Section – 143 & 148 – Interim Relief for the Complainant in the Cheque Bouncing Case.

Aim of this amendment is to curb out the unnecessary burden of the cases filed where there are chances people will  try to resolve among themselves by way of settlement or mediation.

Synopsis: –

1. A sum of 20% of the bounced cheque be deposited within 60 days from the date of the order and further extention of 30 days may be granted by the Court if deems fit.

2. Incase, the drawer is acquited, the said sum be complusarily refunded back to the drawer and the said repayment be made within 60 days from the date of the Order.

Reference Guide for opening new Commercial Establishments

 

Introduction to Idea of Shops, Establishments and the Licenses Required

This blog post aims to serve as a one-time reference guide with regard to opening new shops and commercial establishments in India. It deals with various licenses and registrations that one has to compulsorily acquire in order to set up a business. Every state in India has the jurisdiction to enact its own Shops Act to regulate every business that exists within their territories. It is one of the most powerful tools to ensure that all legal businesses are recorded with the respective state governments. Only after successful compliance with the shops registration act, the existence of the business is confirmed.

This blog post deals specifically with the license requirement for opening shops and commercial establishments in Mumbai. There is no specific reason for choosing Mumbai as a model city except that it requires one of the maximum numbers of permits from different departments of the Municipal Corporation. Giving an account of the licenses required in Mumbai would almost definitely cover the licenses required in other states in India.

Depending on the type of business one is in, the licenses vary. For example, someone who wishes to venture into the food industry, by opening a restaurant requires permits from the Food and Drug Inspector, the Fire Department, the Police Commissioner and the local municipal authorities; for a normal grocery shop, one needs approvals from the fire department, municipality and health department. This blog will cover the general requirements for opening a shop or any commercial establishment under the meaning of the Bombay Shops and Establishments Act, 1948.

Application Procedure

Any citizen who wishes to open a shop or a commercial establishment in Maharashtra must be registered under the Bombay Shops and Establishments Act, 1948. For the purposes of registration, every business owner must send the relevant application form along with the fees to the Inspector appointed under Section 48 of the Act. The default authority under the Act is “local authority” that can be the following entities as per Schedule 1A of the Act –

  1. Any corporation under the Bombay Municipal Corporation Act, 1888
  2. A Municipality under the Bombay Municipal Boroughs Act, 1925, Bombay District Municipal Act, 1901, the Central Provinces and Berar Municipalities Act, 1922 or the Hyderabad District Municipalities Act, 1956
  3. A local board constituted under the Local Boards Act, 1923

An application sent to the local authority along with the following mandatory documents and registration fees would complete the registration process.

  1. Address proof of the premises where the shop or commercial establishment shall be set up (electricity bill/sale deed/tax receipt are considered valid for this purpose);
  2. Identity proof of the owner (in case of a firm/trust, then that of the partners/trustees);
  3. Nature of business verification – this can be of the following types:
  1. If Bar and Restaurant, Wine Shop or Beer Shop, then State Excise License has to be attached;
  2. If Medical Stores, then Food and Drug Administration License needs to be attached;
  3. If Cyber Café, then NOC from the Police Department -, Police Commissioner License and Man Power Supplier copy of the Work Order of the Principal Employer has to be attached;
  4. If Entertainment, then copy of the Collector’s permission has to be attached;
  5. If Transportation/Tour and Travel Agency, then RTO Transport Permit needs to be attached;
  6. If Import/Export/Clear Forwarding/Shipping/Cargo Industry, then licenses from the concerned department to be attached;
  7. For a share brokering business, SEBI Enrolment Form to be attached;
  8. For Trading Business, copy of the financial transaction to be attached;
  9. For Fire Works Shops, Municipal Corporation NOC, Fire Brigade NOC, Collector’s NOC and Police Department NOC must be attached.

Once a shop is registered under the Shops and Establishments Act, there are some basic conditions relating to work and employment that the employer has to adhere to. The objective of the Bombay Shops and Establishment Act was to regulate the conditions of work and employment in shops, commercial establishments, hotels, restaurants, eating houses, theatres and other establishments. Opening and closing hours of shops/residential hotels/restaurants/theatres, their daily weekly work hours, interval for rest, holidays. It prohibits the working of children in establishment. General rules regarding leave, paid leaves and other benefits accorded to employees are also laid down. Health Safety and precautions in case of emergency also have to be observed. Penalty for not complying with any of the provisions of the Act attracts a maximum fine of Rs 5000.

