Restrictions on making an application under Section 248 of the Companies Act

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April 5, 2022

This article is written by Ankit Rao pursuing a Diploma in General Corporate Practice: Transactions, Governance, and Disputes. This article has been edited by Ruchika Mohapatra (Associate, Lawsikho).

This article has been published by Sneha Mahawar.

Table of Contents

Introduction

Under the Companies Act, 2013 two modus operandi exist for closing the operations of a Company and striking off the Company name from the Register of Companies. Firstly, the Registrar is empowered and authorized to remove the name of the Company from the Register of Companies where he has reasonable cause to believe that the conditions laid down under Section 248(1) stand fulfilled. Secondly, the company can also on its own accord file an application under Section 248(2) to the Registrar of Companies requesting the removal of the name of the company from the Register of Companies. Sections 248 to 252 of the Companies Act lays down the framework and procedure to be taken into account while striking off the company whether initiated by the Registrar of Companies or Suo moto by the Company itself. The striking-off basically provides for the closure of a defunct company in an expedite and brisk manner.

Striking off company name by the registrar of the company or the suo moto by the company itself

The company can approach the ROC for removal of its name/strike off and the ROC can accordingly remove the name of the company from the Register of Company subject to the fact that the opportunity is given to the Company to deliver representations in regard to the notice sent, if following conditions as laid down in Section 248 of the Companies Act stands fulfilled:

The concerned company has not commenced its dealings or business transaction even after the completion of a period of one year from its incorporation.
The concerned company has not engaged in any business dealings and operations for a period of two forthright preceding financial years and the company has also failed to submit an application to be granted the status of a dormant company under Section 455 of the Companies Act.
The subscribers to Memorandum have not paid the subscription amount which they were bound to pay and a declaration highlighting the same has not been done/filed within a period of 180 days from the Company’s Incorporation.

Thereby the conditions laid down by the legislature, in case of the fulfillment of which Company’s name can be removed/stricken off is the same both for the company and the ROC. The difference that exists herein is that the procedure to be adopted by both of them is different to the effect that the company has to move an application to the Registrar of Company whereas the Registrar has to send a notice to the company and directors and consider the representation sent by them before striking off the company.

Procedure for striking off company name by the registrar of companies

If the Registrar of Companies has reasonable cause to believe that the above-mentioned conditions stand fulfilled, then he can forward the notice to the said company and its officers/directors apprising them of his intention to remove the name of the said company from ROC. The Company is entitled to send representation to the ROC accompanied by relevant documents countering the statement put forth by the ROC in the notice sent and such representations have to be supplied to the ROC within a period of thirty days from the date when the said notice was sent.

Suo moto application to strike off company name from the registrar of companies

In order for the company to move such an application before the Registrar of Companies, a Special Resolution has to be passed by its members in the general meeting. Once, the Special Resolution has been passed with the concurrence of seventy-five percent of members in respect of the paid-up capital, the application can be moved to the ROC for striking off the company name. When such an application is moved to the ROC, it shall issue a public notice in the manner in consonance with the rules laid down under the Act before striking off the company name.

If there is an absence of the fulfillment of scenarios laid down under Section 249(1) of the Companies Act, the company is qualified to move an application with the Registrar of Companies. The documents to be accompanied along with the said application are an indemnity bond duly attested by all the directors of the company, a statement of liability shedding light on all assets and liabilities of the company which has to be, prior to the submission, certified by a Chartered Accountant, the statement regarding undecided/undisposed off lawsuits, certified true copy of the Special Resolution duly signed by every director of the company and an affidavit signed by all director in the form STK 4. The application has to be accompanied by the above-mentioned documents in order for the said application to be considered and to ensure that the application is passed and allowed in favor of the Applicant.

Restrictions on the power of a company to make an application under Section 248

The company is empowered with the powers to file an application on its own accord for the removal of the name of the company from the Register of Company, however as per Section 249(1) in certain scenarios its power to file such an application is absolutely restricted and curtailed. As per Section 249, an application Under Section 248(2) cannot be made Suo moto by the company if during the period of preceding three months:

The Company has altered/modified its name or shifted the registered office from one state to another. If the company has shifted its registration from one district to another one, then there exists no impediment in moving for removal of name, however, if the shift leaps the boundary of a state into a different state, then for a period of three months no such application can be entertained. When a company shifts its registered office from one state to another, they seek approval from the Registrar of both the states, and a fresh certificate of incorporation is issued by the Registrar of State within 30 days, where the Company’s registered office is going to be moved. This restriction is in place only for a period of three months after the shift of the Company to a different State, after the expiry of such a period, the Company is permitted to make such an application to strike off the Company.
The company disposes of the value of prerogative or valuable possessions/property owned by it, right before the termination of trade, for the sole objective of disposal of gain in the ordinary course of conducting trade or business. When Company disposes off its property immediately before shutting the business operations, then for a period of three months, the said company is disqualified from moving an application to remove its name from the ROC. The said embargo is incorporated because companies used to dispose of their properties, thereby fraudulently cheating their Creditors and other stakeholders, then shut down the company. Hence, in order to prevent such misuse of funds, the said restriction was put in place.
The Company has registered/moved an application to the National Company Law Tribunal (Adjudicating Authority) for seeking approval of the arrangement or compromise and the concerned application moved has not yet attained finality. Thereby, if an application has been moved in pursuance of Section 230 of the Companies and no compromise or arrangement has been sanctioned by the Tribunal, in the meanwhile, the company cannot formally take measures or steps for striking off the company. The entire process of the approval of the scheme of arrangement or compromise is a lengthy one with various requirements and compliances to be fulfilled, therefore in the meanwhile, no coercive steps are allowed to be taken which can probably hinder the scheme under the direct scrutiny of the National Company Law Tribunal.
The company is engaging itself or taking part in any activity apart from the one which is imperative or expedient in nature viz., filing an application, determining or taking steps for execution/registration of such an application, adhering to the due compliances as laid down by the legislation or culminating the affairs of the company.
The company has wound up in pursuance or in accordance with the procedure incorporated under the Companies Act under Chapter XX or under the Insolvency and Bankruptcy Procedure Code, 2016. The provision concerning the wounding up of the company was recently substituted by Section 255 of the IBC in the manner specified in Eleventh Schedule and brought into effect from 15.11.2016 [S.O. 3453(E)].

Conclusion

If the above-mentioned conditions incorporated under sub-section (1) of Section 249 stands fulfilled, the company should not register an application with the Registrar of Companies to strike off the company as that would result in the company being in direct violation and contravention of rules laid down thereunder and accordingly the company shall be punishable with a fine that may extend to one lakh rupees as per Section 248(2). It is further stipulated in Section 249(2) that the application registered under Sub Section 248 shall be retracted by the Registrar of Companies immediately once the ROC is apprised about the fulfillment of conditions given under Sub-Section (1).

It is further imperative to highlight that not every company is allowed the prospect of being considered to qualify under the provision of strike off and the companies which do not fall under such domain include but are not limited to listed companies, Section 8 Companies, companies having charges which are yet to be satisfied and company accepting subscription/public deposits which remains outstanding.

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Section 55 of the Transfer of Property Act, 1882

By

Rachit Garg

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April 4, 2022

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This article is by Shivi Khanna, a student of the School of Law, Sushant University, Gurugram. This article examines the rights, duties, and liabilities of both, the buyer and seller in the ‘sale of immovable property’ under Section 55 of the Transfer of Property Act, 1882.

It has been published by Rachit Garg.

Table of Contents

Introduction

Section 54 of the Transfer of Property Act, 1882 (hence referred to as the Act), defines what constitutes a sale; how a sale is to be made; and what is a contract for sale. In a ‘sale’ there is a “transfer of ownership” from the transferor to the transferee, in exchange for a price or consideration. The price can be – a price paid, or promised, part-paid or part-promised. The transferor is called the ‘seller’ and the transferee is called the ‘buyer.’ For a sale to be valid, the buyer must transfer the property with free consent (as per Section 10 of the Indian Contract Act, 1872).

The transfer of a property includes the transfer of 3 basic rights:

Right to possess and enjoy the property;
Right of alienation;
Right of title;

This is an ‘absolute transfer’ – the seller does not retain any rights or privileges with respect to the transferred property after a sale is made. There must be a total transfer of rights from the seller to the buyer for it to constitute a sale. The intention and substance of a transaction are also important. For example, if the owner is only putting up the property as a security or collateral for a loan taken from the bank, then this would be a mortgage, not a sale. Similarly, if a house was to be put up for rent to a tenant, then this would be a lease and not a sale. A power of attorney cannot be called a sale.

However, when studying the process of the sale of immovable property, it is not enough to merely read Section 54. This article attempts to understand and examine the significance of the provisions of Section 55 of the Transfer of Property Act, 1882, which is read along with Section 54 of the Act.

Section 55 of the Act, “in the absence of a contract to the contrary”, defines the duties, liabilities, and rights of both the buyer and seller, respectively, where there is a transfer of immovable property. The main objective behind Section 55 is to ensure fair dealings, prevent fraudulent acts, and keep the property in circulation (avoid the property becoming stagnant and going to waste).

It is important to note, that Section 55 is applicable only where there is no contract to the contrary – which implies that as long as there is a clause in the contract of sale outlining the rights, liabilities, and duties of the buyer and seller, there is no need for the provisions of Section 55 to apply.

Contract to the contrary

This phrase implies that any liabilities or charges imposed by the provisions under Section 55 of the Act, can be offset or nullified by a contract to the contrary. The contract can be expressed or implied, but its terms should be clear. If there is ambiguity with respect to the terms of the contract, then the decision regarding the same is usually made in favour of the buyer. Only a contract to the contrary can allow the buyer and seller to avail an exception from the provisions of Section 55.

Seller’s duties or liabilities before the sale

The following sub-heads are the duties/liabilities of a seller before the sale of immovable property:-

Disclosure of material defects in the property or title

Section 55 imposes a duty on the seller to reveal or disclose all ‘material defects’ with respect to both the property and seller’s title. This duty applies where the seller is aware of the said defect and the buyer is not. The defect must also be of such a nature that despite practising due diligence, a prudent man would not be able to discover the problem in the property or title. If the seller were to deliberately neglect this duty, then it would amount to fraud or omission, on his part.

What is a material defect?

A material defect is a factor that can affect the decision of the buyer on whether to buy a certain property or not, once he becomes aware of it. Material defects can be of the following types:

Something which interferes with or obstructs the enjoyment of the property;
Failure to disclose a defect in the title;
Non-disclosure of street alignment, lack of right of way, or non-existence of independent passage to the property;
Right of way of public which cannot be discovered on first inspection of the property;

For example, ‘X’ wants to sell his farmhouse to ‘Y’ but does not disclose the fact that due to the property being considerably old, the entire farmhouse is in urgent need of renovation and refurbishment, else there could be danger of collapse. This is a material defect in the property, and ‘X’ as the seller who is aware of the defect, has a responsibility to inform ‘Y.’ If “X’ fails to make the disclosure, then ‘Y’ has the right to rescind the contract.

Defect in title

It is the duty of the seller to convey a good title to the buyer. However, the burden of proof to show that there has been non-disclosure with respect to a defect in the title lies with the buyer.

Another example, ‘Q’ wants to sell a flat to ‘Z’. However, the actual ownership of the title of the flat in question is still in dispute. At the time of making the contract of sale, ‘Q’ does not possess the authentic title to the property. This is a material defect in the title. ‘Q’ is bound to inform ‘Z’ of the actual ownership of the title.

In some cases, there is a defect in both the property and the title. For example, when the property which is the subject-matter of the transfer, is illegally built on government land. Consequently, the seller receives a notice of demolition for the illegally built property.

In Haryana Financial Corporation v. Rajesh Gupta (2010), the seller ‘A’ wanted to sell a factory by way of auction. The buyer ‘B’ deposited a certain amount with ‘A’, on the condition that ‘A’ must ensure that there is an independent passage or way to the unit. The tacit understanding regarding this condition was established through frequent communication between the parties. However, this passage was in fact, too narrow and not broad enough to meet ‘B’s’ requirements. Ultimately, ‘A’ was not able to arrange for an adequate passage to the unit. Therefore, ‘B’ refused to pay the pending amount for the property. In response, ‘A’ regarded the amount previously deposited by ‘B’ as a forfeit and placed the property back for auction. Here, the Court, in light of Section 55(1)(a) of the Transfer of Property Act, 1872, held that the seller ‘A’ was in the wrong for failing to disclose a material defect – i.e., there was no adequate passage to the factory. The seller would not be allowed to take advantage of this wrong to swallow up the deposited money.

To produce the title deeds for inspection

If the buyer asks for it, then the seller has to supply the title deed for inspection before the execution of the sale deed. The main objective is to satisfy the buyer that there is no defect or problem with the title, and it would not lead to any disadvantage if the buyer were to acquire it. The delivery of the title is usually at the place of the seller/seller’s representative or lawyer. However, the legislature can also make provisions with respect to the place of delivery.

To answer relevant questions as to the title

Before the sale, the seller also has the duty to answer all ‘relevant’ questions with respect to the sale. If the seller fails to answer, then the buyer has the right to rescind the contract. Answering relevant questions as to the title is the responsibility of the seller because it is his duty to ‘make out a good title in himself.’ If the information contained in relevant documents leads to doubts or questions, the seller must resolve them upon being asked by the buyer.

To execute conveyance

Conveyance is the legal process of transferring the property from the seller to the buyer. The conveyance is executed before the execution of the sale deed to complete the process of the sale. Section 55(1)(d) stipulates that the buyer must tender the instrument.

In Jamshed Khodaram Israni v. Burijori Dhunjibhai (1915), there was an agreement between the buyer and seller to transfer property – a certain piece of land – for Rs. 85,000. The buyer deposited Rs. 4000 as a deposit. Within 2 months from the date of the agreement, the conveyance was to be signed, and Rs. 80,500 was to be paid by the buyer. After the registration and transfer, the remaining balance of Rs. 500 would be paid by the buyer. However, if the buyer failed to make payment within the time period mentioned in the agreement, then the deposited money could be forfeited by the buyer. Ultimately, the buyer failed to make payment within the stipulated 2 months, and as a result, the seller forfeited the deposited money. The buyer sued the seller for specific performance. The Court held that the language of the plainly expressed stipulation must concretely show the intention of the parties to make their rights dependent on the observation of prescribed time limits.

