Incorporation of a Company

Incorporation of a company is a process used to form the corporate entity or the company. A company comes into existence after being incorporated. It becomes a separate legal entity of its own, recognized by law, and can be identified with terms like “Inc” or “Limited “ in its names once it gets incorporated. Incorporation essentially means giving birth to a company.

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Revisiting Related Party Transaction laws in India

In layman’s language, a Related Party Transaction is nothing but businesses carried out among the relatives of different companies. On the other hand, legally speaking, there are many financial and commercial legal instruments which define and provide for such transactions.

Section 188 of the Companies Act, 2013 does not disallow or prohibit Related Party Transactions (for brevity, RPTs) but in fact, lays down how the contracts or arrangements involving related parties should be made keeping in mind the interests of the company, investors and other tax compliances. It is to be noted that the definitions of related parties have been given in not just The Companies Act, 2013 but also in Indian Accounting Standards-18 which is a tax compliance rule. Additionally, under the S. 41 of the Income Tax Act, 1961, while considering the taxable status of transactions, the following have been regarded as related parties:

assessee is an individual – any relative of the assessee; (ii) assessee is a company, firm, association of persons or HUF – any director of the company, partner of the firm, or member of the association or family, or any relative of such director, partner or member; (iii) any individual who has a substantial interest in the business or profession of the assessee, or any relative of such individual; (iv) a company, firm, association of persons or Hindu undivided family having a substantial interest in the business or profession of the assessee or any director, partner or member of such company, firm, association or family, or any relative of such director, partner or member; (v) a company, firm, association of persons or Hindu undivided family of which a director, partner or member, as the case may be, has a substantial interest in the business or profession of the assessee; or any director, partner or member of such company, firm, association or family or any relative of such director, partner or member; (vi) any person who carries on a business or profession, (A) where the assessee being an individual, or any relative of such assessee, has a substantial interest in the business or profession of that person; or (B) where the assessee being a company, firm, association of persons or Hindu undivided family, or any director of such company, partner of such firm or member of the association or family, or any relative of such director, partner or member, has a substantial interest in the business or profession of that person[1].

Therefore, it is always better to go through the section in the company’s annual report which details related party disclosures to get a fair idea of the operative mechanism of the company.Globally speaking, in countries like South Korea, RPTs act as a tool to transfer wealth from one generationof controllers to the next in avoidance of inheritance taxes.[2] In business adverse jurisdictions with stringent tax system, RPTs is a way of accruing private benefits.

Impact of RPTs

The RPTs have a tendency to adversely affect the financial health of the corporates by the undesired influence or control or joint control on the policies of the administration and operation of companies. The corporate wealth can be misappropriated by reducing the profits to the outside investors and shareholders. Tax evasion is also accompanied with such actions by managers of the company-. The best corporate governance practices are thus challenged owing to poor monitoring and disclosure policies of the companies in case of RPTs. Recent corporate scandals have heightened the concern to understand the phenomenon. Accounting frauds in Enron, Tyco, Parmalat, and Satyam are glaring examples of the same.[3] There has always been an incessant effort made to highlight the significance of transactions done based on arm length principle (usually, the parties to the transactions act independently without showing any personal interest in the business).

Let’s look at the laws in place

RPTs under Indian Accounting Standards

Under AS 18, related party includes[4]:

Enterprises, directly or indirectly, controlled by one or more other enterprises;

Associates or Joint Ventures of an enterprise;

Individuals who own interest in the voting power of an enterprise and are in a position tosignificantly influence the enterprise;

Key Management Personnel and their relatives;

Enterprises which share common directors.Now comes the analysis part, if we compare the two definitions, we will come to know that AS­ 18 is wider in purview than the Companies Act. The Companies Act requires approval only when a director and his/her relatives are involved in the transactions. However, even if substantial interest is involved if the key management personnel (i.e -a director), is not involved in any transaction, the approvals are not required-. In this way, AS-18 takes a lead because it requires the approval from all key management personnel transacting with related parties.