These requirements are more on part of the employer to accord certain basic work conditions to his employees. The workers have been left completely out of the purview of this legislation. Rightly so, the author feels, since the requirements of the employee differs from case to case basis, and it is the employer who can best decide the qualification of his employees. It is important to understand the legislative intent behind the enactment of Shops Act; it is not to balance the rights of employers and employees, it is a clear pro-worker legislation aimed at regulating various details about the business like work hours, holiday’s list, overtime rule, joining and termination criteria etc. Therefore, it is a democratic jurisdictional act that is established by every state in India in order to guide their business segments.

License Requirements for opening a Small-Sized Restaurant in Mumbai

Just to give a perspective, it would be interesting to take a look at the licenses/permits/certificates to be obtained by a small-sized restaurant in Mumbai.

There are five major departments that need to be approached – Brihanmumbai Municipal Corporation (BMC), Police Department, State Government, Excise Department and Sales Department. The Central Government also needs to be approached for Food Safety and Standards Authority of India license and recorded musical performance licenses.

Sr No Department License/NOC
1. BMC Shops and Establishment Certificate
2. BMC Health License (to serve food)
3. BMC Madira License (to serve Liquor)
4. BMC Grading Certificate, Sign Board License under License Department, Medical Certificate of Kitchen Staff, Water Connections, Drainage Inspection Certificate, Neon Sign certificate, Pollution Clearance Certificate, Weights and Measures Certificates etc.
5. BMC Permission to operate more than two gas cylinders at a time (fire department and health department), permission to operate heavy machinery (PWD)
6. State Government Professional Tax Certificate of employees and employers
7. Police Department Police Registration Certificate and under the Bombay Police Act, Noakarnama
8. Sales Tax Department Sales Tax Registration Certificate under Bombay Sales Tax Act
9. Income Tax Department PAN for Restaurant Business
10. Excise Department Dance Permits (if any), Accounts Register, Customer’s Drinking Permit etc.

Critique of the Application Procedure and Suggestions

Shops and Establishments Act has been one of the effective tools to protect the illegitimate and illegal acts in the employment segment of particular state jurisdiction. It is compulsory for all business houses to register under various authorities mentioned under the Act before starting their business. Waiver under the Act is not an option under the Indian Laws.

Most of the other states have their own Shops and Establishments Act that lay down the long list of authorities to be approached for opening a single shop. While each of these licenses are necessary keeping in mind the safety and regulatory aspect, the actual procedure of procuring a license from so many departments is very cumbersome.

India is counted among the fastest growing economies in the world today, and if we are to live up to our name, it is imperative that we incentivise the domestic production, manufacturing and service sectors. Opening a restaurant, or a hair-saloon or a simple grocery store would definitely contribute to the GDP of our country, albeit in a smaller scale. Therefore, the process of acquiring licenses by these small scale enterprises must be made easier and hassle-free. Some of solutions are suggested below.

  • A much needed reform in the system is to create a centralised nodal agency for procuring licenses, where all forms can be submitted together, and the approval would also be given from that nodal centre. This would ensure a one stop solution for the license seekers while at the same time not compromising with any of license requirements.
  • Another solution can be to create different sets of licenses, with each set pertaining to the licenses required by one particular entity, for example, all the licenses required to open a restaurant will be in Set-A, all licenses required to open a medical store in Set-B, for a cyber café Set-C and so on. This would help the license seekers get a clearer and cleaner understanding of all the regulations they are supposed to comply with. This would also aid the concerned government department to regulate the licensees according to their establishment-type.

More than the above mentioned solutions, it is the present system that needs to be strengthened; the extent of red-tapism existing in our bureaucratic framework is staggering. The culture of collecting files needs to be replaced with a positive culture of clearing files. Every department needs to be proficient in its working, so much so that prospective business houses should feel hopeful about their licenses getting approved at the earliest and believe that their government is supportive of their ventures. It is only with a change in attitude can we really expect a change for real.