The duty to tender a conveyance and to pay the consideration at the time of the execution is subject to a contract to the contrary.

To take reasonable care of the property and title deeds

The seller’s duty to take reasonable care of the property and title deeds begins before the execution of the sale deed and continues till the delivery of property to the buyer. Section 55 stipulates that if there is damage to the property or titles, within the time period specified by the Section, then the buyer has the right to lower the price or consideration he has to pay. The buyer can also opt to sue for damages and demand compensation from the seller.

To pay the outgoings

If there are any encumbrances on the property then it is the seller’s duty to clear them up before the execution of the sale deed. Regardless of whether the seller has knowledge of the encumbrance or not, the seller still has to resolve it. The buyer has the right to enforce this duty on the seller through Section 69 of the Indian Contract Act, 1872. The seller has to pay any rents or charges accrued to the property before the date of execution of the sale deed. The seller also has the duty to deal with public charges, and in cases where necessary, gain the permission of the statutory authority to make the sale.

Seller’s duties after the sale

The following are the seller’s duties/liabilities after the sale of immovable property:-

Give possession to the buyer

After the sale deed is executed, the seller must hand over possession of the property to the buyer. Even if the buyer has not yet furnished the promised consideration, the seller cannot refuse to hand over possession. The question of whether the buyer can be compelled to pay the consideration to the seller has arisen and has been debated heatedly. The High Courts have taken the following views regarding the delivery of possession:

It is ‘equitable’ to make handing over possession of the property by the seller, conditional to the payment of the price by the buyer.
The language of Section 55(1)(f) must be followed and interpreted at face value. If the buyer has paid the full consideration then he can acquire possession and ownership of the property through the apparatus of the courts.

If the buyer asks for enforcement of specific performance with respect to the delivery of possession, when the full price has not been paid by him, the court will require the buyer to deposit money with the court to show his intention to pay the balance amount due. The court can also order the buyer to present proof of his intention to make the due payment.

It was observed in B Rajamani v. Azhar Sultana (2005), that if the buyer fails to show his intention to pay, additionally, failing to show that the amount was ready and available, it is indicative of his lack of desire to fulfil the contract.

Nature of possession has a significant influence on the delivery of possession. The seller must vacate the property, regardless of whether he himself occupies it or a tenant occupies it. The seller must also clear out any trespasser illegally occupying the property. However, when there is already a tenant occupying the property or in the case of a usufructuary mortgage, the buyer only gains a symbolic possession.

To covenant for title

It is the duty of the seller to deliver a good title to the buyer, free from any defects or problems. In order to enforce the right of specific performance against the buyer, the seller must ensure that the title is beyond reasonable doubt and convince the court of its authenticity.

The seller must have a saleable interest in the property. Where the seller does not in fact have a saleable interest, even if he is not guilty of fraud, he is still liable to pay damages to the buyer.

The seller cannot represent a higher title than that which he actually owns. If the seller misrepresents the title, then he can be held liable to pay damages.

An incorrect description of the property is not covered under the covenant of title, however, if the buyer finds out about it before the conveyance is executed, the buyer can cancel the contract or sue for damages, depending on how severely distorted the description is.

In Ram Swarup and Another v. Fattu (1960), it was held that the buyer need not inquire into the seller’s title. Mere suspicion of the buyer with respect to whether the seller’s title holds good or not, does not prevent the covenant from operating. The English law doctrine – caveat emptor, i.e. buyer beware – does not apply here.

To deliver title deeds on receipt of the price

Once the consideration has been paid by the buyer to the seller, it becomes the latter’s duty to deliver all documents relevant to the property’s title that he owns/holds. The right to the deeds runs with the land, therefore, there is an absolute transfer from the seller to the buyer. The buyer needs to be careful to check if there is an unregistered mortgage with respect to the property and title deeds, and his failure to inquire about this would amount to gross negligence.

Where only a part of the property is sold, while the seller retains a portion as well, he is entitled to hold onto the title deeds. Where the property is sold to multiple buyers, the buyer of the lot of the greatest value gains the right to hold the title deeds. When the sale is made at different time periods, the last purchaser has the right to hold the title deeds. However, the holder of the title deeds has the duty to furnish said documents to the other property-holders when asked, at the cost of the one who asked for the deeds. The individual holding the title also has the duty to keep the title documents in good condition, safe from damage and fire.

Seller’s rights

A seller has the following rights:-

The seller has the rights to rents and profits generated from the property till it is transferred to the buyer
Payment of promised consideration from the buyer to the seller;

Rents and profits

Till the ownership is passed from the buyer to the seller, the latter is entitled to any income generated from the property, including rent collected from tenants occupying the property. If the buyer takes possession before the completion of the sale, then he can enjoy the income from the rent. However, the buyer is also liable to pay interest on the unpaid consideration he had promised to pay when he made the contract of sale. On the other hand, if the ownership of the property passes to the buyer, but the seller still retains possession of the property, then the seller is not allowed to collect interest on the purchase money. The seller cannot enjoy both possession and interest at the same time. The seller must choose between the two – interest and possession.

Payment of consideration

A seller is entitled to full consideration as stipulated in the contract of sale. If the contract specifies that the payment must be made within a certain time period, then the buyer must adhere to the said time limit. The buyer failing to pay within the time limit specified in the contract would amount to a breach of contract on his part.

In Nalamothu Venkaiya v. BS Neelakanta (2005), a contract of sale was made, and it was stipulated that the payment must be made within a specified time. The buyer gave an oral promise, however, he did not deposit any money as an assurance. When the buyer sued for specific performance, the court held that the oral promise did not hold weight, and the fact that he did not make a deposit showed his lack of intention to fulfil the contract.

In a case where a seller has already transferred the ownership to a buyer, but the latter has not paid the entire consideration, a charge can be placed on the property. Even if the buyer transferred the property further, the charge would still exist as long as the consideration remains unpaid. The seller can also avail interest on the pending consideration from the date of transfer of possession. The charge can be imposed only from the date the conveyance is executed.

An exception to this rule of charge – is oral sale and lease.

A seller’s charge on the pending consideration cannot be extinguished by a promissory note for unpaid money. The rule that interest and possession are mutually exclusive still applies here. Furthermore, the seller cannot forfeit deposited money, in the case where the amount remains unpaid, taking into consideration a contract to the contrary.

Buyer’s duties before sale

The following are the duties/liabilities of a buyer before the sale:-

Duty to disclose material facts

When the buyer has knowledge or information about the nature and extent of the seller’s interest in the property, and such knowledge or information indicates an increase in the material value of such interest, the buyer has a duty to disclose such information to the seller. This duty applies when the buyer has reason to believe that the seller is unaware of said information.

To pay the price

The duty of the buyer to furnish the promised consideration is paramount. He must pay or tender at the agreed time and place of executing the sale, and to such person as per the instructions of the seller. The duty to pay is “personal in nature” and the buyer upon refusal of the seller to accept it is free to make a deposit with the court.

Encumbrances on the property

Generally, it is understood that the seller has the duty to get rid of any encumbrances before he sells the property to the buyer. Before the sale deed is executed, if the buyer finds out that there are charges/encumbrances on the property being sold, despite receiving assurances from the seller to the contrary, the buyer can retain a portion of the purchase money to offset the charges on the property. The buyer can upon finding out about the encumbrances before the sale, also choose to rescind the contract or sue for damages.

Buyer’s duties after sale

The following are the duties/liabilities of a buyer after the sale:-

To bear the loss to property

Once the ownership of the property has been transferred from the seller to the buyer, any loss to the property as a result of the destruction, injury, or decrease in value – not caused by the seller’s actions – is to be borne by the buyer. This rule applies even where – possession has not been delivered yet by the seller; full payment of consideration has not been furnished by the buyer. The key point to pay attention to is the passing of ownership. Once the buyer attains ownership, even if he does not have possession, he has to bear the losses.

To pay the outgoings

Similar to the case of bearing loss to the property, the key point to focus on is ownership. Once the ownership passes to the buyer, he also gains the obligation to pay any public charges or rent payable with respect to the property. Public charges may include taxes imposed by the municipality or relevant authorities on the property. The authorities charge tax against the property itself and not on the buyer or seller in particular. Before the sale, public charges are paid by the seller. After the sale, public charges are paid by the buyer. Upon completion of the sale, the seller ceases to enjoy the benefits from the property, however, he gains the right to be indemnified by the buyer with respect to charges imposed after the completion of the sale.

Buyer’s rights

The buyer has the following rights:-

Benefits of improvements
Charge for prepaid consideration

Benefits of improvements

During the interval between the passing of ownership from the seller to the buyer, and payment of consideration by the buyer, if there is an increase in the value of the property, the seller cannot demand a price higher than the one agreed upon before. Here, the buyer is entitled to the increase in value of the property. Where there is an increase in the material value of the property, and benefits arising from rents and profits derived from such improvement or increase – it is the buyer’s right to enjoy such benefits. The buyer can also enjoy the repairs, and improvements made by the seller after the completion of the sale. Since the buyer has paid for the exclusive enjoyment of the property and its associated benefits, the seller loses his right to derive benefits from the property after the sale.

Charge for prepaid consideration

Although the amount varies from case to case, the seller usually asks for a deposit from the buyer at the time of making the contract of sale. The buyer can charge a lien on the property against the interest of the seller and the people claiming under him, and the interest on the deposit money that he had paid in anticipation of delivery. This is a statutory charge and commences from the date of payment of consideration. Interest on the prepaid amount lasts from the date of payment till the date of delivery of possession. However, the exception to this charge on prepaid consideration: is when the sale is invalid or the buyer himself commits a default.

Earnest

Earnest is part of the purchase money or consideration deposited by the buyer with the seller when the agreement is made. Earnest is kept as a security by the seller and indicates the intention of the buyer to fulfil the agreement. If the buyer commits a default then the seller has the right to forfeit the earnest. However, mere delay on the part of the buyer to make payment does not amount to a default. If the seller commits a default then the buyer can avail of a refund by filing a suit. The seller’s defaults include making a faulty title, not delivering possession in time, failing to obtain any permissions necessary for the sale, etc.

In Shri Hanuman Cotton Mills v. Tata Air Craft Ltd (1969), the following observations about earnestness were made:

When the contract is concluded it must be given.
It indicates the intention of the buyer to fulfil his part of the contract. It is symbolic of the binding nature of the contract.
It is part of the consideration agreed upon between the parties for carrying out the transaction.
It is forfeited when the buyer commits a default (mere delay is not a default).
Unless there is a contract to the contrary, the earnest is forfeited when the buyer commits default.

Conclusion

Section 55 of the Transfer of Property Act, 1882, lists the rights, liabilities, and duties of both the buyer and seller, with respect to a transaction where there is a transfer of immovable property unless there is a contract to the contrary. To understand the transfer of property, it is not enough to merely read Section 54 of the Act which describes – what is a sale; how a sale is made, and what is a contract of sale. Section 54 must be read along with Section 55 to gain a complete picture of the intricacies that go into the entire process of transfer between the buyer and seller. Section 55 provides a means for both the buyer and seller to protect their individual interests without worrying about suffering a loss due to unfair means or fraud. Section 55 focuses on endorsing fair dealings and encourages the transfer of property to prevent it from remaining stagnant or going to waste. This Section is also based on the principles of fairness, equity, and good consciousness.

References

Mallika Taly, Vepa P. Sarathi’s Law of Transfer of Property including Easements, Trusts and Wills, EBC, Lucknow
Dr. Poonam Pradhan Saxena, Property Law, 2nd edition, LexisNexis

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All you need to know about a Retainer Agreement

By

Rachit Garg

-

April 4, 2022

0

This article is written by Michael Shriney from the Sathyabama Institute of Science and Technology. This article explains everything about retainer agreements, its fundamentals, need, purpose, kinds, and a template of the agreement.

It has been published by Rachit Garg.

Table of Contents

Introduction

A retainer agreement is a long-term contract in which a client hires a lawyer to represent him or her in one or more situations. Advocates and attorneys are the most common users of retainer agreements. They charge their clients on an hourly basis through an agreement that is divided into two types of contracts: work-for-hire and pay-for-access. The client will employ a lawyer to assist them in representing their problem in court and to provide legal advice. This agreement is in place to safeguard and secure the legal services of the attorney. The attorney fees and other considerations must be addressed in a retainer agreement. The following article goes through the entire structure as well as further information on retainer agreements.

What is a retainer agreement

Retainer agreements are long-term contracts to retain ongoing services, and they are contracts between a company or a client. They fall between a one-time agreement and a permanent employment contract. It’s a contract between a firm or a person and a client in the form of a paper or a service contract. It allows clients and customers to pay in advance for the services rendered by an individual or a company’s professionals. The retainer agreement is mostly used for the service rendered by attorneys on an hourly basis, which they charge to their customers.

Essentials of a retainer agreement

Written agreement: A retainer agreement must be documented properly. It should be written and should cover the entire client-attorney agreement’s terms & conditions.
Nature: The agreement must be simple and clear. For the client to grasp the contract effectively, the words must be written in a simpler format.
Duration: The period of the contract must be specified.
Fee: The attorney charges a fee for the services he or she provides to the client.
Additional charges: Any additional fees or expenditures must be included in the contract so that the client understands exactly what they are responsible for.
Subject matter: The agreement must specify the topics that are addressed. It is required to specify the subject matter concerns for which clients have requested solutions or assistance.
Misrepresent: The agreement shall not misrepresent clients about the services covered by the agreement in any manner.
Usage of funds in a proper manner: The attorney must make good use of the funds received from the client.
Separate account: Attorneys and advocates are encouraged to set up a separate account for cash received from clients. They should not execute this agreement using their personal account. It is important for the attorney to create a separate account that is only for the benefit of the client and not for personal gain.

