part of the respondent. The court, under the same sub-section, also has the power to dismiss such a petition of divorce presented before a period of one year if it finds out that the petition was filed under any misrepresentation or if there is any concealment of facts by the petitioner. Presently, the term “exceptional depravity” is not defined under any Indian Act, however, the same in layman’s language can be termed as a situation when a person is deprived of something that he or she extremely desires, or in a normal situation, cannot be expected to live without or suffer.
Clause (2) of the Section mandates that the court while dismissing a petition due to the non-completion of a period of one year, shall try all possible efforts of reconciliation when a similar petition is filed after the expiry of one year, looking into the interests of children, if any, or if there exists any probability of reconciliation in marriage.
The concept of divorce as enshrined under the HMA, 1955, is based on the “fault theory,” which means that the Act provides the grant of divorce to the parties, based on the faults or sins that one of the parties has committed. These fault grounds on which a party can seek a decree of divorce or judicial separation are mentioned in Section 13 of the Act.
Section 13(1) of the Act provides that either of the parties can seek divorce by way of filing a petition on the following grounds, namely, sexual intercourse with any person other than spouse, cruelty, desertation, conversion of religion, unsound mind or mental disorder, either of the party is suffering from leprosy or venereal disease in a communicable form, if one of the spouse has renounced the world by entering into any religious order, or if any one of the spouse has not been heard alive for a period of 7 years or more. The petitioner can seek a decree of divorce on any of the above mentioned grounds. The Section further provides for the explanation of terms “mental disorder”, “psychopathic disorder” and “desertation”.
Section 13(1A) of the Act further talks about two additional grounds, which were inserted after an amendment made in 1976. These two additional grounds are;
If the parties have not cohabited for two years or more after the passing of decree of judicial separation, or
If there has been no restitution of conjugal rights for a period of one year or more after the passing of decree for the restitution of conjugal rights.
Clause (2) of the Section mentions additional grounds on which the wife can seek a decree of divorce. The additional grounds are:
Section 13(2)(i))– when the husband already had a wife at the time of his marriage; or
Section 13(2)(ii)– A wife can seek a decree of judicial separation or divorce if the husband is found guilty of rape, sodomy, or bestiality; or
Section 13(2)(iv)– The third additional ground provided to the wife is that if she was married before the age of puberty (15 years), she can apply for divorce or judicial separation after attaining majority.
In the case of Dharmendra Kumar v. Usha Kuma (1977), the Apex Court, while dealing with a petition for divorce on the grounds mentioned in Section 13(1A)(ii) of the Act, granted divorce to the wife. In this case, the wife applied for the grant of a divorce decree after around two years of a decree of restitution of conjugal rights in her favour. In reply to the petition, the husband contended that the wife refused to entertain, receive, or reply to any of his letters wherein a request was made by him to live with her. The Court stated that even if the above allegations are true, this does not disentitle the wife to ask for a divorce decree.
In the case of Sirajmohmedkhan Janmohamadkhan v. Hafizunnisa Yasin Khan (1981), the wife (respondent in present case) filed an application for grant of maintenance under Section 125 of the Code of Criminal Procedure, 1973, stating that her husband is unable to fulfil his obligations under a marriage, and is guilty of wilful neglect. It was contended by the wife that her husband was incapable of carrying on a physical relationship, and that even her husband accepted the said fact. She also said that her husband treated her cruelly, and that she was driven out of her husband’s house. The learned lower court, stating that mere impotency cannot be a ground for maintenance, dismissed the petition of the wife. Being aggrieved by the decision, the wife filed an appeal against the judgement before the High Court of Gujarat, wherein her appeal was allowed. Thereafter, the appellant-husband filed an appeal seeking special leave before the Hon’ble Supreme Court. The Apex Court after looking into the facts and circumstances of the case, held that if the husband is impotent and is not able to discharge his marital obligations, and the same has been proved to the Court, then this would amount to both mental and legal cruelty, as contemplated under Section 13. The Court further stated that this would be a just ground to seek maintenance and for the wife’s refusal to live with her husband.
In the case of Durga Prasanna Tripathy v. Arundhati Tripathy (2005), the wife deserted the husband after seven months of marriage, and both of them had been living separately for the past 14 years. Since the wife was not ready to lead a conjugal life with her husband and all the efforts of reconciliation went in vain, the Court granted the decree of divorce under Section 13(1) of the Hindu Marriage Act, 1955, on the ground of cruelty and desertion.
Grounds for judicial separation and divorce – Section 13(1)
Adultery: If the spouse has sexual intercourse with any person other than their spouse, then the other party can seek divorce or judicial separation by way of filing a petition before the concerned family court. Adultery as a ground for judicial separation or divorce occurs when either of the spouse engages in sexual intercourse with another person, in such a condition the other party can file a petition and seek divorce or judicial separation, as the case may be. It is important to note that for a party to establish adultery before the court, he or she has to rely mainly on the ancillary facts, for instance;
Circumstantial evidence; or
When no evidence of contact between the parties has happened and the wife is pregnant; or
A clear confession by the other party who was involved in extramarital intercourse, or a confession of the same in some other parallel proceedings; or
Any letters or other proof of a conversation between the parties involved in the affair which suggest any sexual relationship between the two.
In the case of Mrs. Pragati Varghese v. Cyril George Varghese (1997), it was held that in order to prove adultery, circumstantial evidence can be used by the plaintiff, however, it shall be such that it entirely wipes out the possibility of innocence of the respondent. It is to be noted that illicit intercourse that happened before the marriage cannot be a ground for seeking a judicial decree.
Wherein a person has married within the prohibited degrees of relationship as provided under Hindu law, and after some time when he realises that the marriage is invalid as per law and hence remarries, intercourse with the previous wife would amount to adultery. The wife in such a case can obtain a decree of judicial separation or divorce.
Cruelty: In a simple language, cruelty connotes a situation when the spouse treats the other spouse with cruel behaviour. Section 13(1)(i)(ia) of the Hindu Marriage Act deals with cruelty.The Act does not provide for any specific definition of the term “cruelty”, however, after looking into various judicial pronouncements, it can be said to include, physical violence, mental agony, affairs, toxic behaviour, etc. There is no specific scope or ambit of the definition, it is on the courts to determine, after looking into the facts and circumstances of the case, whether a particular conduct amounts to cruelty or not. The term is not restricted to the english doctrine of danger, nor limited to any particular definition or scope under the statutory limits.
In the case of A. Jayachandra v. Aneel Kaur (2005), the Supreme Court held that the term “cruelty”, as a ground of divorce and judicial separation, is used in relation to human conduct and/or human behaviour. Also, the Court stated that the conduct that has been complained about should be grave and weighty so as to lead to the conclusion that the spouse can no longer reside together with the other spouse. In the present case, the respondent wife used to ask her husband to do certain things, casting doubt on her husband’s reputation, character, and fidelity. The Court, looking into the facts and circumstances, held that what the wife used to ask her husband amounts to cruelty, as against the contentions of the respondent’s wife, who stated that those things were just simple advice. It was further stated that, though irreversible breakdown of marriage is not a specified ground of divorce under the HMA, 1955, under certain circumstances to shorten the agony of the parties and in the interest of justice, a court can grant the decree of divorce.
Desertion: Section 13(1)(i)(ib) of the HMA, 1955 deals with the provision of desertion, meaning that the spouse has left the other spouse for a period of at least two years without any reasonable grounds. The term “desertion” basically means the act of leaving or quitting without an intention to return back to live with the spouse. Put simply, it is an act of forsaking or abandoning. It is important to note that to seek divorce on the ground of desertion it is essential that the parties have not cohabited and that the party has wilfully left the house. In various instances, it happens that there may be separation without desertion, and desertion without separation, hence, mere severance of a relationship is not a sufficient and a valid ground for divorce. It is the wilful abandonment of one spouse by the other with any relevant or reasonable cause. In such a case, the consent of the affected party is not there. It is the total denial of the obligations of marriage.
In the case of Usharani Pradhan v. Brajkishore Pradhan (2005), the Orissa High Court held that the conduct of the respondent-wife of leaving her husband and children for such a prolonged time (7 years) to pursue her so-called ambition amounts to desertion. While upholding the divorce decree granted by the learned Family Court’s judge, the Court, while commenting on the respondent wife’s act, stated that “this case depicts the sordid episode of the life of a woman who spoiled her homely environment and family relationships running after the politics and politicians forgetting her solemn duties and responsibilities of a matrimonial life and neglecting her husband and children.”
In the case of Santosh Singh v. Sumita Singh (2022), the Chhattisgarh High Court granted divorce to the petitioner husband in a case where the wife did not return to her matrimonial house while waiting for shubh muhurat for almost 10 years. The Court stated that this act by the wife amounts to desertion under Section 13(1)(i)(ib) of the HMA, 1955.
Conversion: If one of the spouses has converted to some other religion. By virtue of Section 13(1)(ii) of the Hindu Marriage Act, 1955, if any of the spouse ceases to be a hindu by conversion, then the other spouse can ask for the decree of divorce or judicial separation. Prior to the Amendment Act of 1976, conversion was only the ground for seeking divorce, but after the amendment it is a ground for judicial separation too. However, the petitioner himself or herself cannot seek a decree of judicial separation or divorce on the ground of his or her conversion.
In the case of Madanam Seetha Ramulu v. Madanam Vimala (2014), the wife was Hindu by birth, however, later on, she got herself converted to Christianity after the solemnization of her marriage. The husband filed a petition seeking divorce on the grounds of his wife’s conversion to another religion. The Andhra Pradesh High Court held that the husband is entitled to get divorce on the ground of his wife’s conversion to another religion. This Section does not cover marriages that are solemnised under special statutes, and thus they cannot be dissolved under this section.
Insanity: An incurable unsoundness of mind or mental disorder in either of the parties to the marriage is a valid ground for seeking divorce or judicial separation under Section 13(1)(iii) the Hindu Marriage Act suffers from any mental disorder. Incurable unsoundness of either of the spouses is a reasonable ground for seeking a decree of divorce or judicial separation. After the Amendment made in the year 1976, it is no longer essential to establish the unsoundness of the other party for a period of not less than two years immediately before filing of the petition of divorce or judicial separation. The petitioner is required to establish that the respondent has been suffering from such a kind of mental disorder or unsoundness of mind continuously or intermittently that it is not possible for the petitioner to live with him or her. The meaning and scope of the terms “mental disorder” and “psychopathic disorder” have been provided in the explanation clause of Section 13.
In the case ofUtpal Hazari v. Maya Hazari (2018), the Jharkhand High Court held that marriage cannot be dissolved on the ground of mental disorder, which was caused by the sudden death of a sixteen-year-old son of the wife. In the present case, the wife lost her 16-year-old son, which traumatised and broke her, resulting in various mental disorders and unusual behaviour. The High Court stated that the learned lower court erred in looking into the facts and, especially, the circumstances of the case and that this is not the case of incurable unsoundness or insanity.
Leprosy: It is a kind of bacterial infection, which is a contagious disease. Prior to the amendment made in the year 2019, Section 13(1)(iv) of the Hindu Marriage Act provided leprosy as a ground of divorce and judicial separation. The Personal Laws (Amendment) Act, 2019, removed the disease of leprosy, as a ground for seeking decree of divorce. Before the passing of this amendment, the 20th Law Commission of India in its 256th Report titled as “Eliminating Discrimination Against Persons Affected by Leprosy”, recommended the removal of leprosy as a ground of divorce. The Law Commission Report stated that, since there have been a great advancement in the medical facilities, and medicinal treatment, such diseases have now up to a large extent have become curable. Thus, to still have such provisions in the various personal laws will be discriminatory to the person suffering from the disease.