Photo Courtesy: https://www.google.co.in/search?q=registration+of+a+shop&biw=1366&bih=667&source=lnms&tbm=isch&sa=X&ved=0CAcQ_AUoAmoVChMI_YfY_dzYxwIV1wmOCh0qKQo4#tbm=isch&q=shop+registration&imgrc=9KpB503Eg8V6TM%3A

FAQs: Registration of Property.

 

The registration of property that is land, flat, shop, garage or other things are mandated by the three laws such as Transfer of Property Act 1882; The Indian Contract Act 1872; The Registration Act 1908; Hindu Succession Act 1956; Indian Succession Act 1925 and such other municipal laws, local laws and bye laws.

One should be aware that whenever someone purchases any immovable property[1] (like, land, building etc and not tractor, gold etc) which is valued at or above Rs. 100, he would have to get such a property registered with the local registration office. It is easy to locate the local registration office for this purpose-the municipal corporation within which the buyer resides would be considered as the right place.

The buyer has to appoint an advocate for carrying out the registration of his property[2]. Though a buyer can get the property registered with the local registry office[3] also he can register any property situated in the State of West Bengal at ‘The Registrar of Assurances” situated opposite to the Governor house in Kolkata.

The buying and selling of such immovable property is considered legal when an “agreement of sale[4]” is drawn up. Such deed of sale must contain every minute particulars[5] relating to the property. For instance in case of sale of a flat by a promoter to an individual buyer the deed of sale should lay down specific details like: the material used to do the flooring (Mosaic or marble or tiles) the material used to make the walls, the kind of doors (Iron gates or steel gates) installed; the kind of water facilities installed; the percentage of common area that comprises the stair case, terrace lift, water tank, reservoir.

Note here, that many a times promoters try to get away with delivering less services than what is expected of them. Usually a small clause is put into the agreement which puts the liability of construction of “better reservoir facilities” upon the buyer on the payment of an extra fee. It is better for the buyer to be cautious of such clauses and ensure that every tiny details such as these is notified explicitly in the contract. This would give the buyer the right to sue the promoter for specific performance of the suit if the latter doesn’t keep to his promise.

The deed of sale must also contain the method (cheque, cash, demand draft) and the amount of payment that is to be made by the buyer. A payment schedule contains these details.

The buyer usually pays[6] the per sq. ft. rate based upon the total area (i.e. super built up + carpet area). Now, super built area is calculated upon other amenities provided in the complex in which the building is located. For instance, if the promoter provides common facilities like lift, swimming pool etc then the super built area is calculated as 25%-30% (depends on the construction manifesto) of the Carpet Area. Whereas if these common facilities are non existent then the super built area is calculated at 20% of the Carpet Area. Do check the construction manifesto carefully to know the exact percentage that applies to you.

For eg., If an apartment has a common lift; and the carpet area purchased is 600 sq. ft.—the super built up area would be (25/100*600=150 sq ft). In other words the buyer would have to pay to the seller a total amount on the total area of 750 sq ft (600+150 = 750 sq. ft).

            Steps for registration:

The first thing the buyer must do is engage in the process of searching the property (be it a new property or an old property). Searching has to be done before agreement of sale is drawn up between the parties. This helps in identifying possible sales that a fraudulent promoter could have engaged in. This is a critical step in the process of buying and registering a property, since there are abundant cases pending before the court where the same property has been sold to more than one parties.

The buyer has to pay the stamp duty upon the market value which is obtained from the registration office after submitting the details of the buyer and seller along with the sale agreement. Incase the property is located in one of the places where the land was given as refuge land, then the photocopy of the mother deed of the land would be required. This process is called obtaining the valuation/query[7] of the property. This is primarily a clerical work and the buyer can himself visit the registration office and get it sorted.

The query takes about three working days. After this the same has to be handed over to the advocate for preparation of the draft of the registration/conveyance deed.