Need of a retainer agreement

The major reason for the requirement for a retainer agreement is to protect the legal profession, attorneys, and advocates, for example. It’s similar to a doctor providing treatment to a patient after the patient pays for the medical bills, which is a future service; similarly, advocates are compensated by the client for the service they will provide after the client pays for the expenses. It promotes income stability and improves client relationships. A retainer agreement is in high demand for legal services, consulting services, and freelance work. This contract can be utilized for consultants, who will be working for a longer length of time. Using this agreement, the advocates gain popularity. As a result of this agreement, professionals will have more opportunities in the legal profession. It’s a method to have a stable income for a long time.

Purpose of a retainer agreement

The retainer agreement’s goal is to ensure that the advocates do not mislead or take the client for granted. It is designed to protect both the client and the advocate. In the case of an advocate, they are compensated by the client for their services. Similarly, in the case of a customer, they receive a solution to their difficulties in exchange for payment for the advice and solutions provided. When it comes to retainer agreements, they are both in the safe zone. All specifics, including when the period begins, the cost per hour of services, the total amount, the problem, reasons, and remedies are to be included in this agreement.

Types of a retainer agreement

There are two sorts of retainer agreements: those for the number of hours worked and those for access to experts.

Work-for-hire retainers

With work-for-hire retainers, businesses expect to receive regular payments from their clients on a monthly basis. This sort of agreement speaks for itself, and it begins with their client and advocate connections. This is often used as a general agreement. The consultants are paid for the number of hours they worked, which is similar to a project or a contract. They’re always in the loop to provide services to the client.

Pay-for-access retainers:

This kind is required for more experienced consultants, who would wish to pay for professional advice and information on an ongoing basis. It’s not like the old work-for-hire retainers based on hours and rupees that were expected to be a transaction. When a client believes in the value of the services their advocate provides, their service must be extraordinary, rather than being maintained on a regular basis. It is helpful for the customer to have faith in the advocates who are providing the services. The client will pay for the information and value experts provide, not for the number of hours they work. The client may rely on high-quality services.

How to draft a retainer agreement

A retainer agreement is a legal document that covers both parties as well as legal consequences in case of default. For really understanding the consequences of entering into a retainer agreement, and assisting in the execution of a legitimate agreement that can be legally enforced by law, it is essential to have solid documentation provided by the advocate. The advocate will guarantee that both parties interests are safeguarded. They reach an agreement in order to reduce the risk of a conflict. The skilled attorney will draft a detailed contract that includes all terms and conditions that may emerge between the parties in the future.

The procedure of drafting a retainer agreement is as follows:

Step 1: Obtain a duplicate of the retainer template

An employment agreement with a retainer must be included in the agreement, which may be saved as a pdf, word, or ODT file. It is beneficial to have a copy of the agreement template on hand, so that the advocate may refer to it and draft their own agreement.

Step 2: Describe the client, the retainer, and the services they provide

After receiving the retainer draft, the client will be able to complete the agreement by filling in the blank spots. It is intended that the vacant spaces will be filled in by typing. All blank spots in the agreement must be filled in, including the name, date, location, and nature of the problem.

Step 3: Mention the length of service and when it will expire

Following the introductory section of the document, here, the advocate needs to fill in the time when the agreement starts and under what circumstances the agreement would be terminated.

Step 4: The amount to be paid or the document that will be used to make the payment

The amount to be paid or compensated must be clearly stated in the draft agreement, i.e., whether it is a work for hire agreement or pay for access agreement. The client’s approval for the payment is important.

Step 5: The information needed to resolve the conflicts must be given

Regardless of how great the agreement is, there is a possibility that the parties may have disagreements. Both sides must speak with one another in order to avoid a future conflict beforehand. To avoid future disagreements, the professional drafter should specify all conditions.

Step 6: Signatures of both the professional and the client are necessary

Both the professional and the client must sign to recognize that the above-mentioned agreements are accurate and that they are obliged by them. This is the final stage in the agreement drafting process.

How are fees decided in a retainer agreement?

The payments in retainer agreements are determined by the advance charged to the clients for the professional services of an adviser, consultant, lawyer, freelancer, and so on. The payments are mostly connected with advocates or attorneys who assist legal services to clients. This charge is intended to secure the agreement for the services delivered. After both the payer and the receiver have approved the agreement for the service to be completed, the fee must be put into a separate or different account rather than the receiver’s original account to guarantee that these funds are not used for various uses.

How to negotiate a retainer agreement?

In order to negotiate a retainer agreement, consulting a professional for advice on their dispute is to make an attempt to obtain a retainer client from negotiating an agreement that is appropriate for both parties on adopting the retainer-based payment in their management system. The following situations help retainers in obtaining clients.

Establishing the worth of a retainer agreement

These retainer agreements, which are signed by both parties, are important in the negotiation of an agreement. It will take many years to maintain genuine connections and a professional reputation as someone who provides their expertise and accomplishes good solutions. Professionals who have established a strong reputation in their field by working hard and serving a small number of clients might take advantage of this chance to negotiate their contracts with clients.

Providing discounts to clients

Clients are given discounts because they wish to protect themselves from professionals by signing retainer agreements. Some clients will pay in advance if the specialist is in high demand. Client discounts will encourage clients to seek professional advice more frequently if there is a discount.

Reassuring clients

Specialists must assure clients that their problems will be solved by proving that professionals should keep their promises to their clients. This makes an impact on the professionals to excel and get more clients by demonstrating that they can handle their clients’ concerns.

Advantages of a retainer agreement

The following are some of the advantages of using a retainer agreement:

A fixed-fee retainer with a retainer agreement maintains continuity.
The benefits of a retainer agreement include a steady price from the client and a long-term connection with the client. They do not waste their time on marketing.
This agreement guarantees that specialists will be available when the client requires assistance.
As they have agreed on a retainer price over a lengthy period of time, there will be sufficient cash flow maintenance.
The professional is paid on a regular basis, which allows them to focus effectively on the client’s demands and produce high-quality work.

Disadvantages of a retainer agreement

Although the retainer agreement between the customer and the expert has benefits, it also has drawbacks. The following are some cases:

Clients are given a certain amount of time to devote to their difficulties by the professionals.
Professionals stick to a strict timetable, which is inconvenient for the clients.
Professionals enter into hourly commitments, which is challenging.
It is tough for professionals to find clients; they must work hard to find clients.
Professionals find it difficult to seize opportunities that come their way. If the opportunity arises, the experts must prove to their clients that they are capable of assuring and resolving their issues.
In the case of professionals, there is a possibility that they will only acquire rare clients.
In case of innocent clients lose a lot of money investing in their issues, even when it is obvious that there is no way to remedy them. They also pay the professionals in advance without receiving any service.

Mistakes to avoid while drafting a retainer agreement

The following points must be kept in mind to avoid mistakes while drafting a retainer agreement:

In drafting a retainer agreement, it is best to avoid using confusing or unclear terms.
Avoid using complicated languages.
Requiring clients to pay more than the value of the service provided should be avoided.
For the dispute, insufficient information presented must be avoided.
Not stating all the factors that will lead to the termination of the agreement. This should be avoided.
There is no provision for resolving disputes, which seems to be a drafting error that must be avoided.
Proofreading and proper formatting are not clearly drafted. This mistake must be avoided.
Instead of offering an appropriate solution to the problem, advocates do not provide a proper remedy to their party’s dispute. These activities must be avoided.
Professionals should avoid using cash for personal purposes.

Sample format of a retainer agreement

RETAINER AGREEMENT

This Agreement acknowledges the employment of the _______________ Law Office, and ______________ (hereinafter “Attorney”) by ______________ (hereinafter “Client”) and the fee arrangement by which Attorney will represent the Client in the following matter or proceeding: Divorce (subject matter)

The client understands that the Attorney cannot guarantee the results of any proceeding and acknowledge that no representations have been made by the Attorney about the outcome of this matter.

Legal Fees: Legal fees for representation of Client in this proceeding are based upon the following hourly charges:

Attorney Rs.___________

Paralegal or Legal Assistant Rs.___________

The client will be charged at the above rates for all time spent on this matter. Hourly charges may be increased during January of each year, and the Attorney will provide the Client with reasonable notice of any such increases. An upward adjustment may also be made to the normal hourly charge for special demands made upon the Attorney including difficulty, whether the work is of an emergency character, results achieved and inability to represent other clients.

Costs and Expenses: In addition to legal fees, the Client is responsible for payment of costs incurred and disbursements made on Client’s behalf including, but not limited to, photocopying costs, long-distance telephone charges, postage, and fees and expenses for any experts hired on the Client’s behalf. The client agrees to pay all of the expert fees and expenses in advance. The client specifically understands that the Attorney will not advance any expert fees and expenses.

Retainer: A retainer of Rs.____________ is required, prior to commencement of any legal services for Client. The retainer will be applied against future billings. An attorney will refund the unused portion, if any, of the Client’s retainer upon completion of all work on the Client’s file.

Payment of fees: The client will be responsible for the prompt payment of all fees and costs incurred in excess of the retainer. Payment is due immediately upon receipt of the billing statement unless other arrangements have been made in writing. Charges not paid by the last business day of the billing month are considered delinquent and will bear interest at the rate of eighteen percent (18%) per annum, or the maximum rate allowed by law, whichever is less. In the event, the Attorney must take legal action to collect the Client’s account, the Client expressly agrees to pay all collection costs, including reasonable attorney fees.

Services to be performed: Attorney will charge Client for services which will include, but are not limited to, the following: (1) telephone contact with Client, Attorneys, and other relevant persons; (2) case correspondence; (3) document preparation; (4) legal research; (5) office conferences; (6) court appearances; and (7) travel time to and from locations away from the Attorney’s office. Services are billed to the Client on the basis of time expanded. Each party to a legal proceeding has certainly available alternatives which will affect the amount of time and money expended in the proceeding. Since the time spent on each matter varies, as does the nature and amount of work necessary to achieve the desired result, the Attorney makes no estimate as to the extent of the legal service or the total amount of fees and expenses which Client’s case will require. Unless otherwise expressly stated in this Retainer Agreement, representation does not include an appeal of your case.

Costs of copying file: Attorney will provide Client with contemporaneous copies of all pleadings and correspondence when they are received or sent by Attorney.

Withdrawal of Attorney: Client understands and expressly agrees that Attorney may withdraw from representation of Client at any time, if Client fails to honour the fee arrangement therein set forth including, but not limited to, payment of fees and expenses on a timely basis; fails to cooperate in the preparation of the case; fails to make a full and complete disclosure of the facts and circumstances relating to the case; or otherwise takes any action which impedes the ability of Attorney to provide adequate and ethical representation.

THIS RETAINER AGREEMENT CONSTITUTES A LEGALLY BINDING CONTRACT BETWEEN ATTORNEY AND CLIENT. THE ATTORNEY ADVISES THE CLIENT TO READ THE RETAINER AGREEMENT CAREFULLY AND TO DISCUSS ANY QUESTIONS OR CONCERNS REGARDING THE TERMS OF THE RETAINER AGREEMENT.

I hereby acknowledge that I have read this Retainer Agreement and have discussed any questions or concerns which I have regarding this Retainer Agreement and have received a copy of the same. I agree to retain an attorney in accordance with the terms and conditions of this Retainer Agreement.

Date:____________ Client ___________________

In consideration of the foregoing, I hereby agree to provide representation in the above matter.

Date: ____________ By _____________________

Law firm: Attorney

Conclusion

This article sums up with a short overview of the retainer agreement. This agreement is primarily for advocates and attorneys to receive compensation for services rendered to their clients in two forms: one for the number of hours worked for which a fee will be charged, and the other for the advocates’ knowledge and intelligence in resolving disputes. This agreement establishes communication between the parties and the advocate which is beneficial to both the parties.

References

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Is call recording legal in India and admissible in courts

By

Sneha Mahawar

-

April 4, 2022

0

In this article, Insiya Kothari of Indore Institute of Law talks about the concept of call recording, its meaning, and usage. What is the evidentiary value of a call recording in a court?’ Two approaches help explain the concept. One from a foreign perspective and one from an Indian standpoint.

This article has been published by Sneha Mahawar.

Introduction

Modernism in technology has blurred the line between private thought and public thought. Recording calls intertwines with the concepts of wire-trapping or phone tapping. Recording a call helps to confirm the words spoken by an individual. A call recorded for harming a person is unethical, and recording without the consent of the person speaking is a violation of the right to privacy. Section 65B of the Indian Evidence Act of 1872 outlines special provisions relating to electronic records. Dealing with tape recordings involves a delicate approach. The manner of obtaining telephone recordings is crucial from a legal point of view. The Indian stance on the admissibility of tape recordings is observed with the help of important cases and judgments.

Call recordings and right to privacy

Phone tapping is a serious crime unless there is a proper reason and authority behind recording a person’s private conversations. The right to privacy of an individual is a paramount concept that cannot be ignored in the view of electronic evidence. Article 21 in the Constitution of India, 1949 is the fundamental legal provision governing privacy. It further guarantees personal liberty as an inalienable birthright. However, if an authority is legally authorized, these telephone conversations are not private anymore, thus, can be collected or restored as judicial evidence. Further, Entry 31 of the Union List of India (List I) places the subject of call recordings under the list item “posts and telegraphs; telephones, wireless, broadcasting and other like forms of communication.”