The Apex Court in the case Pankaj Sinha v. Union of India (2018), issued similar guidelines. In the case of Pankaj Sinha, a writ petition was filed under Article 32 of the Indian Constitution, in which it was prayed that the Union of India and other respondents be issued directions to conduct regular national surveys in determining the cases of leprosy, and to bring the reports in the public domain. It was also sought by the petitioner that regular awareness camps be conducted to raise awareness and curb the fear of such diseases. In light of the relief sought by the petitioners, the Apex Court released certain guidelines to formulate and adopt measures to eradicate leprosy.
To get a decree of judicial separation or divorce (when this ground is available), the petitioner has to establish that the respondent has been suffering from leprosy for a period that is not less than a year immediately before the filing of the petition. However, after the amendment made in 1976 the statutory period of one has been deleted, and the term “incurable” has been inserted. The petitioner is now required to establish that the other spouse is suffering from a virulent and incurable form of leprosy.
Venereal disease: The petitioner can file a petition seeking a decree of divorce or judicial separation on the ground that the other spouse is suffering from venereal disease (a disease that can be transmitted through sexual intercourse) in a communicable form. Prior to the amendment, the suffering of the spouse from a venereal disease for at least three years was an essential requirement. In the case of Prasanna Krishanji Musale v. Mrs. Neelam Prasanna Musale (2022), the Bombay High Court while dismissing the husband’s appeal against the judgement of the trial court for grant of divorce under Section 13(1)(ia), 13(1)(ib), and 13(v) of the HMA, 1955, wherein he falsely accused his wife of having HIV Positive, and had refused to cohabit with her.
Renunciation of the world: Section 13(1)(vi) of the HMA, 1955, lays down that if any of the party to the marriage has renounced the world to unite with God or for the search of the truth, the other spouse can seek divorce or judicial separation. Renunciation from the world was the ground available only for getting a decree of divorce and not judicial separation before the amendment done in the year 1976. In the case of Shital Das v. Sitaram (1954), the Supreme Court held that, the renunciation announced by the spouse infers to a religious order, which works or implies civil death, and this is the reason why the other party has been provided with the right to seek decree of divorce or judicial separation. It is important that the petitioner establishes the fact that the other spouse has joined some religious order contrary to the concept of marriage. A mere declaration that the other spouse has renounced the world does not prove to be a sufficient ground.
Presumptive death: Under Section 13(1)(vii) of the HMA, 1955, if one party to the marriage has not been heard alive for seven years, then the other spouse can seek divorce or judicial separation on the ground of presumptive death. Presumption of death of the other spouse, if the person has not heard of being alive for a period of seven years or more, is a ground available to seek divorce or judicial separation. In order to prove this ground, it is required that the petitioner establishes that no person who would have naturally heard from the respondent knows about him or her being alive. In the case of Nirmoo v. Nikka Ram (1968), the Delhi High Court held that, if the spouse presumes the death of the other spouse, and without getting a divorce in such a case, remarries to the other person, then, the person that has returned after the span of seven years or more can contest the validity of the second marriage.
Divorce by mutual consent – (Section 13B of Hindu Marriage Act, 1955)
In a case where none of the aforementioned grounds is available but the parties decide they do not want to remain married to each other or cannot live with one another, they can seek divorce by mutual consent under Section 13B of the Hindu Marriage Act.
The Hindu Marriage Act, 1955 enshrines the right to divorce by way of mutual consent under Section 13B. The spouses can jointly file a petition seeking divorce under Section 13B before the family court, which possesses the jurisdiction to pass such a decree of divorce under Section 13B. The Section expressly mentions the conditions under which the spouses can file a petition for the grant of divorce by mutual consent.
In order to seek divorce on the grounds of mutual consent, the parties must have been living separately for a period of at least one year. The term living separately connotes that the parties must not live together as husband and wife, however, it does not say that the parties cannot live under the same roof if they are filing a petition for divorce by mutual consent. The important factor that is to be addressed is that there is no possibility of them living together as husband and wife. Another essential ingredient is that the parties are not able to live together and have mutually agreed that their marriage has no chance of reconciliation and that in no way can the dispute between the parties be resolved.
The judiciary has conflicting opinions regarding the waiting period that is prescribed in the provision of Section 13B. There have been clashes while considering the period of waiting as directory or mandatory. In the case of Gandhi Venkata Chitti Abbai v. Unknown (1988), the Allahabad High Court held that the waiting period was mandatory. However, in the case of Dinesh Kumar Shukla v. Neeta (2005), the Madhya Pradesh High Court held that the period prescribed under Section 13B is directory in nature and can be brought down below 6 months if the circumstances of the case demand so. Putting an end to this question, the Apex Court, as discussed in the later part of the article, has held that the waiting period under Section 13 B can be waived if the circumstances demand it.
The parties at the time of filing the petition for divorce must mutually agree on the same, however, the consent can be withdrawn unilaterally if one of the spouses in the waiting period is of the opinion that he or she does not want a divorce. It is pertinent to note that the decree for divorce by mutual consent cannot be passed ex parte, i.e., both parties must be present at the time of the passing of the final decree.
Essentials of divorce by mutual consent
Parties should be living separately
Section 13(B) of the Act prescribes that in order to mutually dissolve a marriage, the spouses should be living separately for a period of at least 1 year before filing the petition.
This period of one year where the parties have lived separately must be immediately before the filing of the petition. “Living Separately” in the context of Section 13B does not necessarily mean physically living in different places. The parties could be living in the same house, sharing the same roof but there can still be a distance between the two.
If that is the case then they are not considered to be living as husband and wife, which qualifies as living separately.
The same was held by the Hon’ble Supreme Court in the case of Sureshta Devi v. Om Prakash. Wherein it was made clear that living separately does not necessarily mean living in different places. The parties can be living together but not as spouses.
Parties have not been able to live together
It is said that relationships are made in heaven, however sometimes the holy relationships do not work for long on Earth. These days divorce is taken very lightly and people go for it as a first resort whereas the intention behind the law of divorce was to make it a last resort. Many times, in a marriage it so happens that the spouses can’t stand each other and can no longer live together happily. That is when they opt for divorce by mutual consent.
Sadly enough, it often happens that the parties are not able to live together even after trying mediation and reconciliation and putting multiple efforts, before filing a divorce petition by mutual consent.
In Pradeep Pant & anr v. Govt of NCT Delhi, the parties were married and had a daughter from their wedlock. However, due to temperamental differences between them, they were not able to live together and decided to live separately. Despite putting their best efforts they were unable to reconcile their marriage and could not see themselves living together as husband and wife ever again. A divorce petition was jointly filed and issues such as maintenance and custody of their child were decided and agreed upon by both.
The wife would get custody of their daughter and the husband would reserve visitation rights, it was mutually agreed upon by both of them. Both parties gave their free consent without any undue influence. The court observed that there was no scope of reconciliation and granted a decree of divorce.
After filing a petition for divorce by mutual consent, the parties are given a waiting period of 6 months, also known as a cooling period and it may extend up to 18 months. During this time the parties must introspect and think about their decision.
If the parties are still not able to live together after the cooling period, then the divorce petition shall be passed by the district judge.
They have mutually agreed that marriage should be resolved
In some situations – the parties may choose to give their marriage another chance and mutually resolve their marriage. During the waiting period, the parties may sometimes be able to reconcile and make their relationship work.
After the first motion has been passed, the parties have a total of 18 months to file for second motion and if they fail to do so within those 18 months, both parties are deemed to have withdrawn their consent mutually.
Procedure for getting a decree of divorce by mutual consent
Step 1: Jointly filing a petition
A divorce petition in the form of an affidavit is to be signed by both parties and filed before a family court in their region.
Jurisdiction of the court should not be a major issue in filing for divorce as the petition can be filed within the local limits of the ordinary civil jurisdiction of where the marriage was solemnized or where either of the parties currently resides.
As mentioned earlier, the parties to a marriage must be living separately for at least one year before filing the petition.
Step 2: First motion
After filing the petition the parties shall appear before the court and give their statements. If the court is satisfied and the statements are recorded then the first motion is said to have been passed, following which a waiting period of 6 months will be given to the parties before they are able to file the second motion.
This waiting period as statutorily prescribed under Section 13B(2) of the Act is for the parties to introspect and think about their decision. It is a time given for them to reconcile and give their marriage another chance, just in case they decide to change their mind.
Anyhow, sometimes the court may be convinced that the marriage has reached the point of no return and the waiting period will only expand their misery. In that case, this period can be waived off by the court. This period if not waived off can extend up to 18 months. If the parties still want to get divorced they may now file for second motion. The second motion can be filed only after the waiting period of 6 months and before 18 months has elapsed.
Step 3: Second motion
This is when final hearings take place and statements are recorded again. If the issues of alimony and child custody (if any) are mutually agreed upon the decree of divorce is passed after this step. The marriage has finally ended by now and divorce by mutual consent has been granted.
Is the six month waiting period mandatory for getting a divorce by mutual consent
Getting a divorce is a very serious matter, it can destroy and separate families. But, on the other hand, the parties get to exercise their right to choose and pursue their happiness as there is no point to continue being in a matrimonial relationship if the spouses are not happy. For couples who go for filing divorce by mutual consent are given time to try and make their marriage work. They are advised to go for mediation and reconciliation to sort their issues out.
However, many times these efforts don’t work and people actually go through with the divorce.
While filing for divorce by mutual consent the parties have already lived separately for a period of over one year per the statutory requirement. So, there is very little to no chance that they can make the marriage work again.
In the case of Amardeep Singh v. Harveen Kaur, it was observed that the couple had internal disputes and their married life was not the best one. The disputes escalated really bad and many civil and criminal proceedings were followed.
They mutually decided to resolve all the disputes and file for divorce by mutual consent. The custody of their children would be with the husband, and permanent alimony was paid to the wife.
After all these issues were mutually sorted by the parties they just wanted a quick divorce and sought to waive off the waiting period. The parties could no longer be with each other and the waiting period would only prolong their agony.
Keeping this in view, Hon’ble Supreme Court laid down the waiting period of six months can be waived off if the court is satisfied that the spouses have lived separately for more than the statutorily prescribed time of at least one year and have settled the issues of alimony and custody of children(if any).
Hon’ble Supreme Court also observed that the waiting period will do nothing but merely prolong the misery and sufferings of the parties unable to live together anymore.
In another case of K. Omprakash v. K. Nalini, the parties were not happy with their marriage anymore and were allegedly having extramarital relationships. It was the contention of the petitioner that they were living apart without ever visiting each other for more than a year and so, there was no scope of reconciliation between them.
They blamed each other for their suffering and unhappiness. Both alleged each other to be involved in a series of illicit relationships but denied ever being involved in such relationships themselves.
There was no other option left but only to file for divorce by mutual consent. The marriage had suffered irretrievable damage and had reached a point of no return.
Both parties prayed for an instant divorce and a waiver of the waiting period. Observing that the parties had lived separately for long enough and there was no scope of getting the marriage to work again.
The High Court of Andhra Pradesh held that Section 13B(2) of the Hindu Marriage Act should be read not as a statutory mandate, but only as a directory.
Hence, the waiting period which was once mandatory in nature now remains discretionary.
Whether consent can be unilaterally withdrawn for divorce by mutual consent
After the first motion, if the parties are provided with the waiting period they may sometimes decide to change their mind. Not all cases of divorce are irreparable and some may still have some scope of reconciliation and the parties may choose to withdraw their consent and give their marriage a second chance.
The waiting period proves to be very useful for some cases as the parties get to go for mediation which may change their mind. The consent of the parties is also deemed to be withdrawn after the expiry of the waiting period of 18 months, wherein a decree of divorce shall not be granted.
The phrase “Divorce by Mutual Consent” is self-explanatory, it simply means that the consent of both parties is required in order for the court to grant the decree of divorce. In Sureshta Devi v. Om Prakash, the wife’s consent was fraudulently obtained by the husband for filing a divorce. The wife was unwilling to give her consent for divorce and therefore she did unilaterally revoked her consent.