 

The query obtained shall contain terms such as, market value, set forth value, stamp duty, registration fees etc. The amount of fees is calculated upon the market value. An additional 1% is charged if the market valuation exceeds 25 (twenty five) lakhs of rupees. Now there are two types of fees:- registration fees and stamp duty which the government receives when a property is sold/brought. The registration fees has to be paid in cash to the office and the stamp duty has to be paid by demand draft by the buyer. The Stamp duty can also be paid through electronic transfer such as NEFT. But if the buyer wishes to make the payment through the NEFT facility he would have to ensure that the payment is made within 30 days from the date on which the query/valuation of the property is procured. Whereas if he chooses to pay by a demand draft he would enjoy an extra buffer period of 14 days (the time period for payment through demand draft is 44 days). The deed of conveyance has to be printed on a stamp paper. Such stamp papers come in various valuations: like Rs. 500, 1000, 5000[8].

The procedures in between the registration date and submission of the documents in the registration office for registering the property involves making what is popularly called “volumes”. In a crude sense, volumes refers to “big green official papers” where every minute details of the property is recorded, including the names of old buyer and new buyer and such other details which the office intends to record. This is not something a buyer should be concerned with. It is primarily the duty of the advocate engaged for this purpose.. For example: If the market value of the property is 45 lakhs, then the fees is calculated @8.2 % of 45lakhs. The amount arrived at would be termed government fees. The buyer other than this has to pay the fees of the advocate which ranges from 0.5 to 1 or up to 2%. The advocate’s fees is steep when he seeks to take up additional tedious responsibilities like sorting of the following things on behalf of the client like— obtaining the query, drafting and typing the deed; paying the volume fees, the clerk fees and such other fees as is required. For more information you can visit: http://www.wbregistration.gov.in/(S(ddoa4qstlcfmlrx0awcygsyk))/Stamp_duty.aspx

The buyer is given the opportunity to propose a desired date for the registration of the property. If the office agrees to that date, the buyer has to be present at the registration office along with the seller, witness, landlord and such other persons as is required by the said office. There are two witnesses (each from the buyer and the seller) required to be present for the process of registration. The new regulation of obtaining[9] the query requires the seller to give the name of a person (known as the ‘identifier’) and his details who has to be present on the day of registration.

For those of you who find the above process (of visiting the registration office) cumbersome, there is another option called “commission[10]”. If you avail of this option, on payment of an extra fee, you could get the registrar and his staffs to come over to your place (the new property) to complete all the formalities of registration.

After the completion of the registry the buyer has to usually wait for one month to receive the original registry deed. This usually depends upon the functioning and efficiency of the registration office. But once the buyer gets the original deed of the property, he can keep it with himself. There is no legal requirement for him to deposit the deed at any government office. The position would however slightly change if the buyer seeks to obtain a loan from a bank against this newly purchase property. He would then have to deposit the original deed with the bank as a security.If the buyer loses the original deed of the property, he could get hold of a duplicate copy of the same after having registered an FIR/GD[11] and paying the required fees. This is possible because the buyers’ lawyers usually makes a photocopy of the original deed and keeps it in the office. Though this is not something that the buyer should be concerned with, it would be good for him to confirm with his lawyer if the same has been done.

 After the completion of the process of registration, the buyer has to initiate the process of mutation[12]. Mutation essentially is the process that allows you to pay property tax to the government. Every year a bill is sent from the municipality/corporation or sometimes one has to go to the municipality himself and pay the tax on a yearly or quarterly basis.

The buyer should ensure before making the final payments for the purchase of the property if the promoter has complied with all the promises he made regarding construction of the apartment. Do note that a part of sum can even be paid later[13] even after the completion of the registration process (this all depends on your negotiating abilities).

Upon taking delivery of the flat the buyer must obtain the NOC[14] and possession letter from the promoter and be verify if there are any pending taxes required[15] to be paid by the promoter. If the buyer does not get this clarified, and if there is tax amount due, upon possession of the apartment, the entire liability of payment of the taxes would shift from the promoter to the buyer.

There is a possibility of the promoter requiring you to engage the services of his designated advocate and telling you how that is a mandatory requirement under law. He could also that that it is important to do so in order to avoid potential legal problems pertaining to the property. Do note that there is no such limiting clause placed upon the buyer by law. The buyer can very well appoint his own personal Advocate for carrying out the work.