The right to privacy in the context of recording calls is important only when there is a matter of public emergency or in the interest of public safety. In People’s Union of Civil Liberties v. Union of India (2003), it was stated that secretly recording a person’s private conversations is a grave violation of the right to privacy of an individual. This case challenged the constitutional validity of Section 5(2) of the Indian Telegraph Act, 1885. The Section grants legal authority to state and central organizations in India to record those telephonic conversations that are purely against the sovereignty and security of the nation. The Court also laid down detailed safeguards to check for arbitrariness in the issuance of telephone tapping orders and they are as follows :

Orders for phone tapping may just be given by the Home Secretary of the focal government or a state government. In a crisis, this power might be designated to an official of the Home Department of the focal or state government, and a duplicate of the request should be shipped off to the concerned Review Committee in one week or less.
The power making the request should consider whether the data which is viewed as important to get could sensibly be gained by different means.
Orders given under the Indian Telegraph Act, 1885 will be legitimate for a very long time from the date of issue.
Survey Committees will be Secretary-level officials at both the federal and state levels. They might assess whether a capture request has been passed in accordance with the law, and on the off chance that it has not, they might save it and direct the obliteration of any duplicates of the caught interchanges.
The power to give the block attempt request should keep up with records of : (i) the caught interchanges; (ii) the degree to which material is revealed; (iii) the quantity of people to whom the material is uncovered and their character; (iv) the degree to which the material is replicated; and (v) the quantity of duplicates made.

The importance of the right to privacy is further witnessed in the case of Vinit Kumar v. Central Board of Investigation and others (2019) where the Supreme Court answers the question of permissibility of tape-recorded conversations as judicial evidence. The case also highlights that any interception order of calls should not violate Rule 419A of the I ndian Telegraph Rules, 1951. In another case of K.S Puttaswamy v. Union of India (2018), the Supreme Court laid down the “Principles of proportionality and legitimacy” to determine the legality of call recording orders issued by the government. It was held that if there was no risk to the public, then the government had no authority to issue orders for telephone tapping.

Legality of call recording in India

Section 2 of the Information Technology Act, 2000 provides the definition of an electronic record, which includes sound stored, received, or sent in an electronic form. Additionally, Section 85B of the Indian Evidence Act, 1872 deals with the law regarding the alteration of recorded electronic evidence. The authenticity and integrity of this electronic record are measured by a digital signature. This signature must be affixed to sign the record.

Further, Sec tion 5 of the Indian Telegraph Act, 1885 concerns the power for the Government to take possession of licensed telegraphs and to order interception of messages. This Section provides a right to the Central or the State government to procure telegraphs in the interest of public safety. Thus, it can take hold of electronic messages given that there is a situation of public emergency. Section 65B of the Indian Evidence Act, 1875 provides for the conditions of admissibility of electronic evidence, and it also provides that a certificate is necessary for its related admissibility. Under Indian law, an electronic record is defined under Section 2(1)(t) of the Information Technology Act, 2000.

Moreover, Rule 419A of the Indian Telegraph Rules, 1951 is a very lengthy law. It can be summarized in two stages. The first stage is procurement and review of lawful orders. This Section states that directions for interception under Section 5 of the Indian Telegraph Act, 1885 can only be issued by the union or state home secretary. Further, in an unavoidable circumstance, a lawful order can be issued by a person of rank not less than a joint secretary. Unless all the ways of getting the information are ruled out, only then a lawful order can be issued. The second stage is the interception process. It is carried out by law enforcement agencies in India. In the interception process, the identity of the personnel and the agency is not revealed to the public.

Admissibility of call recordings in courts

Today, electronic evidence in the form of call recordings is used extensively in civil and criminal matters, but what’s more important is its admissibility factor. Section 65B of the Indian Evidence Act, 1872 provides for the admissibility of electronic records. A speech documented without the explicit permission of at least one of the speakers is not legally valid. The participants to the same conversation should consent to the recording. The evidentiary value, in any case, is the most important law behind developing the legality of the idea of presenting to the court a ‘digital’ form of evidence.

S. Pratap Singh v. the State of Punjab (1964)

In this case, the Supreme Court accepted a telephonic recording of a conversation between two parties after examining the evidentiary value of tape-recorded conversations. The evidence submitted was accepted only because it helped to resolve the case. The parties claimed to have had a conversation that was then illegally obtained and subsequently allowed in this case. Thus, through this case, we gather insights into the admissibility factor of recorded electronic evidence. The court accepted tape-recorded conversations illegally obtained only because it helped in the conviction process.

Ratan N. Tata v. the Union of India and Others (2014)

Vexed telephonic recordings of former lobbyist Nira Radia, with several spokesmen, associates, and clerks in reciprocity with the recent 2G spectrum allocation scam caused several issues when published by a media house. The two most important legislations were the Television Networks (Regulation) Act of 1995, and the Information Technology Act of 2000. While the Delhi High Court was examining whether the contents of the phone conversations were debatable or even highly confidential, the Central Bureau of Investigation took over to assess the same influential nature of Nira Radia’s tapes. Since the tape recordings were authorized to be recorded, they were submitted and accepted as valid evidence by court order. Thus, the most important aspect of this case was whether the authorized recording of telephone conversations was illegal if it defamed any party to the conversation.

Important legal decisions

R.M. Malkani v. the State of Maharashtra (1973)

In this case, the Supreme Court of India stated that the most important legislation within the context of legal tape recordings is the Indian Telegraph Act. This case revolved around the question of using tape-recorded conversations as a basis for criminal prosecution of a person. The evidence under question was illegally obtained from tape recordings and so they were in contravention of Section 25 of the Indian Telegraph Act. Therefore, such evidence was inadmissible. It was further held that the right to privacy in the Indian constitution protects only innocent citizens and does not protect those who are trying to vindicate the police because they are guilty of immoral crimes. In this case, a doctor who was guilty of postoperative death in a hospital tried to escape his criminal prosecution through bribing. The council for the appellant challenged the admissibility of the tape recordings while proposing a gross violation of Articles 20 and 21 of the Indian Constitution. However, the Court held that the tape recordings were admissible as evidence even despite the violation of the Telegraph Act.

Ram Singh v. Colonel Ram Singh (1986)

This case was about an allegation where the appellant objected to the termination of voting in some part of a village. The issue was regarding the admissibility of statements that were recorded in the toll booth. The Court declared the tape recording as inadmissible. Thus, the Supreme Court dismissed the appeal on the ground that the tape recordings were not strong enough to support the evidence required to prove the issue raised by the appellant. The Court also stated that the recording did not promote any kind of confidence in the public. Thus, the protection of call recordings, audios, and other forms of digital evidence should be the same as other apparatus involving the right to privacy.

Rayala M. Bhuvaneswari v. Nagaphamender Rayala (2008)

In this case, the petitioner sought divorce from his wife based on a hard disk containing recorded phone conversations of his wife with her family members. Although the wife denied some contents of the recordings, the Court held that the relationship between the husband and the wife is a pure one, and that the husband who records calls of his wife is infringing on her right to personal liberty and privacy. In this case, the husband was considered a criminal in the eyes of the law, resorting to unconstitutional means to obtain evidence for divorce. Moreover, he recorded her calls without her consent, which is prohibited by the law, and is also an indecent act. The Court further held that where the husband cannot trust his wife, their whole marriage becomes redundant.

The European General Data Protection Regulation (GDPR)

European General Data Protection Regulation is a tenacious and well-framed regulatory framework that helps to protect personal data such as telephonic conversations. It is a crucial European law that provides a firm stance on privacy and data security. In a digital economy, this legislation adds to the ongoing legal interpretation by statutory bodies trying to develop better laws. It helps ordinary people secure better control over the usage of their data. GDPR standards impose strict fines on those who violate its rules. Within this law, data processing covers the collection, storage, retrieval, alteration, storage, and destruction. Its scope is wide and sufficient to take into control every data processing unit within Europe.

Legal compliance with the GDPR

Article 4 of GDPR defines ‘personal’ data as any information relating to an identifiable natural person. GDPR compliance is binding in its entirety upon all member states. It applies to all institutions that process peculiar data and run their operations in Europe. These rules provide the right of access to business data to EU member states. The GDPR outlines the following measures for all data processing units.

Process personal data in a lawful, fair, and transparent manner.
The collection of personal data should be for a specific and legitimate purpose only.
Personal data must not be retained longer than the necessary duration.
The data must be accurate where necessary and must be kept up to date.
Data processing must properly take place to maintain security.

Debate on recording calls

If conversations would in some way threaten national security or public safety, it gives the government a solid reason to intervene using its phone-tapping powers. The act of listening in on another person’s conversation, or even recording it, has long been a topic of debate between law enforcement officials and civil liberties activists.
In a world driven by fast technology, the act of recording someone’s calls is common because people take advantage of the vast network of unsecured communication, which means only a few people care about privacy. However, from the Indian perspective, the right to privacy and freedom of speech are fundamental human rights.
The debate around ‘phone tapping’ clarifies the scope of governmental powers in allowing the uninterrupted exercise of the right to freedom of speech and expression. The main aim of the government is to secure personal liberty.
Moreover, when a court decides to use a tape recording as evidence, a loss of reputation, identity, and integrity is inevitable because personal information contained in the evidence often reveals aspects of a person’s personal life that would have remained hidden had somebody not recorded the conversation.
The discussion here clarifies the scope of governmental powers in allowing the uninterrupted exercise of the right to freedom of speech and expression. In a country like India, it is a common practice for the media to not care about privacy because the media thrives on giving the public what they want; i.e., gossip. Thus, when a privacy breach occurs, only a few authorities have the power to record calls such as the police or government-authorized agencies. The main aim of the government should be to secure personal liberty and security.
The basic idea behind using tape recordings of phone conversations is to generate evidence on the words or actions of another person. While a recording may take place by any person, usually it is practiced by the government and high-ranking authorities to reveal information that would help in bringing justice to the courts. Another significant aspect of a call recording is whether it is done consensually or not.

Importance of one-way and two-way consent

The term “consent” disintegrates into two main categories, i.e., one-way consent and two-way consent for recording calls. As the names themselves suggest, one-way refers to only one person agreeing to the call recording. Two-way refers to both the persons approving a legal call recording. The authenticity of electronic call recordings is evident through the parameters of consent. Thus, it is necessary to preserve the privacy of an individual. Places like California, Massachusetts, and Washington are a few states with a legal requirement to obtain two-party consent. Alabama, Hawaii, Texas, and West Virginia are a few states that require only one-party consent. Therefore, it goes without saying to ask for consent before recording someone’s call.

Status in other countries

Since the advent of high-functioning technology, privacy has become a big concern. In some cases, people tend to go beyond their capacity to record a call without consent and then use it to cause harm to a person’s reputation. So, all countries attempt to make call recording safe and secure to prevent a privacy breach. Various state and international regulations support this fundamental necessity for electronic evidence. Here, we examine the legality of such recordings in different geographic jurisdictions. With the importance of preserving the value of sensationalism for human beings, this Section helps us understand the importance of call recordings as a legal tool. We know that the courts may accept a piece of electronic evidence relevant to a case. But this acceptance generally comes with certain caveats for ensuring privacy and personal security.

Australia

In Australia, the Telecommunications Interception and Access Act (1979) prohibits a person from listening in on a live phone call without the permission of either party or both parties. While Section 7 prohibits recording calls, Section 6 defines the interception of calls. The most essential element in interception is the lack of knowledge of the person making the conversation. Thus, interception the general law in Australia states that a call must not be recorded.

Canada

Lawyers in Canada must comply with the Personal Information Protection and Electronic Documents Act (PIPEDA). Further, the legal requirements of privacy law ensure that lawyers carefully access, use, and disclose personal or sensitive information such as a call recording. Canadian law gives significance to consent while recording calls. The law also outlines a method in which the call may be recorded. This method should use either automatic recording software or a customer service agent. Further, if the caller does not consent to record, then they should have other alternatives for the transaction to take place.

New Zealand

In New Zealand, there is no specific law for recording calls except Part 9 A of the Crimes Act, 1961. Section 216A which is an interpretation clause helps to understand interception devices as well as private communication. A call may be intercepted in two ways. Either when the conversation is taking place or while it is in transit. A transition takes place when there is an exchange of voices over the telephone. An interception device is used to intercept a private communication.

Sweden

The law in Sweden prohibits illicit telephone recording by individuals. The courts here grant permission to judicial officers to allow a call recording to take place legally. The Swedish Criminal Code (Brottsbalken) deals with the law relating to electronic evidence.

Conclusion

In recent years, exponential growth in the technological sector has made it both convenient as well as risky to conduct our personal affairs over telecom services. Both the Central and the State authorities have the power to record calls under Section 5(2) of the Indian Telegraph Act, 1885. Electronic evidence is a novel method of submitting evidence to the Court under Section 65B of the Indian Evidence Act. This article allows us to compare the two scenarios. Status of call recording evidence in foreign countries such as New Zealand or Sweden, and the law in India on the same topic. Various state and central legislations with some landmark cases demarcate India’s legal stance on call recordings.

References

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:

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Enforcement of International Commercial Arbitration (ICA) awards outside India and in India

By

Sneha Mahawar

-

April 4, 2022

0

This article is written by Advocate Aashish Chimnani (B.B.A LL.B) pursuing a Diploma in International Business Law from LawSikho. This article has been edited by Zigishu (Associate, Lawsikho).

This article has been published by Sneha Mahawar.

Table of Contents

Introduction

The importance of International Commercial Arbitration has been recognized all across the world. Litigation in the courts is costlier and time-consuming; it takes years to resolve disputes, whereas International Commercial Arbitration makes finality in the decision-making process quicker. The aim is to achieve the sole objective of resolving the dispute timely and efficiently with minimum intervention of a Court of Law so that trade and commerce are not affected on account of litigations before a Court.

This Article identifies Institutions that are located worldwide, seats in India and worldwide, enforcement of foreign awards, countries notified by the government, requirements of foreign arbitral awards, and much more information that may help you now or in the future.

International Commercial Arbitration

Section 2(1)(f) of the Act defines an International Commercial Arbitration (ICA) as a legal relationship that must be considered commercial, where either of the parties is a foreign national or resident, or is a foreign body corporate or is a company, association or body of individuals whose central government or control is in foreign hands.

The UNCITRAL Model Law on International Commercial Arbitration was adopted by the United Nations Commission International Trade Law (UNCITRAL) on 21 June 1985, at the close of the Commission’s 18th annual session. The General Assembly, in its resolution 40/72 of 11 December 1985, recommended “that all States give due consideration to the Model Law on International Commercial Arbitration, in view of the desirability of uniformity of the law of arbitral procedures and the specific needs of International Commercial Arbitration practice” In 2006 the model law was amended, it now includes more detailed provisions on interim measures.