Upon reading the judgement of the Supreme Court we can conclude that a party can unilaterally withdraw their consent if the same has not been freely given.
After the first motion has been passed the parties will have agreed to settle on various issues such as alimony, custody of children and other marital expenses. Now, If one of the parties unilaterally withdraws their consent the other party may suffer prejudice that could be irreversible.
In Rajat Gupta v. Rupali Gupta, the court says that the agreement between the parties to settle their issues and opt for divorce by mutual consent is a binding agreement and a form of undertaking. If a party now unilaterally withdraws their consent, they would be in breach of their undertaking made before the court of law, resulting in civil contempt of court by wilfully disobeying an undertaking. If the consent has to be withdrawn unilaterally, it must be done so on a just and reasonable ground and the other party must not suffer prejudice.
Therefore, consent can be unilaterally withdrawn only in exceptional cases on reasonable grounds.
Supreme Court on the unilateral withdrawal of consent for divorce by mutual consent
In the case of Hitesh Bhatnagar v. Deepa Bhatnagar (2011), initially a divorce petition under Section 13 B of the Hindu Marriage Act was filed before the District Court, Gurgaon. The parties in the aforesaid case got married in 1994 and were thereafter blessed with a girl in 1995. However, due to certain differences, they started living separately, and since then they have been living separately, owing to which they filed for divorce under Section 13 B in the year 2001. Later on, when the case was in second motion, the wife withdrew her consent, although the husband still insisted on the grant of a decree of divorce. Due to a withdrawal of consent by one of the parties, the petition was dismissed by the Learned Additional Districts Judge, Gurgaon. The appellant husband, aggrieved by the order of the Learned Additional Districts Judge, Gurgaon, filed an appeal before the Punjab and Haryana High Court, which was again dismissed. Thereafter, the husband moved to the Supreme Court.
The issue before the Supreme Court was whether consent can be withdrawn by one of the parties after filing a divorce petition under Section 13 B after the expiration of more than 18 months. The second issue before the court was whether divorce under Section 13 B can be granted after the withdrawal of consent by one of the spouses. The circumstances under which divorce was to be granted in spite of the withdrawal of consent by one of the parties were also to be laid down by the Apex Court.
The Apex Court dismissed the appeal filed by the husband, stating that the courts only grant the decree of divorce when they are convinced beyond a doubt that the marriage is irreversibly broken down. However, in the present case, the wife is firm on her stand that for the future of her daughter, she is willing to put all the bitterness that exists between the parties behind her and is ready to live with her husband. In such a case, where there is still a chance that the marriage can work, granting divorce will not be appropriate. As far as the period of 18 months is considered, the court stated that this period is provided for speedy disposal of cases and is in no way a direction that specifies the period of withdrawal of consent. It was further stated by the Hon’ble Court that if the second motion in the divorce case does not begin within the period of 18 months, then the Court is not bound to pass a decree of divorce by mutual consent. It is to be noted that a second motion by both parties is not made prior to the completion of a period of 6 months from the date on which the case was filed.
Difference between judicial separation and divorce
Judicial Separation
Divorce
The provision for judicial separation is provided under Section 10 of the Hindu Marriage Act, 1955.
The provision for the grant of a decree of divorce is under Section 13 of the Hindu Marriage Act, 1955.
In judicial separation, the relationship between the parties just stands superseded.
In the decree of divorce, the obligations of marriage no longer exist. The relationship between the spouses ceases to exist.
In cases of judicial separation, the original marital status of the parties can be restored. However, they can seek a decree of divorce if the two have not cohabited for a period of one year after the passing of the decree of judicial separation.
After the passing of the decree of divorce, the marital status of the parties cannot be restored.
In the decree of judicial separation, parties are not entitled to remarry.
After the passing of the divorce decree, the parties can choose to remarry after the lapse of the statutory period.
Judicial pronouncements
Anil Kumar Jain v. Maya Jain (2009)
Facts of the case
In the present case, the appellant husband filed the appeal before the Apex Court, seeking divorce under Section 13B and asking the court to invoke the extraordinary powers enunciated under Article 142 of the Constitution of India. The husband and wife, owing to the differences between them, filed a joint petition under Section 13 B seeking divorce by way of mutual consent. After the filing of the divorce petition, the learned lower court fixed a date for the further proceedings after asking the parties to wait for the six months statutory period. At the next date, the wife stated that, though she acknowledges the differences, she does not wish to dissolve the marital ties. On the other hand, the husband reiterated his stand. Based on the withdrawal of consent by the wife, the lower court dismissed the petition for divorce by mutual consent.
Being aggrieved by the order passed by the lower court, the husband filed an appeal before the Madhya Pradesh High Court. However, since the wife was firm with her stand that she does not want dissolution of their marriage despite the differences between the two, and hence the appeal filed by the husband was dismissed by the High Court. It further stated that the husband is free to file an appeal before the Apex Court. The Court said so, because the High Court does not have any such extraordinary powers, to grant divorce in such a situation when one of the parties has withdrawn their consent. Hence, present appeal was preferred by the husband before the Hon’ble Supreme Court.
Issue involved in the case
Whether the court under Article 142 can grant the decree of divorce under Section 13B in the present case or not?
Judgement of the Court
The Apex Court opined that normally it is necessary that the consent of both parties subsist till the end of the divorce proceedings under Section 13B, and that withdrawal of consent by one of the parties leads to the dismissal of the petition. However, the Apex Court stated that when the proceedings under such circumstances move to the Supreme Court and the Court is satisfied that a divorce decree can be granted looking into the facts and circumstances of the case, it can invoke the power under Article 142 of the Constitution and grant the decree of divorce.
Devendar Singh Narula v. Meenakshi Nangia (2012)
Facts of the case
In the present case, the marital ties between the parties subsisted merely on a superficial basis, and both parties had been living separately since their marriage. Three months after the marriage took place, the appellant filed a petition under Section 12 of the HMA, 1955. The matter went to mediation, and the parties decided to divorce by mutual consent. The learned family court fixed the next date owing to the statutory waiting period. In the meantime, parties approached the Supreme Court to invoke Article 142.
Issue involved in the case
Whether divorce under Section 13B can be granted before the statutory waiting period provided under the Act or not?
Judgement of the Court
The Apex Court, looking into the facts and circumstances of the case and finding that there were no marital ties between the parties at all and that the marriage only existed in name, granted divorce to the parties before the completion of the six months statutory period.
Shri Uttam Kumar Bose v. State of West Bengal (2023)
Facts of the case
In the present case, the petitioner is a lawfully wedded husband, however, the married life of the petitioner and the respondent wife was not peaceful. The reason contended by the petitioner is the extremely hostile, adamant, and inimical attitude of the respondent’s wife towards the petitioner and his family members. The respondent’s wife developed various medical conditions and disorders that caused her infertility, thereby making her unable to conceive. The respondent wife used to blame her husband for the diseases she suffered and used to torture him for that reason. Being agitated by this, the petitioner served legal notice to the respondent’s wife, thereby asking her to grant a divorce by mutual consent. In reply to the aforesaid legal notice, the respondent’s wife lodged a complaint against the present petitioner and his family members. The learned lower court allowed the criminal proceedings against the husband, and being aggrieved by this, the present petitioner for quashing of the impugned proceedings knocked on the doors of the Calcutta High Court.
Issues involved in the
Whether the learned lower court erred in allowing the criminal proceedings or not.
Whether the present situation of the infertility of the wife is a valid ground for divorce?
Judgement of the Court
The Calcutta High Court held that the infertility of the wife is not a valid ground for divorce. The Court further opined that there are several ways in which the parties can become parents, and the husband has to be sensitive in such matters where the wife is already suffering mentally, as in the present case due to her being unable to conceive. The Court dismissed the revision plea filed by the husband against the quashing of criminal proceedings.
Conclusion
Divorce is a serious issue and must be used only as a last resort, however, these days people do not think twice before getting divorced. It splits families and the child of the separating couple has to go through serious trauma growing up with separated parents.
Having said all that, countries having higher divorce rates have higher standards of women empowerment. People get to exercise their right to choose to end the marriage if they are not happy.
Divorce by mutual consent is the best way of divorce as the parties do not have to bad mouth each other in the courtroom and both parties can mutually settle on all issues and end their marriage.
The legislature has set numerous grounds for the legal termination of marriage, but the decorous way of seeking a divorce that is beneficial for both parties is by way of mutual consent.
Frequently asked questions (FAQs)
Is it possible to obtain a decree of divorce precisely on the same grounds on which a decree of judicial separation is obtained?
In the absence of a fresh matrimonial offence, the petitioner cannot apply for a decree of divorce, on the same grounds as those taken in obtaining a decree of judicial separation. It is crucial to understand that the scope and ambit of both judicial separation and divorce are qualitatively different.
What are the two additional grounds on which a wife can seek a decree of judicial separation, other than the ones which are common grounds for both spouses?
A wife can seek a decree of judicial separation on the ground of bigamy (Section 13(2)(i)), i.e., when the husband already had a wife at the time of his marriage. Another ground provided under Hindu law is rape, sodomy, or bestiality (Section 13(2)(ii)). The third additional ground provided to the wife is that if she was married before the age of puberty (15 years), she can seek a decree of judicial separation after attaining a majority (Section 13(2)(iv)).
What documents are required for filing for divorce?
Whether the parties opt for divorce under Section 13 or Section 13 B of the Hindu Marriage Act, 1995, the petitioner while filing the petition is required to file proof of their marriage (the marriage certificate), proof of the ground that he or she has taken for seeking the decree of divorce, and respective identity proof of the parties to the marriage. Also, the divorce petition must be filed along with an affidavit.
What is the 71st recommendation report?
The 71st Law Commission Report (1978) pertains to the concept of irrevertible breakdown of marriage. The aforesaid report firmly recommended the addition of “irrevertible breakdown of marriage” as a separate ground for divorce. After the law commission’s report, the bill was introduced in the Lok Sabh;, however, it did notgett the majority. The bill was also introduced in the year 2013 as the Marriage Laws (Amendment) Act, 2013, which inserted Section 13 C, HMA, 1955, and Section 28 A, Special Marriage Act, 1954, both pertaining to irrevertible breakdown of marriage as a ground for divorce. However, the bill has not been cleared by the lower house yet.
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This article is written by Shivam Kumar pursuing Diploma in Corporate Litigation. This article discusses the various nuances of the Amazon Future dispute.
It has been published by Rachit Garg.
Table of Contents
Introduction
The dispute between Amazon and the Future Retail Group is a long-standing and media-highlighted case which has brought into light several nuances of how the Indian courts deal with emergency arbitration. Moreover, this epic saga has also brought into the limelight how the Competition Commission of India contributes to the evolution of anti-trust jurisprudence. This article will portray to the readers in a simple and analytical manner how this legal battle had played out and the various nuances of the same.
Facts of the case
It started in 2019 when Amazon got into various shareholder agreements with Future Retail Ltd., Future Coupons Pvt. Ltd. and their promoters Biyani Group. Amazon invested INR 1431 crores in Future Coupons Pvt. Ltd. as per this agreement. What Amazon got in return was that Future Retail Ltd. cannot transfer any of its retail and other assets without the consent of Future Coupons Pvt. Ltd. and Future Coupons Pvt. Ltd needed to take permission from Amazon to give such consent. There was also a list of prohibited entities in the agreement to which Future Retail Ltd. was prohibited from disposing, divesting, transferring, selling or otherwise encumbering any of its retail assets. Reliance Retail was one such prohibited entity. Inter alia, what these agreements meant were that Amazon could sell any assets of Future Retail Ltd. on its website too.
Now what happened after these agreements was that Future Retail Ltd., Future Coupons Pvt. Ltd. and their promoters Biyani Group entered into an agreement with the Mukesh Dhirubhai Ambani Group and this resulted in the amalgamation of the shares of the Future Retail Ltd. with the Mukesh Dhirubhai Ambani Group. As a direct consequence of this agreement, Future Retail Ltd. ceased to exist and became one with the Mukesh Dhirubhai Ambani Group.