Also remember to inform your advocate who handles your income tax returns about the purchase/sale of any immovable property. If you don’t, you could fall on the wrong side of the law. The details of buying/selling of properties in a year has to be informed to ones’ income[16] tax advocate also so that it is recorded in the balance sheet[17]. It is advised that the buyer seeks the assistance of his advocate while choosing the mode of payment for the property (cheque, cash, demand draft etc).

There could be other smaller aspects (not covered in the blog post) involved in the purchase and sale of property. It is best to seek the assistance of a real estate and tax lawyer for the same before venturing out in the buying and selling of immovable property.

There are a couple of other things that you need to be aware of to avoid yourself from landing in any unpleasant situation are as follows.

A.There is a possibility of the promoter requiring you to engage the services of his designated advocate and telling you how that is a mandatory requirement under law. He could also that that it is important to do so in order to avoid potential legal problems pertaining to the property. Do note that there is no such limiting clause placed upon the buyer by law. The buyer can very well appoint his own personal Advocate for carrying out the work.

B.Also remember to inform your advocate who handles your income tax returns about the purchase/sale of any immovable property. If you don’t, you could fall on the wrong side of the law. The details of buying/selling of properties in a year has to be informed to ones’ income[1] tax advocate also so that it is recorded in the balance sheet[2]. It is advised that the buyer seeks the assistance of his advocate while choosing the mode of payment for the property (cheque, cash, demand draft etc).

There could be other smaller aspects (not covered in the blog post) involved in the purchase and sale of property. It is best to seek the assistance of a real estate and tax lawyer for the same before venturing out in the buying and selling of immovable property.

 

Photo Courtesy:
https://www.google.co.in/search?q=registration+of+property&biw=1366&bih=612&source=lnms&tbm=isch&sa=X&ved=0CAgQ_AUoA2oVChMI9Jz857LhxgIVEAeOCh3J6wWR#imgrc=QDllZFitT-0zHM%3A

http://www.covermiles.com/investment/property-registration-points-to-remember/

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[1] Section 139(1) of Income Tax Act.

[2] Section 139(1) of Income Tax Act.

[1] Part III OF REGISTRABLE DOCUMENTS u/s 17: Documents of which registration is compulsory of The Registration Act available at http://dolr.nic.in/acts&rules/registrationact(1908).htm .

[2] Hiring an Advocate is necessary as the ‘deed of conveyance’ (the official sealed and stamped document which you receive from the registration office basically saying you are the new owner of such and such property) has to be prepared based upon the agreement of sale and other documents available with the buyer and such work is entirely based upon the legal frameworks such as the present laws and other norms that have to be compiled with. The advocate also studies the agreement of sale in case of purchase of new flat and in case of resale he checks the present conveyance deed. It is prudent to allow the advocate to oversee all the above issues and avoid the possibility of incorrect statements.

Depositing the fees can also be technically done by the buyer himself but since an advocate is a regular visitor of the court, adept at handling such issues on an everyday, it is advisable that the buyer employs the services of an Advocate to check the veracity of receipts and vouchers involved in the transaction.

[3] Part V and XI of the Registration Act 1908.

[4] – Section 54 of Transfer of Property Act.

[5] Terms of contract which has been agreed between the parties under the Contract Act Indian Contract Act 1872.

[6] Municipal laws Kolkata Municipal Act, West Bengal Land Reforms Act 1955 Laws; West Bengal Premises Tenancy Act, 1997; West Bengal Estate Acquisition Act, 1953.

[7] Mainly known as the e-assessment slip issued by the Directorate of Registration & Stamp Revenue covered under PART XIII: OF THE FEES FOR REGISTRATION, SEARCHES AND COPIES under section 78 of the Registration Act.

[8] Please note that only the first page has to be purchased for such cost which is known as the stamp paper. (the other pages of the deed of conveyance are the regular green legal sheets)

[9] The office of the Registrar of Assurances Kolkata has been computerized, which now mandates supplying every minute details of the property, buyer, seller, identifier along with bank details.

[10] Section 33 and 32 of the Registration Act 1908.