History of arbitration in India

Until the Arbitration and Conciliation Act, 1996, the law governing arbitration in India consisted mainly of three statutes:

The 1940 Act was the general law governing arbitration in India and resembled the English Arbitration Act of 1934

The United Nations Commission International Trade Law (UNCITRAL) Model Law in 1985

Then the Arbitration and Conciliation Act was passed in 1996.

Provisions under the Arbitration and Conciliation Act, (1996)

Part I of the Act deals with domestic arbitration and ICA when the arbitration is seated in India. Thus, arbitration seated in India between one foreign party and an Indian party, though defined as ICA, is treated akin to domestic arbitration.
Part II of the Act deals only with the foreign awards, their enforcement under the Convention on Recognition and Enforcement of Foreign Arbitral Award, 1958 (New York Convention) and Convention on the Execution of Foreign Arbitral Awards, 1927 (Geneva Convention)
Part III of the Act is a statutory embodiment of conciliation provisions.
Part IV deals with the Supplementary Provisions.

Section 8 regulates the commencement of arbitration in India.
Section 3, 4, 5, 6, 10 to 26, and 28 to 33 regulate the conduct of an arbitration.
Section 34 regulates the challenge to the award.
Section 35 and 36 regulate the recognition and enforcement of the award.
Section 1, 2, 7, 9, 27, 37, and 38 to 43 are ancillary provisions that either support the arbitration process or are structurally necessary.
Section 10 to 33 of Part I of the Act, Contain the curial or procedural law of which parties would have the autonomy to opt-out of.
The other chapters of Part I of the Act are from part of the proper law, thus making them binding to all the parties who are subjected to Indian Arbitration Law.
Part II, on the other hand, regulates arbitration only with respect to the commencement and recognition/enforcement of a foreign award, and no provisions under the same can be derogated from a contract between two parties.

Institutions of International Arbitration worldwide

Following are the Institution of International Arbitration:

The International Court of Arbitration at the International Chamber of Commerce (ICC);
The Singapore International Arbitration Center (SIAC);
The Hong Kong International Arbitration Center (HKIAC);
The London Court of International Arbitration (LCIA); and
The China International Economic and Trade Arbitration Commission (CIETAC).

International Commercial Arbitration seated in India

The Provisions of setting aside the Award as in section 34 are applicable. However, with The 2015 Amendment, the ground of Patent Illegality is taken away in cases of International Commercial Arbitration seated in India.

International Commercial Arbitration seated outside India

The applicability of the provisions of the Act on International Commercial Arbitration seated outside India is divided into two phases i.e. before the judgment of Bharat Aluminium Co vs Kaiser Aluminium Technical (BALCO judgment) and after the judgment.

Pre BALCO judgment: the position was that the provision of Part I of the Act will apply to the ICA seated outside India unless they are impliedly or expressly excluded by the parties.

Post BALCO judgment: Part I of the Act will not apply in case of foreign seated arbitration. The decision was given prospective effect and therefore applied to only arbitration agreements executed on or after September 6, 2012. If the arbitration agreement was executed before September 6, 2012, the necessary modification would have to be made in the arbitration agreement to be governed by the ruling BALO.

Amendment Ordinance 23.10.2015: Part I of the Act will not apply in the case of foreign seated arbitration except Sections 9, 27, and 37(1)(a) and 37(1)(3) unless a country’s intention appears in the arbitration agreement.

Enforcement of foreign awards in India

Part II of the Act applies to all foreign awards sought to be enforced in India and to refer parties to arbitration when the arbitration has a seat outside India. Part II is divided into two chapters, Chapter 1 being the most relevant one as it deals with foreign awards delivered by the signatory territories to the New York Convention which has reciprocity with India, while Chapter 2 is more academic as it deals with foreign awards delivered under the Geneva Convention. (As mostly all parties signatory to the Geneva Convention are now members of the New York Convention, Chapter 2 of Part II remains primarily academic)

A Foreign award under Part II is defined as (i) an arbitral award (ii) on differences between persons arising out of legal relationships, whether contractual or not, (iii) considered as commercial under the law in force in India, (iv) made on or after 11^th day of October 1960 (v) in pursuance of an agreement in writing for arbitration to which the convention outlined in the first schedule applies and (vi) in one of such territories as the Central Government, being satisfied that reciprocal provisions made may, by notification in the Official Gazette, declare to be territories to which said convention applies.

So simply because a territory is a signatory to the New York Convention Part II Does not automatically apply.

There has to be further notification by the Central Government declaring that country to be a territory to which the New York Convention applies.

Countries notified by the Indian Government for ICA

About 48 countries have been notified by the Indian government so far, they are:-

Australia, Austria, Belgium, Botswana, Bulgaria, Central African Republic, Chile, China, Cuba, Czechoslovak Social Republic, Denmark, Ecuador, Federal Republic of Germany, Finland, France, Democratic Republic, Ghana, Greece, Hungary, Italy, Japan, Kuwait, Malagasy Republic, Malaysia, Mauritius, Mexico, Morocco, Nigeria, Norway, Philippines, Poland, Republic of Korea, Romania, Russia, San Marino, Singapore, Spain, Sweden, Switzerland, Syrian Arab Republic, United Kingdom, United Republic of Tanzania and United States of America.

Applicability of Part II (enforcement of certain foreign awards)

The following conditions must be satisfied:

The award passed should be an arbitral award,
It should be arising out of a dispute between the parties,
The differences should be arising out of a legal relationship,
The legal relationship should be considered commercial,
It should be in pursuance of written agreement to which the New York Convention applies; and,
The foreign award should be made in one of the aforementioned 48 countries.

Requirement of the foreign arbitral award to be enforceable under Act

There has to be a “Written Agreement”;
The Agreement must be Valid and Enforceable by Law;
The award must be unambiguous.

Case laws

Section 2 (1)(f) (iii) was determined by the Supreme Court in the case of TDM Infrastructure Pvt. Ltd. Vs. UE Development India Pvt. Ltd. 2008 (14) SCC 271 wherein, despite TDM Infrastructure Pvt. Ltd. Having foreign control, it was concluded that “A Company Incorporated in India can only have Indian Nationality for the Act.”
M/s Larsen and Toubro Ltd. SCOMI Engineering BHD Vs. Mumbai Metropolitan Region Development Authority, 2018 SCC Online SC 1910 In that case where an Indian company was the lead partner in a consortium (which also included foreign companies) and was the determining voice in appointing the chairman and the consortium was in Mumbai, the Supreme Court held that the central management and control was in India.
The award must arise out of Dispute in a “Commercial Transaction” In the case of RM Investment & Trading vs. Boeing Company the Supreme Court observed that the term “commercial” should be liberally constructed as having regard to manifold activities which are an integral part of international trade.

Conclusion

The growth of arbitration and conciliation has aided in the reduction of the transaction costs of business through a fast and speedy resolution of conflict among states, this was possible due to the nominal interference of the court, especially at the stage of enforcement of arbitral awards. One of the finest perks of arbitration is the expected speedy resolution of disputes. The New York and the Geneva Convention are some of the best outcomes of this which have created a simpler method to seek justice without the interference of local courts, and even these awards should be more modified by the growing needs of states.

Reference

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Environmental jurisprudence, festivals in India and their impact on environment

By

Rachit Garg

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April 3, 2022

0

This article is written by Ishan Arun Mudbidri, from Marathwada Mitra Mandal’s Shankarrao Chavan Law College, Pune. This article talks about environmental jurisprudence, various festivals in India and their impact on the environment.

It has been published by Rachit Garg.

Table of Contents

Introduction

Ancient Indian culture has always been associated with nature. The end of the monsoon calls for the arrival of various Indian festivals. These festivals are celebrated with great pomp and fervour. However, many times while celebrating these festivals, we tend to neglect the impact it is having on our environmental surroundings.

Concept of environmental jurisprudence

In India, environmental importance has been prevalent and is mentioned in the Vedas, Upanishads, and various other Puranas. The concept of Dharma, known to many as the foundational principle of Hinduism, mentions that protecting the environment is an expression of Dharma. The Bhagwad Gita in many of its texts has referred to the presence of the Supreme Divinity throughout nature. In the later Vedic period, cutting trees and plants was strictly prohibited. It was, however, in the British era and post-independence, the real meaning of the term environmental jurisprudence was put forth.

Evolution of environmental laws in India

The basic meaning of the term environmental jurisprudence is the protection of the environment with various legal enactments. Article 51A of the Constitution of India makes protection of the environment a fundamental duty of every citizen of the country. Further, Article 21 guarantees the right to life, wherein the right to environment is a part.

In 1972, the Stockholm Conference on Human Environment was held by the United Nations wherein, various policies and plans were set up with regards to the protection of the environment. This gave rise to a well-defined and separate legal framework covering all the aspects of mother nature in India.

Laws relating to the protection of the environment

The Environment Protection Act 1986

This was the main legislation enacted to protect the environment in India. The Dehradun quarry case (1988), wherein the court banned the mining of hazardous materials in Mussoorie, was the first case under this act.

The National Green Tribunal Act 2010

Under this Act, the National Green Tribunal was established to hear cases relating to the protection of the environment, the protection of forests and wildlife, and everything else relating to nature.

Laws relating to pollution

The Air (Prevention and Control of Pollution) Act 1981

This Act was enacted to help in solving problems relating to air pollution, and also suggests ways with which air pollution can be reduced. This act has set up ambient air quality standards.

The Water (Prevention and Control of Pollution) Act, 1974

Similar to the air act, the Water (Prevention and Control of Pollution) Act seeks to reduce water pollution and lays down penalties for polluting different water bodies.

Laws relating to wildlife and forests

The Forest Conservation Act 1980

This Act helps to keep a check on deforestation, and also promotes social forestry.

The Wildlife Protection Act 1972

This Act aims at protecting various types of flora and fauna available in the country and suggests ways in which management of the wildlife can be improved.

Why festivals in India justify the phrase unity in diversity

Festivals in India are like one big religion in itself. It is a symbol of unity and togetherness when the whole of India celebrates unitedly. I say the whole of India because, when it is Eid or Christmas, the whole of India has a holiday and there’s a festive atmosphere even though one is not a Muslim or a Christian. Similar is the case during Diwali or Ganesh Chaturthi when everyone irrespective of their religion, does the Laxmi Puja or welcomes Lord Ganesh with equal love and affection.

All Indian festivals are celebrated in a unique way. From flying differently colored kites during Makar Sankranti to wearing 9 different colors during nine days of Navratri, Indian festivals have come a long way. Further, these festivals generate loads of income and help in employment because of the gifts and sweets that are distributed in huge numbers. Lastly, there is a sense of togetherness among all Indians. Families meet and spend quality time together, all the stress and other workload is largely narrowed down due to there being a holiday on almost every festival, and people celebrate each festival by respecting other ethnicities.

Impact of festivals on the environment

The end of the monsoon season calls for the arrival of different festivals in India. However, we people get so engrossed in the celebrations that we forget the harmful effect it might be having on other living beings.

Noise pollution

Noise pollution caused during festivals is by far the worst effect that festivals have on the environment. In almost every festival, there are huge loudspeakers and bursting of firecrackers which has a deadly effect on plants and animals. A survey conducted by the World Health Organization, states that noise pollution has a harmful effect on the environment and also human beings. High-decibel sounds affect toddlers, small children, and can cause health problems like sleep disorders and hearing loss.

Water pollution

The colors used in Holi season, idol immersion in water bodies done during Ganesh Chaturthi, chemicals used in making the idols get released into the water add up to the already existing water pollution.

Air pollution

The bursting of firecrackers during the festival of Diwali leads to the release of toxic gases into the air. This further leads to a rise in the respirable suspended particulate material in the air. In a survey conducted in 2014 by the World Health Organization, Delhi had the worst atmosphere in the world.

Dry waste

The bursting of firecrackers, unused Holi color packages littered around, all the material for the pooja which is unused being wasted, generates a lot of dry waste. Local government bodies do their bit in reducing these things, however, it is up to us human beings to spread awareness of civic sense amongst the people and be a little responsible.

As it is said that there are two sides of a coin, despite these ill-effects festivals in India worship nature. Festivals like Makar Sankranti, Baisakhi, Onam, are all celebrated to mark the beginning of the harvest season. Further, the Van Mahotsava also known as the festival of forests is celebrated to create awareness among the people about tree plantation and maintaining ecological balance. The Chhath Puja festival is celebrated to worship Surya Dev on the river banks. Further, festivals Naga Panchami and Gau Puja are celebrated to worship animals. Hence, there’s no doubt that most festivals in India cause harmful effects to the environment, but at the same time, some festivals make us aware of the importance of our environment.

Legal angle to the relationship between the environment and festivals in India

Article 25 of the Constitution of India, guarantees the freedom to practice religion with reasonable restrictions. However, the term reasonable restrictions doesn’t seem to apply to the manner in which we Indians celebrate festivals. The Covid-19 pandemic was possibly the first instance where there were restrictions on how we people celebrate festivals. No loud processions, no firecrackers, no loud music, and likewise. Article 21 of the Constitution gives us the Right to Life and Liberty, but it also mentions the right to a free environment which while celebrating festivals gets neglected many times.

It’s not like every Indian festival that is celebrated causes nuisance or pollutes the environment, but a few of the major ones do create an imbalance. The Supreme Court in Subhash Kumar v State of Bihar (1991), held that a pollution-free environment is an essential part of Article 21 of the Constitution.

Further, the ‘polluter pays principle’ also known as the 1992 Rio Declaration, is a universally accepted principle that whoever causes pollution, must pay for it to protect human health and the environment. However, as mentioned above, this seems to get neglected while celebrating certain festivals in India.

Diwali

When talking about festivals and environmental pollution, the Diwali festival seems to be the major talking point. The bursting of firecrackers during Diwali has caused and is causing a lot of pollution and thus harm to the environment. In a recent 2020 report of the IQ Air’s World Air Quality Report, India stands at third position out of all the countries in Central Asia, which is better than 2019 due to the pandemic but is still very alarming.