Naturally, this subsequent agreement with the Mukesh Dhirubhai Ambani Group was hurting the business interests of Amazon and thereafter, Amazon brought this matter before the Singapore International Arbitration Centre, where an award was passed in favour of Amazon. In response to this, the Biyani Group called this award a nullity and continued with the transaction with Mukesh Dhirubhai Ambani Group.
The matter thereafter reached Delhi High Court when Future Retail Ltd. claimed that the execution of this emergency arbitration award of a foreign tribunal would result in tortious interference with its civil rights. Based on this main argument, Future Retail Ltd. filed a civil suit and requested interim relief from the Delhi High Court by disallowing Amazon from appealing to statutory authorities based on its arbitral award.
In response to this, Amazon took recourse of Section 17(2) of the Arbitration and Conciliation Act, 1996 before the Delhi High Court and the main issue before the High Court was to decide if the foreign emergency award granted in favour of Amazon was maintainable in India or not. The Delhi High Court ruled in favour of Amazon and held that such an award would be enforceable as an order.
Thereafter, Amazon, Future Group, and Reliance brought the fight all the way to the Supreme Court of India because they were caught in a massive disagreement that is in the news every day. The lawsuit consists of an objection to Future Group’s sale of retail assets to Reliance for USD 3.38 billion. The e-commerce behemoth Amazon has based its argument on the claim that the contested transaction is against the shareholder’s agreement (SHA) that was signed between Amazon and the Future Group founders. Future Group, however, has vehemently denied any wrongdoing and has actually accused Amazon of illegally interfering with the sale without any justification.
The $1 billion transaction was suspended by the emergency arbitrator chosen in accordance with the procedures for emergency arbitration included in the Singapore International Arbitration Centre (SIAC) Regulations, giving Amazon a temporary advantage. To put it another way, Amazon was issued an “emergency order” that prevented the two businesses from moving further with the acquisition until the Arbitral Tribunal was formally established (EA Order). The question that emerges in the Indian context concerns the enforcement of this “EA Order,” given that the existing structure of the Arbitration and Conciliation Act, 1996 (the Act) does not expressly recognise the legality of the interim orders issued by emergency arbitrators.
The dispute’s core issue
Amazon is required to purchase 49% of Future Coupons’ share capital under the terms of the Agreement between the two parties. The aforementioned agreement also includes a list of “restricted individuals,” which names certain organisations that Future Group was forbidden from entering into any agreements with. Notwithstanding these underlying clauses, Future Group decided to sell some of its assets to Reliance, a division of the Mukesh Dhirubhai Ambani Group, in order to avoid going bankrupt. It’s also significant to know that Reliance hopes to purchase Future Group’s liabilities, which total about Rs 12,801 crores, along with its retail assets. In addition, Reliance has committed to providing Rs 2800 crores to the combined company, which would be used, among other things, to settle Future Group’s outstanding debts. As a result, it is clear that this deal will stop Future Group from becoming insolvent, and if it fails, Future Group will surely enter liquidation.
Amazon claims that Future Group violated the terms of the deal by engaging in a selling transaction with Reliance since Reliance is one of the prohibited parties listed in the contract. According to Future Group, the Foreign Exchange Management Act (FEMA)–Foreign Direct Investment (FDI) Regulations are actually being broken by Amazon. Taking a look at the overlap of agreements between Amazon and Future Group, it can be argued that in addition to establishing protective rights, Amazon is also infringing by controlling Future Retail, which in reality calls for prior government clearance. Amazon would be in breach of the FEMA-FDI Regulations without such authorization.
Future Group’s and Reliance’s arguments
Future’s position is that they are not seeking an anti-suit or anti-arbitration injunction but rather a court order prohibiting Amazon from unlawfully interfering with the transaction between Future Group and Reliance. Future Group’s major complaint is with the conclusions in the EA Order and the interim directives issued in response. Future Group is not seeking a ruling that the EA Order is unlawful on the merits of the case but rather concerns the legal standing of the emergency arbitrator and the EA Order under India’s present arbitration regime.
Amazon’s whole legal defence is based on the EA Order’s legal bindingness, much like Future Group and Reliance have done. It has been argued that the SIAC Rules, upon which the EA Order was based, are merely procedural in nature and cannot grant substantive jurisdiction to a forum to grant interim reliefs aside from those that are required under Part I of the Act, specifically Sections 9 and 17, and are therefore ineligible to be used as the basis for the EA Order. In other words, the argument is predicated on the notion that the EA Order is illegally null and void, incapable of being enforced in accordance with Part I of the Act, and as a result, the proceedings before the emergency arbitrator are null and void because they were conducted in an improper forum.
Justifications offered by Amazon
In a resounding denial of the claims made by Future Group and Reliance, Amazon argued that the Delhi High Court lawsuit was unconstitutional and a misuse of the legal system. Amazon continued by highlighting Future and Reliance’s actions as they took part in the arbitration procedures before SIAC and appeared before the emergency arbitrator while making several arguments that were identical to those made by them in the current lawsuit. Amazon also argued that the Future Group was improperly attempting to persuade the Court that the EA Order was invalid and that it did not fall within the Act’s existing legal definition. Amazon claimed that they had utilised the party autonomy rights granted to them by Section 2(8) of the Act, and that as a result, their decision to request emergency relief before the SIAC was legal under Indian law.
Amazon also used Section 2(1)(d) of the Act, which states that an “arbitral tribunal” is defined as “a lone arbitrator or a panel of arbitrators,” to support its claim that the emergency arbitrator contemplated under the SIAC Rules qualifies as an arbitration tribunal for the purposes of the Act. A legitimate emergency arbitrator might therefore be included in an arbitration tribunal according to a combined reading of Sections 2(8) and 2(1)(d) of the Act. Last but not least, Amazon drew the court’s attention to the SIAC Regulations, according to which an emergency arbitrator served in such capacity up until the Arbitral Tribunal was completely formed. In light of the aforementioned assertion, the emergency arbitrator’s procedures are admissible under Indian law and the Under Section 17(1) of the Act and Section 17(2) of the Act, the EA Order is a court order and an interim measure.
Analysis of developments at the Delhi High Court and the Supreme Court of India
So what happened was that dissatisfied with the emergency arbitrator’s conclusions, Future moved quickly to explore an alternate strategy to prevent Amazon from interfering with their deal with Reliance. Future Group filed a lawsuit with the Delhi High Court, asking for, among other things, an order from the court prohibiting Amazon from improperly interfering with the transaction. The maintainability of the lawsuit in view of the ongoing arbitration procedures before the SIAC came up for decision by the knowledgeable Single Judge Bench. After recording a lengthy legal argument, the Court quickly provided its conclusion and found that the claim filed by Future was in fact maintainable before it in its ruling dated 21-12-2020. To Future’s dismay, the Court determined that they were not entitled to the injunctive relief they had requested through the lawsuit. The Court based its reasoning on the fact that Future had made comparable claims before the different legislative and regulatory agencies and that these bodies should keep acting in line with the law.
Although the proceedings before the Securities and Exchange Board of India (SEBI), Competition Commission of India (CCI), and National Company Law Tribunal (NCLT) were proceeding quickly, the Delhi High Court’s ruling was unquestionably a partial victory for Amazon. Amazon quickly pursued another delaying strategy to obstruct the acquisition out of resentment at these concurrent developments before the regulatory agencies, and as a result, it filed an application under Section 17(2) of the Act for the enforcement of the EA Order. The EA Order was recognised as a legitimate order under Section 17(1) of the Act and deemed to be enforceable under Section 17(2) of the Act by a single judge through a judgement dated 2-2-2021 that expressed support for the EA Order’s legality. The learned Single Judge ordered that the status quo be preserved with regard to the contested transaction while deferring making a reasoned ruling until a later time. It is clear that Amazon won big with this.
Future, who felt wronged by this decision, quite arrogantly appealed it to the Division Bench. The Division Bench issued its judgement on February 8, 2021, by which the Court ordered a delay in the execution of the learned Single Judge’s ruling maintaining the status quo. In its reasoning, the Division Bench said that it does not see why statutory organisations like NCLT, CCI, and SEBI should be prevented from carrying out their mandates and acting in line with the law. As the judgement of the learned Single Judge was appealed before the specific order could be issued, in our opinion, there appears to be a lack of respect for the Court’s procedure. It is also plausible to say that the Division Bench erred in recognising that the challenged ruling did not have finality and may not have been prepared for the Appellate Court’s review.
As was to be predicted, Amazon, who was extremely unhappy with the Division Bench’s ruling dated 8-2-2021, utilised its constitutional remedy by submitting a special leave petition (SLP) to the Supreme Court of India. The Supreme Court categorically declined to pronounce on the merits of the contested transaction on 22-2-2021, and as a result, gave the parties two weeks to submit rejoinders before the case would be considered. Although the Supreme Court ruled that it should hold off on making a final determination about the sanction of schemes, it did permit the NCLT to continue evaluating the merger in the interim.
It is important to highlight at this time that the learned Single Judge of the Delhi High Court rendered his decision on March 18, 2021. In a significant ruling rendered by Midha, J., the Court upheld the validity of the emergency arbitrator appointed under the Act. According to Section 17(1) of the Act, the Court recognised the EA Order as an order. The decision has fully described the Indian position on the group of enterprises’ idea and repeated the emergency arbitrator’s interpretation of Indian law, which appears to be generally in conformity with the EA Order of 25-10-2020.
Fine by Competition Commission of India and its effect
Amidst all these, on 17.12.2021, the Competition Commission of India revoked the original shareholder agreement made between Amazon and Future Coupons Pvt. Ltd and imposed a never-before hefty fine of INR 200 crores on Amazon for suppressing material information about the scope and purpose of the agreement. Another reason for the revocation and imposition of such a lumpsum penalty is that Amazon had described the rights granted by the shareholder agreement as protective but the CCI had discovered from uncovered notes of Amazon that it was a strategic decision of Amazon to control Future Retail Ltd. whose majority shareholder was Future Coupons Pvt. Ltd. Unfortunately for Amazon, when it appealed against the CCI penalty to NCLAT, the hefty fine of INR 200 crores was upheld.
Empowered by this, Future Group approached the SIAC to revoke its arbitration agreement citing the revoking of the original shareholder agreement between Amazon and Future Coupons Pvt. Ltd.
Meanwhile, the Apex Court felt that the Delhi High Court had not given sufficient time to Future Retail and Future Coupons Pvt. Ltd and sent the matter back to Delhi High Court to begin fresh adjudication. Later, based on a joint memo filed by the Future Group and Amazon, the Apex Court allowed the arbitration proceedings to continue before the SIAC where the SIAC was asked to evaluate the Future Group’s claims of revocation of the arbitration proceedings on the ground that CCI had revoked the original shareholder agreement.
Conclusion
It doesn’t appear that the Indian courts are especially driven to uphold their duty to observe lawful arbitral instruments. It goes without saying that this approach would make India less desirable as a site for international arbitration. It is also true that over the past ten years, India’s arbitration sector has suffered due to the controversy over whether Part I of the Act applies to arbitrations conducted abroad.
In the context of international arbitration, the Indian courts have frequently demonstrated an unwillingness to uphold international comity. The 1985 UNCITRAL Model Law on International Commercial Arbitration was incorrectly interpreted by the Indian courts, and they were unwilling to exclude India from its obligations under the 1958 New York Convention. International arbitration has unquestionably evolved into an institution that is governed by universally recognised legal standards and transcends judicial and legislative peculiarities. The Amazon-Future-Reliance case appears to be one in which the wealthy plaintiffs have blatantly disregarded the law and the system of justice. The Supreme Court will have to pass on a number of rulings when the special leave petition is analysed on the merits in order to advance institutional arbitration, promote confidence between individuals in the international business community, and emphasise the significance of the due process of law.