[11]– Depending on the quantum of the property in question the police registers a case of FIR or GD. Both of them are valid under law

[12] Mutation of Names in the R.O.R.s (Record of Rights) under section 50 of WBLR Act, 1955 available at http://banglarbhumi.gov.in/banglarbhumi/(S(mgexizvmyggg0dvngwnh4tji))/ASP%20PAGES/lr_mutation.aspx.

[13] It can be treated as due diligence of the buyer referred under the terms of the contract which has been agreed between the parties in the agreement of sale.

[14] The is the duty of the promoter to handover the NOC and Possession certificate upon completion of payment but the buyer should be aware that he needs to receive the documents before registration is completed.

[15] The buyer before buying any property should ask for the latest tax receipt paid buy the present owner/seller. The same can be verified in the local municipality office.

[16] Section 139(1) of Income Tax Act.

[17] Section 139(1) of Income Tax Act.

Is Companies Act, 2013 actually Changing Fortunes?

Is Companies Act, 2013 actually Changing Fortunes?

The Companies Act, 1956 had been in need of a substantial revamp for quite some time. The 1956 Act was passed in the first decade of free India and the business landscape has changed radically ever since. The opening of the Indian economy in the early 1990s posed newer and greater challenges for the corporate world. The Companies Act, 2013 seems to focus on the factors which have an impact on the governance of the company such as risk management, due diligence, etc. In several other areas also an attempt has been made to harmonise the law with international requirements. The new Act is a modern legislation which would enable growth and greater regulation of the corporate sector in India in a rapidly changing economic, commercial and technological environment, both nationally and globally. The new Act emphasises on two concepts i.e. democracy of shareholders and supremacy of shareholders. The new Act facilitates stricter enforcement of provisions, higher levels of transparency, business friendly corporate regulations, improved corporate governance[1] norms, e-management (electronic management), enhanced accountability on the part of key management and auditors, protection of interest of investors, employee friendliness, whistle blower protection[2], and corporate social responsibility[3].

One of the major objectives behind the new Act is Shareholders democracy. It has been considered as a mode of Corporate Governance which also increases independence of shareholders with a view to make the shareholders more knowledgeable and informed about their rights. As specified in the new Act[4], all major transactions such as inter-corporate investments, guarantees, securities, managerial remuneration, related party transactions etc., need approval from shareholders. The concept of class action suits has also been introduced under Section 245 which provides for shareholder rights or protection because it gives scope to consumer organizations to bring claims on behalf of large groups of consumers.

The concept of e-governance tends to reduce paper work and provide higher level of transparency and disclosure as the important and specified documents such as financial statements have to be available on the company’s website. It also tries to promote user friendly environment by making maintenance and inspection of the documents easier, simpler and faster. The concept of e-voting and video-conferencing in meetings facilitates the participation of the shareholders and directors from around the globe and these have been introduced under Sections 174 and 175 of the Companies Act, 2013 where the quorum for the meetings of board and passing of resolutions can be achieved through audio visual means. The new Act also lays emphasis on higher levels of transparency as well as enhanced accountability on the part of key management by introducing some new regulatory bodies such as National Company Law Tribunal under Section 408, National Financial Reporting Authority under Section 132, and Special Courts for speedy trial under Section 435.

The new Act seems to be employee friendly as it mandates the disclosure of difference of salaries of the Directors and the average employees. It also gives a provision for Auditor rotation after every 5 years which will increase efficiency of the company as it will bring the books of accounts of the company under fresh eyes which may help to point out issues which the previous Auditor may not have been able to identify. Also, the Auditors tend to lose their independence after a certain period of time if they keep working for the same company as they come under the dominance of the key managerial personnel.

Making it mandatory for the audit firms to rotate is one of the measures of improving the independence, objectivity, and professional scepticism of auditors.[5] The rotation of Auditors is now mandatory not just for listed companies but for all companies including private companies covered in class of companies mentioned in Rule 5 of Companies (Audit and Auditors) Rules, 2014.[6]

Every listed or any other company as prescribed under the Act has to mandatorily establish a vigil mechanism for staff and Directors for reporting genuine concerns under Section 177(9). This mechanism needs to be established to provide safeguards against victimization of the whistleblower, who may be an employee, Superior Officer or any Designated Officer.[7] It ensures anonymity of whistle blower. The details of this mechanism have to be disclosed on the company’s website as well as in the Board’s report.