Judicial stand

The Environmental Protection Act 1986 in its Rule 89, states that the firecrackers generating a noise level above 145 dB(decibels) at 4 meters from the point of bursting shall be prohibited. Further, to identify such firecrackers, The Explosive Rules 2008 Rule 14 mentions that every firecracker shall have its details including the chemical details mentioned on the box in which they are being sold. The Supreme Court in a landmark judgment in the case of Prevention of Environment and Sound Pollution v Union of India (2005), laid down certain guidelines one of which included a complete ban on bursting firecrackers between 10 pm to 6 am.

As of now in 2021, there isn’t a complete ban on bursting firecrackers, however, with the Covid 19 pandemic still lurking around, there are certain strict state-wise guidelines regarding the sale, purchase, and bursting of firecrackers.

Ganesh Chaturthi

Ganesh Chaturthi is another equally important festival wherein, the whole of India welcomes Lord Ganesh with passion, love, and affection. However, the plaster of Paris used in making the idols, and the loud processions and music have caused a lot of harmful effects on the environment.

Judicial stand

The Delhi High Court in its judgment in the case of Free legal Aid cell Shri Sugan Chand Aggarwal v. Gov. of NCT of Delhi (2001), stated that noise can be regarded as a pollutant if it exceeds the reasonable limits mentioned in Article 21 of the Constitution.

Further, in the case of State of Bombay v Narasu Appa Mali (1952), the Bombay High Court ordered the authorities to regulate the use of loudspeakers used during Ganesh Chaturthi festivals and impose the Environmental Acts.

Despite such constant efforts by the courts, there is no legislation on festivals like Ganesh Chaturthi and Durga Puja. However, there have been certain reforms like the use of separate tanks to immerse the idols, eco-friendly Ganpati, green crackers, etc.

Conclusion

Nature is worshipped in India. Festivals are also celebrated in the same way. There is no legislation stopping people from celebrating their beloved festivals, and quite rightfully so, there shouldn’t be. The Constitution itself guarantees the freedom to live and enjoy life openly, however, with certain minor limitations. These minor limitations are laid down with a view to improving the overall well-being of the citizens and also for the development of the country. The same is the case with regards to celebrating festivals. We shouldn’t be so engrossed in the celebrations as to neglect every other living being around us. Nature is family. The governing authorities and the judiciary are doing their best to impose minor reforms by restricting certain firecrackers, keeping a neutral noise level, providing separate tanks for immersing idols, and much more to reduce pollution, waste, and overall harm to the environment. However, it is up to us common citizens to be aware and respect these reforms and celebrate within the limit.

References

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All you need to know about Section 65 of the Indian Evidence Act, 1872

By

Sneha Mahawar

-

April 3, 2022

0

This article is written by Kuberan a student at Dr. Global Ambedkar Law Institute, Tirupati Andhra Pradesh. This article talks about digital evidence, laws related to it and its admissibility in Indian Courts.

This article has been published by Sneha Mahawar.

Table of Contents

Introduction

Evidence plays a major role in deciding every case. There are two kinds of evidence, oral and documentary. Documentary evidence is again divided into two types, primary evidence and secondary evidence. Sections 61 to 90A of the Indian Evidence Act, 1872 deal with documentary evidence. All the documents presented as evidence in both civil and criminal proceedings are admitted as per the procedure mentioned in Sections 61 to 90A of the Indian Evidence Act. This particular Chapter of the Indian Evidence Act, 1872 along with the art of cross-examination and argument decides the case.

What is Section 65 of the Indian Evidence Act, 1872

Section 65 provides for the circumstances in which secondary evidence may be given without filing primary evidence. However, the party cannot seek Court’s permission for admitting the secondary evidence without exhausting Section 65. In other words, the party should show the bonafide cause for filing the secondary evidence and it is the discretion of the Court to admit the same. Those circumstances are as follows:

In cases where the original is with the opposite party or with a person who is out of reach or with a person who refused to give the original document after notice.
In cases where the content of the original document has been admitted by the opposite party subsequently through another document.
In cases where the original is lost or is a public document or the original cannot be moved easily. If a public document or any other document of which a certified copy can be obtained under law, then, that certified copy can be admitted as secondary evidence.
When the original document consists of numerous accounts and high volume, then the portion of the document examined by a skilled person can be admitted as secondary evidence.

Difference between primary and secondary evidence

Primary evidence is the original document itself, whereas secondary evidence is the copy made from the primary evidence.

Original document

When a document is executed in several parts, each of the parts is considered as primary evidence. For example in a loan agreement, if the borrower has signed in all the pages, then each page is considered as primary evidence.
If a document is executed in duplicate, then each of the copies is considered as primary evidence. For example, if a contract is made between two or more parties, then each of the contract agreements is considered as primary evidence.
If several documents are prepared by the same mechanical process, then one document of that mechanical process is considered as primary evidence of other documents prepared under the same mechanical process.
Copies made from the above original shall be considered secondary evidence.

Section 65A of Indian Evidence Act, 1872

Section 65A and Section 65B of the Indian Evidence Act, 1872 were inserted through the Indian Evidence (Amendment) Act, 2000. the Main objective of Sections 65A and 65B is to clarify the admissibility of the electronic record as evidence. According to Section 65A, the content of electronic records can be proved by the procedure given under Section 65B.

Section 65B of Indian Evidence Act, 1872

Section 65B talks about the electronic device and the circumstances under which the evidence is recorded. It also talks about the conditions of electronic devices during the recording of evidence. Sub-Section 1 of Section 65B defines the computer output. While reading this Section with Section 2 of Information technology Act, 2000, it can be presumed that any electronic device such as a computer, mobile phone, tape recorder, or video recorder, which has the capacity to store, process and send information can be considered an electronic device. These devices are commonly called “computer output”.

Conditions for the admissibility of electronic evidence under Section 65B

If any information contained in an electronic record that is printed in paper, stored, recorded, or copied in optical or magnetic media, produced by a computer, shall be deemed as a document.

Such documents shall be admissible as evidence without further proof or production of the original if the owner or person responsible for the computer, who recorded the evidence gives a certificate under Section 65B(4) of Indian Evidence Act, 1872 stating

The working condition of the computer during the recording of evidence.
It’s lawful use by the owner or operator.
A description of the regular use of computers.
If the information is fed into another computer in the ordinary course of activity, a description about it.
A description of the working condition of the computer during the entire period in which information is processed or created or transferred.
If a group of computers is used to create or process the information, then a description about all the computers and further, all the computers can be construed as a single computer.

How to obtain a certificate under Section 65B of the Indian Evidence Act, 1872

The owner of the computer or the person operating the computer while the information is being created should certify the same about,

stating the circumstances in which it was produced.
the device involved in the production of the electronic record and details about ownership.
the legality of the production of the record.
other matter is given in Sub-Section 2 of Section 65B of the Indian Evidence Act,1872.

It is to be noted that the information created should be general and should not infringe the privacy of others. For example, if a husband records the call of his wife without her permission, then the record cannot be taken as evidence as it was taken without the permission of the wife.

What comes under the ambit of electronic evidence as per Section 65 of the Indian Evidence Act, 1872

Any information that is produced, recorded, and transferred from an electronic device, which can create, store and transfer such information or electronic record is admissible as evidence.
The information that has been recorded in electronic form is considered a document. Few examples of electronic records and documents are cell phone, computer, ATM receipt email, SMS, IP address, internet browsing history, a file saved from computer programs, e-forms, gazette notification, debit cards, and credit cards transAction, CCTV footage, etc., comes under the ambit of electronic evidence.

How is Section 65 of the Indian Evidence Act, 1872 linked with the Information Technology Act, 2000

Due to rise of the digital transactions through schemes like Jan Dhan Yojana, Digital India mission, direct benefit transfer, mobile banking, various e-services by the government, and the accuracy of an electronic record, it is considered important to formulate laws related to electronic signature and other electronic records to regulate and stop the fraudulent usage of such electronic record.
While enacting the Information technology Act, 2000, Sections 65A and 65B were inserted in the Indian Evidence Act 1872, regarding the admissibility of electronic evidence.
Definition of terms such as electronic record, computer and computer network can be taken from Section 2 of information technology Act, 2000.
Information technology Act, 2000, defines a computer system as a device or collection of devices, including input (keyboard, mouse), output (monitor, printer), and support devices and capable of being used in conjunction with the external files( format such as MP3, MP4, word, pdf ) which contain computer programs, electronic instructions, input data, and output data.
Any device that performs logic, arithmetic, data storage and retrieval, communication control, and other functions also comes under the definition of a computer. Sections 65A and 65B can be well interpreted with the help of the IT Act.

Evolution of admissibility of electronic records as evidence in India

During the 1950s, the electronic record was confined only to tape recording and videography. Electronic records had been admitted as evidence in 1960 in the State of Maharashtra v. Prakash Vishnurao Mane (1979). The Supreme Court laid rules regarding the admissibility of electronic records in this case. The rules include playing the record in the Courtroom, analyzing the voice with expert opinion, and crossing the person who recorded the incident and the person whose voice has been recorded.

Before 2000, the Courts did not accept the electronic record as evidence to a greater extent. However, after 2000, the Court admitted electronic evidence as per procedure mentioned in Section 65 of the Indian Evidence Act and made a certificate under Sub-section 4 of Section 65B of Indian Evidence Act, 1872 as optional (Archana Rastogi v. Vivek Rastogi (2007)).

Now, almost all types of electronic records are being admitted as electronic evidence such as CCTV footage, ATM receipt, bank statement, e-forms, Government orders, digital signatures, etc.

What was the position before the year 2000

Before 2000, electronic evidence was admitted either as primary evidence or secondary evidence by applying Sections 61 to 65 of the Indian Evidence Act, 1872. If the original document itself was produced, then it was taken as primary evidence. In other cases, the procedure under Section 65 has to be followed to adduce the electronic evidence.

What was the position after the year 2000

After 2000, electronic evidence was admitted under Sections 65A and 65B of the Indian Evidence Act, 1872. However, conflicts regarding the production of certificates while adducing electronic evidence prevailed. In https://indiankanoon.org › doc

State (N.C.T. Of Delhi) vs Navjot Sandhu@ Afsan Guru 2005 the Supreme Court held that a certificate under Section 65B(4) is not necessary and electronic evidence can be adduced through Sections 63 and 65 of the Indian Evidence Act, 1872.

This view was overruled in Anvar P.V vs P.K.Basheer & Ors, (2014). where the Supreme Court held that Section 65A and 65B are code in itself and the procedure of those Sections should be followed to adduce the electronic evidence. Again, this view was overruled by the Supreme Court in Shafhi Mohammad vs The State Of Himachal Pradesh, (2018)., where it was held that the procedure under Sections 65A and 65B is only procedural and hence, it need not be followed in all the circumstances.

Finally, this confusion has been settled by a larger bench of the Supreme Court in Arjun Panditrao Khotkar vs Kailash Kushanrao Gorantyal,(2020). where it was held that the procedure under Sections 65A and 65B is a code in itself and overrules the general provisions regarding admissibility of electronic evidence. Therefore, provisions of 65A and 65B should be followed to adduce the electronic evidence.

Conclusion

To sum up, while presenting electronic evidence, the procedure under Sections 65A and 65B of the Indian Evidence Act, 1872 should be followed. A certificate by the owner of the device or the lawful operator of the device is essential for the admissibility of the electronic evidence. Also, to file secondary evidence, the party should have the bonafide cause and try to produce primary evidence before filing the secondary evidence. Moreover, the party should mention the reason for filing the secondary evidence after exhausting the options given in Section 65 of the Indian Evidence Act. It is the discretion of the Court to admit the same as secondary evidence.

References

Bare Act of the Indian Evidence Act 1872.
Law of evidence by Ratanlal & Dhirajlal

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:

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Legal drinking age in India

By

Sneha Mahawar

-

April 3, 2022

0

This article is written by Sarthak Kulshrestha, a BA.LLB. student at Jagran Lakecity University, Bhopal. In this article, the author has discussed the laws relating to alcohol that are in force in India, along with the laws which apply to different states.

This article has been published by Sneha Mahawar.

Introduction

Alcohol is a largely consumed intoxicating substance in our country. There are various types of drinks like beer, vodka, port wine, whiskey, and many more that have a considerable percentage of alcoholic content making these drinks an intoxicating substance. In our country specifically, the sales of liquor do not fall but keep on rising with time. One of the major reasons for the liberal attitude of governments regarding the sale of alcohol is the additional tax imposed on liquor. It contributes majorly to the economy of our country. For this very reason, the liquor shops were among the first businesses to be opened after the imposition of lockdown in 2020. When alcohol shops were opened after a long time following the lockdown, people gathered in huge numbers to buy drinks.

Owing to the intoxication and cultural reasons, there exist some alcohol laws in order to regulate the distribution and consumption of alcohol in India. The laws relating to alcohol vary from state to state and accordingly, the variation in the legal drinking age is observed across different parts of India. This article discusses those laws and the legal drinking age across different parts of our country.

Alcohol laws in India

The laws with respect to alcohol are not uniform in India because this subject is governed independently by the states. The Con stitution of India consists of 12 Schedules out of which Schedule VII deals with the division of various subjects into three lists viz the Union list, State list, and Concurrent list. The State list contains those subjects on which the State legislatures are responsible to make laws. Item number 51 in the State list deals with ‘alcohol for human consumption’, and it empowers the state legislature to draft rules governing the business of alcoholic drinks in the state.

Therefore, laws on alcohol vary from state to state depending upon the rules framed by a particular state legislature and thereby the legal age of drinking also differs from one state to another.

In the context of the liquor business, the state laws governing the trade of alcohol in respective states differ in several aspects. For example, in any two states the legal age of consuming alcohol might be the same but the criteria of sale might be different. In some states, only the vendors are required to have a license to sell alcohol in their stored outlets without which it would be illegal to carry out its trade. And in some particular states, not only the vendors but the consumers are also needed to have a license to consume alcohol. The state-made laws also regulate the places where the business of liquor can be carried out. Along with the legal drinking age, the laws also list down the places where alcohol can be sold and this varies from state to state. For example, liquor is generally sold in bars, restaurants, liquor stores, etc. and in some states, liquor may be sold at groceries, departmental stores, banquet halls and/or farm houses. Some tourist areas have special laws allowing the sale of alcohol on beaches and houseboats.