Disclosures

Presence of parent or controlling company is to be revealed in the financial statements irrespective of the transaction between the two[5]. However, before the Ministry of Corporate Affairs gave a clarification through a circular issued in 2014, to exclude mergers and acquisitions transactions from the purview of related party transactions (RPT) provision in the new company law. Prior to this, there were much speculations u/s 188 since the provision was not clear.[6]

Under both CLA, 2013 and SEBI Code, approval of the shareholders through special resolution needs to be obtained in addition to the requirement that the related parties must abstain from voting on such resolutions. But, the problem with this might be the rising of doubts in the minds of minority shareholders who have every right to disapprove a non-abusive RPT without wholly examining the proposed transactions. Not only this, it is highly imperative on the part of independent directors on the board to effectively monitor and identify the RPTs. Until these things materialize, Indian capital markets will continue to suffer.

Conclusion

Further, Auditing and Assurance Standard 23­ Related Parties impose duty on auditor to identify and disclose the related party transaction in the financial statements of the company. This is in correspondence to the roles of auditors in a company.

 Photo Courtesy: https://www.google.co.in/search?q=related+party+transaction&biw=1366&bih=612&source=lnms&tbm=isch&sa=X&ved=0CAcQ_AUoAmoVChMIhIutk8LhxgIViweOCh1VsQiR#imgrc=F8HmOobZKtdc9M%3A

http://www.thehindubusinessline.com/iw/2002/12/08/stories/2002120800520600.htm

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[1] Definition of Related Party – A Comparative Analysis
CORPORATE LAW REPORTER http://corporatelawreporter.com/2013/02/22/definition-related-party-comparative-analysis/ last accessed 12/7/15
[2]Luca Enriques, Related Party Transactions: Policy Options and Real-world Challenges (with a Critique of the European Commission Proposal), HLS Forum
<http://corpgov.law.harvard.edu/2015/06/04/related-party-transactions-policy-options-and-real-world-challenges-with-a-critique-of-the-european-commission-proposal/>   last accessed 12/7/15
[3]Padmini Srinivasan, An Analysis of Related-Party Transactions in Indiahttp://www.iimb.ernet.in/research/sites/default/files/WP%20No.%20402_0.pd last accessed 12/7/15
[4]See Supra note 1
[5]IAS 24 — Related Party Disclosures, DELOITTE
http://www.iasplus.com/en/standards/ias/ias24last accessed 14/7/15
[6]K R Srivats, M&A deals, de-mergers not to attract related party provision in new company law, THE BUSINESS LINE

By Aishwarya Dhakarey

A Rape Covered Under The Veil Of Marriage

1.  Introduction

Whenever Mahira, who is 25 years old, has a fight or a heated argument with her husband, he takes it out on her in the bed. She is merely a toy for him whom he can use differently every night. He forces himself on her, every single day, even during her periods. Their relationship has never been about ‘consent’ and ‘equality’.

Similarly, many women are subjected to dowry harassment and brutal rape which involves inflictions with torch lights leading to serious injuries.

These are just a few examples out of the plethora of such cases. These women are all married and they have to go through such kind of violence and forced intercourse. Is a wife merely a tool to vent out sexual and emotional tension and frustration? Marital rape is an oxymoron. Yet marriage and rape have an unfortunate continued relationship in India. Both rape and marriage are considered ways of gaining control over a woman’s body since time immemorial. This was also exemplified in the infamous Imrana rape case[1] where back in 2005, 28-year-old Imrana, a mother of five, was raped by her 69-year-old father-in-law. And the Panchayat (local council) declared her marriage to her husband as void since she had had sex with her father-in-law and by virtue of her physical relationship with her father-in-law she was also told to treat her own husband as her son.

The dictionary meaning of the word “rape” is “ravishing or violation of a woman” which in its generic term “Raptus” implies violent theft, applied to both property and person. Rape is the word for forced or coerced sex. It is when the woman has not had the opportunity to freely give consent or she is unable to give consent. Marital rape is the non-consensual sex committed by the spouse. It is also known as partner rape or rape in marriage.

2.  Indirect laws addressing Marital Rape

Marriage in India is considered a holy sacrament between a husband and his wife. When a man marries a woman, it not only brings implied consent of sexual intercourse but also the man’s duty to give due respect to the dignity of his wife. When the husband commits unwanted/ forceful intercourse with his wife, he breaks the confidence of his wife and breaches her trust in him. Lately, Section 498A of the Indian Penal Code i.e. the anti-dowry law is voluminously misused by the women and a considerable number of rape cases reported each year are also false. Proving marital rape and taking bedrooms to courtrooms in such cases is not only a difficult but also a dangerous idea.[2]

As per the Indian penal legislation i.e., Section 375 of the Indian Penal Code- “Sexual intercourse” or “sexual acts” by a man with his own wife, the wife not being under fifteen years of age, is not rape.” [3] Exception to Section 375[4] of IPC provides immunity to the husband who rapes his wife and declares marital rape as legal and does not consider it as rape. This shows that the concept of marital rape goes beyond the virtues of Article 21[5] of the Constitution of India i.e. right to live with human dignity. Marital rape prima facie violates Article 14[6] of the Constitution as it creates a classification between married and unmarried women and denies equal protection of the criminal legislation to the former.[7] Though marital rape violates basic human rights that are attributed to every human being under the purview of these Articles there are not many remedies available to the victim.