Every company having a net worth of INR500 crores or more or a turnover of INR1000 crores or more or a net profit of INR5 crores or more in any financial year shall constitute a Corporate Social Responsibility (CSR) Committee.[8] This CSR committee will formulate and recommend CSR activities to the Board. The Committee will recommend the amount to be incurred and monitor the CSR activities of the company. The company should comply with the policies of the committee and disclose the policy in the Board Report. In case of any failure, reasons have to be disclosed in the Report. The company should give preference to the local area where it operates, for spending the amount earmarked for CSR activities. This will help in improving the conditions of the weaker sections of society, in return for which the company will gain in terms of goodwill and long- term survival.

The new Act not only brings some new provisions but also strikes off some old provisions which have become obsolete with time. A large number of sections have not been notified yet and the other provisions are largely to be tested. A number of provisions still need some clarifications.

The new Act which has a number of new provisions faces a few challenges as well:

The term ‘shareholders democracy’ which sounds so fascinating is not that easy to attain. The challenge which the new Act faces is whether this objective of shareholders’ democracy is actually attainable? Also, it is not only the shareholders whose interests have to be safeguarded by the company; there are some other people also who are related to it. Any person directly or indirectly related to the company is referred to as ‘stakeholder’. Now the question that arises is will this democracy improve the conditions of non-shareholders i.e., ‘stakeholders’ such as employees, creditors, consumers, etc?

The Companies Act, 2013 has tried to change the rules of the game by providing provisions for mandatory approval from shareholders in certain cases by making them the major players, but these major players i.e., the shareholders are often ill-informed to take important decisions such as intercorporate investments, managerial remuneration, etc.

The new Act creates a doubt as to whether making CSR will actually benefit the society or will it just provide tax benefit to the companies. It can be seen now that these companies are the way for emergence of CSR consultants who help companies to make tax beneficial policies.

The companies Act has tried to change the fortunes of the companies by changing the rules for them. Now, the major questions that arise after the new Act are: Can an Act become redundant in six decades? Whether the 1956 Act has become totally obsolete? Whether the companies will be able to adapt to the new Act when it needs a plethora of clarifications? It can be hoped that the MCA and the concerned regulatory bodies will soon address such challenges to truly make the new Companies Act, an exemplary reformative step forward in empowering India Incorporated.[9]

[1] Corporate Governance: The system of rules, practices and processes by which a company is directed and controlled. Corporate governance essentially involves balancing the interests of the many stakeholders in a company – these include its shareholders, management, customers, suppliers, financiers, government and the community. Since corporate governance also provides the framework for attaining a company’s objectives, it encompasses practically every sphere of management, from action plans and internal controls to performance measurement and corporate disclosure.

[2]Whistle blowing’ is when a worker reports suspected wrongdoing at work. Officially this is called ‘making a disclosure in the public interest’.

A worker can report things that aren’t right, are illegal or if anyone at work is neglecting their duties, including:

  • someone’s health and safety is in danger
  • damage to the environment
  • a criminal offence
  • the company isn’t obeying the law (like not having the right insurance)
  • covering up wrongdoing

[3] Corporate Social Responsibility is a management concept whereby companies integrate social and environmental concerns in their business operations and interactions with their stakeholders.

[4] Section-185: Loan to Directors

Section-186: Intercorporate Loans or Investments

Section-188 and Rule 16: Approval and Disclosure of Related Party Transactions

Section-197: Managerial Remuneration

All the above-mentioned provisions need shareholders’ approval

[5] As specified under Section 139(2) of the Companies Act, 2013

[6] http://www.caclubindia.com/articles/companies-act-2013-rotation-of-auditors-20274.asp#.VP2gdvmUeuA

[7] As per Section 177(10) of the Companies Act, 2013

[8] As provided under Section 135 of the Companies Act, 2013

[9]http://www.grantthornton.in/assurance-tax-regulatory-framework/companies-act-2013implementation-challenges