The legal drinking age in all states

The state governments have fixed a certain minimum age to consume alcohol for a very obvious reason of upholding morality and keeping the youth away from intoxicating substances. This regulation is necessary to ensure the focused mentality of the young generation serving the future of the nation.

Every state legislature has introduced its excise statute under which the trade of alcohol has been regulated and fixed a particular age number at which a person is eligible to drink alcohol. However, it is not as simple and straight as it sounds because in a few states, the age criteria differ for both purchase and consumption of alcohol. This means that in a single state there is a considerable gap in both purchasing and consumption age. For example, in Maharashtra, the government has fixed the purchasing age of alcohol at 18 or above but the consumption age is fixed at 25. Therefore, a lot of times it creates a loophole in ensuring that a person aged 18 years who buys a drink will not consume it because according to the state alcohol law, he can consume it only when he reaches the age of 25 years.

Let us now see the classification of states on the basis of the legal drinking or consuming age according to the respective alcohol laws of each state.

The states where legal drinking age is 18

Andaman and Nicobar Islands

The excise administration in the Union Territory of Andaman and Nicobar Islands is regulated under the Andaman and Nicobar Islands Excise Regulation, 2012. The law provides for the administration of excise on the issue of a license or permit by the administrator under any government agency or an autonomous body owned by the government for the purpose of carrying out the business of alcohol. Section 24 of the above-mentioned Act talks about the legal age in this respect and states that no person or licensed vendor or agent shall sell or deliver any liquor to any person under the age of eighteen years whether for consumption by self or of sale to others.

Himachal Pradesh

In the state of Himachal Pradesh, the excise rules are exhaustively dealt with under the Himachal Pradesh Liquor License Rules, 1986. The legal consumption age of liquor is fixed at eighteen years under this legislation in the state of Himachal Pradesh.

Mizoram

Mizoram is one of the states where liquor consumption is legal at the age of 18 years. There is a penalty provision for certain unlawful acts in the Mizoram Liquor (Prohibition and Control) Bill 2014, under which Section 58(1)(b) prohibits any licensed vendor to sell or deliver liquor to any person under the age of eighteen years, whether for consumption by such person or by any some other person.

Pondicherry

Any person possessing the license to sell alcohol in the Union Territory is subject to the penalty for misconduct under the Pondicherry Excise Act, 1970. One of the penal liabilities of the license holder is to sell liquor to any person who has not attained the competent age to consume alcohol. Section 35(1)(g) of the Act prohibits the licensed vendor from selling any intoxicant to a person under the age of eighteen years. Further, it explicitly prohibits any license holder to permit or let a child below the age of eighteen years of age remain on the premises where the excisable goods are sold.

Rajasthan

The Rajasthan Excise Act, 1950 has set the lower age limit to purchase and consume alcohol at eighteen years. According to Section 22 of the Act, no person below the age of 18 years shall be given or delivered liquor or an intoxicating drug by any licensed vendor in the state. This provision applies in every circumstance whether the person is given liquor for his own consumption or for the same by any other person.

Sikkim

Sikkim is one of the few states where the legal drinking age is fixed at 18 years and any licensed vendor or his servant is not authorized to sell or deliver liquor or any drug to a person who has not attained the age of eighteen years.

The states where legal drinking age is 21

Andhra Pradesh

Most of the Indian states have fixed the legal drinking age at twenty-one years. Andhra Pradesh is one of those states and any person above twenty-one years of age may purchase and consume liquor legally as per the Andhra Pradesh (Regulation of Wholesale Trade and Distribution and Retail Trade in Indian Liquor, Foreign Liquor, Wine and Beer) Act, 1993.

Arunachal Pradesh

The licensed vendors or any person working on the behalf of them in the liquor stores are subject to the penalty under Section 42(1)(a) of the Arunachal Pradesh Excise Act, 1993, if they sell liquor for consumption to any person below the age of twenty-one years.

Assam

There is a provision in the Assam Excise Rules, 1945 with respect to the prohibition of sale or delivery of any intoxicating material to a person belonging to a certain category. Section 241 of the Act talks about such prohibition and clause 5 of this provision strictly restricts any licensed vendor to sell or deliver alcohol or an intoxicating drug to a person below the age of twenty-one years.

Dadra and Nagar Haveli and Daman and Diu

Recently, the Union Territories of Dadra and Nagar Haveli and Daman and Diu were merged with each other under Dadra and Nagar Haveli and Daman and Diu (Merger of Union territories) Act, 2019. The excise laws of both the erstwhile Union Territories have been extended to be in force in those areas in respect of which they were in force immediately before the merger had taken place. The trade of excisable articles in the Union Territory of Dadra and Nagar Haveli is regulated by the Dadra And Nagar Haveli Excise Regulation, 2012. According to Section 24 of the Act, liquor shall not be sold to any person below the age of twenty-one years.

Before both the Union Territories were merged, the legal age of drinking that was fixed by the excise laws of both of them was the same. Thus, the Goa, Daman and Diu Excise Duty Act and Rules 1964, under Section 19, has fixed the legal drinking age at twenty-one years, the same as Dadra and Nagar Haveli.

Goa

The law governing the excise regulation in Daman and Diu is the same for Goa as well. Section 19 of the Goa Excise Duty Act and Rules, 1964 has set the legal drinking age in Goa at twenty-one years.

Jammu and Kashmir and Ladakh

According to Section 50B of the Jammu and Kashmir Excise Act, 1958, any licensed vendor or any servant in his employ is liable for a penalty if he gives or sells liquor or any intoxicating drug to a person who is below twenty-one years of age. Following the Jammu and Kashmir Reorganization Act, 2019, the state of Jammu and Kashmir was made a Union Territory and a new Union Territory of Ladakh was also made. Thus, the Jammu and Kashmir Excise Act, 1958 applies to both the UTs, thus the legal drinking age in Ladakh is also fixed at twenty-one years.

Jharkhand

The Bihar Excise Act, 1915 regulates the excise trade in the whole of the state of Jharkhand as it is an Act to amend the Jharkhand Excise Act, 1915. Section 54 of the Act penalizes any licensed vendor or any servant working on his behalf on selling or delivering the intoxicating drink to a person below the age of twenty-one years.

Karnataka

The legal drinking age in the state of Karnataka is fixed at twenty-one years. The Karnataka Excise Department, 1967 has prescribed this age number for the consumption of both liquor and any intoxicating drug. It is not legal for any licensed vendor to sell or give the intoxicating substance to any person below the age of twenty-one years.

Madhya Pradesh and Chhattisgarh

The states of Madhya Pradesh and Chhattisgarh were bifurcated into two separate states in November 2000. The excise regulation of both the states even till now is controlled under the Madhya Pradesh Excise Act, 1915. As specified by Section 23 of this Act, the legal purchasing and consumption age of liquor or any other intoxicating drug is fixed at twenty-one in both Madhya Pradesh and Chhattisgarh.

Odisha

The legal drinking age in Odisha was earlier fixed at twenty-five years of age. But, through an amendment, the age limit was reduced in the state. As of now, according to Section 61(1) of the Odisha Excise Act, 2005, the legal age of purchasing and consuming alcohol in all parts of the state is fixed at twenty-one years.

Tamil Nadu

The legal drinking age in the state of Tamil Nadu is fixed at twenty-one years. The Tamil Nadu Prohibition Act, 1937 has prescribed this age number for the consumption of both liquor and any intoxicating drug. It is not legal for any licensed vendor to sell or give the intoxicating substance to any person below the age of twenty-one years.

Telangana

The alcohol laws and excise regulation in Telangana are governed under the Andhra Pradesh Excise Act 1968. According to Section 36 of this Act, no license-holder under or an employee of such holder acting on his behalf shall sell or give any intoxicant to any person apparently under the age of twenty-one or permit or suffer such person to remain in the premises where any excisable article is sold or manufactured.

Tripura

The legal drinking age in the state of Tripura is fixed at twenty-one years of age according to the Tripura Excise Tax Rules, 1990. The licensed vendors are bound to give or sell liquor only to a person who has attained the age of twenty-one years, as specified under the said statute.

Uttar Pradesh

Under the United Provinces Excise Act, 1910, Section 22 exclusively deals with the legal age question in this regard and it explicitly clarifies the legal age to purchase and consume alcohol or an intoxicating drug. According to the said provision, any licensed vendor or a servant working on his behalf shall not sell liquor or any other intoxicating substance to a person below twenty-one years of age.

Uttarakhand

The United Provinces Excise Act, 1910 governs the excise regulation in Uttarakhand. However, the state has the Uttarakhand (the United Provinces Excise Act, 1910) (Adaptation and Modification Order, 2002) (Amendment) Act, 2018 under which there have been a few amendments to certain sections of the former Act in the context of Uttrakhand. As far as the question of the legal drinking age is concerned in Uttarakhand, it has similar status to that of Uttar Pradesh, i.e. it is fixed at twenty-one years of age under Section 22 of the United Provinces Excise Act, 1910.

West Bengal

The regulation of the trade of excisable products in West Bengal is governed under Bengal Excise Act, 1909. As per Section 51 of this Act, if any licensed vendor or anyone in his employ acts on his behalf and sells or gives liquor or any intoxicating drug to a person who has not attained the age of twenty-one years, will be punished under the above-mentioned statute.

The states where legal drinking age is 25

Punjab, Chandigarh and Haryana

In the Union Territory of Chandigarh, Punjab Excise Act, 1915 regulates the activities of import, export, transport, manufacture, sale and possession of intoxicating liquor and of intoxicating drugs. Section 2 of the Act extends the applicability of the provisions of this law to the whole of the states of Punjab and Haryana. According to Section 29, no licensed vendor and any of his servants on his behalf shall sell or deliver the alcoholic drink or intoxicating drug to any person under the age of twenty-five years, whether for consumption by such person or by another person and whether for consumption on or off the premises of the vendor.

Meghalaya

The Eastern Bengal And Assam Act, 1910 has the provisions specified relating to the business of liquor within the state of Meghalaya. The licensed vendors in Meghalaya are prohibited to sell or give liquor to any person below the age of twenty-five years.

Maharashtra

In the state of Maharashtra, the Bombay Prohibition Act,1949 regulates the excise management of the state. According to Section 18 of the Act, no licensed vendor shall sell or deliver liquor to any person who is a minor. The Act interprets the term ‘minor’ as to a person aged 21 years. However, this age limit is applicable only to beer and not every alcoholic drink. The age number that has been fixed for purchasing and consuming alcohol is twenty-five years at which it would be legal for a licensed vendor to sell or give liquor or any intoxicating drug to a suitable person.

The dry states

There are a few state governments that have banned the business of liquor and any trade practice related to any intoxicating drink is illegal in those states. Such states are known as dry states. Chapter IV of the Constitution deals with the DPSP (Directive Principles of State Policy) under which Article 47 prescribes the duty of the State to raise the level of nutrition, the standard of living and public health. It mentions the prohibition of alcoholic drinks and intoxicating drugs which are injurious to health.

Mahatma Gandhi, also, advocated the national ban on these intoxicating drinks and drugs. Hence, in order to comply with the duty prescribed under the DPSP of the Constitution, some state governments have imposed a complete prohibition on liquor in their states. They advocate this legislative action by stating the curb on menace caused by drunk people to destroy public peace and mitigate the instances of domestic violence to some extent.

However, such a complete ban has been opposed numerous times. For example, the Patna High Court, in 2016, said that the state-wide prohibition on the business of liquor is illegal and impractical. Similarly, a lot many other times as well, it has been alleged by different sections of society to remove the total ban on liquor in states in which it is in force. The dry states argue that this is a positive step to bring social change in the state and it will help to uphold the principle of morality. The five dry states in India have been discussed hereunder as:

Bihar

Bihar is one of the states in which the government had taken into account the menace caused by increasing alcoholism throughout the state. Therefore, a few years ago, the state government came up with an amendment to the Bihar Excise Act, 1915 and the Bihar Excise (Amendment) Act, 2016 was promulgated. The Act was notified on 2nd October 2016 and its preamble provides for the enforcement, implementation, and promotion of complete prohibition of liquor and intoxicants across the entire state.

Gujarat

The prohibition of liquor in the state of Gujarat is said to be in existence since 1960 when the state of Maharashtra and Gujarat were bifurcated. The Bombay Prohibition Act,1949 is still in force in Gujarat but according to a sumptuary law in Gujarat, there is a complete ban imposed on the sale and consumption of liquor. Additionally, the Bombay Prohibition (Gujarat Amendment) Act, 2009 is in force in Gujarat for the penalty in case of the manufacture and sale of homemade liquor that results in fatalities.

Lakshadweep

The island of Lakshadweep is one of the Union Territories of India situated in the Arabian sea. In the Union Territory of Lakshadweep, alcohol consumption is totally illegal except on the resort island of Bangaram.

Manipur

The preamble of Manipur Liquor Prohibition Act of 1991 provides for the strict prohibition of liquor or any intoxicating drug to any class of persons except for the medicinal, scientific, industrial purposes of production, manufacture, import, export, purchase, transport throughout the state.

Nagaland

The preamble of the Nagaland Liquor Total Prohibition Act, 1989 explicitly lays down the objective of the Act to expeditiously prohibit the possession, sale, consumption and manufacture, import and export of liquor in the state of Nagaland in its entirety.

The legal drinking age in Kerala

The Abkari Act, (1 OF 1077) is the law relating to the import, export, transport, manufacture, sale and possession of alcohol and intoxicating drugs in the State of Kerala. Section 15A of this Act states that the consumption of liquor by a person below the age of 23 years is prohibited and Section 15B puts an obligation on the licensed seller not to sell or deliver any alcoholic drink to any person below twenty-three years of age.