Therefore, in India, marital rape can come under cruelty clauses of section 498A of IPC. Cruelty covers physical and mental harassment. Punishment is imprisonment for a maximum period of three years with fine. The remedies for cruelty under the Indian Penal Code take years to reach an outcome. In view of this, victims remain victims. They either give in, or give up.

Another remedy available to the wife is under the Protection of Women from Domestic Violence Act, 2005 which deals with protection of women from physical and mental cruelties of all forms, including sexual abuse. Family Courts as well as Magistrates provide counselling to the husband under domestic violence laws. But unfortunately, the provisions of this Act provide civil remedies only and a wife who wants to see her husband (rapist) punished finds no solution to that. Instead she is the one who struggles and suffers especially if she has children or is financially dependent or is without family support.

The only lasting solution to the problem of marital rape is legal separation or annulment of the marriage itself. A legally separated wife can only file a complaint for rape against her husband under Section 376A[8] of IPC.[9]

3. Startling Statistics

Marital rape is both common and an un-reported crime. A study conducted by the Joint Women Programme – an NGO, found that one out of seven married women had been raped by their husbands at least once. They frequently do not report these rapes because the law does not support them.[10] According to the UN Population Fund, more than two-thirds of married women in India, aged 15 to 49 years, have been beaten, or forced to provide sex.[11] Bertrand Russell in his book Marriage and Morals saw marriage as one of the most conventional forms of livelihood for a woman where the frequency of undesired intercourse she has to give in to is in all probabilities higher than that endured by a prostitute. [12]

Still the problem of marital rape has received very little attention from the activists, criminal justice system and the society at large. The concept of rape in marriage got recognition only after 1970s. The right of a husband to have sexual intercourse with his wife was considered to be one of the most natural implications of the contract of marriage.[13]

International Instruments

Article 2 of the Declaration of the Elimination of Violence against Women includes marital rape explicitly in the definition of violence against women.[14] Also the unanimous resolution at the UN conference in Beijing, September 1995 guarantees every woman the right to say no to sex as she wishes, specifically wives. In accordance with these Declarations and Conferences many countries have either enacted marital rape laws, repealed marital rape exceptions or have laws that do not distinguish between marital rape and ordinary rape. These States include Albania, Algeria, Australia (in 1991), Belgium, Canada, China, Denmark, France, Germany, Hong Kong, Ireland, Italy, Japan, Mauritania, Mauritius (in 2007), New Zealand (under Crimes Act, 1961), Norway, the Philippines, Scotland, South Africa, Sweden, Taiwan, Tunisia, the United Kingdom (in 1991), the United States, and recently, Indonesia, Thailand (in 2007), Turkey (in 2005).[15] In England and Wales, the House of Lords held in 1991 that the status of married women had changed beyond all recognition. Lord Keith, compared a marriage of the modern times with a partnership of equals where the wife is no longer the subservient chattel of the husband.[16]

4. Rethinking of the existing law

In India, the 42nd Law Commission Report (1972) suggested that marital rape should be criminalised. However, actions were not taken to that effect and the 84th Report (1980) was not in favour of the criminalisation. In the year 1996 the Supreme Court of India in Bodhisattwa Gautam v. Subhra Chakraborty[17] classified rape as a crime against the basic human rights and a violation of the victim’s most cherished of fundamental rights, namely, the right to life enshrined in Article 21 of the Constitution. However, the Apex Court negated this very pronouncement by not recognizing marital rape.[18] This shows that the Indian courts as well as the law makers have made recommendations and pointed out the need for penalising marital rape several times. Still there has not been any substantial change in this field.