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This article is written by Shubham Kumar and Gautam Badlani, a student at Chanakya National Law University, Patna. The article discusses the difference between judicial separation and divorce. Further, this article enumerates the grounds of divorce and judicial separation as provided under the various personal laws and also differentiates between the two concepts.
It has been published by Rachit Garg.
Table of Contents
Introduction
In Indian society, marriage is considered a sacrament. It is an irrevocable relationship between a husband and wife established through rituals and customs. Before 1955, there was no relief available to either party in case of a failed marriage. They had to continue with the marriage and couldn’t break it. However, after the passage of Hindu Marriage Act, 1955, things changed in favour of both parties to the marriage. Now, in the case of a failed marriage, the parties do not need to suffer in the marriage and can easily break their matrimonial alliance through judicial separation or a decree of divorce.
The Marriage Laws (Amendment) Bill, 1976, makes the ground for judicial separation and divorce common. It is up to the parties to choose between the two methods of dissolution.
The legal effects of judicial separation and divorce are, however, different. A divorce puts the final nail in the coffin of marriage, whereas, judicial separation leaves scope for settlement between the parties.
Now let us have a look at exactly what the key differences are between judicial separation and divorce.
What is judicial separation
Either party to the marriage, whether solemnised before or after the commencement of the Hindu Marriage Act, 1955, can, under Section 10 of the Act, file a petition for judicial separation. After a decree is passed in favour of the parties, they are not bound to cohabit with each other. Some matrimonial rights and obligations, however, continue to exist. They cannot remarry during the period of separation. They are at liberty to live separately from each other. Rights and obligations remain suspended during the period of separation. The grounds for judicial separation are the same as for divorce. Under Section 13(1), judicial separation may be sought on the following grounds:
Adultery: If another spouse had voluntary sexual intercourse with any person other than his or her spouse after solemnization of marriage.
Cruelty: If after solemnization of marriage, one of the spouses treats the other with cruelty.
Desertion: If the other party has deserted the spouse for a continuous period of 2 years without any reasonable ground immediately preceding the presentation of the petition.
Conversion: If one of the spouses has ceased to be a Hindu.
Insanity: If the other party is of unsound mind or has been suffering continuously from mental disorder of such a kind and to such an extent that the petitioner cannot live with the other party.
Leprosy: If the other party has been suffering from a virulent and incurable form of leprosy.
Venereal disease: If the other party has been suffering from venereal disease in a communicable form.
Renounced the world: If the other spouse has renounced the world by entering any religious order.
Has not been heard alive for seven years.
In addition to these grounds, some of them are exclusively reserved for women:
Husband has more than one wife living: If the husband had married before the commencement of the Act and after the commencement of the Act has remarried, either of the wives can present a suit for judicial separation provided the other wife is alive at the time of presentation of the petition.
Rape, sodomy or bestiality: If a man is guilty of offence like rape, sodomy or bestiality, the wife can present a petition for judicial separation.
Marriage before the age of fifteen years: If the marriage of women was solemnised before attaining 15 years of age, she has the right to repudiate it, provided she is below the age of 18 years.
Effect of judicial separation
Judicial separation is regarded as a temporary suspension of marriage where the parties are no longer entitled to the right of cohabitation. It can be considered a forward step towards divorce. However, there is always the possibility of reconciliation.
Judicial separation does not end the marital status of the parties. However, it is pertinent to note that where a decree for judicial separation has been passed and the wife is unable to maintain herself, the court may order the husband to provide maintenance to the wife.
However, the parties continue to remain legally married, and if either of the parties marries again, such a party will be guilty of the offence of bigamy. Similarly, if either of the parties dies while the decree of judicial separation is in effect, the surviving party is the legal heir to the deceased’s property.
Judicial separation under various laws
Judicial separation under the Special Marriage Act, 1954
Section 23 of the Special Marriage Act, 1954, provides that a husband or wife can file an application for a decree of judicial separation against the spouse under the following circumstances:
Where one of the spouses deserts the other for a continuous period of 2 years;
Where any spouse is convicted of an offence under the Indian Penal Code, 1860, and sentenced to 7 years of imprisonment or more;
Where the spouse suffers from leprosy;
Where the spouse treats the petitioner with cruelty;
Where the spouse is a person of unsound mind or where he/she suffers from continuous or intermittent mental disorder;
Where the spouse suffers from a communicable venereal disease;
Where the spouse has not been heard of for the past 7 years;
Where the husband has committed the offence of rape, bestiality, or sodomy after the solemnization of marriage;
Where the parties to the marriage fail to comply with a decree for restitution of conjugal rights. Section 23(1)(b) of the Special Marriage Act, 1954, specifically provides that failure to comply with a decree passed for the restitution of conjugal rights will be a ground for judicial separation.
Section 23(2) provides that once the decree for judicial separation is passed by a court of law, the petitioner will no longer be obliged to cohabit with the respondent. Moreover, the Section provides that the court may, upon an application by either of the parties, rescind the decree if it finds the statements of the petition to be truthful and if it finds it just and reasonable to rescind the decree.
Judicial separation under the Foreign Marriage Act, 1969
Marriages that are solemnised under the laws of foreign countries are recognised in India by virtue of Section 23 of the Foreign Marriage Act, 1969. This Section provides that if the Central Government is satisfied that the law in force in a foreign country by which marriages are solemnised is similar to the law in India on the solemnization of marriages, the Central Government may notify that the marriages solemnised under the foreign law will be recognised as valid in India.
So far as the marriages solemnised under foreign law are concerned, Section 18 of the Foreign Marriages Act, 1969, provides that the provisions of Chapters IV, V, VI, and VII of the Special Marriage Act, 1954, will apply to the marriages solemnised under foreign law.
Judicial separation under the Divorce Act, 1869
Section 22 of the Divorce Act, 1869, provides that either of the parties to a marriage can obtain a decree of judicial separation on the grounds of cruelty, adultery, or desertion for a period of 2 years or more. Such a decree will bar a decree for a divorce mensa et toro, but judicial separation is obtainable. A mensa et toro divorce forbids the parties from cohabiting but does not dissolve the marriage.
Section 23 of the Act provides that either of the parties to a marriage can file a petition for judicial separation before the district court. The court may, if it is satisfied that the statements made in the petition are true and there are no legal grounds to reject the application for judicial separation, grant the relief sought.
Judicial separation under the Parsi Marriage and Divorce Act, 1936
Section 34 of the Parsi Marriage and Divorce Act, 1936, provides that a married person can file a suit for judicial separation on any ground for which a divorce suit can be filed. Section 35 provides certain conditions upon which the court may refuse to grant a decree of judicial separation or divorce.
Maintenance during judicial separation
A wife who is unable to maintain herself can seek maintenance from the husband even if they are living separately under a decree for judicial separation. In the case of Sanju Devi v. State of Bihar (2017), the husband argued that since there was a decree of judicial separation in operation, the wife was not entitled to maintenance. The High Court had held that since the trial court had not recorded any finding to the effect that the wife was unable to maintain herself, she was therefore not entitled to maintenance.
The matter went to the Supreme Court on appeal, and the Apex Court held that whether the wife is entitled to maintenance or not must be determined by the High Court by looking into the merits of the matter. Moreover, a wife who is judicially separated is also entitled to maintenance, and her right to seek maintenance is not seized by the decree of judicial separation.
Some noteworthy points on judicial separation
Can maintenance be claimed by a wife during the period of judicial separation
In cases pertaining to judicial separation, the court can also deal with questions of maintenance of the wife, custody of children, and property. In Sohan Lal v. Kamlesh (1984), it was held that in cases of judicial separation, a wife is allowed to claim maintenance from her husband if she is not able to maintain herself.
What to do in cases where, after judicial separation, the parties want to resume cohabitation
Since a decree for judicial separation is a judgement in rem, if the parties want to resume cohabitation, it is necessary for them to get the order of judicial separation annulled by the court. Normally, the court rescinds the degree upon presentation of the petition with the consent of both parties.
What is the purpose of a judicial separation
Judicial separation is a step before divorce. The purpose of judicial separation is to provide an opportunity for the parties to reconcile their differences.
Advantages of judicial separation
The advantage of judicial separation is that it enables the parties to enjoy their lives separately from each other without any interference from the other spouse. The parties also have the opportunity to reconcile their marriage, as it is not dissolved. The parties are not allowed to remarry, and they remain legally married to each other.
What is a divorce
In cases of divorce, the parties cease to be husband and wife. Divorce puts an end to the marriage, and all mutual rights, and obligations are terminated. The parties are free to marry again.
Grounds for divorce
The grounds for divorce are mentioned under Section 13(1). The grounds of divorce and judicial separation are the same. Apart from these grounds, the wife may seek divorce on additional grounds like cruelty, leprosy, desertion, etc.
The parties are also free to present a petition in case there is no resumption of cohabitation between the parties to the marriage for a period of one year or more after the passing of judicial separation by the court. In such a case, the court will not require proof of any of the grounds for divorce. A mere presentation of the petition will be sufficient for the court to grant a decree of divorce.
If the court had ordered restitution of conjugal rights under Section 9 of the HMA, 1955, and the parties did not comply with the decree of the court and failed to cohabit, then on presentation of the petition for divorce, the court will not inquire into any grounds for divorce and will pass a decree of divorce on the grounds of failure of restitution of conjugal rights.
In a petition for divorce, if the petitioner cannot prove grounds for divorce, or the court is not satisfied that the act is so grave to pass a decree of divorce it has the power to pass a decree of judicial separation even if the petitioner did not ask for it. In the case of Vimlesh v. Prakash Chandra Sharma (1992), the Allahabad High Court held that a single instance of cruelty is not so grave as to pass a decree of divorce. Thus, the Court granted a decree of judicial separation to provide an opportunity for the parties to reconcile.
Additional grounds for divorce
The Marriage Law (Amendment) Act, 1976, provides an additional ground for divorce under Section 13(b). Where both parties feel that the marriage is torn and there is no scope for reconciliation, both parties may, by mutual consent, present a decree of divorce under Section 13(b), whereby the court will not inquire for any reason for divorce and will grant a decree in favour of the parties if both of them want a divorce. Under the Act, a period of six months for reconciliation is granted on presentation of a petition for divorce by mutual consent. However, in the case of Nikhil Kumar v. Rupali Kumar (2016), the Supreme Court has done away with the mandatory reconciliation period of six months. Now, divorce on the ground of mutual consent can be granted on presentation of the petition, and parties do not need to wait for six months.
Irretrievable breakdown of marriage
There have been several debates regarding the inclusion of irretrievable breakdown as a ground for divorce under the Hindu Marriage Act, 1955. The matter was referred to the Eighth Law Commission by the Government of India. It is pertinent to note that an irretrievable breakdown of marriage is not a ground for seeking a decree of judicial separation.
An irretrievable breakdown of marriage implies that the marriage has become bitter and that there is no possibility of it being restored or saved. This theory implies that if the court is of the opinion that there are no measures that can be taken to save the marriage and that even if restored, the marriage would amount to cruelty to the parties, then it can grant a decree of divorce.
The 71st Report of the Law Commission of India recommended that the irretrievable breakdown of marriage be incorporated as a separate ground for divorce. The Law Commission suggested that if the parties remained separate for three continuous years, then their marriage should be considered irretrievably broken.
The Marriage Laws (Amendment Bill), 2010, proposed to incorporate irretrievable breakdown as a ground for divorce under Section 13 by the insertion of Section 13(c). However, the Bill could not survive the mandate of Parliament. The Bill was opposed on the ground that mutual consent already exists as a ground for divorce, and if the marriage has broken down irretrievably, then the parties have the option to file for divorce by mutual consent. However, it is noteworthy that divorce by mutual consent requires the consent of both parties, and divorce on the grounds of irretrievable breakdown can be sought by either of the parties without the consent of the other party.