Recent development in New Delhi

Delhi is the only metropolitan city in India where the legal drinking age is set high at 25. In 2021, the Deputy Chief Minister of Delhi Manish Sisodiya announced that the legal age of consuming alcohol will be reduced from 25 to 21. The Delhi government took this step in order to increase the revenue of the state by expanding its market. The government of Delhi has introduced a new excise regime in the state and along with the reduction in the legal drinking age, the government has taken some other steps too to increase the revenue.

This reduction has not been implemented yet and thus, the liquor consuming age remains 25 as of now. In December 2021, the Delhi government clarified that the plan to reduce the drinking age has been approved and in future, if any change is introduced with regard to the age, it will be informed to all concerned.

Conclusion

We have seen that there exist very dynamic and sundry laws with respect to the liquor business in India. The Excise Acts of various states have fixed a certain age number to be the minimum age limit under which it would be punishable to consume alcohol. Taking into consideration the geographic location, demography, and some other factors, the state governments have decided on the age limit to consume alcohol.

Such a dynamic variation in age limit creates a lot of confusion and also lacks efficiency. In my opinion, it is necessary to have uniformity in the age criteria to consume alcohol. If all the states fix the minimum age to both purchase and consume alcohol at 21 years, that would be better because across all the parts of the country, the same age criteria would be followed, free from any kind of confusion and irregularity on the part of the licensed vendors and anyone working on their behalf in the bars or liquor stores.

References

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.

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Primary factors to be considered for M&A transaction

By

Sneha Mahawar

-

April 2, 2022

0

This article is written by Yashwardhan Yadav. This article has been edited by Ruchika Mohapatra (Associate, Lawsikho).

This article has been published by Sneha Mahawar.

Table of Contents

Introduction

Business mergers and acquisitions in a business are crucial to helping a business expand in size or territory and assisting a business in diversifying risk. In an M&A environment, value isn’t defined by the price of a transaction but by what you can unlock through a carefully considered value creation strategy. According to PWC, there is a rapid increase in M&A transactions, as there were only 234 deals worth $500 million to $1 billion until 2020; in 2019, that number increased to 375. The deal value of $1 billion to $5 billion in the year 2020 was 241 and in the year 2019 it was 209, but this gradually increased in the year 2021 when it went to 430 and the deal value over $5 billion went from 59 in 2019 to 54 in 2020 to 99 in 2021. While a major aspect of the acquisition is the manner of funding the acquisition, ensuring the smooth and cost-effective transfer of the transferee company is also important to the purchase of the undertaking.

Pre-transaction

Foran M & A transaction to be successful, there are some points that one should keep in mind before the transaction takes place. This includes the time taken for the entire transaction process. The M&A transaction is a time-consuming process that can last up to six months, depending on the parties and their mutual understandings. Looking out for a potential buyer is a good idea, as for the transaction to go smoothly, one should look for someone with the same motives and intent. A strong and organised team of legal experts and lawyers is needed as they will be the ones laying the stepping stones in the transaction.

Partners’ trust and communication between them

The choice of the right partner for the transaction is essential in an M&A transaction as it can be very easy to achieve common goals with allies having the same potential. Trust between them is of the utmost importance. A faithful and healthy transaction with mutual interests is a good one. The goals and targets of the parties should be the same, as when they go with the same common interests, they are likely to grow more and achieve more.

Due diligence

A quality due diligence report is a must; good observation is the key. An in-depth study of the financial reports of the entity is needed before the transaction takes place. The basic premise can be that the entity should not have acquired any debts in order for goodwill to develop.

A well-thought-out M&A structure

One of the steps in merging or acquiring is the M & A structure. It is important to build a framework for appropriate agreements by taking into account the most important objectives of the parties involved. A proper deal structure will result in a successful merger or acquisition agreement.

While doing a transaction, we can go through any of the following methods

Asset sale

In this method, the buyer can choose between the assets and the liabilities of the entity that he wants to go with. In an asset sale, a firm sells some or all of its actual assets, either tangible or intangible. The seller retains legal ownership of the company that has sold the assets but has no further recourse to the sold assets. The buyer assumes no liabilities in an asset sale.

Slump sale

A slump sale also referred to as a business transfer, is the transfer of a business undertaking as a whole, on a “going concern” basis, wherein the acquirer wants to acquire the whole setup of a business undertaking along with all assets and liabilities of the target company but without acquiring the target company that houses the business.

Stock sale or share sale

In the stock market, the buyer buys a share in the company rather than just the assets. The buyer buys the company, a separate legal entity. In general, the company continues to maintain its assets and liabilities. The transaction is between the company’s shareholders and the buyer of the shares. The acquirer is looking to acquire the whole business without disturbing the house currently running the business by just acquiring more than 50% of the shares in the company.

Amalgamation

When two different companies come together to become one, they usually lose their identity in any form of newly amalgamated company. Shares of both the companies vest together and form a new one. An amalgamation is the combination of two or more companies into a new business. Amalgamations are different from mergers because no affiliated company continues to exist as a legal entity. Instead, a completely new business is created that keeps the combined assets and liabilities of both companies.

Demergers

Usually done through a court-driven process, companies opt for this method to focus on a particular vertical of the entity. A demerger is a type of business restructuring in which the business functions of a business are divided into one or more components. It is a discussion about merging or acquisition. A demerger can be a spin-off by distributing or transferring shares to a subsidiary holding a business to the company’s shareholders who conduct the split. A demerger is also possible by transferring the right business to a new company or business where the shareholders of that company are given shares. Conversely, segregation may also “delay” a merger or acquisition if assets are sold out rather than stored under a renamed business. Demergers can be made for a variety of business and non-commercial reasons, such as government intervention, in the form of fraudulent legislation, or by removing cartelization.

Payment method

Now the basic question that strikes the mind is, “How will the seller get paid or how will the buyer pay?” The payment usually includes cash, company stocks, a payable note, or all of them together. The buyer usually obtains the funding through debts or equity.

Accounting in an M & A transaction

The next thing that will impact the purchase is earnings per share. The assets of the two merged companies will need to be analysed using the merger model. The purpose of this analysis is to determine how the buyer’s earnings per share (EPS) will change as a result of consolidation. An increase in EPS is called “accretion,” and a decrease is called “dilution.”

Then, to determine the goodwill in the M&A transaction, the Purchase Price Allocation (PPA) is prepared, which is calculated as the purchase price minus the net identifiable assets.

Intellectual property

The position of the intellectual property of the seller and how the buyer will receive it is an important point to consider during M&A contracts. Consumer company ratings are affected by intellectual property rights. Intellectual property representation and guarantees ensure that there is no misuse or infringement of the intellectual property rights of the commercial company.

M & A tax

The implications of a merger or acquisition tax should always be a key consideration in negotiating a deal and the purchase price. Tax evasion is the thorough investigation into the various types of taxes that may affect the performance and identification of potential breaches of the agreement. It is very important to identify the current and estimated tax liabilities of the target company and consider how they will be reflected in the agreement. Usually, asset purchases are good for buyers, and share sales minimise the taxes.

Sellers often choose to share sales for tax purposes. The share sale is generally considered to be a long-term financial gain (assuming the trader has been interested in the company for more than one year). Therefore, they are taxed at a higher tax rate of 20%, with an income tax rate of about 3.8% potential investment (NIIT). On the other hand, the sale of goods may produce a combination of normal income (currently a tax with a maximum value of 37%) and higher profits. Exploring alternative planning methods before starting a formal marketing process offers a few benefits.

First, it enables the seller to identify the preferred property and set expectations for potential buyers at the beginning of the process. Second, understanding the implications of tax allows the seller to anticipate how the buyer will view the design of the proposed transaction. Lastly, it allows the seller to assess whether they can negotiate a higher price if they agree to a bargaining agreement in favour of the buyer. Stamp duty and tax implications differ in each of the sale types according to state policies.

Post-transaction

After the transaction, the steps and procedures taken to merge the two companies that have completed the merger or acquisition of funds into one business to operate a new union Reasons given by the union during the courtship process can include: expanding new markets, increasing product portfolio, increasing market share, leveling the economy, technological change, and more.

Plan execution

Naturally, everything starts with a well-organized, detailed program: the organisation decides how the goal will be achieved, and this should be done in a comprehensive plan based on common sense. The most important factor in the post-work phase is the “high-quality implementation policy implementation.” Once an agreement has been reached with the right strategy, the practice must reflect the plan as closely as possible. Poor communication creates confusion among the executives. Changing management and a reasonable cost estimate during the process make the changes more efficient.

Cultural impacts

Additionally, you should consider how the target strategy aligns with that of the initiator: If the target has assets and related strategies, only a few adjustments are required, but if not, an integrated company needs to change to ensure strategic alignment. Organizational equity is achieved by ensuring that the parallel structures in the two organisations are successfully united. Since two companies are operating in the same industry, this is likely to improve much more easily than when different sectors are involved. However, in this case, it is often possible to combine departments such as human resource management and marketing. Cultural equality does not always manifest itself. Studies show that the location of groups has a very small impact, which benefits international integration or acquisition. But combining different world cultures or, to a lesser extent, corporate cultures, can lead to more miscommunication. Here, in particular, thoughtful management is needed.

Conclusion

Mergers and acquisition activities are identified as key areas of organisational growth. The advantages of M & A are evolving and aid in the long-term development strategy. Perhaps the effectiveness of M&A depends on the board’s strategy, the flexibility of the length of the negotiations, and the enthusiasm of the parties. Yet they can achieve their objectives if they are well-planned and aimed at combining ethics and effective acquisition. Achieving corporate dreams and ambitions may involve the external acquisition of goods and services needed for expansion, a step that may be greener than inward growth. If the buyer accurately pays the value of the trading business on an independent basis, then any profit earned on intentional adjustment, i.e., synergy is a benefit to the seller. Conversely, if the buyer does not contribute to the seller’s performance, then paying the actual amount no longer gives the client a certain advantage and disadvantage. As a result, we must exercise caution before engaging in M&A to avoid the unintended consequences of money and time. Each feature board should use law firm consulting services or the provision of financial consulting services to improve the quality of preparation and negotiation times. Finally, I want to emphasise the importance of M&A in group development. M&A has already been shown to be one of the most effective strategies for overcoming modern problems and improving corporate development. M&A is a major factor in the growth of the global economy as it enables disadvantaged companies to keep and increase their capital and human assets. Therefore, corporate competitive advantages lead them to success and prosperity.

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:

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How to hire the best litigation lawyer

By

Sneha Mahawar

-

April 2, 2022

0

This article has been published by Sneha Mahawar.

Most probably, you’ll require the services of a litigation lawyer at some point in your life. This is a trained professional who can represent you in court when solving disputes with another person.

A litigation lawyer will work for you whether you’re a plaintiff or defendant. When that time comes, make sure you choose the best attorney. This is important because the success of your case will majorly depend on the lawyer you’re working with.

Table of Contents

How to find and hire the best litigation lawyer

Consider the area of specialization

Area of specialization is one of the essential things to put at the back of your mind when hiring a litigation lawyer. Different attorneys work in different fields or sections of the law. Make sure you select a partner specializing in a specific field you’re interested in.

For instance, if your case is about car accidents, you can select a personal injury lawyer. And, if the case involves patents, copyrights, and trademarks, consider getting an intellectual property lawyer.

If you can’t find a litigation lawyer who specializes in the area of your interest, you can hire a general practice litigation solicitor. You can visit GLG LLP or any other similar site for more information.

Ask for qualifications and license

After finding a lawyer who specializes in the area of your interest, confirm to determine whether they’re qualified and licensed.

The best lawyer must possess an undergraduate degree in a specific field. Apart from that, they must have gone to a law school for a specified period, usually between one and three years. No lawyer will get a working license without such qualifications.

It’d also be a good idea to work with a litigation lawyer who belongs to a legal professional association. Such an attorney is likely to represent you in the courtroom adequately.

Find a lawyer with experience

You can get a lot of qualified and licensed lawyers in your region. However, they’ll be of no value if not experienced. For that reason, be sure to connect with an experienced partner.

The best way to determine the experience of a service provider is to find out how long they’ve provided services to clients. A lawyer who’s served for many years in the industry may have sufficient experience to handle your case. Hire a litigation attorney who’s provided legal services for a reasonable duration.

Take pricing into account

Different litigation lawyers may provide similar services. However, their prices may differ significantly. Some lawyers charge high prices, while others charge low fees. That’s why you need to consider prices for different attorneys before hiring one.

If you’re on a tight budget, hire a litigation lawyer who charges low fees for their services. However, you shouldn’t accept low-quality services. Make sure you receive good services for a reasonable price.

Ensure they can communicate effectively

Sometimes, you may decide to wholly entrust your case to a lawyer. This means that it’ll be the lawyer’s responsibility to represent you in the courtroom. You don’t necessarily need to appear before judges. Hire a partner who can update you about the case on time. That’s where effective communication comes in.

The best way to determine the effectiveness of your lawyer’s communication is to find out what tools they use to pass information. They should be using live chat software, like chatbots, social media channels, etc. Such tools enable the lawyer to communicate with you in real-time.

Select a lawyer near you

Location is essential when choosing a litigation lawyer. When you work with a partner from another region, you might experience several challenges, like commuting hassles. For that reason, you may consider hiring an attorney near you.

Selecting a lawyer within your locality is a good idea because they’ll be easily accessible to you. You can hold meetings and discuss your case at any time.

Apart from that, a lawyer near you is likely to understand all the rules and regulations surrounding litigation cases in your area. Therefore, they can ensure you’re operating within the law. Note that laws vary from one region to the other.

Takeaway

Filing or defending a litigation case isn’t always a walk in the park. It involves complex procedures or steps. And, if you fail to adhere to the laid down guidelines, you may lose the case. But, the good news is that you can hire a lawyer and simplify the whole process. They’ll interpret the law for you and represent you in the courtroom. Implement the tips in this article to find the best litigation lawyer for your case.

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:

https://t.me/lawyerscommunity

Follow us on Instagram and subscribe to our YouTube channel for more amazing legal content.