5. The gray areas

There are a lot of loopholes in the Indian legal system when it comes to marital rape. It not only provides immunity to the rapist husband but is also silent with regard to a lot of questions. For example, there are no provisions to deal with the cases of rape which are committed by the husband in collusion with a third person or if rape is committed by both the husband and a third person. Whether the third person will only be punished for rape, or whether the husband, would escape punishment for marital rape owing to his relationship with the victim are some of the many questions which the law has failed to adequately answer.[19]

 The honourable High Court of Delhi has rightly pointed out in the case of Meena & Anr. v. State & Anr.[20] on 17 October, 2012 where the Court observed that if a girl who is not the wife of the man but is below 16 years of age (15 as per the Criminal Law Amendment 2013) then even the consensual intercourse between the two amounts to rape. But if the girl is above 16 years and is wife of the man, then even the forced intercourse is not rape. This provision in the Indian Penal Code, 1860 is a specific illustration which shows that the legislature has legitimized the concept of child marriage by keeping a lower age of consent for marital intercourse.

6. The deep scars left from the crime

Marital rape causes both mental as well as physical trauma which has severe and long-lasting consequences on women. The immediate physical and gynaecological effects of marital rape include injuries to private organs, lacerations, soreness, bruising, torn muscles, fatigue, vomiting, miscarriages, stillbirths, bladder infections. It may also lead to infertility and HIV. Rape in marriage has a lot of long-lasting psychological consequences also. It causes anxiety, shock, intense fear, depression, sleep problems, suicidal ideation, etc. [21]

7. Conclusion

The concept of marital rape is an oxymoron. It is a rape under the veil of marriage. Marriage is not a licence for sex. Just because a woman says “I do” to marriage it does not mean that she has said “I do” to sex whenever, wherever, and however her husband wants it. Sex is not an implied ‘right’ under the contract of marriage rather it is a clear communication of love, mutual consent, caring and respect between husband and wife.

A recent incident of gang rape and murder of a student on a bus in Delhi in 2012 led to a mass outcry. This outrage took place when the girl was raped by strangers. Had she been raped by her husband, would it have the same effect? If rape is the violation of human rights then it would continue to be a violation whether committed by her husband or a stranger.

The dignity of women either married or unmarried is alike. She cannot be considered as a property or the subservient chattel of the husband In today’s scenario we require generation of awareness along with judicial awakenings. What really needs to be done is to teach both boys and men to not rape and educate them to view women as valuable partners in every aspect of life.

[1] http://archive.indianexpress.com/news/imrana-rape-case-fatherinlaw-gets-bail/1143012/

[2] http://www.bbc.com/news/world-asia-india-32810834

[3] As per the Criminal Law (Amendment) Act, 2013

[4] Section 375- Definition of Rape

[5] Article 21 of Indian Constitution- Protection of life and personal liberty

[6] Article 14 of Indian Constitution- Equality before law

[7] http://www.indialawjournal.com/volume2/issue_2/article_by_priyanka.html

[8] Section 376A – Intercourse by a man with his wife during separation

[9] http://www.firstpost.com/living/law-marital-rape-domestic-violence-act-reasonable-substitute-2223674.html

[10] http://www.supremecourtcases.com/index2.php?option=com_content&itemid=5&do_pdf=1&i

d=586

[11] www.ijmr.net.in

[12] http://www.ndtv.com/opinion/the-sordid-reality-of-marital-rape-760245

[13] http://www.ebc-india.com/lawyer/articles/645.htm

[14] http://www.un.org/documents/ga/res/48/a48r104.htm; Usha Badri Poonawalla vs K. Kurian Babu [AIR 2002 Bom 292]

[15] Refer – Law Commission of India’s 20th Report on Proposal to Amend The Prohibition Of Child

Marriage Act, 2006 And Other Allied Laws

[16] http://nlrd.org/wp-content/uploads/2013/01/121798698-Justice-Verma-Committee-report.pdf

[17] (1996) 1 SCC 490

[18] http://www.theglobaljournals.com/ijar/file.php?val=December_2013_1385986800_cc62d_76.pdf

[19] www.jstor.net

[20] W.P. (Crl.) 1231/2012

[21] http://www.vawnet.org/research/summary.php?doc_id=248&find_type=web_desc_AR

By Anubha Yadav

Juvenile Justice (Care and Protection of Children) Amendment Bill, 2021: All you need to know

The Juvenile Justice (Care and Protection of Children) Amendment Bill, 2021 (hereinafter referred to as ‘the bill’) which amends the Juvenile Justice Act, 2015 was recently passed by the Rajya Sabha after being tabled in the Lok Sabha in March. The Bill did not receive too much opposition and was passed with overwhelming support from both the opposition and the ruling party. The Bill brings in certain key changes with regard to the power of district magistrates as well as in classification of offences. 