Dr. N.G. Dastane v. Mrs. S. Dastane (1975)
In this case, the appellant husband had filed a petition seeking a decree for annulment of marriage on the ground of fraud, or alternately, a divorce on the grounds of unsoundness of mind or judicial separation on the ground of cruelty.
Both the appellant and the respondent were well educated and belonged to reputed families. Prior to the marriage, the respondent’s father had written two letters to the appellant’s father stating that the respondent had been afflicted by some mental illness in the past. However, the respondent’s father assured the appellant that she had recovered from the condition.
The couple got married, and three children were born to them out of the marriage. However, thereafter, things started turning around, and the couple started living separately. The appellant had sought annulment of marriage on the ground that his consent to marriage was obtained by fraud. He sought judicial separation on the ground that the respondent had treated him with cruelty and there was a reasonable apprehension of harm if he continued to live with her. The appellant also sought divorce on the ground that the respondent had been mentally unsound and incurable for a continuous period of three years.
The appellant had alleged that the respondent abused him, his parents, and other family members. The respondent tore the mangal-sutra, sat beside the bed of the appellant at midnight to nag him, switched on the lights, and inflicted beatings on the infant children. The respondent, on the other hand, submitted that the appellant demanded excessive domestic discipline from her, which was very difficult to live with. The respondent was provoked by the appellant to act and behave in an improper manner. The respondent thus pleaded that she acted out of self-defence.
The Apex Court held that none of the demands made by the appellant would justify the plea of self-defence taken by the respondent. The Court observed that the acts of the respondent amounted to cruelty. However, the Court pointed out that Section 23(1)(b) of the HMA, provides that in any proceedings under the Act, the concerned relief can be granted only if the petitioner has not condoned the alleged conduct.
In the present case, the appellant had condoned the wrongful conduct of the respondent, and therefore, even though the wife was guilty of cruelty, the appellant was not entitled to the relief of judicial separation.
Naveen Kohli v. Neelu Kohli (2006)
In this case, the Supreme Court recommended that the Union of India seriously consider an amendment to the Hindu Marriage Act, 1955, to incorporate irretrievable breakdown of marriage as a ground of divorce.
The appellant husband and the respondent wife were married, and three sons were born to them. Thereafter, the appellant filed a petition for divorce, contending that the respondent had rude behaviour and quarrelled and misbehaved with the appellant and his parents. The appellant also pleaded that he had also found the respondent in a compromising position with one Biswas Rout. The appellant stated that the respondent registered false cases against him and tried to get him arrested.
The respondent sought maintenance during the pendency of the case before the trial court. However, her plea was dismissed by the trial court. Finally, the trial court concluded that the marriage should be dissolved and directed the appellant to pay Rs. 5,00,000 as permanent maintenance to the respondent. The respondent filed an appeal before the Allahabad High Court, and the High Court set aside the order of the Trial Court and dismissed the appellant’s plea for divorce. Thereafter, the matter went to the Supreme Court. The Supreme Court, while noting that cruelty includes physical, mental, as well as deliberate harm, held that the actions of the respondent amounted to cruelty and ordered the dissolution of marriage. The appellant was directed to pay Rs. 25,00,000 as permanent maintenance to the respondent.
Rakesh Raman v. Kavita (2023)
In the recent case of Rakesh Raman v. Kavita (2023), the appellant husband filed a suit for dissolution of marriage. The trial court allowed the application, but it was set aside by the High Court on appeal. Subsequently, the husband filed an appeal before the Supreme Court. The husband had alleged that the wife used offensive words and got her pregnancy terminated without informing him. The trial court had recorded findings on cruelty and dissertation in favour of the appellant husband.
The Supreme Court noted that the parties to the marriage have lived separately for the past 25 years. All the efforts to restore cohabitation had failed. Moreover, there was no child born out of wedlock. The parties had leveled bitter allegations of cruelty against each other. Moreover, they had filed several cases against each other.
The Supreme Court held that the repeated filing of criminal cases by one party against another amounted to cruelty. The Court held that the continuation of the marriage would be cruel to the parties, and even if irretrievable breakdown is not a ground for divorce, cruelty has been enumerated as one of the grounds. The Court held that where a marriage is irretrievably broken and each party is treating the other with cruelty, then the marriage must be dissolved. The Court thus upheld the order of the trial court.
Divorce under the Special Marriage Act, 1954
In most legal systems, the grounds for judicial separation and divorce are the same. A similar scheme has been adopted under the Hindu Marriage Act, 1955, where Section 10 enumerates grounds for judicial review that are similar to the grounds for divorce enumerated under Section 13. However, one of the peculiar features of judicial separation under the Act is that, besides the grounds that are similar to those for divorce, the Act provides an additional ground that is clearly applicable in a plea for judicial separation.
While all the grounds for judicial separation provided under Section 23 are also grounds for divorce under Section 27 of the Special Marriage Act, 1954, non-compliance with the decree of conjugal rights is not a ground for divorce under the aforementioned Act.
Divorce under Parsi Marriage and Divorce Act, 1936
Section 32 of the Act provides the grounds for divorce. The grounds are as follows:
If the marriage has not been consummated within 1 year of its solemnization due to the wilful refusal of the defendant.
If the defendant was of unsound mind at the time of marriage and has been so up to the date of the marriage. However, a decree for divorce cannot be granted if the plaintiff was aware, at the time of marriage, that the plaintiff is of unsound mind. Moreover, in order to avail the divorce under this ground, the plaintiff must file the suit within 3 years of the marriage.
The defendant has been of incurable unsound mind for a period of more than 2 years.
The defendant was at the time of marriage pregnant by any person other than the plaintiff.
If the defendant commits bigamy, adultery, fornication or rape of unnatural nature.
If the defendant causes grievous hurt to the plaintiff or has inflicted the plaintiff with venereal disease.
If the husband compels the wife to undertake prostitution.
If the plaintiff ceases to be a Parsi.
If the defendant is sentenced to imprisonment for 7 years or more for any offence under the Indian Penal Code.
If the defendant deserts the plaintiff for a period of 2 years or more.
It is pertinent to note here that Section 32 provides that in a suit for divorce, it will be at the discretion of the court to decide whether a decree shall be granted for divorce or for judicial separation, as stated in Section 34.
Divorce under the Dissolution of Muslim Marriages Act, 1939
If the husband fails to provide maintenance to the wife for a period of 2 years.
If the wife is unaware of the whereabouts of the husband for 4 years.
If the husband is imprisoned for a period of 7 years or more.
If the husband fails to perform, without any reasonable cause, for a period of years or more.
If the husband has been insane for a period of two years or more or has been suffering from leprosy or some virulent venereal disease.
If the husband was impotent at the time of marriage and continues to remain so till the time of the filing of the suit.
If the woman was married before she attained the age of 15 years and she repudiated the marriage before she attained the age of 18 years.
Scope of judicial separation and divorce
The Delhi High Court explained the scope of judicial separation and divorce in the case ofVinay Khurana v. Shweta Khurana(2022). The Delhi High Court held that, as per the scheme of the Hindu Marriage Act, there is a qualitative difference between judicial separation and divorce.
A marital relationship is not terminated by a decree of judicial separation, but a decree of divorce puts an end to the jural relationship between the husband and the wife and liberates them of their legal marital obligations. A decree of judicial separation can be rescinded by the same court that granted the decree, but a decree of divorce can be reversed only when a judicial order is passed to that effect, either in an appeal or a review. If an order for divorce is passed ex parte, then it may be reversed on an application filed to set aside the ex parte order.
Difference between judicial separation and divorce : a tabular representation
Points
Judicial separation
Divorce
Time for filing petition
A petition for judicial separation can be filed at any time after marriage.
A petition for divorce can only be filed after one year of marriage.
Stages of granting a decree
Under a petition for judicial separation, there is only one stage of judgement. If the grounds are satisfied, a decree is granted.
Under a petition for divorce, the judgement is a two-step process, where attempts are made first for reconciliation, and if that fails, a divorce decree is granted.
Effect
A decree on judicial review will lead to a temporary suspension of marriage.
A divorce decree will bring a marriage to an end.
Remarriage
The parties cannot remarry after the passage of the decree.
The parties can remarry once a divorce decree in their favour is passed.
Ground for divorce
It is one of the grounds for divorce.
NA
Basis for granting the decree
A single instance of adultery is sufficient for judicial separation.
Living in an adulterous relationship or satisfying any grounds stated under particular sections, depending on the legislation, is necessary.
Reconciliation
There is a possibility of reconciliation.
There is no possibility of reconciliation.
Right to inheritance
Under a decree of judicial separation, the right to inheritance remains enforced.
Whereas, under the divorce decree the right to inheritance ends once the divorce decree is passed.
Petition for divorce or judicial separation
Under Hindu Law
A petition for divorce or judicial separation can be filed in a district court within the jurisdiction of whose:
The marriage was solemnised.
The respondent, at the time of presentation of petition, resides.
The parties to marriage last resided together.
The petitioner is residing, in case the respondent is outside territory of India.
Under Order VII, Rule 1 of the CPC, every petition for divorce or judicial separation must contain:
The place and date of marriage,
Affidavit of being a Hindu,
Name, status, and domicile of husband and wife,
Name of children, their sex, and date of birth,
Full particulars of any litigation filed before the presentation of the petition for divorce, and
Evidence of the grounds for divorce or judicial separation. For example- in case of cruelty, specific act of cruelty, medical report, place of cruelty, etc.
After filing the petition, the other party is summoned. Both parties are required to furnish evidence to strengthen their claim. After the furnishing of evidence is over, the judge hears the arguments of each side and passes a decree. Appeals against the decision of the lower court can be made to a higher court.
Under Parsi Marriage and Divorce Act, 1936
Any of the parties to a Parsi marriage can file a suit for divorce under Section 32 of the Parsi Marriage and Divorce Act. The court will decide the suit depending on the merits of the case. Once a decree for divorce is passed by the court under the Act, it is registered in a register by the Registrar of Marriages.
Under Muslim Law
A Muslim woman can seek a decree of divorce under Section 2 of the Dissolution of Muslim Marriages Act, 1939. Divorce obtained under this provision is known as judicial divorce. However, there is also the concept of extra-judicial divorce under Muslim law. Parties can also seek extra-judicial divorce by mutual agreement.
Family courts
Family courts have been established in India under the Family Courts Act, 1984, for the purpose of dealing with suits and proceedings relating to family disputes. These courts are established by the state governments after consultation with the concerned high courts. The judges of these courts are also appointed by the state governments with the concurrence of the high court.
The main objective of the family court is to protect and preserve the institution of marriage. They encourage settlement between the disputing parties through conciliation. They are not bound by the provisions of the Indian Evidence Act, 1872. The family courts are free to determine the relevance and admissibility of the evidence on a case to case basis. Moreover, women are given priority in relation to appointments as judges of family courts.
Section 7 of the Family Courts Act, 1984, deals with the jurisdiction of the family courts. These courts have the jurisdiction to try any suit or proceeding relating to judicial separation and divorce. Besides divorce and judicial separation, these courts also decide disputes relating to:
Maintenance,
Custody or guardianship of a minor,
Maintenance,
Division of property.
Section 8 of the Act provides that the district courts or other subordinate civil courts will not have jurisdiction over matters that can be heard by the family courts. Thus, the district courts or the subordinate civil courts cannot entertain the suits and proceedings over which the family courts have jurisdiction.
Some relevant questions on the difference between judicial separation and divorce
Is it possible to file for a divorce while the period of judicial separation is in continuance?
At any time after the pronouncement of the decree of judicial separation, a petition for divorce can be filed. However, where judicial separation has been taken within 12 months of marriage, a petition for divorce can be presented after one year of marriage.
Can a decree of judicial separation be converted to a decree of divorce?