What Is The Procedure To Change Your Attorney In The Middle Of The Case

Right to justice is one of the fundamental rights and one of the primary rights of any individual. The Preamble to the Constitution of India guarantees to all citizens, social, economic and political justice. One of the prime objectives of the Indian Judicial system is to ensure that justice is given to all. The most important players of this system among others are the Judges and advocates; one who decides and one who helps the people to get justice. Advocates, in addition to being independent professionals, are also officers of the Courts and play a vital role in the administration of justice. Accordingly, the set of rules that govern their professional conduct arises out of the duty that they owe to the Court, their clients, their opponents and fellow advocates.[i]

 The professional standards that an advocate needs to maintain are mentioned in Chapter II, Part VI of the Bar Council of India Rules. These rules have been placed under Section 49(1)(c) of the Advocates Act, 1961. Under Rules on ‘An Advocate’s duty Towards the Client’ following practices are mentioned:

  • An advocate is bound to accept briefs
  • An advocate should not to withdraw from service
  • An advocate should not appear in matters where he himself is a witness
  • An advocate must make full and frank disclosure to client
  • A advocate must uphold interest of the client
  • An advocate should not suppress material or evidence
  • An advocate should not disclose the communications between client and himself
  • An advocate should not be a party to stir up or instigate litigation.
  • An advocate should not act on the instructions of any person other than his client or the client’s authorised agent.
  • An advocate should not charge depending on the success of the litigation
  • An advocate should not receive interest in actionable claim
  • An advocate should not bid or purchase or transfer property arising out of legal proceeding
  • An advocate should not adjust fees against personal liability
  • An advocate should not misuse or take advantage of the confidence reposed in him by his client.
  • An advocate should keep proper accounts and not divert money from accounts
  • An advocate should intimate the client on amounts
  • An advocate should adjust fees after termination of proceedings
  • An advocate should provide copy of accounts
  • An advocate should not enter into arrangements whereby funds in his hands are converted into loans.
  • An advocate should not lend money to his client
  • An advocate should not appear for the opposite parties

  If an advocate fails to fulfil any of the duties towards his/her client or the performance of the advocate is not satisfactory to the client, the client can at any point of time prior to the ending of the case, change his pleader for any reason. The client can take such a decision for whatever reason; because even though the client hired the services of a professional, he/she is still ultimately responsible for his/her own legal affairs. If there is reason to believe that, there is a problem one needs to speak up and take responsibility for fixing it.[ii]

 This absolute right remains even if the advocate has rendered valuable services or the client owes the advocate his fees. Although a client does not need to have a reason, common circumstances for changing an advocate include[iii]:

  • An advocate’s conflict of interest
  • Differing case strategies or personality conflicts
  • A change in the pleadings or parties of the case
  • A change of the Court hearing the case
  • Expanded legal needs which the advocate fails to fulfil

When an advocate is appointed by a client for a certain case under Order 4 of Civil Procedure Code, 1908 the pleader has to file to the Court a duly signed written document by the client, which is termed as a Vakalatnama. In case a client is not satisfied with the lawyer, then first, the client should discuss it with the lawyer, and resolve the issue amicably. If it is not resolved then he might ask for a No Objection Certificate (NOC) on the Vakalatnama or on other documents related to the case. This is an easier way. But in case the advocate does not agree to give a NOC, then the person can issue a notice of termination to the advocate and apply to the court for withdrawal of Vakalatnama. Order 3 of Civil Procedure Code gives aggrieved persons the right to choose one’s pleader. Therefore changing of pleader with the leave of the Court is possible. The new pleader should submit a duly signed Vakalatnama to the court. Hence it is possible to change one’s pleader. In a few cases problem arises with the case history. If the pleader fails to give it to the client, the client can apply for the order sheet by an application to the Court.

Though right to justice is guaranteed by the Indian Constitution; way to justice is to be made by the person seeking justice. Hence, although the pleader is going to appear before the court the full responsibility rests on the instituting or defending the suit or criminal proceeding. Therefore, if the appointed attorney is not fulfilling the purpose then the client can at any

[i]  http://www.barcouncilofindia.org/about/professional-standards/rules-on-professional-standards/

[ii] http://research.lawyers.com/replace-a-lawyer.html

[iii]  http://research.lawyers.com/changing-attorneys-mid-case.html