What is the Juvenile Justice Act, 2015?

The Juvenile Justice Act, 2015 (hereinafter referred to as ‘the Act’) is the act governing the juvenile justice system in India. It was passed in 2015 and replaced the now-repealed Juvenile Justice (Care and Protection of Children Act), 2000. The Act deals with the trial of juveniles as adults i.e. those from 16-18 years of age. It provides for a Juvenile Justice Board to decide whether a juvenile should face trial as a child or not, depending on the crime committed and the circumstances surrounding it. The Act also brought in certain provisions relating to adoption and the procedure to adopt.

The Act at the time of passing, received huge backlash from Child Right Activists and opposing MPs who argued that punishing juveniles should not overshadow the prospect of educating them, especially considering the fact that many who commit crimes at a young age are illiterate and economically backward. Even till date, there are question marks that remain over the Act with organizations that stand for child rights pushing for it to be repealed or amended. 

The Juvenile Justice Amendment Bill, 2021 – Changes brought in

The latest amendment bill brings in a few crucial changes to the original act, although most of these don’t concern the earlier mentioned criticisms of the Act. While presenting the Bill, Minister for Women and Child Development, Smriti Irani stated that the bill would give more responsibilities to District Magistrates to ensure fast trials as well as fast adoption procedures. 

The changes that have been brought in are as follows:

Increased power and responsibilities for District Magistrates

The bill provides District Magistrates (DMs) with the power and responsibility to ensure that all provisions of the Act are implemented. More specifically, it requires them to supervise the functioning of agencies such as Child Welfare Committees, Juvenile Protection Units, Juvenile Justice Boards, etc. The change has been brought in due to the fact that a plethora of such institutions were found to not be conforming to the provisions of the Act. 

The bill also requires every DM to check on members of such institutions, especially Child Welfare Committees. Background checks, criminal charges and the like are to be looked at and verified by the DM to remove any probability of child abuse and the like. For the same, the committees must adhere to the DM’s requirements and file reports on their activities and that of their members. Further, DMs are also tasked with issuing adoption orders. 

While all of these changes have been welcome ones that have been brought in to ensure the smooth functioning of welfare committees, boards and protection units, concerns have been raised that the responsibilities placed on the DMs are excessive. 

Clarification of offences and punishments

There was quite a bit of ambiguity previously regarding certain terminology in the original Act such as ‘heinous offences’ and ‘serious offences’. The bill has clarified the same and brought in minor changes in punishments. Serious offences would now include those for which maximum punishment is more than seven years of imprisonment. Heinous offences are those with a maximum imprisonment of seven years.

Conclusion

Although the amendment bill does not address the original concerns that were raised when the original act was passed, it seems like a step in the right direction as it provides for better functioning and operation of committees, boards and protection units. DMs might feel hard done by however, and it remains to be seen if some burden will be eased on them after the bill comes into force as an Act. 

Consumer Protection Laws In India With Special Reference To Human Health- A Socio-Legal Study

The Consumer Protection Act or the CPA is a statute that was enforced in the year of  1986. The CPA was implemented in India so as to ensure the protection of the interests of the consumers and to prevent them from exploitation at the hands of the sellers. Under the Consumer Protection Act, six consumer rights were included,  namely, right to be heard, right to choose, right of education of customer, right to safety, right to redress and the right to be informed.

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Annual Compliances for a Startup in India

There are a variety of annual compliances that a startup must keep in their mind to follow through. Different acts prescribe different compliances to be followed. However, it can be quite difficult for such companies to keep track of these compliances and since at times these startups are run by one person, it can get quite overwhelming as well.

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A complete guide on software license agreements

A software license agreement is a legal contract that is entered into between the owner or creator of a software and a purchaser (licensee). Since softwares act as services, one cannot ‘sell’ them as such. They will be provided or licensed and the software license agreement makes clear how the said software must be used in such a way that the rights of the owner as well as the purchaser are protected.

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Procedure to file consumer complaints online

In today’s fast-moving world, consumer protection is of paramount importance. Only when there is a sound system of safeguarding the interest of consumers who purchase goods or services from businesses or sellers will there be smooth functioning of markets, consumer welfare, and accountability on the part of businesses.

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