Yes, a decree of judicial separation is one of the grounds for divorce. After a decree of judicial separation is granted and a petition for converting it into divorce is presented, the court will not inquire into any grounds for divorce and will grant a divorce.
Does judicial separation mean living in different homes? Or can one undergo a judicial separation while living inside one home?
Judicial separation does not require spouses to stay in different places. They can reside under a common roof. Only their conjugal duties toward each other come to an end.
What to do in case a husband tries to establish physical relationship forcefully with his wife while undergoing a judicial separation?
If a husband tries to establish a physical relationship with his wife during the period of judicial separation, he will be charged under Section 376(A) of the IPC, wherein he will be punished with imprisonment up to 2 years and a fine.
What is the difference between judicial separation and separate residence?
Section 18(2) of the Hindu Adoptions and Maintenance Act, 1956, provides the grounds under which the wife can claim separate residence from her husband. While there is some overlapping similarity between judicial separation and separate residence, the two are different in principle. Where a decree of judicial separation has been passed, the parties need to get it rescinded if they want to resume cohabitation. However, rescinding the decree is not mandatory in the case of a decree for separate residence, and the parties can resume cohabitation at their own will.
There can be a situation where a Hindu wife wants to live separately from her husband and receive maintenance from her, but no grounds for judicial review or divorce are available to her. In such a scenario, the wife can seek remedy under Section 18 of the Hindu Adoptions and Maintenance Act, 1956. This Section provides that a Hindu wife can seek separate residence from her husband on the following grounds:
Where the husband deserts or wilfully neglects his wife. Derserting has been defined as the abandonment of the wife against her will and consent.
Where there is a reasonable apprehension that, due to the cruel nature of the husband, any injury may be caused to the wife if she resides with the husband.
Where the husband has any other living wife.
Where the husband is afflicted by the disease of leprosy.
If the husband keeps any concubine in the same residence where the wife resides.
If the husband has converted to any other religion and has ceased to be a Hindu.
However, a Hindu wife cannot claim the relief of separate residence if she is unchaste or has converted to another religion and has ceased to be a Hindu.
Can the court pass an order of judicial separation where an application for divorce has been filed?
The courts are competent to pass an order of judicial separation in proceedings relating to the nullity of marriage. If a petition for divorce has been filed and the petitioner fails to establish any ground for divorce but is able to successfully establish a ground for judicial separation, then the court may pass an order of judicial review. The court may grant a decree for judicial separation if the petitioner prays for the relief of judicial separation in an application for divorce.
In the case of Vira Reddi v. Kishtamma (1969), the Madras High Court held that the petitioner may plead for judicial separation in a petition for divorce even at the appellate stage. This discretion has been vested in the courts to enable them to protect and preserve the institution of marriage, which is regarded as sacrosanct in Indian society.
However, if a petition for divorce has been filed on the grounds of religious conversion, presumption of death, or renunciation of the world, then the court cannot exercise its discretion to grant judicial separation instead of divorce.
Conclusion
Before 1955, there was no provision for separation or divorce. Reforms introduced in Hindu law by way of legislation and amendments are a welcome step by the government. The two reliefs granted by the Hindu Marriage Act, 1955, have proven to be effective in resolving disputes between parties by giving them an opportunity to reconcile their differences or by releasing them from marital ties.
The grounds for judicial separation and divorce are expressly enumerated under the various personal laws. While most of the grounds are similar across all legislation, there are some differences with regard to the grounds for divorce under the various personal laws. It can also be seen that, while irretrievable breakdown of marriage is not expressly mentioned as a ground for divorce, the courts, through the constructive interpretation of statutes, have granted divorce in certain cases on grounds of irretrievable breakdown.
Frequently Asked Questions (FAQs)
Is judicial separation the same as divorce?
No, judicial separation is not the same as divorce. Under judicial separation, the parties do not have the right to cohabit with each other but remain legally married. They are free from interference by each other, but they are not allowed to remarry.
What is the duration of judicial review?
The period of judicial separation is one year.
Can a husband and wife stay separated without divorce?
Yes, the husband and wife can stay separated without divorce. If either of the parties obtains a decree of judicial separation, then the other party will lose the right to cohabit. Thus, the parties will be legally entitled to stay separate from each other.
Can judicial separation and divorce be used interchangeably?
No, the two terms are different in their meanings and thus, cannot be used interchangeably. In judicial separation, the parties continue to be legally married even though they may not cohabit. However, under divorce, the marriage of the parties is dissolved, and they are legally allowed to remarry.
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This article is written by Gautam Badlani, a student at Chanakya National Law University, Patna. This article provides a detailed analysis of the various provisions of the Hindu Widows Remarriage Act, 1856. It also explains the reasons for the repeal of the Act. Moreover, the article highlights the suggestions made by the Law Commission with respect to the relevancy of the Act.
It has been published by Rachit Garg.
Introduction
During the British period, there were many customs and transitions that discriminated against a Hindu widow. Those customs placed obstacles in the way of the remarriage of a Hindu widow. In order to protect the rights and interests of the Hindu widow, the Hindu Widows Remarriage Act was enacted in 1856. This Act is regarded as a major reform that legalised the remarriage of Hindu widows.
This article explains the various provisions of the Act. Moreover, it also highlights some landmark judgements relating to the validity of widow remarriage.
Historical background of the Hindu Widows Remarriage Act
During the 1800s, Hindu widows were not allowed to remarry. The Hindu females were forced to live their lives with hardships after the deaths of their husbands. In many cases, the heads of the widows were shaved, and they were forced to wear only white saris. They were not even allowed to attend any functions or celebrate any festivals.
Since child marriages were also prevalent during the 1800s, there were many instances where the Hindu widow was a minor. At a very young age, the widow was forced to live a life full of extremities.
The widows were considered to be incapable of entering into a second marriage. If the widow contracted a second marriage, then the children born out of such a marriage were regarded as illegitimate. These children were also denied inheritance rights.
Social reformers
In order to eliminate these practices, social reformers campaigned for legal safeguards. Subsequently, the Hindu Widows Remarriage Act was enacted. The credit for the enactment of this Act is often attributed to social reformer Ishwar Chandra. Other reformers who contributed to the movement were Vidyasagar, Ishnu Shastri Pandit, and Karsondas Mulji.
Overview of the Hindu Widows Remarriage Act, 1856
Section 1
Section 1 of the Act provides that the marriage of a Hindu widow will not be invalidated by any custom.
The primary objective of this Section is to nullify those customs that bar a Hindu widow from entering into a second marriage after the death of her husband.
Section 6
Section 6 provides that all ceremonies that are performed in the first marriage of a Hindu female would also constitute a valid marriage if they were performed in the marriage of a Hindu widow. A marriage cannot be declared invalid on the ground that such ceremonies are not applicable in cases of widow remarriage.
Inheritance rights
Sections 2, 4, and 5 deal with the inheritance rights of the widow.
Section 2 states that the inheritance rights that a Hindu widow may have by virtue of any will or testamentary disposition will cease upon her remarriage. Any rights that the widow may have in the property of her deceased husband will be determined as if she had died.
Thus, after the remarriage, the widow will have no right to maintenance out of the estate of her deceased husband. The widow, upon remarriage, loses all interest in her deceased husband’s estate. If a Hindu widow was incapable of inheriting any property because of her being childless, then anything provided in the Act would not render her capable of inheritance.
Section 4 of the Act provides that a childless widow will not be rendered capable of inheriting the property if, at the time of the passing of the Act, she was not capable of inheriting such property.
Section 5 states that, except in the aforementioned two situations, any property or other rights that a Hindu widow may have will not be forfeited upon her remarriage.
However, this provision was rendered ineffective after the passing of the Hindu Succession Act, 1956. The 1956 Act made no distinction between the rights of a childless widow and other widows. Moreover, since most of the rights concerning a Hindu widow have been codified, Section 5 of the Widow Remarriage Act was also rendered archaic.
Guardianship
Section 3 of the Act provides a list of persons who can petition the court for the appointment of a guardian of the children of the deceased husband after the remarriage of the Hindu widow. The list of relatives include-
the father or mother of the deceased husband,
the paternal grandfather or paternal grandmother of the deceased husband,
any other male relative.
However, the court can be approached for the appointment of the guardian only if the widow or any other relative has not been constituted as a guardian by any will of the deceased husband. The guardian so appointed would be responsible for taking care of the minor children till they attain majority.
However, the issue of guardianship is now dealt with under the Hindu Minority and Guardianship Act, 1956. This Act does not provide remarriage as a ground for denying guardianship of the children to the widow.
Remarriage of a minor Hindu widow
Section 7 provides that if the remarrying Hindu widow is a minor whose marriage is not consummated, then she cannot remarry without the prior consent of her father. The Section provides that if the father of the widow is dead, then the consent of the paternal grandfather would be required. In the absence of the paternal grandfather, the consent of the widow’s mother has to be obtained. If neither of these relatives is available, then the consent of the brother has to be obtained, and in the absence of the brother, the consent of the next male relative has to be obtained.
The remarriage of a minor Hindu widow without the consent of her father or any other relative, as provided under Section 7, would be voidable. Thus, such a marriage can be declared voidable by any court of competent jurisdiction.
Moreover, persons who abet any remarriage contrary to the provisions of Section 7 would be punishable with up to 1 year of imprisonment and a fine. When any dispute relating to the validity of the remarriage of a minor widow is brought before the court, the court will presume that the marriage was conducted with the consent of her relatives. The burden is on the petitioners to prove that there was no consent from the widow’s father or other relative and that the marriage was not in accordance with the provisions of Section 7.
In the case of a widow of full age, the consent of the widow would be sufficient, and the consent of no relative is required.
The Law Commission of India and its report on the 1856 Act
The 81st Report (1979) of the Law Commission of India recommended the repeal of the Act. The primary reason given by the Law Commission for the repeal was that the Act had become obsolete after the enactment of subsequent laws codifying Hindu personal law. The Commission referred to the following Act:
These acts modified the laws and customs dealt with under Hindu law. Moreover, these acts had an overriding effect on the preceding statutes. Section 4 of the Hindu Marriage Act, for instance, deals with the overriding effect of the Act over preceding laws. It provides that the Act would supersede any previous law dealing with matters covered by the Act. If any previous law is inconsistent with the provisions of the Act, then it will cease to apply to Hindus. Similarly, Section 4 of the Hindu Adoption and Maintenance Act provides that all preceding laws dealing with matters covered under the Act will cease to have effect.
Consequently, they superseded the provisions of the Hindu Widow Remarriage Act. Thus, the Law Commission was of the opinion that the Widow Remarriage Act had become obsolete and must be repealed.
The Commission also highlighted some drawbacks of the Widow Remarriage Act. The Act denied inheritance rights to a childless widow. The Commission was of the opinion that such a practise needed to be eliminated.
Amendments to the Hindu Widows Remarriage Act
Hindu Widows Remarriage Repeal Act
As a result of the recommendations made by the Law Commission, the Act was repealed in 1983 by virtue of the Hindu Widows Remarriage Repeal Act, 1983. This Act was enacted to give effect to the recommendations of the Law Commission of India. The Hindu Widow Remarriage Act had become redundant, and it was considered best to repeal it.
Landmark judgements on the Hindu Widows Remarriage Act, 1856
Jagdish Mahton v. Mohammad Elahi (1972)
In the case of Jagdish Mahton v. Mohammad Elahi (1972), the widow was divested of the interest that she had in the property of her deceased husband.
The appellants had pleaded that the widow’s interest in the property would cease upon her remarriage by virtue of Section 2 of the Widow Remarriage Act. However, the plea taken by the respondent (widow) was that, by virtue of the provisions of the Hindu Succession Act, the widow had acquired the property of her deceased husband as an absolute owner. Hence, she could not be divested of the interests that she had in the property. The Hindu Succession Act would supersede the Widow Remarriage Act. Section 4 of the Hindu Succession Act provides for the overriding effect of the Act.
The Court held that a Hindu widow acquires an absolute interest in her deceased husband’s property by virtue of Section 14 of the Hindu Succession Act. Since this Act has an overriding effect over the preceding laws, Section 2 of the Widow Remarriage Act will cease to have effect to the extent of the inconsistency. Thus, the Hindu widow cannot be divested of the interests that she has in her deceased husband’s property on the grounds of her remarriage.
Bhola Umar v. Kausilla (1932)
There has been a lot of controversy regarding the scope of the Widow Remarriage Act. In the case of Bhola Umar v. Kausilla (1932), the issue before the Allahabad High Court was whether the Act applied to all Hindu widows.
The Court held that the Act does not apply to all Hindu widows. The High Court was of the opinion that widows who were permitted by the customs followed by certain castes to remarry upon the deaths of their husbands would not be covered within the scope of the Act. Such widows need not take advantage of the safeguards provided under the Widow Remarriage Act.
The Court was of the opinion that there may be certain cases where the remarriage of the widow is regulated by the customs followed in her religion. In such a case, matters such as inheritance, maintenance, guardianship, etc., must also be governed by the customs followed by the same caste. If no custom relating to the forfeiture of the interests of the widow upon her remarriage is established, the widow will retain all the interests in her deceased husband’s property even after the remarriage.
Chando Mahtain v. Khublal Mahto (1982)
In this case, the petitioner had filed a suit for the partition of the property. However, the suit was dismissed on the ground that the petitioner had failed to add the widow of his brother to the suit. The trial court dismissed the suit on the ground that the widow was a necessary party.
The petitioner preferred an appeal and pleaded that since the widow had remarried, she was divested of all rights to the property. Thus, the widow was not a necessary party. The Court held that Section 2 of the Hindu Widow Remarriage Act divests the widow of all interests in her deceased husband’s property upon remarriage.
The Court held that the Hindu Succession Act did not have the effect of repealing the Hindu Widow Remarriage Act. However, Section 2 of the Remarriage Act is abrogated by Section 4 of Hindu Succession Act. Since the widow is mentioned as one of the Class I heirs in the Hindu Succession Act, she was rightly held to be a necessary party by the trial court.
Conclusion
The Hindu Widows Remarriage Act dealt with various aspects of Hindu law. It covered the maintenance, inheritance, and property rights of a Hindu widow. The Act was certainly a watershed movement in the history of social reforms in India.
However, certain provisions of the Act had become redundant with the passage of time. Thus, the Law Commission rightly recommended the repeal of the Act. The provisions of the Act that provided for divesting the widow of any interests in the property that she acquired prior to the death of her husband were certainly archaic. The Act was rightly repealed as it was not apt to meet the prevailing structures of society.
Frequently asked questions (FAQs)
What are the conditions for a valid Hindu marriage?
Section 5 of the Hindu Marriage Act provides the conditions to be fulfilled in order to constitute a legally valid Hindu marriage. A marriage solemnised between two Hindus is a Hindu marriage. At the time of marriage, neither of the parties should have a living spouse. Both parties should be capable of giving legally valid consent. Neither of the parties should be of an unsound mind or suffer from recurrent attacks of insanity.
The minimum age of marriage for Hindu males is 21 years. The minimum age of marriage for Hindu females is 18 years. The parties to the marriage must not be sapindas of each other.
When was the Hindu Widow Remarriage Act repealed?
The Hindu Widow Remarriage Act was repealed in 1983.
What were the reasons for the repeal of the Hindu Widow Remarriage Act?
The Hindu Widow Remarriage Act was repealed because it had become outdated and redundant. Most of the provisions of the Act had become obsolete because the matters dealt with in the Act were also covered by the Hindu personal laws. The codified Hindu personal laws had an overriding effect over the provisions of the Hindu Widow Remarriage Act.
What is the Hindu Widow’s Remarriage and Property Act, 1989?
The Hindu Widow’s Remarriage and Property Act, 1989, applied to the State of Jammu and Kashmir and legalised widow remarriage in the erstwhile state. It provided that marriage between Hindus would not be invalidated on the ground that the bride was a widow. The Act further provided that the Hindu widow, upon remarriage, would lose any right and interest in her deceased husband’s property.
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Law graduates who wish to become members of the subordinate judiciary should write the entry-level exam, which is the Judiciary Exam or the PCS (J)-Provincial Civil Service-Judicial Examination.
This exam is uniformly divided into 3 stages across all states in India:
Prelims,
Mains and
Interview.
The state government, under the supervision of the respective high courts, appoints members of the subordinate judiciary.
The selection process is further dependent on yearly vacancies/ number of seats.
Judicial services offer several attractive features that include handsome perks and privileges, including, among others- rent-free accommodation, fuel allowances, subsidised electricity and water supplies, telephone allowances, and bursaries for children’s education.
This article provides detailed information about the Chattisgarh PSC wherein you can see the eligibility criteria, the syllabus, previous year cut-offs, seat analysis with respect to vaccines, tips and tricks to prepare for the exam, important topics and books as well as a sample paper. For all other information, you can refer: https://psc.cg.gov.in/.
Chhattisgarh Judiciary (CGPSC) eligibility
The following essential qualifications must be met at the time of application:
The candidate must be a citizen of India.
The candidates must be holder of a degree in law which is recognized by the Bar Council of India.
The candidates must hold a character certificate provided to them by the dean of their educational institute.
For all fresh law graduates, lawyers, attorneys, and advocates appearing for the exam, the minimum age limit is 21 years and must be less than or equal to 35 years as on the date mentioned in the official advertisement.
Chhattisgarh Judiciary (CGPSC) syllabus
Preliminary Exam (online mode)
Number of questions: 100
Stipulated Time: 2:00 Hours
Maximum Marks: 100 (No negative marking)
Indian Penal Code
Code of Civil Procedure
Code of Criminal Procedure
Indian Evidence Act
Constitution of India
Transfer of Property Act
Contract Act
Limitation Act
The Chhattisgarh Rent Control Act, 2011
Court Fees Act
Specific Relief Act
Registration Act
Chhattisgarh Land Revenue Code
The Negotiable Instruments Act, 1881
The Chhattisgarh Excise Act, 1915
Mains Exam (written mode)
Stipulated Time: 3:00 Hours
Maximum Marks: 100
The Mains exam is subjective and is divided into three parts:
Framing of Issues and writing of Judgment of Civil Cases: 40 Marks
Framing of Charges and writing of Judgment of Criminal Cases: 40 Marks
Translation:
Hindi to English – 10 Marks
English to Hindi – 10 Marks
Interview
Maximum marks: 15
Percentage of marks to be secured
Unreserved category: 33%
Reserved categories: 25%
Relatively more meritorious candidates from among those who appeared in the Mains examination in the ratio 1:3 having regard to the number of vacancies shall be called for viva-voce.
Chhattisgarh Judiciary (CGPSC) seat analysis
Year
Vacancy (No. of seats)
Candidates qualified for Mains
Candidates Qualified/ seats filled
Seats filled %
Seats Vacant
2019
39
427
39
100%
0
2020
32
341
32
100%
0
2022
48
521
Mains exam to be held on June 27
2023
49
The deadline for completing the exam form is June 24 (till 11:59 PM).
Chhattisgarh Judiciary (CGPSC) previous year cut-offs for reference (2018, 2019)
Chhattisgarh Judiciary (CGPSC) major and minor topics
Though officially there is no list for this, we have analysed the previous year’s question papers and compiled a list of major and minor topics.
Major topics (expect 10-15 questions from these topics)
Minor topics (expect 3-6 questions from these topics)
IPC
Chhattisgarh Rent Control Act
CPC
Limitation Act
CrPC
Court Fees Act
Evidence Act
Chhattisgarh Land Revenue Code
Transfer of Property Act
Negotiable Instruments Act
Indian Contact Act
Specific Relief Act
Constitution of India
Chhattisgarh Judiciary (CGPSC) important books for reference
It is important to read the bare acts and judgments, irrespective of any reference books.
Subjects
Authors
IPC
P. S. A. Pillai
CPC and Limitation Act
C. K. Takwani
CrPC
R. V. Kelkar
Constitution of India
M. P. Jain
Evidence Act
Batuk Lal
Contract Act and Specific Relief Act
Avtar Singh
Transfer of Property Act
R. K. Sinha
Tips and tricks to prepare for Chhattisgarh Judiciary (CGPSC)
Starting preparation
The best time to start preparing for judiciary exams is when you are in your 4th or 5th year of college. Gaining conceptual clarity should be the first and foremost priority. At least three revisions should be completed before appearing for the preliminary exams to increase the probability of selection, so start accordingly.
Reverse preparation strategy
Start preparing for the Mains exam first. While you are preparing for the subjective part, it will automatically assist you for Prelims examination. This should be done because once Prelims are conducted and the results are released, you have a mere few weeks before Mains exams are held.
Reading Bare Acts, judgments, and the newspaper
Bare acts are the most important and should be studied thoroughly. Try to memorise the Sections/Articles/Clauses while you are reading the bare act. When you are reading a particular Section, make sure you read all the illustrations. It is really important that you understand the illustrations to be able to figure out if you have conceptual clarity or not.
When you are studying a particular topic, make sure you read the landmark judgments. For current judgments, you can use websites such as LiveLaw and Bar and Bench. Understand that both landmark and current judgments are important before you take your exam.
Apart from these things, you need to read the newspaper daily. This will provide insights that you can utilize in your interview round. You can check out our YouTube channel for daily newspaper analysis provided by experts.
Solve previous year question papers and mocks
Whenever you are appearing for any exam, you need to keep in mind that there are certain important topics, questions which are often repeated. So, it is best to go through and solve past 10 years question papers and get an idea of what topics are important, what kinds of questions are anticipated, etc., while doing your preparation.
You must also solve as many mock tests as possible. Time yourself and be honest with yourself. Do not take extra time to complete the mocks, and do not use the internet or books if you do not know any answers. If you give your mocks with honesty, it will help you prepare realistically for the exam and teach you time management. If you do not give any mocks and directly appear for the exam, you are more likely to be nervous and caught off guard.
Be focused and fully concentrated
Keep a target based approach. Do not sleep before you complete the target.
Write down a plan and stick to it. Divide the plan into smaller blocks to make it achievable. For example, if you plan to revise IPC in 5 days, you need to study roughly 100 sections per day. So decide accordingly.
Stay away from distractions, especially mobile phones. Decide on a fixed “phone time” and use your phone only during that duration. You can use the “focus” feature on your phone, and you can also put a timer on distracting apps.
Take out 20-30 minutes every day for some physical activity, like walking, dancing, or playing a sport. A healthy mind resides within a healthy body.
To apply for the exam, go to https://psc.cg.gov.in/htm/OA_CJ_2023.html. For domiciled students, this form is free of charge; however, for non-domiciled students, there is a fee of Rs. 400. Both domiciled and non-domiciled have to pay Rs. 40 that are charged for accessing the portal.
What are the essentials you must have before you appear for the CGPSC exam?
You must have an active e-mail address and a working phone number, and use your formal signature.
You must carry your ID proof (Aadhar card, Voter ID card, Pan Card, Passport, etc.,) and passport size photographs)
You must carry your documents (Category Certificate, Domicile Certificate, Grade Sheet – Graduation, Passing Certificate.)
What are the similar states you can apply for if you are appearing for CGPSC exam?
If you are applying for the CGPSC exam, you can also appear for the following states, as the syllabus is similar for them:
Rajasthan
Madhya Pradesh
What are the CGPSC examination centres for Prelims and Mains?
Bilaspur
Raipur
Durg-Bhilai
For the Mains exam, the centres will be Bilaspur and Raipur.
Can a foreign national appear for CGPSC exam?
No, only citizens of India can appear for this exam, and they must meet the eligibility criteria laid down in the State Notification.
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